<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 4, 1996
REGISTRATION NO. 333-10649
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 2 TO FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------
VIISAGE TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 7373 04-3320515
(PRIMARY STANDARD (I.R.S. EMPLOYER
(STATE OR OTHER INDUSTRIAL IDENTIFICATION NUMBER)
JURISDICTION OF CLASSIFICATION CODE)
INCORPORATION OR
ORGANIZATION)
531 MAIN STREET
ACTON, MASSACHUSETTS 01720
(508) 263-8365
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
ROBERT C. HUGHES
CHIEF EXECUTIVE OFFICER
VIISAGE TECHNOLOGY, INC.
531 MAIN STREET
ACTON, MASSACHUSETTS 01720
(508) 263-8365
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES OF ALL COMMUNICATIONS TO:
CHARLES J. JOHNSON, ESQ. MARK H. BURNETT, ESQ.
FINNEGAN, HICKEY, DINSMOOR TESTA, HURWITZ & THIBEAULT, LLP
& JOHNSON, P.C. HIGH STREET TOWER
20 BEACON STREET 125 HIGH STREET
BOSTON, MASSACHUSETTS 02108 BOSTON, MASSACHUSETTS 02110
(617) 523-2500 (617) 248-7000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, as amended, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, as amended, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Amendment No. 2 to the Registrant's Registration Statement on Form S-1
(File No. 333-10649) is being filed solely for the purpose of filing exhibits
to the Registration Statement.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by the Company
in connection with the sale of Common Stock being registered, other than the
underwriting discount and commissions. All amounts are estimates except for
the SEC registration fee, the NASD filing fee and the Nasdaq National Market
listing fee. The Company will pay all expenses in connection with the issuance
and distribution of any securities sold by the Selling Stockholder, except for
underwriting discounts and commissions and for any fees of counsel selected by
the Selling Stockholder to act in addition to or lieu of the counsel for the
Selling Stockholder appointed by the Company.
<TABLE>
<S> <C>
SEC registration fee............................................ $ 11,897
NASD filing fee................................................. 3,950
Nasdaq National Market listing fee.............................. 37,700
Securities Act liability insurance coverage..................... 140,000
Printing and engraving expenses................................. 130,000
Legal fees and expenses......................................... 200,000
Accounting fees and expenses.................................... 150,000
Blue sky fees and expenses (including counsel fees)............. 25,000
Transfer agent and registrar fees and expenses.................. 2,500
Miscellaneous................................................... 123,953
--------
Total......................................................... $825,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law affords a Delaware
corporation the power to indemnify its present and former directors and
officers under certain conditions. Article IX of the Restated Certificate of
Incorporation and Article 5 of the By-Laws provide that the Company shall
indemnify each person who at any time is, or shall have been, a director or
officer of the Company, and is threatened to be or is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is,
or was, a director or officer of the Company, or served at the request of the
company as a director, officer, employee, trustee, or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement incurred in connection with any such action, suit or proceeding to
the maximum extent permitted by the Delaware General Corporation Law.
Section 102(b)(7) of the Delaware General Corporation Law gives a Delaware
corporation the power to adopt a charter provision eliminating or limiting the
personal liability of directors to the corporation or its stockholders for
breach of fiduciary duty as directors, provided that such provision may not
eliminate or limit the liability of directors for (i) any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) any
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) any payment of a dividend or approval of a
stock purchase that is illegal under Section 174 of the Delaware Corporation
Law or (iv) any transaction from which the director derived an improper
personal benefit. Article VIII of the Restated Certificate of Incorporation
provides that to the maximum extent permitted by the General Corporation Law
of the State of Delaware, no director of the Company shall be personally
liable to the Company or to any of its stockholders for monetary damages
arising out of such director's breach of fiduciary duty as a director of the
Company. No amendment to or repeal of the provisions of Article VIII shall
apply to or have any effect of the liability or the alleged liability of any
director of the Corporation with respect to any act or failure to act of such
director occurring prior to such amendment or repeal. A principal effect of
such Article VIII is to limit or eliminate the potential liability of the
Company's directors for monetary damages arising from
II-1
<PAGE>
breaches of their duty of care, unless the breach involves one of the four
exceptions described in (i) through (iv) above. Article VIII does not prevent
stockholders from obtaining injunctive or other equitable relief against
directors, nor does it shield directors from liability under federal or state
securities laws.
Section 145 of the Delaware General Corporation Law also affords a Delaware
corporation the power to obtain insurance on behalf of its directors and
officers against liabilities incurred by them in those capacities. The Company
is procuring a directors' and officers' liability and company reimbursement
liability insurance policy that (a) insures directors and officers of the
Company against losses (above a deductible amount) arising from certain claims
made against them by reason of certain acts done or attempted by such
directors or officers and (b) insures the Company against losses (above a
deductible amount) arising from any such claims, but only if the Company is
required or permitted to indemnify such directors or officers for such losses
under statutory or common law or under provisions of the Restated Certificate
of Incorporation or the By-Laws.
Reference is also made to Section 6 of the Underwriting Agreement between
the Company, the Selling Stockholders and the Underwriters, filed as Exhibit
1.1 of this Registration Statement, for a description of indemnification
arrangements between the Company, the Selling Shareholder and the
Underwriters.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The following information is furnished with regard to all securities issued
or sold by the Company within the past three years which were not registered
under the Securities Act.
In connection with and prior to the issuance of the shares of Common Stock
being registered hereby, the Company will issue 5,680,000 shares of its Common
Stock to the Selling Shareholder, Lau Technologies ("Lau") in return for Lau's
contribution of the assets, liabilities and business of its Viisage Technology
Division to the Registrant, a transaction exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to Section 4(2) thereof. Lau has represented that, other than with
respect to the 500,000 shares of Common Stock being registered on its behalf
hereunder, it is acquiring the shares for investment purposes and not with a
view to distribution within the meaning of the Securities Act. The stock
certificates representing Lau's unregistered shares will bear restrictive
legends.
On February 1, 1996, Lau granted nonqualified options (i) for 1,167,950
shares of Common Stock in the Company, with an exercise price of $2.96 per
share, to eight employees and (ii) for 81,650 shares of Common Stock in the
Company, with an exercise price of $2.96 per share, to its five serving
directors. On April 15, 1996, Lau granted nonqualified options to acquire an
additional 177,500 shares of Common Stock in the Company, at an exercise price
of $4.86 per share, to a ninth executive employee. All of these options were
ratified by the Board of Directors of the Company on June 17, 1996 following
its incorporation in connection with the Board's adoption of the Company's
1996 Management Stock Option Plan (with respect to grants to executives) and
the 1996 Director Stock Option Plan. No options have been exercised. The
option grants were exempt from the registration requirements of the Securities
Act pursuant to Section 4(2) thereof relating to sales by an issuer not
involving a public offering. In addition, the Company intends to register the
shares subject to options granted under the plans pursuant to Form S-8. Unless
and until such shares are registered, option holders will be required to
represent that they are acquiring their securities for investment purposes and
not with a view to distribution within the meaning of the Securities Act.
Stock certificates representing shares issued pursuant to such options (except
to the extent registered) will bear restrictive legends.
None of the foregoing transactions involved a distribution or public
offering. No underwriters were engaged in connection with the foregoing
issuances of securities, and no underwriting commissions or discounts were
paid.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
The Exhibits required to be filed as part of this Registration Statement are
listed in the attached index to Exhibits.
II-2
<PAGE>
(b) Financial Statement Schedules
Financial statement schedules have been omitted because the information
required to be set forth therein is not applicable or is shown in the
Financial Statements or notes thereto.
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes to provide to the Underwriters at the
closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered hereunder, the Registrant will, unless in the
opinion of counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of Prospectus
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED IN THE TOWN
OF ACTON, COMMONWEALTH OF MASSACHUSETTS, ON THIS 4TH DAY OF NOVEMBER, 1996.
Viisage Technology, Inc.
/s/ Robert C. Hughes
By:_________________________________
Robert C. Hughes
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 2 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON THE 4TH DAY OF NOVEMBER, 1996:
SIGNATURE TITLE
* Chairman of the Board of Directors
By: _________________________________
DENIS K. BERUBE
* President and Chief Executive Officer
By: _________________________________ (Principal Executive Officer)
ROBERT C. HUGHES
* Treasurer and Chief Financial Officer
By: _________________________________ (Principal Financial and Accounting
WILLIAM A. MARSHALL Officer)
* Secretary and Director
By: _________________________________
CHARLES J. JOHNSON
* Director
By: _________________________________
HARRIET MOUCHLY-WEISS
* Director
By: _________________________________
PETER NESSEN
* Director
By: _________________________________
THOMAS J. REILLY
/s/ Robert C. Hughes
*By: ________________________________
ROBERT C. HUGHES
ATTORNEY-IN-FACT
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ----------- --------
<C> <S> <C>
1.1** Form of Underwriting Agreement.
2.1** Amended and Restated Asset Transfer Agreement, dated as
of August 20, 1996, between the Registrant and Lau
Technologies.
3.1** Restated Certificate of Incorporation of the
Registrant.
3.2** By-Laws of the Registrant.
4.1 Specimen certificates for shares of the Registrant's
Common Stock.
5.1* Opinion of Finnegan, Hickey, Dinsmoor & Johnson, P.C.
10.1** Amended and Restated License Agreement, dated as of
August 20, 1996, between the Registrant and Lau
Technologies.
10.2+ Administration & Services Agreement, dated as of
November 1, 1996, between the Registrant and Lau
Technologies.
10.3+ Use & Occupancy Agreement, dated as of November 1,
1996, between the Registrant and Lau Technologies.
10.4** License Agreement, dated as of August 20, 1996, between
the Registrant and Facia Reco Associates, Limited
Partnership.
10.5** Employment Agreement, dated as of February 1, 1996,
between the Registrant and Robert C. Hughes.
10.6** Employment Agreement, dated as of February 1, 1996,
between the Registrant and William A. Marshall.
10.7** Employment Agreement, dated as of July 1, 1996, between
the Registrant and Yona Wieder.
10.8** 1996 Management Stock Option Plan.
10.9** 1996 Director Stock Option Plan.
10.10+ Form of Option Agreement for the 1996 Management Stock
Option Plan.
10.11** Form of Option Agreement for the 1996 Director Stock
Option Plan.
10.12 Executive Incentive Compensation Plan.
10.13+ Subcontract between the Registrant and Information
Spectrum, Inc. (relating to the U.S. Immigration &
Naturalization Service), dated as of October 19, 1995.
10.14** Contract between the Registrant and the North Carolina
Department of Transportation, dated as of April 26,
1996.
10.15+ Purchase Agreement (Project Finance Facility) between
the Registrant and Sanwa Business Credit Corporation,
dated as of September 12, 1996.
10.16 Contract between the Registrant and Transactive, Inc.
(relating to the New York Department of Social
Services), dated as of December 8, 1994, as amended.
23.1+ Consent of Arthur Andersen LLP.
23.2* Consent of Finnegan, Hickey, Dinsmoor & Johnson, P.C.
(See Exhibit 5.1 above).
24.1** Power of Attorney.
24.2** Power of Attorney.
27.1** Financial Data Schedule.
</TABLE>
- --------
*To be filed by amendment.
**Previously filed.
+Supersedes previously filed exhibit.
II-5
<PAGE>
EXHIBIT 4.1
COUNTERSIGNED AND REGISTERED:
THE FIRST NATIONAL BANK OF BOSTON
TRANSFER AGENT AND REGISTRAR
SPECIMEN
BY [SIGNATURE APPEARS HERE]
AUTHORIZED SIGNATURE
COMMON STOCK [LOGO OF VIISAGE TECHNOLOGY APPEARS HERE] COMMON STOCK
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFICATE IS TRANSFERABLE SEE REVERSE SIDE FOR CERTAIN
IN BOSTON, MA OR NEW YORK, NY DEFINITIONS AND A STATEMENT OF
RIGHTS, PREFERENCES, AND PRIVILEGES
CUSIP 92675K 10 6
THIS CERTIFIES THAT
SPECIMEN
IS THE RECORD HOLDER OF
FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK, PAR VALUE $0.001, OF
Viisage Technology, Inc.
CERTIFICATE OF STOCK
transferable on the books of the Corporation by the record holder hereof, in
person or by duly authorized attorney upon surrender of this certificate
properly endorsed. This certificate is not valid until countersigned and
registered by the Transfer Agent and Registrar. Witness the facsimile seal of
the Corporation and the facsimile signatures of its duly authorized officers.
DATED:
SPECIMEN [SEAL APPEARS HERE] SPECIMEN
[SIGNATURE APPEARS HERE] [SIGNATURE APPEARS HERE]
CHIEF FINANCIAL OFFICER AND TREASURER PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
A statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights as established, from time to time, by the Certificate of
Incorporation of the Corporation and by any certificate of determination, the
number of shares constituting each class and series, and the designations
thereof, may be obtained by the holder hereof upon request and without charge at
the principal office of the Corporation.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed at though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ..................Custodian...................
TEN ENT - as tenants by the entirities (Cust) (Minor)
JT TEN - as joint tenants with right under Uniform Gifts to Minors
of survivorship and not as Act...........................................
tenants in common (State)
UNIF TRF MIN ACT - ...................Custodian (until age.......)
(Cust)
........................under Uniform Transfers
(Minor)
to Minors Act..................................
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
______________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
_______________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated _______________________________
_________________________________________________
THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON
NOTICE: THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed:
- ----------------------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS
AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED MEDALLION SIGNATURE
GUARANTEE PROGRAM), PURSUANT TO S.E.C. RULE 17A6-15.
<PAGE>
EXHIBIT 10.2
EXHIBIT C
---------
ADMINISTRATION AND SERVICES AGREEMENT
This Administration and Services Agreement (the "Agreement") dated
November 1, 1996, by and between Lau Acquisition Corp., a Massachusetts
corporation doing business as Lau Technologies ("Lau"), and Viisage Technology,
Inc., a Delaware corporation ("Viisage"), is made with reference to the
following facts:
A. Lau has entered into an Amended & Restated Asset Transfer Agreement
dated as of August 20, 1996 with Viisage (the "Asset Transfer Agreement")
pursuant to which Lau will contribute to Viisage substantially all of the assets
and business currently conducted by the division of Lau that is in the business
of facial imaging and identification systems and services (the "Imaging
Division") in exchange for common stock of Viisage and the assumption by Viisage
of certain liabilities of Lau related to the Imaging Division.
B. Lau has heretofore provided various services on behalf of the Imaging
Division, and Lau and Viisage desire to enter into this Agreement to set forth
the terms and conditions under which Lau will continue to provide certain
services to Viisage following the date of the closing (the "Closing Date")
respecting the Asset Transfer Agreement, and to provide for other related
matters.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereto hereby agree as
follows:
1. General Services to be Provided.
-------------------------------
(a) Lau shall provide to Viisage those services delineated on Exhibit A
---------
substantially equivalent to those heretofore provided by Lau's central
administrative and support offices to the Imaging Division, subject to any
modifications which are made in accordance with Section 4 below (collectively,
the "General Services").
(b) Viisage understands that the General Services will be performed by
those employees of Lau who perform similar services for Lau in the normal course
of their employment.
2. Term.
----
The term of this Agreement shall commence on the Closing Date and terminate
upon the termination of the Use and Occupancy Agreement between the parties of
even date herewith or such later date as may be mutually agreed to by the
parties in writing;
<PAGE>
provided that Viisage may terminate this Agreement at any time upon thirty (30)
days advance written notice to Lau.
3. Fee for General Services.
------------------------
In consideration of the General Services provided by Lau, Viisage shall pay
to Lau a fee for services at the rate of $55,000 per month (subject to
adjustment as provided herein and to such changes as the parties may agree upon
from time to time (the "Service Fee")). This charge does not include office
space, facilities and services which are provided by Lau to Viisage under the
Use and Occupancy Agreement of even date herewith, which are subject to a
separate charge as provided therein. The Service Fee for services to be
performed in a month shall be due on or before the first day of that month.
4. Changes in General Services.
---------------------------
The scope and nature of the General Services shall be subject to change
from time to time as hereinafter provided in this Section 4:
(a) Viisage may cause any particular class of General Services to be
removed from the General Services, if Viisage determines in its sole discretion
to provide such class of services internally or obtain them elsewhere; provided
that Viisage shall give Lau at least 30 days' prior written notice of any such
removal.
