Exhibit 10.22
EXCLUSIVE RIGHTS TRANSFER DISTRIBUTION AND PARTNERSHIP RIGHTS AGREEMENT
AGREEMENT made this 20th day of April, 2002, by and between WonderNet,
Ltd., having its principal offices in Kibbutz Givat Hashlosha, Israel
(hereinafter referred to as "WonderNet" or the Grantor), Security Biometrics
Inc., a Public Company incorporated in the State of Nevada a Nevada corporation,
having its principal offices at 0 Xxxxx Xxxxxxxxx Xxxxx Xxxxxx, XX XXX 00000
(hereinafter "Security Biometrics" or the "Grantee").
W I T N E S E T H :
WHEREAS, WonderNet is the owner of the Technology and Existing
Proprietary Property as hereinafter defined;
WHEREAS, WonderNet and the Grantee wish to enter into this Exclusive
Rights Transfer DISTRIBUTION AND PARTNERSHIP Agreement (the "Agreement") to
enable the Grantee to exploit WonderNet's Technology and the Existing
Proprietary Property relating thereto within the Territory, as hereinafter
defined, under the terms and conditions of this Agreement; and
NOW THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration from each to the other, the
receipt and sufficiency of which is hereby acknowledged by both parties, it is
hereby agreed as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. The following terms used in this Agreement shall
have the meanings set forth below:
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(a) Exclusive Rights Agreement: distribution and partnership
agreement shall mean this Exclusive Rights by and between WonderNet, as Grantor,
and Security Biometrics, as Grantee.
(b) Existing Proprietary Property shall mean all intellectual
property rights in the Technology, including without limitation: (i) any and all
patents and patent applications filed anywhere in the world relating to or based
upon the Technology, including any and all continuations, divisions and
continuations-in-part thereof, and all patents, inventor's certificates, utility
models and the like issuing there from, including any and all re-examinations,
reissues, renewals and extensions thereof; (ii) any copyrightable or copyrighted
works based upon the Technology, including computer software and computer
programs; (iii) any confidential or proprietary know-how and information
regarding the Technology; (iv) any trademarks and trade names associated with
the Technology, whether or not registered; and (v) all fixed representations,
hard copies, computer-readable media and other tangible implementation of the
Technology, patent rights, copyrights, trademarks and trade secret rights.
(c) "Grantee Improved Technology" shall mean any
modifications, alterations, developments or improvements to the Technology done
by either Grantee.
(d) "Technology" shall mean WonderNet's Penflow proprietary
Biometric Signature Authentication ("BSA") software engine, which consists of a
database of user profiles and enables remote and local access to the database
using the Internet, smart cards, or LAN connections to verify signatures by
comparison to said database.
(e) "Territory" or "Territories" shall mean North America,
South America, Mexico, Central America, Bermuda, and the Caribbean Island.
(f) "Applications Technology" shall mean any application or
product developed by the grantee and based on WonderNet's Technology.
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ARTICLE 2
COVENANTS OF GRANTOR
2.1 The Grantor hereby represents, warrants and covenants in favor of
the Grantee that;
(a) the Grantor is the sole owner of the Products, the Technology
and the Proprietary Rights.
(b) The Grantor owns or where deemed appropriate has undertaken
steps to obtain patents on the Products, Technology and
Proprietary Rights;
(c) The Grantor will continue to undertake research and
development to enhance and improve the Products, Technology
and Proprietary Rights; and
(d) The Grantor will advise and forthwith make available to the
Grantor all Grantee enhancements, modifications, derivatives,
improvements and replacements to the Products, Technology and
Proprietor Rights.
2.2 The Grantor acknowledges that certain applications of the Products
may be more marketable than others, and as such agrees to apportion its
time spent on activities relating to the research, development, and
enhancements of the Products according to the marketability of such
uses, which marketability shall be determined by the Grantee in
consultation with the Grantor. The Grantee shall from time to time
advise the Grantor which uses are currently more marketable, and the
Grantor, in response to such advise shall apportion its time spent on
such will give priority to research, development and enhancements in
accordance therewith.
ARTICLE 3
RIGHTS GRANT AND CONSIDERATION
3.1 Rights Grant. (a) WonderNet hereby grants to Security Biometrics a
perpetual, sole and the Rights to develop applications or products based on it's
technology as well as use, market, sell, distribute and commercially exploit the
Technology and the Applications Technology within the Territory and the rights
constituting the Existing Proprietary Property relating thereto subject to all
of the terms, conditions and restrictions contained in this Agreement.
