LICENSING AND MARKETING AGREEMENT
THIS AGREEMENT is made and entered into this 26th day of
April, 1996, by and among XXXXXXXX X. XXXXXX, XXXXX X. XXXXX, XXXXXXXX X.
XXXXXX and XXXXXXX X. XXXXXX (collectively hereinafter referred to as
"INVENTORS"), JASPER CONSULTING, INC., a Minnesota corporation with offices in
Bemidji, Minnesota (hereinafter referred to as "JASPER"), and SAC TECHNOLOGIES,
INC., a Minnesota corporation, formerly known as BBG Engineering, Inc., and
sometimes doing business as "Secure Access Control Technologies, Inc."
(hereinafter referred to as "SAC").
RECITALS
From time to time INVENTORS, JASPER and SAC (hereinafter
referred to individually as "PARTY," or as the "PARTIES" if more than one is
referred to) have entered into various agreements and understandings regarding
their relationship, each with the other, concerning the ownership, manufacture,
commercialization and exploitation of technologies known as "OPTIC TECHNOLOGY"
and "FIDS TECHNOLOGY" (each as hereinafter defined), including but not limited
to agreements dated November 24, 1992, January 13, 1994, August 4, 1995,
December 6, 1995 and March 6, 1996. It is the purpose and intent of this
instrument to consolidate in one instrument, and concurrently supersede and
replace, all of the agreements and understandings reached and entered into
between and among the PARTIES prior to the date hereof.
ARTICLE I
DEFINITIONS
1.1 "FIDS TECHNOLOGY" means and refers to all knowledge,
information and know-how, whether patentable or not, now in existence or
hereafter acquired, relating to computer hardware and software technology used
to create an automated process of analyzing a fingerprint, and identifying and
verifying the person whose fingerprint it is, originally created by the
INVENTORS other than Xxxxxxx X. Xxxxxx, including but not limited to, that
knowledge, information and know-how described in and comprising U.S. Patent
Application Nos. 08/152,974; 08/249,796; 08/473,754; and 08/483,934, and any
improvements, or modifications thereto. FIDS TECHNOLOGY does not include OPTIC
TECHNOLOGY, STBS, or any other technology or products owned or developed by SAC.
1.2 "OPTIC TECHNOLOGY" means and refers to all knowledge,
information and know-how, whether patentable or not, now in existence or
hereafter acquired, relating to any imaging or optic sciences, solutions,
systems or applications, originally created by Xxxxx X. Xxxxx and Xxxxxxx X.
Xxxxxx, which are and were intended to be used in conjunction with FIDS
TECHNOLOGY.
1.3 "SAC TECHNOLOGIES BIOMETRIC SOLUTION" or "STBS" means and
refers to all knowledge, information and know-how, whether patentable or not,
now in existence, or hereafter acquired or provided by SAC if SAC has been
instrumental in acquiring or providing the same, relating to the technological
process by which FIDS TECHNOLOGY and OPTIC TECHNOLOGY are combined to create an
automated process of analyzing and imaging a fingerprint, and identifying and
verifying the person whose fingerprint it is, including but not limited to
application/database development software and networking software, and which
technology will always be provided in a serialized chip set calibrated to a
specific imaging system. STBS will also include an electronic
registration/activation system for purposes of tracking and protecting the use
of PRODUCTS and TECHNOLOGY.
1.4 "TECHNOLOGY" used alone means and refers to FIDS
TECHNOLOGY, OPTIC TECHNOLOGY and STBS.
1.5 "PRODUCT" or "PRODUCTS" means and refers to any finished
single unit which is intended for industrial, commercial or personal use by an
end user without any changes or modifications, and which incorporates STBS, FIDS
TECHNOLOGY and OPTIC TECHNOLOGY.
1.6 "SAC FIELD OF USE" means and refers to all markets in the
world where PRODUCTS may be sold for use in industrial, commercial and consumer
"access control" applications, including, but not limited to, the control of
access to buildings, apartments, offices, and other facilities, appliances,
information, resources, computers and computer networks.
1.7 "JASPER FIELD OF USE" means and refers to all markets in
the world where PRODUCTS may be sold for uses other than industrial, commercial
and consumer "access control," including but not being limited to, credit card
clearing, check clearing and other such financial applications, law enforcement,
national identification systems, immigration control, automobiles, medical
patient identification systems, and personnel identification systems for federal
and state government applications.
1.8 "SALE(S)" means and refers to any transfer of a PRODUCT
for consideration, and a SALE shall be deemed to have occurred when the
consideration is received.
1.9 "AFFILIATE(S)" means and refers to any third party to
which FIDS TECHNOLOGY is transferred pursuant to Article IV, or any third party
which is owned or controlled by the PARTY referred to, or which owns or controls
the PARTY referred to. "Owned or controlled" means that through ownership or
contract, the party in control can elect or otherwise determine the majority of
the board of directors. A transferee of FIDS TECHNOLOGY to a third party within
JASPER FIELD OF USE shall be an Affiliate of JASPER, and a transferee of FIDS
TECHNOLOGY to a third party within SAC FIELD OF USE shall be an Affiliate of
SAC.
1.10 "OPTION BOARDS" means and refers to a CPU card, network
card or other accessory card which may be used in PRODUCTS. Optics assemblies,
solution chip sets and the system main board are not "OPTION BOARDS."
ARTICLE II
OWNERSHIP OF TECHNOLOGY
2.1 It is agreed and understood by all PARTIES that JASPER is
the sole owner of FIDS TECHNOLOGY. It is agreed and understood by all PARTIES
that SAC is the sole owner of OPTIC TECHNOLOGY and STBS, and each PARTY agrees
to execute such instruments of conveyance as may from time to time be required
in order to perfect title accordingly.