(b) In the event that Lau determines in its sole discretion to remove or
modify a particular class of its own administrative services, then Lau shall be
permitted correspondingly to remove or modify such class of General Services as
provided by Lau to Viisage under this Agreement; provided that Lau shall give
Viisage at least 30 days' prior written notice of such removal or modification.
(c) Lau and Viisage may by written agreement at any time agree to change
the extent and nature of the General Services in general or with respect to any
particular class of the General Services.
(d) In the event of any change in the scope or nature of the General
Services under any provision of this Section 4, the Service Fee shall be
equitably adjusted by mutual agreement of the parties to reflect the impact of
such change on the cost of providing the General Services.
5. Independent Contractor Status.
-----------------------------
The Company acknowledges that Lau shall render and perform the General
Services to be rendered and performed by it hereunder as an independent
contractor in accordance with its own standards, subject to its compliance with
the provisions of this Agreement.
<PAGE>
6. Disclaimer; Limited Liability.
-----------------------------
(a) Subject to Section 6(d) below, Lau shall not be liable to Viisage for
any expense, claim, loss or damage (including, without limitation, compensatory,
indirect, special, consequential or exemplary damages) arising out of its
performance or non-performance of the General Services pursuant to Section 1
herein, except to the extent of amounts billed or billable for such General
Services.
(b) Lau shall provide prompt notice to Viisage of any failure or delay in
performance of General Services to be performed by Lau pursuant to Section 1
herein.
(c) Subject to Section 6(d) below, Viisage shall indemnify and hold
harmless any employee of Lau who performs General Services for Viisage pursuant
to Section 1 herein to the same extent that Viisage would indemnify its own
officers in accordance with its customary practices if they were to perform such
services.
(d) Each of Lau and Viisage shall indemnify and defend the other and hold
it harmless against any claims, liability, loss, damage or expense (including
reasonable attorneys' fees) arising out of any personal injury or property
damage caused by the negligence or willful misconduct of the employees or agents
of such party in connection with their activities under or related to this
Agreement.
7. Access to Information.
---------------------
Viisage shall afford Lau (including its authorized representatives)
reasonable access to records, books, and other data and information (including
using reasonable efforts to give access to persons or firms possessing such
information) relating to Viisage's business which is required in order for Lau
to provide the services contemplated under this Agreement.
8. Confidentiality.
---------------
Unless compelled to disclose by judicial or administrative process or, as
advised by its counsel, by other requirements of law, each of Lau on the one
hand, and Viisage on the other hand, shall hold, and shall direct its officers,
directors, employees, auditors, attorneys, financial advisors, bankers and other
consultants and advisors (collectively, "Representatives") to hold, in strict
confidence, all information identified as confidential or proprietary and
furnished or made available to the other pursuant to this Agreement (including
without limitation any information provided under Section 7), except to the
extent that such information has been (a) in the public domain through no fault
of the receiving party or (b) later lawfully acquired from any third
-3-
<PAGE>
person, except such persons who have agreed to keep such information
confidential.
9. Miscellaneous.
-------------
(a) Complete Agreement; Construction. This Agreement and documents
--------------------------------
referred to herein shall constitute the entire agreement between the parties
with respect to the subject matter hereof and shall supersede all previous
commitments and writings with respect to such subject matter.
(b) Survival of Agreements. Except as otherwise contemplated by this
----------------------
Agreement, all covenants and agreements of the parties contained in this
Agreement shall survive the Closing Date.
(c) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of The Commonwealth of Massachusetts, without regard to
the principles of conflicts of laws thereof.
(d) Notices. All notices and other communications hereunder shall be in
-------
writing and shall be delivered by hand, by facsimile (with confirmation of
receipt) or mailed by registered or certified mail (return receipt requested) to
the parties at the following addresses or at such other addresses for a party as
shall be specified by like notice) and shall be deemed given on the date on
which such notice is received:
To Lau:
Lau Technologies
531 Main Street
Acton, Massachusetts 01720
Attention: Joanna T. Lau, President
-4-
<PAGE>
To Viisage:
Viisage Technology, Inc.
531 Main Street
Acton, Massachusetts 01720
Attention: Robert C. Hughes, President
(e) Amendments. This Agreement may not be modified or amended except by an
----------
agreement in writing signed by the parties.
(f) Successors and Assigns. This Agreement and all of the provisions
----------------------
hereof shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns.
(g) No Third Party Beneficiaries. This Agreement is solely for the benefit
----------------------------
of the parties hereto and shall not be deemed to confer upon other third parties
any remedy, claim liability, reimbursement, cause of action or other right.
(h) Legal Enforceability. Any provision of this Agreement which is
--------------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
enforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction. Without prejudice to any rights or
remedies otherwise available to any party hereto, each party hereto acknowledges
that damages would be an inadequate remedy for any breach of the provisions of
this Agreement and agrees that the obligations of the parties hereunder shall be
specifically enforceable.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
LAU ACQUISITION CORP.
d/b/a LAU TECHNOLOGIES
By: /s/ Joanna T. Lau
_______________________________
Its: President
______________________________
VIISAGE TECHNOLOGY, INC.
By: /s/ Robert C. Hughes
_______________________________
Its: President
______________________________
-6-
<PAGE>
EXHIBIT 10.3
EXHIBIT D
---------
USE AND OCCUPANCY AGREEMENT
---------------------------
The Use and Occupancy Agreement (this "Agreement") is made this 1st day of
November, 1996, by and between Lau Acquisition Corp., a Massachusetts
corporation doing business as Lau Technologies ("Lau"), whose address is 531
Main Street, Acton, Massachusetts 01720, and Viisage Technology, Inc., a
Delaware corporation ("Viisage"), whose address is 531 Main Street, Acton,
Massachusetts 01720.
1. Recitals. This Agreement is made with reference to the following facts
--------
and objectives:
(a) Bowmar/ALI, Inc., a Massachusetts corporation, as Landlord
("Landlord"), and Lau, as Tenant, entered into a written lease dated as of
February 23, 1990 (the "Lease"), of certain premises known as 531 Main
Street, Acton, Massachusetts. Lau's rights and obligations respecting such
premises under said Lease were also the subject of a Non-Disturbance,
Attornment, Estoppel & Subordination Agreement dated as of August 28, 1995
(the "Non-Disturbance Agreement"), by and among Lau, Landlord and
Landlord's mortgagee, Bank One, Arizona, NA ("Mortgagee"). Unless
otherwise defined herein, all capitalized terms used in this Agreement
shall have the same meaning as ascribed to them in the Lease or the Non-
Disturbance Agreement, as the case may be.
(b) Viisage is succeeding to the business of the division of Lau which
develops, markets and supports facial imaging and identification systems
and services (the "Imaging Division") by virtue of the transactions
contemplated by a certain Amended & Restated Asset Transfer Agreement dated
as of August 20, 1996 by and between Lau and Viisage.
(c) The Imaging Division had occupied, and Viisage desires to continue
to occupy, the portion of the Premises currently occupied by the Imaging
Division (the "Space").
(d) The Imaging Division has utilized, and Viisage desires to continue
to utilize, certain furniture, fixtures and equipment located in the Space
(the "Equipment").
(e) The Imaging Division has received, and Viisage desires to continue
to receive, certain office services from Lau such as janitorial, upkeep and
snow removal (the "Office Services").
<PAGE>
2. License; Subordination; Indemnity.
---------------------------------
(a) Lau hereby grants Viisage a license to (1) use and occupy the
Space and (2) cross other portions of the Premises as reasonably necessary
to maintain access and egress between the Space and the Common Areas of the
Building, subject in all cases to the provisions of this Agreement.
Viisage acknowledges that Lau licenses the Space to Viisage "as is," and
that Lau makes no warranty, covenant or representation that the Space shall
be other than in its present existing condition. The parties expressly
acknowledge that this Agreement does not constitute a demise by Lau of any
real property interest in or encumbrance on the Premises (including without
limitation the Space) and, consequently, Viisage shall not be entitled to
any rights or remedies to which a subtenant may be entitled at law or in
equity, unless Viisage shall have been expressly afforded such rights and
remedies pursuant to the provisions of this Agreement. This Agreement is
subject and subordinate to the Lease and the Non-Disturbance Agreement and,
consequently, if the Lease expires or terminates for any reason whatsoever,
this Agreement shall immediately terminate and Viisage's license under this
Agreement shall terminate. Viisage's failure to immediately vacate the
Space following the expiration or earlier termination of this Agreement
shall constitute a trespass and Viisage hereby indemnifies and holds
harmless Lau from any loss, cost, liability or expense associated with such
trespass.
(b) Lau shall provide the Office Services to Viisage on the same basis
that such services are currently provided by Lau to the Imaging Division, such
Office Services to be performed by those employees of Lau who perform similar
services for Lau in the normal course of their employment.
3. License Period; Mutual Right of Termination. The period during which
-------------------------------------------
Viisage may use and occupy the Space, utilize the Equipment and receive the
Office Services, subject to the provisions of this Agreement, shall commence on
the date hereof and, subject to earlier termination as provided herein or in the
Lease, end on February 23, 1997 (the "License Period"). In addition to all
other circumstances which could result in the termination of this Agreement, the
parties shall have the following respective rights as to termination:
(a) Viisage shall have the right to terminate this Agreement, at any
time during the License Period, by giving thirty (30) days' prior written
notice to Lau; and
(b) Lau shall have the right to terminate this Agreement, at any time
during the License Period, by giving six (6) months' prior written notice
to Viisage.
-2-
<PAGE>
4. Changes in Office Services.
--------------------------
The scope and nature of the Office Services shall be subject to change from
time to time as hereinafter provided in this Section 4:
(a) Viisage may cause any particular type of Office Services to be
removed from the Office Services, if Viisage determines in its sole
discretion to provide such class of services internally or obtain them
elsewhere, provided that Viisage shall give Lau at least thirty (30) days'
prior written notice of any such removal.
(b) In the event that Lau determines in its sole discretion to remove,
reduce or change a particular class of services from the office services
provided for its own internal uses then Lau shall be permitted
correspondingly to remove, reduce, or change the nature of such class of
Office Services as provided by Lau to Viisage under this Agreement,
provided that Lau shall give Viisage reasonable prior written notice to
enable Viisage to obtain such services elsewhere.
(c) Lau and Viisage may by written agreement agree to change the
extent and nature of the Office Services in general or with respect to any
particular class of the Office Services.
(d) In the event of any change in the scope or nature of the Office
Services under any provision of this Section 4, the Service Fee shall be
reasonably adjusted by mutual agreement of the parties to reflect the
impact of such change on the cost of providing the Office Services.
5. Rent and Other Charges.
----------------------
(a) Rent Reimbursement. Viisage covenants and agrees to pay Lau for
------------------
Viisage's Share (as hereinafter defined) of the rent payable by Lau under
Section 4 of the Lease (the "Basic Rental Reimbursement"). Payment shall be
made on a timely basis to enable Lau to satisfy its financial obligations
under the Lease. For purposes of this Agreement, "Viisage's Share" shall
equal 16.67%. Additionally, Viisage shall reimburse Lau for all other
financial obligations, if any, for which Lau is responsible under the Lease
arising as a direct result of Viisage's use and occupancy of the Space,
including without limitation, any indemnity required under Section 6(c) of
the Lease.
-3-
<PAGE>
(b) Taxes, Insurance, Utilities, Etc. Viisage covenants and agrees to
---------------------------------
pay Lau for Viisage's Share of Lau's out-of-pocket costs for real estate
taxes, insurance premiums, utilities costs, costs of repairs and
maintenance, and other costs specifically set forth in the Lease and Office
Services. Payment shall be made on a timely basis to enable Lau to satisfy
its obligations under the Lease.
6. Landlord's Services. Viisage shall have the right to enjoy the
-------------------
services which Landlord provides to the Space pursuant to the Lease. However,
Lau shall have no liability for the obligations of Landlord under the Lease or
the Landlord's failure to fulfill such obligations in whole or in part.
7. Viisage's Covenants. Except as otherwise expressly set forth in this
-------------------
Agreement, Viisage shall, in its use and occupancy of the Space and access
thereto through the remainder of the Premises, observe and otherwise be bound by
all of the terms and conditions set forth in the Lease and in the Non-
Disturbance Agreement.
8. Independent Contractor Status. Viisage acknowledges that Lau shall
-----------------------------
render and perform the Office Services to be rendered and performed by it
hereunder as an independent contractor in accordance with its own standards,
subject to its compliance with the provisions of this Agreement.
9. No Transfer. The license granted pursuant to this Agreement is
-----------
personal to Viisage and Viisage shall have no power to transfer any of its
rights hereunder.
10. No Alterations; Surrender. Except to the extent permitted under
-------------------------
Section 9 of the Lease, Viisage may not make any alterations, additions or
improvements to the Space without Lau's prior consent, and subject to Lau having
obtained Landlord's consent to the extent required under Section 9 of the Lease.
Viisage shall surrender the Space as required by this Agreement in the same
condition as it now exists, except for wear and tear which cannot reasonably be
repaired by Viisage's performance of its obligations under this Agreement.
11. Access to Space. Lau and the Landlord shall each have the right to
---------------
enter the Space to the extent permitted under Section 10 of the Lease.
12. Insurance. Viisage shall maintain with respect to the Space all
---------
insurance policies in compliance with the requirements imposed upon the tenant
as set forth in the Lease (unless Lau chooses to maintain such insurance
policies for the Premises and
-4-
<PAGE>
Building and to have Viisage reimburse Lau for Viisage's share of such cost),
except that Viisage shall deposit with Lau all certificates of insurance which
the Lease requires to be deposited with Landlord.
13. Fire, Casualty and Eminent Domain. In the event there is casualty
---------------------------------
damage to the Space as contemplated in Section 11 of the Lease, or a
condemnation or taking by eminent domain of a portion of the Space as
contemplated in Section 12 of the Lease, Viisage may continue to occupy the
Space and receive its equitable portion of any abatement of rent which Lau
receives from the Landlord under Section 11 or 12, as the case may be, of the
Lease, or immediately terminate this Agreement by giving written notice to Lau.
14. Conformance with Lease Requirements. Without limitation by any other
-----------------------------------
provision of this Agreement, Viisage shall not do, omit to do or permit to be
done or omitted anything which would constitute a default under the terms,
covenants and conditions of the Lease, or which would otherwise result in
Landlord having the right to terminate the Lease.
15. Limitations on Lau's Liability. Viisage acknowledges that it has not
------------------------------
relied upon any representations or warranties of Lau or its agents with respect
to the Building or the Space. Viisage expressly acknowledges that, if Viisage
should have the right to seek recovery of any judgment from Lau associated with
Viisage's use and occupancy under this Agreement or Lau's obligations hereunder,
Viisage shall look solely to Lau's interest in the Lease for recovery of any
judgment from Lau. Lau's directors, officers and shareholders shall never be
personally liable for any such judgment.
16. Remedies and Damages. If this Agreement is terminated as the result
--------------------
of a default by Viisage beyond any applicable cure period, Lau may expel and
remove Viisage from the Space, provided that such termination shall be without
prejudice to Lau's power to exercise all of the rights to which it is entitled
at law or in equity by virtue of Viisage's default. If Viisage's default should
result in the termination of the Lease, Viisage shall indemnify Lau from and
against all damages for which Lau is liable to Landlord as a consequence
thereof, in addition to any other damages which Lau suffers or incurs.
17. Notices. Any notice, statement, certificate, consent, approval,
-------
disapproval, request or demand required or permitted to be given in this
Agreement shall be in writing and delivered by hand, by facsimile (with
confirmation of receipt) or sent by United States mail, registered or certified,
postage prepaid, or by a nationally recognized overnight courier, addressed, as
the case may be as follows:
-5-
<PAGE>
To Lau at the following address:
Lau Acquisition Corp.
d/b/a Lau Technologies
531 Main Street
Acton, Massachusetts 01720
Attn: Joanna T. Lau, President
and to Viisage at the following address:
Viisage Technology, Inc.
531 Main Street
Acton, Massachusetts 01720
Attn: Robert C. Hughes, President
Either party may change or add persons and places where notices are to be
sent or delivered by notice to the other. Mailed notices will be deemed served
three (3) business days after mailing as required above provided the same are
received in the ordinary course of business or upon receipt if sent by hand
delivery.
18. Entire Agreement; Construction. This Agreement contains the entire
------------------------------
agreement between Lau and Viisage with respect to its subject matter and can
only be changed by a written agreement executed by the parties. The titles of
the several Sections contained herein are for convenience only and shall not be
considered in construing this Agreement.
