Exhibit 10.2.1
SOFTWARE LICENSE AND ROYALTY AGREEMENT
This Software License and Royalty Agreement (hereinafter " Agreement") is made
as of the_____ day of December 2001 (hereinafter the "Effective Date") by and
between Authentec Corporation, a corporation duly organized under the laws of
the State of Delaware, and located in Melbourne, Florida "Authentec"), and
Digital Descriptor Systems Inc., a corporation duly organized under the laws of
the state of Delaware, with offices at 00 Xxxxxxx Xxxxxxx, Xxxxxxxx Xxxxx, XX
00000 (hereinafter "DDSI").
ARTICLE 1
Defined Terms
"Documentation" shall mean all documents, reports, instruments, memoranda or
papers, in any medium or manifestation, electronic or otherwise, including,
without limitation, research records and reports, development reports,
experimental records and reports, engineering records and reports, production
drawings, engineering drawings, board layout drawings, schematics, raw material
specifications, quality control reports and specifications, drawings,
photographs, models, simulations, test routines, test fixtures, test reports and
results, technical data, business plans, marketing studies, financial forecasts,
customer lists, books, records, view graphs and other written presentation
materials, user's manuals, databases, notes, and any other tangible information
owned or controlled by Authentec, whether or not considered a Trade Secret,
related to, incorporated in or constituting the PowerMatch Technology.
"DDSI" shall mean, collectively, DDSI and any majority-owned subsidiary of DDSI.
"Authentec" shall mean, collectively, Authentec and any majority-owned
subsidiary of Authentec.
"Government Sales" shall mean sales to the national government of any domestic
or foreign sovereign nation, and the government of any state, province,
territory or other political subdivision thereof including any agency,
department, branch, division, institution, ministry or other bureaucratic
subdivision thereof.
"Commercial Sales" shall mean all other sales not included in the definition of
Government Sales above.
"PowerMatch Product" means that PowerMatch Technology, which in combination with
other hardware and software comprise a fingerprint match engine licensed,
leased, bartered, or exchanged by DDSI as of the Effective Date including all
non-substantial improvements and derivatives thereof. Any fingerprint matching
software product designed or developed after the Effective Date, and based in
substantial part on a PowerMatch Technology, will be considered a Derivative
PowerMatch Product. Any fingerprint matching software product designed or
developed after the Effective Date and (i) uses no more than 10% of either the
PowerMatch Client Software or PowerMatch Server Software; and (ii) if it
operates in a substantially different manner or for a substantially different
purpose than a PowerMatch Product and (iii) it does not incorporate the
PowerMatch Patents or PowerMatch Inventions, will not be considered a PowerMatch
Product or a Derivative PowerMatch Product.
1
"PowerMatch Technology" shall mean (i) the PowerMatch Patent Applications; (ii)
the PowerMatch Inventions; (iii) the PowerMatch Software in the form as it
existed at the time of delivery to DDSI; and (iv) the PowerMatch Trademarks, all
of which are further described in Exhibit A to this Agreement. DDSI expects to
develop modified versions of the PowerMatch technology both to integrate with
its own installed base of users and to meet the needs of customers who require
enhanced features not currently supported by PowerMatch.
"PowerMatch Software" shall mean the software of Authentec, in source code and
object code form, and identified as:
(1) PowerMatch Client Software (Rev. Level 1.0); and
(2) PowerMatch Server Software (Rev. Level 1.0).
(3) Associated dynamic link libraries (dll's) and algorithms
(4) Any incremental improvements, whether "beta" versions, or even
informal or prototype code files.
"Product" shall mean either a PowerMatch Product or a Derivative PowerMatch
Product.
"Territory" shall mean all the countries and territories of the world.
"Total Price" means DDSI's gross invoice price for the Product packed for
shipment without any deductions, except for the following items, to the extent
they are paid or allowed by DDSI:
(a) sales or turnover taxes on sales invoices;
(b) transportation charges and insurance on shipments to customers;
(c) trade or quantity discounts (but not cash discounts allowed to
customers and not agents' commissions); and
(d) credits allowed for PowerMatch Products returned or not accepted
by customers.
