Exhibit 10.4
STRATEGIC ALLIANCE AGREEMENT
This Strategic Alliance Agreement is made and entered into this 4th day of May
2000 by and between BSI2000, Inc. (`BSIX'), a Colorado corporation with offices
located at 00000 Xxxx Xxxxxx Xxxxxx, Xxxxx X000 Xxxxxxxx, Xxxxxxxx 00000, and
Drug Intervention Services of America, Inc. (`DISA'), a Texas corporation with
offices located at 00000 Xxxxxxxx Xxxxxxxxx Xxxxxxx, Xxxxx 00000.
WHEREAS, BSIX designs, builds, and markets proprietary and patent pending
systems for various applications that use optical cards and wishes to team, on
an exclusive basis, with DISA for the joint purpose of introducing and marketing
and selling optical card related products into the general drug and alcohol
testing markets;
WHEREAS, DISA specializes in the development and administration of mandated
federal, state, company, and contractor drug and alcohol testing programs and
wishes to team, on an exclusive basis, with BSIX for the joint purpose of
introducing and marketing and selling optical card related products into such
drug and alcohol testing markets.
THEREFORE, in consideration of the mutual covenants hereinafter set forth, the
parties to this Strategic Alliance Agreement agree as follows:
1. Strategic Alliance. The parties agree to work together in good faith, on a
best efforts basis, to further develop and market on a worldwide basis, as
quickly as practical, the family of drug and alcohol testing optical card
products, developed by BSIX, named 'DISA 2000'.
2. Specific Exclusive Markets. The parties agree that only DISA and its
agents will have the exclusive right to market and sell the products of
BSIX into the following segments on a worldwide basis: mandated
governmental, company, and contractor drug and alcohol testing, including
US Department of Transportation regulated personnel (federal highway,
pipeline, airlines, coast guard, railroad, and nuclear); site access and
control for the petroleum and chemical industries; administration of
worker's compensation; insurance for construction sites; and construction
contractor consortiums (collectively 'Exclusive Markets'). BSIX agrees
that it will not, during the term of this Strategic Alliance Agreement,
design, market, or sell, either solely or in partnership or cooperation
with any third-party, any optical card based products into the Exclusive
Markets without the express written preauthorization of DISA. DISA agrees
that it will not, during the term of this Strategic Alliance Agreement,
design, market, or sell, either solely or in partnership or cooperation
with any third-party, any optical card based products, other than those
provided by BSIX, into the Exclusive Markets without the express written
preauthorization of BSIX.
3. Responsibilities of BSIX. BSIX agrees that it will use its best efforts
to: work closely with DISA to understand the requirements of customers in
the Exclusive Markets in order to develop and provide, in a timely manner,
manufactured products that DISA can sell; assist DISA by preparing and
producing marketing and training materials relative to the optical card
component of the DISA 2000 in sufficient quantities to support the DISA
sales force; and support DISA in any way practical to further the goal of
selling product into the Exclusive Markets. BSIX agrees that it will be
responsible for development costs directly related to optical card
transaction processing units as modified for the Exclusive Markets
provided that BSIX has agreed to make such modifications.
4. Responsibilities of DISA. DISA agrees that it will use its best efforts
to: work closely with BSIX to educate BSIX about the requirements of
customers in the Exclusive Markets; keep BSIX informed
about its general activities in marketing and selling optical card related
products into the Exclusive Markets; and actively market and sell the DISA
2000 family of optical card products into the Exclusive Markets. DISA
expects to make an investment over the next five years of approximately
$5.0-million to market the DISA 2000 family. Further, the Parties
acknowledge that DISA has created a five (5) year business plan that
reflects the intent of DISA incorporating approximately 60-70 sales
professionals operating in the Exclusive Markets. These sales
representatives will promote the sales and support of DISA 2000 as an
integral part of the DISA product offering.
5. Ownership of Technology. The parties agree that ownership of all
associated technology, already developed or to be developed, will not
change as a result of this Strategic Alliance Agreement. The parties agree
that BSIX will retain all rights and ownership of all software and
hardware technology and all patents, that it has already developed or will
develop, that is contained within or used by the optical card transaction
processing units.
6. Term of Agreement. This Strategic Alliance Agreement shall become
effective on the date hereinabove first shown and the term of the
Strategic Alliance Agreement shall be for five (5) years after the
effective date of the Strategic Alliance Agreement unless mutually
extended, in writing, by the parties or canceled as allowed in paragraph 9
titled Termination of Agreement.
