AGREEMENT
This Agreement is entered into this ____ day of June, 1997 by and between
Arkona, LLC, a Utah Limited Liability Corporation of 000 Xxxxx Xxxx Xxxxxx
#000, Xxxx Xxxx Xxxx, XX 00000 ("ARKONA") and OEC Medical Systems, Inc., a
Delaware corporation of ("OEC").
RECITALS
Whereas, ARKONA and OEC entered into a Memorandum of Understanding
contemplating a "Detailed Agreement" for ARKONA to develop a certain product
for OEC relating to computer communications between OEC offices and OEC field
service OEC's Designated Representatives; and,
Whereas, ARKONA and OEC desire now to finalize that Detailed Agreement;
NOW, THEREFORE, in consideration of the foregoing Recitals and the
following mutual promises, the parties agree to the following:
TERMS
1. Product to be developed. ARKONA will design, write and implement the
Product as specified in Exhibit "A" which is attached and incorporated by
reference. OEC shall provide any further information concerning OEC's
internal systems and procedures on a timely basis as determined reasonably
necessary by ARKONA.
2. Ownership, confidentiality, licensing and royalties. As more fully
specified in the Licensing Agreement which is attached and incorporated by
reference as Exhibit "B", ARKONA will retain ownership of all logic and the
code related to the Product except that OEC shall own all of its internal code
and any other code uniquely necessary to allow the Product to communicate with
OEC's internal network. ARKONA shall license the Product to OEC as specified
in Exhibit "B". Exhibit "B" also obligates each party to keep specified
information about the Product confidential and otherwise governs disclosure of
information.
3. Royalties to OEC. ARKONA shall pay royalties to OEC from any royalties or
other license fees received by ARKONA from subsequent sales or licensing to
third-parties of the Product. The right of OEC to receive such royalties
shall not be construed to give OEC any interest in the Product nor any control
over ARKONA'S sale or use of such product which control shall be solely in the
discretion of ARKONA. The royalty shall be 5 percent of net revenues (selling
price less ARKONA'S direct selling expenses such as product cost, sales
commissions, marketing, etc.) until OEC has recovered its payments to ARKONA
for development of the Product under this Agreement. After such recovery,
OEC's royalty shall be 2 percent of net revenues until OEC has recovered a
total of twice its payments to ARKONA and 1 percent thereafter. This royalty
provision shall only apply to subsequent sales or licensing by ARKONA of
products or services which substantially incorporate both the logic and code
of the Product. This royalty provision shall not apply to products or
services created by ARKONA not under this Agreement nor paid for by OEC
including, but not limited to, generic, abstracted, web objects which may
interface with generic database products. Net revenues from such sales or
licensing to third-parties shall mean all monies actually received by ARKONA
(or for any in-kind or other payment, the market value of such payment at the
time received by ARKONA) for that the subsequent product or service less
ARKONA'S direct selling expenses, such as sales commissions and other sales
related expenses and all costs incurred in any modifications of the Product to
meet the needs of future customers (modification costs shall not exceed fifty
percent (50%) of revenues) and all costs incurred in any modifications of the
Product to meet the needs of future customers, incurred in connection with the
subsequent sale as determined under generally accepted accounting principles.
For any six month period ending either December 31 or June 30 of any year for
which ARKONA has made any sales or licensing of the Product requiring royalty
payments to OEC pursuant to this paragraph, ARKONA shall provide to OEC a
reasonably detailed accounting of such net revenues received and shall,
simultaneously, pay the appropriate royalty amount to OEC.
4. Schedule for development of the Product. ARKONA developed the Product to
date pursuant to a schedule agreed upon with OEC. The schedule provided that
work agreed to have begun on December 13, 1996 and was to have been completed
on or before April 6, 1997. A milestone was agreed to and met on February 24,
1997. Subsequently, items of additional work were discovered necessitating
the extension of the completion date. ARKONA and OEC hereby accept the
following future schedule as a complete satisfaction of any claims related to
such schedule change. On or before May 15, 1997, assuming OEC has timely
provided the necessary hardware, all appropriate dial-in connections at OEC
shall be established. On or before May 19, 1997 ARKONA shall deliver an
operable version of the Product to OEC for testing. Modifications and
corrections to the test version reasonably required by OEC shall be made by
ARKONA on or before May 26, 1997. Final production distribution of the
Product and user documentation shall be completed by June 9, 1997.