2.2. Each PARTY shall promptly disclose to the other any
improvements conceived or reduced to practice which relates to the other's
technology.
2.3 JASPER agrees that it will not sell, assign or otherwise
transfer FIDS TECHNOLOGY or any interest therein to any third party without the
consent of SAC. SAC agrees that it will not sell, assign or otherwise transfer
OPTIC TECHNOLOGY or STBS or any interest therein to any third party without the
consent of JASPER.
2.4 SAC shall be primarily responsible for all research and
development activities related to FIDS TECHNOLOGY and PRODUCTS. PRODUCTS
contemplated by this Agreement include but are not limited to (1) low cost
PRODUCTS incorporating TECHNOLOGY; and (2) add on configurations which will
allow for multiple PRODUCTS to be tied to a single personal computer and a
combination of local and remote units. New versions of PRODUCTS may be developed
by SAC from time to time including, but not limited to, the redesign of the
current FIDS TECHNOLOGY so as to port to a cost effective, open personal
computer architecture with such PRODUCTS to be available as an add on peripheral
for both local and remote configuration and with components of such systems to
include key pad interfaces, display interfaces, network interfaces, and base
software that will be incorporated into any such PRODUCTS or PRODUCT systems.
SAC will use its best effort to complete all such PRODUCTS for use in SAC FIELD
OF USE and JASPER FIELD OF USE. All present, future versions, and any
modifications or improvements to the FIDS TECHNOLOGY or to PRODUCTS shall be
within the scope of this Agreement and the PARTIES shall have the same rights
and obligations with respect to any such new versions of PRODUCTS or FIDS
TECHNOLOGY as they have with respect to any current FIDS TECHNOLOGY or PRODUCTS.
All present, future versions, and any modifications or improvements to FIDS
TECHNOLOGY whether developed by SAC or any third party will be included in the
license to SAC hereinafter, and made available to JASPER at no additional cost,
and JASPER will retain all ownership and intellectual property rights in such
versions. JASPER may, at its sole discretion, share in any research and
development costs associated with the FIDS TECHNOLOGY and PRODUCTS.
2.5 All source code, data, information, know-how, techniques,
processes, materials, computer programs, files, manual databases, hardware,
firmware, or documentation or any discoveries, inventions, and improvements,
whether or not patentable or copyrightable, conceived, made, first reduced to
practice, developed by or for SAC or JASPER with respect to FIDS TECHNOLOGY
("Developments") shall promptly be disclosed and submitted without delay to
JASPER. JASPER and SAC shall maintain all such Developments as confidential and
proprietary information of JASPER provided, however, JASPER and/or SAC may use
such Developments to support any PRODUCTS, and may license such Developments to
third parties for the limited purpose of the development and support of PRODUCTS
or as necessary to commercialize PRODUCTS, all in accordance with the terms and
conditions of this Agreement. JASPER reserves the exclusive right to acquire any
patents or other intellectual property protection in such Developments, and SAC
will provide reasonable assistance to JASPER as necessary to obtain and perfect
such rights, subject to the reimbursement by JASPER of any out of pocket
expenses of SAC.
2.6 SAC shall perform at the request of JASPER all lawful acts
and execute, acknowledge, and deliver all instruments, including assignments,
deemed necessary, useful, or appropriate by JASPER to vest in JASPER the entire
right, title and interest in and to such Developments and obtain and record
title thereto and to enable JASPER to prepare, file, and prosecute applications
for and obtain patents, copyrights and other forms of industrial property
protection thereon, as well as continuations, divisions, continuations-in-part,
additions, reissues, renewals, and extensions thereof, as JASPER at any time
deems useful or desirable to preserve such interests in any and all countries
selected by JASPER, and to obtain and record title to patents, copyrights and
other forms of industrial property protection and applications thereof so that
JASPER shall be the sole and absolute owner thereof in any and all countries in
which JASPER may desire such protection. As used herein, "industrial property"
includes patents and copyrights as well as any other form of industrial or
intellectual property protection which is presently available or applicable, or
which may become available or application, to Developments, including
developments in expression of data and computer software. Any reasonable
additional costs to SAC required to satisfy the obligations of this Subsection
will be reimbursed to SAC by JASPER.
2.7 To the extent permitted by law, any Development including
software, that generates copyrightable material shall fall within the enumerated
categories of ss. 101 of the 1976 Copyright Act definition of "work for hire"
subsection (2) and thus be considered a "work made for hire:, and SAC
acknowledges that by so considering any Development as a "work made for hire"
that JASPER shall own all right, title and interest in and to any copyright
associated with such Development. To the extent under applicable law that such
work may not be deemed a "work made for hire" SAC hereby expressly assigns and
agrees to assign JASPER all right, title and interest in and to SAC's copyright
for such work. SAC shall execute and deliver to JASPER such instruments of
transfer and take other such actin that JASPER may reasonably request,
including, without limitation, such assignments and other documents required to
vest in JASPER the entire right, title and interest in and to any copyright
associated with such Development.
ARTICLE III
LICENSE GRANTS
3.1 Subject to the terms and conditions set forth herein,
JASPER hereby grants to SAC and SAC hereby accepts from JASPER, an exclusive
worldwide license to use FIDS TECHNOLOGY to: (a) make PRODUCTS; (b) use and sell
PRODUCTS within the SAC FIELD OF USE; and (c) sell PRODUCTS exclusively to
JASPER with respect to JASPER FIELD OF USE.
3.2 Subject to the terms and conditions set forth herein, SAC
hereby grants to JASPER and JASPER hereby accepts from SAC, an exclusive
worldwide license to use and sell PRODUCTS within the JASPER FIELD OF USE which
incorporate OPTICS TECHNOLOGY and STBS.
3.3 The exclusive licenses granted herein shall terminate upon
the termination of this Agreement in accordance with Article VII.
