EXCLUSIVE DISTRIBUTION AND PARTNERSHIP RIGHTS AGREEMENT
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AGREEMENT made this 15th day of August, 2003, by and between WonderNet, Ltd.,
having its principal offices in Kibbutz Givat Hashlosha, Israel (hereinafter
referred to as "WonderNet or the Grantor), Security Biometrics Inc., a Public
Company incorporated, in the State of Nevada corporation, having its principal
offices at 0000-0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, XX X0X 0X0 (hereinafter
"Security Biometrics" or the Grantee).
WITNESSETH:
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WHEREAS, WonderNet is the owner of the Technology and Existing Proprietary
Property as hereinafter defined;
WHEREAS, WonderNet and the Grantee wish to enter into this Exclusive Rights,
Licensing, Distribution and Partnership Agreement (the 'Agreement") to enable
the Grantee to exploit WonderNet's Technology and. the Existing Proprietary
Property relating thereto within the Territory, as hereinafter defined, under
the terms and conditions of this Agreement; and
NOW THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration from each to the other, the receipt and
sufficiency of which is hereby acknowledged by both parties, it is hereby
agreed as follows:
ARTICLE 1
Definitions
1.1 Definitions. The following terms used in this Agreement shall have the
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meanings set forth below:
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(a) Exclusive distribution and partnership agreement shall mean this
agreement by and between WonderNet, as Grantor, and Security Biometrics, as
Grantee.
(b) Existing Proprietary Property shall mean all intellectual property
rights in the Technology, including without limitation: (i) any and all patents
and patent applications filed anywhere in the world relating to or based upon
the Technology, including any and all continuations, divisions and
continuations-in-part thereof., and all patents, inventors certificates, utility
models and the like issuing there from, including any and all re-examinations,
reissues, renewals and extensions thereof; (ii) any copyrightable or copyrighted
works based upon the Technology, including computer software and computer
programs; (iii) any confidential or proprietary know-how and information
regarding the Technology; (iv) any trademarks and trade names associated with
the Technology, whether or not registered; and (v) all fixed representations,
hard copies, computer-readable media and other tangible implementation of the
Technology, patent rights, copyrights, trademarks End trade secret rights.
(c) "Technology" shall mean WonderNet's Penflow proprietary Biometric
Signature Authentication ("BSA") software, that includes an "engine" (based on a
proprietary algorithm), that analyzes the hand-written signature as a series of
pen movements, the Software Development Kit (SDK) that enables to bind easily
the engine into applications and all software for the secure storage and
communication of data which enables remote and local access including using the
Internet, smart cards, or LAN connections etc.
(d) "Territory" or "Territories" shall mean North America, Mexico, Central
America, , Bermuda, and the Caribbean Islands.
(f) "Optional Territories" shall mean Geographies, that the Grantee will
have non exclusive distribution rights, for the period of one year, after which
the sides will according to the success in this year decide on an exclusivity.
Those Geographies will be mentioned in a special "Attachment on Optional
Territories' to be agreed and signed, including their Revenue Goal, between the
Grantor and Grantee.
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(e) "Applications Technology" shall mean any application or product
developed by the grantee and based on WonderNet's Technology.
ARTICLE 2
Covenants of Grantor
21 The Grantor hereby represents, warrants and convenants in favor of the
Grantee
that;
(a) the Grantor is the sole owner of the Products, the Technology and the
Proprietary Rights
(b) The Grantor owns or where deemed appropriate has undertaken steps to
obtain patents on the Products!, Technology and Proprietary Rights;
(c) The Grantor will continue to undertake research and development to
enhance and improve the Products, Technology and Proprietary Rights; and
(d) The Grantor will advise and forthwith make available to the Grantee
enhancements, modifications, derivatives, improvements and replacements to the
Products, Technology and Proprietor Rights.
2.2 The Grantor acknowledges that certain applications of the Products may be
more marketable than others, and as such agrees to apportion its time spent on
activities relating to the research, development, and enhancements of the
Products according to the marketability of such uses, which marketability shall
be determined by the Grantee in consultation with the Grantor. The Grantee shall
from time to time advise the Grantor which uses are currently more marketable,
and the Grantor, will give priority to research, development and enhancements in
accordance therewith.
