SOFTWARE CONVERSION AGREEMENT
THIS AGREEMENT, made and entered into as of the ___ day of April, 1997,
by and between Arrhythmia Research Technology, Inc., a Delaware corporation
having an office and place of business at 0000 Xxxxxxxxx Xxxxx, Xxxxx 000,
Xxxxxx, Xxxxx 00000 (hereinafter "ART") and Softheart, Inc., a Vermont
corporation having an office and place of business at 000 Xxxxx Xxxx,
Xxxxxxxxx, Xxxxxxx 00000 (hereinafter "Softheart").
WHEREAS, ART is the exclusive licensee, pursuant to a License Agreement
with Softheart of even date herewith (the "License Agreement"), of certain
existing software which operates under the DOS operating system, for cardiac
catheterization laboratory signal acquisition from a patient, data analysis
and storage; and
WHEREAS, Softheart agrees to upgrade the existing software known as the
K-3 System Software (Version 3.0) by converting it to run under the
Windows-TM- NT or 95 operating system.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the meanings hereinafter defined:
1.1 "EXISTING SOFTWARE" shall mean the software and documentation
of the current K-3 System Software (Version 3.0).
1.2 "WINDOWS UPGRADE" shall mean the Existing Software (except the
On-Line Cath Lab Analysis Computer Program without modifications, to be sold
as an "add-on" product) upgraded to operate under the Windows NT or 95
operating system, recognizing that there will be differences in program
interfaces and flow because of opportunities provided by and limitations of
the Windows environment, and because of mutually agreed upon changes, which
may include but are not necessarily limited to, changing program flow to
facilitate ease of use, providing access to patient data by using standard
Access-TM- database structures, and providing flexible program structures
that allow integration of future enhancements and product developments.
2. DUTIES OF SOFTHEART.
2.1 Softheart shall modify the Existing Software to create the
Windows Upgrade in accordance with the timetable and milestones for
performance as set forth in Schedule A attached hereto and made a part
hereof. The Windows Upgrade shall be subject to ART's acceptance as set
forth in Paragraph 3.2 below.
2.2 Softheart shall correct any deliverables rejected as set forth
in
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Paragraph 3.2 and resubmit the same to ART within sixty (60) days after
rejection for ART's acceptance as provided in Paragraph 3.2 below. If
Softheart fails to cure as set forth in Paragraph 3.2 hereof, Softheart shall
be deemed to have breached a material provision of this Agreement.
3. DUTIES OF ART.
3.1 ART shall identify a Beta test hospital, negotiate the
financial arrangements, and provide and install the equipment required to
test the Windows Upgrade. ART shall pay Softheart's reasonable and necessary
out-of-pocket expenses in connection with any travel which may be required to
and from the test site during the Beta test phase of the software development.
3.2 ART shall promptly accept or reject the Windows Upgrade and
all deliverables and tasks. If, within thirty (30) days of receipt of the
Windows Upgrade and all deliverables and tasks, ART determines that the
Windows Upgrade and all deliverables and tasks do not substantially comply
with the Specifications set forth in Paragraph 1.2, ART may return the
Windows Upgrade and all deliverables and tasks with a report detailing the
reasons for its unacceptability. Softheart shall have a period of sixty (60)
days within which to cure any such non-compliance with the Specifications as
described in Paragraph 1.2. The Windows Upgrade and all deliverables and
tasks shall be deemed to be accepted by ART if (i) a system is sold with the
upgraded software, or (ii) ART fails to reject the upgrade within thirty (30)
days of receipt of the Windows Upgrade and all deliverables and tasks or any
cure provided for hereunder.
4. PROPRIETARY RIGHTS
ART acknowledges and agrees that the Windows Upgrade embodies and
constitutes valuable proprietary information and trade secrets of Softheart.
ART agrees that this Agreement in no way confers title, ownership, or
proprietary rights in the Windows Upgrade to ART, and that all such title,
ownership and proprietary rights belong to and shall remain with Softheart.
Softheart shall be obligated to obtain such copyrights, patents, and
trademarks as are necessary at its sole expense.
5. COMPENSATION.
5.1 ART shall advance to Softheart One Hundred Forty-Five Thousand
and No/100 Dollars ($145,000), payable as follows:
(a) Thirty Thousand Seven Hundred Twenty-Five and No/100 Dollars
($30,725) upon execution of this Agreement; and
(b) Six Thousand Seven Hundred Twenty-Five Dollars ($6,725) on
the last day of the month next succeeding the execution of this Agreement
and on the
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last day of the next sixteen (16) months following such next succeeding
month. The seventeen monthly payments shall be subject to the provisions
of Paragraph 3 of Exhibit B of the License Agreement.
5.2 For travel required as set forth herein, or as otherwise
requested by ART, ART will pay for the reasonable and actual costs of travel
and living accommodations of Softheart's employees and/or consultants in
accordance with ART's then applicable expense reimbursement policies for
corporate officers.