3.4 No PARTY will have the right to grant sublicenses without
the consent of the other PARTY. Any sublicenses granted to third parties shall
be subject in all applicable respects to the provisions of this Agreement.
3.5 JASPER will refer all SALES opportunities within SAC FIELD
OF USE to SAC, and SAC will refer to all SALES opportunities within JASPER FIELD
OF USE to JASPER.
3.6 All PRODUCTS made and sold to JASPER with respect to
JASPER FIELD OF USE shall be made and sold in accordance with the terms and
conditions of the OEM AGREEMENT attached hereto as EXHIBIT A.
ARTICLE IV
TECHNOLOGY TRANSFERS; PAYMENTS
4.1 Notwithstanding the grant of an exclusive license to SAC
to use FIDS TECHNOLOGY to make, use and sell PRODUCTS as described in Article
III, subject to and with the consent of SAC, JASPER shall have the exclusive
right to sublicense or otherwise transfer, subject to the terms of this
Agreement, FIDS TECHNOLOGY within the JASPER FIELD OF USE, and subject to and
with the consent of JASPER, SAC shall have the exclusive right to sublicense or
otherwise transfer, subject to the terms of this Agreement, FIDS TECHNOLOGY
within the SAC FIELD OF USE.
4.2 With respect to any license or transfers of FIDS
TECHNOLOGY pursuant to this Article IV, any consideration received for the same
shall be divided as follows:
(a) With respect to a transfer of FIDS
TECHNOLOGY within JASPER FIELD OF USE:
(i) 10% to JASPER for purposes of funding
any legal fees and costs incurred with
respect to the transfer or claims subsequent
and with respect thereto;
(ii) 10% to SAC for purposes of funding
ongoing research and development expenses
with respect to TECHNOLOGY;
(iii) 48% to JASPER without restriction;
(iv) 32% to SAC without restriction;
(b) With respect to a transfer of FIDS
TECHNOLOGY within SAC FIELD OF USE:
(i) 10% to JASPER for purposes of funding
any legal fees and costs incurred with
respect to the transfer or claims subsequent
and with respect thereto;
(ii) 10% to SAC for purposes of funding
ongoing research and development expenses
with respect to TECHNOLOGY;
(iii) 48% to SAC without restriction;
(iv) 32% to JASPER without restriction;
ARTICLE V
ROYALTIES, REPORTS AND RECORDS
5.1 JASPER shall pay to SAC a running royalty in the amount of
Thirty Dollars ($30.00) with respect to each SALE of a PRODUCT within JASPER
FIELD OF USE by JASPER or an AFFILIATE of JASPER, and SAC shall pay to JASPER a
running royalty in the amount of Thirty Dollars and 50/100 ($30.50) with respect
to each SALE of a PRODUCT within SAC FIELD OF USE by SAC or an AFFILIATE of SAC.
5.2 Royalties shall be payable only once with respect to each
SALE of a PRODUCT regardless of the number of patented or nonpatented portions
of TECHNOLOGY or improvements thereto incorporated in the PRODUCT.
5.3 Royalty payments payable on account of PRODUCT SALES in
any month shall be made in United States Dollars on or before the end of the
month next following the month in which the subject PRODUCT SALE occurs. Each
such payment shall be accompanied by a report setting forth separately the SALES
of PRODUCTS occurring during the preceding month. Royalty checks shall be mailed
to the address specified in Article XI. Any currency translations that are
necessary to calculate payments shall be made at the average exchange rate
quoted by First Bank National Association, Minneapolis, Minnesota, for the month
in which the SALE occurred. In the event that foreign monies are not capable of
export to the United States, the PARTY paying the royalty payment shall escrow
the same on behalf of the PARTY to which the royalty is due at the paying
PARTY's sole risk and expense. SAC shall be responsible for the payment of all
royalties due hereunder by its AFFILIATES, and JASPER shall be responsible for
the payment of all royalties due hereunder by its AFFILIATES.
5.4 JASPER, SAC and their respective AFFILIATES shall keep and
maintain records of SALES which shall be open to inspection at reasonable times
by a certified public accountant chosen by the PARTY to which royalties are to
be paid on such SALES. Such records will include the name of the third party to
which the SALE was made, the number of PRODUCTS purchased, the payment terms and
the payments received. Such inspection shall be made at the expense of the
inspecting PARTY unless the inspection results in the additional payment of at
least $5,000 in royalties to the inspecting PARTY, in which event the expense of
the inspection shall be paid by the PARTY which was the subject of the
inspection. The records required by this paragraph shall be maintained and
available for inspection for a period of five (5) years following the month to
which they pertain.
ARTICLE VI
INFRINGEMENT
6.1 In the event that JASPER or SAC determines that a third
party is making, using or selling a product that may infringe on PRODUCTS or
TECHNOLOGY, it will promptly notify the other party in writing. JASPER may, at
its sole option, bring suit at its sole cost and expense against such alleged
infringer. In the event JASPER decides to bring suit, it shall give prompt
written notice to SAC of that fact. All recoveries in such suit shall inure to
the benefit of JASPER, except that SAC shall have the right to elect to pay up
to fifty percent (50%) of the litigation costs and receive a percentage of any
recovery equal to the percentage of litigation costs paid. SAC must make such
election within ninety (90) days of its receipt of notice that JASPER has
decided to bring suit. SAC shall also have the right to choose to be represented
by separate counsel in any such suit. If JASPER elects not to bring a suit
against the alleged infringer, it shall promptly notify SAC of that fact and SAC
shall have the right to commence such action at its own cost and expense, in
which case any recoveries shall inure to the benefit of SAC; provided, however,
that JASPER shall have the reciprocal right of contribution and recovery, and to
elect to have separate counsel.