7. Confidential Information. The parties acknowledge that certain business or
technical information that may be disclosed by either party to the other
represents valuable, proprietary, and trade secret information that is the
property of the disclosing party. Such information includes, but is not
limited to, unpublished product specification and related technical data
such as drawings, data, source computer programs, software, and other
items; customer lists; marketing plans; the internal organization,
business relationships and other affairs of the disclosing party; and
other items (hereinafter `Proprietary Information'). The parties agree,
that during the course of this Strategic Alliance Agreement, and at all
times thereafter, as specified herein, to keep all Proprietary Information
confidential which disclosing parties indicate, in writing, at the time of
disclosure, to be proprietary, and to not disclose Proprietary Information
to any third party without the express written approval of the disclosing
party other than to those employees or agents that must have access to
Proprietary Information in order to effectively perform the obligations
under the Strategic Alliance Agreement. The parties each agree to take the
same steps that they each utilize to protect their own similar proprietary
information, but in any event not less than reasonable means, to protect
all Proprietary Information received hereunder. The obligations of the
parties that receive Proprietary Information, as set forth above, shall
not apply to any disclosed information that appears in any printed or
recorded public publication or that ceases to be proprietary other than by
disclosure by any party; or that can be shown, by documentary evidence, to
have been in the possession of a receiving party, prior to receipt
hereunder; or that is available or becomes available, without restriction
to the receiving party, from a source independent of the disclosing party;
or that is agreed to be unrestricted by the disclosing party in writing;
or that is developed independently by the receiving party; or that is
required to be disclosed by the recipient party by a government agency or
other legal authority, so long as the recipient party provides the
disclosing party with written notice of the required disclosure promptly
upon receipt of notice of the required disclosure; or that is not received
by the receiving party, in tangible form and conspicuously marked
`proprietary', `confidential' or some such similar designation. The
obligations of the receiving party with regard to Proprietary Information
shall survive the termination or expiration of this Strategic Alliance
Agreement for a period of three (3) years.
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8. Terms of Sales, Pricing and Commissions.
(a) DISA 2000 Systems. The parties agree that DISA shall purchase the
DISA 2000 from BSIX for resale to third parties; provided, that any
such transaction shall be limited so as to only embody a license to
the end user to use any software, firmware, or similar intellectual
property incorporated into the DISA 2000, and any "xxxx of sale" or
purchase order shall so reflect such restricted terms of sale. The
parties also agree that the initial list pricing of the BSIX systems
sold by DISA will be $ per optical card; $ for
standard DISA 2000 transaction terminals; $ for
enrollment DISA 2000 terminals; and $ per transaction.
DISA shall not represent anything to the contrary in connection with
such transactions, and shall indemnify and hold BSIX harmless from
any breach of this provision. DISA shall pay BSIX for the DISA 2000
in an amount equal to a discount from the price that DISA
sells the DISA 2000 to such third party; provided, however, that
BSIX shall establish a minimum price to be received by BSIX for DISA
2000 product (including all components and accessories for use
therewith), so as to assure that BSIX is not required to sell the
DISA 2000 system at less than BSIX's cost, plus a reasonable markup.
BSIX shall provide DISA with a current schedule setting forth the
minimum price to be received by it from time to time, and BSIX may
change such pricing on 60 (sixty) days prior written notice to DISA,
which shall become effective for all purchase orders received from
DISA after its effective date (but no less than 60 (sixty) days
after such schedule is provided to DISA). Payment to BSIX by DISA
shall be due on a Net 30 days basis unless negotiated otherwise on a
case-by-case basis. BSIX will consult with DISA in advance prior to
any change in pricing to be effected hereunder. Risk of loss shall
pass to DISA upon delivery of DISA 2000 systems to DISA or to the
end customer, as the case may be. No purchase order submitted by
DISA to BSIX that contains terms that are contrary to these general
provisions shall be binding on BSIX. No purchase order submitted by
DISA to BSIX shall be binding on BSIX until accepted by BSIX. The
DISA 2000 shall be warranted to the end user by BSIX according to a
one (1) year term. Warranty service during the term of such warranty
shall be at the expense of BSIX, pursuant to its standard warranty.
(b) Accessories. The parties agree that accessories (such as optical
cards) that are used in conjunction with the DISA 2000 or
stand-alone maintenance agreements may be purchased from BSIX by
DISA on the same pricing terms as the DISA 2000 systems.
(c) Transaction Fees. The parties acknowledge that an integral component
of the transaction involving the sale of a DISA 2000 is ongoing
transaction fees paid to DISA by the end user of the DISA 2000
system. BSIX shall be paid percent of such transaction
fees generated by the DISA 2000. Payment shall be due to BSIX thirty
(30) days after such fees are received from the end user by DISA.