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ARTICLE 3
Rights Grant and Consideration
3.1 Rights Grant.
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(a) WonderNet hereby grants to Security Biometrics the Rights to develop
applications or products based on it's technology as well as use, market, sell,
distribute and commercially exploit the Technology and. the Applications
Technology within the Territory and the rights constituting the Existing
Proprietary Property relating thereto subject to all of the terms, conditions
and restrictions contained in this Agreement.
(b) Security Biometrics hereby grant to WonderNet a perpetual,
royalty-free, sole and exclusive Rights to use, market, sell, distribute and
commercially exploit the Grantee Improved Technology in all geographic locations
worldwide other than in the Territory; provided, however, that WonderNet shall
have no rights whatsoever, whether arising under this Agreement or otherwise,
relating to products or technology of either Grantee other than to the Grantee
Improved Technology.
3.2 Authority to Sublicense. Subject to all of the terms, conditions and
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restrictions contained herein, WonderNet hereby grants to each Grantee the
authority to sub-licensing rights the exercise of the rights specified in
Section 2.1 above without the prior written approval of WonderNet within the
Territory.
3.3 Reservations.(a) WonderNet retains all rights in and to the Technology
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including those granted in Sections 3.1(a) above.
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(b) Grantee retains rights in its applications development based on Penflow
technology.
3.5 Grantee Development of the Technology, Grantee agrees to use commercially
reasonable efforts, consistent with its resources and its activities and
obligations other than those arising under this Agreement: (1) to commercially
exploit the Technology and the Applications Technology within the Territory;
and (ii) to modify, alter, develop and improve the Technology.
ARTICLE 4
Security Biometrics Obligations
4.1 In consideration for the rights herein granted;
Grantee will purchase all software products with a discount of 50% and up to
$1,000,000 of products purchased annually from $1,000,000 to $2,000,000 a
discount of 55% and a discount of 60% for all annual purchases above $2,000,000.
All hardware products will apply with a discount of 10%, as listed in the
International price list attached and subject to changes from time to time.
(a) In addition to 4.1(a), Grantee will pay a royalty equal to 12% of the
gross transaction and distribution fees proceeds received by parties
sub-licensed to integrate and/or sale Penflow granted by the Grantee. The
Royalty shall be paid within 30 days from the end of each quarter.
(b) Upon execution of this agreement, and for the entire period of this
agreement The Grantee agrees to purchase a minimum quote of US$120,000 per
quarter of software licenses from WonderNet Ltd. In consideration for the
payment Wond.erNet hereby grants Security Biometrics Inc. a perpetual rights as
defined above for the Exclusive Distribution, and Sub-Licensing Rights to enable
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the Grantee to exploit WonderNet1s Technology and the Existing Proprietary
Property relating thereto within the Territory.
(c) Payment for each quarter (Starting September l, 2003) will be made not
later than 10 clays from the beginning on each quarter in direct transfer to
WonderNet bank account.
(d) In case of using WonderNet personnel in Territory in order to assist
by technical, business, marketing or any other aspects, the travel expanses such
as flights, accommodations and TLM will he shared 5O%-5O% by both parties.
4.2 All amounts payable pursuant to this Agreen,ent shall he made in United
States Dollars.
4.3 All payments made by Grantee to the Grantor shall be net of any applicable
taxes, which may be imposed provided that the Grantee is entitled to witithold
from any such payments due to the Grantor any applicable income taxes whether
taxed directly or indirectly thereupon which the Grantee is legally required to
withhold. and pay to appropriate taxing authorities. k the event that such taxes
are withheld by the Grantee, it shall, upon payment of same, deliver to the
Grantor official receipts or certificates for the payment of any such required
taxes sufficient support of any claims made by the Grantor for any applicable
tax benefit or credit with respect thereto.
4.4 Tn the event that any monetary obligations of any nature owed by the
Grantee to th.e Grantor are not paid by the Grantee when due, the Grantee
shall, in addition to the unpaid monetary obligations, pay to the Grantor
interest on such unpaid amount at a rate equal to two (2%) percent in
excess of the prime rate of Citibank, New York charged to its most credit
worthy commercial customers in effect from time to time until such
monies are paid.
