Document:

EXHIBIT 10.1
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                            OPTION PURCHASE AGREEMENT

This Option Purchase Agreement (the "Agreement") is entered into as of April 29,
2004 (the "Effective Date") by and among DATAWATCH CORPORATION, a Delaware
corporation with offices located at 175 Cabot Street, Lowell, Massachusetts
01854 ("DATAWATCH") jointly and severally with PERSONICS CORPORATION, a Delaware
corporation with offices located at 175 Cabot Street, Lowell, Massachusetts
01854 ("PERSONICS") (Datawatch and Personics are collectively referred to herein
as "BUYER"), on the one hand, and RAYMOND J. HUGER ("HUGER"), a sole proprietor
doing business as Math Strategies, having its principal place of business at 600
Green Valley Road, Suite 304, Greensboro, North Carolina 27408 ("MATH
STRATEGIES"), on the other hand.

            WHEREAS, Personics and Math Strategies entered into a Software
Development and Marketing Agreement dated as of January 19, 1989 (which
Agreement, as amended to date, is hereinafter referred to as the "LICENSE
AGREEMENT") which is attached hereto as Exhibit A;

            WHEREAS, Datawatch has acquired Personics and has become a party to
the License Agreement;

            WHEREAS, pursuant to the License Agreement, Math Strategies
developed, maintained and licensed to Buyer on an exclusive basis a number of
software products (as defined below, the "SOFTWARE PRODUCTS");

            WHEREAS, Buyer has requested an option to purchase the Software
Products ;

            WHEREAS, Math Strategies has agreed to accommodate Datawatch and to
grant such option on the terms and conditions set forth below;

            NOW THEREFORE, in consideration of the premises contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties, the parties covenant and agree as follows:

            1. Definitions. As used herein, the following capitalized terms
shall have the following meanings:

            "CLOSING" has the meaning set forth in Section 6.

            "OPTION" has the meaning set forth in Section 2 .

            "PURCHASE PRICE" has the meaning set forth in Section 5 .

            "SOFTWARE PRODUCTS" means the (i) the software programs developed by
            Math Strategies under the License Agreement including those listed
            on Exhibit B attached hereto and any additional software programs
            which become subject to the License Agreement prior to the date of
            exercise of the Option, (ii) all past and current bug fixes,
            releases, enhancements, modifications, updates, upgrades and
            versions thereof, (iii) all existing Source Code related thereto,
            and (iv) all intellectual property rights embodied therein,
            including, without limitation, copyrights.

            "SOURCE CODE" means the human readable, English language code of a
            Software Product, together with such explanatory notes and
            description of the Software Product, all in such form as Math
            Strategies has maintained for itself.

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            2. OPTION GRANT AND TERM. For one hundred dollars ($100) paid to
Math Strategies, the receipt and sufficiency of which is acknowledged by Math
Strategies, and otherwise subject to the provisions of this Agreement, Math
Strategies hereby grants to Buyer an option ("OPTION") to purchase the Software
Products. The right of Buyer to exercise the Option shall commence as of the
Effective Date and shall expire two (2) years from the Effective Date ("OPTION
PERIOD"). If Buyer fails to exercise the Option in a timely manner, the Option
shall expire automatically.

            3. CONDITIONS TO EXERCISE. The exercise of the Option by Buyer is
conditioned on the continuing compliance with the provisions of the License
Agreement by Buyer through the date of Buyer's exercise of the Option,
including, without limitation, timely payment of all royalty and other sums due
Math Strategies thereunder through the date of exercise; provided, however, that
Math Strategies will provide Buyer with notice of noncompliance and a reasonable
period to cure prior to enforcing this provision.

            4. EXERCISE OF OPTION. Subject to the provisions of Section 3 above,
Buyer may exercise the Option by delivering written notice thereof to Math
Strategies on or before the last day of the Option Period. Exercise of the
Option shall be irrevocable and constitute the binding agreement of Buyer to
purchase the Software Products for the Purchase Price and in accordance with the
provisions hereof.

            5. PURCHASE PRICE. The purchase price ("PURCHASE PRICE") for the
Software Products payable to Math Strategies at Closing shall be eight million
dollars ($8,000,000).

            6. CLOSING. If Buyer exercises the Option in accordance with this
Agreement, the closing of the purchase of the Software Products ("CLOSING")
shall take place at 125 High Street, Boston, Massachusetts 02110, at the offices
of Testa, Hurwitz & Thibeault, LLP or such other time and place as the parties
shall agree in writing, on the thirtieth (30th) day next following the date of
the Option Notice, or if such day is a weekend day or a state banking holiday in
either Massachusetts or North Carolina, on the next day on which banks in both
such states are open ("CLOSING Date").

            (a) Buyer Closing Deliveries. At Closing, Buyer shall execute and
deliver to Math Strategies the following:

                       (i) A fully executed copy of the Intellectual Property
                 Assignment in substantially the form of Exhibit C; and

                       (ii) Payment of the Purchase Price, in immediately
                 available funds, delivered by wire transfer and directed in
                 accordance with the instructions provided by Math Strategies;
                 and

                       (iii) Payment of any amounts accrued for the benefit of,
                 or due, Math Strategies under the License Agreement.

            (b) Math Strategies Closing Deliveries. At Closing, Math Strategies
shall execute and deliver to Buyer the following:

                       (i) A fully executed copy of the Intellectual Property
                 Assignment in substantially the form of Exhibit C; and

                       (ii) The Software Products.

            (c) Failure to Close by Buyer. If for any reason (other than a
reason for which Math Strategies is solely and directly responsible or a force
majeure event), the Closing fails to occur on or before the Closing Date and
Math Strategies has not, by written consent, extended the Closing Date, then the
Option shall lapse, the License Agreement shall continue in full force and
effect, and Buyer shall pay Math Strategies, as

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liquidated damages and not as a penalty, the sum of five hundred thousand
dollars ($500,000) (the "LIQUIDATED AMOUNT") which payment shall be Math
Strategies' sole remedy. Datawatch acknowledges and agrees that the exercise of
the Option by Datawatch will cause Math Strategies to make significant changes
to its business operations, that the failure of Datawatch to close the purchase
of the Software Products will cause significant damage to Math Strategies not
capable of being fully ascertained, and that the Liquidated Amount is reasonable
under the circumstances.

            (d) Transition. During the period between the exercise of the Option
and the Closing, Math Strategies will (i) provide reasonable technical
assistance to Buyer and its personnel regarding the Software Programs and (ii)
reasonably cooperate with Buyer's efforts to employ any employees and
consultants of Math Strategies and will waive any noncompete or other
restrictions with such employees and consultants to the extent necessary for
such employment.

            (e) Effect. Upon completion of the Closing, the License Agreement
shall terminate and the parties thereto (including Huger individually) shall be
released from any further obligations to each other under the License Agreement,
including, without limitation, any maintenance obligations, any rights of first
negotiation, and non-competition covenants or restrictions, provided, however
that any obligation of a party to the License Agreement to pay any unpaid
amounts due, accrued for the benefit of, or owing to Math Strategies as of the
Closing Date, shall continue until fully paid.

            7. REPRESENTATIONS AND WARRANTIES.

            (a) Representations and Warranties. Math Strategies represents and
warrants to Buyer that: (i) it has full right and authority to enter into this
Agreement, (ii) the Software Products are owned exclusively by Math Strategies
(or Huger) without any encumbrance as of the Effective Date, except for the
License Agreement, (iii) to Huger's actual knowledge, the Software Products do
not infringe any intellectual property rights of any other person or entity, and
(iv) this Agreement is a binding agreement upon Math Strategies and is
enforceable in accordance with its terms. Buyer represents and warrants to Math
Strategies that: (i) it has full right and authority to enter into and perform,
and has obtained all consents necessary to enter into and perform, this
Agreement, and (ii) this Agreement is a binding agreement upon Buyer and is
enforceable in accordance with its terms.

            (b) Disclaimer. except as expressly provided herein, Neither party
makes any REPRESENTATION OR warranty of any kind, WHETHER EXPRESS, IMPLIED, OR
STATUTORY, REGARDING THE SOFTWARE PRODUCTS, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, AND
NON-INFRINGEMENT OF THIRD-PARTY RIGHTS.

            8. CONTINUATION OF LICENSE AGREEMENT. Nothing contained in this
Agreement shall modify either party's rights and obligations under the License
Agreement, including but not limited to the obligation of Buyer to pay royalties
to Math Strategies under such License Agreement. The License Agreement shall
remain in full force an effect unless and until it is terminated or expires on
its own terms, or is terminated pursuant to the execution of the Assignment
Agreement as contemplated by this Agreement.

            9. CONFIDENTIALITY. Upon Closing, the Software Products will be
confidential information of Buyer.

            10. NONCOMPETE. For a period of three (3) years following the
Closing Date, neither Huger nor Math Strategies shall on their own behalf or on
behalf of any other person or entity, directly or indirectly develop,
manufacture, license, sell, lease or otherwise distribute any software products
that reasonably competes with the Software Products as they are constituted as
of the Closing Date.

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            11. FURTHER ASSURANCES. At the sole cost of Buyer or its successors
and assigns, Math Strategies agrees for itself and its successors and assigns to
execute all applications, deeds or other instruments, and to do all acts,
reasonably necessary or proper to secure the transfer of the Software Products
to Buyer and its successors and assigns in the United States and all other
countries, and to vest and confirm in Buyer and its successors and assigns, the
legal title to the Software Products and to otherwise give full effect to and
perfect the rights of Buyer and its successors and assigns in the Software
Products.

            12. ASSIGNMENT. Buyer may assign this Agreement only to, and solely
in whole to, a successor in interest to substantially all of the business or
assets of Buyer, whether by merger, sale of stock or assets, or otherwise,
provided, however, Buyer notifies Math Strategies of any such assignment at
least thirty (30) days prior to the effective date thereof. Any attempted
assignment or other transfer in violation of the foregoing shall be void and of
no effect. Neither Math Strategies nor Huger will transfer or assign the
Software Products to any third party without the prior written consent of
Datawatch, which consent will not be unreasonably withheld or delayed; provided
that Math Strategies and/or Huger may assign or transfer any of the software
Products or other assets of Math Strategies (subject to the provisions of this
Agreement and the License Agreement) to a corporation, limited liability
company, partnership, limited partnership, trust or other entity of which Huger
owns or controls more than fifty percent (50%) of the equity or voting rights.

            13. TERMINATION OF OPTION. Anything in this Agreement to the
contrary notwithstanding, the Option shall terminate in the event of the
insolvency of Buyer or its successor in interest, the filing by Buyer or its
successor in interest of a voluntary petition in bankruptcy, or the filing
against Buyer or its successor of an involuntary petition in bankruptcy that is
not dismissed or stayed within sixty (60) days of such filing.

            14. INDEMNIFICATION.

            (a) General. Each party ("INDEMNITOR") shall indemnify, defend and
hold harmless the other party (including, without limitation, such other's
employees, agents, directors, officers, and proprietors) (collectively,
"INDEMNITEE") from and against any liability, damages, causes of action, claims
and expenses (including, without limitation, attorneys' fees) ("CLAIMS") that
the Indemnitee may incur as a result of any breach of this Agreement, including,
without limitation, any breach of Indemnitor's representations and/or
warranties.

            (b) Buyer. In addition to and not in limitation of the foregoing,
Buyer (as Indemnitor) shall indemnify, defend and hold harmless Math Strategies
(as Indemnitee), together with its employees, agents, directors, officers, and
proprietors, from and against any and all Claims relating to the infringement of
any third party intellectual property rights arising from the sale,
exploitation, export, or any other use of the Software Products whatsoever by
Buyer, its successors, customers, employees, agents or any other person,
occurring on or after the Closing Date; provided, however, Buyer shall have no
obligation to indemnify, defend or hold harmless Math Strategies with respect to
any infringement by any of the Software Products (as they are constituted as of
the Closing Date) of any third party intellectual property rights arising from
any willful infringement of any third party patent or other intellectual
property rights by Math Strategies, or any theft of any third party trade
secrets by Math Strategies.

            (c) Procedure. The foregoing indemnification obligations are
conditioned on the Indemnitee: (x) providing the Indemnitor with notice of the
relevant Claim; (y) cooperating with the Indemnitor, at the Indemnitor's
expense, in the defense of such Claim; and (z) giving the Indemnitor the right
to control the defense of any such Claim, provided that the Indemnitor may not
enter into any settlement affecting the Indemnitee's rights without the
Indemnitee's written agreement. The Indemnitee will have the right to
participate in the defense of any Claim with counsel of its choice at its own
expense.

            15. COSTS. In the event a party deems it necessary to enforce the
provisions of this Agreement against the other party in a court of competent
jurisdiction or an arbitral proceeding, the prevailing party in any such

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action shall be entitled to reimbursement from the non-prevailing party for all
of the prevailing party's costs of enforcement or defense, as the case may be,
including, without limitation, attorneys' fees and court costs.

            16. NOTICES. All notices, consents and approvals under this
Agreement must be delivered in writing by courier, by electronic facsimile
(fax), or by certified or registered mail, (postage prepaid and return receipt
requested) to the other Party at the address set forth in the first paragraph of
this Agreement, and will be effective upon receipt or when delivery is refused
or three (3) business days after being deposited in the mail as required above,
whichever occurs sooner. Either party to this Agreement may change its address
by giving written notice of the new address to the other Party.

            17. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement, including
the Exhibits attached to this Agreement, state the entire agreement between the
parties relating to the subject matter hereof. This Agreement may be modified or
amended and rights under this Agreement waived, only in a writing signed by each
of the parties. Any waiver or failure to enforce any provision of this Agreement
on one occasion will not be deemed a waiver of any other provision or of such
provision on any other occasion.

            18. SUCCESSORS. This Agreement shall bind and benefit the parties
and their respective successors and permitted assigns.

            19. INDEPENDENT CONTRACTORS. The parties are independent contractors
and nothing in this Agreement shall imply any principal or agent relationship or
other joint relationship and neither party shall have the power or authority,
express or implied, to obligate the other party.

            20. ARBITRATION. Except as set forth below, any dispute between the
parties shall be finally resolved by binding arbitration. The arbitration shall
be in accordance with the Commercial Arbitration Rules ("Rules") then in effect
of the American Arbitration Association ("AAA"), which shall administer the
arbitration, and act as appointing authority; provided that the arbitrator(s)
appointed with regard to the arbitration proceeding shall not be the same
persons who served as mediated in any mediation between the parties. The parties
agree to permit discovery proceedings of the type provided by the Federal Rules
of Civil Procedure both in advance of, and during recesses of, the arbitration
hearings, and any disputes relating to such discovery will be resolved by the
arbitrator(s). In the event of any conflict between the Rules and the provisions
of this Section, the provisions of this Section shall govern. If the amount in
controversy exceeds $50,000, then the arbitration shall be heard and determined
by a panel of three arbitrators selected in accordance with the procedures of
the AAA. The arbitration, including the rendering of the award, shall take place
in (i) Greensboro, North Carolina, if brought by Buyer against Math Strategies;
or (ii) Lowell, Massachusetts, if brought by Math Strategies against Buyer.
Judgment upon the award of the arbitrators may be entered in any court having
jurisdiction thereof. The parties hereby waive their respective rights to
further appeal or redress in any other court or tribunal except solely for the
purpose of obtaining execution of the judgment rendered by the arbitration
proceeding. In the event of any arbitration or other legal proceeding brought by
any party against another party with regard to any matter arising out of or
related to this Agreement, each party hereby expressly agrees that the final
award decision shall also provide for an allocation and division between or
among the parties to the arbitration, on a basis which is just and equitable
under the circumstances, of all costs of arbitration, including court costs and
arbitrators' and attorneys', accountants' and expert witness fees, costs and
expenses fees (including disbursements) incurred in connection with such
proceedings. Notwithstanding the foregoing, neither the provisions of this
Section nor the exercise of any rights hereunder shall limit the right of either
party to institute and maintain litigation in a court of competent jurisdiction
in order to obtain equitable remedies including, without limitation, attachment,
specific performance and other injunctive relief; the institution and
maintenance of such litigation shall not constitute a waiver of the right of
either party to submit any controversy or claim to arbitration as herein
provided.

            21. LAW. This Agreement shall be governed by the laws of the State
of Massachusetts, without regard to its conflicts of laws provisions. The rights
and obligations of the parties under this Agreement will

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not be governed by the provisions of the 1980 United Nations Convention on
Contracts for the International Sale of Goods or the United Nations Convention
on the Limitation Period in the International Sale of Goods, as amended.

            22. SEVERABILITY. If any provision of this Agreement is
unenforceable, such provision will be changed and interpreted to accomplish the
objectives of such provision to the greatest extent possible under applicable
law and the remaining provisions will continue in full force and effect.

            23. CUMULATIVE RIGHTS; REMEDIES. Except as may be specifically
provided herein, the parties' rights and remedies under this Agreement are
cumulative and the election of one remedy will not preclude any other remedy.

            24. NO THIRD PARTY RIGHTS. Nothing contained herein, express or
implied, is intended or will be construed to confer upon or give any person,
other than the parties hereto, any rights or remedies under or by reason of the
Agreement.

            25. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which will be considered an original, but all of which together will
constitute the same instrument.

            26. DATAWATCH AND PERSONICS. For purposes of this Agreement, all
covenants, agreements, warranties, representations, and other obligations of
Buyer shall be deemed to be the joint and several covenants, agreements,
warranties, representations and other obligations of Datawatch and Personics.

            27. CONSTRUCTION. The section headings in this Agreement are for
convenience of reference only, will not be deemed to be a part of this
Agreement, and will not be referred to in connection with the construction or
interpretation of this Agreement. Any rule of construction to the effect that
ambiguities are to be resolved against the drafting party will not be applied in
the construction or interpretation of this Agreement. As used in this Agreement,
the words "include" and "including," and variations thereof, will not be deemed
to be terms of limitation, but rather will be deemed to be followed by the words
"without limitation." When used in this Agreement, the words "hereof," "herein,"
"hereunder" and words of similar import shall refer to the Agreement as a whole
and not to any particular provision of this Agreement.

            In Witness Whereof, the parties have executed this Agreement as of
the Effective Date first above written.

THIS AGREEMENT CONTAINS BINDING ARBITRATION PROVISIONS THAT ARE ENFORCEABLE BY
THE PARTIES.

MATH STRATEGIES                              DATAWATCH CORPORATION

By: /s/ Raymond J. Huger                     By:  /s/ Robert W. Hagger
    -------------------------------               ------------------------
     Raymond J. Huger, individually          Name: Robert W. Hagger
     and as  a Sole Proprietorship                 -----------------------
                                             Title: President and CEO
                                                    ----------------------
                                                    Duly Authorized

                                             PERSONICS, INC.

                                             By:  /s/ Robert W. Hagger
                                                  ------------------------
                                             Name: Robert W. Hagger
                                                   -----------------------
                                             Title: President
                                                    ----------------------
                                                    Duly Authorized

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                                    EXHIBIT A

                               LICENSE AGREEMENT

                  SOFTWARE DEVELOPMENT AND MARKETING AGREEMENT

This agreement is made and entered into as of January 19th, 1989 by Personics
Corporation, a Delaware Corporation having its principal place of business at 63
Great Road, Maynard, Massachusetts 01754, and Raymond Huger, a sole proprietor
doing business as Math Strategies having its principal place of business at 604
Green Valley Road, Suite 306, Greensboro, North Carolina 27408.

                                    RECITALS

   A.   Huger is in the process of developing a software product presently known
        as "Down-To-Size."

   B.   Personics wishes to manufacture and market such software under an
        exclusive license granted by Huger.

        In consideration of the mutual promises contained herein, Personics and
Huger agree as follows:

1.      Definitions. As used in this Agreement, the following terms shall have
        the following meanings:

        (a)  "Down-To-Size" ("DTS") shall mean the computer software product
             presently known as "Down-To-Size" as more fully described in
             Exhibit A to this Agreement. "Down-To-Size" shall also mean all
             versions of "Down-To-Size" as defined in subparagraphs (i), (ii)
             and (iii) below, as well as any improved versions of the original
             computer software product ("Down-To-Size") developed by Huger.

             (i)    "DOS version" shall mean the version or versions of DTS that
                    run on personal computers and network workstations whose
                    operating system is DOS, OS/2 or another operating system
                    that is generally regarded as a successor or extension to
                    DOS or OS/2.

             (ii)   "non-DOS version" shall mean the version or versions of DTS
                    that run on personal computers and network workstations
                    whose operating system is not DOS, OS/2 or a successor
                    operating system. (Clarifying examples: A version of DTS
                    that runs on a standard Apple Macintosh would be regarded as
                    a non-DOS version. A version of DTS that runs on an Apple
                    Macintosh operating in DOS emulation mode would be regarded
                    as a DOS version.)

             (iii)  "Host version" shall mean the version or versions of DTS
                    that run on mainframe and mini computers supporting remote
                    terminals, PC's and workstations.

             (iv)   "the commercial introduction of DTS" shall mean the date on
                    which the product announcement press release is made by
                    Personics.

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        (b)  Specifications. "Specifications" shall mean the description of
             Down-To-Size set forth in Exhibit A to this Agreement.

2.      Development of Down-To-Size for Personics; License; Exclusivity.

        (a)  Development. Huger shall, at his own expense, develop DTS in
             accordance with the Specifications set forth in Exhibit A.
                          them in an indexed subsystem.
             end-user documentation and packaging materials for DTS which meet
             the same standards for quality and production value as found in
             other Personics products such as "LOOK & LINK" and "@BASE."
             Personics shall coordinate in-house testing and field testing of
             DTS during the development period.