6.2 In the event that JASPER, SAC or any AFFILIATE is sued by
a third party charging patent infringement for the manufacture, use or sale of
PRODUCT or TECHNOLOGY, all PARTIES shall promptly be notified. JASPER shall
promptly undertake the defense of the same at its sole and exclusive cost, and
SAC, to the extent the same is appropriate, shall use its best efforts to remove
from TECHNOLOGY any element thereof deemed to be infringing.
6.3 If any PARTY or any AFFILIATE is required to pay a royalty
to other than a PARTY as a result of a final judgment or settlement in order to
make and/or sell PRODUCTS or TECHNOLOGY, then in that event, the amount of the
same shall be deemed a credit against any royalty owed by one PARTY to another
PARTY hereunder.
ARTICLE VII
TERM AND TERMINATION
7.1 Unless renewed by mutual agreement or terminated pursuant
to the terms of paragraph 7.2, the term of this Agreement shall commence as of
the date hereof and shall end with the expiration of the last to expire of any
patent covering TECHNOLOGY; or, if no patent covers TECHNOLOGY, the term of this
Agreement shall end on the twentieth anniversary of the date hereof.
7.2 This Agreement may be terminated prior to the expiration
of its term in any one of the following manners:
(a) Breach. If one party has breached a
provision of this Agreement, the non-breaching party may terminate this
Agreement by giving written notice to the breaching party describing the breach;
provided, however, if the breach is curable, such termination shall not be
effective unless and until such breach remains uncured for a period of sixty
(60) days after delivery of the notice.
(b) Insolvency. Either party may terminate this
Agreement effective upon written notice to the other in the event the other
party:
(i) makes a general assignment for the
benefit of creditors;
(ii) files a voluntary petition for
bankruptcy or has filed against it an
involuntary petition for bankruptcy which is
not discharged within ninety (90) days;
(iii) applies for the appointment of a
receiver or trustee for any
substantial portion of its property or
assets; or
(iv) permits the appointment of any such
receiver or trustee who is not discharged
within a period of ninety (90) days after
such appointment.
7.3 Upon termination of this Agreement for any reason,
including the end of term as specified above, nothing herein shall be construed
to release any PARTY from any obligation which matured prior to the effective
date of termination. Any PARTY and its AFFILIATES may after the effective date
of such termination sell all PRODUCTS in stock and complete construction of all
PRODUCTS in the process of manufacture at the time of termination and sell the
same, provided that royalties on such PRODUCTS are paid as specified in this
Agreement.
ARTICLE VIII
CONFIDENTIAL INFORMATION
8.1 Anything in this Agreement to the contrary
notwithstanding, any and all knowledge, know-how, practices, process, or other
information (hereinafter referred to as "Confidential Information") disclosed or
submitted in writing or in other tangible form which is designated as
Confidential Information to any PARTY by any other PARTY shall be received and
maintained by the receiving PARTY(IES) in strict confidence and shall not be
disclosed to any third party. Furthermore, no PARTY shall use said Confidential
Information for any purpose other than those purposes specified in this
Agreement. The PARTIES may disclose Confidential Information to employees
requiring access thereto for the purposes of this Agreement provided, however,
that prior to making any such disclosures each such employee shall be apprised
of the duty and obligation to maintain Confidential Information in confidence
and not to use such information for any purpose other than in accordance with
the terms and conditions of this Agreement. No PARTY will be held financially
liable for any inadvertent disclosure, but each will agree to use its reasonable
efforts not to disclose any Confidential Information.
8.2 Nothing contained herein will in any way restrict or
impair any receiving PARTY's right to use, disclose, or otherwise deal with any
Confidential Information which at the time of its receipt:
(a) is generally available in the public domain,
or thereafter becomes available to the public through no act of the receiving
PARTY; or
(b) was independently known prior to receipt
thereof, or made available to such receiving PARTY as a matter of lawful right
by a third party.
8.3 The above obligations for Confidential Information shall
be in effect for the duration of, and for a period of six (6) years from and
after the termination of, this Agreement.
8.4 Any wording to the contrary notwithstanding, after first
informing the other PARTY of its intent to do so, any PARTY may make disclosures
of Confidential Information as may be required by any Federal, State or
Municipal authority having jurisdiction over the party. The PARTIES agree that
they will use their best efforts to persuade the appropriate authority that
because of the nature of the Confidential Information that the Confidential
Information not be disclosed.
8.5 SAC will maintain a copy of its Confidential Information.
JASPER will have right of access to SAC's Confidential Information for the
purposes of patent submission as it pertains to FIDS TECHNOLOGY, patent
maintenance, defense, or for the fabrication or manufacture of OPTION BOARDS for
JASPER FIELD OF USE.
ARTICLE IX
PUBLICATION
9.1 No PARTY shall have the right to publish any information
about TECHNOLOGY without first securing the consent of all other PARTIES.
ARTICLE X
INDEMNIFICATION
10.1 JASPER agrees to indemnify all other PARTIES and hold all
other PARTIES harmless against all liabilities, demands, damages. expenses, or
losses arising from the manufacture, use, or sale of PRODUCTS or TECHNOLOGY if
such losses are occasioned by the inclusion of FIDS TECHNOLOGY therein.
10.2 Except as set forth in Exhibit A attached hereto, SAC
agrees to indemnify all other PARTIES and hold all other PARTIES harmless
against all liabilities, demands, damages, expenses, or losses arising from the
manufacture, use or sale of PRODUCTS or TECHNOLOGY if such losses are occasioned
by the inclusion of OPTIC TECHNOLOGY or STBS therein.
10.3 The provisions of this Article shall survive termination
of this Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Each PARTY hereby assures the other PARTY that it will
comply with all United States export controls as set forth in the Export
Administration Regulations, 15 C.F.R. 770 et seq.
11.2 This Agreement shall be governed by the Laws of the
State of Minnesota.