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ARTICLE 5
Duties and Obligations of Grantee
5.1 The Grantee agrees the best of its ability to conduct its business in
compliance with all applicable laws and regulations of each country or
jurisdiction in which it markets the Existing Proprietary Property. The Grantee
will not make or permit to be made any representation concerning the Grantor or
the Existing Proprietary Property other than representations, which are truthful
and accurate.
5.2 The Grantee shall devote its best efforts to the sale and promotion of the
Existing Proprietary Property.
5.3 The Grantee shall refrain from committing any act or pursuing any course or
conduct, which would tend to bring thc Licensor or the Existing Proprietary
Property into disrepute.
ARTICLE 6
Improvements to the Technology
6.1 WonderNet Improvements. Grantee acknowledges and agrees that WonderNet shall
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retain exclusive ownership to the Applications Technology, which are developed
durin.g the term of this Agreement as well as after this Agreement is terminated
regardless of the cause or method of termination.
6.2 Security Biometrics Improvements. WonderNet acknowledges and agrees
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that Security Biometrics shall retain ownership to applications developed
by them based. or related to the Penflow technology, which are developed
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during the term of this Agreement as well as after this Agreement is
tenninated regardless of the cause or method of termination.
6.3 Page: 8
Security Biometrics will not develop any application andlor technology which may
compete, directly or indirectly with WonderNet's products.
ARTICLE 7
Rights and Obligations of Grantor and Grantee
7.1 Confidentiality and Disclosures to Third Parties. Any party hereto may
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disclose any confidential information relating to the Technology, the Existing
Proprietary Property, and the Applications Technology or the Crantee Improved.
Technology (hereinafter the "Disclosing Party") to third parties only pursuant
to a confidentiality agreement between the Disclosing Party and the third party.
The parties hereto acknowledge and agree that, because of the nature of the
property riglts involved in this Agreement, any breach of their obligations
under this Section 6 shall cause immediate, irreparable injury to th.e
non-breaching party(ies); therefore, each party hereby agrees and acknowledges
that the non-breaching party( es) shall be entitled, in addition to any other
rights and remedies at law and in equity, to seek temporary, preliminary and/or
permanent injunctions in the event an unauthorized. disclosure is made or
appears to be imminent. Each party's duty of confidentiality shall survive the
termination of this Agreement regardless of the cause or method. of termination.
7.2 Rights to the Technology. WonderNet hereby represents, warrants and
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covenants that WonderNct is the sole owner of the Technology and the Existing
Proprietary Property and, except for the rights granted to the Grantee in this
Agreement, and has the exclusive right and Rights for the use of the Technology
together with the right to Rights and sub-Rights to others, manufacture,
distribute and sell the Technology.
ARTICLE 8
Protection of Intellectual Property Rights
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8.1 Authorization to Grantee to File for Intellectual Property Protection In
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the Territory. Subject to the provisions of Section 2.1, Section 3,3, Section
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7.1 hereof and all of the other terms and conditions contained herein, the
Grantee shall have the authority, but not the obligation, to take actions in the
Territory on behalf of WonderNet such as filing patent applications and seeking
registrations of copyrights for the purpose of securing and protecting
intellectual property rights for WonderNet in the Technology and the
Applications Technology. The authority granted in this Section 8.1 may not be
assigned, delegated or sublicensed. The Grantee shall bear the expense of all of
their activities under this Scction 8.1 including the payment of attorney fees,
patent issuance and maintenance fees, copyright and trademark registration fees
and. other similar fees and expenses where applicable. Grantee shall have the
authority, but not the obligation, with the prior consent of WonderNet, to take
actions worldwide such a.s filing patent applications and seeking registrations
of copyright for the purpose of securing and. protectirg intellectual property
rights in the Grantee Improved Technology.