19. Power to Execute. Lau and Viisage covenant, warrant and represent
----------------
that they have full power and proper authority to execute this Agreement.
20. Covenants and Conditions. All provisions, whether covenants or
------------------------
conditions, on the part of Viisage to be performed under this Agreement shall be
deemed to be both covenants and conditions.
-6-
<PAGE>
IN WITNESS WHEREOF, Lau Acquisition Corp. d/b/a Lau Technologies and
Viisage Technology, Inc. have each caused these presents to be executed as a
sealed instrument as of the day and year first written above.
LAU ACQUISITION CORP.
d/b/a LAU TECHNOLOGIES
By: /s/ Joanna T. Lau
_________________________________
Name: Joanna T. Lau
_________________________________
Title: President
_________________________________
VIISAGE TECHNOLOGY, INC.
By: /s/ Robert C. Hughes
_________________________________
Name: Robert C. Hughes
_________________________________
Title:President
_________________________________
-7-
<PAGE>
EXHIBIT 10.10
Option # _____ Shares
VIISAGE TECHNOLOGY, INC. -- STANDARD FORM
MANAGEMENT NONQUALIFIED STOCK OPTION CERTIFICATE AND AGREEMENT
Viisage Technology, Inc. (the "Company"), a Delaware corporation, pursuant
to its 1996 Management Stock Option Plan (the "Plan"), hereby issues to the
Optionholder named below an option to purchase the number of shares of Common
Stock, $.001 par value (the "Shares"), of the Company set forth below (the
"Option"), exercisable on the following terms and conditions:
Name of Optionholder: _______________________________
Address: _______________________________ Social Security No.:
_______________________________
_______________________________ ____________________
Number of Shares: ____________________ (________)
Option Price per Share: __________ Dollars ($__.__) U.S.
Date of Issuance: _____________, 1996
Exercise Schedule: The Option is exercisable for all Shares on or after
__________, 2003, subject to acceleration and earlier vesting as follows:
- -Benchmark Shares: Exercisable for a total of ___________ (________) Shares, in
increments at the rate of ________ (______) Shares (the
"Benchmark Rate") each, for each Benchmark Increment as
defined in and pursuant to Section 11 below.
- -Grant Shares: [Exercisable for _______________ (________) shares
immediately on or after Date of Issuance.] [-if none
scheduled, substitute "None" above-]
Expiration Date: ______________, 2006, subject to earlier termination as
provided below.
TRANSFER OF THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE ATTACHED TERMS
AND CONDITIONS.
By signing below, the Company and the Optionholder each agrees to the
foregoing and to the attached Management Stock Option Terms and Conditions,
which are incorporated herein by reference.
VIISAGE TECHNOLOGY, INC. OPTIONHOLDER
By: _____________________ __________________________
Title:
<PAGE>
VIISAGE TECHNOLOGY, INC.
MANAGEMENT STOCK OPTION AGREEMENT
Management Stock Option Terms and Conditions
--------------------------------------------
(Nonqualified)
1. Option Price. The price to be paid for each share of common stock
------------
of the Company, $.001 par value (each, a "Share"), issued upon exercise of the
whole or any part of this Option, is the Option Price per Share set forth on the
stock option certificate to which these terms and conditions have been attached
(the "Certificate").
2. Exercise Schedule. This Option may be exercised for the Number of
-----------------
Shares set forth on the Certificate as follows: (i) the Option may be exercised
with respect to the Grant Shares on or after the date of Option Issuance, and
(ii) the Option may be exercised with respect to the Benchmark Shares, at any
time and from time to time, on or after _______________, 2003, subject to
acceleration pursuant to Section 11 below, all as administered by the Committee
described in Section 10 below in its sole discretion. The Option may not be
exercised as to any Shares after the Expiration Date set forth on the
Certificate or after any earlier termination of the Option in accordance with
this Agreement.
3. Method and Terms of Exercise.
----------------------------
(a) Notice of Exercise. To exercise this Option, the Optionholder shall
deliver written notice of exercise to the Treasurer of the Company specifying
the number of shares with respect to which the Option is being exercised
accompanied by payment of the Option Price for such Shares.
(b) Payment. Payment shall be made by (i) cash; (ii) certified check,
(iii) if permitted by vote of the Committee, and subject to Section 3(f) hereof,
by delivery and assignment to the Company of Shares previously owned by the
Optionholder for more than six months or more and having a value equal to the
Option price; (iv) if permitted by vote of the Committee, and if permitted by
applicable law, through the delivery of an assignment to the Company of a
sufficient amount of the proceeds from the sale of unrestricted Shares acquired
upon exercise to pay for all of the Shares so acquired and any tax withholding
obligation resulting from such exercise, and an authorization to the broker or
selling agent to pay that amount to the Corporation; or (v) by a combination of
(i), (ii), (iii) and (iv). The value of the Company stock for purposes of the
foregoing clause (iii) shall be its fair market value as of the date the Option
is exercised, as determined in accordance with procedures to be established by
the Committee. Optionholder's election to request payment in any manner other
than that described in clause (i) or (ii) above shall be made in writing on or
before the applicable exercise date and (subject to approval by the Committee)
shall be irrevocable by the Optionholder, unless any such method of exercise
would result in a loss of exemption under or violate Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor provision, as applicable to the Company at the time ("Rule 16b-3").
(c) Reload Options. Reload Options, as defined in the Plan, have been
authorized with respect to this Option. Accordingly, (a) if any portion of this
Option is permitted to be exercised under Subsection 3(b)(iii) above or if any
withholding tax obligation is permitted to
<PAGE>
be paid under the second sentence of Section 9 below, in either case at a time
when Optionholder is employed by the Company, and (b) if the Option price or
such withholding tax is paid by assignment and delivery of Shares that have been
owned by Optionholder for a period of more than six months, then Reload Options
for the Shares so assigned and delivered shall be issued as provided in and
subject to the terms and conditions of the Plan.
(d) Delivery of Shares. Promptly following notice of exercise and payment,
the Company will deliver to the Optionholder a certificate representing the
number of Shares with respect to which the Option is being exercised.
(e) Compliance and Registration. If said Shares are not at that time
effectively registered under the Securities Act of 1933, as amended, the
Optionholder shall include with such notice a letter, in form and substance
satisfactory to the Company, confirming that the Shares are being purchased for
the Optionholder's own account for investment and not with a view to
distribution. The issuance or delivery of any Shares hereunder may be postponed
by the Committee for such period as may be required to comply with any
applicable requirements under the Federal securities laws, any applicable
listing requirements of NASDAQ or any national securities exchange or any
requirements under any law or regulation applicable to the issuance or delivery
of such Shares. The Company shall not be obligated to issue or deliver any such
Shares if the issuance or delivery thereof would constitute a violation of any
provision of any law or of any applicable regulation of any governmental
authority, NASDAQ or any national securities exchange; but the Company shall
exercise its reasonable efforts to cause the Shares that are the subject of the
Option to be effectively registered on Form S-8 under the Securities Act of
1933, as amended, within nine months after the date when Company has first
registered Shares on Form S-1 under said Securities Act, and for so long as the
Company shall continue to be registered under the Exchange Act, the Company
shall exercise its reasonable efforts to keep such registration in effect.
(f) Withheld Shares -- Rule 16b-3. Any election made by the Optionholder,
if then subject to Section 16 of the Exchange Act, to make payment of any
portion of a tax withholding obligation with respect to any Option exercise by
withholding or assignment of Shares or to make payment of any portion of an
exercise price by assignment of Shares shall be subject to any then-applicable
requirements of Rule 16b-3 and other applicable rules under Section 16 of the
Exchange Act.
4. Rights as a Stockholder or Employee. The Optionholder shall not
-----------------------------------
have any rights in respect of Shares to which the Option shall not have been
exercised and payment made as provided above. The Optionholder shall not have
any rights to continued employment by the Company or its affiliates by virtue of
the issuance of this Option.
5. Stock Dividends; Stock Splits; Recapitalization. In the event of
-----------------------------------------------
a stock dividend, stock split or combination of shares, recapitalization or
other change in the Company's capitalization, or other distribution with respect
to holders of the Company's common stock other than normal cash dividends,
automatic adjustment shall be made in the number and kind of shares as to which
the then unexercised portion of the Option shall be exercisable, to the end that
the proportionate interest of the Optionholder shall be maintained as before the
occurrence of such event. Such adjustment shall be made without change in the
total price
-3-
<PAGE>
applicable to the unexercised portion of the Option and with a corresponding
adjustment in the Option price per Share.
6. Merger; Sale of Assets; Dissolution. In the event of a change of
-----------------------------------
the Shares resulting from a merger or similar reorganization as to which the
Company is the surviving corporation, or the formation of a holding company, the
Committee will adjust the number and kind of shares subject to this Option and
the exercise price hereunder to prevent substantial dilution or enlargement of
the rights available or granted hereunder. If the Company shall be a party to a
merger or a similar reorganization after which the Company will not survive, or
if there will be a sale of substantially all the Common Stock of the Company or
a sale of all or substantially all of the assets of the Company, the Committee,
in its discretion, may declare (a) that the Option shall terminate on a date not
less than 30 days after the date notice of such termination is given to the
holder hereof unless theretofore exercised (but if the Committee determines that
30 days' notice would be disruptive to the reorganization transaction with
respect to which such notice is given, then the Committee may give such shorter
notice as the circumstances reasonably require, but in no event less than 10
days), (b) that the Option shall pertain to and apply, with appropriate
adjustments as determined by the Committee, to the securities of the resulting
corporation to which a holder of the number of Shares subject to this Option
would have been entitled, or (c) that the Company or resulting corporation will
purchase the Option from the holder at a price per Share as to which the Option
is outstanding, unexercised and vested equal to the difference between the price
at which Shares of the Company are to be purchased or exchanged in the
transaction and the Option Price.
7. Option Not Transferable. This Option is not transferable by the
-----------------------
Optionholder otherwise than by will or the laws of descent and distribution, and
is exercisable, during the Optionholder's lifetime, only by the Optionholder.
Notwithstanding the foregoing (but if Optionholder then is subject to Section 16
of the Exchange Act, only to the extent consistent with the requirements of Rule
16b-3 or other rules under Section 16 of the Exchange Act), this Option may be
transferred pursuant to an order that would constitute a qualified domestic
relations order as defined in the Code or Title I of the Employee Retirement
Income Security Act or the rules thereunder.
8. Exercise of Option After Termination of Employment. If the
--------------------------------------------------
Optionholder's employment with (a) the Company or (b) a corporation (or parent
or subsidiary corporation of such corporation) issuing or assuming a stock
option in a transaction to which section 424(a) of the Code applies, is
terminated for any reason, then the Option may be exercised for a period of
ninety days (or in the case of death or disability, for a period of one year)
after such termination of employment, but only to the extent that the Option
shall have been vested in accordance with the terms and conditions hereof on the
date of such termination, and upon the expiration of such ninety-day period
following termination (or in the case of termination by death or disability,
upon the expiration of such one-year period following termination), the Option
immediately shall expire and may not be exercised. If the Optionholder's
employment is terminated in any of the following manners: (i) by the Company
without cause under the terms of any then-existing employment agreement with the
Optionholder for a stated term of employment, (ii) by Optionholder's resignation
due to a material breach of such employment agreement by the Company at a time
when Optionholder is not in breach thereof, or (iii) by reason of the
Optionholder's death or disability (any termination described in the foregoing
-4-
<PAGE>
clause (i), (ii) or (iii) being referred to as a "Measuring Termination"), then
the most recently ended fiscal quarter of the Company shall be a "Measuring
Date" for purposes of Section 11 hereof, whether or not such quarter end
coincides with the fiscal year end of the Company. Notwithstanding the
foregoing, no rights under the Option may be exercised after the Expiration
Date, and any portion of the Option that is not vested on the date when
employment terminates immediately shall expire on the date of employment
termination and may not be exercised.
9. Payment of Taxes. The Optionholder shall pay to the Company, or
----------------
make provision satisfactory to the Company for payment, of all applicable
federal, state and local income and employment act withholding obligations.
Such tax obligations may be paid in whole or in part, to the extent permitted
under Section 3(f) hereof and if the Committee so approves: (i) by electing to
have Shares withheld having a value equal to the amount to be so satisfied (but
not in an amount exceeding the minimum statutory withholding requirement
applicable to such exercise), or (ii) by assigning and delivering to the Company
Shares previously owned by the Optionholder and having a value equal to the
amount to be so satisfied (but unless such Shares have been owned by the
Optionholder for more than six months, not in an amount exceeding the minimum
statutory withholding requirement applicable to such exercise). The value of
Shares to be withheld or assigned shall be determined based on the fair market
value of the Shares on the date the amount of tax to be withheld is to be
determined. The Company, its parent and subsidiaries may, to the extent
permitted by law, deduct any such tax obligations from any payment of any kind
otherwise due to the Optionholder.
10. Administration. The Option is issued and this Agreement has been
--------------
made pursuant and subject to the terms and conditions of the Company's 1996
Management Stock Option Plan. The Option and this Agreement shall be
administered by a committee of two or more members of the Board of Directors of
the Company appointed by said Board (the "Committee") pursuant to the Plan. The
Committee shall have full power to determine whether Benchmark Increments have
been achieved and the amounts thereof, to construe and interpret the Option,
this Agreement (which includes the Certificate and these Management Stock Option
Terms and Conditions) and the Plan, and to establish, amend and rescind rules
and regulations for its and their administration. Any decisions of the
Committee made with respect to any of the foregoing shall be final and binding
on the Company, the Optionholder and all other persons.
11. Benchmarks. For so long as the Option remains in effect, subject
----------
to the terms and conditions set forth herein, the Option for the Benchmark
Shares set forth on the Certificate shall vest and become exercisable on each
Measuring Date (as defined below) in increments of previously unvested Benchmark
Shares equal in number to the product of (i) the Benchmark Rate set forth on the
Certificate, multiplied by (ii) the Benchmark Increment (as defined below),
rounded to the nearest whole number of Shares:
11.1 For purposes hereof, the term "Benchmark Increment" as at any
-------------------
particular Measuring Date shall mean the quotient (to be calculated in the
manner(s) designated by the Committee and rounded to the nearest thousandth)
having as its numerator the sum of the Current Common Value minus the Base Value
and also minus the Prior Increments (all as of
-5-
<PAGE>
the close of business on such Measuring Date), and having as its denominator the
number one million (1,000,000), said quotient being depicted mathematically as
follows:
Net Current Common Value - Base Value - Prior Increments
--------------------------------------------------------
1,000,000
where:
(a) the term "Current Common Value" on any particular Measuring Date
--------------------
means either (i) the total net proceeds and the net value of any securities or
other property that are payable or distributable in liquidation to the common
stockholders of the Company by reason of a Change in Control (as defined below);
or (ii) if the foregoing clause (i) is not applicable, the average closing price
on NASDAQ (or, if the Company's common stock is not traded on NASDAQ, on the
principal exchange on which the Company's stock then is publicly traded) for the
last twenty trading days immediately preceding such Measuring Date multiplied by
the average number of Shares used in the earnings per share calculations of the
Company for financial reporting purposes over the same 20 day period, or (iii)
if neither of the foregoing clauses (i) or (ii) is applicable, the fair market
value of all issued and outstanding Shares used in the earnings per share
calculations of the Company for financial reporting purposes as at the close of
business on such Measuring Date determined in such other manner as the Committee
shall determine; and in any such case, there shall be deducted from the value
determined all amounts, if any, that then are owed to the Company with respect
to the issuance of any Shares in accordance with generally accepted accounting
principles consistently applied; with all of the foregoing being determined by
or in the manner(s) designated by the Committee;
(b) the term "Base Value" means _______________ Dollars ($________);
(c) the term "Prior Increments" means the aggregate number of
----------------
Benchmarks that have been achieved on any prior dates or for which any Benchmark
Shares already shall have been vested hereunder, multiplied by the number one
million; and
(d) the term "Change in Control" means and shall be deemed to occur
-------------------
if any of the following occurs: (i) any Person is or becomes the beneficial
owner of securities of the Company representing more than 50% of the combined
voting power of the Company's then outstanding voting securities; or (ii)
individuals comprising the Incumbent Board, or individuals approved by a
majority of the Incumbent Board, cease for any reason to constitute at least a
majority of the Board of Directors of the Company; or (iii) approval by the
stockholders of the Company of a merger or consolidation of the Company, other
than (A) a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
more than 50% of the combined voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or (B) a
merger or consolidation effected to implement a recapitalization of the Company
in which no Person acquires more than 50% of the Company's then outstanding
voting securities; or (iv) approval by the stockholders of the Company of (A) a
complete or substantial liquidation or dissolution of the Company, or (B) the
sale or other disposition of all or substantially all of the assets of the
Company. An underwritten public offering of common stock of the Company,
including the completion of any sale of common stock
-6-
<PAGE>
pursuant to an underwriter's over-allotment option, and any offering to
employees pursuant to a registration statement on Form S-8 or other similar
offering shall not be counted toward a Change in Control for purposes of this
Agreement. For purposes of the foregoing: "Incumbent Board" shall mean those
individuals who comprised the Board of Directors of the Company on its
incorporation date; and "Person" shall have the meaning used in Sections
13(d)(3) or 14(d)(2) of the Exchange Act, provided that, it shall not include
-------------
Denis K. Berube, Joanna T. Lau, Lau Acquisition Corp., the Company, any trustee
or other fiduciary holding securities under an employee benefit plan of the
Company, or any entity owned by the stockholders of Lau Acquisition Corp.
