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EXHIBIT 10.67
MARKETING AND DEVELOPMENT AGREEMENT
between
INTEGRATED SECURITY SYSTEMS, INC. and
INNOVATIVE SECURITY TECHNOLOGIES, INC.
and
I.S.T. PARTNERS, LTD.
September 1, 1996
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TABLE OF CONTENTS
SECTION 1 1
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DEFINITIONS 1
SECTION 2 3
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OWNER'S OBLIGATIONS 3
2.1 Initial Deliveries. 3
2.2 Enhancements. 3
2.3 Provide Basic Infrastructure. 3
2.4 Royalties. 3
SECTION 3 3
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SALES REPRESENTATIVE'S OBLIGATIONS 3
3.1 Evaluation and Testing. 3
3.2 Development of Code. 3
3.3 Marketing and Sales. 3
3.4 Royalties. 4
SECTION 4 4
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GRANT OF EXCLUSIVE WORLDWIDE SALES AND MARKETING RIGHTS 4
SECTION 5 4
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ROYALTIES AND PAYMENT 4
5.1 Advance Royalties. 4
5.2 Ongoing Royalties. 4
5.3 Audit of Owner. 5
5.4 Audit of Sales Representative. 5
SECTION 6 5
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AVAILABILITY OF ENHANCEMENTS 5
SECTION 7 5
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LIMITED WARRANTY AND LIMITATIONS OF LIABILITY 5
7.1 Ownership and Authority. 5
7.2 Conformity to Specifications. 5
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SECTION 8 6
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OWNERSHIP AND RIGHTS 6
8.1 Ownership of Code by Owner. 6
8.2 Vesting of Rights. 6
8.3 Patent License. 6
SECTION 9 6
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INVENTIONS 6
9.1 Inventions Defined. 6
9.2 Assignment of Inventions. 6
SECTION 10 7
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MARKING OF PRODUCTS 7
SECTION 11 7
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TERM OF AGREEMENT 7
SECTION 12 7
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INDEMNIFICATION 7
12.1 Owner Indemnification. 7
12.2 Project Indemnification. 7
12.3 General Partner Indemnification. 8
12.4 Conditions. 8
SECTION 13 8
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MISCELLANEOUS 8
13.1 No Assertion of Rights. 8
13.2 Independent Contractor Status. 8
13.3 No Conflict of Interest. 8
13.4 Compliance with Law. 8
13.5 No Assignment. 9
13.6 Notices. 9
13.7 Governing Laws. 9
13.8 No Waiver. 9
13.9 Force Majeure. 9
13.10 Scope of Agreement; Amendment. 9
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THIS MARKETING AND DEVELOPMENT AGREEMENT (this "Agreement") is
effective as of the 1st day of September 1996, by and between Integrated
Security Systems, Inc. and its wholly-owned subsidiary, Innovative Security
Technologies, Inc. (hereinafter collectively referred to as "Owner"), having
an address for purposes of this Agreement at 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000,
Xxxxxx, Xxxxx, and I.S.T. Partners, Ltd. (hereinafter referred to as "Sales
Representative") having an address for purposes of this Agreement at 0000
XxXxxxxx Xxxxxx, Xxxxx X, Xxxxxx, Xxxxx.
WITNESSETH:
WHEREAS, Owner is the owner of all U.S. copyrights and other
proprietary rights in certain computer programs and related documentation that
are the subject of this Agreement (hereinafter defined as the "Code");
WHEREAS, Owner desires to grant Sales Representative the exclusive
worldwide right to market and license the Code, and Sales Representative
desires to enhance and supplement the Code in order to more effectively market
the Code; and
WHEREAS, each party hereto represents that it is ready, willing and
able to undertake the responsibilities and obligations set forth in this
Agreement and that it possesses the rights, resources and capabilities to
perform its responsibilities under this Agreement;
NOW, THEREFORE, in consideration of the premises, and of the
obligations herein made and undertaken, the parties hereto do hereby covenant
and agree as follows:
Section 1
DEFINITIONS
For the purposes of this Agreement, the definitions set forth in this
Section shall apply to the respective capitalized terms:
1.1 "AUTHORIZED END-USER COPY."
A copy of a Product that may be used by customers of Sales
Representative under the Owner License. Backup copies for use only in the
event of loss or destruction of an Authorized End-User Copy are not counted as
Authorized End-User Copies.
1.2 "CODE."
Computer programming code, including source code (i.e.,
human-readable) and object code (i.e., machine- readable) and associated
procedural code, commonly referred to as the Intelli-Site(R) system.
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1.3 "DERIVATIVE WORK."
A work that is based upon one or more pre-existing works, such as a
revision, modification, translation, abridgment, condensation, expansion or any
other form in which a pre-existing work may be recast, transformed or adapted,
and that, if prepared without the authorization of the Owner of the
pre-existing work, would constitute a copyright infringement.