8.2 Actions Not Taken by Grantee. In the event that WonderNet, in its sole
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discretion, deems it necessary or beneficial to take a specific action that
ncither Grantee has taken somewhere in the Territory to protect or maintain any
or all of the intellectual property rights discussed in Section 8.1 hereof,
WonderNct may notify both Grantee of its intention to take such action in
writing. Upon receipt of such notice, Grantee shall respond to WonderNet within
fifteen (15) calendar days indicating whether they choose to take the action
requested, If the Grantee fails to respond within such time period, or if either
of them responds indicating that it chooses not to undertake the requested.
action4 then in that event WonderNet may take the action independently, bearing
the cost of the action.
8.3 Assistance and Cooperation in Protecting Intellectual Property. All parties
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hereto, including their employees and affiliates, shall be obligated to assist
and cooperate with each other in securing the legal protection of any and all
intellectual property rights under Sections 8.1 and 8.2 above.
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ARTICLE 9
Term; Termination for Cause and Survival of Certain Provisions
9.1 Term. The term of this Agreement shall commence on the date hereof and shall
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continue for perpetuity.
9.2 Termination. Notwithstanding anything otherwise contained in the Agreement,
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the Grantor shall have the right to terminate this Agreement, and the rights and
licenses granted to the Grantee forthwith and without notice, upon the happening
of any one or more of the following events:
(a) If the Grantee fails or refuses to pay promptly any amount payable
under thi.s Agreement and as same shall become due and payable, and such default
shall continue for a period of thirty (30) days after written notice thereof has
been given by the Grantor to the Grantee;
(b) If the Grantee becomes insolvent or ceases to carry on business, or
takes any actiOn to liquidate its assets, or stops making payments in the usual
course of business, provided that the foregoing shall not be construed so as to
prohibit a bona fide reorganization of the Grantee;
(c) If the Grantee makes an assignment for the benefit of creditors, or a
petition is filed against and consented to by the Grantee and such pctition is
not dismissed within ninety (90) days, or the Grantee is adjudicated bankrupt;
(d) If a receiver or any other person with like powers shall be appointed
to take charge of and liquidate all or any part f the Grantee's business,
property or assets, or if an order sball be made or resolution passed for the
winding-up or the liquidation of the Grantee or if the Grantee adopts or takes
any corporate proceedings for its dissolution or liquidation;
(e) If the Grantee should fail to comply with any other material
requirement or obligation imposed upon the Grantee by this Agreement and such
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default shall not be cured within thirty (30) days after receipt or written
notice to cure form the Grantor, of if the Grantee does not take and diligently
pursue reasonable steps to cure such default.
9.2 Upon termination of this Agreement, for cause the parties hereto shall be
permitted to continue to use, market, sell, distribute and commercially exploit
the to the extent of concluding all going projects included but not limited to
customers already contacted or in negotiations for a project.
ARTICLE 10
Miscellaneous
10.1 Assignability. This Agreement shall not be assignable by any party in whole
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or in part except upon the written and signed consent of the other party(es),
which consent shall not be unreasonably withheld or delayed.
10.2 Binding Effect. Subject to the restrictions on ass4gnability contained,
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herein, this Agreement is binding on and inure to the benefit of the parties
hereto and their respective authorized successors and assigns.
10.3 Further Assurances. The parties hereto agree to execute and deliver any
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additional documents and instruments and perform any additional acts that may be
necessary or appropriate to comply with their obligations hereunder.
10.4 Governing Law. This Agreement shall be governed by and be construed in
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accordance with the laws of the UK a to all matters of interpretation,
performance, remedies and enforceability. The parties hereto irrevocably consent
to the service of any and all process in any such action or processing by the
certified mailing with return receipt of copies of such process to their address
specified in this Agreement The parties hereto agree that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in any
other jurisdiction by suit on the judgment or any other manner provided by law.
The parties hereto waive any
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objection to venue in such state and any objection to an action or proceeding in
such state on the basis of forum non-convenience.
10.5 Arbitration. Any controversy or claim arising under this Agreement shall be
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settled by arbitration to be held in court of arbitration, New York, in
accordance with the commercial arbitration rules of the New York Arbitration.
