FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended January 31, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________to___________
Commission file number
0-13176
NON-INVASIVE MONITORING SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
Florida 59-2007840
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1840 West Avenue, Miami Beach, Florida, 33139
(Address of principal executive offices) (Zip Code)
(305) 534-3694
(Registrant's telephone number:)
-----------------------
Indicate by check mark if the registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
The number of shares outstanding of the registrant's Common Stock, par
value $.01 per share (the "Common Stock"), as of March 15, 2000 was 21,514,726.
This document contains 12 pages
<PAGE>
NON-INVASIVE MONITORING SYSTEMS, INC.
Index
PART I. FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets at July 31, 1999 and January 31,
2000
Condensed consolidated statements of operations for the Three and Six
Months Ended January 31, 1999 and 2000
Condensed consolidated statements of cash flows for the Three and Six
Months ended January 31, 1999 and 2000
Notes to condensed consolidated financial statements January 31, 2000
Item 2. Management's Discussion and Analysis of Financial Conditions
and Results of Operations
PART II OTHER INFORMATION
--------------------------
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
----------
2
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PART I. FINANCIAL INFORMATION
- ------------------------------
NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
July 31, 1999 Jan. 31, 2000
(Note) (Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 3,198 $ 18,246
Accounts and royalties receivable
- net of allowance of $4,343 35,636 59,628
Inventories 37,665 10,743
Prepaid expenses 0 4,399
--------- ---------
TOTAL CURRENT ASSETS 76,499 93,016
PROPERTY AND EQUIPMENT
Furniture and equipment 722,339 109,371
Leasehold improvements 15,731 3,464
--------- ---------
738,070 116,299
Less accumulated depreciation and amortization (712,036) (93,805)
--------- ---------
26,034 19,030
Patent costs, net of accumulated amortization of
$202,035 in July and $214,695 in January 283,632 327,972
OTHER ASSETS 6,758 3,661
--------- ---------
Total other assets 290,390 331,633
- ------------------ --------- ---------
Total Assets $ 392,923 $ 443,679
- ------------ --------- ---------
</TABLE>
Note: The balance sheet at July 31, 1999 has been derived from the audited
financial statements at that date.
See notes to condensed consolidated financial statements.
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NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS---Continued
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
July 31, 1999 Jan. 31, 2000
(Note) (Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and Accrued expenses $ 64,629 $ 122,417
Loan Payable to Shareholder 29,500 46,500
------------ ------------
TOTAL CURRENT LIABILITIES 94,129 168,917
SHAREHOLDERS' EQUITY
Preferred Stock, $1.00 par value,
1,000.000 shares authorized
Series B: 100 shares issued and outstanding 100 100
Series C: 62,048 shares issued and outstanding 62,048 62,048
Common Stock, $.01 par value, 100,000,000 shares
authorized, 21,514,726 issued and outstanding 215,148 215,148
Additional Paid-in capital 10,996,877 10,996,877
Accumulated deficit (10,975,379) (10,999,411)
------------ ------------
Total shareholder's equity 298,794 274,762
------------ ------------
Total liabilities and shareholders equity $ 392,923 $ 443,679
------------ ------------
</TABLE>
Note: The balance sheet at July 31, 1999 has been derived from the audited
consolidated financial statements at that date.
See notes to condensed consolidated financial statements.
4
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NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
January 31, January 31,
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 53,136 $ 75,456 $ 97,473 $ 134,616
Royalty Income 28,000 19,116 56,000 42,997
Research and Consulting 0 139,000 0 139,000
------------ ------------ ------------ ------------
Total revenues 81,136 233,572 153,473 316,613
Operating Expenses:
Cost of goods sold 18,786 8,847 26,490 33,958
Selling, General & Administrative 93,427 111,784 186,347 178,243
Research & Development 88,098 39,318 197,646 131,456
------------ ------------ ------------ ------------
Total operating expenses 200,331 159,949 410,483 343,657
(LOSS) FROM OPERATIONS (119,175) 73,623 (257,010) (27,044)
Interest income 572 210 6,207 562
Other income 1,750 1,400 1,750 2,450
------------ ------------ ------------ ------------
NET (LOSS) $ (116,853) $ 75,233 $ (249,053) $ (24,032)
------------ ------------ ------------ ------------
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 16,514,726 21,514,726 16,514,726 21,514,726
BASIC AND DILUTED (LOSS) PER COMMON SHARE (0.007) 0.003 (0.015) (0.001)
------------ ------------ ------------ ------------
</TABLE>
See notes to condensed consolidated financial statements.
5
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NON-INVASIVE MONITORING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
----------------
January 31,
-----------
1999 2000
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) $(249,053) $ (24,032)
Adjustment to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 38,565 18,185
Changes in operating assets and liabilities:
Decrease (Increase) in accounts and
royalties receivable 12,802 (23,992)
(Increase) Decrease in inventories (36,951) 26,922
Decrease in prepaid expenses and other assets 4,000 177
(Decrease) Increase in accounts payable and
accrued expenses (11,136) 57,788
--------- ---------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (241,773) 55,048
--------- ---------
INVESTING ACTIVITIES
Short-term investments 200,000
Purchases of plant and equipment (3,434)
Patent costs (22,863) (57,000)
--------- ---------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 173,703 (57,000)
--------- ---------
FINANCING ACTIVITIES
Proceeds from Shareholder loans 17,000
---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 17,000
---------
(Decrease) Increase in Cash (68,070) 15,048
CASH AT BEGINNING OF PERIOD 136,975 3,198
--------- ---------
CASH AT END OF PERIOD $ 68,905 $ 18,246
--------- ---------
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
NON-INVASIVE MONITORING SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED
January 31, 2000
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-QSB and
Article 10 of regulation S-B. Accordingly, they to not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and six month
periods ending January 31, 2000 are not necessarily indicative of the results
that may be expected for the year ending July 31, 2000. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's 10-KSB and/or Annual Report for the fiscal year ended July 31,
1999.
Forward-Looking Statements
The following discussion contains, in addition to historical information,
forward-looking statements regarding Non-Invasive Monitoring Systems, Inc. (the
"Company" or "Nims"), that involve risks and uncertainties. The Company's actual
results could differ materially. For this purpose, any statements contained in
this Report that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the generality of the foregoing,
words such as "may," "will," "expect," "believe," "anticipate," "intend,"
"could," "estimate," or "continue" or the negative or other variations thereof
or comparable terminology are intended to identify forward-looking statements.
Factors that could cause or contribute to such difference include, but not
limited to, history of operating losses and accumulated deficit; possible need
for additional financing; competition; dependence on management; risks related
to proprietary rights; government regulation; and other factors discussed in
this report and the Company's other filings with the Securities and Exchange
Commission.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Introduction
Non-Invasive Monitoring Systems, Inc. (the "Company" or "Nims") is
engaged in the research and development of computer assisted, non-invasive
monitoring devices designed to detect abnormal respiratory and related pulmonary
events from sensors placed on the body's surface. These devices provide
diagnostic information regarding cardiorespiratory and sleep disorders in
infants, children and adults; in addition alarms are sounded for adverse cardiac
and respiratory events in critically ill patients. The Company has developed a
therapeutic motion platform (patent pending) that produces repetitive head to
foot motion. In animal
7
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experiments, this device produces Non-Invasive Motion Ventilation, a new means
to achieve ventilation at breath volumes lower than natural breathing and with
more rapid rates. This modality does not impose positive pressure on the lungs
and reduces the potential for damage to lung tissue as has been demonstrated
with conventional mechanical ventilation. This new modality might also serve as
a means for Non-Invasive Cardiopulmonary Resuscitation. Further, the motion
platform appears to cause release of Nitric Oxide from the inner lining of blood
vessels. The Company expects to fabricate an adult motion platform during its
third quarter for adult testing.
Prior to April, 1999, the Company was party to an exclusive
distribution agreement for most of its products with SensorMedics Corporation
and was largely dependent on SensorMedics Corporation for the marketing of Nims
products. The agreement was amended to a non-exclusive arrangement. This
amendment allowed the Company to seek additional channels of distribution rather
than relying exclusively on SensorMedics Corporation.
On November 2, 1999, the Company entered into a License Agreement with
Lifeshirt.com, Inc., an Internet start-up company. The License Agreement
provides that LifeShirt.com, Inc. licenses the Company's technology and software
incorporated into a wearable computer garment system termed Lifeshirt. The
Company retained rights to marketing LifeShirt technology in hospitals. In
December, 1999, the Company received notification from the patent office that
its claims for patent of this garment were allowed. LifeShirt.com, Inc. was
founded in August 9, 1999 with 1,000,000 shares. The Company received 235,000 of
these shares in Lifeshirt.com, Inc. as well as termed royalties (3%) based upon
the revenues of Lifeshirt.com, Inc. From October 22, 1999 to January 14, 2000,
LifeShirt.com, Inc. through a private placement memorandum issued 196,814 shares
at $5 each. In addition to the Licensing Agreement, an Agreement ("R&D
Agreement") was signed that called for research and development of the Lifeshirt
System. This agreement funds Company operations through April 2000. Thereafter,
it is renewable on a month-by-month basis depending upon needs for further
research and development. The Company should be able to meet its working capital
requirements during fiscal 2000. However, if Lifeshirt.com, Inc. fails to meet
its financial obligations to the Company, then the Company may require
additional capital to remain in business in the future. Failure to secure
necessary financing might result in the further reduction and curtailment of
operations.