        (b)  License. Personics shall have and Huger hereby grants to Personics
             the exclusive (subject to subparagraphs (c) and (d) below)
             world-wide right and license (i) to reproduce, market, copy,
             publish, sell copies of, license and distribute DTS and (ii) to
             sublicense others to reproduce, market, copy, publish, sell copies
             of, license and distribute DTS; provided however, that any
             licensing or sublicensing in accordance with this paragraph shall
             not impair Huger's right to receive royalties as defined in Exhibit
             B hereto for products distributed in any way by licensees or
             sublicensees of Personics.

        (c)  Exclusivity. The license granted under this Agreement is exclusive
             and shall continue to be exclusive as long as this Agreement is in
             effect provided that Personics meets the following minimum
             performance tests.

             (i)    Minimum Project Expenditures. Between the date of this
                    agreement and the end of the seventh month following the
                    commercial introduction of DTS Personics shall spend not
                    less than $140,000 on the development and market
                    introduction of DTS. Such expenditures may include, but are
                    not limited to, development of DTS documentation and
                    packaging materials, preparation of advertising and
                    promotional materials, placement of product introduction
                    advertising (first six month media costs), tooling and
                    pre-launch inventory investment, and other direct
                    out-ofpocket costs associated with the DTS project.

             (ii)   Minimum Advertising Exposures. Personics shall provide for
                    not less than 12 advertising exposures per year of DTS in
                    major computer publications such as PC Magazine, PC
                    Computing, ComputerWorld, InfoWorld, Byte, PC Week, Personal
                    Computing, Lotus and PC World. Such exposures may include
                    single and multiproduct ads in which DTS is featured.
                    Exposures shall be counted quarterly beginning at the end of
                    the first quarter following the commercial introduction of
                    DTS.

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                    Period                                Minimum # of Exposures
                    ------------------------------------------------------------
                    1st quarter following introduction                3
                    1st and 2nd quarters (cumulative)                 5
                    1st, 2nd and 3rd quarters (cumulative)            8
                    First full year (cumulative)                     12
                    Subsequent years (rolling 12 months)             12

             (iii)  Minimum Distribution. Personics shall provide for national
                    distribution of DTS through at least one major software
                    reseller such as Softsel, Micro D, Kenf11, Ingram, Corporate
                    Software and Egghead Discount Software. Distribution shall
                    be defined as the inclusion of DTS in the reseller's price
                    book or catalog. Such distribution must be in place by the
                    end of the 12 month period following the commercial
                    introduction of DTS, beyond which time no more than one
                    quarter may pass without such distribution in place.

        (d)  Rights Retained by Huger. The exclusive license granted to
             Personics under this Agreement shall exclude (i) non-DOS versions
             of DTS and (ii) host versions of DTS specifically designed to run
             on Wang VS computer systems. Huger shall retain the exclusive right
             to manufacture and market such nonDOS and Wang versions of DTS,
             subject to Paragraphs 9 and 11.

3.      Delivery.

        (a)  Deliverable Items. Huger shall deliver DTS in accordance with the
             Specifications, and Huger shall test DTS and all deliverable items
             thoroughly as set forth in the Specifications prior to delivery.
             The deliverables shall include the following items:

             (i)    Complete source code listing, including hardcopy and IBM PC
                    diskette versions. The source code package should also
                    include explanatory comments and a description of the
                    operation of the program in the English language.

             (ii)   Debugged (tested) batch files for these tasks:

                    a)  Read files from source diskettes, build required file
                        structure on hard disk.

                    b)  Print all source files and directories in a form
                        convenient for reference.

                    c)  Compile, assemble and link the source code to produce
                        the program binaries.

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             (iii)  Program binaries required by Personics to reproduce, market,
                    copy, publish, sell copies of, license and distribute DTS.

        (b)  Delivery Schedule. Huger shall in good faith do his best to provide
             the deliverable items in conformance with the Specifications and
             Development Schedule set forth in Exhibit A. The items listed in
             (3)(a) shall also be delivered by Huger upon completion of upgrades
             and new versions of DTS.

        (c)  Failure to Deliver. If Huger fails to deliver the completed items
             listed in (3)(a) within 180 days after their expected delivery date
             as set forth in the Development Schedule, or if the completed work
             is not materially in conformance with the Specifications, Personics
             shall have the option, upon written notice within thirty (30) days
             thereafter to (i) give Huger sixty (60) days following receipt of
             written notice to supply, correct, or complete DTS or (ii) cause a
             third party to do so and to deduct any amount equal to Personics'
             reasonable costs, as determined by industry standards, incurred
             therein from any payments due Huger under this Agreement. Huger
             shall cooperate with Personics if third-party development is deemed
             to be necessary under this paragraph. In such case, Personics will
             permit Huger to oversee any development work undertaken by the
             third-party.

4.      Acceptance of Completed Work. The completed work (DTS), as developed by
        Huger or third-party under the direction of Huger shall be deemed
        accepted by Personics, unless within thirty (30) days of delivery (and
        written notice thereof) to Personics, Personics gives Huger written
        notice that DTS does not materially conform to its specifications. In
        such event, Huger shall have sixty (60) days from receipt of such notice
        to make and submit to Personics such changes as shall be reasonably
        required to correct the material deficiencies set forth in the notice.
        In the event that such changes are submitted to Personics by Huger,
        Personics shall have an additional thirty (30) day period in which to
        reexamine and retest DTS. If no changes are submitted, or the changes
        submitted do not correct the deficiencies, then Personics may, at its
        option, after written notice to Huger, correct or complete DTS, with the
        cooperation of Huger, and deduct an amount equal to Personics'
        reasonable costs incurred from any payments due Huger under this
        Agreement.

5.      Marketing.

        (a)  Marketing Effort. Personics agrees that it will use its best good
             faith efforts to market DTS through sales and/or licenses.
             Personics and Huger shall cooperate to permit Personics to commence
             marketing. Personics makes no representations or warranty that DTS
             will be successfully marketed or that any minimum level of sales or
             licensing will be achieved except to the extent that Personics must
             meet certain minimum performance obligations as described in
             Paragraph 2(c) in order to retain exclusivity.

                                       4
<PAGE>

        (b)  Marketing Rights. Personics shall have the right to prepare, copy,
             publish, sell, distribute and license DTS throughout the world (1)
             in any variety of forms, including without limitation human and
             machine readable forms, binary code forms, subrecorded forms such
             as cassettes, tapes and disks, and solid state forms such as
             read-only memories, and (2) by any variety of methods, including
             without limitation distribution of copies (either separately or
             with other works), licensing or sublicensing and offering the use
             of DTS through a timesharing or videotext service. All aspects of
             the distribution and marketing of DTS shall be in Personics' sole
             control including without limitation determining the versions and
             upgrades to be prepared and marketed, the methods of marketing,
             pricing, naming, packaging, labeling and identification,
             protection, advertising, terms and conditions of sale and/or
             license, collection of customers' names and use of warranty or user
             registration procedures. Personics shall consult with Huger
             regarding pricing, documentation, support, packaging, advertising,
             and promotion concepts and designs related to DTS, or to Huger.

        (c)  Personics shall have the right to use, publish and permit others to
             use and publish Huger's name, likeness, voice, biographical
             material, or any reproduction or simulation thereof in connection
             with the marketing, advertising, sale, distribution, exploitation,
             production and manufacture of DTS, as reasonably may be necessary,
             provided that such use shall be subject to Huger's approval which
             approval shall not be unreasonably withheld.

6.      Royalties and Expense Reimbursements.

        (a)  Huger shall earn a royalty calculated as the greater of (i) a
             minimum per unit royalty or (ii) a percentage of Net Receipts,
             based on the sale of DTS by Personics or an affiliate owned or
             controlled by Personics or parent company to an unaffiliated
             customer, as set forth in Exhibit B(1). (Net Receipts shall be
             defined as gross receipts less credits or refunds for returns, and
             exclusive of reasonable shipping costs, reasonable insurance, and
             sales, use, excise and other taxes reimbursed by customers, from
             sales of DTS.) In some cases, DTS may be sold under volume
             site-license agreements. In such cases, Personics shall compute
             royalties for such sales based on the percentages presented in
             Exhibit B(2). (For each site-license, Net Receipts shall be defined
             as above where gross receipts is defined as all receipts
             attributable to the site-license purchase transaction.)

        (b)  Royalties shall also be earned by Huger for sales of upgrades to
             previous owners as set forth in Exhibit B, except that the minimum
             unit royalty for such upgrades shall be computed as follows:
             (UPGRADE MINIMUM ROYALTY) = (DTS MINIMUM ROYALTY) X (UPGRADE LIST
             PRICE) / (DTS LIST PRICE)

                                       5
<PAGE>

        (c)  If DTS is sold or licensed in a package or on a single medium for a
             single price with other Personics products, or with the products of
             an affiliate owned or controlled by Personics or parent company,
             the Net Receipts attributable to DTS shall be determined by
             prorating the receipts from the package or medium according to the
             suggested retail prices established for the separate products when
             sold separately.

        (d)  Payments due Huger shall be calculated on a calendar quarterly
             basis, and shall be made within forty-five days after the close of
             each calendar quarter.

        (e)  At the time of payment Personics shall deliver to Huger a report
             which shall provide all reasonably necessary information for
             computation of such payments.

        (f)  An auditor or certified public accountant who is retained by Huger
             on other than a contingent fee basis and is reasonably acceptable
             to Personics may, upon reasonable notice, and during normal
             business hours, but only once in each calendar quarter, inspect the
             records of Personics on which such reports are based, provided that
             such accountant or auditor shall hold such reports in strict
             confidence except as necessary to report to Huger and Personics on
             the accuracy of Personics' reports. If a discrepancy is discovered
             by Huger's auditor or CPA in the royalty amount reported by
             Personics, then Personics shall pay the discrepancy and reimburse
             Huger for reasonable accounting fees associated with the discovery.

        (g)  Replacement and Promotional Copies. Net Receipts shall not include
             any receipts from copies of DTS which are distributed by Personics
             to existing customers for free or for a nominal fee approximating
             Personics manufacturing and handling costs as back-up, replacement
             or corrected copies whether provided to such customers under a
             back-up, warranty or maintenance policy, and no amount shall be
             credited or paid to Huger with respect to any receipts from no more
             than 1,000 copies per year per version supplied for free or for a
             nominal fee for promotional purposes to the press, trade, sales
             representatives or potential customers. Huger shall be entitled up
             to 50 free copies per year of DTS. Huger's copies are not for
             resale.

        (h)  Personics shall reimburse Huger for reasonable travel expenses
             incurred in association with the development and\or marketing of
             DTS. In addition, Personics shall pay Huger a reasonable per diem
             for any time spent out of his office promoting or supporting DTS.

        (i)  Miscellaneous. Amounts received by Personics as deposits or
             advances shall not be deemed to have been received until deliveries
             have been made against such deposits or advances. In the event of a
             partial payment of an invoice which includes DTS and other items,
             Personics shall calculate its Net Receipts by prorating the payment
             received over the invoiced

                                      6
<PAGE>

             amounts for DTS and other items absent specific acceleration by the
             customer. Amounts received by Personics in foreign currencies shall
             be deemed converted into United States Dollars at the average
             exchange rates used by Personics in its financial statements for
             the month of receipt, except that "blocked funds" which cannot be
             remitted to the United States in Dollars shall not be deemed
             received until they can be so remitted, provided that, at Huger's
             request and if reasonably practicable, Personics shall deposit in a
             foreign back account established by Huger the amount due in the
             foreign currency of the royalties that would be due Huger with
             respect to such blocked funds.

7.      Maintenance. Huger shall promptly deliver to Personics, at no charge to
        Personics, all corrections or modifications necessary to correct any
        errors in DTS developed by Huger, of which errors Personics notifies
        Huger during the period while payments are accruing to Huger hereunder.
        As used in this Paragraph, the term "errors" shall mean any deviations
        from the Specifications and any deviations from commonly accepted
        standards for normal and correct operation of computer programs, even if
        not explicitly mentioned in the Specifications, such as any cases where
        DTS abnormally ceases functioning, produces incorrect or misleading
        information or erroneously interprets information given to it, and
        similar deviations.

8.      Continuation Engineering and Support.

        (a)  Huger agrees to provide continuation engineering services, as
             reasonably requested by Personics, and with reasonable notice, at
             any time during the commercial life of DTS. Such services may be
             employed for product maintenance, bug fixes, upgrades,
             enhancements, extensions, development of new versions and other
             modifications to the DTS product. At his option, Huger may
             subcontract such continuation engineering services, subject to
             Personics' approval of the subcontractor.

        (b)  Huger agrees to provide consulting services, upon reasonable
             request by Personics, for the purpose of educating Personics
             personnel in regards to DTS operation, at no charge to Personics.

9.      Protection of Proprietary Rights. Huger and Personics acknowledge that
        DTS is of a character which is or may be protectable by patent, trade
        secrecy and/or copyright under the laws of the United States and other
        countries. Personics shall treat documentation regarding DTS as
        proprietary, confidential information, especially listings of source
        code for DTS, not including instructions, manuals or other elements of
        the publicly marketed form of the work. Personics shall use reasonable
        efforts to obtain and maintain proprietary protection for DTS consistent
        with Personics' ability to effectively market DTS in each country in
        which DTS is distributed. Huger agrees to cooperate with Personics, at
        Personics' expense, in obtaining patent, copyright or other

                                       7
<PAGE>

        statutory protections for DTS in each country in which it is sold,
        distributed or sublicensed, and Huger hereby authorizes Personics to
        execute and prosecute in Huger's name as author or inventor and/or
        Personics' name as exclusive licensee an application for patent or
        copyright registration of DTS, and Huger shall execute such other
        documents of registration and recordation as may be necessary to perfect
        in Personics, or protect, the exclusive rights granted Personics
        hereunder in each country in which such items are sold or distributed.
        Personics shall place or cause to be placed in and on each copy that is
        distributed an appropriate copyright notice.

        Huger shall be the owner of the copyright and all other proprietary
        rights in DTS. Personics shall be the owner of the copyright and all
        other proprietary rights in the user documentation and promotional
        materials for DTS. Personics agrees that Huger may use portions of the
        DTS documentation in connection with his sale of non-DOS and Wang VS
        versions of DTS. Huger agrees that if substantial portions of such
        documentation are used, Huger will negotiate in good faith with
        Personics to determine a fair price to be paid by Huger to Personics for
        use of such documentation.

        Huger represents and warrants to Personics that, to the best of his
        knowledge, the DTS code developed under this agreement will be the
        original work of Huger, or programmer(s) engaged by Huger, or will
        employ third-party code licensed to Huger, and will not infringe upon
        any U.S. patent, copyright, trade secret, or other proprietary rights of
        others.

10.     Nondisclosure. Huger agrees that the trade secrets and technology
        embodied in DTS to which Personics acquires the rights hereunder, any
        information disclosed by Personics to Huger or Huger's accountants,
        auditors or attorneys under Paragraph 6 and any other information
        concerning Personics' marketing plans, Personics' existing or future
        products, any methods of protection employed by Personics to prevent
        unauthorized duplication of software programs, the terms of this
        Agreement, and any other confidential business or technical information
        disclosed by Personics to Huger in the futherance of this Agreement
        shall be held in strict confidence and shall not be disseminated or
        disclosed to any other party without the express written consent of
        Personics. Personics agrees that the source code of DTS, the unique
        programming techniques or underlying algorithms developed independently
        by Huger, third-party manufacturers' existing or future plans disclosed
        to Huger, any development aids developed by Huger and information
        identified as confidential when disclosed by Huger to Personics in the
        futherance of this Agreement shall be held in strict confidence. The
        obligations of this Paragraph shall survive the expiration or
        termination of this Agreement. Notwithstanding the foregoing, if this
        Agreement is terminated or Personics' license becomes nonexclusive,
        Huger may disclose to third parties such information that is proprietary
        to Huger as is reasonably necessary to enter into license agreements
        with such third parties.

                                        8
<PAGE>

11.     Trademarks. Any trademarks adopted and used by Personics in the
        marketing of DTS shall be the property of Personics. Personics shall
        have the sole responsibility for ensuring that any such trademarks do
        not infringe the rights of third parties. Huger understands and agrees
        that he may not use the trademarks of Personics in any way without
        permission of Personics.

12.     Infringement by Others. Each party will notify the other of any
        infringements of rights in DTS that come to such party's attention. In
        the event of any infringement of any rights granted to Personics
        hereunder, Personics shall have the first option to bring any action for
        such infringement on behalf of itself and Huger, and Huger shall
        cooperate fully with Personics in such action; and in such event
        Personics shall bear the expenses of the action and shall recover its
        expenses from any sums recovered in the action. The balance of the
        proceeds of such action shall be deemed to be Net Receipts within the
        meaning of Paragraph 6 and shall be divided between Personics and Huger
        according to the percentages specified in Exhibit B(1). If Personics
        declines in writing to bring any such action, Huger may proceed and
        shall bear all expenses of the action, and shall recover his expenses
        from any sums recovered in the action. The balance of such recovery, if
        any, shall be deemed to be Net Receipts and shall be divided as provided
        above.

13.     Term and Termination.

        (a)  Term. The term of this Agreement shall commence on the date first
             set forth above and shall continue for ten (10) years thereafter,
             unless earlier terminated as provided in this Agreement. Upon
             expiration of such initial term, this Agreement and the licenses
             granted Personics hereunder shall automatically be renewed for
             successive one year periods unless either party notifies the other
             in writing at least 90 days prior to the expiration of such initial
             or any renewal term that it elects not to renew this Agreement.

        (b)  Breach by Personics. In the event of (i) the bankruptcy of
             Personics (ii) the failure to pay any sums hereunder within thirty
             (30) days from their due date or (iii) a material breach by
             Personics of a material provision hereof (which breach is not cured
             within sixty (60) days after written notice thereof by Huger), then
             Huger may, effective sixty (60) days after written notice thereof
             to Personics, terminate this Agreement, and the rights granted to
             Personics hereunder shall thereupon revert to Huger as provided in
             subparagraph 13(f) hereof. A good faith dispute as to the
             determination or calculation of payments due Huger hereunder shall
             not be considered a breach of this Agreement provided that
             Personics deposits the disputed amount in an interest bearing
             escrow account with a commercial bank and offers to arbitrate the
             dispute in accordance with the Rules of the American Arbitration
             Association in Boston, Massachusetts. In addition to or in lieu of
             his rights to terminate this Agreement upon a material breach by
             Personics, Huger shall have the right

                                       9
<PAGE>

             to pursue any remedies Huger may have at law or in equity, provided
             that in no event will Personics be liable to Huger for incidental
             or consequential damages or the loss of anticipated profits arising
             from any breach of this Agreement by Personics.

        (c)  Breach by Huger. In the event of a material breach by Huger of a
             material provision hereof, which breach is not cured within sixty
             (60) days after written notice thereof by Personics, then Personics
             may, effective sixty (60) days after written notice thereof to
             Huger, terminate this Agreement, and the rights granted to
             Personics hereunder shall revert to Huger as provided in
             subparagraph 13(f) hereof. In addition to or in lieu of its rights
             to terminate this Agreement upon material breach by Huger,
             Personics shall have the right to pursue any remedies at law or in
             equity, and Personics shall pay into an interest bearing escrow
             account with a commercial bank any payments due Huger hereunder as
             security for payment of any damages arising from any material
             breach by Huger of any provision of this Agreement. Upon resolution
             of the claim, the amounts in escrow INCLUDING interest thereon
             shall be distributed to Huger after deduction of the amounts, if
             any, required to be paid to Personics. Huger shall not be liable to
             Personics for incidental or consequential damages or the loss of
             anticipated profits arising from any breach of this Agreement by
             Huger.

        (d)  Voluntary Termination by Personics. Notwithstanding subparagraph
             (a) above, if after executing this Agreement Personics determines
             that due to changes in market conditions or for any other reason
             Personics will not market or will not continue to market or
             distribute DTS, Personics shall have the right, without further
             liability to Huger except as specified below, to terminate this
             Agreement by giving written notice to Huger.

        (e)  Voluntary Termination by Huger. Notwithstanding subparagraph (a)
             above, if after executing this Agreement Personics does not meet
             the Minimum Project Expenditures obligation defined in Paragraph
             2(c)(i), Huger shall have the right, if exercised within the first
             10 months following the commercial introduction of DTS, without
             further liability to Personics except as specified below, to
             terminate this Agreement by giving written notice to Personics.

        (f)  Effect of Termination. Upon any termination of this Agreement: (1)
             the licenses granted in Paragraph 2 shall terminate and Personics
             shall promptly return to Huger any development and DOCUMENTATION
             work in process, and all master copies, source code, and production
             materials relating to DTS; (2) Personics shall promptly execute and
             deliver to Huger all documents necessary to assign to Huger
             Personics' interest in any patent, copyright or trademark in such
             works. (3) all rights and licenses granted by Personics to third
             parties

                                       10
<PAGE>

             shall continue in full force and effect; (4) Personics shall in any
             event have the right to retain copies of any version of DTS for
             Personics' own use and for the purpose of providing support to its
             then existing customers; and (5) Personics' obligation to pay Huger
             royalties then due or which may thereafter become due under
             Paragraph 6 with respect to Net Receipts received by Personics
             shall continue.