11.3 For purposes of mailings of notices, payments, or other
communications, the addresses of the parties are given below.
In the case of JASPER and XXXXXXXX X. XXXXXX:
000 - 0xx Xxxxxx X.X.
Xxxxx 000, X.X. Xxx 0000
Bemidji, MN 56619-1005
In the case of SAC and all other PARTIES:
0000 Xxxx 00xx Xxxxxx
Xxxxx 000
Xxxxx, XX 00000
11.4 No term or provision of this Agreement shall be waived
and no breach excused, unless such waiver or consent shall be in writing and
signed by the PARTY claimed to have waived or consented. No waiver of a breach
shall be deemed to be a waiver of a different or subsequent breach.
11.5 This Agreement may not be modified, changed or terminated
orally. No change, modification, addition or amendment shall be valid unless in
writing and signed by all of the PARTIES.
11.6 This Agreement, including Exhibit A attached hereto,
constitutes and contains the entire Agreement of the PARTIES respecting the
subject matter hereof and supersedes any and all prior negotiations,
correspondence, understanding, and agreements, whether written or oral, between
the parties respecting the subject matter hereof.
11.7 Nothing contained in this Agreement, or in any other
document or instrument made in connection with this transaction, shall be deemed
or construed to create a partnership, tenancy-in-common, joint tenancy, joint
venture, other common enterprise or co-ownership by or among the PARTIES or any
of them.
11.8 Whenever any PARTY's approval or consent shall be
required herein, such approval or consent shall not be arbitrarily or
unreasonably conditioned, delayed or withheld and shall be deemed to have been
given, unless within ten (10) days of a PARTY's request therefor, the requested
PARTY notifies the requesting PARTY that the requested PARTY is denying such
approval or consent, stating in such notice the reasonable grounds therefor.
11.9 All communications, demands, notices or objections
permitted or required to be given or served under this Agreement shall be in
writing and shall be deemed to have been duly given or served if delivered in
person or deposited in the United States mail, postage prepaid, for mailing by
certified or registered mail, return receipt requested, and addressed to a PARTY
to the address set forth herein. Any PARTY may change his/its address by giving
notice in writing, stating his/its new address to all other PARTIES as provided
in the foregoing manner. Commencing on the tenth day after the giving of such
notice, such newly designated address shall be such PARTY's address for the
purpose of all communications, demands, notices or objections permitted or
required to be given or served under this Agreement.
11.10 This Agreement shall be binding upon and inure to the
benefit of the PARTIES hereto and their respective heirs, representatives,
successors and assigns; provided that no PARTY shall assign any right or
obligation hereunder in whole or in part, without the prior consent of the other
PARTIES, and any attempt to do so shall be void; provided further, however, that
any permitted assignment shall not release the primary obligor from the
responsibility of performing the obligation unless the obligor is specifically
released from such obligation.
11.11 The invalidity or unenforceability of any provision in
this Agreement or the application thereof to any person or circumstances shall
not affect or impair the validity or enforceability of any other provision
herein.
11.12 Any dispute, controversy or claim arising out of or in
connection with this Agreement, except for questions of fraud or questions
concerning the validity and enforceability of this Agreement or any of the
rights herein, shall be determined and settled by arbitration in Minneapolis,
Minnesota, or other place mutually agreed upon by the PARTIES pursuant to the
Rules then in effect of the American Arbitration Association as modified by this
Section. Any award rendered shall be final and conclusive upon the PARTIES and a
judgment thereon may be entered in a court having competent jurisdiction.
The PARTY submitting such dispute shall request and the
American Arbitration Association shall (i) appoint a group of three (3) neutral
arbitrators who are knowledgeable in the area of technology licensing and
contract law; (ii) direct the arbitrators to follow substantive rules of law and
the Federal Rules of Evidence and to determine the issue by majority vote; (iii)
allow for the PARTIES to request discovery pursuant to the rules then in effect
under the Federal Rules of Civil Procedure for a period not to exceed ninety
(90) days; (iv) require the testimony to be transcribed; and (v) require the
award to be accompanied by findings of fact and a statement of reasons for the
decision.
All costs and expenses, including attorneys' fees, of all
PARTIES incurred in any dispute which is determined and/or settled by
arbitration pursuant to this Section shall be borne by the PARTY determined to
be liable in respect of such dispute; provided, however, that if complete
liability is not assessed against any one PARTY, the PARTIES shall share the
total costs in proportion to their respective amounts of liability so assessed.
IN WITNESS WHEREOF, the PARTIES have caused this Agreement to
be executed effective the day and year first above written.
SAC TECHNOLOGIES, INC.
By /s/ XXXXX X. XXXXX /s/ XXXXX X. XXXXX
----------------------- ----------------------------
Its CEO XXXXX X. XXXXX
-----------------------
/s/ XXXXXXXX X. XXXXXX
----------------------------
XXXXXXXX X. XXXXXX
/s/ XXXXXXX X. XXXXXX
JASPER CONSULTING, INC. ----------------------------
XXXXXXX X. XXXXXX
/s/ XXXXXXXX X. XXXXXX
By /s/ XXXXXXXX X. XXXXXX ----------------------------
----------------------- XXXXXXXX X. XXXXXX
Its Pres/CEO
-----------------------
OEM AGREEMENT
EFFECTIVE DATE: April 26, 1996
PARTIES:
SAC Technologies, Inc.
0000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxxx 00000 ("SAC")
Jasper Consulting, Inc.
000 - 0xx Xxxxxx X.X., Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000 ("JASPER")
RECITALS:
A. SAC and JASPER are parties to a certain Licensing and Marketing
Agreement ("License Agreement") of even date herewith which, INTER ALIA,
describes the distribution rights of the parties regarding products representing
an automated process of analyzing and imaging fingerprints in a cost effective
manner.