11.2 Despite the foregoing formula, in no event shall the amount of
any Benchmark Increment be less than zero. Once the Company has achieved a
Benchmark Increment, then the Shares that vest hereunder as result thereof shall
remain vested, regardless of whether the Current Common Value thereafter shall
decrease in amount.
11.3 For purposes hereof, the term "Measuring Date" shall mean each
--------------
date while the Option remains in effect and the Optionholder is employed by the
Company that is either: (i) a fiscal year end of the Company; or (ii) the date,
if any, when a Change in Control shall have been completed as determined by the
Committee (or if the Committee shall have exercised its right hereunder to
terminate the Option by reason of a Change in Control, the date immediately
preceding such date of termination, with the Benchmark Increment for such date
to be determined as if the Change in Control had been completed on such earlier
date); or (iii) if there occurs a Measuring Termination of Optionholder's
employment as defined in Section 8 above (but not otherwise), the most recently
ended fiscal quarter of the Company that occurs on or before the date of such
termination of Optionholder's employment.
11.4 The maximum number of Shares that shall vest or become exercisable
under this Section 11 shall not exceed the lesser of either (i) the Number of
Shares set forth on the Certificate or (ii) the total number of Benchmark Shares
set forth on the Certificate. Therefore, if the application of the above vesting
formula ever results in any number of Shares that would vest in an amount
exceeding the then-remaining unvested number of Benchmark Shares, the number of
Shares to vest at such time shall equal the number of Benchmark Shares then
remaining unvested, and no more.
11.5 Attached as Exhibit A hereto is a
---------
hypothetical example of how the Benchmark Increment shall be calculated.
12. Option Nonqualified. The Option shall be a nonstatutory option which is
-------------------
not intended to meet the requirements of Section 422 of the Code.
13. Surrender and Notation of Option. If and when the Option is exercised in
--------------------------------
its entirety, this Agreement and the Certificate shall be surrendered to the
Company for cancellation. If and as the Option shall be exercised in part, or
any change or adjustment shall be made to the Option as contemplated under this
Agreement, this Agreement and the Certificate shall be delivered by the
Optionholder to the Company for the purpose of making appropriate notation
thereon, or of otherwise reflecting the partial exercise or the change or
adjustment hereto.
-7-
<PAGE>
Exhibit A
---------
to Management Stock Option Terms and Conditions
-----------------------------------------------
The following is a hypothetical example of how the Benchmark Increment
shall be calculated:
(I) If the applicable Certificate designated a total of 200,000 Benchmark
Shares and a Benchmark Rate of 15 Shares, (ii) the Base Value were $21,000,000,
(iii) at the next fiscal year end of the Company ("FYE 1") the immediately
preceding 20-day trailing average closing price on NASDAQ for Shares is $25.00,
(iv) during such 20 day period the number of outstanding Shares (used in the
earnings per share calculation of the Company for financial reporting purposes)
is 10,000,000, (iv) at the close of business on such fiscal year end the Company
is owed $35,000.00 in subscription payments for Shares, and (v) at FYE 1 the
Optionholder is an officer or employee of the Company, then the Benchmark
Increment would be calculated as follows:
Before adjustment for unpaid subscriptions, market value of Shares would
be: 25 * 10,000,000 = $250,000,000. To adjust for unpaid subscriptions:
250,000,000 - 35,000 = $249,965,000, which would be the Current Common
----------- --------------
Value.
-----
The Benchmark Increment would be:
(249,965,000 - 21,000,000 + 0) / 1,000,000 = 228.97
------
The number of Shares to vest as of such fiscal year end shall be: 15 *
228.97 = 3,434.48, which rounded to the nearest whole number of Shares
would result in a vesting increment of 3,434 Shares.
-----
(II) If at the next fiscal year end ("FYE 2") the immediately preceding
20-day trailing average closing price on NASDAQ for Shares is $22.00 per share,
but none of the other facts set forth above have changed, then:
The number initially calculated to determine the Benchmark Increment would
be:
(219,965,000 - 21,000,000 - (228.97 * 1,000,000)) = -30,005,000 = -30.005 or -
------------------------------------------------- -----------
1,000,000 1,000,000
30.01
Because the Benchmark Increment is limited by a floor amount of zero,
instead of using the above negative number, the Benchmark Increment for FYE 2
would be zero. The 3,434 Shares that vested at FYE 1, however, would remain
----
vested and would continue to be exercisable if the Option had not already been
partially exercised for such Shares.
(III) If at the next following fiscal year end ("FYE 3") the immediately
preceding 20-day trailing average closing price on NASDAQ for Shares is $27.50
per share, but none of the other facts set forth above have changed, then:
The number initially calculated to determine the Benchmark Increment would
be:
(275,000,000 - 35,000) - 21,000,000 - (228.97 * 1,000,000) =
----------------------------------------------------------
1,000,000
(274,965,000 - 21,000,000 - 228,970,000 = 24,995,000 = 25.00
---------------------------------------- ----------
1,000,000 1,000,000
Because this number exceeds zero, the Benchmark Increment for FYE 3 would be 25.
--
Multiplying that figure times the Benchmark Rate: 25 * 15 = 375, which would
result in 375 additional Benchmark Shares vesting at FYE 3. If the Option still
---
has not been exercised to acquire the 3,434 Benchmark Shares that vested at FYE
1, a total of 3,809 Shares would be vested and available for exercise of the
Option at FYE 3.
8
<PAGE>
Exhibit 10.12
-------------
Confidential
Viisage Technology
Management Compensation Plan
INTRODUCTION
This document describes Viisage Technology's, division of LAU Technologies,
basic philosophy and approach to compensating its senior executives, managerial
and key professional personnel. It is designed to align management and
shareholder interests and deals with the following aspects of direct
compensation:
. Base salaries
. Incentive compensation
Viisage intends to apply the following general principles in compensating its
senior executives, managers and key professionals:
. It expects to pay generally "competitive" salaries. This is determined
periodically by the market and by comparing Viisage's positions with like
positions in broadly similar types and sizes of companies.
. Viisage intends to maintain an attractive incentive program designed to
provide opportunities for key people to earn "extra" compensation for
attaining above average results, a "pay for performance" philosophy.
BASE SALARIES
Salary levels will be established for the Company according to sound personnel
practices. Through appropriate salary surveys of selected positions, and the
pay practices of comparable size and type companies, salary ranges will be
developed and maintained for Viisage.
Except in unusual cases, new hires will be paid salaries toward the middle range
of such salary levels depending on the qualifications of the person. Salary
increases will be based on meritorious performance as evaluated at least
annually in October for January 1 action.
Care will be exercised and documentation approved to substantiate that merit
increases are fully justified. Exceptional performance may be rewarded by
increases of 20 percent or more. Barely adequate job performance will not be
rewarded by merit increases, while good to average performance may warrant an
increase of up to 10 percent.
Appropriate promotional increases will be given when an executive is judged to
be qualified for and is transferred to a higher level position.
<PAGE>
Confidential
Viisage Technology
Management Compensation Plan
From time to time, the Company may adjust its salary ranges to recognize general
inflationary pressures. It may or may not relate this to all individuals as one-
time "cost of living" adjustments separate from merit or promotional increases.
At the beginning of each fiscal year, job objectives, specifying the most
important results to be achieved for that year, will be set for each executive
and key professional. Periodic (at least annual) formal performance evaluations
will be made by each executive's superior, discussed with the individual and a
written record maintained. (This is especially important as the basis for
administering incentive forms of compensation.)
INCENTIVE COMPENSATION
General Principles
- ------------------
Viisage follows a "pay for performance" philosophy and intends to develop and
maintain effective plans that are designed to provide attractive, "extras"
compensation opportunities to selected key personnel who can have a material
impact on the Company by producing above average results. In addition to
programs for senior executives, managers, and key professionals, the Company may
adopt, from time to time, specific plans for such personnel. These plans will
be carefully tailored to the needs, circumstances, marketing objectives, and
economics of the Company.
The Company has not placed any arbitrary ceiling on individual incentive
payments. It believes that the plans are so structured as to make "runaway"
payments unlikely. In any event by providing for final Board approval of
awards, the means exist to correct any proposed payment which appears to be
truly excessive.
Other key assumptions include:
. Viisage base salaries are generally presumed to be "competitive" so
incentive awards in no way are intended to make up for a "low base pay"
situation.
. Individual incentive awards are not considered an "across-the-board" form
of compensation. Payments are made only to specific individuals who have
demonstrated above average performance during the fiscal period in
question.
. Eligible employees will be told at the outset that they are plan
participants, given a general outline of the plan's provisions, told they
will be judged on individual as well as group performance, advised of the
main goals they must meet to justify personal awards, and promised a formal
objective
<PAGE>
evaluation at the time of an award (or lack thereof).
<PAGE>
Confidential
Viisage Technology
Management Compensation Plan
Basic Approach
- --------------
There are many factors which can be used to design a management incentive plan.
For example, among others, there are plans which provide the basis for payment
of incentive bonuses when:
. A company meets and surpasses its approved profit plan, Results exceed
those of the prior year(s) or some judgmental or quantitatively established
target.
. Certain specified goals are achieved regardless of current year's cash,
such as meeting compound rates of growth in profit or sales goals.
. Results exceed certain specified returns on such factors as (a) total
assets, net assets, stockholder's equity, sales, etc.
. Certain preset cash flow goals are met or exceeded.
. When a loss situation is improved by $ "X."
The principle elements of the Viisage incentive plan are:
. Determination of eligible participants.
. Establishing a Minimum Earnings Requirement.
. Accumulation of an incentive fund.
. Distribution of the incentive fund equitably among the participants.
Participation
- -------------
Viisage's senior executives will participate in the Management Incentive Plan.
This includes the President and his direct reports in finance, marketing,
engineering and program management, and the Controller and such others as may be
designated from time to time by the President. Generally, the number of
eligible participants will range from 7 to 10 persons. See Appendix A.
Minimum Earnings Requirement
- ----------------------------
The Minimum Earnings Requirement (MER) is a preset level of performance used to
determine the level at which the incentive fund accrues. As stated earlier, the
MER can be expressed in a variety of ways. Currently MER is expressed in terms
of earnings before income taxes and bonuses as determined by generally accepted
accounting principles. This is an established method of determining a bonus
goal that is simple and commonly understood.
<PAGE>
The MER, set annually, is the planned earnings before income taxes and bonuses
included in the Forecast. This target places a premium on management presenting
to the Board of Directors a carefully reasoned, documented forecast for the
ensuing year which represents a reasonable "stretch" goal. Only if the plan is
"soft" or clearly has significant short-comings will the MER target be modified.
The persons affected will be notified promptly of any modification.
<PAGE>
Confidential
Viisage Technology
Management Compensation Plan
Accumulation of the Incentive Fund
- ----------------------------------
As indicated, the Company's (approved) forecasted earnings before income taxes
and bonuses becomes its NE. The MER represents a reasonably achievable but
somewhat demanding target.
Using the MER, incentive funds will be accumulated as follows:
Base Incentive Fund - The base incentive fund will begin to accrue at modest
- -------------------
rates between 75% to 100% of MER as shown in Table 1. The plan is designed to
produce an incentive fund of 25% of eligible payroll (base salaries of
participants) upon attaining the MER.
Once MER is reached, the percentage of eligible payroll accrued in the base
incentive fund will increase 3% for each 5% increment in contribution in excess
of MER, as shown in Table 1. There is no limit on the percentage of eligible
payroll that can be accrued. For example, 200% of MER=85%, 300% of MER=145%,
etc.
Adjusted Incentive - The base incentive fund accrued under the formula described
- ------------------
above will be subject to a plus or minus (+/-) adjustment of 20 percent,
depending on the results of applying 3 to 5 carefully selected "quality
factors." These factors will be selected annually to focus on the quality of the
contribution generated, i.e., on specific result areas that are considered
important. The quality factors applied should be carefully selected and agreed
upon at the start of the fiscal year by the President and the eligible
personnel. They should represent the most timely, significant and appropriate
economic improvement areas upon which the Company should place emphasis during
the fiscal period in question. Quality factors used in all likelihood will vary
considerably at different periods, depending on the circumstances existing.
Examples are set forth in Table 2.
<PAGE>
Confidential
Viisage Technology
Management Compensation Plan
Table 1
Base Incentive Fund Accrual Formula
<TABLE>
<CAPTION>
Actual Contribution % Eligible
as a % of MER Payroll
------------- -------
<S> <C>
75 15%
80 17%
85 19%
90 21%
95 23%
100% MER 25%
105 28%
110 31%
115 34%
120 37%
125 40%
130 43%
135 46%
140 49%
145 52%
150 55%
</TABLE>
<PAGE>
Confidential
Viisage Technology
Management Compensation Plan
Table 2
Quality Factors
<TABLE>
<CAPTION>
====================================================================================================
Factor Weighted
(-) Target (+) Weights% Score % Score %
- ----------------------------------------------------------------------------------------------------
Performance rating 80% 100% 120%
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1. Achieve revenue ($000) $22,488 $28,110 $33,732 25 110 27.50
growth
- ----------------------------------------------------------------------------------------------------
2. Achieve gross margin (%) 17% 21% 25% 25 105 26.25
- ----------------------------------------------------------------------------------------------------
3. Use less than $4 ($000) $4,800 $4,000 $3,200 25 95 23.75
million of
additional LAU cash
(A)
- ----------------------------------------------------------------------------------------------------
4. Maintain backlog ($000) $25,600 $32,000 $38,400 15 120 18.00
- ----------------------------------------------------------------------------------------------------
5. Annualized return on (%) 30% 33% 35% 10 105 10.50
divisional equity -- -----
- ----------------------------------------------------------------------------------------------------
100 106.00
--- ------
- ----------------------------------------------------------------------------------------------------
(A) Cash used does not include new non-recourse lease commitments related to contracts.
====================================================================================================
</TABLE>
<PAGE>
Confidential
Viisage Technology
Management Compensation Plan
Distribution of the Incentive Fund
- ----------------------------------
The adjusted incentive fund is the amount of money which normally will be made
available for management incentive bonuses, with awards subject to final
approval by corporate management and Viisage's Board of Directors.
To provide a sound basis for determining incentive awards to participants, the
following steps will be followed:
. At the outset of the fiscal year, specific annual goals will be established
formally for each plan participant. These goals must be tailored to his/her
area of responsibility and should represent the 4 or 5 most significant
accomplishments he/she is expected to make during the year. The factors
selected will be weighted according to top management's judgment of their
relative importance and should be chosen because they are the principal
ways in which the individual can contribute to accomplishing the overall
Company goals for the year. Each factor should be expressed as succinctly
and quantitatively as possible, although significant qualitative or
intangible objectives should be considered as well. Theoretically, if every
person performed as called for in his/her goals, the combination would
result in coordinated achievement of Viisage's overall forecast for the
year.
. At the end of the fiscal year each plan participant will be evaluated and
rated on how well he/she met his/her goals (while still performing well the more
routine aspects of his/her position). These performance ratings will be
discussed with the participant and the weighted ratings will be used to assist
in determining what relative portion of the adjusted incentive fund should be
awarded to each participant.
Appendix A has been prepared to illustrate the mechanics of the plan using an
assumed adjusted incentive fund, the basic format for documenting individual
goals set for several different types of divisional positions, factors (goals)
weighted judgmentally, and allocation of bonus pool.
