Exhibit 10.1
[CONFIDENTIAL TREATMENT REQUESTED. CERTAIN PORTIONS OF THIS AGREEMENT HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION]
Letter of Intent
- Vasco Date Security ("Vasco") a BelgIan company with offices at Konongin
Xxxxxxxxxx 000, 0000 Xxxxxx, Xxxxxxxx, XXXXXXX
And
- nCryptone ("nCryptone"), a French company with offices at 000 xxx
Xxxxxxxx, 00000 Xxxxxxxx Xxxxx, XXXXXX
And
- InCard ("InCard"), an American company with offices at 00000 Xxxxxxxx
Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, XXX
Hereinafter referred collectively to as "the Parties":
This letter of intent (LOI) formalises parties' interest in cooperating on the
development and the marketing of the nCryptone/InCard DisplayCards in all form
factors (OTP only, PIN-pad OTP only, multi-function OTP/Financial cards
including magnetic stripe and smart cards or any combination thereof, RFID/OTP
cards) hereafter collectively referred to as "DISPLAYCARD".
The LOI contains:
1. the mutual considerations underlying parties' interest;
2. parties' mutual rights and Obligations during a trial- end
development period which will run from the effective date until
January, 31, 2006;
3. Parties' intentions, at the time of signature and subject to
contract, with regard to the terms or a long term agreement
(hereinafter described as the "Agreement") In case at successful
completion of the trial - and development period.
Only parties' mutual rights and obligations during the trial and .development
period as set out in this Letter or Intent are binding as specified under
section 1 b).
Whereas:
o Vasco is the market leader for two-factor authentication products in
the e-banking market segment with over 20 million Digipass OTP
(one-time-password) products sold and delivered;
o Vasco is continuously expanding its Digipass OTP product portfolio
with new client devices;
o Vasco is actively investigating the market potential for DISPLAYCARD
in close co-operation with banking customers;
o nCryptone, has an acknowledged experience since 1993 in the "Power
Embedded ISO Card".
o nCryptone/InCard has developed a family of financial transaction
cards, OTP Cards and other cards with a similar form factor having
an internal battery and other electronic components and
manufacturing methods therefore
o Vasco is confident that it can generate sales for hundreds of
thousands of DISPLAYCARD products provided that:
o nCryptone/InCard is capable of developing and producing the
DISPLAYCARD in volume and within acceptable quality control
standards,
o The DISPLAYCARD can feature OATH and Digipass algorithms (on
separate devices) in accordance with VASCO's technical and
commercial requirements,
o The DISPLAYCARD can operate as described in Annex 1 to this
LOI ("Current Prices and Technical Specifications of the
DISPLAYCARD"),
o nCryptone/InCard can provide DISPLAYCARD devices at prices
described in Annex 1.
Section 1: During the trial and development period (from the effective
datte until January 31st 2006):
a. nCryptone/InCard will:
o Port VASCO's OTP algorithm to DISPLAYCARD Deliver to VASCO before
CARTES show in Paris (November is-11th, 2005) between 50 and 100
DISPLAYCARDS Version 1.0.0.0. Those cards will carry a VASCO logo,
support OATH application and be embossed with fictive CC number and
name "Vasco-Demo".
o Supply 2000 cards Version 1.0.1.0.
o Supply technology specifications.
In return, VASCO shall pay a non-refundable sum of *** (in a one-time payment)
to nCryptone. Payment will be done within 14 days after receiving the invoice
from nCryptone.
b. Parties will be bound by the provision 10 to 16 of the following of
section "'2" below (but by no other provisions):
Section 2: During the trial and development period, Parties will make
their best efforts to agree upon an Agreement with the following lines:
1. Parties agree to co-operate in development, sales and marketing Of
DISPLAYCARD. DISPLAYCARD will be sold to VASCO as an OEM product to
be integrated in their "DIGIPASS" family.
2. nCryptone/InCard will guarantee VASCO a "best price policy" period.
VASCO will have *** better purchase conditions compared to other
competitors or to. However, Vasco shall commit not to purchase
DISPLAYCARD from another vendor than nCryptone/InCard during the
best price policy period. If VASCO can find the same technology with
the same specifications in the market *** less than the cost
proposed by nCryptone/InCard, VASCO will be free to purchase it and
therefore, nCryptone/InCard will be discharged from all of it's
"best price policy" or commitments.