1.4 "DOCUMENTATION."
The printed material relating to the Code, including the description
of the principles of operation of the Code.
1.5 "ENHANCEMENT."
A change or addition to the Code or Documentation, other than an Error
Correction, that improves its function, adds new function, or substantially
enhances its performance. Enhancements shall not include programs that have a
value and utility separate from the use of the Code and that, as a practical
matter, may be priced and offered separately from the Code.
1.6 "ERROR."
A defect in the Code or a mistake in the Documentation that prevents
the Code from functioning in material conformity with the specifications.
1.7 "ERROR CORRECTION."
A change to the Code or the Documentation that is in a form that
allows its application to the Code or inclusion in the Documentation to
re-establish material conformity with the specifications. All Error Correction
shall be considered part of the Code and Documentation for all purposes under
this Agreement.
1.8 "OWNER LICENSE."
A license agreement between Owner and Sales Representative's customers
under which copies of the Product will be provided to such customers. The
Owner License shall contain terms limiting the use of Products to designated
Central Processing Units (CPU's), allowing only one backup copy for each CPU,
prohibiting further copying and/or transfer of the Products by such customers,
and prohibiting reverse assembly, reverse compiling, or reverse engineering of
the Products.
1.9 "PRODUCT."
Computer programs that contain, or are Derivative Works of, the Code
or any subset thereof, and that are completed in marketable form (with
appropriate end-user Documentation) by Sales Representative and are offered by
Sales Representative to its customers or potential customers, in object code
form, under the terms of the Owner License.
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SECTION 2
OWNER'S OBLIGATIONS
2.1 INITIAL DELIVERIES.
Owner shall deliver to Sales Representative two (2) copies of the Code
(in object code and source code forms), and two (2) copies of the Documentation
within three (3) days following the date of this Agreement.
2.2 ENHANCEMENTS.
Owner shall offer Enhancements, proposed additions to the Code, and
Documentation in accordance with Section 6 hereof.
2.3 PROVIDE BASIC INFRASTRUCTURE.
Owner shall provide basic support services to the Sales Representative
that shall include, but not be limited to, office space, office equipment and
communications.
2.4 ROYALTIES.
Owner shall pay royalties to Sales Representative in accordance with
Section 5.
SECTION 3
SALES REPRESENTATIVE'S OBLIGATIONS
3.1 EVALUATION AND TESTING.
Sales Representative shall evaluate and test the Code and
Documentation to determine its suitability for use.
3.2 DEVELOPMENT OF CODE.
Sales Representative shall use all reasonable efforts to develop the
Code to meet customer requirements and to more effectively market the Code
(these additions shall be considered Enhancements). It is anticipated that to
effectively market the Code, engineering services will be needed that will
include engineering support of clients, additional device driver development,
additional application development, and functional enhancement.
3.3 MARKETING AND SALES.
Sales Representative shall use all reasonable efforts to market and
sublicense the Code in accordance with this Agreement. Sales Representative
shall use all reasonable efforts to package the Code that the Sales
Representative determines to be a commercially reasonable offering and to
market such Products to potential customers worldwide.
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3.4 ROYALTIES.
Sales Representative shall pay royalties to Owner in accordance with
Section 5.
SECTION 4
GRANT OF EXCLUSIVE WORLDWIDE SALES AND MARKETING RIGHTS
Owner hereby grants to Sales Representative, the worldwide exclusive
right to solicit, promote, sell and fulfill the Code and to take the following
actions:
1. Use and reproduce the Code and Documentation and prepare
Derivative Works thereof, in object code or source code form, for the
purposes of development, technical support, maintenance and warranty
service of Code.
2. Use, reproduce and distribute copies of the Code and
Documentation or Derivative Works thereof, in object code form only,
in furtherance of the marketing of Code to customers of Sales
Representative.
3. Use and copy the Code and Documentation or Derivative Works
thereof, for marketing, training and demonstration purposes with
respect to the Code.
The above grant of the exclusive sales and marketing rights prohibits
the Owner from in any way marketing or selling the Code through any
distribution channel other than the Sales Representative.
SECTION 5
ROYALTIES AND PAYMENT
5.1 ADVANCE ROYALTIES.
Sales Representative shall pay to Owner a non-refundable amount of
$250,000 for existing contracts, proposals and market prospects as detailed in
Exhibits F and G.
5.2 ONGOING ROYALTIES.
Owner desires to have all contracts placed in its name and any
contract or purchase order shall be styled accordingly. All net revenue of any
kind, as revenue is defined in the Private Placement Memorandum, associated
with the licensing or service of the Code shall be split as follows:
Owner 15%
Sales Representative 85%
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Owner shall remit the Sales Representative's portion within ten (10)
days after the receipt of said revenue.