5. Training. Arkona shall provide such training for OEC as reasonably
required by OEC prior to June 9, 1997. Such training is presently
contemplated to involve two (2) training classes at remote locations. OEC
shall pay Arkona all necessary and reasonable travel expenses including
airfare, hotels, ground transportation and meals. OEC shall make such
payments to Arkona within ten (10) days of Arkona's submission of an invoice
for suchand costs together with expense receipts.
6. Compensation. OEC shall pay ARKONA a total of $100,000.00 for completion
of the Product. $30,000 was paid, the receipt of which is hereby
acknowledged, upon the execution of the Memorandum of Understanding.
$30,000.00 was paid upon meeting the February 24, 1997 milestone, the receipt
of which is hereby acknowledged. The final $40,000.00 shall be paid on
acceptance of the final deliveries on June 9, 1997 as specified above.
7. Service and support. ARKONA shall provide support for the Product after
acceptance for thirty (30) days at no cost to OEC. ARKONA shall use its best
efforts to provide such service as expeditiously as reasonably required by
OEC. OEC and ARKONA shall enter into a long-term service agreement for the
Product prior to June 9, 1997.
8. Additional Work. During ARKONA'S work on the Product additional elements
of necessary work were discovered by OEC and ARKONA. These additional
elements relate to a need to maintain database consistency between OEC's
existing Metrix field service database and new information created by the
Product. This additional work was not reasonably discoverable by OEC or
ARKONA under the timeframe of ARKONA'S work on the Product. ARKONA shall
create, in conjunction with Xxxxx Xxxxx of OEC, the necessary logic and code
required to create and maintain this necessary database consistency. A
preliminary version of the additional work will be delivered to OEC on May 12,
1997. OEC and ARKONA shall work jointly to finalize the additional work by
May 19, 1997. Upon acceptance of the additional work by Xxxxx Xxxxx, OEC
shall pay ARKONA $25,000.00.
9. Phase 2 Compatibility. ARKONA shall use its best efforts to design the
Product to accommodate at the lowest reasonable expense the development of
Phase 2 work as specified.
10. Phase 2 General Product Description. The Phase 2 product ("Phase 2
Product") will be a software toolset in an appropriate programming language as
mutually agreed upon between OEC and ARKONA. The Phase 2 Product will provide
access to and data mapping to and from remote office computers or field sales
representatives laptop computers in a connected network state to the OEC
network and databases.
11. Phase 2 Analysis. To more fully understand the exact requirements and
the times and costs involved in creating the Phase 2 Product OEC and ARKONA
shall perform an initial analysis. Prior to starting the actual detailed
analysis OEC's designated representative and ARKONA'S Phase 2 team leader
shall conduct a two (2) day pre-analysis on or before June 30, 1997. This
pre-analysis will more closely specify the time, methodology and individuals
necessary to complete the detailed analysis. Presently the detailed analysis
is contemplated to take approximately four (4) weeks and will involve an
ARKONA analyst working with various OEC employees involved in various aspects
of the order entry process; reviewing OEC's internal documentation regarding
such processes and reviewing such Oracle documentation as necessary. It is
anticipated that completion of the Phase 2 Product will require complete
access to information regarding the Oracle order entry system.
12. Phase 2 Analysis Payment. OEC shall pay ARKONA $1,000.00 per day per
person for Phase 2 analysis work billed on a weekly basis.
13. Phase 2 Analysis Deliverable. At the completion of the Phase 2 detailed
analysis, ARKONA shall deliver to OEC a report specifying a detailed scope of
work and/or specification for the Phase 2 Product, an statement of options
concerning the Phase 2 Product together with an analysis of the risks of such
options, a budget for completion of the Phase 2 Product and a schedule for
production.
14. Phase 2 Contract and Start of work. If OEC chooses to proceed with Phase
2 after receiving the analysis deliverable, OEC and ARKONA shall enter into a
detailed agreement for the work and start work within seven (7) days.
15. Miscellaneous. This Agreement shall be governed by the law of the State
of Utah and any action brought to enforce its terms shall be brought only in
Utah. In any such action, the prevailing party shall be entitled to its costs
of action including a reasonable attorneys fee.
This Agreement is executed and effective as of the date and year first
written above.
ARKONA, LLC OEC Medical Systems, Inc.
By: __________________ By: __________________
Its: __________________ Its: __________________