(b) Security Biometrics hereby grant to WonderNet a perpetual,
royalty-free, sole and
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exclusive Rights to use, market, sell, distribute and commercially
exploit the Grantee Improved Technology in all geographic locations
worldwide other than in the Territory; provided, however, that
WonderNet shall have no rights whatsoever, whether arising under this
Agreement or otherwise, relating to products or technology of either
Grantee other than to the Grantee Improved Technology.
(c) Security Biometrics hereby grant to WonderNet, Rights to use,
market, sell, distribute and commercially exploit the SBTI's - current
GRT technology for the use in Video Gaming and Interactive TV, in the
Middle East and Europe on terms and conditions to be agreed upon;
(d) Additionally Security Biometrics grants the right of first refusal
for the other technology that Security Biometrics that may be developed
or acquired during the course of this agreement.
3.2 Authority to Sublicense. Subject to all of the terms, conditions
and restrictions contained herein, WonderNet hereby grants to each Grantee the
authority to sub-Rights the exercise of the rights specified in Section 2.1
above with the prior written approval of WonderNet within the Territory.
3.3 Reservations. (a) WonderNet retains all rights in and to the
Technology except including those granted in Sections 3.1(a) above. Without
limiting the generality of the foregoing sentence, WonderNet retains title to
the Technology, the WonderNet Improved Technology and the Existing Proprietary
Property.
(b) Grantee retains all rights except those granted in Section
3.1(b) above. Without limiting the generality of the foregoing sentence, Grantee
retains title to the Grantee Improved Technology rights in its applications
development based on Penflow technology.
3.5 Grantee Development of the Technology. Grantee agrees to
use commercially reasonable efforts, consistent with its
resources and its activities and obligations other than those
arising under this Agreement: (i) to commercially exploit the
Technology and the Applications Technology within the
Territory; and (ii) to modify, alter, develop and improve the
Technology.
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ARTICLE 4
SECURITY BIOMETRICS - Consideration OBLIGATIONS
4.1 Consideration. In consideration for the rights herein granted;
(a) Security Biometrics agrees to issue 2,500,000 common
shares (subject to regulatory approval) in Security
Biometrics to WonderNet Ltd, which represents 2.7% of
Security Biometrics common share.
(b) Commencing in the calendar year starting January 1,
2002, pay a Royalty equal to 5% of the gross sale
proceeds by the Grantee from the sale of the Products
or Applications. For the purposes hereof, "gross sale
proceeds" shall mean the Grantee's gross sale
proceeds and receipts for the sale of the Products
without deduction for sales commissions, bad debts or
selling expenses. The Royalty shall be paid on the
60th day after each three-month period commencing
March 31, 2002.
(c) For the purposes hereof revenue derived from
modifying, altering, developing, improving, using,
marketing, selling, distributing and commercially
exploiting the Technology and the WonderNet Improved
Technology within the Territory. Grantee will
purchase all software products with a discount of 50%
and all hardware products with a discount of 10%, as
listed in the International price list attached and
subject to changes from time to time.
(d) Security Biometrics will commit to US$250,000 for the
initial funding of the marketing and development of
the Territory, and to commit to a mutually agreed
upon milestones for the product launch in the
Territories in the period of 24 month commencing from
this agreement signing date.
(e) Within thirty (30) days Security Biometrics initial
order for PenFlow products will be as follows;
1- Server Software Package 10,000 users
1,000+ - Wacom Tablets
1,00+ - Client Software
Applications
100 - Word
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100 - Embedded Signature
100 - Lotus Notes
(f) 100 - File Protection after the execution of this
agreement, the Grantee will prepay a sum equal to US
$ 100,000 for future purchases of WonderNet's
products. This payment will not be returned to
Security Biometric if from any cause or reason, these
future purchases would not occur.
(g) The grantee states his obligation to fulfill his part
and all expectations subjected the business plan
attached.
4.2 All amounts payable pursuant to this Agreement shall be made
in United States Dollars. Payment shall be made to the Grantor
at its main office or such other place as the Grantor may
designate. i.e, 30 days from invoicing.
4.3 All payments made by Grantee to the Grantor shall be net of
any applicable taxes, which may be imposed provided that the
Grantee is entitled to withhold from any such payments due to
the Grantor any applicable income taxes whether taxed directly
or indirectly thereupon which the Grantee is legally required
to withhold and pay to appropriate taxing authorities. In the
event that such taxes are withheld by the Grantee, it shall,
upon payment of same, deliver to the Grantor official receipts
or certificates for the payment of any such required taxes
sufficient support of any claims made by the Grantor for any
applicable tax benefit or credit with respect thereto.