Results of Operations
- ---------------------
Revenue for the three and six month periods ended January 31, 2000 was
approximately $233,000 and $316,000 respectively as compared to approximately
$81,000 and $153,000 for the same period for the prior year.
Royalty income decreased approximately $13,000 during the period ended January
31, 2000 period as compared to the same period 1999.
Selling, general and administrative expenses increased approximately $18,000
during the three months ended January 31, 2000 and decreased $8,104 during the
six month period ended January 31, 2000 as compared to the same period in 1999.
1999 Costs were higher due to the costs associated with ISO 9001 certification
and CE marking process required for marketing the company's products.
8
<PAGE>
Nims incurred a net loss of $24,000 in the 2000 period as compared to a net loss
of $249,000 in the 1999 as a result of the factors described above.
Liquidity and Capital Resources
- -------------------------------
Working capital at January 31, 2000 was ($75,000) as compared to $111,000 at
January 31, 1999. The decrease in working capital was primarily due to the
increase in Accounts Payable and Accrued expenses during the six month period
ended January 31, 2000.
In March 1999, Nims required additional working capital to fund continued
operations, as revenues from product sales and royalty income were not
sufficient to sustain operations. Accordingly, in March 1999, Dr. Marvin A.
Sackner, Nims' Chairman provided the Company with an equity infusion of $150,000
through the purchase of 5,000,000 shares of Common Stock at a price of $.03 per
share.
The Company believes that the equity infusion combined with the anticipated
revenues from operations, will enable Nims to meet its working capital needs and
continue operations through July 31, 2000. However, if revenues do not reach
levels sufficient to fund working capital operations, Nims will require further
financing to continue operations in subsequent periods and in any event may
require additional capital to fund its research and development efforts
thereafter. Failure to secure necessary financing might result in the
curtailment of operations.
Cash provided by operating activities was $55,000 as compared to Cash used in
operating activities $241,000 during the six months ended January 31, 1999.
Cash used in investing activities was $57,000 during the six months ended
January 31, 2000 as compared to cash provided by investing activities of
$173,000 during the six months ended January 31, 1999. Investing activities
consist primarily of costs for patents, software production and purchase/sale of
short term investments.
Cash provided by financing activities during the six months ended January 31,
1999 was $17,000 and consisted of loans from a shareholder.
ISO 9001 Certification and CE Mark
- ----------------------------------
The Company has been notified that it met requirements for ISO 9001
certification and may affix the CE Mark to its products. Quality System
Requirements are required to market products into the EC. In addition, it has
met the FDA GMP Good Manufacturing Practice qualifications which correspond to
the ISO certification as well. Management believes this will enhance the
Company's ability to favorably position itself to potential marketing and
development partners.
9
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5 Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits:
Exhibit- 10.1 - License Agreement dated November 2,
1999 with LifeShirt.com, Inc. Research and Consulting
Agreement dated November 2, 1999 with LifeShirt.com,
Inc.
Exhibit- 27.1 - Financial data schedule (SEC use only)
B. Reports on Form 8-K - Not applicable
10
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934 the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
NON-INVASIVE MONITORING SYSTEMS, INC.
Dated: March 15, 2000 By: /s/ Marvin A. Sackner
-------------------------
Marvin A. Sackner,
Chairman of the Board
- --------------------------------------------------------------------------------
11
LICENSE AGREEMENT
This License Agreement (the "Agreement") is made and entered into on
October 28, 1999 by and between Non-Invasive Monitoring Systems, Inc., a Florida
corporation whose business address is 1840 West Avenue, Miami Beach, Florida
33139 ("NIMS" or "Licensor") and LifeShirt.com, Inc., a Delaware corporation,
whose business address is P. O., Box 262, Ojiai, California 93024 ("Licensee").
WHEREAS, Licensor possesses certain technology and owns valuable
know-how which pertains to the design, manufacture, assembly, sale,
distribution, servicing, installation, use, leasing and testing of devices for
online vital sign monitoring devices and specifically, related to the
development, manufacturing and marketing of a garment with embedded sensors that
records and transmits data over the Internet for respiration,) ECG, and over 35
other physical and emotional vital signs into a small digital recorder (the
"LifeShirt System"); and
WHEREAS, Licensee desires to obtain the right to use such technology
and know-how for the development, manufacture, marketing and sale of certain
products relating to the LifeShirt System; and
WHEREAS, Licensee and Licensor have entered into that certain Research
and Consulting Agreement by and between Licensee and Licensor, dated as of the
date hereof and attached hereto as Exhibit "A"; and
WHEREAS, Licensee has entered into that certain Consulting Agreement
with Marvin Sackner, a principal of NIMS, dated as of the date hereof and
attached hereto as Exhibit "B".
NOW, THEREFORE, in consideration of the premises and mutual promises,
terms and conditions hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties do hereby agree as follows:
1. Definitions.
As used herein, the following terms shall have the following
definitions.
1.1 Affiliates, "Affiliates" shall mean any business entity controlled
by, controlling or under common control with any party hereto, with "control"
being interpreted broadly, including any entities with which such party may
merge, acquire or be acquired by.
1.2 Business. Day. "Business Day" shall mean a day on which banks are
open for business in Los Angeles, California.
1.3 Dollars. "Dollars" or "$" shall mean lawful money of the United
States of America in immediately available funds.
1.4 Effective Date. "Effective Date" shall mean the date of this
Agreement.
<PAGE>
1.5 Force Majeure. "Force Majeure" shall mean any of the following
events or conditions, acts of state or governmental action, orders, legislation,
regulations, restrictions, priorities or rationing, riots, disturbance, war,
strikes, lockouts, slowdowns, prolonged shortages of energy supply, interruption
of transportation, embargo, fire, earthquake, flood, hurricane, typhoon.
explosion and accident.
1.6 Payment Period. "Payment Period" shall commence on March 31, June
30, September 30 or December 31, whichever first follows the initial sale of and
service related to the Product, any Derivative Product and any Reserved Product,
and continue for each of March 31, June 30, September 30 and December 31 for as
long as Licensee sells the Products and any Derivative Product and Licensor
sells any Reserved Products.
1.7 Products. "Products" shall mean the products, and only the
products, described in Exhibit "C" attached hereto and made a part hereof
1.8 Reserved Products. "Reserved Products" shall mean the products, and
only the products, described in Exhibit "D" attached hereto and made a part
hereof.
1.9 Technology. "Technology" shall mean any and all inventions and
discoveries, whether patentable or not (including without limitation any and all
patents and patent applications and extensions resulting therefrom), processes,
trade secrets, trade names, copyrights, mask work rights, know-how, computer
programs and software and hardware relating thereto, computer source codes,
methods, contrivances, plans, processes, specifications, experiments, circuit
descriptions. suggested circuit board layouts, parts, lists, test fixtures and
procedures, manuals, instruction devices, layouts, schematics, drawings,
prototypes, system operating maintenance and instruction manuals and other
intellectual property rights which have been created by or at the direction of
Licensor or any person or entity on behalf of Licensor or directly or indirectly
engaged by Licensor (including without limitation all subcontractors,
consultants and research and development partners or team members) which have
been, are or will be used to develop, design, manufacture, assemble, sell,
distribute, use, install, service or test the Products or any of them, A
description of the Products is set forth in Exhibit "C" attached hereto and made
a part hereof.
2. Grants of Rights.
2.1 Ownership of Technology and Products.
(a) Licensor represents and warrants to Licensee that all rights,
title and interest in and to the Technology and the Products are currently owned
by Licensor free and clear of any encumbrances or liens.
(b) Licensor hereby represents and warrants to Licensee that
Licensor has and shall maintain full power and authority to use, license, grant
rights to or otherwise dispose of the Technology and the Products without
infringing a third party's patent or other rights in the Technology and the
Products.
(c) Licensor shall deliver to Licensee an opinion of Licensor's
patent counsel that Licensor has the right to grant the licenses granted
hereunder.
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(d) The failure of Licensor to comply with any of the
representations or warranties in section 11(a) (b) or (c) hereof at any time
after the Effective Date shall constitute a material breach of this Agreement.
2.2 Exclusive license of Technology_and Products,
---------------------------------------------
(a) As of the Effective Date, Licensor grants to Licensee, during
the Term of this Agreement the exclusive, world-wide right and license to use
and practice the Technology in order to develop, design, make, use, sell and
service the Products other than the Reserved Products, This right and license
includes, without limitation, the rights: (i) to develop, design, manufacture,
assemble, sell, distribute, lease, install, test, repair, service and use any
and all Products incorporated within the LifeShirt System; (ii) to maintain the
Products incorporated within the LifeShirt System; (iii) to practice the methods
and processes involved in the use of the Products incorporated within the
LifeShirt System; (iv) to make and have made, to use and have used and to
maintain and have maintained, machines, tools, instrumentality's and materials
in connection with the development, design, manufacture, assembly, installation,
testing, repair, servicing and use of the Products incorporated within the
LifeShirt System; and (v) to use and have used methods and processes insofar as
such machines, tools, instrumentality's, materials, methods and processes are
involved in or incidental to the development, design, manufacture, installation,
testing or repair of the Products incorporated within the LifeShirt System. All
rights granted herein shall be exclusive to Licensee, but Licensor shall have
full right and license to use and practice the Technology and any improvements
and to make, use and sell the Reserved Products.