X. XXXXXX desires to have SAC manufacture such products for JASPER as
are for use in JASPER FIELD OF USE and as directed by JASPER under the terms and
conditions of this OEM Agreement.
AGREEMENT:
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Definitions. For purposes of this Agreement, the words "PRODUCT(S)",
"FIDS TECHNOLOGY," and other capitalized terms used but not defined in this
Agreement shall have the meanings assigned to them in the License Agreement,
which definitions shall survive any termination of the License Agreement.
2. Manufacturing.
a. Purchase Requirements of PRODUCTS. PRODUCTS to be
manufactured by SAC on behalf of JASPER shall be PRODUCTS for use in
JASPER FIELD OF USE and shall be identified by mutual agreement between
the parties from time to time and set forth on Attachment A to this
Agreement. During the term of this Agreement, JASPER agrees to purchase
all of its requirements of PRODUCTS from SAC except for OPTION BOARDS
or enclosures which JASPER may elect to manufacture for JASPER FIELD OF
USE. The parties understand and acknowledge that this Agreement is not
a purchase order for any PRODUCT. JASPER will not be obligated to pay
for or take delivery of, and SAC will not be obligated to produce and
deliver, any PRODUCTS except pursuant to JASPER's purchase orders.
b. Serialization of PRODUCTS. All PRODUCTS produced by SAC
will be serialized not only as part of the quality control process, but
also to ensure protection of the technology at an embedded hardware
level. SAC will control the serialization of these embedded chip sets
and the chip sets in turn will be keyed to specific serialized
software.
c. Applicable Specifications. SAC shall produce and package
PRODUCTS pursuant to specifications agreed upon by the parties and set
forth in writing from time to time on Attachment A attached hereto (the
"Specifications"). Any written modifications to, or upgrading of, the
Specifications provided by JASPER to SAC with respect to a specific
purchase order shall, upon acceptance of SAC, be added to Attachment A
and incorporated in PRODUCTS produced by SAC after its receipt of such
modifications or upgrades.
d. Rolling Estimates. JASPER shall deliver to SAC on the first
day of each calendar quarter during the term of this Agreement its best
estimate of its requirements for PRODUCTS (on a per customer basis)
during the next twelve (12) month period on a quarter by quarter basis.
Such estimates shall not constitute firm purchase orders by JASPER.
e. SAC's Obligation to Manufacture. SAC agrees to manufacture
PRODUCTS ordered by JASPER; provided, however, that SAC shall not be
obligated to manufacture any PRODUCT in a particular quarter in
quantities which exceed one hundred ten percent (110%) of the quarterly
forecast of such PRODUCT submitted by JASPER at the commencement of the
quarter prior to such quarter unless such an order has been accepted in
writing by SAC.
f. Custom Products. SAC is hereby granted the first right of
refusal to perform custom design or integration projects for JASPER.
Should SAC elect not to perform or participate with any specific custom
project then JASPER may locate other resources to perform such custom
project provided that all confidentiality clauses and provisions of
this agreement are adhered to, and provided further, that SAC's
election not to perform a specific custom project shall not prejudice
its first right of refusal with respect to a later custom project.
3. Labels and Packaging.
a. Label and Package Design. JASPER will supply SAC with the
labeling and package design for all PRODUCTS and SAC agrees to package
PRODUCTS in accordance therewith. JASPER shall be entirely responsible
for such labeling and package design.
b. Purchase of Packaging Materials. SAC will order packaging
for PRODUCTS from its suppliers according to the minimum order
requirements of such suppliers in reliance on JASPER's forecasts. The
price of such packaging shall be added to the purchase price of
PRODUCTS. JASPER shall pay SAC for any extra charges or assessments
incurred by SAC for less-than-minimum or other non-standard size
packaging orders requested by JASPER.
c. Discontinuance of Packaging. JASPER shall pay SAC promptly
for any packaging purchased by SAC for PRODUCTS if such packaging is
discontinued by JASPER for any reason whatsoever or has remained unused
by SAC for a period of six (6) months; provided, however, that JASPER
shall not be required to pay SAC for any packaging which was designed
by SAC and which was also found to be unusable or defective.
4. Purchase Orders.
a. Applicable Terms and Conditions. The terms and conditions
of this Agreement shall apply to all purchase orders for PRODUCTS
submitted by JASPER to SAC. No terms and conditions contained on any
quotation or purchase order for PRODUCTS submitted by JASPER (except
the terms specified in subparagraph b below) or contained on any
acceptance or invoice form submitted by SAC, which are inconsistent
with or in addition to the terms and conditions of this Agreement shall
apply to such quotation or resulting purchase order, unless the parties
agree otherwise in a written document separate from the quotation,
purchase order, acceptance document or invoice.
b. Placement of Orders. JASPER shall place its orders for
PRODUCTS by delivery of a written purchase order to SAC. Each purchase
order shall specify the quantity, identity and delivery and shipment
instructions for the ordered PRODUCTS and any modified or upgraded
Specifications. JASPER shall not cancel orders for PRODUCTS or return
any PRODUCTS ordered by it without SAC's prior written consent;
provided, however, that upon receipt of written request by SAC from
JASPER that JASPER desires to change, reduce or otherwise curtail any
subject purchase order, SAC will respond to JASPER's request with
respect to any PRODUCTS the manufacture of which was not commenced at
the time of the receipt of the written request. No change order or
curtailment request shall be effective with respect to completed
PRODUCTS, or PRODUCTS which are in process at the time the written
request is received by SAC.