4.4 In the event that any monetary obligations of any nature owed
by the Grantee to the Grantor are not paid by the Grantee when
due, the Grantee shall, in addition to the unpaid monetary
obligations, pay to the Grantor interest on such unpaid amount
at a rate equal to two (2%) percent in excess of the prime
rate of Citibank, New York charged to its most credit worthy
commercial customers in effect from time to time until such
monies are paid.
WONDERNET'S - CONSIDERATION
3.2 In consideration for the rights herein granted by Security Biometrics to
WonderNet, WonderNet agrees to the following;
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(a) WonderNet Ltd agrees to issue 5% interest by way of common
shares in WonderNet Ltd to Security Biometrics
(b) Commencing in the calendar year starting January 1, 2002, pay
a Royalty equal to 5% of the gross sale proceeds by the
Grantee from the sale of the Products. For the purposes
hereof, "gross sale proceeds" shall mean the Grantee's gross
sale proceeds and receipts for the sale of the Products
without deduction for sales commissions, bad debts or selling
expenses. The Royalty shall be paid on the 60th day after each
three-month period commencing March 31, 2002.
(c) For the purposes hereof revenue derived from modifying,
altering, developing, improving, using, marketing, selling,
distributing and commercially exploiting the SBI - Technology
and the SBI's Improved Technology within the Territory.
ARTICLE 5
DUTIES AND OBLIGATIONS OF GRANTEE
5.1 The Grantee agrees the best of its ability to conduct its business
in compliance with all applicable laws and regulations of each country or
jurisdiction in which it markets the Existing Proprietary Property.
5.2 The Grantee will not make or permit to be made any representation
concerning the Grantor or the Existing Proprietary Property other than
representations, which are truthful and accurate.
5.3 The Grantee shall devote its best efforts to the sale and promotion
of the Existing Proprietary Property.
5.4 The Grantee shall refrain from committing any act or pursuing any
course or conduct, which would tend to bring the Licensor or the Existing
Proprietary Property into disrepute.
ARTICLE 6
IMPROVEMENTS TO THE TECHNOLOGY
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6.1 WonderNet Improvements. Grantee acknowledges and agrees that
WonderNet shall retain exclusive ownership to the Applications Technology, which
are developed during the term of this Agreement as well as after this Agreement
is terminated regardless of the cause or method of termination.
6.2 Security Biometrics Improvements. WonderNet acknowledges and agrees
that Security Biometrics shall retain ownership to the Grantee Improved
Technology, applications developed by them based or related to the Penflow
technology, which are developed during the term of this Agreement as well as
after this Agreement is terminated regardless of the cause or method of
termination.
ARTICLE 7
RIGHTS AND OBLIGATIONS OF GRANTOR AND GRANTEE
7.1 Confidentiality and Disclosures to Third Parties. Any party hereto
may disclose any confidential information relating to the Technology, the
Existing Proprietary Property, and the Applications Technology or the Grantee
Improved Technology (hereinafter the "Disclosing Party") to third parties only
pursuant to a confidentiality agreement between the Disclosing Party and the
third party. The parties hereto acknowledge and agree that, because of the
nature of the property rights involved in this Agreement, any breach of their
obligations under this Section 6 shall cause immediate, irreparable injury to
the non-breaching party(ies); therefore, each party hereby agrees and
acknowledges that the non-breaching party(ies) shall be entitled, in addition to
any other rights and remedies at law and in equity, to seek temporary,
preliminary and/or permanent injunctions in the event an unauthorized disclosure
is made or appears to be imminent. Each party's duty of confidentiality shall
survive the termination of this Agreement regardless of the cause or method of
termination.
7.2 Rights to the Technology. WonderNet hereby represents, warrants and
covenants that WonderNet is the sole owner of the Technology and the Existing
Proprietary Property and,
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except for the rights granted to the Grantee in this Agreement, and has the
exclusive right and Rights for the use of the Technology together with the right
to Rights and sub-Rights to others, manufacture, distribute and sell the
Technology.
ARTICLE 8
PROTECTION OF INTELLECTUAL PROPERTY RIGHTS
8.1 Authorization to Grantee to File for Intellectual Property
Protection In the Territory. Subject to the provisions of Section 2.1, Section
3.3, Section 7.1 hereof and all of the other terms and conditions contained
herein, the Grantee shall have the authority, but not the obligation, to take
actions in the Territory on behalf of WonderNet such as filing patent
applications and seeking registrations of copyrights for the purpose of securing
and protecting intellectual property rights for WonderNet in the Technology and
the Applications Technology. The authority granted in this Section 8.1 may not
be assigned, delegated or sublicensed. The Grantee shall bear the expense of all
of their activities under this Section 8.1 including the payment of attorney
fees, patent issuance and maintenance fees, copyright and trademark registration
fees and other similar fees and expenses where applicable. Grantee shall have
the authority, but not the obligation, with the prior consent of WonderNet, to
take actions worldwide such as filing patent applications and seeking
registrations of copyright for the purpose of securing and protecting
intellectual property rights in the Grantee Improved Technology.