14.     Right of First Negotiation. Provided that the licenses granted hereunder
        are exclusive, if Huger develops any new software product or products,
        he will be obligated to negotiate in good faith with Personics for at
        least thirty (30) days after the demonstration by Huger of a working
        prototype, for exclusive distribution rights to such product, before
        negotiating with any other potential publisher or distributor. If, after
        negotiating with Personics without reaching an agreement, Huger
        subsequently modifies the new product in any significant way, Huger must
        once again offer the new modified product to Personics under the terms
        of this Paragraph.

15.     General.

        (a)  Entire Agreement. This Agreement including Exhibits A and B states
             the entire agreement between the parties with respect to the
             subject matter hereof and supersedes all prior negotiations,
             understandings and agreements between the parties hereto concerning
             the subject matter hereof. No amendment or modification of this
             Agreement shall be made except by an instrument in writing signed
             by both parties.

        (b)  Force Majeure. No party shall be deemed in default of this
             Agreement to the extent that performance of their obligations or
             attempts to cure any breach are delayed or prevented by reason of
             any act of God, fire, natural disaster, accident, or act of others
             beyond the control of such party ("Force Majeure"), provided that
             such party gives the other party written notice thereof promptly
             and, in any event, within fifteen (15) days of discovery thereof
             and uses its best efforts to cure the default for a period equal to
             the duration of the Force Majeure but not in excess of six (6)
             months.

        (c)  Assignment. This Agreement may not be assigned in whole or part by
             either party without consent of the other party, which consent
             shall not be unreasonably withheld, except that Huger may assign
             (subject to any rights of Personics) Huger's interest in all or
             part of the payments due Huger hereunder upon notice in writing to
             Personics and Personics may assign (subject to any rights of Huger)
             any or all of its rights under this Agreement to any subsidiary or
             affiliate or to any third party which succeeds to the business of
             Personics by operation of law, who purchases or otherwise acquires
             substantially all of the assets of Personics or a subsidiary or
             affiliate thereof and assumes such party's obligations hereunder,
             upon written notice to Huger. As used in this subparagraph,
             "subsidiary" shall mean any company which is

                                       11
<PAGE>

        controlled, directly or indirectly, by the relevant party, and
        "affiliate" shall mean any company which controls, is controlled by or
        is under common control with such party where "control" shall mean
        possession of more than fifty percent (50%) of the equity interest or
        voting power of the company.

        (d)  Governing Law. This Agreement shall be governed by and interpreted
             in accordance with the substantive laws of the Commonwealth of
             Massachusetts.

        (e)  Severability. Should any provision of this Agreement be held to be
             void, invalid or inoperative, the remaining provisions of this
             Agreement shall not be affected and shall continue in effect as
             though such provisions were deleted.

        (f)  Notices. Any notice required or permitted to be sent hereunder
             shall be deemed delivered if hand delivered or if mailed, postage
             prepaid, by registered or certified mail, return receipt requested,
             to any party at the address listed above, or such other addresses
             which either party may so notify the other.

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

PERSONICS CORPORATION

By: /s/ Marc Peterson                             /s/ Raymond J. Huger
   -------------------------------                -----------------------------
                                                  Raymond Huger
Name: Marc Peterson
     -----------------------------

Title: President
      ----------------------------

                                       12
<PAGE>

                           Exhibit A - Specifications

Marketing Overview                                        Page A-2
        Our Customer
        His Alternatives
        Marketing Handle

Application Scenarios                                     Page A-3

Functional Specification                                  Page A-4

User Interface                                            Page A-5
        Compatibility
        Development Schedule
        Deliverable Product

Defining the Input                                        Page A-6

Customizing the Output                                    Page A-7

                                      A-1
<PAGE>

                               MARKETING OVERVIEW
                               ------------------

The Environment
---------------
In the corporate/institutional marketplace the primary data storage machine is a
minicomputer or mainframe. Paradoxically, the primary data analysis machine is
the PC. This creates an ongoing need to download information from mainframe to
PC.

Downloading has two components, data transfer and data query. The former is
generally addressed as a byproduct of the termainal emulation process. This is
to say, because no one wants two workstations on his desk, the PC is given a
board and terminal emulation software that allow it to communicate with the
mainframe. This is sometimes done through a LAN gateway but the effect is the
same - the PC can log onto the mainframe and run a job. One function within
terminal emulation generally PROVIDED is file transfer.

The data query function is more problematic. The user will either use custom
mainframe software or a query language. We believe that neither approach
addresses the real need of the PC user. This is because most PC users view a
mainframe information system not as a series of files but as reports that come
out on green and white paper. These reports give the user highly selected,
sorted, joined, and summarized views of the information system. However, since
these reports were meant to be read by people not by machines it can be
difficult to capture the data they contain in a way that PC programs such as
1-2-3 can exploit. We want to give the user this capability with Down To Size.

Our Customer
------------
The customer profile is the non DP professional in a large organization who
wants to use mainframe data as a starting point for some ad hoc work in a PC
package.

His Current Alternatives
------------------------
1. Rekeying data from a printou .

2. Scanning the data via OCR. 3. Using 1-2-3 Data Parse.

4. Custom software on mainframe or PC. This can be difficult on both mainframe
and PC because of the need to write the WK1 format. The first time you do this
it is very difficult especially the floating point numbers in their IEEE 64 bit
format.

5. Zeno. This PC product is now being reviewed.

Marketing Handle
----------------
Show a big pile of paper as input, a nice spreadsheet as output, and tell him we
will cut it Down To Size.

                                      A-2
<PAGE>

                              APPLICATION SCENARIOS
                              ---------------------

1.  Inventory. Distributor keeps his inventory on a VAX. Turnover is bad. Wants
    sales manager to propose disposition of all stock with value greater than
    $50,000.

    Solution: Download Stock Status Report to laptop. Select DESCRIPTION, ON
    HAND, ON ORDER, YTD SALES UNITS. Bring into 1-2-3. Walk the floor with plant
    manager verify On Hand note condition of goods. Make report to VP finance
    using 1-2-3.

2.  Asset management. Mortgage finance company wants to determine the effect of
    a law changing state tax depreciation.

    Solution: Download 1987 State Tax Payment Report. Select all records whose
    STATE=46. Select LEASE NUMBER, LEASE TERM, ACCUM DEPRECIATION, DATE
    PURCHASED, 1987 PROPERTY TAX. Add columns with current depreciation schedule
    and proposed.

                                   A-3
<PAGE>

                            FUNCTIONAL SPECIFICATIONS
                            -------------------------
INPUT
-----
     Limit line length to 255 characters (132 is typical).
     User tests by "COPY FILE.DAT PRN".

OUTPUT
------
     WK1, DBF, Comma Delim ASCII.
     Also possibly: Supercalc, DIF, MACINTOSH TAB-TEXT.

PRIMARY FUNCTIONS
-----------------
      Recognize record types via masking mechanism on first line of record.

      Select records via logical filtering mechanism similar to @BASE criteria.

      Output records per output specification.

USER ACTIVITIES
---------------
      Specify input & output file names.

      Optionally allow loading of parameters
         input template
                             Masks
                             Fields
         selection criteria boolean string
             and or
             >    >=  <   <=  <>   =
             ()
         output specifications
             field names
             field selection
             field order
             format (eg. LOTUS date or number of decimals)

      Optionally create/edit parameters

      Execute to create the output file from the input file in terms of the
parameters.

      Optionally save parameters

                                      A-4
<PAGE>

                                 USER INTERFACE
                                 --------------

MENU STRUCTURE Have yet to determine whether traditional 1-2-3 style or framer.

HELP On line, context sensitive. Get to Help with Fl. Exit from Help with Esc.

INPUT TEMPLATE See "Defining the input"
REPORT VIEW

     To see the effect of the current parameters, user could scroll through the
     input.

     Would have option of seeing effect of all parameters or just Page title, or
     A heading, etc.

     Would have the option of "emphasizing" either the fields or the
     prototype sets. For B&W monitor emphasis would be reverse video. For color
     monitors the various levels would determine colors. For example: Backround
     White, Page title Brown, A heading Blue, B heading Green, C Heading Yellow,
     Detail Red.

SPREADSHEET VIEW To see what has been selected user could scroll through the
output. Each record would be a row each field would be a column.

MASK TESTING Done with report view- prototype option.

FIELD TESTING Done either in report or spreadsheet view.

RECORD SELECTION CRITERIA See "Customizing the output"

CUSTOMIZE FIELDS See "Customizing the output"

GO The execute function will return back to menu. Bar graph showing %completion
will be included.

                                  COMPATIBILITY
                                  -------------

Program will be written in C. Compilation will be optimized for 80286 but will
also support 8088 and 80386. As a standalone program it should be able to work
with all levels of MSDOS and PCDOS. if possible will test with OS/2.

Explicit Ultravision support will make 132 column view easier.

                              DEVELOPMENT SCHEDULE
                              --------------------

Deadline is July 1, 1989. Intention is to deliver fully functional main program
by April 15, 1989. The installation batch procedure, security, and example files
are to be determined.

Whenever requested will send current version of main program.

                               DELIVERABLE PRODUCT
                               -------------------

Product to be delivered debugged with initial testing done by developer. Bug
fixes by developer as soon as possible.

                                       A-5
<PAGE>

                               DEFINING THE INPUT
                               ------------------

The input template is a set of parameters that constitute a view of the input
file. The use of the name, template, is intended to convey the idea of drawing
boxes around only the important data in the input file.

In a very short input file, such as a one page balance sheet, one could have a
template that would cover the whole file. Usually, the report will be longer and
less predictable in length. For this reason the template describes only a
section of the input file and then describes how the patterns in that section of
the report are repeated throughout.

These repeating sections are most easily defined by using a sample from a
typical input file. These samples are called prototypes. If the input file were
one column out of the yellow pages a prototype would be one company's address
and phone number. By drawing one box around the address and another around the
phone number the pattern for all lines containing the fields, address and phone
number, would be established.

In addition to drawing boxes around the fields, it is necessary to tell
Down-To-Size where a repetion of the desired data is to begin. In the yellow
pages example it is necessary to distinguish between the address and phone
number lines and the advertisements. To do this Down-To-Size uses a mask to look
for a repeating character pattern in each line. In, the yellow pages
Down-To-Size might be told to look for "three digits, a dash, and then four more
digits" on the right side of a line.

Since the designer of the input file might have had many records that shared
some common data fields, he might have chosen to put this common data in a
heading over the data. Since Down-To-Size wants to create a data set where each
record can stand on its own and not within a context, a method is needed to
append fields from these headings to the unique detail data.

These headings can exist at several levels within the data. Also some heading
data may be repeated on every page in the title lines at the top. For this
reason Down-To-Size needs to be able to distinguish several different types of
headings repeating throughout the input file. The input template uses the same
method for these headings as for the detail data. A prototype is selected and
used-to help create the mask and fields.

In a consolidated yellow pages example the title at the top of each page might
show the name of the town. The first heading might be Restaurants, the second
heading might be Pizza Hut, the detail might have the five locations with phone
numbers. To analyze the data out of the context of the yellow pages a typical
record would be.

          Greensboro, Restaurants, Pizza Hut, 600 College Road,294-6298

Only the last two fields come from the detail record but without the supporting
heading information they are useless. Similarly, the heading information has no
value unless it is attached to usable detail.

                                       A-6
<PAGE>

                             CUSTOMIZING THE OUTPUT
                             ----------------------

Down-To-Size will not work unless the user explicitly defines the input. The
output, however, can be created using default values. Many users will want to
customize the output. There are two forms of customization, record selection
criteria and field customization.

RECORD SELECTION CRITERIA
-------------------------
For large input files the user may not want all possible records. The masks can
provide a rudimentary record selection capability. Since masks rely on character
string matching on the first line of a record set, mask based record selection
is frequently inadequate.

Down-To-Size will give the user the ability to associate alias names with the
fields defined with boxes on the input template and use these names in boolean
logic strings for record selection. The format for record selection will follow
that of @BASE criteria.

This record selection will not be limited to detail records but will extend to
heading fields. In the yellow pages example we might choose "all attorneys and
physicians whose phone number starts with 855 or 273".

FIELD CUSTOMIZATION
-------------------
There are several ways Down-To-Size will help the user to exercise control over
the output. These are:

o    Output order. The default order is primary by level (Page Heading, A
     Heading, B Heading, C Heading, Detail), secondary by input location. The
     user will be able to overide this default order.

o    Field off/on. By default it is assumed that all input fields are to be
     output. There are at least two occasions when the user will not want to
     output an input field. The first is when the input template has been
     defined in general without the needs of a particular user in mind. The
     second is when an' input field is used in the record selection criteria but
     is not needed in the output file.

o    Output format. By default Down-To-Size will take each field and try to
     convert it to number, if this is impossible the field will be interpreted
     as a label. Instead the user may want to force certain numbers, such as
     account numbers, to be interpreted as labels. Also the user may want to
     translate dates into LOTUS date format. For these reasons the user will be
     able to explicitly state output format.

o    Field alias. The user may want to give names to the fields. Since the
     official Down-To-Size field names will be simple numeric ones (e.g. Al, A2,
     etc.), the names supplied by the user are called aliases. The aliases will
     be helpful in defining selection criteria, as headers over the first row of
     spreadsheet output, and as DBF field names.

                                      A-7
<PAGE>

                                  Exhibit B(1)
                   Royalty Percentage Applied to Net Receipts

Product                                 Royalty - The Greater Of:
--------------------------------------------------------------------------------

DTS - DOS Version                         10% of Net Receipts
                                                  or
                                             $22 per unit.

                                  Exhibit B(2)
                   Royalty Percentage Applied to Net Receipts
                       For Volume Site-License Agreements

Product                                        Royalty:
--------------------------------------------------------------------------------
DTS - DOS Version                                 12% of Net Receipts

DTS - Host Version                                24% of Net Receipts
<PAGE>

           AGREEMENT BETWEEN MATH STRATEGIES AND PERSONICS CORPORATION

OVERVIEW

This agreement is an amendment to the "Software Development and Marketing
Agreement" entered into January 19, 1989 by the parties.

1.       DEFINITIONS.

"Monarch for Windows" ("MFW") shall mean the version of the Monarch computer
software product designed for the Microsoft Windows environment. The features of
MFW shall be similar to Monarch 1.1 but shall additionally include others
consistent with the monarch mission of allowing the user to view, manipulate,
and extract text file information.

"Optical and Archiving Product" ("OAP") shall refer to an as yet undeveloped
product idea whose primary mission shall be the creation, indexing, and
simultaneous access to an information warehouse based on a large number of text
or other files.

2.       INCLUSION.

This agreement is for the development and marketing of MFW not OAP. Regarding
OAP both parties acknowledge a common interest in such a project and agree to
consult with the other before either pursues OAP without the participation of
the other.

3.       ROYALTIES.

         Product                                        Royalty
         -----------------------------------------------------------------------
         MFW                                        The greater of 12% Net
                                                    Receipts or $25 per unit.

         MFW - Site License agreements 12% of Net Receipts.

4.       EXPENSE REIMBURSEMENTS.

         a) Personics shall advance to Math Strategies funds to offset expenses
            Math Strategies shall have for:

            (i).    Payments to Math Strategies employees or contractors other
                    than Mr. Huger himself who are directly involved in the
                    programming of MFW.

            (ii).   Computer hardware to support MFW development.

            (iii).  Design Expenses.
<PAGE>

MATH STRATEGIES/PERSONICS CORPORATION AGREEMENT - PAGE 2

         b) The above advances shall cease upon 60 days notice by Personics or
            upon commercial introduction of MFW.

         c) the advances shall be repaid to Personics by deducting them from
            quarterly royalty payments for MFW. However, no more than one third
            of a quarter's royalty payment can be so deducted.

5.       DESIGN EXPENSES.

Personics and Math strategies will equally share the cost of a MFW designer. The
designer shall be retained and report directly to Personics. Math Strategies
authorizes Personics to spend up to $10,000 as the Math Strategies share of the
total expense for the designer.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date indicated below.

    PERSONICS CORPORATION

By: /s/ Marc Peterson                                Date:   3/5/92
   -------------------------------                         -----------
    Marc Peterson

    MATH STRATEGIES

By: /s/ Ray Huger                                    Date:   3/6/92
   -------------------------------                         -----------
    Ray Huger
<PAGE>

            Amendment To Software Development and Marketing Agreement

This document serves as an amendment to the "Software Development and Marketing
Agreement" dated January 19, 1989, and amended March 6, 1992.

     The parties agree to extend the term of the Agreement until January 19,
     2009. The following paragraph shall be substituted for paragraph 13(a):

         13a.  Term. The term of this Agreement shall commence on the date first
               set forth above and shall continue until January 19, 2009, unless
               earlier terminated as provided in this Agreement. Upon expiration
               of such initial term, this Agreement and the licenses granted
               Personics hereunder shall automatically be renewed for successive
               one year periods unless either party notifies the other in
               writing at least 90 days prior to the expiration of such initial
               or any renewal term that it elects not to renew this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date indicated below.

    PERSONICS CORPORATION

By: /s/ Marc Peterson                                Date:   2/11/93
   -------------------------------                         -----------
    Marc Peterson

    MATH STRATEGIES

By: /s/ Ray Huger                                    Date:   2/12/93
   -------------------------------                         -----------
    Ray Huger
<PAGE>

            Amendment To Software Development and Marketing Agreement

This document serves as an amendment to the "Software Development and Marketing
Agreement" dated January 19, 1989, as amended on March 6, 1992 and February 12,
1993, in which Personics has been granted exclusive worldwide publishing rights
to Monarch for DOS (formerly known as "Down-To-Size") and Monarch for Windows.
(Collectively, "Monarch")

The parties agree as follows:

1.  Math Strategies shall develop, at its own expense, report archive products
    which are based on popular document management systems such as Lotus Notes
    and Novell Groupwise. The document management-based archive ("DMBA") is
    intended to give users of document management systems the ability to create,
    manage and maintain a repository of report files. Users will access reports
    held in the archive using Monarch running on a PC or workstation. DMBA
    requires a document management system already in place at the customer's
    site and does not operate as a stand-alone product.

2.  Personics intends to acquire distribution rights for a report archive
    product which runs in association with popular local area networks. The
    LAN-based archive ("LBA") is intended to give LAN users the ability to
    create, manage and maintain a repository of report files. Users will access
    reports held in the archive using Monarch running on a PC or workstation.

3.  Personics agrees to cooperate with Math Strategies to enable the timely
    development of DMBA. Such cooperation would include (1) providing feedback
    to Math Strategies, as requested, regarding the DMBA product specification;
    (2) providing access by Math Strategies to selected Monarch customers for
    the purpose of soliciting the customer's feedback regarding the DMBA product
    specification; and (3) providing access by Math Strategies to selected
    Monarch customers for the purpose of soliciting and managing the customer's
    participation in a beta test program for DMBA.

4.  Math Strategies agrees to cooperate with Personics to enable the timely
    integration of Monarch with LBA. Such cooperation would include making
    changes to Monarch as necessary to support (1) smooth launch-integration
    with LBA, (2) page-oriented file input, (3) saving temporary files, index
    files, page database files, etc. (4) enabling Monarch to be used as the tool
    for creation of report recognition templates, and (5) any other changes that
    may reasonably be requested by Personics to support the integration of
    Monarch with LBA. Personics agrees, however, that if any such changes are
    deemed by Math Strategies to require effort beyond that which would
    ordinarily be provided at no charge to OEM customers of Personics for
    Monarch, then Math Strategies shall be reimbursed by Personics for
    programming effort associated with such changes at the rate of $50 per hour.

5.  Subject to paragraph 11, Math Strategies shall have the right to sell DMBA
    to resellers and endusers under any pricing, terms and conditions of its
    choice, and under any tradename of its choice, except that any use of the
    tradename "Monarch" shall be subject to prior written approval by Personics.
    Personics agrees that Math Strategies can represent itself as "the
    programmers of
<PAGE>

    Monarch", but such representation shall not be made in formal marketing
    materials without prior written approval by Personics.

6.  Math Strategies agrees that the client software used in association with
    DMBA for report viewing and report access shall be Monarch, and shall be
    purchased by Math Strategies from Personics. Personics agrees to sell
    Monarch to Math Strategies under favorable OEM/VAR discounts, terms and
    conditions. Personics and Math Strategies understand that some end-users and
    resellers of DMBA may choose to purchase Monarch directly from Personics or
    Personics' resellers. Personics agrees that the standard text viewers used
    in association with the document management systems underlying DMBA may be
    supported by DMBA.

7.  Personics agrees that the client software used in association with LBA for
    report viewing and report access shall be Monarch, for which Math Strategies
    shall receive a royalty as set forth in the Software Development and
    Marketing Agreement, and summarized in paragraph 9 below.

8.  Personics shall have the right to sell LBA and DMBA to resellers and
    end-users under any pricing, terms and conditions of its choice, and under
    any tradename of its choice, except that any use of the tradename(s) chosen
    by Math Strategies, as described in paragraph 5 above, shall be subject to
    prior written approval by Math Strategies. Math Strategies agrees to sell
    DMBA to Personics under favorable OEM/VAR discounts, terms and conditions,
    comparable to those under which Monarch clients are sold to Math Strategies,
    as described in paragraph 6.