(b) Licensee agrees that Licensor shall retain title and interest
in and to any and all derivative patents related to the Products incorporated
within the LifeShirt System and Technology discovered by Licensor following the
signing of this Agreement (the "Derivative Patents"); provided that in the
event Licensor, within a reasonable time after the invention of any Derivative
Patent, fails to notify Licensee in writing that Licensor intends to apply for
said Derivative Patents at Licensor's expense, then Licensee, at Licensee's
sole, exclusive and irrevocable option (the "Option"), may apply for the
Derivative Patents on behalf of and in the stead of Licensor, as Licensor's
attorney-in-fact, at Licensee's expense, and thereafter, upon obtaining said
Derivative Patent(s), Licensor shall assign any and all right, title and
interest in and to any and all Derivative Patent(s) to Licensee; and Licensor
hereby irrevocably appoints Licensee as its attorney-in-fact (which appointment
is coupled with an interest) with full power of substitution to execute, verify,
acknowledge and deliver any documents necessary to apply for, prosecute, obtain
and maintain such Derivative Patents, which Licensor may fail to promptly
execute, verify, acknowledge and/or deliver after Licensee's request therefor.
In the event Licensor gives Licensee written notice of its intention to proceed
with any Derivative Patent, as set forth herein, and does proceed within a
reasonable time to apply for, prosecute, obtain and maintain the Derivative
Patents at Licensor's expense, then Licensor shall retain and own all right,
title and interest in and to the Derivative Patents; and Licensor shall license
the Derivative Patents to Licensee on the same terms as are set forth in this
Agreement for the Products and Technology related to the LifeShirt System
(c) Licensee agrees that Licensor shall retain all patent rights
for the Technology and the Products, except for the events contemplated in
Sections 2.2(b) above (License's Option re: Derivative Patents) and 7.2 (re:
Licensor's going out of business).
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(d) As soon as practicable after the Effective Date, but in no
event later than sixty (60) days after the Effective Date, Licensor shall
provide to Licensee, at no additional cost to Licensee, specific and necessary
information with respect to the LifeShirt System and with respect to the
Technology and the Products.
(e) Licensee shall have the right to sublicense the LifeShirt
System and related services (i) so long as each sublicensee or assignee agrees
to be bound by all of the terms and conditions included in this Agreement; and
(ii) so long as Licensor is given prior written notice of any such sublicense or
assignment and has a meaningful right of consultation regarding the sublicense
or assignment.
(f) The exclusivity of this license shall survive any sale,
merger, acquisition or other reorganization of Licensor and any assignment,
hypothecation or other transfer of any of the rights licensed hereunder by
Licensor to any third party and Licensor specifically agrees to obligate any
such third parties to assume Licensor's duties to Licensee hereunder.
3. Compensation Payable to Licensor/Licensee.
3.1 Royalty.
--------
(a) Licensee agrees to transfer or pay to Licensor, for granting
the rights and licenses described in Section 2 hereof:
(1) Licensee agrees to issue shares of common stock of
Licensee (the "Common Stock") to Licensor, valued equally with the founders'
shares, equal to twenty-three and one-half percent (23.5%) of the total shares
or 235,000 shares of Licensee's Common Stock. Licensee agrees to grant piggyback
registration rights in the Common Stock if and when Licensee makes an initial
public offering of its securities.
(2) A royalty which shall be computed as three percent (3%)
of Licensee's gross revenues from sales of the Product and any Derivative
Product licensed by Licensee from Licensor and services related to the Product
and any Derivative Product licensed by Licensee from Licensor, as such shall be
computed in accordance with generally accepted accounting principles; and paid
following the end of each quarterly Payment Period as set forth in Section 12
hereinbelow (the "Quarterly Royalty Payments").
(3) Subject to events of Force Majeure, Licensee agrees to
pay Licensor minimum Quarterly Royalty Payments that shall, in the aggregate,
total not less than Two Hundred Fifty Thousand Dollars ($250,000) (the "Minimum
Royalty") for the "Minimum Royalty Year". The Minimum Royalty Year is defined as
the second year of a two-year period, with such two-year period commencing on
the first day of any commercial sales of the Product or licensed Derivative
Product.
(b) Licensor agrees to transfer or pay to Licensee, for permitting
Licensor to retain the rights and licenses to the Reserved Products described in
Section 2 hereof:
(1) A royalty which shall be computed as five percent (5%) of
Licensor's gross revenues from sales of Reserved Products and services related
to the Reserved Products, as
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set forth on Exhibit "D", which incorporate or utilize any of the Product,
Derivative Product or TechnoLogy, as such shall be computed in accordance with
generally accepted accounting principles; and paid following the end of each
quarterly Payment Period as set forth in Section 3.2 hereinbelow.
3.2 Payments of Fees and Royalties.
(a) All royalty payments under Section 3.1(a)(2), 3.1(a)(3)
and 3.l(b)(l) hereof shall be made by check payable to the respective party
entitled to such royalty payments not later than thirty (30) days following the
Payment Period.
(b) Whenever any payment hereunder shall be due on a day,
which is not a Business Day, such payment shall be made on the immediately
preceding Business Day.
4. Prosecution and Maintenance of Patents.
4.1 Licensor represents and warrants that all of the patents for the
Products on the attached Exhibit "C" are in force as set forth on Exhibit "C"
and Licensor will continue to prosecute and maintain, amend, update, extend or
otherwise take any and all actions required for such patents for the Products
and shall take any and all other actions, legal or otherwise, which it considers
necessary or desirable to do so. Licensee shall have the right to be kept
informed of the status and progress of all actions instituted by Licensor
pursuant to this Section 4.1. Licensor shall support all such efforts by
Licensee.
5. Protection of Technology and Products.
5.1 lnfringements.
--------------
(a) Licensor shall take any and all actions, legal or
otherwise, which, in its sole discretion, it considers necessary or desirable to
terminate infringements of the Technology or any Product or any unfair
competition with any Product and/or against any individual(s) or entity(ies)
which Licensor deems, in its sole discretion, to be acting in contravention of
Licensor's intellectual property or proprietary rights. Licensee shall have the
right to be kept informed of the status and progress of all actions instituted
by Licensor pursuant to this Section. Licensor shall support all motions and
other efforts by Licensee to become a party jointly with Licensor to such
action.
(b) Each party hereto shall pay all the fees and expenses of
their respective legal counsel incurred in connection with actions initiated
pursuant to this Section. If the parties hereto agree to use the same legal
counsel in any such action they shall also agree on their respective
responsibilities with respect to payment of the fees and expenses of such
counsel.
(c) If Licensor does not institute an action within one
hundred twenty (120) days after receiving notice from Licensee of any
infringement of the Technology or any Product or any unfair competition with any
Product and/or against any individual(s) or entity(ies) which Licensee deems, in
its sole discretion, to be acting in contravention of Licensor's intellectual
property or proprietary rights, Licensee may institute any action with respect
thereto. Licensor shall have the right to be kept informed of the status and
progress of all such actions instituted by Licensee pursuant to this Section and
discussions between the parties must be held as to the advisability of
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such action. Licensee shall support all motions and other efforts by Licensor to
become a party jointly with Licensee to such action. Licensee shall not be under
any obligation to institute any such action,
(d) Any recoveries or settlement proceeds (or parts thereof)
received from suits or settlements involving an action initiated pursuant to
this Section by either party or agreed to relating to the Technology or Products
shall be applied first to reimbursing each party for such fees, expenses and
other costs as it may have incurred in connection with such action or
settlement, and then the balance, if any, to be divided between Licensor, on the
one hand, and Licensee, on the other hand, according to a fair determination of
each party's actual and potential losses and damages to which. the recovery
relates. In the event Licensor and Licensee cannot agree on the division between
them, the issue shall be decided by arbitration pursuant to section 8.3 of this
Agreement.
5.2 Use of Name in Suit. Where, in the judgment of the party
prosecuting an action under section 5.1 hereof, it is necessary to use the other
party's name to prosecute such action, such other party agrees to allow the
prosecuting party to so use the name of such other party, provided, however,
that the prosecuting party agrees to hold such other party harmless against any
court costs, attorney's fees, or damages resulting solely from the use of such
other party's name by the prosecuting party in such action and to indemnify the
non-prosecuting party.
5.3 Detect and Report Infringements. Each party agrees to keep watch to
detect any actual or suspected unauthorized use of the Technology or any Product
and any attempted passing-off by imitation of any product, and shall notify the
other party in writing of any such actual or suspected unauthorized use and any
such attempted passing-off within thirty (30) calendar days after receiving
knowledge of the actual or suspected unauthorized use or the attempted
passing-off.
6. Defensive Litigation.
6.1 Actions Brought by Third Parties.
---------------------------------
(a) Licensor shall indemnify and hold Licensee harmless from
and against any adverse final monetary judgment rendered against Licensee in any
action brought against any party asserting the infringement by Licensee or any
licensee or assignee of Licensee of rights of a third party (including without
limitation patent rights) due to the use or practice by Licensee or any licensee
or assignee of Licensee of the Technology or the Product
(b) Licensor shall, at its own expense, defend Licensee from
and against any such claim, provided, however, that Licensor shall not settle
any action without the prior written consent of Licensee, which consent shall
not be unreasonably withheld.
(c) Each party hereto will indemnify and hold harmless the
other party against any losses, claims, damages, expenses or liabilities to
which the indemnified party may become subject, under federal or state law,
insofar as such losses, claims, damages, expenses or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact made by the indemnifying party, its
officers, shareholders, agents, employees, and representatives in the use and
marketing of the Product, Derivative Product or
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Technology (so long as such untrue statement or alleged untrue statement of a
material fact has not been provided to the indemnified party by the indemnifying
party).