5. Price and Payment.
a. Price. The purchase price to JASPER for PRODUCTS shall be
as set forth on Attachment B, and as may be modified from time to time
in writing between the parties, in order to provide SAC with a
manufacturing gross margin of twenty percent (20%), determined as the
product of 1.2 multiplied by the sum of SAC's accountable direct costs
for materials, labor and overhead burden associated with the
manufacturing process.
b. Taxes and Shipping Costs. The purchase price for PRODUCTS
shall not include any sales, use, excise or other taxes or any shipping
or freight insurance costs due with respect to PRODUCTS. JASPER shall
reimburse SAC or shall pay directly for all such taxes, shipping and
insurance costs.
c. Payment. JASPER shall pay SAC for PRODUCTS within forty-
five (45) days of the date of SAC's invoice. If JASPER does not pay
its invoices when due, SAC reserves the right to require payment in
advance, by COD, or otherwise change credit terms by delivery of
written notice to JASPER.
d. Letter of Credit. Payment for each purchase order shall be
by confirmed irrevocable letter of credit drawn on a bank acceptable to
SAC in the amount of the purchase order. At the discretion of SAC, SAC
may extend payment terms on other than letter of credit, but shall
reserve the right to insist upon payment by letter of credit at any
time.
6. Shipment, Delivery and Acceptance.
a. Shipment and Risk of Loss. SAC shall deliver PRODUCTS
F.O.B. SAC's manufacturing location to the place designated for
shipment and by the carrier specified by JASPER on its purchase order.
Title to and risk of loss of PRODUCTS shall pass to JASPER upon
delivery of the same to the carrier designated by JASPER, or if not
designated by JASPER to the carrier selected by SAC. The carrier shall
be deemed to be JASPER's agent and JASPER shall make all claims with
respect to damage in transit against the responsible carrier.
b. Delivery Dates. JASPER shall submit its purchase orders to
SAC at least ninety (90) days prior to any delivery date requested in
such purchase order. SAC agrees to use its reasonable efforts to meet
such delivery dates. However, as for PRODUCTS that are custom ordered
by JASPER, pursuant to modified or upgraded Specifications, and
therefore not commonly manufactured by SAC, such delivery dates are
deemed to be estimates only and SAC shall not be in breach of this
Agreement or the purchase order or otherwise be liable to JASPER if it
fails to meet such delivery dates.
c. Inspection. JASPER shall inspect all PRODUCTS immediately
after arrival and shall notify SAC in writing within thirty (30) days
after receipt of any shortages, non-conformance with the purchase order
or any other failure under this Agreement, and SAC, as soon as is
practicable, shall rectify the shortage, non-conformance or other
failure. JASPER shall return any non-conforming or failed PRODUCT to
SAC for inspection at JASPER's cost, and the cost of shipment shall be
a credit against future PRODUCT purchases. After such time period, SAC
shall not be liable for any non-conformance of PRODUCTS which JASPER
could reasonably have discovered within such time period, and no
PRODUCTS shall be returned to SAC (for reason of shortage,
non-conformance, or any other failure discoverable upon inspection by
JASPER) without SAC's prior written or telefaxed consent or return
material authorization.
d. Force Majeure. SAC shall not be liable to JASPER for any
breach of this Agreement or any purchase order for PRODUCTS caused in
whole or in part by any contingency beyond SAC's reasonable control,
including without limitation, acts of God, acts of any government or
any agency or subdivision thereof, or shortage or inability to secure
labor, fuel, energy, raw materials, supplies or machinery at reasonable
prices from regular sources.
7. Warranty.
a. Limited Warranty. SAC represents and warrants to JASPER
that all PRODUCTS will be manufactured in accordance with the
Specifications and with all applicable federal, state, and local laws
and regulations governing the manufacture of such PRODUCTS
(the "Limited Warranty").
b. Notification of Defect. In order to recover under the
Limited Warranty, JASPER must send SAC written notice of a defect not
discoverable upon inspection as provided in Section 6.c. above (setting
forth the problem in reasonable detail) within one (1) year from the
date of shipment or within sixty (60) days after the date of discovery,
whichever is sooner. Upon SAC's written request and return material
authorization, JASPER shall return the alleged defective PRODUCT to
SAC, freight and insurance prepaid by JASPER, for inspection. SAC will
not be responsible for damage due to improper packing or shipment of
such PRODUCT, provided such packing or shipment meets JASPER's
requirements or is otherwise in accordance with SAC's usual packing and
shipping of PRODUCTS of a similar nature, but SAC shall be responsible
for damage due to SAC's negligence in packing or shipping such PRODUCT.
c. Remedy for Breach of Warranty. SAC's sole obligation in
the event of a breach of the Limited Warranty shall be, at its
option, to repair or replace such defective PRODUCT or to refund the
purchase price paid by JASPER to SAC for such PRODUCT.
d. Limitation of Warranty. THE LIMITED WARRANTY DOES NOT COVER
ANY PARTS WHICH BY THEIR NATURE MAY NOT FUNCTION FOR A FULL YEAR. THE
LIMITED WARRANTY DOES NOT INCLUDE ANY FAILURE DUE TO ACCIDENTAL
BREAKAGE. THE LIMITED WARRANTY SHALL AUTOMATICALLY TERMINATE IF: (i)
THE LABEL OR SERIAL NUMBER IS REMOVED FROM PRODUCT; (ii) PRODUCT OR ITS
PARTS ARE NOT PROPERLY MAINTAINED OR ARE MISUSED, ABUSED, NEGLECTED,
DAMAGED IN TRANSIT, ALTERED OR USED FOR A PURPOSE NOT INTENDED; (iii)
PRODUCT IS USED WITH IMPROPER ELECTRICAL CURRENT, IS STORED, MOVED,
INSTALLED, MAINTAINED OR OPERATED CONTRARY TO SAC'S WRITTEN
INSTRUCTIONS OR IS IMPROPERLY INTERFACED WITH CUSTOMER SUPPLIED
INSTRUMENTATION OR SOFTWARE; (iv) PARTS ARE USED WITH PRODUCT WHICH ARE
NOT SUPPLIED BY SAC; OR (v) PRODUCT OR PARTS ARE SERVICED BY ANY PARTY
OTHER THAN DISTRIBUTOR OR SERVICE CENTER APPROVED BY BOTH JASPER AND
SAC AS AN AUTHORIZED DISTRIBUTOR OR SERVICE CENTER.
e. Disclaimer of Warranty. EXCEPT AS EXPRESSLY PROVIDED IN
THIS SECTION 7, SAC MAKES NO REPRESENTATION OR WARRANTY TO JASPER OF
ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO ANY PRODUCTS, WHETHER AS
TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, WARRANTIES
ARISING FROM A COURSE OF DEALING OR USAGE OR TRADE OR ANY OTHER MATTER.