<PAGE>

9.  Royalty rates and prospective VAR/OEM prices paid by Personics to Math
    Strategies are summarized below:

<TABLE><CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                WHEN SOLD            WHEN SOLD UNDER
                               PERSONICS'      UNDER SINGLE          NETWORK, SITE OR            WHEN SOLD
          PRODUCT               LICENSE        USER LICENSE             OEM LICENSE              As UPGRADE
----------------------------------------------------------------------------------------------------------------------
<S>     <C>                    <C>             <C>                   <C>                        <C>
                                               The greater of:                                  The greater of
        MONARCH/DOS            Exclusive       10% of net sales      12% of net sales           10% of net sales
                                                 or $22 each                                     or $P each*
----------------------------------------------------------------------------------------------------------------------

                                               The greater of:                                  The greater of:
                                               12% of net sales                                 12% of net sales
      Monarch/Windows          Exclusive         or $25 each         12% off net sales           or $P each*
----------------------------------------------------------------------------------------------------------------------

 Other future versions of
   Monarch that run on a
     PC or workstation
  (including stand-alone
 and client PCs.) as well      Exclusive       12% of net sales      12% of net sales           12% of net sales
  as Monarch derivatives                        or $M each**                                     or $P each*
    such as the Monarch
         Mini-Pump
----------------------------------------------------------------------------------------------------------------------

                                                                     Favorable OEM/VAR         Favorable OEM/VAR
     Lotus Notes-Based        Non-exclusive         N/A            discounts, comparable     discounts, comparable
      Report Archive                                               to discounts given to     to discounts given to
          (DMBA)                                                    Math Strategies for       Math Strategies for
                                                                      Monarch clients           Monarch clients
----------------------------------------------------------------------------------------------------------------------
</TABLE>

    * Note - Minimum royalty for upgrades is computed as follows:

             P = (Single user minimum royalty) X (Upgrade list price) /
                 (Single user list price)

                 Example for Monarch/Windows 2.0 upgrade: $25 X $99 / $499 = $5

   ** Note - Minimum royalty for other future versions of Monarch is computed as
             follows: M = $25 X (future version list price) / $499

10. Math Strategies shall be the owner of the copyright and all other
    proprietary rights in DMBA, except that Personics shall be the owner of the
    trademarks made by Personics and used in association with its sales and
    marketing of DMBA.
<PAGE>

11. Both parties acknowledge a common interest in maintaining Monarch as the
    leading product for accessing data held in reports. The parties agree to
    remain focused on Monarch and its core technology while pursuing the DMBA
    and LBA market opportunities.

12. Personics agrees to cooperate with any third-party designated and paid by
    Math Strategies to conduct an audit of the royalty accounting process, but
    no more than once each year. Personics understands that Math Strategies
    intends to engage a third-party auditor to conduct such an audit for the
    year ended September 30, 1995.

13. Personics agrees that royalty payments shall be express mailed or wired to
    Math Strategies on or before their due date, as set forth in the Software
    Development and Marketing Agreement, and that the royalty amount shall
    include a late payment amount at the rate of 12% per annum for each day the
    royalty payment is late.

AGREED:

    PERSONICS CORPORATION

By: /s/ Marc Peterson                                Date:   8/14/95
   -------------------------------                         -----------
    Marc Peterson

    MATH STRATEGIES

By: /s/ Ray Huger                                    Date:   8/25/95
   -------------------------------                         -----------
    Ray Huger
<PAGE>

                     Amendment No. 4 to Software Development
                             and Marketing Agreement

     This Amendment No. 4 is made and entered into as of December 22, 1995 by
Datawatch Corporation ("Datawatch"), a Delaware corporation having its principal
place of business at 234 Ballardvale Street, Wilmington, Massachusetts 01887,
Personics Corporation ("Personics"), a Delaware corporation wholly-owned by
Datawatch having its principal place of business at 234 Ballardvale Street,
Wilmington, Massachusetts 01887, and Raymond Huger, a sole proprietor doing
business as Math Strategies ("Math Strategies") having its principal place of
business at-6-04 Green Valley Road, Suite 388`; Greensboro, North Carolina
27408.

     WHEREAS, Math Strategies and Personics are parties to a Software
Development and Marketing Agreement dated as of January 19, 1989, as amended
March 6, 1992, February 12, 1993 and August 25, 1995 (the "Software Agreement");

     WHEREAS, Math Strategies and Datawatch intend to enter into an escrow
agreement (the "Escrow Agreement") with Fort Knox Escrow Services, Inc. or
another mutually acceptable escrow agent ("Escrow Agent") whereby Math
Strategies shall deposit the (i) source code (consisting of a diskette
containing complete source code, batch file to compile, assemble and link the
code) for the software (the "Software") specified in the Software Agreement (the
"Source Code") with Escrow Agent along with (ii) all information necessary to
enable Datawatch to maintain such software for the support of Datawatch's
customers and end users (together, (i) and (ii) being referred to herein as the
"Escrowed Materials"); and

     WHEREAS, Math Strategies and Personics desire to amend the Software
Agreement to provide for the deposit of the Escrowed Materials with Escrow
Agent, to provide Datawatch access to the Escrowed Materials under certain
circumstances and to add Datawatch as a party to the Software Agreement.

     NOW, THEREFORE, in consideration of the foregoing, of the mutual promises
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

     1. The Software Agreement shall be amended to incorporate the following
terms:

        (a)  Addition of Datawatch as a Party to Software Agreement. Math
             Strategies acknowledges that Personics is a wholly-owned subsidiary
             of Datawatch and agrees that for all purposes under the Software
             Agreement any and all references to "Personics" shall include
             Datawatch and Personics. The rights and obligations of Datawatch
             under the Software Agreement shall be identical to those of
             Personics and such rights and obligations shall be enforceable as
             if Datawatch were a party to the Software Agreement as originally
             entered into between Math Strategies and Personics.
<PAGE>

                                      -2-

        (b)  Establishment of Escrow. Math Strategies shall deposit the Escrowed
             Materials with Escrow Agent in accordance with the terms of the
             Escrow Agreement.

        (c)  License to Escrow Materials. Upon the occurrence of an Event of
             Default (as defined below), upon notice by Datawatch and in
             accordance with the Escrow Agreement, Escrow Agent shall deliver
             the Escrowed Materials to Datawatch. Math Strategies hereby grants
             to Datawatch, contingent upon Datawatch's valid receipt of the
             Escrowed Materials pursuant to the first sentence hereof, a
             non-transferable, world-wide, exclusive license (the "Escrow
             License") to use the Escrowed Materials to reproduce, market, copy,
             publish, sell copies of, license and distribute the Software and to
             sublicense others to do the same. Except as provided below, the
             cost (the "Development Costs") of modifying and maintaining the
             Software shall be borne by Datawatch. With respect to the software
             sold or licensed by Datawatch under the Escrow License, Datawatch
             shall continue to pay the royalties due under the Software
             Agreement; provided, however that the amount of royalty owed Math.
             Strategies shall be reduced by the Development Costs. After the
             Escrow License has become effective, no termination of the Software
             Agreement shall terminate the Escrow License. "Event of Default"
             shall mean the occurrence of any of the following:

                  (i) Math Strategies shall cease conducting business in the
                  normal course; be adjudicated insolvent; make a general
                  assignment for the benefit of creditors; petition, apply for,
                  suffer or permit with or without his consent the appointment
                  of a custodian, receiver, trustee in bankruptcy or similar
                  officer for all or any substantial part of his business or
                  assets; or avail himself or become subject to any proceeding
                  under the Federal Bankruptcy Code or any similar state,
                  federal or foreign statute relating to bankruptcy, insolvency,
                  reorganization, receivership, arrangement, adjustment of
                  debts, dissolution or liquidation, which proceeding is not
                  dismissed within one hundred and twenty (120) days of
                  commencement thereof; or

                  (ii) default shall be made by Math Strategies in the
                  observance or performance of any material term, covenant or
                  agreement contained in the Software Agreement for a period of
                  thirty (30) days from the date of receipt of written notice
                  from Datawatch advising of such default and Math Strategies
                  has not cured such default and so notified Datawatch within
                  such thirty (30) day period.
<PAGE>

                                       -3-

        (d)  Establishment of Escrow for Datawatch Licensees. Math Strategies
             shall deliver an additional set of the Escrowed Materials to Escrow
             Agent for the benefit of Datawatch licensees. Math Strategies
             hereby authorizes the release of the Escrowed Materials to
             Datawatch licensees upon the occurrence of any one of the following
             events described below or any substantially similar event:

                  (i) Datawatch shall cease conducting business in the normal
                  course; be adjudicated insolvent; make a general assignment
                  for the benefit of creditors; petition, apply for, suffer or
                  permit with or without its consent the appointment of a
                  custodian, receiver, trustee in bankruptcy or similar officer
                  for all or any substantial part of its business or assets; or
                  avail itself or become subject to any proceeding under the
                  Federal Bankruptcy Code or any similar state, federal or
                  foreign statute relating to bankruptcy, insolvency,
                  reorganization, receivership, arrangement, adjustment of
                  debts, dissolution or liquidation, which proceeding is not
                  dismissed within one hundred and twenty (120) days of
                  commencement thereof; or

                  (ii) default shall be made by Datawatch in the observance or
                  performance of any material term, covenant or agreement
                  contained in a license agreement with any Datawatch licensee
                  for a period of thirty (30) days from the date of receipt of
                  written notice from the Datawatch licensee advising of such
                  default and Datawatch has not cured such default and so
                  notified the Datawatch licensee within such thirty (30) day
                  period;

             provided, however, the release of the Escrowed Materials to such
             Datawatch licensees pursuant to this Section 1(d) shall be
             contingent upon (A) Math Strategies being provided written notice
             of the events under subparagraphs (i) and/or (ii) above on which
             the release of the Escrowed Materials would be based and Math
             Strategies being provided true and complete copies of Datawatch's
             agreements with its applicable licensees upon the occurrence of any
             of such events, (B) Math Strategies being provided a sixty (60) day
             time period after receipt of Datawatch's agreements with its
             licensees in which, at its option, Math Strategies may fulfill
             Datawatch's obligations under Datawatch's agreements with its
             licensees prior to release of the Escrowed Materials to such
             licensees and (C) the failure of Math Strategies within such sixty
             (60) day period to fulfill Datawatch's obligations under
             Datawatch's agreements with its licensees.
<PAGE>

                                      -3-

     2. Amendment. Except as amended as set forth herein, the Software Agreement
shall remain in full force and effect. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.

     3. Counterparts. This Amendment No. 4 may be executed in any number of
counterparts, each of which shall be an original but all of which taken together
shall constitute one instrument.

     IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 4 as
of the date first above written.

                                             DATAWATCH CORPORATION

                                             By: /s/ Marc Peterson
                                                --------------------------------

                                             Title: Vice President
                                                   -----------------------------

                                             PERSONICS CORPORATION

                                             By: /s/ Marc Peterson
                                                --------------------------------

                                             Title: President
                                                   -----------------------------

                                             MATH STRATEGIES

                                             By: /s/ Raymond Huger
                                                --------------------------------
                                                Raymond Huger
<PAGE>

                            OCTOBER 1999 AMENDMENT TO
                  SOFTWARE DEVELOPMENT AND MARKETING AGREEMENT

This document serves as an amendment to the Software Development and Marketing
Agreement among Math Strategies, Datawatch Corporation and Personics
Corporation. dated January 19th, 1989, as amended (the "Software Agreement").

The purpose of this Amendment (the "October 1999 Amendment") is to set forth
license fees for various software components to be provided by Math Strategies
to Datawatch Corporation ("Datawatch"), and to modify our understanding
regarding certain matters agreed in our letter dated June 4, 1998 as accepted on
June 8, 1998 (the "June 1998 Letter"), and in a prior Amendment which was agreed
and accepted by Personics on August 14, 1995 and by Math Strategies on August
25, 1995 (the "August 1995 Amendment").

The parties agree, effective as of October 1st, 1999, as follows:

      1. That this October 1999 Amendment replaces and supersedes the June 1.998
         Letter and the August 1995 Amendment.

      2. That Math Strategies agrees to use all commercially reasonable efforts
         to develop, and then provide certain software components, as more fully
         described in Exhibit A, and license those components to Datawatch on an
         exclusive worldwide basis for internal use and for sublicense to third
         parties directly or indirectly under and for the same term as the
         Software under the Software Agreement. Datawatch shall have no right to
         license or disclose the source code for such software components
         without the prior written consent of Math. Strategies.

      3. That the license fees payable to Math Strategies with respect to the
         sublicensing of such software components shall be the amounts shown in
         Exhibit A.

      4. That Datawatch would like Math Strategies to provide certain additional
         components that collectively comprise the product now known as
         PalozzoTM, and that the parties agree to negotiate in good. faith to
         establish the license fees under which the additional components will
         be licensed to Datawatch on an exclusive worldwide basis for internal
         use and for sublicense to third parties directly or indirectly under
         and for the same term as the Software under the Software Agreement.
         Datawatch shall have no right to license or disclose the source code
         for the Software without the prior written consent of Math Strategies.

         For purposes of this October 1999 Amendment, "Palozzo" is a software
         tool set that enables enterprise document management software systems
         to utilize the Software.

     5.  The parties acknowledge a desire to offer a "zero-client" option for
         Monarch/ES under which users can query the Monarch/ES system and gain
         access to reports and report information using a standard Web-browser
         rather than using the Hyland. Software "client software application"
         with Monarch and/or Monarch Report Explorer. Customers who choose this
         option will purchase a license for "access rights" rather than a
         license to install and use Monarch or Monarch Report Explorer and the
         Hyland Software client software application. The parties agree that the
         license fee payable to Math Strategies with respect to the sublicensing
         of such access rights shall be 7% of the license revenues received by
         Datawatch for such access rights.
<PAGE>

     6.  Datawatch agrees to pay Math Strategies 50% of maintenance revenues
         received by Datawatch from OEM partners for maintenance associated with
         Monarch, Monarch Report Explorer, and all products that incorporate one
         or more of the components listed in Exhibit A. In addition, Datawatch
         agrees to pay Math Strategies a 15% per year maintenance fee on all
         components sublicensed to third-parties who purchase an annual
         maintenance contract from Datawatch covering products that incorporate
         components listed in Exhibit A. For example, the annual maintenance fee
         payable to Math Strategies with respect to a maintenance contract
         associated with a product that incorporates Indexer would be 15% of
         $1,000, or $150 per year. Math Strategies agrees to support and
         maintain the components listed in Exhibit A under and for the same term
         as the Software under the Software Agreement.

     7.  Datawatch agrees that its payments to Math Strategies shall be express
         mailed or wired on or before their due date, as set forth in the
         Software Agreement, and that the amount paid shall include a late
         payment amount at the rate of 12% per annum for each day the royalty
         payment is late.

     8.  Datawatch agrees to cooperate with any third party designated and paid
         by Math Strategies to conduct an audit of the royalty accounting
         process, but no more than once each year. If a discrepancy is
         discovered by such third party in the royalty or license amount
         reported by Datawatch, then Datawatch shall pay the discrepancy and
         reimburse Math Strategies for reasonable fees associated with such
         audit.

     9.  That, except as amended hereby, the Software Agreement shall continue
         in full force and effect.

     Agreed to and Accepted as of October 25, 1999

DATAWATCH CORPORATION

By: /s/ Bruce Gardner
   --------------------------------
   Bruce Gardner

PERSONICS CORPORATION

By: /s/ Marc Peterson
   --------------------------------
   Marc Peterson

MATH STRATEGIES

By: /s/ Raymond Huger
   --------------------------------
   Raymond Huger

                                        2
<PAGE>

     OCTOBER 1999 AMENDMENT TO SOFTWARE DEVELOPMENT AND MARKETING AGREEMENT
                                    EXHIBIT A

<TABLE><CAPTION>
-------------------------------------------------------------------------------------------------
<S>                      <C>                                                <C>
  COMPORT NAME           DESCRIPTION                                             License Fee
-------------------------------------------------------------------------------------------------
                         Indexer extracts text from report pages as they          $1,000.
  Indexer                are stored in the Monarch/ES system, and
                         provides associated index values.
-------------------------------------------------------------------------------------------------
                         PRF Exporter exports Monarch Portable                      $750.
  PRF Exporter           Report Files (PRF).
-------------------------------------------------------------------------------------------------
                         Table/Summary Exporter exports Monarch                   $1,250.
  Table/Summary          Exporter tables and summaries as the basis
                         for delivering HTML views of such tables and
                         summaries.
-------------------------------------------------------------------------------------------------
                                                                                    $750.
  ISAM                   Exporter ISAM Exporter exports data ino
                         popular ISAM formats including XLS, DB, DBF,
                         etc.
-------------------------------------------------------------------------------------------------
                                                                             12% of the license
  Combined Exporter      This component serves as the basis for              revenues received by
                         Monarch Data Pump and Monarch Publisher             Datawatch for any
                         and combines key features from the other            and all versions of
                         exporter components.                                Monarch Data. Pump
                                                                             and Monarch
                                                                             Publisher.
-------------------------------------------------------------------------------------------------
</TABLE>
                                       3
<PAGE>

                             APRIL 2000 AMENDMENT TO
                  SOFTWARE DEVELOPMENT AND MARKETING AGREEMENT

This document serves as an amendment to the Software Development and Marketing
Agreement among Math Strategies, Datawatch Corporation and Personics Corporation
dated January 19 , 1989, as amended (the "Software Agreement").

The purpose of this Amendment (the "April 2000 Amendment") is to amend the
license fee schedule for various software components to be provided by Math
Strategies to Datawatch Corporation ("Datawatch"), and to modify our
understanding regarding certain matters agreed in an Amendment agreed and
accepted on October 25, 1999 (the "October 1999 Amendment"), and in our letter
dated June 4, 1998 as accepted on June 8, 1998 (the "June 1998 letter"), and in
a prior Amendment which was agreed and accepted by Personics on August 14, 1995
and by Math Strategies on August 25, 1995 (the "August 1995 Amendment").

The parties agree, effective as of January 1, 2000, as follows:

1. That this April 2000 Amendment replaces and supercedes the October 1999
Amendment, the June 1998 letter and the August 1995 Amendment.

2. That the license fees payable to Math Strategies with respect to the
sublicensing of software components shall be the amounts shown in Exhibit A.

Agreed to and Accepted as of April 10, 2000

DATAWATCH CORPORATION

By: /s/ Bruce Gardner
   --------------------------------
   Bruce Gardner

PERSONICS CORPORATION

By: /s/ Marc Peterson
   --------------------------------
   Marc Peterson

MATH STRATEGIES

By: /s/ Raymond Huger
   --------------------------------
   Raymond Huger
<PAGE>

                             APRIL 2000 AMENDMENT TO
                  SOFTWARE DEVELOPMENT AND MARKETING AGREEMENT

                                    EXHIBIT A

<TABLE><CAPTION>
-------------------------------------------------------------------------------------------------------------
<S>                        <C>                                         <C>                    <C>
Component                         Description                          Standard               License' Fee
Name                                                                   License Fee            for Sales to
                                                                                              NSA
-------------------------------------------------------------------------------------------------------------
  Indexer                 Indexer extracts text from report                                   The greater
                          pages as they are stored in the                                     of $300 or
                          Monarch/ES system, and provides               $1,000                30% of the
                          associated index value                                              license
                                                                                              revenues
                                                                                              received by
                                                                                              Datawatch
-------------------------------------------------------------------------------------------------------------
  PRF Exporter            PRF Exporter exports Monarch
                          Portable Report Files (PRF).                  $750                  n/a
-------------------------------------------------------------------------------------------------------------
  Table/Summary           Table/Summary Exporter exports
  Exporter                Monarch tables and summaries as
                          the basis for delivering HTML                 $1,250                n/a
                          views of such tables and summaries.
-------------------------------------------------------------------------------------------------------------
  ISAM Exporter           ISAM Exporter exports data in
                          popular ISAM formats including                $750                  n/a
                          XLS, DB, DBF, etc.
-------------------------------------------------------------------------------------------------------------
  Combined                This component serves as the basis            12% of the            12% of the
  Exporter                for Monarch Data Pump and                     license revenues      license
                          Monarch Publisher and combines                received by           revenues
                          key features from the other exporter          Datawatch for         received by
                          components.                                   any and all           Datawatch
                                                                        versions of
                                                                        Monarch Data
                                                                        Pump and
                                                                        Monarch
                                                                        Publisher
-------------------------------------------------------------------------------------------------------------
  Recognizer/             These 3 components are provided as                                  50% of the
  Burster/Filer           a bundled solution for the purpose of                               license
                          recognizing report types based on             n/a                   revenues
                          content, bursting them, and filing                                  received by
                          them in an indexed subsystem.                                       Datawatch
-------------------------------------------------------------------------------------------------------------
  Migrator                Migrator provides the ability to                                    50% of the
                          move reports that have been stored                                  license
                          in the filing system.                         n/a                   revenues
                                                                                              received by
                                                                                              Datawatch
-------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>
<TABLE><CAPTION>
                                    EXHIBIT B

                                SOFTWARE PRODUCTS

   DESKTOP PRODUCTS                                                  CURRENT        NON-CURRENT           NON-CURRENT
                                                                     RELEASE         SUPPORTED      RELEASES (NOT SUPPORTED)
                                                                     RELEASES
<S>                                                   <C>             <C>            <C>              <C>
       Monarch Standard and Professional
                                                       English         7.01           6.0, 5.0         4.x, 3.x, 2.x, 1.x
                                                       French          7.01           6.0, 5.0                   4.x, 3.x
                                                       German          7.01           6.0, 5.0                   4.x, 3.x
                                                       Spanish         5.02               None                       None
      Monarch Workstore                                                1.00                N/A                        N/A
      Monarch Report Explorer
                                                       English         5.00                1.0                       None
                                                       German          5.00                1.0                       None
                                                       French          5.00                1.0
  SERVER PRODUCTS

      Monarch Data Pump (in development                                7.00                N/A                        N/A

      VorteXML Designer                                                3.00                2.0                   2.x, 1.x
      VorteXML Server                                                  1.00               None                       None
      VorteXML Server for Tamino                                       1.00               None                       None

  SERVER COMPONENTS
      Monarch Indexer OCX                                              7101         7xxx, 6xxx                      5,4,3
      Monarch Exporter OCX                                             7014                                  7xxx, 6xxx  5,4,3

   OEM PRODUCTS
      Monarch for Ceyoniq (OEM Ceyoniq)                                6.01
      Monarch for EZPickins (OEM BCD)                                  7.01                6.0                   4.x, 5.x
      EZ-Pickin's Report Explorer (OEM BCD)                            5.00                                           1.x
      Monarch Pro for Cypress (OEM Cypress)                            6.01                                           5.x
      DocuAnalyzer (OEM Mobius)                                        6.01                                      4.x, 5.x
      STARS (Rogers Lynch OEM)                                                                                        4.x
      Monarch for Fundware (American Fundware OEM)                                                                    4.x
      Monarch for Coinserv (INSCI OEM)                                                                                4.x
      ValetMiner (Momentum OEM)                                                                                       4.x
      ValetXplore (MRE OEM Momentum)                                                                                  1.x
      Report.Web Modeler (NSA OEM)                                                                                    4.x
      Report.Web Insight (NSA MRE OEM)                                                                                1.x
      Bookworm (Vanguard OEM)                                                                                         4.x
      Bookworm Report Explorer (Vanguard MRE OEM)                                                                     1.x
      CRG (Your Communications OEM)                                                                                   5.x
      Monarch for Vista Plus (Quest OEM)                                                                              5.x

Notes: Monarch Data Pump was developed by Datawatch for release 6.0 and earlier using the Monarch Exporter OCX.
</TABLE>
                                        9
<PAGE>

                                    EXHIBIT C

               FORM OF INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT

                       ASSIGNMENT OF INTELLECTUAL PROPERTY

            THIS INTELLECTUAL PROPERTY ASSIGNMENT ("Assignment"), dated as of
the _____ day of ________________, 200_ (the "Effective Date"), is made between
Raymond J. Huger, a sole proprietor doing business as Math Strategies, having
its principal place of business at 600 Green Valley Road, Suite 304, Greenboro,
North Carolina 27408 ("Assignor") and Datawatch Corporation, a Delaware
corporation with offices located at 175 Cabot Street, Lowell, Massachusetts
01854 ("Assignee") (each a "Party," and collectively, the "Parties").