6.2 Notification of Suits.
----------------------
(a) Licensee shall give Licensor written notice of any suit or
action described in section 5.1 hereof wherein Licensee is named as a party.
Licensee shall give such written notice within ten (10) days after acquiring
such knowledge or prior to the expiration of time which is reasonably necessary
to prepare a response for filing with a court, whichever occurs first,
(b) Licensor shall give Licensee written notice of any suit or
action brought against Licensor with respect to the Technology or any Product
asserting the infringement on rights of a third party (including, without
limitation, patent rights) due to the use or practice of the Technology or any
Product. Licensor shall give such written notice within ten (10) days after
acquiring such knowledge or prior to the expiration of time which is reasonably
necessary to prepare a motion to intervene for filing with a court or other
judicial body, whichever is first to occur.
7. Termination
-----------
7.1 Term of Agreement. Unless it is terminated on an earlier
date pursuant to Section 2.2 or Section 7,2 herein, the license granted
hereunder shall be for a period of ten (10) years, commencing on the Effective
Date hereof (the "Term"). LifeShirt.com, at its sole option and with thirty (30)
days notice, may extend this Agreement beyond the Term for additional periods of
ten (10) years under the same terms and conditions (the "Additional Term"), for
as many successive ten (l0-year Additional Terms as it so elects. The
obligations of Licensee and Licensor to pay royalties on any Product and any
Reserved Product, respectively, shall terminate on the date this Agreement
terminates. Royalties accrued to that date shall be paid in accordance with this
Agreement.
7.2 Notice of Termination.
----------------------
(a) Upon the occurrence of a material breach or default as to
any obligation hereunder by either party and the failure of such party, within
sixty (60) days after receiving written notice thereof from the other party, to
cure (or to provide adequate assurance of cure of) such material breach or
default, this Agreement may be terminated by the other party by giving written
notice to the breaching party of such termination, such termination being
immediately effective upon the giving of such notice of termination to the
breaching party.
(b) In the event of a material breach of any of the provisions
hereof by either party, the other party may seek to recover monetary damages
against the breaching party in accordance with the provisions of section 7.3
hereof.
(c) Notwithstanding anything to the contrary herein, Licensee
shall be entitled to prevent termination by Licensor hereunder by providing such
adequate assurance of its performance of any prospective award for damages in
favor of Licensor in such amount and in such manner, including but not limited
to the posting of a bond, as shall be determined by the arbitrator pursuant to
section 7.3 acting on an expedited preliminary basis prior to actual full
arbitration proceedings.
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(d) In the event of any of the following, any and all right,
title and interest in and to the Technology and Products will automatically (and
with no further action required on behalf of Licensor or Licensee) be assigned
to Licensee to allow Licensee to maintain its exclusive rights to the Technology
and Products per this Agreement (i) Licensor files in any court pursuant to any
statute of the United States or of any individual state, a petition in
bankruptcy or insolvency or for reorganization or for an arrangement or at the
appointment of a receiver or trustee of the party of its assets, (ii) Licensor
proposes a written agreement of composition or extension of its debts, (iii)
Licensor is served with an involuntary petition against it, filed in any
insolvency proceeding, and such petition shall not be dismissed within ninety
(90) days after filing thereof; (iv) Licensor proposes or is a party to any
dissolution or liquidation, (v) Licensor makes an assignment for the benefit of
creditors, or (vi) Licensor discontinues its operations for any reason
whatsoever.
(e) In the event of any of the following, any and all right,
title and interest in and to the Technology and Products will automatically (and
with no further action required on behalf of Licensor or Licensee) be assigned
to Licensor to allow Licensor to recover its rights to the Technology and
Products per this Agreement: (i) Licensee files in any court pursuant to any
statute of the United States or of any individual state, a petition in
bankruptcy or insolvency or for reorganization or for an arrangement or at the
appointment of a receiver or trustee of the party of its assets, (ii) Licensee
proposes a written agreement of composition or extension of its debts, (iii)
Licensee is served with an involuntary petition against it, filed in any
insolvency proceeding, and such petition shall not be dismissed within ninety
(90) days after filing thereof; (iv) Licensee proposes or is a party to any
dissolution or liquidatIon, (v) Licensee makes an assignment for the benefit of
creditors, or (vi) Licensee discontinues its operations for any reason
whatsoever.
8. Miscellaneous.
8.1 Assignments.
------------
(a) Except as is permitted under Section 2.2 above, this
Agreement and any and all of the rights and obligations of either party
hereunder shall not be assigned, delegated, sold, transferred, sublicensed or
otherwise disposed of, by operation of law or otherwise, without the prior
written consent of the other party which consent shall not be unreasonably
withheld; provided, however, that (i) Licensor's consent shall not be required
with respect to any assignment, delegation, sale, transfer, sublicense or other
disposition by Licensee to any of its Affiliates; and (ii) withholding one's
consent because the proposed assignee, delegate, transferee, sublicensee or
disposee is a competitor of such party shall not be deemed to be unreasonable,
for the purposes of this Section. Any attempted assignment, delegation, sale,
transfer, sublicense, or other disposition, by operation of law or otherwise, of
this Agreement or any rights or obligations hereunder contrary to this Section
8.1 shall be a material breach of this Agreement by the attempting party, shall
be void and shall be of no force or effect
(b) This Agreement shall be binding upon, and inure to the
benefit of, Licensor and Licensee and their respective successors and assigns,
to the extent such assignments are in accordance with this Section 8.1.
8.2 Governing Law. This Agreement shall be governed, interpreted and
construed in accordance with the laws of the State of California.
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8.3 Arbitration.
------------
(a) Any dispute, controversy or claim arising out of or
relating to this Agreement or to a breach thereof, including its interpretation,
performance and termination, shall be submitted to and finally resolved by
arbitration. The arbitration shall be conducted in accordance with the
commercial rules of the American Arbitration Association, which shall administer
the arbitration and act as appointing authority. The arbitration, including the
rendering of the award, shall take place in Los Angeles, California, and shall
be the exclusive forum for resolving such dispute, controversy or claim. For the
purposes of this arbitration, the provisions of this Agreement and all rights
and obligations thereunder shall be governed and construed in accordance with
the laws of the State of California. The decision of the arbitrators shall be
executory, final and binding upon the parties hereto, and the expense of the
arbitration (including, without limitation, the award of attorneys' fees to the
prevailing party) shall be paid as the arbitrator determines. Judgment based on
the decision of the arbitrator may be entered by any court of competent
jurisdiction. Notwithstanding this, judgment upon the award of the arbitration
may be entered in any court where the arbitration takes place or any court
having jurisdiction thereof, and application may be made to any court for a
judicial acceptance of the award or order of enforcement.
(b) Notwithstanding anything contained in sub-section (a)
above to the contrary, each party shall have the right to institute judicial
proceedings against the other party or anyone acting by, through or under such
other party in order to enforce the instituting party's rights hereunder through
reformation of contract, specific performance, injunction or similar equitable
relief.
8.4 Waiver. A waiver of any breach of any provision of this Agreement
shall not be construed as a continuing waiver of other breaches of the same or
other provisions of this Agreement.
8.5 No Other Relationship. Nothing herein contained shall be deemed to
create an agency, joint venture or partnership relationship between the parties
hereto. At no time shall either party make commitments or incur any charges or
expenses for or in the name of the other party.
8.6 Notice. Unless otherwise specifically provided in this Agreement,
all notices, demands, requests, consents, approvals or other communications
(collectively and severally called "Notices") required or permitted to be given
hereunder, or which are given with respect to this Agreement, shall be in
writing, and shall be given by: (a) personal delivery (which form of Notice
shall be deemed to have been given upon delivery), (b) by telegraph or by
private airborne/overnight delivery service (which forms of Notice shall be
deemed to have been given upon confirmed delivery by the delivery agency), (c)
by electronic or facsimile or telephonic transmission, provided the receiving
party has a compatible device or confirms receipt thereof (which forms of Notice
shall be deemed delivered upon confirmed transmission or confirmation of
receipt), or (d) by mailing in the United States mail by registered or certified
mail, return receipt requested, postage prepaid (which forms of Notice shall be
deemed to have been given upon the fifth (5th) business day following the date
mailed). Notices shall be addressed to the addresses set forth in the
introductory paragraph of this Agreement, or to such other address as the
receiving party shall have specified most recently by like Notice, with a copy
to the other parties hereto.
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8.7 Entire Understanding. This Agreement and all exhibits hereto
together embody the entire understanding between the parties relating to the
subject matter hereof, whether written or oral, and there are no prior
representations, warranties or agreements between the parties not contained in
this Agreement.
8.8 Invalidity. If any provision of this Agreement is declared invalid
or unenforceable by a court having competent jurisdiction, it is mutually agreed
that this Agreement shall endure except for the part declared invalid or
unenforceable by order of such court. The parties shall consult and use their
best efforts to agree upon a valid and enforceable provision, which shall be a
reasonable substitute for such invalid or unenforceable provision in light of
the intent of this Agreement.
8.9 Amendments. Any amendment or modification of any provision of this
Agreement must be in writing, dated and signed by each party hereto.
8.10 Fees Payable, Licensor and Licensee acknowledge that there is no
broker's commission, finder's fee or other amount payable with regard to this
transaction, and Licensor and Licensee agree to indemnify and hold the other
harmless from and against all liability, claims. demands, damages or costs of
any kind arising from or connected with any broker's or finder's fee,
commission or charge claimed to be due any person arising from the indemnitor's
conduct with respect to this Agreement and the transactions contemplated herein
8.11. Attorneys' Fees. In the event there is any dispute arising out
of or related to this Agreement, the prevailing party shall be entitled to its
reasonable attorneys' fees and other costs and expenses incurred in resolving
such dispute including, but not limited to, all fees and costs through
arbitration or any appeals.