The Company believes that the approach and methodology of its Management
Compensation Plan will produce logical, reasonable and equitable results if
management is conscientious about administration of the program. However, no
formula approach to such a complicated subject is foolproof Whenever the
quantitative approaches inherent in the plan clearly produces a distorted or
incomplete result, it is expected that the managers will offer suggestions about
how to overcome or smooth out any such deficiencies.
<PAGE>
Confidential
Viisage Technology
Management Compensation Plan
Appendix A
Page 1
This appendix delineates the processes of goal-setting, factor-weighting
according to relative importance, performance rating, and fund distribution.
Goal Setting and Performance Evaluation
- ---------------------------------------
Attached as Appendix A, Page 2 is a sample objective statement and factor
weightings for a corporate position. Objectives are to be stated precisely and
quantitatively if possible (most can be). Factor weightings are judgmental,
giving the heaviest weightings to the most critical goals. Scoring (i.e.,"level
of attainment") is also necessarily partly judgmental; here the important thing
is to record why a person was rated a certain way, for example, 80%, 100% or
120% on a given factor; this is needed to be able to explain the decision later,
and perhaps, in the interest of equity, to reconcile or rationalize the amount
awarded to the executive, if needed.
Distribution of the Fund
- ------------------------
Appendix A, Page 3 provides instructions and Page 4 shows how performance values
are used for fund distribution. Based on an analysis of this award schedule,
the President and/or Compensation Committee of the Board may, for good reason,
modify the mathematically arrived at awards to obtain more fair results.
The Board of Directors will review the Management Incentive Plan at the January
Board Meeting. The Plan shall include past year results and next year's goals.
To accommodate quarterly bonus arrangements with certain executives, amounts may
be disbursed based on estimated quarterly bonus amounts, subject to adjustment
based on annual results.
<PAGE>
Confidential
Viisage Technology
Management Compensation Plan
Appendix A
Page 2
Prime Objectives Fiscal Year 1996
(For Illustrative Purposes Only)
<TABLE>
<CAPTION>
Director of Marketing
---------------------
Approved: Pres./Gen. Mgr.
---------------
Date:
---------------------
================================================================================
Level of Performance
Weight % Attainment % Values
-------- ------------ ------
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Management approved 10 95 9.50
marketing budget of
$1,100,000
- --------------------------------------------------------------------------------
2. Add a new Product Sales 10 100 10.00
Mgr.
- --------------------------------------------------------------------------------
3. Add two new direct 10 50 5.0
salesmen: 1 in West, 1
in Southwest
- --------------------------------------------------------------------------------
4. Secure 4 new reps to 10 50 5.0
replace ones in Atlanta,
Detroit, Kansas City and
Denver
- --------------------------------------------------------------------------------
5. Place new bookings for 20 90 18.00
total year of $16,000,000
- --------------------------------------------------------------------------------
6. Increase firm backlog by 20 80 16.00
year end to the level of
$9,000,000
- --------------------------------------------------------------------------------
7. Introduce 5 new accounts 10 80 8.00
of at least $50,000 each
for newly introduced
product
- --------------------------------------------------------------------------------
8. Cut average quotation 10 80 8.00
time to customers from 28 *Formula 79.50%
to 18 days *Adjusted 85.00%
- --------------------------------------------------------------------------------
* The senior reviewing officer may adjust the formula result +/- if
he/she feels the ratings did not fully reflect important aspects of the
results accomplished.
============================================================================
</TABLE>
<PAGE>
Confidential
Viisage Technology
Management Compensation Plan
Appendix A
Page 3
Procedure For Arriving At Individual Incentive Award
At the End of the Fiscal Year...
Step 1. List all positions in rank order of base salaries -- from top to
bottom -- showing the latest salary figures.
Step 2. Complete personal ratings to arrive at performance values.
Step 3. For all participants, multiply performance values by the adjusted
incentive fund percentage to arrive at the participation percentage.
Step 4. For each participant, multiply his total participation percentage by
current salary to reach a tentative incentive award. Round to the
nearest $ 1.00.
Step 5. Array all awards in rank order to better evaluate the equity of the
tentative awards. If they look proper, these amounts become the final
awards.
However, if the manager feels there should be adjustments to arrive at
a distribution that better reflects real results, he/she should make
such adjustment(s) (noting the reasons for so doing).
Step 6. Submit the Final Award Schedule to the Board of Directors or the
Compensation Committee for approval.
<PAGE>
Confidential
Viisage Technology
Management Compensation Plan
Appendix A
Page 4
Final Award Schedule
--------------------
(For Illustrative Purposes Only)
<TABLE>
<CAPTION>
Adjusted Final Awards
Current Performance Incentive Fund Tentative Award Rounded and Award as % of
Salary ($) Values (%)* (%)(1) (A*B)* C($) Adjusted ($)** Base Salary
<S> <C> <C> <C> <C> <C> <C>
President 220,000 100 30 66,000 70,000 32
Chief Financial
Officer 140,000 100 30 42,000 42,000 30
V.P. Program Mgmnt 120,000 100 30 36,000 34,000 28
V.P. Platform
Engineering 104,500 100 30 31,350 30,000 29
Controller 95,000 100 30 28,500 27,000 28
V.P. Software 90,000 70 30 18,900 15,000 17
Engineering
V.P. Marketing-
Private 75,000(2) 100 30 22,500 22,000 29
V.P. Marketing-
Public (3) - - - -
$844,500 $245,250 $240,000
</TABLE>
(1) Assumes 100% of MER and maximum "quality factor" adjustments (25% X 1.20 =
30%).
(2) Reflects 6 months compensation.
(3) Contract relationship, not in plan.
* From Individual Rating Forms. These can exceed 100%
** A judgmental decision to insure more equitable results.
<PAGE>
EXHIBIT 10.13
SUBCONTRACT
BETWEEN
INFORMATION SPECTRUM, INC. (CONTRACTOR)
AND
LAU TECHNOLOGIES (SUBCONTRACTOR)
FOR PRODUCTS AND/OR SERVICES FOR THE
U.S. IMMIGRATION AND NATURALIZATION SERVICE'S
INTEGRATED CARD PRODUCTION SYSTEM
<PAGE>
SECTION A.
- ----------
A.1 This Subcontract is made and entered into effective October 19, 1995, by
and between Lau Technologies (hereinafter the "Subcontractor" or "LAU") having
its principal place of business at 531 Main Street, Acton, Massachusetts 01720
and Information Spectrum, Inc. (hereinafter the "Contractor" or "Prime
Contractor" or "ISI"), a New Jersey corporation having its principal place of
business at 7611 Little River Turnpike, Annandale, Virginia 22003, (collectively
hereinafter the "Parties").
A.2 DEFINITIONS
"Contracting Officer": Means the INS contracting officer.
"Base Year or Base Period": The period commencing on date of the Prime Contract
award by the INS to ISI and continuing for a period of twelve months thereafter.
"COTR": Means the INS Contracting Officer Technical Representative.
"INS": Means the U.S. Department of Justice, Immigration and Naturalization
Service.
"Option Year 1": Means the period commencing the day after the last day of the
Base Year and continuing for a twelve month period thereafter.
"Option Year 2": Means the period commencing the day after the last day of
Option Year 1 and continuing for a twelve month period thereafter.
"ICPS": Means the Integrated Card Production System(s) required to be delivered
by ISI under the Prime Contract with the INS.
"ISI Contracting Representative": Means the ISI representative who is
authorized to enter into or modify this Subcontract or to take actions or
provide notices under this Subcontract on behalf of ISI.
"ISI Technical Representative": Means the ISI representative who is authorized
to provide notices or take actions under this contract on behalf of ISI.
However, the ISI Technical Representative is not authorized to enter into or
modify this Subcontract.
"Prime Contract": Prime Contract No. COW-6-C-0001, dated October 19, 1995 and
entered into between the INS and ISI for delivery of the ICPS, upgrades,
supplies and consumables and related services.
"Reserved": See the definition in section A.3 of this Subcontract.
A.3 SUBCONTRACT STRUCTURE AND SECTION NUMBERS
The structure of, and the numbering of the sections in, this Subcontract are
patterned after the Prime Contract. This will enable the parties to refer easily
to the relevant provisions in the Prime Contract which may be incorporated into
this Subcontract by specific references in the following sections of this
Subcontract. The term "Reserved" following a section number in this Subcontract
means that the particular section is set aside for future use and that the
counterpart section in the Prime Contract is not incorporated by reference into
this Subcontract.
1
<PAGE>
SECTION B. SUPPLIES OR SERVICES AND PRICES/COSTS
-------------------------------------
B.1 CONTRACT PRICING TABLES
The Subcontractor shall provide to the Contractor the products and services in
the contract line item numbers (CLINs), identified as the Subcontractor's
responsibility, as set forth in the pricing tables in Exhibit A of this
Subcontract, and as further detailed in the Statement of Work/Specifications
provided in Section C of this Subcontract. All prices shall be firm-fixed prices
and shall be for the periods shown in the pricing tables in Exhibit A.
B.1.1. THROUGH B.1.8
The Subcontractor's performance of work under this Subcontract will support
ISI's delivery to the INS of the products and services described in sections
B.1.1 through B.1.8 of the Prime Contract.
B.2 OPTIONS/OPTIONAL FEATURES
This subcontract contains two (2) types of options that may be exercised
unilaterally by the Contractor: options to extend the period of performance of
the contract and options to purchase upgrades, additional supplies and
consumables and services.
All options will be exercised by the ISI Contracting Representative's issuance
to the Subcontractor of a unilateral written Task Order which identifies the
option exercised. See also sections F.3 and I.7.
B.3 TRAVEL REIMBURSEMENT
Travel and subsistence charges under this contract in support of Consultation
Services (CLINs 2000 through 2003) furnished by the Subcontractor shall not
exceed those allowed under FAR 31.205-46. All travel and substance charges shall
be authorized in advance by the ISI Contracting Representative.
B.4 INVOICING AND PAYMENT
B.4.1. INVOICE REQUIREMENTS
(a) Subcontractor shall present to ISI, in accordance with the issued
Task Order, in an original and three copies an invoice for products and
services:
(i) accepted in accordance with section E and FAR 52.232-1
"Payments (APR 1984)"; or
(ii) for which an advance payment, partial payment or progress
payment is explicitly provided for in this section B.4.
(b) The original and one copy shall be submitted to the following ISI
office:
Information Spectrum, Inc.
Accounts Payable
7611 Little River Turnpike, Suite 300 East
Annandale, Virginia 22003
2
<PAGE>
One additional copy of the invoice shall be sent to each of the ISI
representatives identified in section G.1 and G.2 of this Subcontract.
To constitute a proper invoice, the invoice must include the following
information and/or attached documentation in addition to the requirements in FAR
52.232-25:
(i) Task Order number.
(ii) Contract Line Item Number (CLIN), product identification
number, description, price and quantity of products or services
actually delivered, and dates products or services delivered.
B.4.2 PAYMENTS.
ISI shall pay the firm fixed price in Exhibit A to the Subcontractor for the
products and services it provides under this Subcontract in accordance with the
following paragraphs.
(a) CLIN 100. ISI shall pay the Subcontractor for its products in the Base
ICPS and for related services in accordance with the following scheme:
(1) 50% of the price of each Base ICPS and related services specified in
CLIN 100a (except for Maintenance Spares in SubCLIN 5(d) and Acceptance
Test in SubCLIN 6(c)), and 50% of the price of each Base ICPS and related
services specified in CLIN 100b (except for Maintenance Spares in SubCLIN
(5c)), shall be paid to the Subcontractor as a Progress Payment after
delivery of the Base ICPS and related services to the designated INS
installation site on a delivery date specified by ISI and the Subcontractor
submits to ISI an appropriate invoice in accordance with this Subcontract.
(2) The remaining 50% of the price specified in these relevant CLINs for
the Base ICPS and related services (including the total price for the
spares and acceptance tests excepted in subparagraph (a)(1), above) shall
be paid to the Subcontractor when the following conditions are met:
(i) after the particular Base ICPS successfully completes
acceptance testing and meets the Standard of Performance in sections
E.2.2 and E.2.3, or, with respect to the spares, after the Government
inspects and accepts the spares; and
(ii) after the Subcontractor submits to ISI an appropriate invoice in
accordance with this Subcontract and the Government pays ISI for these
particular products and services.
(b) CLINs 110 and 111. ISI shall pay the Subcontractor for its products and
services in, or related to, each module provided as an option under CLINs
110 and 111 in accordance with the following scheme:
(1) 50% of the price specified in CLIN 110 and 111 shall be paid to the
Subcontractor as a Progress Payment after delivery of the module to the
designated INS installation site on a delivery date specified by ISI and
the Subcontractor submits to ISI an appropriate invoice in accordance with
this Subcontract.
(2) The remaining 50% of the price specified in these relevant CLINs for
the products and services shall be paid to the Subcontractor when the
following conditions are met:
3
<PAGE>
(i) after the particular module successfully completes acceptance
testing and meets the Standard of Performance in sections E.2.2 and
E.2.3; and
(ii) after the Subcontractor submits to ISI an appropriate invoice in
accordance with this Subcontract and the Government pays ISI for these
particular products and services.
(c) CLINs 122, 123, 130, and 131. ISI shall pay the Subcontractor for its
products and services in, or related to, each module provided as an option under
CLINs 122, 123, 130 and 131 in accordance with the following scheme:
(1) 50% of the price specified for "Non-Recurring Engineering" for
the particular module shall be paid to the Subcontractor as a Progress
Payment after delivery of that module and related software to an INS
site on a delivery date specified by ISI and the Subcontractor submits
to ISI an appropriate invoice in accordance with this Subcontract.
(2) 50% of the price specified for "Installation" of the particular
module's price shall be paid to the Subcontractor as a Progress
Payment after the Subcontractor's certifies that the module has been
installed in the ICPS at the designated INS installation site and is
ready for acceptance testing.
(3) The remaining 50% of the price specified in these relevant CLINs
for these products and services shall be paid to the Subcontractor
when the following conditions are met:
(i) after the particular module successfully completes
acceptance testing and meets the Standard of Performance in
sections E.2.2 and E.2.3; and
(ii) after the Subcontractor submits to ISI an appropriate
invoice in accordance with this Subcontract and the Government
pays ISI for these particular products and services. ISI.
(d) CLINs 136, 137, 140 and 141. ISI shall pay the Subcontractor for its
products and services in, or related to, each module provided as an option under
CLINS 136, 137, 140 and 141 in accordance with the following scheme:
(1) 50% of the price specified in CLINs 136, 137, 140 and 141 shall
be paid to the Subcontractor as a Progress Payment after delivery of
the particular module to the designated INS installation site on a
delivery date specified by ISI and after the Subcontractor submits to
ISI an appropriate invoice in accordance with this Subcontract.
(2) The remaining 50% of the price specified in these CLINs for these
products and services shall be paid to the Subcontractor when the
following conditions are met:
(i) after the particular module successfully completes
acceptance testing and meets the Standard of Performance in
sections E.2.2 and E.2.3; and
(ii) after the Subcontractor submits to ISI an appropriate
invoice in accordance with this Subcontract and the Government
pays ISI for these particular products and services.
4
<PAGE>
(e) CLINs 3001, 3002, 3010, 3011, 9005 and 9006. ISI shall pay the
Subcontractor for the maintenance services performed in 3001, 3002, 3010, 3011,
9005 and 9006 in accordance with the following scheme:
A proportionate part of the price specified in CLINs 3001, 3002, 3010,
3011, 9005 and 9006 shall be paid monthly in arrears to the Subcontractor
for the maintenance services performed in the prior month. The payment
shall be made after the Subcontractor submits to ISI an appropriate invoice
in accordance with this Subcontract and the Government pays ISI for the
maintenance services.
(f) CLIN 9000, 9001, 9002, 9003, and 9004. ISI shall pay the Subcontractor for
its products and services in, or related to the option of a Hot Backup System
provided as an option in CLIN 9000, and related services, and the products and
services in, or related to each module provided as an option in CLINs 9001,
9001, 9002, 9003 and 9004 in accordance with the following scheme:
(1) 50% of the price specified in CLINS 9000 shall be paid to the
Subcontractor as a Progress Payment after the Subcontractor has
certified to ISI that the Hot Backup System is ready for acceptance
testing and the Standard of Performance and the Subcontractor submits
to ISI an appropriate invoice in accordance with this Subcontract.