5.3 All amounts due and payable to Softheart hereunder shall be
inclusive of all applicable taxes.
6. FDA AUTHORIZATION.
6.1 Softheart shall have full responsibility for obtaining FDA
510(k) authorization for the use of the Windows Upgrade as part of or in
connection with ART products, if necessary. It is presently contemplated
that a "letter to file" and the associated documentation will be adequate to
retain the current FDA authorization. However, in the event that a new
510(k) becomes necessary, Softheart will prepare the application and provide
whatever further information the FDA may require. All out-of-pocket expenses
shall be paid or reimbursed by ART upon presentation of adequate
documentation. To the extent that FDA compliance requires a commitment of
time by Softheart beyond that which is necessary for 510(k) authorization,
the parties shall negotiate a new fee arrangement for the FDA aspect of this
Agreement only and ART shall be entitled to recoup its fees and expenses at
the rate of $2,000 per unit for products sold, other than Coronary Reporting
and Inventory programs, as provided in Paragraph 3 of Exhibit B of the
License Agreement.
6.2 Softheart shall indemnify ART to the extent described in this
Paragraph 6.2 for any and all liability, loss, expenses (including, but not
limited to, attorneys' fees), actions or damages of any kind or nature
incurred by ART as a result of any claim or proceeding against ART by any
person not a party to this Agreement or any governmental authority (including
the FDA) which claim or proceeding is based in whole or in part on an
allegation that the use of the Windows Upgrade violates the Medical Device
Amendments to the Food, Drug and Cosmetic Act, or any rules, regulations or
orders promulgated or issued thereunder, but only to the extent that such
claim or proceeding is based on a finding by the FDA that the sale or
marketing of the Windows Upgrade violates such Medical Device Amendments;
provided ART promptly notifies Softheart of any such claim or proceeding in
writing and gives Softheart the opportunity to defend or settle any such
claim or proceeding. If Softheart successfully defends or settles such
claim, it shall have no further liability under this Paragraph 6.2. To the
extent that such third-party liability is not based on Softheart's
negligence, willful misfeasance or willful malfeasance, ART's remedies shall
be limited to terminating this Agreement as provided in Paragraph 9.1(b)
below or obtaining access to the Source Code as set forth in Paragraph 11
hereof.
7. WARRANTY.
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7.1 Softheart warrants and represents that:
(a) The Windows Upgrade meets or will meet the specifications of
Paragraph 1.2 of this Agreement. The Windows Upgrade runs or will run on
the PC operating under the current version of Windows NT or 95; and there
are or will be no substantial errors, malfunctions or defects in the
Windows Upgrade or any portion thereof.
(b) The Windows Upgrade and all portions of the foregoing are or
will be created solely by Softheart pursuant to this Agreement.
(c) The Windows Upgrade and all portions thereof do not or will
not infringe any patents, copyrights, trade secrets, or other proprietary
rights of any third parties, and Softheart has or will have no reason to
believe that any such infringement exists or claims thereof can be made by
third parties.
(d) Softheart has the right to enter into this Agreement, to
grant to ART the rights and licenses set forth herein, and to perform all
other obligations of this Agreement.
7.2 If Softheart is in breach of any warranty or representation
hereunder, Softheart shall return to ART the Existing Software and all monies
paid to Softheart hereunder.
8. CONFIDENTIALITY.
8.1 All information, documentation, and software, including the
Existing Software, Windows Upgrade and all portions thereof shall be held in
confidence by Softheart and may not be used by Softheart (other than for
performance of services hereunder) nor disclosed to third parties without the
prior written consent of ART; provided, however, that nothing contained
herein shall prevent or prohibit Softheart from using any subroutines or
portions of the Windows Upgrade and incorporating them into any software or
products so long as said software or products do not become the functional
equivalent of the Windows Upgrade.
8.2 The terms and conditions of this Agreement may not be
disclosed or made available by either party hereto to third parties without
the prior written consent of the other party. However, nothing contained
herein shall prevent either party from complying with applicable law,
regulation, or court order.
9. TERMINATION AND CANCELLATION.
9.1 This Agreement may be terminated/canceled upon the occurrence
of one or more of the following events, and the terminating/canceling party
shall not be liable to the other party for the rightful exercise of its right
of termination/cancellation:
(a) By either party if the other party seeks protection under
the
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bankruptcy laws (other than as a creditor), or makes any assignment for
the benefit of creditors, or a trustee is appointed for all or any portion
of such party's assets; or
(b) By either party if the other party is in default of any
material provision of this Agreement and such default is not cured within
thirty (30) days after receipt of written notice of default by such other
party.