8.12 Survival of Contents. Notwithstanding anything else in this
Agreement to the contrary, the parties agree that sections 2.1, 2.2, 3.1. 3.2,
4.1, 5.1, 5.2, 5.3, 7.2, 8.1, 8.2, 8.3, 8.4, 8.5, 8.6. 8.7, 8.8, 8.10, 8.11,
8.12, 8.15, and 8,16 shall survive the termination of this Agreement to the
extent required thereby for the full observation and performance by one or both
of the parties hereto.
8.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original. Such counterparts shall
together constitute but one and the same instrument.
8.14 Table of Contents and Headings. Any table of contents accompanying
this Agreement and any headings contained herein are for directory purposes
only, do not constitute a part of this Agreement, and shall not be employed in
interpreting this Agreement.
8.15 Parties to Agreement. The parties to this Agreement are Licensor
and Licensee, and no other persons or entities
8.16 Cross-Breach. The parties acknowledge and agree that a material
breach of that certain Research and Development Agreement between the parties
dated the same date as this Agreement shall be deemed a breach of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement.
"Licensor"
Non-Invasive Monitoring Systems. Inc., a
Florida corporation
By: /s/ Marvin Sackner
------------------
Marvin Sackner
Its: CEO
--------
"Licensee"
LifeShirt.com, Inc., a Delaware corporation
By: /s/ Andrew Behar
------------------
Print Name: Andrew Behar
------------------
Title: Chief Operating Officer
-----------------------
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EXHIBIT "C"
The following are the Products and Technology licensed hereunder:
The LifeShirt System
The LifeShirt system consists of any wearable garment that incorporates two or
more of the following sensor types: inductive plethysmographic sensors,
electrocardiographic electrodes and/or accelerometer. These wearable garments
may store and/or forward data for subsequent processing and analysis by
RespiEvents software or any software that uses RespiEvents as its basis.
The patents and pending patent listed below support the LifeShirt system.
LifeShirt Licensed Patents
This lists the pertinent patents for LifeShirt. Full details can be obtained by
going to the database of the U.S. Patent Office: http://www.
uspto.gov/patftindex.html. These patents refer only to those incorporated in
LifeShirt, They do not refer to individual usage in current Nims' stand alone or
LAN products.
United States Patent 4,834,109
Watson May 30, 1989
================================================================================
Single position non-invasive calibration Technique
Abstract
An improved method for calibrating a non-invasive apparatus for measuring
respiration volume of the type wherein signals indicative of the rib cage and
abdomen contributions to respiration volume are provided, and wherein at least
one of the signals is multiplied by a predetermined weighting factor for
reflecting the relative contributions of the rib cage and abdomen to respiration
volume. The calibration method non-invasively determines the weighting factor
by: totaling, during a period of breathing, a plurality of values of a parameter
indicative of the relative amplitude, for each breath, of uncalibrated rib cage
and abdomen signals: and dividing the average variability of the means of the
total of the values of one of the rib cage and abdomen signals by the average
variability of the mean of the total of the values of the other signal. The
quotient so derived represents the weighting factor. An apparatus for
calibrating in accordance with the method is also disclosed.
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United States Patent 4,452,252
Sackner June 5, 1984
================================================================================
Non-invasive Method for monitoring Cardiopulmonary Parameters
Abstract
A method for monitoring cardiopulmonary events is disclosed. The basic method
comprises looping an extensible conductor (14) in close encircling relation
about the neck (12) of the subject (10), providing a signal indicative of the
inductance of the loop, and monitoring the signal. This signal contains both
qualitative and quantitative cardiopulmonary information In accordance with
another aspect of the method, an extensible conductive loop (14) is disposed in
close encircling relation about the head such that the plane defined by the loop
extends through the mouth. By providing a signal indicative of changes in the
inductance of the loop, qualitative and quantitative information for mouth
volume may be obtained.
United States Patent 4,456,015
Sackner June 26, 1984
================================================================================
Non-invasive method for semiquantitative measurement of neck volume changes
Abstract
A method of semiquantitatively measuring a, subject's neck volume includes the
steps of providing an extensible conductor in the form of a loop having a
predetermined height; providing a signal variably responsive in value to changes
in the inductance of the conductor; calibrating the signal by determining
reference signal values obtained with the conductor disposed about at least two
known volumes and using the reference signal values to establish the
relationship between signal value and the volume enclosed by the conductor;
disposing the conductor in close encircling relationship about the subject's
neck; calibrating the signal for intrapleural pressure by using an invasive
technique as a reference for determining a plurality of intrapleural pressures
for the subject and simultaneously determining the signal value for each such
intrapleural pressure measurement, thereby establishing the relationship between
intrapleural pressure and signal value; discontinuing the reference technique;
determining the signal value with the subject's airway closed, correlating the
closed airway signal value with intrapleural pressure based on the established
relationship between intrapleural pressure and signal value; and correlating
intrapleural pressure obtained in accordance with the previous correlating step
with the volume enclosed by the conductor based on the established relationship
between signal value and enclosed volume.
United States Patent 4,777,962
Watson October 18, 1988
================================================================================
Method and apparatus for distinguishing central obstructive and mixed apneas by
external monitoring devices which measure rib cage and abdominal compartmental
excursions during respiration
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United States Patent 5,588,425
Sackner, et al. December 31, 1996
================================================================================
Method and apparatus for discriminating between valid and artifactual pulse wave
forms in pulse oximetry
Abstract
A method and apparatus for use in pulse oximetry for discriminating between
valid pulse waveforms and artifactual pulse waveforms. Systolic upstroke times
for valid pulse waveforms are in a consistent, narrow range which varies only
slightly from subject to subject. This narrow range, which may be defined
empirically for each subject or established by a default setting applicable to
all subjects, defines a predetermined range of systolic upstroke times
indicative of valid pulse waveforms. The systolic upstroke time of each pulse
waveform is compared against the predetermined range, and pulse waveforms are
deemed valid only if their systolic upstroke times are within the predetermined
range. Only arterial oxygen saturation levels based on validated pulse waveforms
are accepted. The present invention may also be used to validate the heart rate
and/or RR, intervals of an ECG, and for discriminating between sleep and
wakefulness in a monitored subject.
Issued July 1999: Final Copy of Claims Unavailable
PATENT APPLICATION: MEANS FOR ANALYZING BREATH WAVEFORMS AS TO
THEIR NEUROMUSCULAR RESPIRATORY IMPLICATiONS
by Marvin A. Sackner and D. Michael Inman
Claims for Measurement of Respiratory Drive from Breath Waveforms
1. During tidal breathing, peak inspiratory flow and acceleration
derived from breath waveforms of the respiratory inductive plethysmograph serve
as indicators of drive from the respiratory center in the brain. Since sensors
of this device can be placed separately over the rib cage and abdomen
compartments and their values summed to give tidal volume, peak inspiratory flow
and acceleration values can be obtained from tidal volume, rib cage and abdomen
waveforms.
2. The peak inspiratory flow and acceleration parameters from the
respiratory inductive plethysmograph are improvements over current methods in
that the technology is non-invasive, has capability for discrete or continuous
monitoring, and analyzes breath waveforms with a simple algorithm to obtain
these drive parameters.
3. The measurement of breath by breath peak inspiratozy flow and
acceleration, and breath by breath ventilation as the product of respiratory
rate and tidal volume of the breath described in this patent application also
permit simultaneous computation of the ratio of respiratory drive to ventilation
on a breath by breath or time average.
4. The ratio of peak inspiratory flow to ventilation is a dimensionless
number and is not affected by errors in volume calibration of the measurement
device: the ratio of peak inspiratory
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acceleration to ventilation yields a time value and is not subject to errors in
volume calibration of the measurement device.
5. The peak inspiratory acceleration values should be measured during
the early part of inspiration, nominally within a window approximately + 300
msec. near the beginning detection of initial inspiration from breath waveforms.
6, The ratio of drive to ventilation provides an objective measure of
breathlessness.
7. Peak inspiratory flow and acceleration values can be obtained from
all instruments capable of collecting solely tidal volume or airflow; these
instruments include spirometers, pneumotachographs, body plethysmographs,
nasa-oral thermistors and naso-oral thermocouples among others.
8. Peak inspiratory acceleration values can be obtained from
instruments measuring respiration that are applied externally to the body
surface such as the respiratory inductive plethysmograph, jerkin
plethysmograph, linear differential transformers, magnetometers, bellows
pneumograph, strain gauges, piezoelectric devices, and inductance
circumferential transformers among others. Other external respiratory monitoring
devices such as the impedance pneumograph and video transformation of torso
movements into a waveform display currently provide estimates of solely tidal
volume.
9. Peak acceleration values can also be obtained from airway pressure.
intrapleural pressure, transdiaphragmatic pressure, neck inductive
plethysmography and breath sound measurements.
10. The basis for the assertion that values of peak inspiratory flow
and acceleration measure respiratory drive is their good statistical correlation
to parameters derived from the moving time average diaphragmatic
electromyogram. Measures from the latter are considered as the standard by
which other methods such as the respiratory based peak inspiratory and
acceleration parameters in this patent application must he compared.