            WHEREAS, Assignor has developed and licensed to Assignee certain
Software Products, as defined in an Option Purchase Agreement dated as of April
___, 2004 among the Parties (the "Option Agreement"); and

            WHEREAS, pursuant to the Option Agreement, Assignor granted to
Assignee an option (the "Option") to purchase the Software Products including
all intellectual property rights as embodied therein; and

            WHEREAS, Assignee has exercised the Option and on the date hereof
has met the closing delivery conditions of the Option Agreement;

            NOW, THEREFORE, for valuable consideration furnished by Assignee to
Assignor, receipt and sufficiency of which is hereby acknowledged, the parties
hereby agree as follows:

            1. Assignment. Subject to the provisions of Section 2 below,
Assignor hereby assigns, transfers, sells and conveys to Assignee, its
successors and assigns, all of Assignor's right, title and interest throughout
the world in and to the Software Products and all intellectual property embodied
in the Software Products (collectively, "Rights"), including, but not limited
to, the following:

                  a. all patent rights, if any, including, but not limited to,
all provisional and nonprovisional applications for patents, utility models,
designs or other industrial property rights that incorporate, embody, describe
or are otherwise relevant to technology embodied in the Software Products, and
any patents that are or may be granted therefrom or based thereon, whether in
the United States or any other country or jurisdiction, including, without
limitation, any continuations, continuations-in-part, divisions, reissues,
reexaminations, renewals, provisionals, nonprovisionals, revisions, substitutes
and extensions thereof;

                  b. all copyright rights, including, but not limited to, all
copyrighted or copyrightable works embodied in the Software Products, and all
applications for copyright registration and any copyright registrations that are
or may be granted therefrom, whether in the United States or any other country
or jurisdiction, including, without limitation, all renewals and extensions
thereof;

                  c. all rights of paternity, integrity, disclosure and
withdrawal and any other rights that may be known as or referred to as "moral
rights" ("Moral Rights"). To the extent such Moral Rights cannot be assigned
under applicable law and to the extent the following is allowed by the laws in
the various countries where Moral Rights exist, Assignor hereby waives such
Moral Rights and consents to any action of Assignee, its successors and assigns,
that would violate such Moral Rights in the absence of such consent;

                  d. all trademarks rights, including, but not limited to, all
trademarks, service marks,

<PAGE>

trade names, domain names, logos, and trade dress used by Datawatch in
connection with the Software Products, together with all translations,
adaptations, derivations and combinations thereof, and any common law rights
therein and goodwill associated therewith, and all corresponding applications
for trademark registration, and any trademark registrations that are or may be
granted therefrom, whether in the United States or any other country or
jurisdiction, but excluding the right to use the name "Math Strategies", and the
trademark, "Catch the Web(R)";

                  e. all computer code embodied in the Software Products
(including, without limitation, source and object code), in whatever form or
medium, including any proprietary rights therein and all related documentation
and other materials related to the computer code,;

                  f. all trade secrets, know-how, technology and other
confidential business information embodied in the Software Products, however
embodied or documented,;

                  g. all notes, analysis, compilations, studies, summaries, and
other material prepared by or for Assignor to the extent relevant or necessary
in order to use any information included in any of the foregoing subsections (a)
through (f), however documented, provided that Assignor may retain copies of
same; and

                  h. all rights and privileges pertaining to the subject matter
of subsections (a) through (g), including, without limitation, all causes of
action, choses of action, claims or demands presently or hereafter accruing with
respect to the same, including the right to sue or bring other actions for past,
present and future infringement thereof anywhere in the world.

            2. Certain Additional Rights and Reservations. Assignor also hereby
assigns, transfers, sells and conveys to Assignee such methods, tools,
techniques, logic, and know-how used by Assignor (other than any tools or
software that may require a third party license for their use) to create the
Software Products (as limited by (i), the "Tools"); provided, however, (i) the
Tools are assigned, transferred, sold and conveyed only to the extent such Tools
are actually embodied in the Software Products or are reasonably necessary for
Assignee to make use of the Software Products in any manner Assignee or
Assignee's successors and assigns deems appropriate ; and (ii) Assignee hereby
grants Assignor and Assignor's successors and assigns, a perpetual,
non-exclusive, royalty-free right and license to use the Tools in any manner
Assignor or Assignor's successors and assigns deem appropriate, provided that
such use does not violate the provisions of the Option Agreement or infringe the
copyrights embodied in the Software Products. In addition, nothing herein shall
permit Assignor to use any source code or executable code actually embodied in
the Software Products in any products developed or sold by Assignor that
reasonably compete with the Software Products as they are constituted as of the
date of this Assignment.

            3. Protection. Assignor further assigns all rights, and empowers
Assignee, its successors, assigns and nominees, to make applications for patent,
trademark, copyright or other intellectual property registration or protection
anywhere in the world, to claim and receive the benefit of any applicable rights
of priority or in connection with such applications, to prosecute such
applications to issue, and to have any and all registrations issued in the name
of Assignee.

            4. Confidentiality.

                  a. Upon execution of this Assignment, the Software Products
(other than the Tools) will be confidential information of Assignee ("Assignee
Confidential Information") and the Tools will be deemed the confidential
information of both Assignee and Assignor ("Joint Information"). The Assignee
Confidential Information and the Joint Information are referred to collectively
as the "Confidential Information." Until such time as the Confidential
Information meets of the exceptions set forth in Section 4(b)

<PAGE>

below, (i) Assignor shall not disclose any Assignee Confidential Information to
any third parties without Assignee's prior written consent, and (ii) neither
party shall disclose any Joint Information (a) without the other party's prior
written consent, or (b) except as may be combined with or embodied in the
confidential information of that party which is being disclosed under a
non-disclosure obligation. Each party will protect the applicable Confidential
Information from disclosure in the same manner as it protects its own
confidential information, but in any event in a reasonable manner.

                  b. The confidentiality obligations with respect to any
Confidential Information will terminate if such information: (i) is disclosed to
Assignor or Assignee, as applicable, by a third party who had the right to make
such disclosure without any confidentiality restrictions; or (ii) is, or through
no fault of the Assignor or Assignee, as applicable, has become, generally
available to the public. In addition, each party will be allowed to disclose
Confidential Information to the extent that such disclosure is necessary for the
such party to enforce its rights under this Agreement in connection with a legal
proceeding or is required by law or by the order or a court of similar judicial
or administrative body, provided that the party required to disclose notifies
the other party of such required disclosure promptly and in writing and
cooperates with such party, at its reasonable request and expense, in any lawful
action to contest or limit the scope of such required disclosure.

                  c. The provisions of this Section 4 shall survive the
execution and delivery of this Assignment.

            5. Further Assurances. Assignor further agrees that Assignor will,
at Assignee's cost: (a) cooperate with Assignee in the filing and prosecution of
any and all patent, trademark, copyright or other intellectual property
registrations or applications; (b) execute, verify, acknowledge and deliver all
such further papers, including applications and instruments of transfer as may
be reasonably necessary; and (c) perform such other acts as Assignee lawfully
and reasonably may request, to facilitate Assignees right to obtain, protect,
maintain, defend or enforce any of the Rights granted hereunder. In the event
that Assignee is unable for any reason whatsoever to secure Assignor's signature
to any document when so required after making reasonably efforts to do so,
Assignor hereby irrevocably designates and appoints Assignee and Assignee's duly
authorized officers and agents, as Assignor's agents and attorneys-in-fact to
act for and on its behalf and instead of it, to execute and file any such
document and to do all other lawfully permitted acts to further the purposes of
the foregoing, with the same legal force and effect as if executed by Assignor.

            6. General.

                  a. NOTICES. All notices required under this Assignment shall
be in writing and shall be by personal delivery, facsimile transmission,
international courier with tracking capabilities or by certified or registered
mail, return receipt requested, and shall be deemed given upon receipt of
delivery. Notices and payments hereunder shall be sent to the addresses set
forth at the beginning of this Agreement or such other address as either party
may specify in writing.

                  b. WAIVER. The failure of a party to require performance by
another party of any provision hereof shall not affect the full right to require
such performance at any time thereafter; nor shall the waiver by either party of
a breach of any provision hereof be taken or held to be a waiver of the
provision itself.

                  c. SEVERABILITY. If any provision of this Assignment is held
to be illegal or unenforceable, such provision shall be limited or eliminated to
the minimum extent necessary so that the remainder of this Assignment will
continue in full force and effect and enforceable.

<PAGE>

                  d. CONTROLLING LAW; ARBITRATION. This Assignment shall be
interpreted and controlled by and construed and enforced according to the laws
of the Commonwealth of Massachusetts without regard to conflicts of laws
provisions thereof. Any disputes under this Assignment shall be resolved as
provided in the Option Agreement.

                  e. ENTIRE AGREEMENT; MODIFICATION. This Assignment and the
Option Agreement constitute the entire agreement between the parties concerning
the subject matter hereof. This Agreement shall not be modified except by a
subsequently dated written amendment signed by a duly authorized representative
of each party. This Assignment shall be binding upon and inure to the benefit
and detriment of the parties and their respective successors and assigns.

                  f. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which will be considered an original, but all of which
together will constitute one and the same instrument.

            IN WITNESS WHEREOF, each of the undersigned has caused this
Assignment to be executed as an instrument under seal by the signature of its
duly authorized officer as of the date above first written.

  MATH STRATEGIES                             DATAWATCH CORPORATION

  By:                                         By:
     -------------------------------             ------------------------------
  Raymond J. Huger, individually and          Name:
  as a Sole Proprietorship                         ----------------------------
                                              Title:
                                                    ---------------------------Exhibit 10.1

 

Confidential Materials omitted and filed
separately with the 

Securities and Exchange Commission. 
Asterisks denote omissions.

 

 

DISTRIBUTION AGREEMENT

 

by and among

 

PLC SYSTEMS INC.,

 

PLC MEDICAL SYSTEMS, INC.

 

and

 

EDWARDS LIFESCIENCES LLC

 

dated

 

February 24, 2004

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II Appointment

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
  Appointment

  	
   

  
	
  Section 2.2.

  	
  Competition

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III Obligations of Distributor

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
  General
  Obligations of Edwards

  	
   

  
	
  Section 3.2.

  	
  Costs
  and Expenses

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV Obligations of PLC

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
  Labeling
  of Surgical Products

  	
   

  
	
  Section 4.2.

  	
  Manufacturer’s
  Warranty

  	
   

  
	
  Section 4.3.

  	
  Insurance

  	
   

  
	
  Section 4.4.

  	
  Production
  of User Manuals

  	
   

  
	
  Section 4.5.

  	
  Costs
  and Expenses

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V Sales and Marketing

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
  Sales
  & Marketing

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI Purchase Arrangements

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
  Purchaser
  Orders; Product Quantities

  	
   

  
	
  Section 6.2.

  	
  Placement
  of Orders

  	
   

  
	
  Section 6.3.

  	
  PLC
  License

  	
   

  
	
  Section 6.4.

  	
  Failure
  to Supply

  	
   

  
	
  Section 6.5.

  	
  Technology
  Escrow and Transfer

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII Pricing, Shipping, Payment

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
  Determination
  of Disposable Transfer Price

  	
   

  
	
  Section 7.2.

  	
  Procedures
  for Determination of Disposable Transfer Price

  	
   

  
	
  Section 7.3.

  	
  Laser
  Power Source

  	
   

  
	
  Section 7.4.

  	
  Product
  Accessories

  	
   

  
	
  Section 7.5.

  	
  Shipping

  	
   

  
	
  Section 7.6.

  	
  Payment

  	
   

  

 

ii

 

	
  ARTICLE
  VIII Term and Termination;

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  8.1.

  	
  Term and Renewal

  	
   

  
	
  Section 8.2.

  	
  Immediate
  Termination

  	
   

  
	
  Section 8.3.

  	
  Effect
  of Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX Warranties and Indemnification

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.1.

  	
  Warranties

  	
   

  
	
  Section 9.2.

  	
  Indemnification
  by PLC

  	
   

  
	
  Section 9.3.

  	
  Indemnification
  by Edwards

  	
   

  
	
  Section 9.4.

  	
  Indemnification
  Procedures

  	
   

  
	
  Section 9.5.

  	
  Limitations
  on Liability

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X Trademarks and Confidentiality

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.1.

  	
  Trademarks

  	
   

  
	
  Section 10.2.

  	
  Confidential
  Information

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XI MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  11.1.

  	
  Relationship

  	
   

  
	
  Section 11.2.

  	
  No
  Conflict

  	
   

  
	
  Section 11.3.

  	
  Governing
  Law

  	
   

  
	
  Section 11.4.

  	
  Escalation

  	
   

  
	
  Section 11.5.

  	
  Jurisdiction
  and Consent to Service

  	
   

  
	
  Section 11.6.

  	
  Notices

  	
   

  
	
  Section 11.7.

  	
  Interpretation

  	
   

  
	
  Section 11.8.

  	
  Severability

  	
   

  
	
  Section 11.9.

  	
  Counterparts

  	
   

  
	
  Section 11.10.

  	
  Entire
  Agreement; No Third Party Beneficiaries

  	
   

  
	
  Section
  11.11.

  	
  Amendments and Modifications; Waivers and
  Extensions.

  	
   

  
	
  Section 11.12.

  	
  Assignment

  	
   

  
	
  Section 11.13.

  	
  Schedules

  	
   

  
	
  Section 11.14.

  	
  Expenses

  	
   

  
	
  Section 11.15.

  	
  No
  Consequential or Punitive Damages

  	
   

  
	
  Section 11.16.

  	
  Force
  Majeure

  	
   

  

 

iii

 

	
  Schedules

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 4.3(a)

  	
  Product Liability Insurance of PLC

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 4.3(b)

  	
  Product Liability Certificate of Insurance of Edwards

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 7.2(a)(i)

  	
  Example of Determination of Disposable Transfer Price

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 7.2(a)(ii)

  	
  Example of Determination of Disposable
  Transfer Price

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 7.2(e)

  	
  Materials Inventory

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 7.3(i)

  	
  Example
  of Determination of Laser Transfer Price

  	
   

  

 

iv

 

DISTRIBUTION AGREEMENT

 

DISTRIBUTION AGREEMENT, dated as of February
24, 2004 this (“Agreement”), by and among Edwards Lifesciences LLC, a Delaware
limited liability company (“Edwards”), PLC Systems Inc., a Yukon Territory
corporation (“PLC Parent”), and PLC Medical Systems, Inc., a Delaware
corporation (“PLC”), which is a wholly owned subsidiary of PLC Parent.

 

WHEREAS, PLC will develop and manufacture
Surgical Products pursuant to the Contribution, Development and Manufacturing
Agreement (the “CD&M Agreement”), by and among Edwards, PLC Parent and PLC,
dated as of February 24, 2004, and desires that the sale and use of Surgical
Products be promoted by Edwards in the Territory.

 

WHEREAS, Edwards is a company in the medical
devices field with experience and expertise in the commercialization and
distribution of medical devices;

 

WHEREAS, PLC desires to engage Edwards to
purchase, resell and distribute Surgical Products in the Territory; and

 

WHEREAS, Edwards desires to obtain rights to
purchase, resell and distribute Surgical Products in the Territory;

 

NOW, THEREFORE, in consideration of the
mutual agreements and covenants contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the Parties hereto
agree as follows:

 

ARTICLE I

Definitions

 

As used in
this Agreement, defined terms not otherwise defined herein shall have the
meanings ascribed to them in the CD&M Agreement.  Further, the following terms shall have the following meanings:

 

“Agreement” shall have the meaning set forth
in the recitals.

 

“Average Sales Price” shall have the meaning
set forth in Section 7.1(d).

 

“CD&M Agreement” shall have the meaning
set forth in the recitals.

 

“Damages” shall have the meaning set forth in
Section 9.2.

 

“Direct Disposable Cost of Goods Sold” shall
have the meaning set forth in Section 7.1(b).

 

1

 

“Direct Disposable Materials Cost” shall have
the meaning set forth in Section 7.1(b).

 

“Direct Disposable Labor Cost” shall have
meaning set forth in Section 7.1(b).

 

“Direct Laser Costs” shall have the meaning
set forth Section 7.3(c).

 

“Direct Laser Materials” shall have the
meaning set forth in Section 7.3(c).

 

“Direct Laser Labor” shall have the meaning
set forth in Section 7.3(c).

 

“Disposable Margin Share” shall have the
meaning set forth in Section 7.1(c).

 

“Disposable Product Margin” shall have the
meaning set forth in Section 7.1(c).

 

“Disposable Product” shall mean a finished
Surgical Product that is not a Laser Power Source.

 

“Disposable Transfer Price” shall have the
meaning set forth in Section 7.1(a).

 

“Disposable Warranty Period” shall have the
meaning set forth in Section 4.2(a).

 

“Dispute” shall have the meaning set forth in
Section 11.4.

 

“Edwards” shall have the meaning set forth in
the recitals.

 

“Edwards Facility” shall have the meaning set
forth in Section 7.5.

 

“Edwards Margin Factor” shall have the
meaning set forth in Section 7.2(a)(ii).

 

“Edwards’ Representative” shall have the
meaning set forth in Section 7.2(d).

 

“Effective Date” shall have the meaning set
forth in Section 8.1.

 

“Escalation Notice” shall have the meaning
set forth in Section 11.4.

 

“Firm Forecast” shall have the meaning set
forth in Section 6.1.

 

“Force Majeure Event” shall
have the meaning set forth in Section 11.16.

 

“Forecast” shall have the meaning set forth
in Section 6.1.

 

“Indemnified Party” shall have the meaning
set forth in Section 9.4.

 

“Indemnifying Party” shall have the meaning
set forth in Section 9.4.

 

2

 

“Laser Power Source” shall mean a medical
laser power source and the associated control system (including all necessary
hardware and software) for tissue ablation in the Field of Use.

 

“Laser System” shall mean a Laser Power
Source and a Disposable Product designed to function together as a system for
treating atrial fibrillation and/or atrial flutter.

 

“Laser Transfer Price” shall have the meaning
set forth in Section 7.3.

 

“Laser Warranty Period” shall have the
meaning set forth in Section 4.2(a).

 

“Materials Inventory” shall have the meaning
set forth in Section 7.2(e).

 

“Person” means any individual, partnership,
corporation, limited liability company, joint venture, association, joint-stock
company, trust, incorporated organization, government or agency or political
subdivision thereof, or other entity.

 

“PLC” shall have the meaning set forth in the
recitals.

 

“PLC Parent” shall have the meaning set forth
in the recitals.

 

“PLC License” shall have the meaning set
forth in Section 6.3.