5.3 AUDIT OF OWNER.
Upon Sales Representative's request, Sales Representative or an agent
or accounting firm chosen by Sales Representative shall be provided reasonable
access during normal business hours to the records of Owner for purposes of
audit of royalties due. Records sufficient to verify the revenue received,
copies of product authorized to be made, shall be maintained by Owner and made
available for audit.
5.4 AUDIT OF SALES REPRESENTATIVE.
Upon Owner's request, Owner or an agent or accounting firm chosen by
Owner shall be provided reasonable access during normal business hours to the
records of Sales Representative for purposes of audit of royalties due.
SECTION 6
AVAILABILITY OF ENHANCEMENTS
Owner may from time to time offer enhancements, to the extent
developed or acquired by Owner, to Sales Representative for inclusion in the
Code and Documentation. If the parties agree on inclusion of any Enhancements,
appropriate changes in the specifications and royalty provisions shall be set
forth in a written amendment to this Agreement, and thereupon the Enhancements
shall become part of the Code and Documentation for purposes of this Agreement.
Section 7
LIMITED WARRANTY AND LIMITATIONS OF LIABILITY
7.1 OWNERSHIP AND AUTHORITY.
Owner warrants that it is the exclusive owner of all U.S. copyrights
in the Code and Documentation and that it has all rights necessary for the
grant of the exclusive worldwide marketing rights granted by this Agreement.
7.2 CONFORMITY TO SPECIFICATIONS.
Owner warrants that the Code and Documentation will, at the time of
delivery, conform in all material respects to the specifications.
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SECTION 8
OWNERSHIP AND RIGHTS
8.1 OWNERSHIP OF CODE BY OWNER.
All Enhancements shall be owned by Owner. Owner shall own all U.S.
and international copyrights in the Enhancements. Owner shall not own any
interest in any programs that have a value and utility separate from the use of
the Code and that, as a practical matter, may be priced and offered separately
from the Code.
8.2 VESTING OF RIGHTS.
Sales Representative agrees to assign, and upon creation of each
Enhancement automatically assigns, to Owner, its successors and assigns,
ownership of all U.S. and international copyrights in each and every
Enhancement. From time to time upon Owner's request, Sales Representative
and/or its personnel shall confirm such assignment by execution and delivery of
such assignments, confirmations of assignment, or other written instruments as
Owner may request. Owner, its successors and assigns, shall have the right to
obtain and hold in its or their own name(s) all copyright registrations and
other evidence of rights that may be available for Enhancements.
8.3 PATENT LICENSE.
Sales Representative hereby grants to Owner, its successors and
assigns, the royalty-free, worldwide non- exclusive right and license under any
patents owned by Sales Representative, or with respect to which Sales
Representative has a right to grant such rights and licenses, to the extent
required by Owner to exploit the Enhancements and exercise its full rights in
the Enhancements, including (without limitation) the right to make, use and
sell products and services based on or incorporating such Enhancements.
SECTION 9
INVENTIONS
9.1 INVENTIONS DEFINED.
An "Invention" shall mean any idea, design, concept, technique,
invention, discovery or improvement, regardless of patentability, made solely
or jointly by Sales Representative and/or Sales Representative's contract
personnel, or jointly by Sales Representative and/or Owner during the term of
this Agreement. Invention shall not mean any programs that have a value and
utility separate from the use of the Code and that, as a practical matter, may
be priced and offered separately from the Code.
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9.2 ASSIGNMENT OF INVENTIONS.
Sales Representative assigns to Owner, all Inventions, together with
any potential patent rights, and the same shall become and remain property of
the Owner. Sales Representative shall make written disclosure to the Owner of
any features or concepts that Sales Representative believes to be new or
different. Under direction from the Owner, the Sales Representative agrees to
assist with the filing, preparation or prosecution of any patent application or
defense of any patent infringement.
SECTION 10
MARKING OF PRODUCTS
All Code and Documentation, including any Enhancements, shall be
marked with Owner's copyright notice. All Products offered by Sales
Representative shall display Owner's copyright notice, except that Sales
Representative may xxxx with its own copyright notice and register any
Derivative Works of the Code or Documentation prepared by Sales Representative,
provided that appropriate identification is made in such notice and in such
registrations of Owner's pre-existing works. The parties agree to cooperate in
any such registration and to provide necessary information and prepare and
deliver duly executed documents reasonably required in such regard.
SECTION 11
TERM OF AGREEMENT
The term of this Agreement shall commence on the date hereof and
continue until this Agreement is terminated as provided for in Section 10 of
the Limited Partnership Agreement of I.S.T. Partners, Ltd.
SECTION 12
INDEMNIFICATION
12.1 OWNER INDEMNIFICATION.
Owner agrees to and does hereby indemnify and hold harmless Sales
Representative from any and all claims, demands or actions related to the Code
or licensing of the Code or Documentation.