(i) If a Product is included as a component of another product licensed or
leased by DDSI, then Total Price means the Total Price of such Product, as if
separately licensed or leased in an arm's length transaction or the most nearly
comparable Product that has been or would be licensed or leased in the ordinary
course of business.
(ii) When Products are licensed or leased by DDSI to any Affiliate (as that term
is defined by the Securities Act of 1933, as amended), or when Products are
bartered or exchanged for goods or services, then Total Price shall be the Total
Price at which comparable Products have been or would be licensed or leased in
the ordinary course of business.
ARTICLE 2
Licenses & Royalties
License: Authentec hereby grants to DDSI a royalty bearing, worldwide,
non-exclusive right and license to use the PowerMatch Software and all
Documentation with respect to the foregoing, to make, have made, use, improve,
market and license products and to provide services to customers in the
Territory. If requested to do so in writing by Authentec in order to preserve
valuable rights, and if commercially feasible, DDSI shall use reasonable efforts
to cause all products manufactured by it or its Affiliates that are designated
by Authentec and that incorporate or embody inventions covered by the claims of
licensed patents to be marked or labeled with appropriate references to such
patents.
2
Royalties: DDSI shall pay to Authentec a one-time initial royalty payment of
$5,000 for which DDSI will receive an Authentec Software Development Kit and, on
an ongoing basis, a royalty of ten percent (10%) of the Total Price for each
PowerMatch Product licensed, leased, bartered, or exchanged by DDSI from the
Effective Date for all Commercial Sales, and from the expiration date of the
DDSI-Xxxxxx License for all Government Sales. DDSI shall notify Authentec in
writing as soon as the expiration date for the Xxxxxx license is established. A
PowerMatch Product shall be considered licensed or leased on the date of payment
of an invoice. A PowerMatch Product shall be considered bartered or exchanged on
the date of shipment. Only one royalty shall be due for each PowerMatch Product.
This royalty obligation shall continue for the duration of this Agreement.
DDSI shall pay to Authentec a royalty of ten percent (10%) of the Total Price
for each instantiation of each Derivative PowerMatch Product licensed, leased,
bartered, or exchanged by DDSI from the Effective Date. A Derivative PowerMatch
Product shall be considered licensed or leased on the date of payment of an
invoice. A Derivative PowerMatch Product shall be considered bartered or
exchanged on the date of shipment. Only one royalty shall be due for each
Derivative PowerMatch Product. This royalty obligation shall continue for the
duration of this Agreement.
Unless and until DDSI receives payment for the following, no royalty payments
will be due on: (a) product samples, (b) evaluation boards, (c) products
designed by and purchased from a third party and subsequently resold by DDSI as
a component of a product, and (d) non-recurring engineering funds received from
a third party in return for the design, development or modification of a
product.
DDSI shall pay all the royalty due under this Agreement not later than 30 days
after the end of each calendar quarter for the sale, or shipment of a barter
that takes place during the quarter. Payment shall be addressed to the attention
of:
Controller
Authentec
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxx, Xxxxxxx
00000-0000
All royalty due hereunder shall be paid in United States funds. For purposes of
computing the Total Price and royalty on licenses in the international
Territory, the Total Price of the royalty bearing Product hereunder shall first
be determined in the local currency of the country in which licensed or leased
and then converted into its equivalent in United States funds at the bank buying
rate for such local currency, as published by Chemical Bank, N .A. for the last
business day of each accounting period.
3
Licensing of Derivative Products: DDSI agrees that it will offer to Authentec
licensing of Derivative Products which it produces on substantially the same
terms as in this Agreement, i.e., 10% royalty paid to DDSI on the Total Price
realized from the licensing or sale to an end customer, or other terms as may be
negotiated.
Governmental Withholding: Any sum required under the laws of any governmental
authority to be withheld by DDSI, its Subsidiaries or Licensees from payment for
the account of Authentec shall be promptly paid by DDSI for and on behalf of
Authentec to the appropriate tax or other governmental authority and DDSI shall
furnish Authentec with copies of official tax receipts or other appropriate
evidence issued by the appropriate tax or other governmental authorities to
enable Authentec to support a claim for tax or other credit or refund in respect
of any sum so withheld.
Records: DDSI shall keep, and shall cause DDSI Affiliates to keep, full, clear
and accurate records which are sufficient to permit determination of the
royalties due hereunder.