NO EMPLOYEE, REPRESENTATIVE OR AGENT OF SAC HAS ANY AUTHORITY TO BIND
SAC TO ANY AFFIRMATION, REPRESENTATION OR WARRANTY EXCEPT AS STATED IN
THIS WRITTEN WARRANTY POLICY.
f. Limitation of Remedy. SAC SHALL HAVE NO LIABILITY TO ANY
PERSON FOR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF
ANY DESCRIPTION, WHETHER ARISING OUT OF WARRANTY OR OTHER CONTRACT,
NEGLIGENCE OR OTHER TORT, OR OTHERWISE, INCLUDING, WITHOUT LIMITATION,
DAMAGES RESULTING FROM THE NON-OPERATION OF PRODUCTS, LOSS OF RESEARCH
OR PRODUCTION, OR LOSS OF SALES OF PRODUCTS. UNDER NO CIRCUMSTANCES
SHALL SAC'S LIABILITY HEREUNDER TO JASPER OR ANY OTHER PERSON EXCEED
THE PURCHASE PRICE FOR PRODUCTS RECEIVED BY SAC FROM JASPER.
8. Indemnification by SAC. SAC agrees to indemnify, defend and hold
JASPER and its officers, directors, successors and assignees harmless from any
and all claims, liabilities, damages, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) suffered or incurred by any
of them resulting from, arising out of or relating to any claim of personal
injury, property damage or other damage or injury arising from the negligent
manufacture of PRODUCTS by SAC, provided however, that JASPER first notify SAC
of the existence of any such claim, and allow SAC to participate in the defense
of such claim.
9. Indemnification by JASPER. JASPER agrees to indemnify, defend, and
hold SAC and its officers, directors, successors and assignees harmless from and
against all claims, liabilities, damages, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) suffered or incurred by SAC
resulting from:
a. a third party claim of infringement of proprietary rights
with respect to the manufacture, use, or sale of PRODUCTS on account of
their incorporating FIDS TECHNOLOGY or with respect to the use of the
labels and packaging proposed by JASPER for use on PRODUCTS; or
b. any claim of personal injury, property damage or other
damage or injury arising from the use of PRODUCTS, other than those
claims specifically referred to in Section 8 above.
JASPER shall take all necessary precautions to ensure that its activities with
respect to the manufacture, use and sale of PRODUCTS are performed in accordance
with all federal, state, and local laws and regulations governing such
activities.
10. Confidentiality. The care and treatment of the confidential
information of the parties under this OEM Agreement shall be as addressed in
Article VIII of the License Agreement.
11. Term and Termination.
a. Term. This Agreement shall commence as of the date set
forth on the first page of this Agreement and shall continue for a
period commensurate with the License Agreement.
b. Termination as to Specific PRODUCTS. Either party may
terminate this Agreement as to any specific PRODUCT, effective
immediately upon delivery of written notice to the other party, if the
manufacture of, or substantially all of JASPER's requirements for, such
PRODUCT is restricted by order of any state or federal governmental
agency.
12. Effect of Termination. The parties shall take the following actions
upon the effective date of expiration or termination of this Agreement for
whatever reason:
a. Existing Purchase Orders. SAC shall complete manufacture
of and JASPER shall take delivery of and pay for all PRODUCTS subject
to purchase orders which were accepted by SAC on or prior to the
effective date of expiration or termination.
b. Packaging. SAC shall deliver to JASPER all of its
inventory of PRODUCT packaging purchased for the benefit of JASPER as
aforesaid, and JASPER shall reimburse SAC its direct cost for (i) any
inventory of JASPER's packaging for PRODUCTS; (ii) any JASPER packaging
for PRODUCTS which SAC has ordered and cannot cancel within ten (10)
days after delivery of an invoice for the same, and (iii) any
reasonable penalties resulting from SAC's cancellation of an order for
JASPER packaging.
c. Serialization. In the event that SAC is unable to perform
the serialization requirements of paragraph 2.b. above adequately for
JASPER'S needs, as reasonably determined by JASPER according to the
provisions hereof, JASPER may organize its own resources to provide
these functions; provided, however, that in all events SAC will control
the serialization of chip sets for protection of FIDS TECHNOLOGY and
the manufacture of optics imaging assemblies.
d. Survival of Provisions. The obligations of the parties
under Sections 8 and 9 shall survive the expiration and termination of
this Agreement and shall continue in full force and effect.
13. General Provisions.
a. Incorporation by Reference. The provisions of Article XI
of the License Agreement are hereby incorporated herein by this
reference.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
JASPER CONSULTING, INC.
By /s/ Xxxxxxxx X. Yakhar
------------------------------------
Its Pres/CEO
---------------------------------
SAC TECHNOLOGIES, INC.
By /s/ Xxxxx X. Xxxxx
------------------------------------
Its CEO
---------------------------------
ATTACHMENT A
TO
OEM AGREEMENT
1. (Product and Specification)
2. (Product and Specification)
ATTACHMENT B
TO
OEM AGREEMENT
1. Product Price
2. Product Price
Credits and Deferrals of Purchase Price