11. Measurement of peak inspiratory flow and/or acceleration from the
aforementioned devices has diagnostic importance in the following situations in
which measurements of respiratory drive are affected.
12. Assessment of integrity of the respiratory center in the brain by
the breathing of CO2 and/or low O2 gas mixtures -~ respiratory drive normally
increases with such stimulation.
13. To assess baseline respiratory center activity across wake and
sleep stares and ascertain abnormalities; normally, drive is the highest in the
wake state, intermediate in Active or REM state, and lowest in Quiet or NREM
state.
14. To assess respiratory center drive during obstructive
apneas/hypopneas where tidal volume may be absent or negligible but in which
peak inspiratory flow and acceleration values from rib cage and abdomen
compartments can provide a measure of respiratory drive.
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15. To detect the presence of external expiratory resistive loading
during sleep such as snoring and/or "upper airway resistance syndrome."
16. To serve as a set-point for manual or servo titration of positive
airway pressure of patients with snoring and/or "upper airway resistance
syndrome."
17. To monitor for presence of bronchoconstriction which increases
drive in patients at risk such as patients with asthma, chronic obstructive
pulmonary disease, cystic fibrosis, etc.
18. To gauge effect of anesthetic, sedative and analgesic agents that
usually depresses respiratory drive.
19. To categorize respiratory drive in various disease as a measure of
status.
20. To assess status of drive during mechanical ventilation--if
patient is completely controlled by the mechanical ventilator, then drive would
be virtually absent whereas if the patient is making efforts against the
ventilator, peak inspiratory flow and acceleration values would reflect this
situation. In the former, peak inspiratory flow or acceleration would be
equivalent to ventilator peak inspiratory flow or acceleration alone whereas in
the latter circumstance, the values would be greater.
21. To assess status of respiratory muscles during potentially
fatiguing tasks such as 1) elastic loading as in pulmonary edema or Adult and
Infant Respiratory Distress Syndromes, 2) resistive loading as in asthmatic
attacks, COPD, and upper airway resistance syndromes, and 3) during cardiogenic
and non-cardiogenic shock states.
22. As an indirect means to signal hypoxemic events in
newborns--respiratory drive increase.
23. As a means to signal retained tracheobronchial secretions since
drive may increase under these circumstances,
24. As a means to diagnose nocturnal brochospasm during sleep.
25. As a means to detect respiratory center depression after
administration of narcotics to depress excessively high respiratory drive.
26. As a means to monitor for presence of intrinsic PEEP positive end
expiratory pressure).
27. As a means to detect respiratory distress in workers or military
personnel working in hazardous gaseous environments.
Rapid Response Inductive Plethysmographic System.
------------------------------------------------
Although results from analysis of peak inspiratory acceleration
paralleled those from peak inspiratory flow, acceleration values were more
variable than flow values. This was due to the relatively slow digital sampling
rate of the proprietary inductive plethysmographic hardware. The
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current hardware samples the transducer signal at 50 points/s, thereby filtering
out some of the true peak values of acceleration. Recently, new electronic
circuitry was developed to allow digital sampling rates to 200 points/s in order
to obviate this problem. This improves the measurement accuracy of peak
inspiratory flow and acceleration values. The rapid sampling rate is necessary
for accurate display of inductive plethysmography monitored breath waveforms
during high frequency ventilation (respiratory strokes between 4 and 15 Hz). The
system can serve as a rapid response trigger to initiate inspiratory inflation
by mechanical ventilator devices. The system improves timing accuracy or
inductive plethysmographic measurements of ventricular volume, systolic time
intervals, and carotid and internal jugular venous pulses. (6;7;47)
The base frequencies of inductive plethysmographic transducers are
determined by inductance of transducer and the resistance and capacitance in the
oscillator circuitry. All these can be changed independently. For example.
increasing the number of turns of the transducer around the body part being
monitored, e.g., RC, AB or neck changes the oscillatory frequency of the signal
and improves the signal to noise ratio. By maximizing differences in oscillatory
signal frequencies between transducers, one can minimize electrical cross talk
between transducers thereby also increasing the signal to noise ratio between
adjacent inductive plethysmographic sensors. Another source of electrical noise
in the inductive plethysmographic signal is the cable carrying the
undermodulated signal to the demodulator module. This noise is minimized by
locating the oscillators directly on the transducer band with the inductive
plethysmographic hardware capable of accepting any number of oscillator
generated signals. Preliminary studies confirm greater consistency of peak
inspiratory flow and acceleration values by these hardware and transducer
operation modifications.
The current, commercially available inductive plethysmographic hardware
(61) translated changes in transducer inductance to a signal that corresponded
linearly to changes in cross sectional area underneath the band (60), at a rate
of 50 Hz, with a signal to noise ratio of approximately 100 to 1, when the
"signal" was a normal breath,
To increase data sampling rate from 50 points/s to 200 points/s, the
band frequency divider was reduced from 4096 cycles to 1024 cycles; band
oscillation frequency remained the same. To preserve and actually improve the
signal to noise ratio, two steps were taken. First, the oscillation period
counter was increased from 1O MHz to 40 MHz; keeping the oscillation period
resolution the same as in the 50 points/s hardware, Second, the isolation pot
cores used in the initial inductive plethysmographic hardware were replaced with
high performance toroids. The response of the pot cores was found to be
insufficient to allow accurate sampling to be accomplished in the new 5ms
(200Hz) window, but the new toroids yielded a better signal to noise ratio at
200Hz than the pot cores achieved, even at 50Hz.
The current commercially available inductive plethysmographic hardware
utilizes Phillips 14O8PLOO-3B9 pot cores; in this rapid responsive system, these
were changed to Phillips 768XT188-3F3 toroids. The change in material (from 3B9
to 3F3) was a tradeoff - yielding increased bandwidth for reduced gain. The
change in configuration from pot core to toroid yielded a more than offsetting
increase in gain in exchange for slightly more manufacturing difficulty.
The digital circuitry of the hardware was also modernized, changing from
discrete 74 series CMOS logic to an integrated FPGA (Phillips PZ5128-Sl0A84).
This single FPGA contains all the digital logic of two inductive
plethysmographic channels and also has leftover capacity that serves as glue
Page 17
<PAGE>
logic for the microcontroller. The microcontroller is now integrated onto the
same printed circuit card as the inductive plethysmographic channels, realizing
a single card QDC calibratable (58) inductive plethysmographic solution for the
first time. Utilization of surface mount technology and integrated FPGA reduced
the size of this single card to approximately half the size of the previous
inductive plethysmographic hardware card, which did not include the
microprocessor, a component that is necessary for QDC calibration and generation
of analog outputs. The two channel inductive plethysmographic channel system is
expanded to four to eight channels by keeping each oscillator on a separate base
frequency to avoid electrical crosstalk. This is implemented by replicating the
two-channel system, or using a higher density FPGA along with a higher
performance microcontroller such that additional inductive plethysmographic
channels are placed on a single card.
Claims for Rapid Response Inductive Plethysmograph System
----------------------------------------------------------
1. We have invented a rapid response inductive plethymographic system
that increases signal sampling rate by a factor of four. It hinges on reducing
the band frequency divider from 4096 cycles to 1024 cycles, increasing the
oscillation period counter from 10MHz to 40MHz and replacing isolation pot
cores used in current system with high performance toroids.
2. This system improves the ratio of signal to electrical noise.
3. Additional electronic improvements have been made to reduce the size
of the system and allow capability for additional inductive plethysmographic
channels on the same card that currently allows only two channels.
4. This system improves the measurement accuracy of peak inspiratory
flow and acceleration values.
5. The rapid sampling rate is necessary for accurate inductive
plethysmography breath waveform displays of breaths during high frequency
ventilation (respiratory strokes between 4 and 15 Hz).
6. The rapid response system is needed for rapid triggering of the
initiation of inspiratory inflation by mechanical ventilator devices.
7. The rapid system is required for timing accuracy of inductive
plethysmographic measurements of ventricular volume, systolic time intervals,
and carotid and internal jugular venous pulses.
The signal to noise ratio from the inductive plethysmographic system is
increased by increasing the turns of the transducer around the body part being
monitored.
9. The signal to noise ratio is also improved by mounting the
oscillator module directly on the transducer and hooking it to a demodulator
system on the body to eliminate the long recorder electrical cable, a major
source for the electrical noise.
Rapid Trigger System for Initiating Mechanical Ventilator Inflation
-------------------------------------------------------------------
Breaths
-------
Page 18
<PAGE>
Introduction
In recent years, attention has been directed toward methods for
triggering initiation of inspiratory inflations by mechanical ventilators. For
babies, the concern has related to the delay and desynchronization owing to the
rapid breathing rates, intrinsic airway resistance, and transmission of the
pressure trigger (PT) or flow trigger (FT) pulse from the measurement site of
the trigger to the respirator. This delay that leads to asynchrony between
spontaneously breathing mechanically ventilated infants and the ventilator has
been associated with pneumothorax, intracranial hemorrhage, arid hemodynamic
instability. (38) To minimize trigger delay in babies, trigger pulses obtained
from sensors placed on the body surface such as the Grasby capsule, an
applanation device on the abdominal wall, and the impedance pneumograph have
been utilized as alternatives to devices on the airways. In adults, the major
concern dealing with triggering the effects of intrinsic PEEP and delay in
initiation the ventilator breath for overcoming such pressure with consequence
increase in work of breathing. Measurements of trigger effectiveness in terms of
delay, failure to trigger, and work of breathing have been made in models and
patients. The figure below illustrates the considerations in computing the delay
in the presence of intrinsic PEEP. below is reproduced from Figure 1 in the
paper by Nava et al. (36) From top to bottom, flow, esophageal pressure, and
airway pressure. The two solid lines identify on the esophageal pressure trace,
the inspiratory effort during pre-triggering. The initial portion of esophageal
pressure. between the onset of the negative deflection and the point
corresponding to the crossing of zero flow (dashed line) represents the effort
to overcome intrinsic PEEP. The second portion of the esophageal pressure trace,
between zero flow crossing and the point of its abrupt rise (and maximum
negative airway pressure), represents the effort to open the inspiratory valve
of the mechanical ventilator.