9.2 If this Agreement is terminated/canceled by ART pursuant to
Paragraph 9.1, all amounts paid to Softheart pursuant to Paragraph 5.1, if
any, shall be recouped by ART pursuant to the provisions of Paragraph 3 of
Exhibit B of the License Agreement. ART shall further be entitled to recoup
all subsequent development costs, up to $175,000 when aggregated with the
amounts previously paid pursuant to Paragraph 5.1. If this Agreement is
terminated/canceled by Softheart pursuant to Paragraph 9.1, then Softheart
shall be entitled to retain all amounts previously paid by ART.
10. INDEMNITIES.
10.1 Softheart shall indemnify and hold harmless ART and its
customers against any claims that the Windows Upgrade, or any portion
thereof, infringes any patent, copyright, trade secret, or other proprietary
right and shall defend and/or settle any cause of action related thereto. If
ART and/or its customers are enjoined from exercising any rights and licenses
granted hereunder, Softheart shall obtain for ART and its customers the right
to continue to exercise such rights and licenses at no cost to ART or its
customers.
10.2 Softheart shall indemnify and hold ART harmless against any
and all liability for personal injury and property damage arising out of or
related to the performance of this Agreement by Softheart or its employees,
agents, or representatives. This Paragraph 10.2 does not relate to the
performance or non-performance of the Windows Upgrade.
10.3 In the event of any claim hereunder with respect to the
Windows Upgrade which has been delivered to and accepted by ART in accordance
with Paragraph 3.2 hereof, Section 18 of the License Agreement shall control.
11. SOURCE CODE.
Provided ART is not in material breach of this Agreement, Softheart
shall deliver to ART a machine readable form of the Source Code for the
Windows Upgrade, as well as any enhancements, updates and corrections and, to
the extent Softheart develops such materials in the ordinary course of its
business, all related documentation (such as descriptions of the general
program, architecture, module design specifications and FDA applications when
applicable) and all instructions reasonably necessary to permit a skilled
programmer to support, enhance and modify the Windows Upgrade, if (i)
Softheart fails in a material respect to perform in accordance with the
timetable and milestones set forth in Schedule A, and does not provide
reasonable efforts to cure such failure within sixty (60) days after notice
thereof; (ii) Softheart makes the source code generally available to any
other party; (iii) Softheart ceases doing business for any reason; (iv)
Softheart commits any
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act of bankruptcy (except for a Chapter 11 proceeding) within the meaning of
the Federal Bankruptcy Laws; or if bankruptcy (except for a Chapter 11
Proceeding), receivership, insolvency, reorganization, dissolution,
liquidation or other similar proceedings shall be instituted by or against
Softheart; or if a bankruptcy proceeding is converted into a Chapter 7
proceeding; or (v) Softheart fails to correct any substantial error in the
Windows Upgrade and does not cure such failure within sixty (60) days after
notice thereof as provided in Paragraph 3.2 hereof. In the event ART
receives the source code in the manner provided hereunder, ART shall have,
subject to all the terms and conditions of this Agreement, a fully paid-up
license to use and modify the Source Code, subject to the terms of this
Agreement, solely for purposes of completing, maintaining, operating and/or
upgrading the Windows Upgrade.
12. ASSIGNMENT. This Agreement and all rights or obligations of
Softheart hereunder may not be assigned, subcontracted, or transferred by
Softheart without the prior written consent of ART, which consent will not be
unreasonably withheld.
13. NOTICES. All notices required to be given pursuant to this
Agreement shall be deemed given when actually delivered, if delivered in
person, or three days after being deposited in the United States mail,
certified mail/return receipt requested, postage prepaid and addressed to the
receiving party as follows:
For Softheart: Softheart, Inc.
000 Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxx 00000
ATTN: President
For ART: Arrhythmia Research Technology, Inc.
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
ATTN: President
14. ENTIRE AGREEMENT. This Agreement is the entire agreement between
the parties relating to the subject matter hereof and supersedes all prior
agreements, proposals, representations, and commitments. This Agreement may
be amended only by an instrument executed by the authorized representatives
of both parties hereto.
15. GOVERNING LAW. This Agreement shall be interpreted in its entirety
in accordance with the substantive laws of the State of Texas without
reference to any conflicts of law.
16. ARBITRATION. ANY DISPUTE ARISING UNDER THIS AGREEMENT SHALL BE
SUBJECT TO BINDING ARBITRATION PURSUANT TO THE RULES THEN OBTAINING OF THE
AMERICAN ARBITRATION ASSOCIATION IN PITTSBURGH, PENNSYLVANIA AND JUDGMENT ON
THE AWARD RENDERED MAY BE ENTERED IN ANY COURT HAVING JURISDICTION.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized representatives and have caused this Agreement to
become effective as of the date first above written.
SOFTHEART, INC.
By:
-----------------------------------
Xxx Xxxxxxx, M.D., President
ARRHYTHMIA RESEARCH TECHNOLOGY, INC.
By:
-----------------------------------
X. X. Xxxxxxx, President and CEO
software agreement
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