 

“PLC Margin Factor” shall have the meaning
set forth in Section 7.2(a)(iii).

 

“PLC’s Representative” shall have the meaning
set forth in Section 7.2(d).

 

“PLC Surgical Products Intellectual Property”
shall have the meaning set forth in Section 6.3.

 

“Supply Breach” shall have the meaning set
forth in Section 6.4(a).

 

“Transfer Price Documents” shall have the
meaning set forth in Section 7.2(d).

 

ARTICLE II

Appointment

 

Section 2.1.            Appointment.  Subject
to the terms and conditions contained in this Agreement, PLC hereby appoints
Edwards as PLC’s exclusive independent distributor of Surgical Products in the
Territory.  Edwards may appoint a
secondary or sub-distributor to sell Surgical Products without PLC’s prior
written consent.

 

Section 2.2.            Competition.  With respect to competitive
Surgical Products in the Field Of Use,
before Edwards Parent or any of its Subsidiaries offers for sale or sells items
in the Field of Use that are directly competitive with Surgical Products,
Edwards shall offer such items to PLC for manufacture under the CD&M
Agreement on the same terms and conditions as apply to Surgical Products by written
notice to PLC.  If PLC does not accept
such offer in writing

 

3

 

within sixty (60) days of receipt of such written notice, Edwards shall
be free to manufacture and sell these items without limitation provided that
neither Edwards Parent nor any of its Subsidiaries shall offer to any third
party the right to manufacture such items on terms more favorable to such third
party than those offered to PLC without first offering to PLC the right to
manufacture such items on such more favorable terms.  For purposes of clarification, Products that are not used to
ablate tissue shall not be deemed to be competitive with Surgical Products.

 

ARTICLE III

Obligations of Distributor

 

Section 3.1.            General
Obligations of Edwards.  Edwards
shall use commercially reasonable efforts to distribute and sell Surgical
Products in the Territory including, without limitation, commercially
reasonable efforts to do the following:

 

(a)           Promote the sale and use of Surgical
Products in the Territory;

 

(b)           Provide customer service, including
responding to customer inquiries and requests for quotes on Product pricing;
and

 

(c)           Provide invoices to customers and
manage accounts receivable and collection responsibilities for sales by Edwards
of Surgical Products.  Edwards shall be
responsible for any uncollectable sales of Surgical Products to third parties.

 

(d)           Provide all marketing, sales,
training and education collateral material.

 

(e)           Provide all installation, in-service
training, in-service education and customer training.

 

(f)            Edwards shall manage the warranty
service relationships with the customers.

 

Section 3.2.            Costs and
Expenses.  Edwards shall bear
all the costs and expenses associated with its obligations set forth in this
Agreement.

 

ARTICLE IV

Obligations of PLC

 

Section 4.1.            Labeling of
Surgical Products.  PLC shall
and PLC Parent shall cause PLC to provide and to assume regulatory
responsibility for all finished Surgical Product-related labeling such that it
complies with all applicable laws and regulations in the United States and the
European Union during the term of this Agreement.  All labeling for Surgical Products shall include the statement
“Distributed by Edwards Lifesciences LLC, Manufactured by PLC Medical Systems,
Inc” or, if applicable, a similar statement reflecting the appropriate Edwards
entity in a given jurisdiction.  For all
countries of the Territory excluding the United States and the countries of the
European Union, Edwards shall provide camera-ready labels in compliance

 

4

 

with all regulatory requirements related to such labeling for Surgical
Products to be sold in such countries to PLC, which shall be affixed to
Surgical Products by PLC.  PLC shall
label, as appropriate and in accordance with applicable laws and regulations,
Surgical Products to be sold in the United States or in any country of the
European Union.

 

Section 4.2.            Manufacturer’s
Warranty.  PLC shall, and PLC
Parent shall cause PLC to, provide the manufacturer’s warranty described in
this Section 4.2 to Edwards on all Laser Power Sources for a period (the “Laser
Warranty Period”) consisting of the earlier of (i) twelve (12) months from
the date of delivery of the Surgical Products by Edwards to its customer, or
(ii) fifteen (15) months from the date of shipment from PLC to Edwards of
such Laser Power Sources.  Such Laser
Power Sources must be delivered to PLC for repair or replacement for this
warranty to be valid and enforceable.

 

(a)           PLC shall, and PLC Parent shall cause
PLC to, provide the manufacturer’s warranty described in this Section 4.2 on
all Disposable Products for a period of time equal to the shelf life as
reasonably determined by the Steering Committee, taking into account
appropriate tests for determining shelf life, provided, however, that such
shelf life shall be at least one year (the “Disposable Warranty Period”).  Such Disposable Products must be delivered
to PLC for repair or replacement for this warranty to be valid and enforceable.

 

(b)           Subject to the restrictions in (d)
below, PLC warrants to Edwards that all Surgical Products shall be free from
defects in materials and workmanship under normal use and service during the
Laser Warranty Period or the Disposable Warranty Period, as applicable.  PLC shall repair or replace such defective
Surgical Products at its reasonable option during the Laser Warranty Period or
the Disposable Warranty Period, as applicable, at its own cost and expense.  PLC shall pay all costs associated with
shipping and transportation of the defective part or Surgical Product if said
defect appears during the Laser Warranty Period or the Disposable Warranty
Period, as applicable.  Notwithstanding
the previous sentence PLC shall not be responsible for any shipping and
transportation costs for any parts or Surgical Products that are not covered by
the manufacturer’s warranty described in this Section 4.2, and Edwards shall
pay, or reimburse PLC for, all such shipping and transportation costs.  For any product failure that appears after
the expiration of the Laser Warranty Period or the Disposable Warranty Period,
as applicable, Edwards shall pay PLC for all usual and reasonable charges of
PLC to repair such product failure including any shipping and transportation
costs, if Edwards elects to have such product failure repaired by PLC.

 

(c)           The warranties described in Section
4.2(a)-(c) shall not cover failure due to negligence, accident, deliberate
abuse, misuse, nor improper storage, installation and/or maintenance, nor components
supplied by Edwards.  Any use of a
Surgical Product inconsistent with such Surgical Product’s operating
instructions and any modifications made to such Surgical Product shall void
such warranty in its entirety.  Such
warranty does not cover any Surgical Product which has been altered, serviced,
repaired or changed in any manner whatsoever by

 

5

 

anyone other
than PLC, or an authorized service representative of PLC, provided, however,
that such warranty shall not be voided by proper installation of Surgical
Products.

 

Section 4.3.            Insurance.  (a)      Set forth on Schedule 4.3(a) is a copy of PLC’s
product liability insurance policy which is in full force and effect.  PLC shall and PLC Parent shall cause PLC to
obtain and keep in force during the term of this Agreement product liability
insurance coverage in an amount not less than $10,000,000, and from an insurer
rated A- or better by A.M. Best Company and in a form reasonably acceptable to
Edwards.  During the term of this
Agreement and for a period of [**] following the expiration or termination of
this Agreement, such insurance coverage shall evidence Edwards and all of its
Affiliates that sell Surgical Products manufactured by PLC as additional insured
entities and shall provide for written notification to Edwards by the insurer
not less than 30 days prior to cancellation, expiration or modification.  PLC shall and PLC Parent shall cause PLC to
provide a certificate of insurance evidencing compliance with this Section
4.3(a) to Edwards within 30 days of the date hereof.

 

(b)           Set forth on
Schedule 4.3(b) is a copy of a certificate of insurance evidencing
that Edwards currently has product liability insurance coverage in an amount
not less than $10,000,000, and from an insurer rated A- or better by A.M. Best
Company.  Edwards shall maintain product
liability insurance in an amount not less than $10,000,000 and from an insurer
rated A- or better by A.M. Best Company during the term of this Agreement.  During the term of this Agreement and for a
period of [**] following expiration or termination of this Agreement, such
insurance coverage shall evidence PLC and all of its Affiliates that
manufacture Surgical Products as additional insured entities and shall provide
for written notification to PLC by the insurer not less than 30 days prior to
cancellation, expiration or modification. 
Edwards shall provide PLC with a certificate of insurance evidencing
compliance with this Section 4.3(b) within 30 days of the date hereof.

 

Section 4.4.            Production
of User Manuals.  PLC shall
produce all user manuals provided, however, that Edwards shall provide, at no
cost to PLC, translation of user interface manuals and end-user interface menus
that are not in English.

 

Section 4.5.            Costs and
Expenses.  PLC shall and PLC
Parent shall cause PLC to bear all the costs and expenses associated with PLC’s
obligations set forth in this Agreement.

 

ARTICLE V

Sales and Marketing

 

Section 5.1.            Sales &
Marketing.  Edwards shall be
responsible, in its sole discretion, for all sales and marketing activities;
including, without limitation, the preparation and implementation of all sales
and marketing plans and the preparation of all sales literature and marketing
materials.

 

6

 

ARTICLE VI

Purchase Arrangements

 

Section 6.1.            Purchaser
Orders; Product Quantities.  Edwards
shall provide an updated twelve (12) month forecast (the “Forecast”) for  Surgical Products on or before the first
day of the month preceding each calendar quarter.  The Forecast is non-binding and will be used for planning
purposes only, except for the first two (2) quarters within each Forecast (the
“Firm Forecast”).  The Forecast for the
first quarter within the Firm Forecast cannot be changed and the forecast for
the second quarter within the Firm Forecast cannot be decreased by more than
[**] percent ([**]%) when such forecasted amount for the second quarter rolls
forward and becomes the forecasted amount for the first quarter.  Edwards shall be obligated to purchase, and
shall submit a purchase order to purchase not less than [**] percent ([**]%) of
the quantities of Surgical Products as specified for the first quarter of the
most recent Firm Forecast.  Subject to
the foregoing, Edwards shall determine in its sole discretion the quantity of
Surgical Products it shall forecast and purchase and there shall be no minimum
purchase requirements for any Surgical Products.  To the extent that the terms of any purchase order and the terms of
this Agreement conflict, the terms of this Agreement shall control.

 

Section 6.2.            Placement of
Orders.  All orders for
Surgical Products submitted by Edwards shall be initiated by written purchase
orders sent to PLC no later than the first day of the month preceding each
calendar quarter, which purchase orders shall specify the desired delivery date
(which shall not be later than 10 days before the end of a calendar quarter)
and the Edwards Facility as the location for delivery in accordance with Section
7.5.  Quarterly purchase orders
submitted to PLC by Edwards will indicate the quantity of Surgical Products to
be delivered for each month of the quarter, provided, however, the quantity for
any individual month shall in no case be less than [**]% of the total to be
delivered for the entire quarter.  There
shall be no upper limit on the quantity of Surgical Products Edwards may order
in a quarter, provided, however, PLC will have no liability under this
Agreement for failure to deliver, in a timely manner, any amount of Product in
excess of [**]% of the quantity most recently forecasted pursuant to Section
6.1 for the quarter.  PLC shall use
commercially reasonable efforts to deliver Surgical Products on the agreed upon
delivery dates set forth in accepted purchase orders, but, in any event, shall
make all deliveries within ten days of the agreed upon delivery dates set forth
in accepted purchase orders.

 

Section 6.3.            PLC
License.  Subject to the restrictions set
forth herein and only upon the occurrence of a Supply Breach as described in
Section 6.4 or pursuant to Section 2.5 of the CD&M Agreement, PLC
grants to Edwards and its Affiliates a non-exclusive license (the “PLC
License”), in the Territory, to all intellectual property owned or licensed to
PLC, to the extent sublicensable, that PLC uses to develop, make or have made
the Surgical Products for Edwards, including, without limitation, the right to
use PLC’s manufacturing methods to manufacture Surgical Products (including all
necessary trade secrets, technical know-how and other intellectual property of
PLC) (collectively, the “PLC Surgical Products Intellectual Property”) to make,
have made, import, sell, market, or offer for sale, Surgical Products listed on

 

7

 

Schedules 1.1 or 1.2 of the CD&M Agreement (including any Surgical
Products offered by Edwards and accepted by PLC pursuant to Section 2.2 of this
Agreement) that but for the license granted in this Section 6.3 would infringe
or misappropriate PLC Intellectual Property. 
Edwards covenants not to exercise the license granted under this Section
6.3 unless a Supply Breach by PLC occurs.

 

Section 6.4.            Failure to
Supply.  (a)        In the event PLC (in each case, a
“Supply Breach”):  (i) refuses
(including a failure to respond in a reasonably timely matter to a written
inquiry, excluding a purchase order) to timely supply either the Laser Power
Source or the Disposable Product in accordance with a timely issued purchase
order that conforms to all the applicable requirements of this Agreement or
(ii) subject to the limits set forth in Section 6.1, fails twice in any
twelve (12) month period to timely supply Edwards with at least [**] percent
([**]%) of the quantity of the Laser Power Source forecasted for the first
calendar quarter of any rolling Forecast, or fails twice in any twelve (12)
month period to timely supply Edwards with at least [**] percent ([**]%) of the
quantity of the Disposable Product forecasted for the first calendar quarter of
any rolling Forecast (provided that, in each case, Edwards orders at least [**]
percent ([**]%) of such forecasted quantity), Edwards shall have the right to
use the PLC License granted above under Section 6.3 and Edwards shall have the
right to terminate its license to PLC under Section 2.3 of the CD&M
Agreement.  Notwithstanding the
foregoing, any Supply Breach under Section 6.4(b) above shall be excused if
such failure to supply is the direct result of (i) the failure of Edwards
to timely supply the necessary quantity of laser diodes, optics blocks or any
other required Edwards supplied material to PLC within the specified lead times
necessary for PLC to timely manufacture the quantity of product requested on
Edwards purchase order; or (ii) the failure of another PLC supplier to
supply an adequate quantity of materials for the Laser System through no fault
of PLC, and where PLC has exercised commercially reasonable efforts to find an
alternative source of supply for such materials.

 

(b)           In the event of (i) an uncured
Supply Breach related to the Laser Power Source, Edwards may exercise the
license granted pursuant to Section 6.3 with respect to all Surgical Products
listed on Schedules 1.1 or 1.2 of the CD&M Agreement, and (ii) an
uncured Supply Breach related to Disposable Products, Edwards may only exercise
the license granted pursuant to Section 6.3 with respect to Disposable Products
listed on Schedules 1.1 or 1.2 of the CD&M Agreement.  Following such exercise by Edwards, PLC
shall no longer be obligated to advance the development of any Products.

 

Section 6.5.            Technology
Escrow and Transfer.  PLC
shall place the PLC Surgical Products Intellectual Property in a technology
escrow arrangement with Iron Mountain. 
The information placed in escrow by PLC shall include all trade secrets,
know-how, and other intellectual property to allow Edwards to manufacture the
Surgical Products (subject to Section 6.4(b)) in the manner manufactured by PLC
immediately prior to Edwards exercise of the rights under the license granted
under Section 6.3.  PLC shall refresh
the escrow in a prompt and timely manner with any new innovations or know-how
developed or acquired by PLC that relate to the Surgical Products.  Edwards shall have the right to periodically
assess PLC’s compliance with

 

8

 

PLC’s obligations under this section. 
All escrow fees shall be paid by PLC. 
In the event of an escrow release due to an uncured Supply Breach or
pursuant to Section 2.5 of the CD&M Agreement, (i) PLC shall
provide Edwards with training in the use of the know-how and such other
assistance as is reasonably required to enable Edwards to manufacture the
Surgical Products in the manner manufactured by PLC immediately prior to the
exercise of such rights by Edwards, and (ii) PLC shall transfer to Edwards
at no cost to Edwards all (x) Contributed Assets that are still owned by
PLC, and (y) all other movable assets used by PLC that are dedicated to
manufacture the Surgical Products, in order to enable Edwards to manufacture
the Surgical Products in the manner manufactured by PLC immediately prior to
the exercise of such rights by Edwards.

 

ARTICLE VII

Pricing, Shipping, Payment

 

Section 7.1.            Determination
of Disposable Transfer Price.  Edwards
shall purchase the Disposable Products from PLC at the “Disposable Transfer
Price”, as determined below.

 

(a)           The “Disposable Transfer Price” shall
be the sum of the “Direct Disposable Cost of Goods Sold” and PLC’s “Disposable
Margin Share,” each as determined below.

 

(b)           The “Direct Disposable Cost of Goods
Sold” is the sum of PLC’s “Direct Disposable Materials Cost” and PLC’s “Direct
Disposable Labor Cost.”  “Direct
Disposable Materials Cost” shall mean the direct cost of the materials used in
a Disposable Product, including reasonable scrap, but excluding spoilage and
excess and obsolete charges.  PLC’s
“Direct Disposable Labor Cost” shall mean the assembler manufacturing time for
such product multiplied by the assembler hourly wage rate (including fringe and
benefits).

 

(c)           PLC’s “Disposable Margin Share” shall
be the PLC Margin Factor multiplied by the “Disposable Product Margin.”  The “Disposable Product Margin” shall be the
“Average Sales Price” as defined below for the Disposable Product less the
Direct Disposable Cost of Goods Sold.

 

(d)           “Average Sales Price” shall mean the
average of the actual sales price for each Disposable Product (other than
Transition Products) sold by Edwards or its Affiliates to an unaffiliated third
party during a calendar month, net of any royalty paid to any third party.  For conversion of foreign currency to U.S.
dollars with respect to sales of Disposable products in a foreign currency, the
conversion method and rate shall be the conversion method and rate used by
Edwards to convert the applicable sales into U.S. dollars for purposes of the
preparation of Edwards’s financial statements, such conversion to be calculated
in accordance with generally accepted accounting principles in the United
States, applied consistently.

 

9

 

(e)           If Edwards or any of its Affiliates
sells Disposable Products to a customer, together with other Products that are
not Surgical Products manufactured by PLC, in one unified sale, then any
discounts given to such customer for such Disposable Products or such other
Products shall not be applied in a manner that discriminates against PLC,
taking into account the fair value of such Disposable Products.  In the event such discrimination takes
place, the Average Sales Price shall be appropriately adjusted to reflect the
sale of Disposable Products at their fair value.

 

(f)            Within 15 days after the end of each
calendar quarter Edwards shall provide to PLC a written report showing, for
such quarter:  (i) Edwards’ sales
of Surgical Products, (ii) the names of the customers; (iii) the
dates of shipment of Surgical Products, (iv) serial numbers for Laser
Power Sources that have been sold, and (v) Edward’s inventory of Surgical
Products at the end of such quarter.

 

Section 7.2.            Procedures for
Determination of Disposable Transfer Price. 
(a)              For the
first calendar quarter of sales of the Disposable Products, Edwards shall
purchase Disposable Products at an estimated Disposable Transfer Price of $[**]
for the Encircle Disposable Product and at an estimated Disposable Transfer
Price of $[**] for the Endocardial Disposable Product (as each such product is
defined on Schedule 1.1 of the CD&M Agreement).  Within 20 days following the end of such period,
Edwards and PLC shall determine the actual Disposable Transfer Price for such
products and shall adjust the transfer price paid for such products during such
period to reflect the actual transfer prices for these Disposable Products.

 

To determine the actual Disposable Transfer
Price, Edwards and PLC shall take the following steps:

 

(i)            Determine the actual Average Selling
Price, the actual Direct Disposable Cost of Goods Sold, and the actual
Disposable Product Margin for such period.

 

(ii)           Multiply the actual Average Selling
Price for each such Disposable Product by [**]% and then divide this amount by
the actual Disposable Product Margin to determine the “Edwards Margin Factor.”

 

(iii)          Subtract the Edwards Margin Factor
from 1 to determine the “PLC Margin Factor.”

 

(iv)          Multiply the actual Disposable Product
Margin by the PLC Margin Factor to determine PLC’s Disposable Margin Share for
such product for such period.

 

(v)           Add PLC’s Disposable Margin Share to
the Direct Disposable Cost of Goods Sold to obtain the Disposable Transfer
Price for such completed quarter.

 

(vi)          Once determined by steps (i) – (v),
Edwards Margin Factor and PLC Margin Factor shall remain unchanged.

 

10

 

Schedule 7.2(a)(i) sets forth an example
of the procedures for the determination of the Disposable Transfer Price.  An additional example is set forth in
Schedule 7.2(a)(ii) which shows how this calculation and the calculation
in Section 7.1 will work going forward.

 

(b)           At the end of the first calendar
quarter of sales of Disposable Products, the actual Direct Disposable Cost of
Goods Sold and the actual Average Sales Price of the Disposable Product for
such completed quarter shall be used to determine the Disposable Transfer Price
for the next calendar quarter of sales of this product, taking into account the
PLC Margin Factor and the Edwards Margin Factor already determined under
Section 7.2(a), and continuing with this approach for each calendar quarter
thereafter.

 

(c)           Edwards and PLC shall use all
commercially reasonable efforts to establish the Disposable Transfer Price for
each quarter no later than the end of the first month of each such quarter.