Page 19
<PAGE>
EXHIBIT D
The following are the Reserved Products reserved and cross-licensed hereunder:
NIMS shall have the right to use the 1) LifeShirt garment or individual
Respibands and 2) LifeShirt module and/or 3) HandSpring PDA processor, and 4)
supporting software in stand-alone products that have monitoring and/or alarming
(if 510(k) approval is obtained by NIMS) functions. A "stand-alone product"
monitors a single patient and is connected to a nearby PC or polygraph recorder
for display of real-time physiological waveforms with cable or wireless links.
Monitoring of several stand-alone systems can only be accomplished with LAN to a
central PC station located within the facility, not off-site, This product will
be sold by NIMS only to hospital accounts, Any other facility that requests such
a device will be referred to LifeShirt.com who may sell them the LifeShirt
System or refer the account back to NIMS for sale. These additional features,
when they become available, will be licensed to LifeShirt.com under this
licensing agreement.
Page 20
<PAGE>
RESEARCH AND CONSULTING AGREEMENT
This Research and Consulting Agreement (the "Agreement") is made and
entered into as of October 28, 1999 by and between LifeShirt.com, Inc., a
Delaware corporation, whose business address is P. O. Box 262, Ojai, California
93024 (hereinafter referred to as "LifeShirt.com") and Non-Invasive Monitoring
Systems, Inc., a Florida corporation whose business address is 1840 West Avenue,
Miami Beach, Florida 33139 (hereinafter referred to as "NIMS").
RECITALS
WHEREAS, LifeShirt.com, in connection with its business, has acquired certain
inventions, patents and patent rights, confidential information, proprietary
information and trade secrets from NIMS pursuant to that certain license
agreement between LifeShirt.com and NIMS dated as of even date herewith (the
"License Agreement"); and
WHEREAS, LifeShirt.com acknowledges that NIMS has expertise and confidential and
proprietary information of its own; and
WHEREAS, to enable NIMS to effectively perform its services under this
Agreement, it may be necessary for LifeShirt.com to disclose to NIMS certain of
its inventions, proprietary or confidential information, and/or trade secrets
which may not be disclosed to other persons or entities by NIMS and NIMS may
need to divulge proprietary or confidential information to LifeShirt.com which
may not be disclosed to other persons or entities by LifeShirt.com.
NOW, THEREFORE, in consideration of the premises and mutual covenants of the
parties, it is agreed as follows:
AGREEMENT
1. Statement of Work. The services to be performed by NIMS are in support of
LifeShirt.com's garment with embedded sensors that records and transmits data
over the Internet for respiration, ECG, and over 35 other physical and emotional
vital signs into a small digital recorder products and associated technology
(the "LifeShirt System"). The services generally shall consist of offering
expert advice, research support, hardware and software design, and direction of
testing for safety and effectiveness in the development and technical support of
the LifeShirt System. The design specifications, details and milestones
associated with these goals are set forth in the Statement of Work, attached and
incorporated as if fully set forth herein as Appendix A.
The performance of this Agreement and the Statement of Work pertaining
thereto shall be coordinated with the director of research and development (to
be hired) of LifeShirt.com with concurrence from Andrew Behar, Chief Operating
Officer, except where mutually agreed upon in writing by LifeShirt.com and NIMS.
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<PAGE>
Attainment of the task completion milestones described in Appendix A
shall constitute the only performance obligations required to be achieved by
NIMS pursuant to this Agreement. NIMS acknowledges that LifeShirt.com may raise
capital through debt or equity financing and that the task completion milestones
described in Appendix A may need to be revised to accommodate the requests of
any investors in LifeShirt.com. NIMS will negotiate any modification in the
task completion milestones or request for additional services in good faith.
Additional services related or unrelated to the task completion
milestones included on Appendix A shall constitute an amendment to this
Agreement and shall be effective only if authorized in writing by the designated
representatives of both LifeShirt.com and NIMS. Costs for such additional
services shall be calculated and billed separately and shall be in addition to
the compensation outlined hereinafter for this Agreement.
The parties acknowledge and agree that research projects which may or
may not be related to the LifeShirt System may be undertaken by NIMS either
during the term of this Agreement or in the future and that the compensation and
payment due to NIMS for such research projects shall be negotiated on a good
faith basis by the parties as such opportunities arise.
2. Transfer Of Intellectual Property. LifeShirt.com shall retain all licensing
rights to the LifeShirt System technology pursuant to the terms and conditions
of the License Agreement. In addition, any and all rights to the inventions or
technologies related to the LifeShirt System which are developed by NIMS
pursuant to this Agreement or which arise from or are created by information
used in providing services under this Agreement (the "Derivative Patents") shall
be pursuant to the terms and conditions of the License Agreement.
3. Compensation and Payment. In consideration for the services and performance
milestones described in Appendix A, LifeShirt.com agrees to pay NIMS a total of
two hundred sixty-eight thousand dollars ($268,000) in U.S. funds according to
the following schedule:
(i) Ten thousand dollars ($10,000) shall be payable within ten
(10) days of the execution of this Agreement;
(ii) Forty-three thousand dollars ($43,000) shall be due on
November 1, 1999 but payable by November 19, 1999 (the "Initial Installment
Payment"). NIMS agrees that the November 19, 1999 date can be reasonably delayed
provided that LifeShirt.com notifies NIMS of such a delay prior to November 19,
1999 and such a delay is the result of a delay in the receipt of funds arising
from the private placement of the securities of LifeShirt.com. Thereafter,
forty-three thousand Dollars ($43,000) is due and payable on the first day of
each mouth following the initial Installment Payment for a total of five months
(the "R&D Period"). At the end of the R&D Period, the LifeShirt System will be
submitted by NIMS for FDA approval (the "Submission") or if this is deemed
unnecessary by LifeShirt.com and NIMS acting together, a letter to file in lieu
of a 501(k) Submission will be employed in order to release the Products for
marketing.
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<PAGE>
Time is of the essence in this Agreement. If the attainment of the
Submission is delayed due to factors under the (i) sole control of
LifeShirt.com; or (ii) requirements by FDA; or (iii) third parties responsible
for drafting the 501(k) Submission; or (iv) vendor(s) that supplies components
of the LifeShirt System (garment, electronics, HandSpring computer); or (v)
testing service(s) for meeting electrical safety requirements according to FDA
regulations; or (vi) any other Factor beyond NIMS' control, then NIMS shall have
a period of time equal to the length of any such delay (the "Cure Period") to
change or correct those circumstances so that NIMS can continue to perform
pursuant to the terms of this Agreement.
4. Reimbursable Expenses, NIMS shall make any necessary travel and hotel
reservatIons, if and only if such travel is pre-approved in writing by
LifeShirt.com and LifeShirt.com shall pay or reimburse NIMS for automobile
rental, hotel/motel rooms, air travel (tourist class domestically and business
class for overseas travel) and all other related expenses for any travel beyond
200 miles that NIMS must undertake in discharging its obligations under this
Agreement. LifeShirt.com shall furnish at its facility, for NIMS's use in
conjunction with the services performed pursuant to this Agreement, office
space, telephone, fax, postage, online and other communications equipment. At
the beginning of the term of this Agreement and, thereafter, from time-to-time
(including, without limitation, in the event of any unforeseen changes in need
for such resources). NIMS will advise LifeShirt.com on a "best efforts" basis in
writing of the equipment, materials, software, personnel and any other resources
necessary to discharge its obligations under this Agreement in accordance with
the design specifications set forth in the Statement of Work and LifeShirt.com
will either purchase the materials directly or reimburse NIMS for such
expenditures, so long as all such purchases are pre-approved in writing by
LifeShirt.com, with such approval not to be unreasonably withheld. All costs
shall be reimbursed to NIMS within thirty (30) days from invoicing.
5. 510(k), LifeShirt.com agrees to advance (in the form of direct payment to
said parties) all costs of any third party consultants (pre-approved by
LifeShirt.com in writing whose approval will not be unreasonably withheld),
required for providing templates and review of the 510(k) Submission
documentation which is prepared by NIMS under Good Manufacturing Practice
("GMP") and ISO 9001 guidelines and assisting with any related submission
policies and procedures (the "Submission Advances"). Any such Submission
Advances advanced by LifeShirt.com will be recouped by LifeShirt.com in the form
of a deduction from any royalty payments to be made by LifeShirt.com to NIMS
pursuant to the License Agreement (the "Submission Recoupment"). However, under
no circumstances shall the Submission Recoupment exceed ten percent (10%) of the
total NIMS Royalties payable by LifeShirt.com to NIMS for any annual period per
the License Agreement. Any Submission Recoupment remaining unpaid during such
annual period shall be carried forward to the next annual period up to a maximum
of ten percent (10%) and for each subsequent annual period until paid in full.