(2) 50% of the price specified in CLINS 9001, 9002, 9003 and 9004
shall be paid to the Subcontractor as a Progress Payment after the
Subcontractor has certified to ISI that the particular option is ready
for acceptance testing and the Standard of Performance, and the
Subcontractor submits to ISI an appropriate invoice in accordance with
this Subcontract.
(3) The remaining 50% of the price specified in these relevant CLINs
for these products and services shall be paid to the Subcontractor
when the following conditions are met:
(i) after the particular product or service successfully
completes acceptance testing and meets the Standard of
Performance in sections E.2.2 and E.2.3; and
(ii) after the Subcontractor submits to ISI an appropriate
invoice in accordance with this Subcontract and the Government
pays ISI for these particular products and services.
(g) All payments to the Subcontractor shall be made within 15 days after
receipt of invoice but only after the conditions to payment specified in
paragraphs (a) through (f) are met.
(h) Repayment of Progress Payments to ISI. If the Government does not accept
the products and services provided by the Subcontractor and if the Prime
Contract is thereafter terminated, in part or as a whole for this reason, the
Subcontractor shall repay to ISI that portion of the Progress Payments
previously paid to the Subcontractor which corresponds to the terminated portion
of the Prime Contract. Subcontractor shall repay the Progress Payments to ISI
within 30 days after receipt of ISI's demand for repayment. If the Prime
Contract is not terminated but the price paid to ISI is reduced because of the
defective products or services provided by the Subcontractor, the parties shall
seek to agree to a corresponding reduction in the Progress Payments paid to
Subcontractor and Subcontractor shall repay to ISI the amount of Progress
Payments agreed to by the parties.
(i) Reduction of Suspension of Progress Payments. ISI may reduce or suspend
Progress Payments after finding on substantial evidence that the Subcontractor
failed to comply with any material requirement of this Subcontract; however, the
Subcontractor will be given 10 days to cure, and if the failure is cured within
that time, the Progress Payments will be continued.
5
<PAGE>
(j) Defect in ISI Component. Notwithstanding the provisions of paragraph B.4.2
(a)(2), B.4.2 (b)(2), B.4.2 (c)(3), B.4.2 (d)(2) and B.4.2 (f)(3), if the
Government fails to accept the particular products and services solely because
of a defect in a component provided by ISI, then ISI shall pay the Subcontractor
25% of the price specified in the relevant CLINs within 15 days after receipt of
an appropriate invoice in accordance with this Subcontract after the
Government's refusal to accept because of such defect. ISI shall pay the
remaining 25% of the price specified in the relevant CLINs when the following
conditions are met:
(1) after the particular product and services successfully complete
acceptance testing and meet the Standard of Performance in sections E.2.2
and E.2.3; and
(2) after the Subcontractor submits to ISI an appropriate invoice in
accordance with this Subcontract and the Government pays ISI for the
accepted products and services.
B.4.2.3 Subcontractor's Remittance Address
ISI shall make all payments to the Subcontractor under this Subcontract by
remitting the payment to the following address:
LAU TECHNOLOGIES
531 MAIN STREET
ACTON, MA 01720
SECTION C. SPECIFICATIONS/STATEMENT OF WORK
--------------------------------
C.1 RESERVED
C.1.1 SCOPE OF WORK/SPECIFICATIONS
The Subcontractor's scope of work and required specifications are described in
Exhibit B. The Subcontractor shall provide minimum one-year warranties from the
date of the Government's acceptance for all products delivered and all services
performed under this Subcontract.
All work performed under this Subcontract will be ordered through written Task
Orders issued by the ISI Contracting Representative to the Subcontractor.
C.1.2 THROUGH C.2.1
The Subcontractor's performance of work under this Subcontract will support
ISI's delivery to the INS of the products and services which meets the INS
requirements described in sections C.1.2 through C.2.1 of the Prime Contract.
C.2.2 COMMERCIAL AVAILABILITY
All products delivered under this Subcontract must be available as integrated
commercial-off-the-shelf (COTS) products on the dates specified in section C.2.2
of the Prime Contract, subject to section H.19 below.
6
<PAGE>
C.2.3 THE NEW BUSINESS PROCESS
The Subcontractor's products and services shall support the Contractor's
solution described in section C.2.3 of the Prime Contract.
C.2.3.1 CONTINUOUS, AUTOMATED INTEGRATED SYSTEM
The Subcontractor's products and services shall support a continuous, automated
Integrated Card Production System, such that under normal production conditions,
human intervention is not required except to load blank card stock and other
supplies, and to remove the finished cards inside addressed, stamped mailing
envelopes ready for delivery to the Postal Service.
C.2.3.2 PRODUCTION CYCLE
The Subcontractor's products and services shall support an Integrated Card
Production System that is a stable, heavy-duty, reliable product, capable of
continuous uninterrupted production 24 hours per day, seven days per week,
except for normal maintenance.
C.3 CARD PRODUCTION REQUIREMENTS
C.3.1 PRODUCTION RATE
The Subcontractor's products and services shall support the normal production
operation of each card-producing system which produces cards with the hologram
laminate applied at a minimum average rate of 300 cards per hour. This
production rate shall be sustained for cards with: a color photographic image; a
fingerprint and multicolor text printing on the front; text and a 2-D barcode in
PDF417 symbology on the rear; and encoding of data into all three channels of a
high coercivity magnetic stripe, and the insertion of the card in a mailing
insert and envelope.
C.3.2 MULTIPLE TYPES OF CARDS
The Subcontractor's products and services shall support the manufacture of at
least four different card types on the card production systems. Presently, INS
intends to produce the Employment Authorization Document (EAD), Alien
Registration Card (ARC), Border Crossing Card (BCC) and the INS Passenger
Accelerated Service System (INSPASS) card. These cards require different
materials with different electronic (automated) features and security on each as
described in Table C-1 (see Attachment A in Section J).
At a minimum the system supported by the Subcontractor's products and services
shall provide the following capabilities:
a. Production of multiple types of cards (such as, layout of text,
pictures, etc.) which use the same materials under automatic software
control on a card-by-card basis.
b. Production of multiple types of cards which use the same PVC base and
different electronic materials in a batch mode by changing the raw
materials and executing software control over the operation of the
equipment. It shall not take more than 45 minutes to make the changeover
from one type of card to another for the batch process. The changeover
process shall include the changeover of materials.
7
<PAGE>
Table C-1, provided as Attachment A, in Section J, provides a summary of the
features that INS intends to incorporate in each of these card types. Section
C.5, Card Production Formats, provides a more detailed description of each card,
and the technologies that INS will use to develop and produce the cards.
C.4 CARD PRODUCTION REQUIREMENTS
C.4.1 THROUGH C.4.3.1.2
If the Subcontractor is obligated to provide software to the Contractor in the
performance of work under this Subcontract, the Subcontractor shall meet the
software requirements specified in sections C.4.1 through C.4.3.1.2 of the Prime
Contract.
C.5 CARD PRODUCTION FORMAT
C.5 THROUGH C.5.5
To the extent the Subcontractor is required to provide card materials or the
cards itself, the materials and cards shall meet the requirements specified in
sections C.5 through C.5.5 of the Prime Contract.
C.6 SUPPLIES AND CONSUMABLES
To the extent Subcontractor is required to provide supplies and consumables to
produce cards, the cards will use the technologies in Table C-1 of the Prime
Contract. The Subcontractor is obligated to comply with FAR clauses 52.227-14,
Rights to Data-General, 52.227-23, Rights to Proposal Data (Technical), which
are contained in Section I of the Prime Contract (see Exhibit C to this
Subcontract); and H.19, Rights to Technical Data and H.20 Security Requirements,
which are contained in Section H of the Prime Contract (see Exhibit C to this
Subcontract).
C.6.1 INS INSPECTION AND TEST OF SUPPLIES AND CONSUMABLES
Prior to the delivery of any items of supplies or consumables that the
Subcontractor is obligated to deliver under this Subcontract, the Subcontractor
shall furnish sufficient materials for the production of 100 cards (i.e., 25 of
each card type) for inspection and testing by the INS. The batch of materials
submitted for testing shall be taken from the same lot of materials that will be
delivered to the INS. As required by the ISI Contracting Representative or the
ISI Technical Representative, the samples shall be delivered to the COTR, who
will coordinate the production of the sample cards and forward them to the
Director of the INS Forensic Laboratory for inspection and testing. The samples
will be tested to ensure that all items have the security features required,
meet all of the requirements set forth in this Subcontract, and are of good
quality and workmanship. The Subcontractor shall provide written notification of
the date of shipment to, and receipt by, the designated INS officials to the ISI
Contracting Representative and the ISI Technical Representative. It is
estimated that the entire inspection and testing process will take approximately
15 days. The ISI Contracting Representative or ISI Technical Representative will
furnish the Subcontractor with written notification of the results of the
inspection and test of the supplies and consumables. If the Subcontractor's
supplies and/or consumables fail to pass the inspection, the Subcontractor will
immediately provide a second batch of supplies and/or consumables for inspection
and testing at no cost to ISI. If the second batch fails, then ISI shall have
the right to assess liquidated damages in accordance with Section F and/or
terminate this Subcontract for default.
INS' inspection and test of supplies and consumables does not relieve the
Subcontractor of its responsibility to inspect and test its products to ensure
compliance with and adherence to the contract
8
<PAGE>
requirements and industry standards. The Subcontractor must also ensure that the
various consumables it supplied are compatible for the purposes of creating the
INS cards.
The Subcontractor shall be responsible for any damage to the card production
systems resulting from inferior consumables furnished by the Subcontractor. All
costs associated with the repair or replacement of equipment damaged by such
consumables shall be the sole responsibility of the Subcontractor. The
Subcontractor's attention is also called to the Liquidated Damages clause in
Section F of this Subcontract.
C.6.2 CONTROL AND DELIVERY OF SUPPLIES AND CONSUMABLES
Supplies and consumables produced by the Subcontractor which are unique to the
INS will be controlled immediately upon production. Such controls will provide
for access by only those individuals who have met the INS' Office of Security
employment suitability background requirements set forth in section H. Small
inventories may be stored in a safe-type steel file container having a built-in,
three position, dial-type changeable combination lock. Storage of larger
inventories will be accomplished by the use of a vault or spaces where each door
is equipped with a high security, long throw deadbolt lock. All windows in
storage areas shall be secured with steel bars of other appropriate security
devices. Overhead access to inventory storage areas shall be prevented by the
installation of a 9-gauge wire mesh between the top of the walls and the true
ceiling, or by the installation of infra-red or motion detection alarms. If 9-
gauge wire mesh is installed, the mesh opening is not to be wider than 2 inches
square and the top and bottom are to be secured to the ceiling above the wall
below. All items will be kept under secure storage and will remain under such
controls until the time of shipment.
The Subcontractor shall comply with the requirements of the clause entitled
Packaging. Marking and Shipment contained in Section D.
C.6.3 DISPOSITION OF SUPPLIES AND CONSUMABLES
Seventy five days prior to the expiration of the Subcontract, the Subcontractor
shall notify the ISI Contracting Representative of any expected excess in
supplies and consumables at the time of Subcontract completion. Excess or
remaining materials shall be delivered to the Director of the INS Forensic
Laboratory for secure destruction or the ISI Technical Representative, or upon
written request of the ISI Contracting Representative, destroyed by the
Subcontractor in a manner approved by the IS Contracting Representative after
consultation with the INS Security Office and coordinate with ISI Security
Officer.
If, prior to delivery to ISI or the INS, the Subcontractor is required to
dispose of waste and defective supplies and consumables that have not been
converted into INS-unique deliverables, the Subcontractor shall handle such
disposition in accordance with local, state, and federal environmental
regulations and best commercial practices. If the waste and defective supplies
and consumables have been converted into INS-unique deliverables, then the
Subcontractor shall immediately notify the ISI Contracting Representative and
await further instructions. The INS will either assume responsibility for the
items, require the Subcontractor to ship the items to the INS Forensic
Laboratory, or require the Subcontractor to proceed with the destruction and
disposal of the items.
C.7 ENVIRONMENTAL REQUIREMENTS
C.7.1 INSTALLATION SITES
The integrated card production systems are intended to be installed at one or
more of the following INS Service Center sites: St. Albans, Vermont: Lincoln,
Nebraska; Laguna Niguel, California; and Dallas
9
<PAGE>
Texas. INS reserves the right to require the installation of more than one
integrated card production system at these sites, or have such systems installed
at other INS sites, including the possibility of installing a Hot Backup System
at the LAU facility in Acton, Massachusetts.
The INS intends to install the production equipment and store supplies in a
designated security area designed by the INS Service Center in coordination with
the INS Office of Security (HQSEC). The secured area will be a standard office
environment with published access control measures in place including specific
work hours. Therefore, the systems shall be suitable for operation in a standard
office environment.
C.8 MAINTENANCE (APPLICABLE TO LAU)
The Subcontractor shall provide in the Base Year and, to the extent an option is
exercised by ISI, in each Option Year, the following maintenance support in
accordance with section C.8 through C.8.2 of the Prime Contract. In the referred
to sections of the Prime Contract, the term "Contractor" shall mean
"Subcontractor". The Subcontractor shall provide:
(i) telephone technical/engineering support in accordance with section
C.8.1.3 of the Prime Contract;
(ii) corrective and emergency maintenance support in accordance with
Exhibit B and sections C.8.1.2 and C.8.2 of the Prime Contract; and provide
spare parts in accordance with Exhibit B of this Subcontract in and section
C.8.1.2.1 of the Prime Contract;
(iii) software upgrades and documentation updates in accordance with
Exhibit B of this Subcontract and sections C.8.1.2.2 and C.8.1.2.3 of the
Prime Contract.
C.9 WARRANTY
The Subcontractor shall provide a warranty included in the purchase price of the
product and services the Subcontractor provides. The warranty shall start on
INS's acceptance of the system, product or service and end a minimum of one year
later. To the extent the Subcontractor is required to provide one or more of the
following requirements, the one year warranty shall be applicable to the
following requirements the Subcontractor is required to provide as set forth in
section C.8 of the Prime Contract:
a. Preventive Maintenance
b. Corrective Maintenance - 8-Hour Response
c. Emergency Corrective Maintenance - 4-Hour Response
d. Parts
e. Software Upgrades
f. Documentation Updates
g. User-Provided Services
h. Telephone Technical/Engineering Support
10
<PAGE>
C.10 CONSULTATION SERVICES
If the Subcontractor is required by Exhibit A or Exhibit B to provide
consultation services, if and when requested by the ISI Contracting
Representative, the Subcontractor shall furnish the services of a Software
Engineer, Hardware Engineer, and/or System Technician to modify the commercial
off-the-shelf hardware and software (furnished by the Subcontractor as a part of
the integrated card production system) as required by the Contractor to support
future INS card production requirements. Any services required of these
personnel will be specifically requested by the ISI Contracting Representative
through the issuance of Task Orders.
C.11 QUALITY ASSURANCE/CARD VERIFICATION
Reserved.
C.12 SYSTEMS AND MATERIALS/CONSUMABLES DOCUMENTATION
The Subcontractor shall furnish to the Contractor three copies of documentation
for the products it provides which are included in each integrated card
production system developed for the INS under the Prime Contract. The
documentation shall include all the necessary information, with respect to the
products Subcontractor is responsible to deliver under this Subcontract, to
operate, maintain, and develop software interfaces for each integrated card
production system, including optional features purchased with the system.
The Subcontractor shall also furnish three copies of documentation for each
batch of material/consumables the Subcontractor furnishes for the production of
INS cards. The documentation shall include information on storage, handling, and
use of these items, as well as any other information deemed necessary by the
Subcontractor to ensure the reliability of the products.
In addition to the documentation supplies as a part of the integrated card
production system, the Subcontractor shall make available for the Contractor's
purchase, additional copies of the documentation described in this section C.12.
The additional copies will be purchased under CLINs 60-163 (see Exhibit B).
C.13 TRAINING (APPLICABLE TO LAU)
C.13.1 Maintenance Contractor Training. The Subcontractor shall provide, in
accordance with Exhibits A and B, maintenance training to employees of an ISI
designated maintenance contractor, and such other persons as designated by ISI,
at the Subcontractor's facilities, and certify that not less than three
employees are qualified to provide maintenance on the products the Subcontractor
delivered for each installation site, including option and upgrade features.
Training shall provide complete instruction, including testing and
certification, on the proper maintenance of the system and shall include all
training materials for three employees at each INS site.