Quarterly Reports: Within forty-five (45) days after the end of each calendar
quarter ending on March 31st, June 30th, September 30th and December 31st,
commencing with the quarter in which the Effective Date occurs and continuing
thereafter until all royalties payable hereunder shall have been reported and
paid, DDSI shall furnish to Authentec a statement showing all said Product that
was licensed, leased, bartered, or exchanged during such quarter, and the amount
of royalties payable thereon. If no Product has been licensed, leased, bartered,
or exchanged that shall be shown on such statement. DDSI shall provide the
method of calculation, along with reasonable supporting documentation, for the
royalty due.
Audit of Records: Authentec shall have the right to audit the DDSI books and
records related to Products at Authentec' expense, by an independent auditor.
Said audit shall be conducted during normal business hours with 5 days written
advance notice provided by Authentec. The designated auditor shall retain in
confidence the information in the books of account and shall report to Authentec
only the accuracy or inaccuracy of the reports rendered to Authentec. If such
audit discloses that the amounts paid to Authentec were understated by more than
5% in any quarter, then DDSI shall reimburse Authentec for the cost of the audit
and pay the amount of such understated royalties.
Late Payments: For any late payment, DDSI shall pay Authentec interest at the
prime rate. The prime rate will be as established by Chemical Bank, N .A. on the
date the payment was due.
Trademarks: DDSI has no right to use, and agrees not to use or adopt, any xxxx
that is confusingly similar to any trademark owned or used by Authentec Inc. of
Melbourne, FL.
ARTICLE 3
Transfer Documentation and Other Materials
Delivery. Subject to the terms of the Agreement, Authentec agrees to provide
DDSI with one human or machine readable copy of all PowerMatch Technology
Documentation, including source code and object code, to the extent the same is
within the physical possession or control of Authentec. A representative of
Authentec' will be responsible for identifying, assembling and delivering such
Documentation to DDSI. This representative is Xxxx Xxxxxx.
4
Additional Transfers to DDSI. If, subsequent to the Effective Date, either party
identifies any materials that are specific to the operation of PowerMatch
Technology and not specifically delivered to DDSI, then upon written notice
thereof, Authentec shall promptly deliver such specific materials to the extent
Authentec is able to do so.
ARTICLE 4
Representations. Warranties & Limitations on Damages
Authority. Authentec and DDSI have the authority to enter into and execute this
Agreement and to perform its obligations hereunder. This Agreement constitutes a
legal, valid and binding obligation, and is enforceable against Authentec and
DDSI in accordance with its terms.
Indemnification by DDSI. DDSI shall indemnify and hold harmless Authentec and
its successors and assigns, from and against any and all damages, claims,
losses, expenses, costs, obligations and liabilities suffered or incurred by
Authentec, including, without limitation, reasonable attorney fees and costs,
directly or indirectly as a result of any injury to or death of any person, any
loss or damage to property, or any other litigation or claim by any third party
relating in any way to the manufacture, use or licensing of products that
incorporate the PowerMatch Technology.
Indemnification by Authentec. Authentec shall defend and indemnify DDSI and its
successors and assigns, from and against any claim or action to the extent that
such claim or action asserts that the rights and/or licenses granted to DDSI
under this Agreement misappropriates a trade secret or infringes any patent,
trademark, copyright, or other intellectual property rights of any third party,
and pay the amount of any resulting judgement or settlement. AuthenTec's
liability under this provision is limited to the total payments made by DDSI to
AuthenTec under this contract.
Limitation of Liability: NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY OR ANY
THIRD PARTY, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT
LIABILITY) OR OTHERWISE, FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF
ANY KIND, INCLUDING, BUT NOT LIMITED TO, LOSS OF ANTICIPATED PROFITS, EVEN IF A
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH POTENTIAL LOSS OR DAMAGE.
Maximum Liability: This Article 4 and all other paragraphs hereunder providing
protection against liability shall survive the expiration, termination, or
cancellation of this Agreement.