Association by a panel of three (3) arbitrators, and judgment upon the award
rendered by the arbitrators may he entered in any court having jurisdiction
thereof or application may be made to such court for judicial acceptance of any
award and an order of enforcement, as the case may be. The parties each consent
to any personal jurisdiction necessary to subject themselves and each of them to
such arbitration and to such award and such judgment and such order of
enforcement.
10.6 Names and Marks. The Grantee may designate, develop, commission and use
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various Names and. Marks in selling and promoting the Technology; and the
Grantor acknowledges that the Grantee shall retain ownership in the Territories
of all Names and Marks used by it during the term of this Agreement. Any
goodwill associated with Names and Marks shall ensure exclusively to the benefit
of the Grantee.
10.7 Notice. All notices, requests or consents provided for or permitted under
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this Agreement must be in writing and must be given either by mail, addressed to
the recipient, postage paid, registered or certified mail.! return receipt
requested, which shall be effective upon receipt, or by delivery to the
recipient in person, by courier or by facsimile transmission to the address
specified below:
If to the Grantor:
WonderNet, Ltd.
Kibbutz Givat Hashlosha, Israel
Attention:
Attention:
Mr. Un Erel
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If to the Grantee:
Security Biometrics, Inc.,
Xxxxx 0000 0000 Xxxx Xxxxxxx Xxxxxx,
Xxxxxxxxx XX, Xxxxxx X0X 0X0
Attention: Xxxxx Xxxxxxxx
10.8 Headings and Certain Words. Headings &e used in this Agreement for the
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purpose of organization only and do not constitute terms of the Agreement. The
words "herein," "hereof," "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular subdivision unless otherwise
expressly indicated.
10.9 Severability. If any provision of this Agreement or its application to any
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person or circumstance shall be invalid, illegal, or unenforceable to any
extent, the remainder of this Agreement and its application shall not be
affected and shall be enforceable to the fullest extent permitted by law unless
the provision held to be illegal, invalid or unenforceable is so fundamental to
the sense of this Agreement that its illegality, invalidity or unenforceability
would make the enforceability of the remainder unreasonable.
10.10 Entire Agreement. This Agreement sets forth the entire, final and
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exclusive agreement and understanding between the parties as to the subject
matter hereof and supersedes all prior and contemporaneous writings and
discussions between the parties pertaining hereto.
10.11 No Oral Modification. This Agreement may be amended or modified only by a
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written instrument signed by proper and duly authorized representatives of all
parties.
10.12 Counterparts. This Agreement may be executed in any number of
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counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
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ARTICLE 11
Sale, Assignment Transfer and Sub-licensing
11.1 This Agreement shall ensure to the benefit of the successors and assigns of
the Grantor. The Grantor shall have the right to assign all or part of its
rights i.mder this Agreement to any person, firm, association or corporation
provided that such transferee shall agree in writing to assume all obligations
undertaken by tb.e Grantor herein and upon such assignment and assumption, the
Grantor shall be under no further obligation hereunder.
11.2 In the event the Grantor desires to sell, assign or transfer any of its
rights hereunder to any arm's length third party, the Grantor agrees to first
offer the same to the Grantee on. the same terms and conditions as offered to or
by such third party. The Grantee shall have ninety (90) days to acquire the
same, otherwise the Grantor shall be at liberty to dispose of such interest to a
third party on terms and conditions no better than offered to the Grantee. This
right of first refusal shall apply to each sale, assignment or transfer by the
Grantor.
11.3 The Grantee shall have the right to assign all or part of its rights under
this Agreement to any person, xxxx, association or corporation provided that
such transferee shall agree in writing to assume all obligations undertaken by
the Grantee herein and upon such assignment and assumption, the Grantee shall be
under no further obligation hereunder.
11.4 It shall be a condition of any sale, assignment or transfer by either the
Grantor or the Grantee to a third party that suet, third party agree to be bound
by the terms and conditions of this Agreement, and in particular the duties and
obligations of the transferring party.
IN WITNESS WHEREOF, the parties have caused. this Agreement to be duly executed
on the date first set forth above.
Security Biometrics Inc. WONDERNET, LTD.
By Its Authorized Signatory: By Its Authorized Signatory:
/s/ Xxxxx Xxxxxxxxx /s/
Xxxxx Xxxxxxxxx
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