C.13.2 INS Personnel Training. The Subcontractor shall provide, in accordance
with Exhibit B, training to INS employees at each installation site, and such
other persons as designated by ISI, on the operation and maintenance of the
Subcontractor's products delivered for each installation site, including
optional and upgrade features purchased. Training shall provide complete
instruction, including testing and certification, on the proper operation and
maintenance of the system and shall include all training materials for a minimum
of 5 INS personnel.
11
<PAGE>
At a minimum, the Subcontractor shall furnish with its products for each
integrated card production system delivered, training of 5 INS operators on the
operation and maintenance of the system.
SECTION D. PACKAGING AND MARKING
---------------------
D.1 PACKAGING AND PACKING
Unless otherwise specified, the Subcontractor shall package and pack all items
that it is required to deliver in accordance with normal commercial practices.
Packages containing magnetic media shall have on their surfaces express markings
regarding protection against exposure to magnetic fields and/or temperature
extremes.
The Subcontractor shall stamp or mark the items delivered or otherwise furnished
with a notice of the existence of the warranty. Markings may be brief, but
shall include:
(i) a brief statement that a warranty exists,
(ii) the substance of the warranty,
(iii) its duration, and
(iv) who to notify if the supplies are found to be defective.
The INS shall furnish such labor as may be necessary for packaging, unpacking,
and placement of equipment when in the possession of the INS (unless otherwise
specified herein). ISI shall supervise, with the assistance of the
Subcontractor, the packing, unpacking and placement of equipment at each site.
D.2 PACKING LIST
The Subcontractor shall prepare a packing list or other suitable shipping
document to accompany each shipment of all items that is required to deliver.
The packing list or other document shall show the (a) name and address of
consignor; (b) the name and address of consignee; (c) Government contract and
delivery order number; (d) Government bill of lading number covering the
shipment, if any; (e) description of the material shipped, including item
number, quantity, number of containers, and package number, if any; and (f) ISI
Task Order number and date.
D.3 SHIPPING
The Subcontractor shall ship and deliver all items which are unique to INS and
not sold to any other customer by either registered mail, return receipt
requested, or by UPS Delivery Confirmation Response Service with signature
required. Shipments consisting of more than one carton will be identified when
shipped as 1 of 3, 2 of 3, etc. In order to protect the integrity of the sealed
shipping containers, the Subcontractor shall affix packing slips to the outside
of shipping containers. Immediately after shipment, the Subcontractor shall
notify the ISI Contracting Representative, the ISI Technical Representative and
the affected INS regional security Officer via facsimile transmission of the
date of the shipment, quantities of materials being shipped, total number of
cartons shipped and addressee of shipment.
The Subcontractor shall ship and deliver all items which are not unique to the
INS in accordance with normal commercial practice.
The subcontractor shall be responsible for the costs of shipping, including
insurance.
12
<PAGE>
SECTION E. INSPECTION AND ACCEPTANCE
-------------------------
E.1 CLAUSES INCORPORATED BY REFERENCE
The following clauses identified are incorporated by reference into this
Subcontract subject to the modifications specified in section I.1.
Federal Acquisition Regulation (FAR), (48 CFR Chapter 1), Clauses
52.246-2 Inspection of Supplies - JUL 1985
Fixed-Price
52.246-4 Inspection of Services - FEB 1992
Fixed-Price
52.246-6 Inspection--Time-and-Material JAN 1986
and Labor-Hour
52.246-15 Certificate of Conformance APR 1984
52.246-16 Responsibility For Supplies APR 1984
E.2 STANDARD OF PERFORMANCE AND ACCEPTANCE OF INTEGRATED CARD PRODUCTION
SYSTEMS
The Subcontractor shall participate in the performance of the acceptance tests
of the Integrated Card Production Systems delivered under CLIN 100 and, if
options are exercised, the System Upgrades in CLINS 110 through 157, including
tests in Acton, Massachusetts. The INS will inspect and accept the systems to
ensure the systems meet the requirements of Section C of the Prime Contract have
the performance capabilities proposed by ISI and the Subcontractor; and are
configured consistent with the delivery order(s) issued by the INS to acquire
the system(s). The Subcontractors' participation in the acceptance test and
Standard of Performance is described in Exhibit B of this Subcontract. The
acceptance tests which the Subcontractor's products and services are required to
meet, as part of the System at each site, are described in sections E.2.1
through E.2.5 in this Subcontract.
E.2.1 Subcontractor Testing
Each Subcontractor product which is to be part of the Integrated Card Production
System or System Upgrade shall be certified by the Subcontractor in writing as
to having undergone a Subcontractor quality control/assurance test process to
detect faulty hardware and software; to insure the quality and reliability of
system performance; and to certify that the product, when integrated into the
system, will meet the Standard of Performance set forth in Section E.2.3, below.
The Subcontractor's test shall be conducted prior to installation of the system
at the INS sites. The Subcontractor's quality control/assurance tests must be
conducted as evaluated and approved by ISI.
E.2.2 Inspection and Acceptance Testing
The INS will produce 10,000 "live" cards during the inspection and acceptance
test of each of the Integrated Card Production Systems. Therefore INS personnel
will subject the Integrated Card Production Systems to a 10-day acceptance test
following installation at the INS site before formal acceptance. The
13
<PAGE>
INS will operate the system for 10 consecutive days, 24 hours per day, less 4
hours system downtime due to preventive maintenance. The first day of the
Performance Acceptance Period shall be the actual date of installation
completion by ISI and the Subcontractor. If any component fails to complete the
Performance Acceptance Period successfully within 10 days from the initial
installation, INS, at its option may require replacement of the component or the
entire system. In that event, ISI, at its option, may require the Subcontractor
to replace its failed component or its entire product or system. The replacement
of the component, product or system shall be completed within 48 hours. After
replacement is completed, the 10-day test period will begin again. If the
replacement component, product or system fails to complete the Performance
Acceptance Period successfully within the next 10 days after it is installed,
the INS may exercise its right to terminate the ISI Prime Contract for default
and ISI may exercise its right to terminate this Subcontract for default.
During the Inspection and Acceptance Testing of the base integrated card
production system (i.e., CLIN 100, which is considered to be unit #1), INS will
produce 10,000 "live" EAD cards that consist of the features described in
section C.5.1, C.5.2 (exclusive of optional features), C.5.3.1 (exclusive of
optional features), C.5.4.1.1, C.5.4.1.2, and C.5.4.1.3 of the Prime Contract.
For the purposes of Acceptance Tests for other than the Base Integrated Card
Production System (i.e., units #2 through #6) will include all of the features
described in section C.5 of the Prime Contract. Therefore, the inspection and
acceptance test of units #2 through #6 (should the INS decide to order these
units), shall provide for the production of 10,000 "live" cards that include all
of the features described in section C.5 of the Prime Contract.
E.2.3 Standard of Performance
Notwithstanding the requirement for an inspection and acceptance test that will
be completed within 10 days after system installation, the Standard of
Performance for operation of the integrated card production system shall be 95%,
30 consecutive days of 24 hour/day operational use with no more than 12 hours
per month system downtime due to preventive maintenance. Once the system is
placed into production by the INS, ISI and the Subcontractor will be immediately
notified if the system fails to meet the Standard of Performance. For the
purposes of this clause, the INS considers "production" to include INS'
production of sample cards.
E.2.4 Date of Installation
The Date of Installation shall be the day of successful completion, assembly and
installation of the system, including the Subcontractor's products, and
certification by the Subcontractor and ISI that the system is ready for normal
operational use.
E.2.5 Date of Acceptance
The Date of Acceptance of the integrated card production system or the upgraded
system shall be the first day after the system meets the Standard of Performance
and completion of acceptance testing.
E.3 INSPECTION AND TEST OF SUPPLIES AND CONSUMABLES.
See section C.6.1 of this Subcontract for the inspection and test of certain
supplies and consumables.
14
<PAGE>
SECTION F. DELIVERIES OR PERFORMANCE
-------------------------
F.1 CLAUSES INCORPORATED BY REFERENCE
The following clauses are incorporated by reference into this Subcontract
subject to the modifications specified in section I.1.
Federal Acquisition Regulation (FAR), (48 CFR Chapter 1), Clauses
52.212-10 Delivery of Excess Quantities of $250 SEP 1989
or Less
52.212-13 Stop Work Order AUG 1989
52.212-15 Government Delay of Work APR 1984
52.247-34 F.O.B. Destination NOV 1991
F.2 DELIVERY LOCATIONS
Each ICPS and all other products which the Subcontractor is required to deliver
under this Subcontract shall be packaged and shipped to the designated site(s)
(inside delivery to the exact room location as specified in the ISI Task Order).
Delivery locations are listed in section C.7.1 of this Subcontract. ISI
reserves the right to install additional Integrated Card Production Systems at
these sites or at other INS sites.
F.3 PERIOD OF PERFORMANCE
The period of performance of this Subcontract shall commence on the effective
date of this Subcontract. The Base Period of performance of this Subcontract
shall end 12 months days after the date of the INS' award of the Prime Contract
to ISI. In accordance with section B.2 of this Subcontract, ISI has the right
to extend the period of performance of this Subcontract for Option Year 1 and
Option Year 2 as defined in Section A.2.
F.4 TRANSPORTATION
Unless otherwise specifically provided in Exhibits A or B, all shipments in the
performance of this Subcontract shall be at Subcontractor's expense.
F.5 REQUIRED TIME, PLACE OF DELIVERY AND PERFORMANCE
The required time and place of delivery of products or provision of services to
be provided under this Subcontract will be specified in each Task Order issued
by ISI. If a Task Order fails to identify the required time and place of
delivery, then the Subcontractor shall promptly notify the ISI Contracting
Representative and request due dates and/or destinations.
The minimum requirement for the Subcontractor's delivery of products and
services to ISI under this Subcontract is provided in the following matrix. The
time and place of delivery of all products and services will be specified in
written Task Orders issued by ISI.
15
<PAGE>
NOTE: DARO IS "CALENDAR DAYS AFTER RECEIPT OF ORDER" MEANING AFTER ISI'S
RECEIPT OF A PROPERLY EXECUTED INS DELIVERY ORDER TO ISI. DAC IS "CALENDAR
DAYS AFTER AWARD OF THE PRIME CONTRACT TO ISI" MEANING AFTER THE PRIME
CONTRACT IS PROPERLY EXECUTED BY INS AND ISI.
MINIMUM DELIVERY SCHEDULE MATRIX
<TABLE>
<CAPTION>
=================================================================================================
CLIN DESCRIPTION SCHEDULE
=================================================================================================
<S> <C> <C>
100 Integrated Card Production System, installed
- -------------------------------------------------------------------------------------------------
Site #1: Lincoln, Nebraska 60 DAC
- -------------------------------------------------------------------------------------------------
Site #2: Laguna Niguel, CA 120 DARO
- -------------------------------------------------------------------------------------------------
Site #3: St. Albans, Vermont 120 DARO
- -------------------------------------------------------------------------------------------------
Site #4: Dallas, TX 120 DARO
- -------------------------------------------------------------------------------------------------
Site #5 and #6: (location to be determined) 120 DARO
- -------------------------------------------------------------------------------------------------
110-113 WORM Upgrades, installed 300 DARO
- -------------------------------------------------------------------------------------------------
120-123 RF Upgrades, installed 360 DARO
- -------------------------------------------------------------------------------------------------
130-131 OCR-B Upgrades, installed 360 DARO
- -------------------------------------------------------------------------------------------------
132 Multi-Color Text Printing 360 DARO
- -------------------------------------------------------------------------------------------------
133 Write 3D Barcode 360 DARO
- -------------------------------------------------------------------------------------------------
135 Embedded Magnetic Stripe 360 DARO
- -------------------------------------------------------------------------------------------------
136 - 147 IC Chip Upgrades, installed 360 DARO
- -------------------------------------------------------------------------------------------------
150 Tracking Information - Inventory Control 360 DARO
- -------------------------------------------------------------------------------------------------
151 Tracking Information - Failed Card Count 360 DARO
- -------------------------------------------------------------------------------------------------
155 Microline Printing 360 DARO
- -------------------------------------------------------------------------------------------------
156 Mailer - Seal Envelopes 360 DARO
- -------------------------------------------------------------------------------------------------
157 Mailer - Stamp Envelopes (Postal Meter) 360 DARO
- -------------------------------------------------------------------------------------------------
160 - 163 System Documentation 30 DARO
- -------------------------------------------------------------------------------------------------
200 - 235 Substrate 30 DARO
- -------------------------------------------------------------------------------------------------
250 - 287 PVC 30 DARO
- -------------------------------------------------------------------------------------------------
300 Hologram and Hologram Laminate 60 DAC
- -------------------------------------------------------------------------------------------------
310 - 313 Hologram Laminate 30 DARO
- -------------------------------------------------------------------------------------------------
350 - 353 Plain Laminate 30 DARO
- -------------------------------------------------------------------------------------------------
400 - 403 Color Dye Diffusion Ribbon 30 DARO
- -------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
500 - 532 Inks 30 DARO
- --------------------------------------------------------------------------------------------------
600 - 632 Mailing Supplies 30 DARO
- --------------------------------------------------------------------------------------------------
700 - 703 Carbon Ribbon 30 DARO
- --------------------------------------------------------------------------------------------------
750 Cleaning Tape 30 DARO
- --------------------------------------------------------------------------------------------------
751 Cleaning Roller 30 DARO
- --------------------------------------------------------------------------------------------------
752 Print Head 30 DARO
- --------------------------------------------------------------------------------------------------
800 - 805 Card Readers 60 DAC
- --------------------------------------------------------------------------------------------------
1000 - 1012 Training 30 DARO
- --------------------------------------------------------------------------------------------------
2000 - 2003 Consultation Services As Required
- --------------------------------------------------------------------------------------------------
3000 - 4000 Maintenance As Required
- --------------------------------------------------------------------------------------------------
5000 Quality Assurance Verification Station As Required
- --------------------------------------------------------------------------------------------------
9000 Hot Backup System As Required
- --------------------------------------------------------------------------------------------------
</TABLE>
ISI reserves the right to order system upgrades separate from the base
integrated card production system and require that the upgrade be delivered and
installed on the INS Integrated Card Production System within the time frame set
forth for the upgrade as described in the matrix provided above table in this
section F.5.
F.6 WAIVER OF DELIVERY SCHEDULE.
None of the following shall be regarded as an extension, waiver, or abandonment
of the delivery schedule, or waiver of ISI's right to terminate for default:
(i) delay by ISI in terminating for default; (ii) acceptance of delinquent
deliveries; and (iii) acceptance or approval of late delivered samples.
Any assistance rendered to the Subcontractor on this Subcontract, or acceptance
by ISI of delinquent goods or services hereunder, will be solely for the purpose
of mitigating damages and is not construed as an intention on the part of ISI to
condone any delinquency, or as a waiver of any right ISI may have under the
Subcontract.
F.7 NOTICE TO ISI OF DELAYS
In the event the Subcontractor either encounters difficulty in meeting
performance requirements, or anticipates difficulty in complying with the
contract delivery schedule or completion date, or whenever the Subcontractor has
knowledge that any actual or potential situation is delaying or threatens to
delay the timely performance of this Subcontract, the Subcontractor shall
immediately notify the ISI Contracting Representative and the ISI Technical
Representative in writing, giving pertinent details; provided however, that this
data shall be informational only in character and that this provision shall not
be construed as a waiver by ISI of any delivery schedule or date, or any rights
or remedies provided by law or under this contract.
17
<PAGE>
F.8 LIQUIDATED DAMAGES - SUPPLIES, SERVICES, OR RESEARCH AND
DEVELOPMENT (FAR 52.212-4)(APR 1984)
a. If the Subcontractor fails to deliver the supplies or perform the
services within the time specified in the Subcontract, or any extension,
the Subcontractor shall, in place of actual damages, pay to ISI as fixed,
agreed, and liquidated damages, for each calendar day of delay the sum of
$5,000.00 for non-delivery of those supplies and services.
---------
(i) The maximum period for assessment of liquidated damages shall be
90 days which established the maximum amount of liquidated damages at
-------
$450,000.00. The liquidated damages shall be assessed for failure to
-----------
make delivery of each Integrated Card Production System ordered under
CLIN 100, or part thereof for which the Subcontractor is responsible,
and for failure to make delivery of the supplies and consumables
required under CLINs 200 through 532 for which the Subcontractor is
---------------------
responsible.