Such payments shall continue for the life of the installed systems
sold by DISA.
9. Termination of Agreement. This Strategic Alliance Agreement, other than as
limited by the above paragraph 7 titled Confidential Information, shall
automatically terminate upon the happening of any one of the following
events: (a) A party ceases to actively carry on business; (b) A party
fails to remedy a default of any of the terms, covenants or conditions,
contained in this Strategic Alliance Agreement, within thirty (30) days
after being requested, in writing by the other party, to do so; or (c) A
party becomes insolvent, exercises an assignment for the benefit of
creditors, goes into liquidation, or has a trustee appointed for the
benefit of creditors. The parties agree that BSIX has the right to
terminate this Strategic Alliance Agreement if amounts received by BSIX
hereunder are less than $ , $ , $ , and
$ in the years 2001, 2002, 2003, and 2004 respectively. In the
event of termination of this Strategic Alliance Agreement, for any reason,
each party shall return all
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Proprietary Information and any loaner equipment to the other party within
10 days of such termination.
10. Miscellaneous.
(a) Enforceability. Should any provision of this Strategic Alliance
Agreement be held by a court of law to be illegal, invalid, or
unenforceable, then the legality, validity, and enforceability of
the remaining provisions of this Strategic Alliance Agreement shall
not be affected or impaired thereby.
(b) Waiver. The failure of any party to enforce any of the terms and
conditions of this Strategic Alliance Agreement shall not constitute
a waiver of that party's right hereunder to enforce each and every
term and condition of this Strategic Alliance Agreement or upon
reasonable notice to require correction of a default previously
waived.
(c) Governing Laws. This Strategic Alliance Agreement shall be deemed to
have been entered into and shall be interpreted and governed by the
laws of the State of Texas.
(d) Headings. The headings used in this Strategic Alliance Agreement are
for organizational purposes only and are not to be used in the
interpretation of this Strategic Alliance Agreement.
(e) Total Agreement. This Strategic Alliance Agreement sets forth the
entire agreement of the parties with respect to its subject matter
and supersedes all prior agreements (including the "Teaming
Agreement" entered into by the parties in 1998), commitments, or
representations of any kind, oral or written, and may only be
amended or modified, in writing, by mutual consent of duly
authorized representatives of all of the parties.
(f) Assignability. Neither party may assign its obligations under this
Strategic Alliance Agreement without the written consent of the
other party, which consent shall not be unreasonably withheld. (g)
Benefit; Successors and Assigns. This Strategic Alliance Agreement
shall inure to the benefit of, and be binding upon, the parties and
their permitted successors and assigns.
(h) Communications and Notices. All communications and notices provided
for in this Strategic Alliance Agreement shall be in writing and
will be given by facsimile (with delivery confirmed by the party
giving notice), express courier holding itself out as able to make
delivery within one business day of receipt, hand delivery receipted
by the addressee, or by mail (postage-paid, certified or registered
mail, return receipt requested) to such address and for such
attention, as any party may from time to time designate by notice in
writing from one party to the other, as the case may be. Notice will
be effective one business day after delivery to a telegraph company
or express courier, three business days after deposit in the U.S.
Mail as provided above, or upon receipt if hand-delivered or
facsimile-delivered as of a Business Day, or as of the following
Business Day if delivered or facsimile-delivered as of a day that is
not a Business Day. A "Business Day" is any day other than a
Saturday or Sunday on which banks in the State of Texas are open for
business. The present addresses of the parties are as set forth in
the first paragraph of this Strategic Alliance Agreement. The
present facsimile numbers of the parties as follows:
DISA: 000-000-0000
BSIX: 000-000-0000
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(i) Delays, Omissions, and Waivers. No delay or omission to exercise any
right, power or remedy accruing to any party upon any breach or
default by any party under this Strategic Alliance Agreement will
impair any such right, power or remedy nor will it be construed to
be a waiver of any such breach or default, or an acquiescence
therein, nor will any similar breach or default be deemed a waiver
of any other breach or default theretofore or thereafter occurring;
nor will any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party as to any provision or condition
of this Strategic Alliance Agreement, must be in writing and will be
effective only to the extent specifically set forth in such writing.
IN WITNESS WHEREOF, the parties have executed this Strategic Alliance
Agreement in two originals as of the day and year first above written.
B512000, Inc. Drug Intervention Services of America, Inc.
/s/Xxxx Xxxxxx /s/ Xxxxxx Xxxxxx
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Xxxx Xxxxxx, President Xxxxxx Xxxxxx, President
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