No Other Warranties. EXCEPT AS PROVIDED FOR IN THIS AGREEMENT, BOTH PARTIES
DISCLAIM ALL W ARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE
WARRANTY OF MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
BOTH PARTIES SPECIFICALLY DISCLAIM ANY WARRANTY OF FITNESS OR SUITABILITY OF ANY
INVENTIONS, PATENT APPLICATIONS, DOCUMENTATION, KNOW-HOW OR SOFTWARE FOR ANY
PURPOSE. BOTH PARTIES ACKNOWLEDGE THEY HAVE READ AND FULLY UNDERSTANDS THE ABOVE
DISCLAIMERS
5
ARTICLE 5
Miscellaneous
Agency or Partnership Between Authentec and DDSI. Nothing in this Agreement or
any of the transactions, obligations or relationships contemplated hereby shall,
in and of itself, constitute either Authentec or DDSI as the agent, employee or
legal representative for the other for any purpose whatsoever, nor shall any
party to this Agreement hold itself out as such. This Agreement does not create
and shall not be deemed to create a relationship of partners, joint venturers,
associates or principal-and-agent between Authentec and DDSI, and each of the
parties hereto acknowledges that it is acting as a principal hereunder.
Amendment: This Agreement may not be amended, supplemented or otherwise modified
except by an instrument in writing signed by both parties.
Assignment. DDSI shall not assign its rights or obligations under this
Agreement, in whole or in part, to any Person without the prior written consent
of Authentec.
Confidentiality: DDSI agrees that all physical, software and contractual
security it maintains for its other software products will be maintained for the
PowerMatch Software. DDSI agrees to use its best efforts to prevent third
parties from modifying, adapting, translating, reverse engineering, decompiling,
disassembling or otherwise attempting to discover the source code of the
PowerMatch Software except as expressly permitted by this Agreement.
Costs and Expenses. Unless otherwise specified in this Agreement, each party
hereto shall bear its own costs and expenses (including, but not limited to,
attorneys' fees) in connection with the negotiation, preparation, execution,
delivery and performance of this Agreement, and the consummation of the
transactions contemplated hereby.
Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed an original and all of which, taken together, shall
constitute one and the same instrument.
Entire Understanding: This Agreement sets forth the entire understanding between
Authentec and DDSI pertaining to its subject matter and supersedes and replaces
all prior oral or written agreements between Authentec and DDSI pertaining to
such subject matter.
Governing Law: This Agreement shall be governed by and interpreted under the
laws of the State of Florida and the Florida courts, without regard to choice of
laws. The forum for any dispute shall be limited to a Florida court having
subject matter jurisdiction and closest to Melbourne, Florida.
6
Notices: Any notice required or permitted hereunder shall be given in writing by
personal delivery or by registered or certified mail, return receipt requested,
postage prepaid, and, if sent by mail, shall be effective upon delivery to the
following addresses:
Authentec Corporation
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxx, Xxxxxxx 00000-0000
President
Digital Descriptor Systems Inc.
000 Xxxxxxx Xxxxxxx
Xxxxxxxx Xxxxx, XX 00000
Severability: If any provision of this Agreement is held by a court of competent
jurisdiction to be illegal, invalid or unenforceable under present or future
laws effective during the term hereof, such provisions shall be fully severable,
and this Agreement shall be construed and enforced as if such illegal, invalid
or unenforceable provision never comprised a part hereof, and the remaining
provisions shall remain in full force and effect and shall not be affected by
the illegal, invalid or unenforceable provision or by its severance.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there
shall be added automatically as part of this Agreement a provision as similar in
its terms to such illegal, invalid or unenforceable provision as may be possible
and be legal, valid and enforceable.
Termination: This Agreement may not be terminated unless by mutual agreement of
the parties or breach of contract. In addition, Authentec may terminate the
agreement if DDSI breaches its obligations to pay royalties due hereunder with
90 (ninety) days notice. However, should DDSI fully pay all royalties due at
that time within the 90-day notice period, then DDSI shall have cured the breach
and this Agreement shall not terminate. Any PowerMatch customer licensing
agreements entered into by DDSI and for which Authentec has been paid all
royalties due will remain in effect and not be revoked by termination of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
AUTHENTEC CORPORATION DIGITAL DESCRIPTOR SYSTEMS INC.
By: _____________________ By:_________________________________
Name: Name: Xxxxxxx Xxxx
Title: Title: President and C.E.O
7