6. Equipment and Data. LifeShirt.com will furnish to NIMS, without cost to NIMS,
use of equipment and data owned by LifeShirt.com that LifeShirt.com deems
reasonably necessary for NIMS performance of services under this Agreement. Upon
completion of the services or expiration of this Agreement, NIMS shall return to
LifeShirt.com all such equipment and written material furnished by
LifeShirt.com.
Page 23
<PAGE>
7. Technical Notebook. NIMS shall transmit information to LifeShirt.com to
encompass and maintain a notebook at LifeShirt.com's principal place of business
which shall contain notes, ideas, outlines and summaries of activities performed
on behalf of LifeShirt.com; and this notebook shall be the exclusive property of
LifeShirt.com. LifeShirt.com agrees and acknowledges that the information
contained in the notebook is also the property of NIMS and is only to be used
for purposes of accomplishing the terms and conditions of the Licensing
Agreement. Failure to maintain this notebook shall be considered a material
breach of this Agreement.
8. Reports. NIMS agrees to prepare a written progress report on a monthly basis,
to be provided to the parties designated on Section 1 herein on or about the
first of each month during the term of this Agreement.
9. Confidentiality. LifeShirt.com and NIMS mutually covenant to maintain in
confidence any inventions, confidential or proprietary information or trade
secrets which are disclosed to the other in the course of discharging each
party's obligations under this Agreement. Unless otherwise stated in writing,
all inventions and information transferred to the other party shall be deemed to
be proprietary, confidential and a trade secret and both LifeShirt.com and NIMS
agree to take all reasonable precautions to prevent any unauthorized disclosure
of any such inventions and information and not to make use of such inventions
and information, except for the purposes of this Agreement and the License
Agreement.
10. Term. This Agreement shall become effective on execution and shall continue
in effect until the end of the R&D Period (the "Term"). This Agreement
automatically renews on a month-to-month basis, under the same terms and
conditions, including the monthly payment under Section 2(ii) herein, unless and
until terminated by written notice given by either party at least thirty (30)
days prior to the end of the Term or any monthly period, if extended,
thereafter.
11. Assignment NIMS's obligations, rights and benefits under this Agreement are
personal to it and therefore (i) no such obligation, right or benefit shall be
subject to voluntary or involuntary alienation, assignment or transfer; and (ii)
NIMS may not delegate its duties or obligations hereunder. LifeShirt.com may
assign this Agreement in the event of any merger, reorganization or
consolidation or upon the sale or transfer of all or substantially all of its
assets.
12. Notices. Unless otherwise specifically provided in this Agreement, all
notices or other communications (collectively and severally called "Notices")
required or permitted to be given under this Agreement, shall be in writing, and
shall be given by: (A) personal delivery (which form of Notice shall be deemed
to have been given upon delivery), (B) by telegraph or by private
airborne/overnight delivery service (which forms of Notice shall be deemed to
have been given upon confirmed delivery by the delivery agency), or (C) by
electronic or facsimile or telephonic transmission, provided the receiving party
has a compatible device or confirms receipt thereof (which forms of Notice shall
be deemed delivered upon confirmed transmission or confirmation of receipt).
Notices shall be addressed to the address set forth in the introductory section
of this Agreement, or to such other address, as the receiving party shall have
specified most recently by like Notice, with a copy to the other party.
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<PAGE>
13. Choice of Law. This Agreement shall be governed according to the laws of the
state of California.
14. Entire Agreement. This Agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto with respect to the
services to be rendered by NIMS to Company and contains all of the covenants and
agreements between the parties with respect to the services to be rendered by
NIMS to Company in any manner whatsoever. Each party to this agreement
acknowledges that no representations, inducements, promises, or agreements,
orally or otherwise, have been made by any party, or anyone acting on behalf of
any party, which are not embodied herein, and that no other agreement,
statement, or promise not contained in this Agreement shall be valid or binding
on either party.
15. Amendments. Any amendment or modification of any provision of this Agreement
must be in writing, dated and signed by each party hereto.
16. Arbitration.
------------
(a) The parties hereby agree that all controversies) claims and matters
of difference shall be resolved by binding arbitration before the American
Arbitration Association (the "AAA") according to the rules and practices of the
AAA from time-to-time in force: provided however that the parties hereto reserve
their rights to seek and obtain injunctive or other equitable relief from a
court of competent jurisdiction, without waiving the right to compel such
arbitration pursuant to this section.
(b) Notwithstanding anything contained in sub-section (a) above to the
contrary, each party shall have the right to institute judicial proceedings
against the other party or anyone acting by, through or under such other party
in order to enforce the instituting party's rights hereunder through reformation
of contract, specific performance, injunction or similar equitable relief.
17. Severability. If any term or provision of this Agreement or the application
thereof to any person or circumstance shall, to any extent, be determined to be
invalid, illegal or unenforceable under present or future laws effective during
the term of this Agreement, then and, in that event: (A) the performance of the
offending term or provision (but only to the extent its application is invalid,
illegal or unenforceable) shall be excused as if it had never been incorporated
into this Agreement, and, in lieu of such excused provision, there shall be
added a provision as similar in terms and amount to such excused provision as
may be possible and be legal, valid and enforceable, and (B) the remaining part
of this Agreement (including the application of the offending term or provision
to persons or circumstances other than those as to which it is held invalid,
illegal or unenforceable) shall not be affected thereby and shall continue in
full force and effect to the fullest extent provided by law.
18. Preparation of Agreement, it is acknowledged by each party that such party
either had separate and independent advice of counsel or the opportunity to
avail itself or himself of same. In light of these facts it is acknowledged that
no party shall be construed to be solely responsible for the drafting hereof,
and therefore any ambiguity shall not be construed against any party as the
alleged draftsman of this Agreement.
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<PAGE>
19. Waiver. A waiver of any breach of any provision of this Agreement shall not
be construed as a continuing waiver of other breaches of the same or other
provisions of this Agreement.
20. Cross-Breach. The parties acknowledge and agree that a material breach of
the License Agreement shall be deemed a breach of this Agreement.
21. Counterparts. This Agreement may be executed manually or by facsimile
signature in two or more counterparts, each of which shall be deemed an
original, and all of which together shall constitute but one and the same
instrument.
WHEREFORE, the parties have executed this Agreement on the date
first written above.
"NIMS" "LifeShirt.com"
Non-Invasive Monitoring Systems, Inc. LifeShirt.com, Inc.
By: /s/ Marvin A. Sackner By: /s/ [ILLEGIBLE]
----------------------- -------------------
Its: CEO Its: Chief Operating Officer
-------------- ------------------------
Page 26
<PAGE>
Appendix "A"
Statement of Work
Non-Invasive Monitoring Systems, Inc. (NIMS)
Development for LifeShirt.com, Inc.
NIMS shall complete the following engineering and software development tasks
within a six month time period: Development of miniature version of Respitrace
Plus Processor or equivalent of three Repitrace 200 units and Respitrace PT,
including; design work on existing boards preparatory to the miniaturization
process, consultation on selection of miniaturization vendor, supervision and
consultation of miniaturization process, consultation, supervision, and testing
of the miniaturization processor, consultation on selection of processor
manufacturer, supervision of manufacturer prior to commercial production, and
supervision of testing commercial product to be sure that it meets
specifications.
1. Development of a LifeShirt System Jersey, including: development o
prototype LifeShirt System jersey (the "LifeShirt System Jersey")
attendance at locus groups whose expenses and selection are
LifeShirt.com's responsibility, for feedback as to the acceptability
of the patient-LifeShirt System interface, redesign based on consumer
testing, possible second round of consumer tests, consultation on
selection of manufacturer, supervision and consultation of a
production model garment, testing of commercial production units to be
sure that products meet specifications.
2. PalmPilot HandSpring,Windows CE, or other PDA or digital recorder
hardware and software development including; selection of most cost
effective off-the-shelf device, development of software to accept
input of trend and waveform data from LifeShirt System Jersey, module
connected to HandSpring PDA processor, development of customer
interface to input symptoms and record these symptoms against a
timeline to compare with physical signs, testing and debugging of
software. Software completion within the six-month time period of the
R&D agreement will be made at NIMS best efforts but cannot be
guaranteed owing to the limited availability of two programmers and
inexperience in translating RespiEvents software into PalmPilot
operating system.
3. RespiEvents software modifications for LifeShirt System monitoring
including: development of RespiEvents version to run at data hub with
multiple simultaneous technicians and physicians sharing data,
development of reporting formats that can be; emailed, faxed, posted
to a web page. Consultation with LifeShirt.com hub personnel to
integrate software such that RespiEvents can be integrated seamlessly
with data hub customer tracking software for billing and security
verification among many other functions.
4. Cooperate and consult with LifeShirt.com in their development of the
Internet portal for receiving LifeShirt System data.
5. Verification and validation of hardware and software suitable for
510(k) FDA submission including preparation of documentation and
supervision of prepuration of FDA submission, working in collaboration
with outside FDA consultants to expedite the approval of: LifeShirt
System Jersey, module connected to HandSpring PDA processor and
RespiEvents as needed depending on decision to be made by LifeShirt
management with NIMS consultation of whether to file or send letter to
file on specific products, also
Page 27
<PAGE>
supervise electrical safety testing of LifeShirt System and any other
testing that is required for regulatory approval.
6. General consultation on the development of marketing strategy and
marketing plans for the LifeShirt System including review of draft
marketing and advertising materials to be sure that any claims made
are accurate and are not misrepresenting product capabilities.
Page 28
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<PERIOD-END> JAN-31-2000
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