12.2 PROJECT INDEMNIFICATION.
Owner agrees that if the aggregate capital accounts of I.S.T.
Partners, Ltd. are not sufficient to complete any project or sales contract
relating to the Code or Documentation, that
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Owner has the sole and exclusive obligation to meet any additional funding
obligations to complete the project for sales contract. Sales Representative's
inability to perform under this Agreement as a result of insufficient aggregate
capital accounts of I.S.T. Partners, Ltd. shall not be considered a breach of
this Agreement.
12.3 GENERAL PARTNER INDEMNIFICATION.
Owner agrees to and does hereby indemnify and hold harmless the
General Partner from any and all claims, demands or actions related to the Code
or licensing of the Code or Documentation or for any errors in judgment, in the
absence of gross negligence or willful misconduct as stated in the Limited
Partnership Agreement.
12.4 CONDITIONS.
The foregoing indemnities shall be contingent upon the party seeking
to enforce the indemnity against the other party (1) giving written notice to
the other party of any claim, demand or action for which indemnity is sought;
(2) fully cooperating in the defense or settlement of any such claim, demand or
action; and (3) obtaining the prior written agreement of the indemnifying party
to any settlement or proposal of settlement.
SECTION 13
MISCELLANEOUS
13.1 NO ASSERTION OF RIGHTS.
It is expressly understood and agreed that, as between Owner and Sales
Representative, all right, title and interest in and to the Code and
Documentation and any other material furnished to Sales Representative under
this Agreement vests solely and exclusively in the Owner, and Sales
Representative shall neither derive nor assert any title or interest in or to
such materials except for the rights of use or licenses granted under this
Agreement.
13.2 INDEPENDENT CONTRACTOR STATUS.
Sales Representative is an independent contractor under this
Agreement, and nothing herein shall be construed to create a partnership, joint
venture or agency relationship between the parties hereto. Sales
Representative shall have no authority to enter into agreements of any kind on
behalf of Owner and shall not have the power or authority to bind or obligate
Owner in any manner to any third party.
13.3 NO CONFLICT OF INTEREST.
Sales Representative represents and warrants that it has full power
and authority to undertake the obligations set forth in this Agreement and that
it has not entered into any other agreements that would render it incapable of
satisfactorily performing its obligations hereunder, or that would place it in
a position of conflict of interest or be inconsistent with its obligations
hereunder.
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13.4 COMPLIANCE WITH LAW.
Sales Representative agrees that it shall comply with all applicable
laws and regulations of governmental bodies or agencies in its performance
under this Agreement.
13.5 NO ASSIGNMENT.
Sales Representative represents that it is acting on its own behalf
and is not acting as an agent for or on behalf of any third party and further
agrees that it may not assign its rights or obligations under this Agreement
without the proper written consent of Owner.
13.6 NOTICES.
All notices and other communications required or permitted to be given
under this Agreement shall be in writing and shall be considered effected when
deposited in the U.S. mail, postage prepaid and addressed to the appropriate
party at the address noted above, unless by such notice a different address
shall have been designated.
13.7 GOVERNING LAWS.
All questions concerning the validity, operation, interpretation and
construction of this Agreement will be governed by and determined in accordance
with the laws of the State of Texas.
13.8 NO WAIVER.
Neither party shall have by mere lapse of time, without giving notice
or taking other action hereunder, be deemed to have waived or breach by the
other party of any of the provisions of this Agreement. Further, the waiver by
either party of a particular breach of this Agreement by the other shall not be
construed or constitute a continuing waiver of such breach or other breaches in
the name of other provisions of this Agreement.
13.9 FORCE MAJEURE.
Neither party shall be in default if failure to perform any obligation
hereunder is caused solely by supervening conditions beyond that party's
control, including acts of God, civil commotion, strikes, labor disputes and
governmental demands of requirements.
13.10 SCOPE OF AGREEMENT; AMENDMENT.
The parties hereto acknowledge that each has read this Agreement,
understands it, and agrees to be bound by its terms. The parties further agree
that this Agreement is the complete and exclusive statement of agreement and
supersedes all proposals (oral or written), understandings, representations,
conditions, warranties, covenants and other communications between the parties
relating hereto. This Agreement may be amended only by a subsequent writing
that specifically refers to this Agreement and is signed by both parties, and
no other act, document, usage, or custom shall be deemed to amend this
Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized representatives as set forth
below.
Owner
Integrated Security Systems, Inc.
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Xxxxxx X. Xxxxxxxx, President
Innovative Security Technologies, Inc.
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Xxxxxx X. Xxxxxxxx, President
Sales Representative
I.S.T. Partners, Ltd.
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by Founders Equity Group, Inc., its General Partner
Xxxxxx X. Xxxxxxxx, Xx., Vice President
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