 

(d)           Each of Edwards and PLC shall keep
full, true, and accurate books of account containing information necessary for
the purpose of determining the Disposable Transfer Price and amounts payable to
PLC hereunder (the “Transfer Price Documents”).  Upon 30-days prior written notice, such books and Transfer Price
Documents shall be made available for inspection by an agent or representative
of PLC (“PLC’s Representative”) and reasonably acceptable to Edwards, or an
agent or representative of Edwards (“Edwards’ Representative”) and reasonably
acceptable to PLC, as applicable, for the sole purpose of verifying the
accuracy of the Transfer Price Documents and the amounts payable to PLC
hereunder, and PLC’s Representative or Edwards’ Representative, as applicable,
shall be entitled to inspect only such information as is reasonably necessary
for such verification.  PLC’s
Representative shall report to PLC only whether Edward has accurately
determined the Disposable Transfer Price and amounts payable to PLC hereunder
and, if not, the correct determination, and Edwards’ Representative shall
report to Edwards only whether PLC has accurately determined the Direct
Disposable Cost of Goods Sold and, if not, the correct determination.  Any such inspection shall take place during
Edwards’ or PLC’s normal business hours, as applicable, at the place where such
books and records are ordinarily maintained and shall be conducted in a manner
reasonably calculated to minimize the disruption of Edwards’ business or PLC’s
business, as applicable.  PLC and PLC’s
Representative and Edwards and Edwards’ Representative shall keep any
information obtained during such inspection confidential and, upon request of
Edwards or PLC, PLC’s Representative or Edwards’ Representative, as applicable,
shall enter into a written confidentiality agreement prior to commencing said
inspection.  Such inspection may take
place no more frequently than once in any calendar year, and shall be limited
to the books and records necessary to verify the determination of the
Disposable Transfer Price and amounts payable to PLC hereunder for no more than
two calendar years prior to the date of the commencement of the
inspection.  In the event PLC’s
Representative concludes that additional amounts were owed to PLC with respect
to any such period, PLC shall notify Edwards of such discrepancy, and in the
event Edwards’ Representative concludes that PLC was paid more than it was
owed, it shall notify PLC of such discrepancy. 
If an agreement between the Parties is not reached within (30) days
after such

 

11

 

notice, then
no later than ten (10) days after the expiration of such (30) thirty day
period, at a mutually convenient time, PLC or PLC’s Representative shall meet
or consult with Edwards and/or Edwards’ Representative to attempt to reconcile
the difference between the calculations of the respective Representatives.  All fees charged and expenses incurred by
PLC’s Representative or Edwards’ Representative, as applicable, in connection
with any inspections, meetings, or consultations provided for herein shall be
paid by the Party who retained such representatives. Any payments to be made to
Edwards or PLC, as applicable, pursuant to this Section 7.2(d) shall be made
promptly after agreement of the parties is reached.

 

(e)           Schedule 7.2(e) contains a
list of raw material and other inventory items of Edwards (“Materials
Inventory”) related to Surgical Products together with Edward’s actual direct
material cost of such Materials Inventory, which Schedule shall be updated
by Edwards at the end of the Transition Period.  PLC shall purchase such Materials Inventory remaining at the end
of the Transition Period from Edwards on an as-needed first priority basis for
use in the manufacture of Surgical Products, provided such Materials Inventory
is appropriate and its condition is reasonably acceptable to PLC.  PLC shall pay for such Materials Inventory
by crediting the Disposable Transfer Price (or, if applicable, the Laser
Transfer Price) on an as-used basis in an amount equal to Edwards’s actual
direct material cost of such Materials Inventory as set forth in Schedule 7.2(e).  All Materials Inventory remaining at the end
of the Transition Period shall be delivered to PLC promptly following the
completion of the Transition Period.

 

Section 7.3.            Laser Power
Source.  Subject to any
adjustment provided below, Edwards shall purchase the Laser Power Source from
PLC for $[**] per unit (the “Laser Transfer Price”).  Edwards shall provide laser diodes and optics blocks to PLC for
incorporation by PLC into each Laser Power Source.  These laser diodes and optics blocks shall be provided by Edwards
to PLC at no cost to PLC.  The Laser
Transfer Price shall adjust from time to time as follows:

 

(a)           If the cost per Laser Power Source of
the laser diodes and optics blocks supplied by Edwards varies from the initial
cost to Edwards of $[**], then the Laser Transfer Price shall be adjusted to
take into account [**]% of the positive or negative variance from $[**].  If the variance from $[**]is a positive
variance (i.e. the actual cost of the laser diodes and optics blocks are
greater than $[**]), then [**]% of this positive variance shall be deducted
from the Laser Transfer Price. 
Conversely, if the variance from $[**]is a negative variance (i.e. the
actual cost of the laser diodes and optics blocks are less than $[**]), then
[**]% of this negative variance shall be added to the Laser Transfer
Price.

 

(b)           If the “Direct Laser Costs” as
defined below vary from $[**], then the Laser Transfer Price shall be adjusted
to take into account [**]% of the positive or negative variance from
$[**].  If the variance from $[**] is a
positive variance (i.e. the actual Direct Laser Costs are greater than $[**]),
then [**]% of this positive variance shall be added to the Laser
Transfer Price.  Conversely, if the
variance from $[**] is a negative variance (i.e. the actual Direct Laser Costs
are

 

12

 

less than
$[**]), then [**]% of this negative variance shall be deducted from the
Laser Transfer Price.

 

(c)           “Direct Laser Costs” shall mean the
sum of “Direct Laser Materials” and “Direct Laser Labor.”  “Direct Laser Materials” is equal to the
direct cost of the materials used in a Laser Power Source, excluding spoilage
and excess and obsolete charges and the laser diodes and optics blocks supplied
by Edwards.  “Direct Laser Labor” shall
mean the assembler manufacturing time for the Laser Power Source multiplied by
the assembler hourly wage rate plus fringe and benefits.

 

(d)           Within one hundred-twenty (120) days
after the Effective Date, the Steering Committee shall approve the estimated
initial cost of the Direct Laser Materials. 
This estimate shall be prepared by Minnetronix, Inc. and shall only
address the Direct Laser Materials.  If
this cost estimate is greater than $[**], then each dollar of the positive
variance from $[**] (i.e. the amount by which the estimated cost is greater
than $[**]) shall be added to the Laser Transfer Price.  Conversely, if this cost estimate is less
than $[**], then each dollar of this negative variance from $[**] (i.e. the
amount by which the estimated cost is less than $[**]) shall be subtracted from
the Laser Transfer Price.

 

(e)           At the end of the first calendar
quarter of sales, the actual cost per Laser Power Source of the laser diodes
and optics blocks supplied by Edwards shall be prepared by Edwards for such
completed quarter, and shall be subject to review and approval by PLC, and
following such approval shall be used to determine the Laser Transfer Price for
the next calendar quarter of sales of this product, and continuing with this
approach for each calendar thereafter.

 

(f)            At the end of the first calendar
quarter of sales, the actual Direct Laser Costs shall be prepared by PLC for
such completed quarter, and shall be subject to review and approval by Edwards,
and following such approval shall be used to determine the Laser Transfer Price
for the next calendar quarter of sales of this product, and continuing with
this approach for each calendar quarter thereafter.

 

(g)           Edwards and PLC shall use all
commercially reasonable efforts to establish the Laser Transfer Price for each
quarter no later than the end of the first month of each such quarter.

 

(h)           Edwards and PLC shall afford to each
other audit rights with respect to Laser Power Sources and the determination of
the Laser Transfer Price substantially the same as the audit rights granted to
Edwards and PLC with respect to Disposable Products and the determination of
the Disposable Transfer Price in Section 7.2(d).

 

(i)            An example of the above described
calculation is attached as Schedule 7.3(i).

 

Section 7.4.            Product
Accessories.  PLC shall
supply such customary product accessories, including, without limitation cables
and an operation manual, for each Laser Power

 

13

 

Source that it supplies to Edwards. 
The price for the product accessories is included in the Laser Power
Source price set forth in Section 7.3.

 

Section 7.5.            Shipping.  PLC shall deliver Products
directly to Edwards.  All prices for
Surgical Products shall be F.O.B. to a single facility of Edwards located in
the United States, as designated in writing by Edwards (“Edwards Facility”),
which Edwards Facility may be changed to another facility in the United States
by Edwards upon advance written notice to PLC. 
The prices will not include any federal, state or local sales, use,
excise or value added tax that may be applicable.  If PLC has the legal obligation to collect such taxes, the
appropriate amount shall be added to Edwards’ invoice and paid by Edwards
unless Edwards provides PLC with a valid tax exemption certificate authorized
by the appropriate taxing authority. 
PLC shall ship Surgical Products using the method of transportation
reasonably determined by PLC.  In all
cases, title, risk of loss and all responsibility for transportation, insurance
and storage shall pass from PLC to Edwards upon transfer of finished Surgical
Products from PLC to the Edwards Facility and after such transfer PLC shall
promptly issue an invoice related thereto to Edwards.

 

Section 7.6.            Payment.  Full payment shall be made by
Edwards to PLC within sixty (60) days from the invoice date which shall be the
shipping date for Surgical Products to Edwards.  In the event Edwards fails to timely pay more than four (4)
invoices in any twelve month period, then payment shall be due to PLC under
this Section 7.6 within thirty (30) days from such invoice date.

 

ARTICLE VIII

Term and Termination

 

Section 8.1.            Term and
Renewal.  This Agreement
shall commence on the date hereof (the “Effective Date”) and be valid for as
long as the CD&M Agreement is valid and in effect.

 

Section 8.2.            Immediate
Termination.  This Agreement
may be terminated by either Edwards or PLC immediately in the event (a) of
any breach by the other Party of Section 4.3; (b) of any material breach
by the other Party remaining uncured 60 days after written notice containing
details of the breach has been delivered to the other Party; or (c) that
the other Party shall file for protection from its creditors under any
applicable Bankruptcy or insolvency laws, shall make an assignment for the
benefit of creditors, or shall have a receiver appointed for its property.

 

Section 8.3.            Effect of
Termination.  Upon expiration
or early termination of this Agreement, the following shall immediately occur:

 

(a)           Within thirty (30) days of such
expiration or early termination, PLC and PLC Parent shall return all
Confidential Information of Edwards, and vice versa, in its possession or under
its control (subject to any continuing licenses under the CD&M Agreement).

 

14

 

(b)           The CD&M Agreement shall
terminate.

 

ARTICLE IX

Warranties and Indemnification

 

Section 9.1.            Warranties.  (a)    PLC warrants that it possesses good and marketable title to all
Surgical Products sold to Edwards under this Agreement upon delivery to Edwards
of such Surgical Products; (b) at the time of delivery, each Product
conforms to its specifications and will operate according to the indications
described in its labeling; (c) when available for sale in the Territory
Surgical Products are or will be manufactured pursuant to the CD&M
Agreement in conformity with all applicable FDA, UL and/or ETL rules and
regulations and applicable laws of the Territory; (d) Surgical Products
have or will have obtained FDA approval or clearance to market and sell
Surgical Products when Surgical Products are available for sale in the
Territory; and (e) it complies and will continue to comply with all
applicable laws and regulations of the Territory with respect to Surgical
Products provided that the foregoing representation, insofar as it relates to
laws of countries outside the United States or the European Union, is
conditioned on PLC’s receipt of accurate and complete information from Edwards
pursuant to Section 4.1(a)(v) of the CD&M Agreement.  Edwards warrants that it complies and will
continue to comply with all applicable laws and regulations of the Territory
with respect to Surgical Products and the sale thereof.

 

(b)           EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT
OR IN ANY OF THE TRANSACTION DOCUMENTS, PLC AND ITS THIRD PARTY LICENSORS AND
SUPPLIERS EXPRESSLY DISCLAIM ALL OTHER WARRANTIES, REPRESENTATIONS, CONDITIONS,
GUARANTEES OR UNDERTAKINGS OF ANY KIND, EXPRESS OR IMPLIED, STATUTORY OR
OTHERWISE INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.

 

(c)           EXCEPT AS EXPRESSLY STATED IN THIS
AGREEMENT OR IN ANY OF THE TRANSACTION DOCUMENTS, EDWARDS AND ITS THIRD PARTY
LICENSORS AND SUPPLIERS EXPRESSLY DISCLAIM ALL OTHER WARRANTIES, REPRESENTATIONS,
CONDITIONS, GUARANTEES OR UNDERTAKINGS OF ANY KIND, EXPRESS OR IMPLIED,
STATUTORY OR OTHERWISE INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
A PARTICULAR PURPOSE.

 

Section 9.2.            Indemnification
by PLC.  PLC and PLC Parent
shall indemnify and hold harmless Edwards, its officers, directors,
shareholders, employees, parents, successors, Affiliates, assigns, in each
case, from and against any and all costs or expenses (including, without
limitation, reasonable attorneys’ fees, and the reasonable out-of-pocket
expenses of testifying and preparing for testimony and responding to document
and other information requests, whether or not a party to such litigation),
judgments, fines, losses, claims (whether or not meritorious) and damages (collectively,
“Damages”), as incurred, to the extent they relate to,

 

15

 

arise out of or are the result of (i) the manufacture by PLC of
any Surgical Products (except to the extent attributable to components supplied
by Edwards); (ii) the design of any Surgical Products or component of
Surgical Products not developed exclusively by Edwards except to the extent
designed and built in accordance with the specifications provided by Edwards;
(iii) the failure of Surgical Products to satisfy any warranty made by
PLC; (iv) PLC failing to perform any of its covenants and responsibilities
under the Transaction Documents; and (v) PLC’s gross negligence, willful
misconduct or fraud in the development, labeling, supply and manufacture of
Surgical Products by PLC.

 

Section 9.3.            Indemnification
by Edwards.  Edwards shall
indemnify and hold harmless PLC, its officers, directors, shareholders,
employees, parents, successors, Affiliates and assigns, in each case, from and
against any and all Damages, as incurred, to the extent they relate to, arise
out of or are the result of (i) the specifications of the Surgical
Products provided by Edwards; (ii) the sale by Edwards of any Surgical
Products except to the extent Edwards is indemnified by PLC (iii) Edwards
failing to perform any of its covenants and responsibilities under the
Transaction Documents and (iv) Edwards’ gross negligence, willful
misconduct or fraud in the promotion and sale of Surgical Products by Edwards.

 

Section 9.4.            Indemnification
Procedures.  The Party
seeking indemnification (the “Indemnified Party”) pursuant to this Article IX
shall promptly notify the indemnifying party (the “Indemnifying Party”), in
writing, of such claim describing such claim in reasonable detail, provided that the failure to provide such
notice shall not affect the obligations of the Indemnifying Party unless and
only to the extent it is actually prejudiced thereby.  In the event that such claim involves a claim by a third party
against an Indemnified Party, the Indemnifying Party shall have 30 days after
receipt of such notice to decide whether it will undertake, conduct and
control, through counsel of its own choosing (but reasonably acceptable to the
Indemnified Party) and at its own expense, the settlement or defense thereof
unless (i) the Indemnifying Party is also a party to the proceeding and
the Indemnified Party determines in good faith that joint representation would
be inappropriate or (ii) the Indemnifying Party fails to provide reasonable
assurance to the Indemnified Party of its financial capacity to defend such
proceeding, and provide indemnification with respect thereto, and if it so
decides, the Indemnified Party shall cooperate with it in connection therewith,
provided that the Indemnified
Party may participate in such settlement or defense through counsel chosen by
it, and provided further that the
fees and expenses of such counsel shall be borne by the Indemnified Party.  The Indemnifying Party shall not, without
the written consent of the Indemnified Party (which consent shall not be
unreasonably withheld, conditioned or delayed), settle or compromise any
action, unless such settlement or compromise includes an unconditional release
of the Indemnified Party.  If the
Indemnifying Party does not notify the Indemnified Party within 30 days after
the receipt of notice of a claim of indemnity hereunder that it elects to
undertake the defense thereof, the Indemnified Party shall have the right to
contest, settle or compromise the claim but shall not pay or settle any such
claim without the consent of the Indemnifying Party (which consent shall not be
unreasonably withheld, conditioned or delayed).  The Indemnifying Party and the Indemnified Party shall cooperate
fully in all aspects of any investigation, defense, pre-trial activities,
trial,

 

16

 

compromise, settlement or discharge of any claim in respect of which
indemnity is sought pursuant to Article IX, including, but not limited to, providing
the other Party with reasonable access to employees and officers (including as
witnesses) and other information.  The
remedies provided in this Article IX will not be exclusive of or limit any
other remedies that may be available to the Indemnified Parties.

 

Section 9.5.            Limitations
on Liability.  NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO
THE OTHER PARTY OR THE OTHER PARTY’S AFFILIATES FOR ANY INCIDENTAL, PUNITIVE,
SPECIAL, MULTIPLE OR INDIRECT OR CONSEQUENTIAL DAMAGES, HOWEVER CHARACTERIZED,
INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS OR BUSINESS OPPORTUNITIES,
ARISING OUT OF, RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT OR ITS EARLY
TERMINATION.  IRRESPECTIVE OF WHETHER
SUCH LIABILITY IS ASSERTED IN TORT OR CONTRACT AND IRRESPECTIVE OF WHETHER THE
PARTIES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, ALL REMEDIES OF
THE PARTIES SHALL BE LIMITED TO ACTUAL DIRECT DAMAGES.

 

ARTICLE X

Trademarks and Confidentiality

 

Section 10.1.          Trademarks.  Subject to PLC’s consent, which
consent shall not be unreasonably withheld, delayed or conditioned, Edwards
shall have the right to indicate to the public that it is an authorized
distributor of Surgical Products and, at Edwards’ election, to market and sell
Surgical Products under any trademarks, service marks and trade names that PLC
adopts from time to time.  Edwards shall
state and confirm in all advertising and promotional literature that its use of
PLC’s trademarks, service marks and trade names is pursuant to a license from
PLC and shall identify PLC as the owner of such marks and names and any
proprietary rights.  Edwards shall not
alter, obscure or remove any trademarks, service marks or trade names of PLC
which are contained on or in or affixed to Surgical Products at the time of
shipment.  Edwards shall not use any
trademarks, service marks or trade names of PLC in connection with any business
conducted by Edwards other than dealing with Surgical Products in accordance
with the terms of this Agreement. 
Edwards agrees that its use of the trademarks, service marks and trade
names of PLC shall not create in its favor any right, title or interest therein
and acknowledges PLC’s exclusive right, title and interest thereto.  Edwards agrees that it will not use, without
PLC’s prior written consent, any mark which is similar to or is likely to be
confused with any trademarks, service marks or trade names of PLC.  In order to comply with PLC’s quality
control standards, Edwards shall: 
(i) not modify any of PLC’s trademarks, service marks or trade
names in any way; (ii) use PLC’s trademarks, service marks or trade names
in compliance with all applicable laws and regulations; and (iii) upon 30
days written notice, accord PLC the right to inspect during normal business
hours, Edwards’ or its Affiliates facilities used in connection with efforts to
promote and sell the Surgical Products in order to confirm that Edwards’ use of
any of PLC’s trademarks, service marks or trade names is in compliance with

 

17

 

this Section 10.1.  Edwards’
rights to use the trademarks, service marks and trade names of PLC as set forth
in this Section 10.1 shall terminate upon termination or expiration of this
Agreement.

 

Section 10.2.          Confidential
Information.  In order to
avoid disclosure of confidential and proprietary information to any other
person, firm or corporation, the Parties agree that each will treat any such
information which is received from one another in writing and clearly marked as
“Confidential” or if disclosed orally, which is confirmed in writing as
“Confidential” within thirty (30) days of initial disclosure, with the same
degree of care that each employs with respect to its own information which it
does not desire to have published or disseminated.  It is understood that each Party shall be liable for any
unauthorized disclosure should it fail to safeguard the disclosed information
with such care.  This obligation shall
survive the termination or expiration of this Agreement.  The Parties shall not have any obligation
with respect to such information which is:

 

(a)           independently developed by the
receiving Party without the benefit of the disclosure or is already known to
the receiving Party at the time of the disclosure;

 

(b)           publicly known or becomes publicly
known without the wrongful act or breach of this Agreement by the receiving
Party; or

 

(c)           rightfully received by the receiving
Party from a third-party who is not under any obligation of confidentiality or
trade secret obligation to the originating Party.

 

ARTICLE XI

MISCELLANEOUS

 

Section 11.1.          Relationship.  The
relationship of Edwards and PLC established by this Agreement and the
Transaction Documents is of independent contractors and not agents (except as
set forth in Section 2.1), and nothing in this Agreement or any Transaction
Document shall be construed:

 

(a)           To give PLC or PLC Parent the power
to direct or control the daily activities of Edwards, or vice versa, beyond the
obligations imposed on Edwards and PLC, respectively, by this Agreement;

 

(b)           To constitute the Parties as
partners, joint venturers, co-owners or otherwise as participants in joint
undertaking; or

 

(c)           To allow either PLC or PLC Parent to
create or assume any obligation on behalf of Edwards, or vice versa, for any
purpose whatsoever.  The purchase,
promotion, and resale of, or any other legal transactions concerning Surgical
Products hereunder shall be carried out in the name of and for the account of
Edwards as principal, and Edwards shall not enter into any agreement with third
persons binding in any way on PLC or PLC Parent.

 

18

 

Section 11.2.          No
Conflict.  Each Party
represents and warrants to the other Parties that it is not subject to any
contractual obligation or restraint which will materially interfere with its
right and ability to perform pursuant to the terms of this Agreement.

 

Section 11.3.          Governing
Law.  This Agreement shall be
governed by, interpreted under, and construed in accordance with the internal
laws of the State of New York, including, without limitation,
Sections 5-1401, 5-1402 of the New York General Obligations Law and New
York Civil Practice Laws and Rules 327(b).