8.2 Actions Not Taken by Grantee. In the event that WonderNet, in its
sole discretion, deems it necessary or beneficial to take a specific action that
neither Grantee has taken somewhere in the Territory to protect or maintain any
or all of the intellectual property rights discussed in Section 8.1 hereof,
WonderNet may notify both Grantee of its intention to take such action in
writing. Upon receipt of such notice, Grantee shall respond to WonderNet within
fifteen (15) calendar days indicating whether they choose to take the action
requested. If the Grantee fails to respond within such time period, or if either
of them responds indicating that it chooses not to undertake the requested
action, then in that event WonderNet may take the action independently, bearing
the cost of the action.
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8.3 Assistance and Cooperation in Protecting Intellectual Property. All
parties hereto, including their employees and affiliates, shall be obligated to
assist and cooperate with each other in securing the legal protection of any and
all intellectual property rights under Sections 8.1 and 8.2 above.
ARTICLE 9
TERM; TERMINATION FOR CAUSE AND SURVIVAL OF CERTAIN PROVISIONS
9.1 Term. The term of this Agreement shall commence on the date hereof
and shall continue indefinitely unless terminated pursuant to the provisions of
this Agreement.
9.2 Termination. Notwithstanding anything otherwise contained in the
Agreement, the Grantor shall have the right to terminate this Agreement, and the
rights and licenses granted to the Grantee forthwith and without notice, upon
the happening of any one or more of the following events:
(a) If the Grantee fails or refuses to pay promptly any amount
payable under this Agreement and as same shall become due and payable, and such
default shall continue for a period of ninety (90) days after written notice
thereof has been given by the Grantor to the Grantee;
(b) If the Grantee becomes insolvent or ceases to carry on
business, or takes any action to liquidate its assets, or stops making payments
in the usual course of business, provided that the foregoing shall not be
construed so as to prohibit a bona fide reorganization of the Grantee;
(c) If the Grantee makes an assignment for the benefit of
creditors, or a petition is filed against and consented to by the Grantee and
such petition is not dismissed within ninety (90) days, or the Grantee is
adjudicated bankrupt;
(d) If a receiver or any other person with like powers shall
be appointed to take charge of and liquidate all or any part of the Grantee's
business, property or assets, or if an order shall be made or resolution passed
for the winding-up or the liquidation of the Grantee or if the Grantee adopts or
takes any corporate proceedings for its dissolution or liquidation;
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(e) If the Grantee should fail to comply with any other
material requirement or obligation imposed upon the Grantee by this Agreement
and such default shall not be cured within thirty (30) days after receipt or
written notice to cure from the Grantor, of if the Grantee does not take and
diligently pursue reasonable steps to cure such default.
(i) The grantor will be entitled to terminate this
agreement with a 90-calendar day's notice.
(ii) Upon termination of this Agreement, the parties
hereto shall be permitted to continue to use, market,
sell, distribute and commercially exploit the to the
extent of concluding all going projects.
ARTICLE 10
MISCELLANEOUS
10.1 Assignability. This Agreement shall not be assignable by any party
in whole or in part except upon the written and signed consent of the other
party(ies), which consent shall not be unreasonably withheld or delayed.
10.2 Binding Effect. Subject to the restrictions on assignability
contained herein, this Agreement is binding on and inure to the benefit of the
parties hereto and their respective authorized successors and assigns.
10.3 Further Assurances. The parties hereto agree to execute and
deliver any additional documents and instruments and perform any additional acts
that may be necessary or appropriate to comply with their obligations hereunder.
10.4 Governing Law. This Agreement shall be governed by and be
construed in accordance with the laws of the State of Nevada, and of the United
States as to all matters of interpretation, performance, remedies and
enforceability. The parties hereto irrevocably consent to the service of any and
all process in any such action or processing by the certified mailing with
return receipt of copies of such process to their address specified in this
Agreement. The
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parties hereto agree that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in any other jurisdiction by suit on the
judgment or any other manner provided by law. The parties hereto waive any
objection to venue in such state and any objection to an action or proceeding in
such state on the basis of forum non-convenience.