3. Parties will issue mutual Press Release at CARTES show in Paris
(November 15-17th, 2OO5) announcing the co-operation.
4. If required to win potential major volume contracts,
nCryptone/InCard is willing to disclose to VASCO hers "BOM - cost
price" structure. If VASCO can achieve lower production cost price,
parties will discuss in such a case different agreement that will
allow potentially lower sales price and respect margin requirements
of both parties.
5. VASCO Intends to order the DISPLAYCARD In volumes of hundreds of
thousands.
6. Both parties will determine in the Agreement to be signed and/or
will provide in the Agreement for a procedure to determine which
banks nCryptone/InCard will continue to address directly In Asia,
Europe, and USA.
***Confidential Treatment Requested
7. nCryptone/InCard will supply hundreds of thousands of the
DISPLAYCARD for OATH and Digipass algorithm in accordance with
specifications listed in Appendix 1.
8. Commercial co-operation based on the revenue sharing model (T8D)
whereby VASCO will share in its revenue of product other than
DISPLAYCARD (TBD).
9. Availability of DISPLAYCARD in line with requirement and timing to
be specified.
10. VASCO maintains full intellectual property on Digipass algorithm.
11. All right, title and Interest in and to any intellectual property
owned or controlled by nCryptone/InCard shall remain the sore and
exclusive property of nCryptone/InCard.
12. The Parties will investigate revenue sharing and pricing models
(cost plus) and in the future when nCryptone/InCard receives large,
quantity discounts from component vendors, savings will be shared
between VASCO and nCryptone/InCard, ***
13. Vasco is aware of the existence of an agreement between
NCryptone/InCard and Visa. Vasco shall do nothing that would be a
breach or that would cause nCryptone/InCard a breach of the
provisions of the agreement with Visa as mentioned in Appendix two.
14. nCryptone/InCard agrees that, with certain agreed upon exceptions to
be identified and listed, direct sales efforts are to be coordinated
through VASCO. This agreement allows for the maximization of total
sales and total number of products/services available to the
customers. Details shall be agreed before February, 1, 2006.
15. Vasco is aware that InCard and nCryptone/InCard have already
initiated discussions with clients in Asia, Europe, and USA.
16. This LOI shall be governed by French Law. All disputes between the
Parties with respect to the existence, validity, interpretation or
termination of this Agreement or any of its clauses which the
Parties are unable to settle amicably shall be referred exclusively
to the Commercial Court of Nanterre, in which the Parties expressly
vest jurisdiction, even in the case of more than one defendant Or a
third-party action, whether in an emergency or as a precautionary
measure and whether in summary proceedings or on ordinary request.
This LOI is valid until January 30th 2006. If the trial and development phase is
successfully completed and Parties come to an agreement on the full terms of
their long term agreement, such Agreement will become effective on February 12,
2006 and will automatically replace the present LOI. In case no agreement has
been reached, both Parties will be discharged of their obligations under this
LOI.
***Confidential Treatment Requested
VASCO Data Security nCryptone InCard
Jan VALCKE Xxxxx XXXX Xxxx Xxxxxxxxxxx
President & C.O.O. Chairman & C.E.O. C.E.O
28th of October 2005 28th of October 200 28th of October 2005
/s/ Jan VALCKE /s/ Xxxxx XXXX /s/ Xxxx Xxxxxxxxxxx
ANNEX 1: CURRENT PRICES AND TECHNICAL SPECIFICATIONS OF THE DISPLACARD
1. ***
2. ***
*** Confidential Treatment Requested
ANNEX 2: TERMS OF THE VISA AGREEMENT TO BE RESPECTED BY XXXXX
XXXXX respects and recognizes nCryptone/InCard's agreement with Visa. Thus,
VASCO understands the need for certain exceptions whereby the DISPLAYCARD may be
sold directly by nCryptone/InCard outside of the VASCO agreement.
The best price policy field includes DISPLAYCARD that also includes any
financial companion card that is capable of mimicking and emulating an ISO
compliant payment card (credit, debit, or gift) as long as it is not endorsed by
or carry the logo of MasterCard, AMEX, JCB, Europay, Xxxxx Xxxxxxx, Discover,
and Diners.
Thus, VASCO agrees not to sell nCryptone/InCard's DISPLAYCARD for credit, debit,
pre-paid, or gift and other powered cards issued by, but not limited to, Visa,
MasterCard, AMEX, JCB, Europay, Xxxxx Xxxxxxx, Discover, and Diners.