 

Section 11.4.          Escalation.  Edwards and PLC (and/or PLC
Parent) will attempt in good faith to resolve expeditiously any dispute, claim
or controversy arising out of or relating to this Agreement (the “Dispute”)
promptly by negotiations between executives who have authority to settle the
controversy and who are at a higher level of management than the persons with
direct responsibility for the administration of this Agreement.  Either Party may give the other Party,
written notice (the “Escalation Notice”) of any Dispute not resolved in the
normal course of business.  Within 15
days after delivery of the Escalation Notice, the Party in receipt of the
Escalation Notice shall submit to the other a written response.  The Escalation Notice and the response
thereto shall include (a) a statement of each Party’s position and a
summary of arguments supporting that position, and (b) the name and title
of the executive who will represent that Party and of any other person who will
accompany the executive.  Within 30 days
after delivery of the Escalation Notice, the executives of both Parties shall
meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the Dispute.  All reasonable requests for information made
by one Party to the other will be honored. 
All negotiations pursuant to this clause are confidential and shall be
treated as compromise and settlement negotiations for purposes of applicable
rules of evidence.  The Parties shall
attempt to resolve any Dispute pursuant to the procedure set forth in this
Section 11.4 for a period up to 60 days from the date of delivery of the
Escalation Notice before resorting to other available remedies; provided, however, nothing contained in
this Section 11.4 shall prevent any Party from resorting to judicial process if
injunctive or other equitable relief from a court is necessary to prevent
serious and irreparable injury to it or to others.  The use of the procedure set forth in this Section 11.4 will not
be construed under the doctrine of laches, waiver or estoppel to affect
adversely any Party’s right to assert any claim or defense.

 

Section 11.5.          Jurisdiction
and Consent to Service.  In
accordance with the laws of the State of New York, and without limiting the
jurisdiction or venue of any other court, the Parties (a) agree that any
suit, action or proceeding arising out of or relating to this Agreement shall
be brought solely in the state or federal courts of New York; (b) consent
to the exclusive jurisdiction of each such court in any suit, action or proceeding
relating to or arising out of this Agreement; (c) waive any objection
which any of them may have to the laying of venue in any such suit, action or
proceeding in any such court; and (d) agree that service of any court
paper in any such suit, action or proceeding may be made in any manner as may
be provided under the applicable laws or court rules governing service of
process in such court.  The foregoing
shall not apply to actions for injunctive relief, as to which such jurisdiction
shall be non-exclusive.

 

19

 

Section 11.6.          Notices.  All notices, demands, requests,
consents, approvals or other communications required or permitted to be given
hereunder or which are given with respect to this Agreement shall be in writing
and shall be delivered (charges prepaid, receipt confirmed or return receipt
requested (if available)) by hand, by nationally recognized air courier
service, by certified mail or facsimile, addressed as set forth below or to
such other address as such Party shall have specified most recently by written
notice.  Notice shall be deemed given
and effective (i) if delivered by hand or by nationally recognized courier
service, when delivered at the address specified in this Section 11.6 (or in
accordance with the latest unrevoked written direction from such Party),
(ii) if by certified mail, four (4) business days after mailing or
(iii) if given by facsimile when such facsimile is transmitted to the fax
number specified in this Section 11.6 (or in accordance with the latest
unrevoked written direction from such Party), provided the appropriate
confirmation is received.

 

To PLC:

 

PLC Systems
Inc.

10 Forge Park

Franklin, MA  02038

Attention:  Chief Executive Officer

Fax:  (508) 541-7990

 

with a copy (which shall not constitute
notice) to:

 

Hale and Dorr
LLP

60 State Street

Boston, MA  02109

Attention:  Steven D. Singer, Esq.

Fax:  (617) 526-5000

 

To Edwards:

 

Edwards
Lifesciences LLC

One Edwards Way

Irvine, California 92614

Attention:  General Counsel

Fax:  (949) 250-6850

 

with a copy (which shall not constitute
notice) to:

 

Skadden, Arps,
Slate, Meagher & Flom LLP

300 South Grand Avenue, Suite 3400

Los Angeles, California  90071-3144

Attention:  Joseph J. Giunta, Esq.

Fax:  (213) 687-5600

 

20

 

Section 11.7.          Interpretation  When a reference is made in this
Agreement to a Section, Schedule or Exhibit, such reference shall be to a
Section, Schedule or Exhibit of this Agreement unless otherwise indicated.  When a reference is made in this Agreement
to a specific Schedule, such reference shall be deemed to include, to the
extent applicable, all the other Schedules. 
The table of contents, table of definitions, titles and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.  When the words “includes” or “including” are
used in this Agreement, they shall be deemed to be followed by the words
“without limitation.”  All accounting
terms not defined in this Agreement shall have the meanings determined by
generally accepted accounting principles as of the date hereof.  All capitalized terms defined herein are
equally applicable to both the singular and plural forms of such terms.

 

Section 11.8.          Severability.  In the event that any one or more
of the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for any
reason, the Parties shall negotiate in good faith with a view to the
substitution therefore of a suitable and equitable solution in order to carry
out, so far as may be valid and enforceable, the intent and purpose of such
invalid provision; provided, however,
that the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions contained herein shall not be in
any way impaired thereby, it being intended that all of the rights and
privileges of the Parties hereto shall be enforceable to the fullest extent
permitted by law.

 

Section 11.9.          Counterparts.  This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original and all of
which shall, taken together, be considered one and the same agreement, it being
understood that the Parties need not sign the same counterpart.

 

Section 11.10.        Entire
Agreement; No Third Party Beneficiaries. 
This Agreement and the other Transaction Documents, including
all schedules and exhibits hereto and thereto, by and among the Parties hereto,

 

(a)           constitute the entire agreement of
the Parties with respect to the subject matter hereof and supersede all prior
and contemporaneous agreements, representations, understandings, negotiations
and discussions between the Parties, whether oral or written, with respect to
the subject matter hereof; and

 

(b)           shall be binding upon and shall inure
to the benefit of each of the Parties hereto and thereto and their respective
successors and permitted assigns and is not intended to confer any rights,
remedies or benefits on any Persons other than as expressly set forth in this
Section 11.10.

 

21

 

Section
11.11.        Amendments and Modifications; Waivers
and Extensions.

 

(a)           No amendment,
modification or termination of this Agreement shall be binding upon any other
Party unless executed in writing by the Parties hereto intending to be bound
thereby.

 

(b)           Any Party to this Agreement may waive
any right, breach or default which such Party has the right to waive; provided
that such waiver will not be effective against the waiving Party unless it is
in writing, is signed by such Party, and specifically refers to this
Agreement.  Waivers may be made in
advance or after the right waived has arisen or the breach or default waived
has occurred.  Any waiver may be
conditional.  No waiver of any breach of
any agreement or provision herein contained shall be deemed a waiver of any preceding
or succeeding breach thereof nor of any other agreement or provision herein
contained.  No failure or delay in
exercising any right, power or privilege hereunder shall be deemed a waiver or
extension of the time for performance of any other obligations or acts nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.

 

Section 11.12.        Assignment.  Neither this Agreement nor any of
the rights, duties or obligations hereunder may be assigned or delegated by any
of the Parties hereto without the prior written consent of PLC or Edwards, as
the case may be, which may be withheld in its sole discretion except that
Edwards may assign all its rights and obligations to any subsidiary of Edwards
Lifesciences Corporation, provided, however, any Party may assign this
Agreement and all rights, duties or obligations hereunder in connection with
the sale of more than 51% of the outstanding capital stock of such Party in one
or more related transactions, a merger or the transfer of all or substantially all
the assets to which this Agreement relates. 
Any attempted assignment or delegation of rights, duties or obligations
hereunder in contravention hereof shall be void and of no effect.

 

Section 11.13.        Schedules.  Each of the schedules referred to
herein and attached hereto is an integral part of this Agreement and is
incorporated herein by reference.

 

Section 11.14.        Expenses.  Except as otherwise provided in
this Agreement, each Party to this Agreement shall bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the transactions contemplated hereby, including all fees and
expenses of agents, representations, counsel and accountants.

 

Section
11.15.        No Consequential or Punitive
Damage.  If any Party claims
any breach of this Agreement by the other Party or otherwise becomes
dissatisfied with any matter relating hereto or arising herefrom, it shall have
no right to seek consequential or punitive damages and each Party hereby waives
any right it may have to seek such punitive or consequential damages.

 

22

 

Section 11.16.        Force
Majeure.  Notwithstanding
anything to the contrary contained in this Agreement, no liability or loss of
rights hereunder shall result to any Party from delay or failure in performance
(other than payment) caused by governmental restrictions (excluding any
regulatory actions taken by the FDA or similar bodies), war, acts of terrorism,
commotions, riots, strikes, lockouts and acts of God such as fire, flood or
other similar causes that are beyond the control of the parties (each a “Force
Majeure Event”).  Except to the extent
caused by the foregoing, Force Majeure Events shall not include shortage of
labor, lack of or inability to obtain materials, fuel or supplies (unless
caused solely by priorities, restrictions or allocations imposed by
governmental authority), or any other industrial disturbance.

 

23

 

IN WITNESS WHEREOF, the Parties hereto have
executed this Agreement as of the date first above written.

 

 

	
   

  	
  PLC SYSTEMS
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/James G.
  Thomasch

  	
   

  
	
   

  	
  Name: 

  	
  James G.
  Thomasch

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PLC MEDICAL
  SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/James G.
  Thomasch

  	
   

  
	
   

  	
  Name: 

  	
  James G.
  Thomasch

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EDWARDS
  LIFESCIENCES LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ John H.
  Kehl, Jr 

  	
   

  
	
   

  	
  Name: 

  	
  John H.
  Kehl, Jr.

  
	
   

  	
  Title:

  	
  Corporate
  Vice President, Strategy and Business

  Development

  

 

24

 

Schedule 4.3(a)

Product Liability Insurance of

 

 

To be provided

 

1

 

Schedule 4.3(b)

Product Liability Certificate of Insurance of
Edwards

 

 

To be provided

 

1

 

Schedule 7.2(a)(i)

A-Fib Disposable Margin Factor 

(Examples to PLC Margin Factor Calculation With variances in ASP & COGS)

 

	
  Assumptions

  	
   

  	
  Encircle

  with ASP Variances

  	
   

  	
  Encircle

  With COGS Variances

  	
   

  
	
  EW Average
  Selling Price

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PLC’s Direct Disposable COGS 

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Direct Disposable Materials Costs

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  Direct Disposable Labor Costs

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Disposable
  Product Margin

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  EW Margin Factor

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  PLC Margin Factor

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PLC’s Disposable Margin Share

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Disposable
  Transfer Price

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  

 

Absolute
numbers are for illustrative purposes only.

All terms are defined in the agreement.

 

1

 

Schedule 7.2(a)(ii)

A-Fib Margin Sharing Disposable — (Examples to Show Margin Sharing with Various
ASP’s and Costs)

 

	
  Assumptions

  	
   

  	
  Encircle

  	
   

  	
  COGS (-)

  	
   

  	
  Probe

  	
   

  	
  COGS (-)

  
	
  EW Average
  Selling Price

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  $1,500

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [**]

  
	
  PLC’s Direct Disposable COGS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Direct Disposable Materials Costs

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Direct Disposable Labor Costs

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Disposable
  Product Margin

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EW Margin Factor

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  PLC Margin Factor

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PLC’s Disposable Margin Share

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Disposable
  Transfer Price

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

2

 

Schedule 7.2(e)

Materials Inventory

 

A-Fib Inventory as of 1/1/2004

 

	
  Part Number

  	
   

  	
  Description

  	
   

  	
  Cost per
  Unit

  	
   

  	
  Quantity

  	
   

  	
  Total
  Inventory $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193769002

  	
   

  	
  MIRROR,
  COATED

  	
   

  	
  [**]

  	
   

  	
  2,832.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  597311001

  	
   

  	
  FIBER-MESH
  ASSEMBLY

  	
   

  	
  [**]

  	
   

  	
  525.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  597310001

  	
   

  	
  ASSY,
  LIGHTSTIC

  	
   

  	
  [**]

  	
   

  	
  166.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  597369001

  	
   

  	
  ASSY,
  LIGHTSTIC, EPI

  	
   

  	
  [**]

  	
   

  	
  137.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193784001

  	
   

  	
  TUBE
  CONNECTOR

  	
   

  	
  [**]

  	
   

  	
  1,124.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193787001

  	
   

  	
  SHEATH
  FORMING

  	
   

  	
  [**]

  	
   

  	
  1,382.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193777001

  	
   

  	
  FIBER
  ASSEMBLY 600UM

  	
   

  	
  [**]

  	
   

  	
  145.99

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193863001

  	
   

  	
  TUBE,EXTRUSION.
  DUAL W/FLAT

  	
   

  	
  [**]

  	
   

  	
  1,217.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193770002

  	
   

  	
  MIRROR,
  POLISHING

  	
   

  	
  [**]

  	
   

  	
  6,549.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193768001

  	
   

  	
  TUBE,
  DIFFUSER

  	
   

  	
  [**]

  	
   

  	
  4,163.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  692577001

  	
   

  	
  PKG. ASSY,
  OPTIMAZE HANDPIECE

  	
   

  	
  [**]

  	
   

  	
  26.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193876001

  	
   

  	
  SHRINK TUBE,
  GOLD

  	
   

  	
  [**]

  	
   

  	
  1,078.63

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193770001

  	
   

  	
  MIRROR,
  POLISHING

  	
   

  	
  [**]

  	
   

  	
  1,923.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193800001

  	
   

  	
  TUBING, GRAY

  	
   

  	
  [**]

  	
   

  	
  17,684.85

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193791001

  	
   

  	
  TUBING,
  IRRIGANT

  	
   

  	
  [**]

  	
   

  	
  20,242.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  491136001

  	
   

  	
  CARBON
  SPHERICAL POWDER

  	
   

  	
  [**]

  	
   

  	
  49.99

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193776001

  	
   

  	
  TRAY,
  OPTIMAZE

  	
   

  	
  [**]

  	
   

  	
  1,805.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193875001

  	
   

  	
  GOLD, WINGED
  LASER CUT

  	
   

  	
  [**]

  	
   

  	
  472.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  597314001

  	
   

  	
  ASSY, SHEATH
  TUBE 5CM

  	
   

  	
  [**]

  	
   

  	
  264.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193772001

  	
   

  	
  GOLD, LASER
  CUT

  	
   

  	
  [**]

  	
   

  	
  439.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193767001

  	
   

  	
  GOLD FOIL LS
  18

  	
   

  	
  [**]

  	
   

  	
  26.00

  	
   

  	
  [**]

  	
   

  

 

1

 

	
  193786001

  	
   

  	
  HANDLE
  CLS180

  	
   

  	
  [**]

  	
   

  	
  1,659.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193946001

  	
   

  	
  TUBE,EXTRUSION
  DUAL W/FLAT,EPI

  	
   

  	
  [**]

  	
   

  	
  430.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  597315001

  	
   

  	
  ASSY, SUPPLY
  TUBE

  	
   

  	
  [**]

  	
   

  	
  491.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193799001

  	
   

  	
  CARTON,
  FOLDING WHITE SBS

  	
   

  	
  [**]

  	
   

  	
  1,141.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193797001

  	
   

  	
  POUCH, OUTER
  OPTIMAZE

  	
   

  	
  [**]

  	
   

  	
  1,593.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193780001

  	
   

  	
  LID, TYVEK
  BLANK OPTIMAZE

  	
   

  	
  [**]

  	
   

  	
  2,072.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193795001

  	
   

  	
  TUBING, 2
  LUMEN PEBAX SHEATH

  	
   

  	
  [**]

  	
   

  	
  750.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193803001

  	
   

  	
  STRAIN
  RELIEF, HANDLE

  	
   

  	
  [**]

  	
   

  	
  1,308.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193796001

  	
   

  	
  TUBE, OUTER
  SHEATH

  	
   

  	
  [**]

  	
   

  	
  1,197.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193778001

  	
   

  	
  WIRE MESH
  BRAID, SL 180

  	
   

  	
  [**]

  	
   

  	
  5,515.97

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193794001

  	
   

  	
  BOND HEAT
  SHRINK TUBING, FEP

  	
   

  	
  [**]

  	
   

  	
  168.10

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193785001

  	
   

  	
  LINED SHRINK
  SLEEVE, .250” ADH

  	
   

  	
  [**]

  	
   

  	
  927.69

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193781001

  	
   

  	
  BLANK FLAG
  LABEL STOCK

  	
   

  	
  [**]

  	
   

  	
  4,886.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  491101001

  	
   

  	
  ADH,
  MASTERBOND SIL MSIL151

  	
   

  	
  [**]

  	
   

  	
  2.85

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  491100001

  	
   

  	
  ADH, UV
  CURE, DYMAX 1187-M

  	
   

  	
  [**]

  	
   

  	
  21.30

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193944001

  	
   

  	
  SHEATH
  FORMING, EPI

  	
   

  	
  [**]

  	
   

  	
  100.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  597405001

  	
   

  	
  OUTPUT PORT
  SHIELD

  	
   

  	
  [**]

  	
   

  	
  54.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193798001

  	
   

  	
  SHPNG
  BOX,OPTIMAZE HNDPC 10 PK

  	
   

  	
  [**]

  	
   

  	
  241.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193945001

  	
   

  	
  TUBE, OUTER
  SHEATH, EPI

  	
   

  	
  [**]

  	
   

  	
  500.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193947001

  	
   

  	
  WIRE,
  MALLEABLE, EPI

  	
   

  	
  [**]

  	
   

  	
  7,372.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  299391001

  	
   

  	
  CONNECTOR
  SMA 641 UM

  	
   

  	
  [**]

  	
   

  	
  56.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193793001

  	
   

  	
  CAPLUGS,
  FIBER PROTECTIVE CAP

  	
   

  	
  [**]

  	
   

  	
  7,552.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  491102001

  	
   

  	
  ADHESIVE,
  LOCTITE 4081

  	
   

  	
  [**]

  	
   

  	
  8.97

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193789001

  	
   

  	
  WIRE,
  MALLEABLE

  	
   

  	
  [**]

  	
   

  	
  2,533.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  597316001

  	
   

  	
  ASSY, PINCH
  TUBE.

  	
   

  	
  [**]

  	
   

  	
  504.00

  	
   

  	
  [**]

  	
   

  

 

2

 

	
  597317001

  	
   

  	
  WIRE,
  SUPPORT FORMED

  	
   

  	
  [**]

  	
   

  	
  931.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193788001

  	
   

  	
  SCREW, #4 X
  1/4”

  	
   

  	
  [**]

  	
   

  	
  2,338.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193766001

  	
   

  	
  HEAT SHRINK
  TUB. DIFFUSER CSL

  	
   

  	
  [**]

  	
   

  	
  24.17

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  597313001

  	
   

  	
  SILICONE,
  PIGMENTED

  	
   

  	
  [**]

  	
   

  	
  5.99

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193779001

  	
   

  	
  CAPLUGS,
  VINYL CAP

  	
   

  	
  [**]

  	
   

  	
  3,150.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193802001

  	
   

  	
  WASHER,
  STAINLESS STEEL

  	
   

  	
  [**]

  	
   

  	
  189.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193940001

  	
   

  	
  RIBBON,PRINTER
  THERMAL TRANSFE

  	
   

  	
  [**]

  	
   

  	
  2.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  491137001

  	
   

  	
  EPO-TEC
  353ND

  	
   

  	
  [**]

  	
   

  	
  0.99

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193967002

  	
   

  	
  DFU,EW SURG.
  ABLATION HNDP

  	
   

  	
  [**]

  	
   

  	
  128.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  193801001

  	
   

  	
  CONNECTOR ,
  Y

  	
   

  	
  [**]

  	
   

  	
  166.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  491103001

  	
   

  	
  TITANIUM
  DIOXIDE (TIO2) POWER

  	
   

  	
  [**]

  	
   

  	
  5.99

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  299393001

  	
   

  	
  BALL CHAIN

  	
   

  	
  [**]

  	
   

  	
  180.80

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  597312001

  	
   

  	
  SILICONE
  MASTER

  	
   

  	
  [**]

  	
   

  	
  4.98

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  299395001

  	
   

  	
  SS ROUND
  BEAD CHAIN

  	
   

  	
  [**]

  	
   

  	
  36.00

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  
	
  Summary

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  

 

3

 

A-Fib Laser
Transfer Price — Schedule 7.3(i) (Examples to Show
Laser Transfer Price with Various Costs)

 

	
   

  	
   

  	
  Base

  	
   

  	
  PLC Costs

  	
   

  	
  EW Costs

  	
   

  	
   

  	
   

  
	
  Laser Assumptions

  	
   

  	
  Case

  	
   

  	
  Up 10%

  	
   

  	
  Down 10%

  	
   

  	
  Up 10%

  	
   

  	
  Down 10%

  	
   

  	
  Comments

  	
   

  
	
  Direct Laser COGS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Direct Laser Materials Costs (EW)

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Fiber Optic
  Blocks & Laser Diodes

  	
   

  
	
  Direct Laser Materials Costs (PLC)

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  All Other
  Materials

  	
   

  
	
  Direct Labor Laser Costs (PLC)

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Direct Laser
  Labor

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Variances to Direct Laser Costs

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Variances to EW Direct Laser Costs

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  
	
  Variances to PLC Direct Laser Costs

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sharing of Variances to Direct Laser Costs

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EW Portion

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  
	
  PLC Portion

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Laser Transfer Price

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  

 

Absolute numbers
are for illustrative purposes only.

All terms are
defined in the agreement.

 

1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00066-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00066-of-00352.parquet"}]]