10.5 Arbitration. Any controversy or claim arising under this Agreement
shall be settled by arbitration to be held in Las Vegas, Nevada, court of
arbitration, in accordance with the commercial arbitration rules of the American
Arbitration Association by a panel of three (3) arbitrators, and judgment upon
the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof or application may be made to such court for judicial
acceptance of any award and an order of enforcement, as the case may be. The
parties each consent to any personal jurisdiction necessary to subject
themselves and each of them to such arbitration and to such award and such
judgment and such order of enforcement.
10.6 Names and Marks. The Grantee may designate, develop, commission
and use various Names and Marks in selling and promoting the Technology; and the
Grantor acknowledges that the Grantee shall retain ownership in the Territories
of all Names and Marks used by it during the term of this Agreement. Any
goodwill associated with Names and Marks shall ensure exclusively to the benefit
of the Grantee.
10.7 Notice. All notices, requests or consents provided for or
permitted under this Agreement must be in writing and must be given either by
mail, addressed to the recipient, postage paid, registered or certified mail,
return receipt requested, which shall be effective upon receipt, or by delivery
to the recipient in person, by courier or by facsimile transmission to the
address specified below:
If to the Grantor:
WonderNet, Ltd.
Kibbutz Givat Hashlosha, Israel
Attention:
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With a copy to:
Adv. Xxxxxxx Xxxxx
Xxxxxx Xxxxxx 0 Xx.
Xxx-Xxxx 00000
If to the Grantee:
Security Biometrics, Inc.,
Suite 1410, 0000 Xxxx Xxxxxxx Xxxxxx,
Xxxxxxxxx XX, Xxxxxx X0X 0X0
Attention: Xxxxx Xxxxxxxxx
With a copy to:
Xxxxx X. Xxxxx, Esq.
Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
10.6 Headings and Certain Words. Headings are used in this Agreement
for the purpose of organization only and do not constitute terms of the
Agreement. The words "herein," "hereof," "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless otherwise expressly indicated.
10.7 Severability. If any provision of this Agreement or its
application to any person or circumstance shall be invalid, illegal, or
unenforceable to any extent, the remainder of this Agreement and its application
shall not be affected and shall be enforceable to the fullest extent permitted
by law unless the provision held to be illegal, invalid or unenforceable is so
fundamental to the sense of this Agreement that its illegality, invalidity or
unenforceability would make the enforceability of the remainder unreasonable.
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10.8 Entire Agreement. This Agreement sets forth the entire, final and
exclusive agreement and understanding between the parties as to the subject
matter hereof and supersedes all prior and contemporaneous writings and
discussions between the parties pertaining hereto.
10.9 No Oral Modification. This Agreement may be amended or modified
only by a written instrument signed by proper and duly authorized
representatives of all parties.
10.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
ARTICLE 11
SALE, ASSIGNMENT, TRANSFER AND SUB-LICENSING
11.1 This Agreement shall ensure to the benefit of the successors and
assigns of the Grantor. The Grantor shall have the right to assign all or part
of its rights under this Agreement to any person, firm, association or
corporation provided that such transferee shall agree in writing to assume all
obligations undertaken by the Grantor herein and upon such assignment and
assumption, the Grantor shall be under no further obligation hereunder.
11.2 In the event the Grantor desires to sell, assign or transfer any
of its rights hereunder to any arm's length third party, the Grantor agrees to
first offer the same to the Grantee on the same terms and conditions as offered
to or by such third party. The Grantee shall have ninety (90) days to acquire
the same, otherwise the Grantor shall be at liberty to dispose of such interest
to a third party on terms and conditions no better than offered to the Grantee.
This right of first refusal shall apply to each sale, assignment or transfer by
the Grantor.
11.3 The Grantee shall have the right to assign all or part of its
rights under this Agreement to any person, firm, association or corporation
provided that such transferee shall agree in writing to assume all obligations
undertaken by the Grantee herein and upon such assignment and assumption, the
Grantee shall be under no further obligation hereunder.
11.4 It shall be a condition of any sale, assignment or transfer by
either the Grantor or the Grantee to a third party that such third party agree
to be bound by the terms and conditions of this Agreement, and in particular the
duties and obligations of the transferring party.
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ARTICLE 12
RIGHT OF FIRST REFUSAL
121.1 The Grantor hereby grants to the Grantee the exclusive right of
first refusal to acquire the issued and outstanding shares of the Grantor,
including any interim financings. The Grantee agrees to notify its intent to
participate in the acquisition of shares of the Grantor, within thirty (30) days
of being notified of the availability or the offering of shares.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the date first set forth above.
SECURITY BIOMETRICS INC. WONDERNET, LTD.
By Its Authorized Signatory: By Its Authorized Signatory:
/s/ Xxx Xxxx /s/ Shaiwaisel
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