(ii) If the Subcontractor successfully delivers the Integrated Card
Production System (i.e. CLIN 100), or part thereof for which the
Subcontractor is responsible, but fails to deliver the supplies and
consumables (i.e. items ordered under CLINs 200 through 532) for which
the Subcontractor is responsible, liquidated damages at the amounts
set forth above shall be assessed against the Subcontractor.
(iii) If one ore more of ISI's subcontractors or ISI itself also are
responsible for causing the Subcontractor's failure to deliver the
supplies or perform the services for which liquidated damages are
payable by the Subcontractor to ISI, the liquidated damages payable
shall be equitably shared by the Subcontractor and other contributors
to the failure.
(iv) If one or more of ISI's subcontractors or ISI itself also cause,
in parallel, a separate independent failure to deliver supplies on the
same days or perform the services on the same days for which
liquidated damages are payable by the Subcontractor to ISI, the
liquidated damages payable by the Subcontractor to ISI because of such
failure shall be equitably shared by the Subcontractor and the other
contributors to the failure.
(v) If pursuant to subparagraphs (iii) or (iv), there are alleged to
be two or more contributors to a failure to deliver, those
contributors shall meet and seek to determine the relative fault of
each one of them and the corresponding responsibility for payment of
liquidated damages. If the contributors to a failure cannot agree on
the relative fault and the corresponding responsibility for payment of
liquidated damages, these issues will be settled by arbitration in
accordance with section I.21 of this Subcontract.
b. If delivery or performance is so delayed, ISI may terminate this
Subcontract in whole or in part under the Default-Fixed-Price Supply and
Service clause in this Subcontract and in that event the Subcontractor
shall be liable for fixed, agreed, and liquidated damages accruing until
the time ISI may reasonably obtain delivery or performance of similar
supplies or services. The liquidated damages shall be in addition to excess
costs under the Termination clause.
c. The Subcontractor shall not be charged liquidated damages when the
delay in delivery or performance arises out of causes beyond the control
and without the fault or negligence of the Subcontractor as defined in the
Default-Fixed-Price Supply and Service clause in this Subcontract.
18
<PAGE>
F.10 ENVIRONMENTAL CONDITIONS
Each ICPS shall be delivered and fully installed and made operational in a
standard office environment. (See Attachment C of Section J of the Prime
Contract).
F.11 SCHEDULE AND DESTINATION FOR DELIVERY OF REPORTS
In accordance with Exhibit B, the Subcontractor shall provide relevant
information on a timely basis to enable ISI to provide the Management Reports to
the INS. These are the reports required for the COTR and the Contracting Officer
to monitor ISI's performance. This list is not all inclusive and therefore does
not constitute a waiver of other reporting requirements established by the FAR,
FIRMR, or the Special and General Provisions of this Subcontract.
The format and content for each of the following reports is specifically
described in section G of this Subcontract. The deliverables will be marked in
accordance with section D of this Subcontract.
FIRST DUE -
REPORT TITLE PERIODICITY CHANGES ADDRESSEE
<TABLE>
<CAPTION>
=================================================================================
FIRST DUE
REPORT TITLE PERIODICITY CHANGES ADDRESSEE
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Subcontract Management Plan 12 DAC Within 11 ISI CO REP
calendar & ISI TECH
days REP
- ---------------------------------------------------------------------------------
Updated Quality Assurance Plan 19 DAC Within 18 ISI CO REP
calendar & ISI TECH
days REP
- ---------------------------------------------------------------------------------
Documentation Plan 12 DAC Within 11 ISI CO REP
calendar & ISI TECH
days REP
- ---------------------------------------------------------------------------------
Updated Security Management Plan 19 DAC Within 18 ISI CO REP
calendar & ISI TECH
days REP
- --------------------------------------------------------------------------------
Monthly Report 27 DAC As required ISI CO REP
& ISI TECH
REP
- --------------------------------------------------------------------------------
Annual Report 27 DAC As required ISI CO REP
& ISI TECH
REP
=================================================================================
</TABLE>
NOTE: DAC MEANS "CALENDAR DAYS AFTER PRIME CONTRACT AWARD".
ISI may unilaterally modify this delivery schedule provided the Subcontractor
receives 25 calendar days' notice of the scheduled change.
19
<PAGE>
SECTION G. CONTRACT ADMINISTRATION DATA
----------------------------
G.1 CONTRACTING REPRESENTATIVES
The ISI Contracting Representative is:
Ms. Terri Ann Rogers
7611 Little River Turnpike, Suite 100 East
Annandale, Virginia 22003
Telephone: (703) 813-8544
Telefax: (703) 813-8499
The Subcontractor's Contracting Representative is:
Mr. Donald B. Kenyon
Manager of Contracts
531 Main Street
Acton, Massachusetts 01720
Telephone: (508) 263-8365 (Ext.242)
Telefax: (508) 263-3358
G.2 TECHNICAL REPRESENTATIVES
(a) The ISI Technical Representative is:
Mr. William T. Alsbrooks
7611 Little River Turnpike, Suite 100 East
Annandale, Virginia 22003
Telephone: (703) 813-8330
Telefax: (703) 813-8332
The ISI Technical Representative will coordinate the technical aspects of this
Subcontract and inspect products and services furnished hereunder; however
he/she is not authorized to modify or add any terms or conditions of this
Subcontract, including price. The authority to accept products and services
furnished by the Subcontractor is expressly reserved to the ISI Contracting
Representative.
(b) The Subcontractor's Technical Representative is:
Mr. William Bradley
531 Main Street
Acton, Massachusetts 01720
Telephone: (508) 263-8365 (Ext. 267)
Telefax: (508) 263-3358
G.3 INVOICE REQUIREMENTS
See section B.4.1 of this Subcontract.
20
<PAGE>
G.4 AUTHORIZATION FOR PLACING ORDERS
The ISI individuals identified in section G.1 are authorized to place Task
Orders under this Subcontract. All Task Orders will be placed in accordance
with section I.4, "Ordering" of this Subcontract.
G.5 PRICING OF ADJUSTMENTS
When costs are a factor in any determination of Subcontract price adjustment
pursuant to the "Changes" clause, or any other clause of this Subcontract, such
costs shall be in accordance with the contract cost principles and procedures in
Part 31 of the Federal Acquisition Regulation (48 CFR 31) in effect on the date
of the Subcontract.
G.6 CONTRACTOR'S REMITTANCE ADDRESS
See section B.4.2 of this Subcontract.
G.7 CONTRACT ADMINISTRATION REPORTING REQUIREMENTS
The following is a description of reports that the Subcontractor shall provide
on a regular basis as a part of their overall management activities under this
Subcontract:
G.7.1 MANAGEMENT REPORTS
G.7.1.1 LOWER TIER SUBCONTRACT MANAGEMENT PLAN
The Subcontractor shall describe its subcontract management objectives, as well
as describe the criteria used to evaluate the degree of lower tier subcontractor
compliance with performance, price and schedule objectives. Acquisition
strategies shall be specified in the Subcontract Management Plan ("SMP") to
ensure compliance with Government regulations. The SMP shall include a
discussion of implementation and compliance with the Small and Small
Disadvantaged Business Plan and applicable reporting requirements contained in
this Subcontract.
G.7.1.2 UPDATED QUALITY ASSURANCE PLAN
The Updated Quality Assurance Plan (QAP) shall describe the Subcontractor's
standards and procedures for ensuring that all deliverables are accurate,
current, complete, and of the highest possible quality. The QAP shall discuss
requirements for reporting, auditing, and evaluating processes at all levels to
ensure a check and balance is provided.
G.7.1.3 DOCUMENTATION PLAN
The Documentation Plan (DP) shall describe the documentation processes that are
being implemented and the methods that will be utilized for control of the
distribution of system manuals and updates.
G.7.1.4 UPDATED SECURITY MANAGEMENT PLAN
The Subcontractor shall furnish an update of the plan proposed for maintaining
the security and integrity of the INS data and card production process. The
security management plan shall address how the Subcontractor will receive,
control, store, and distribute supplies and consumables that will be purchased
and used by the INS to produce cards.
21
<PAGE>
G.7.2.1 MONTHLY REPORT
The Subcontractor shall submit a monthly report that identifies the status of
all activities under the Subcontract including Task Orders, quality assurance,
lower tier subcontracts, and maintenance services. All warranty/maintenance
(including all emergency corrective maintenance) calls received during the
period shall be identified by the location of the equipment or software, the
problem reported, resolution of the problem (including the amount of time
required to complete repairs) or status of problem (if the problem(s) remain
unresolved).
G.7.2.2 ANNUAL REPORT
The Subcontractor shall submit an annual report that identifies all the
activities under the Subcontract during the year. This report shall contain the
same level of detail as the Monthly Report and shall update and/or correct the
data furnished in the Monthly Report.
SECTION H. SPECIAL CONTRACT REQUIREMENTS
-----------------------------
H.1 Reserved.
H.2 TYPE OF SUBCONTRACT
This is a Fixed Price, Indefinite-Delivery Indefinite-Quantity (IDIQ) type
contract.
H.3 Reserved.
H.4 INCORPORATION OR REPRESENTATIONS, CERTIFICATIONS AND OTHER
STATEMENTS OF SUBCONTRACTOR
This Subcontract incorporates the Representations, Certifications and Other
Statements of Subcontractor (see Exhibit D) by reference with the same force and
effect as if they were included in full text.
H.5 Reserved.
H.6 EMPLOYMENT OF ILLEGAL ALIENS
Subject to existing laws, regulations, Executive Orders, and other provisions of
this Subcontract, aliens unauthorized to be employed in the United States shall
not be employed by the Subcontractor, or it lower tier subcontractors, to work
on, under, or with this Subcontract. The Subcontractor shall ensure that this
provision is expressly incorporated into any and all lower tier subcontracts or
subordinate agreements issued in support of this Subcontract.
H.7 WORK ON OCCUPIED PREMISES
If the Subcontractor (or any of its lower tier subcontractors and their
employees) is assigned to work at INS sites, then the Subcontractor shall comply
with the regulations governing access to, operation of, and conduct while in or
on the premises. The Subcontractor shall ensure that all work is performed in a
manner that does not interrupt or interfere with the conduct of INS business.
The Subcontractor, upon notification by the Contracting officer or the ISI
Contracting Representative, shall immediately remove from any INS site and/or
performance under the Subcontract, any of its
22
<PAGE>
employees so identified. Neither the Contracting Officer nor any INS official
nor the ISI Contracting Representative is required to provide justification for
this unilateral determination, and any such directed removal is not subject to
question or challenge in any fashion.
H.8 INSURANCE
In accordance with FAR 52.228-8, Insurance - Work on a Government Installation
(SEP) 1989), contained in Section I of this Subcontract, the Subcontractor shall
have insurance as follows:
General Liability $500,000 per incident
Worker's Compensation $100,000 per incident
& Employee's Liability
Within 30 days after this Subcontract is awarded, the Subcontractor shall
provide a certification from its insurance broker that the Subcontractor has the
required insurance coverage.
H.9 AMERICANS WITH DISABILITIES ACT
INS currently does not have a requirement for ADP software for INS
employees/users with disabilities. However, if the Subcontractor is obligated to
provide ADP software under this Subcontract, the Subcontractor shall have the
capability to provide ADP software to meet the accessibility requirements as
further described in the Federal Information Resources Management Regulations.
ISI will identify the need for any such software in the individual Task Orders
issued under the Subcontract.
H.10 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO PURCHASE OF
EQUIPMENT
(a) COST OF MOVEMENT: Except as explicitly otherwise provided in this
Subcontract, prior to the expiration period, whenever equipment furnished
by the Subcontractor is shipped for mechanical replacement purposes, the
Subcontractor shall bear all costs, including, but not limited to, the
costs of packing, transportation, rigging, drayage, and insurance.
(b) FAULT OF GOVERNMENT: The warranty shall not apply to maintenance
required due to the fault or negligence of the INS.
(c) TITLE: Title to equipment, including special features installed
thereon, will pass from the Subcontractor to the INS upon acceptance by the
INS. However, the Subcontractor shall retain rights to software identified
in Exhibit F in accordance with the data clauses in this Subcontract--FAR
52-227-14 "Rights In Data--General (JUN 1987)" and FAR 52-227-19
"Commercial Computer Software--Restricted Rights (JUN 1987)".
H.11 ALTERATIONS AND ATTACHMENTS
Upon 7 days written notice to the Subcontractor, the INS may make alterations or
install attachments to the equipment purchased from the Subcontractor, provided
that such action will not create a safety hazard. The INS shall assume full
liability for any damages and/or degradation in equipment performance
attributable directly to such alteration or attachment.
23
<PAGE>
H.12 ENGINEERING CHANGES
Engineering changes proposed by the Subcontractor shall be complete; i.e., they
shall therefore address all training, documentation, maintenance, and warranties
required by Section C of this contract.
(a) After Subcontract award, ISI may solicit, and the Subcontractor shall
propose, engineering changes to the equipment and software specifications,
or other requirements of this Subcontract. These changes may be proposed
to save money, to improve performance, to save energy, or to satisfy
increased data processing requirements. However, if proposed changes
relating to improved performance are necessary to meet the increased data
processing requirements of the user, those requirements shall not exceed
the Prime Contract requirements by more than 25%. If the proposed changes
are acceptable to both parties, the Subcontractor shall submit a price
change proposal to ISI for evaluation. Those proposed engineering changes
that are acceptable to ISI will be processed as modifications to the
Subcontract.
(b) This clause applies only to those proposed changes identified by the
Subcontractor as an engineering change proposal (ECP) submitted pursuant to
the provisions of this clause. At a minimum, the following information
shall be submitted by the Subcontractor with each proposal:
(1) A description of the difference between the existing
Subcontract requirement and the proposed change, and the
comparative advantages and disadvantages of each;
(2) Itemized requirements of the Subcontract which must be
changed if the proposal is adopted, and the proposed
revision to the contract for each such change;
(3) An estimate of the changes in performance and cost, if any,
that will result from adoption of the proposal;
(4) An evaluation of the effects the proposed change would have
on collateral costs to INS and ISI, such as Government-
furnished property costs, costs of related items, and costs
of maintenance and operation; and
(5) A statement of the time by which the change order adopting
the proposal must be issued so as to obtain the maximum
benefits of the changes during the remainder of this
Subcontract. Also, any effect on the Subcontract completion
time or delivery schedule shall be identified.
(c) ECPs submitted to the ISI Contracting Representative shall be
processed expeditiously. Neither ISI nor INS shall be liable for proposal
preparation costs or any delay in acting upon any proposal submitted
pursuant to this clause. The Subcontractor has the right to withdraw, in
whole or in part, any ECP not accepted by ISI within the period specified
in the proposal. The decision of the ISI Contracting Representatives as to
the acceptance of any proposal under this contract shall be final and shall
not be subject to the "Disputes" clause of this contract.
(d) If the ISI Contracting Representative accepts any ECP submitted
pursuant to this clause he/she shall issue a modification to this
Subcontract. Unless and until a modification is executed to incorporate an
ECP under this Subcontract, the Subcontractor shall remain obligated to
perform in accordance with the terms of the existing Subcontract.
24
<PAGE>
(e) If an ECP submitted pursuant to this clause is accepted and applied to
this Subcontract, an equitable adjustment in the Subcontract price and in
any other affected provisions shall be made in accordance with this and/or
other applicable clauses. When the cost of performance of this Subcontract
is increased or decreased as a result of the change, the equitable
adjustment to the Subcontract price shall be calculated in accordance with
the "Changes" clause, but the resulting Subcontract modification shall
state that it is made pursuant to this clause.
(f) The Subcontractor shall specifically identify information contained in
the ECP which it considers confidential and/or proprietary and which
prefers not be disclosed to the public. The identification of information
as confidential and/or proprietary is for information purposes only and
shall not be binding on ISI or the INS to prevent disclosure of such
information. Offerors are advised that such information may be subject to
release upon request pursuant to the Freedom of Information Act (5 U.S.C.
(S)552).
H.13 CERTIFICATE OF MAINTAINABILITY
Reserved.
H.14 REPLACEMENT PARTS AVAILABILITY
The Subcontractor agrees to make available replacement parts for equipment that
it provides in this Subcontract for the system life designated in Section F,
"Term of Contract." The Contractor shall notify ISI 180 days before the end of
the system's life as to the continuing availability of parts subsequent to this
period. If parts will not be available from the Subcontractor, ISI may require
the Subcontractor to furnish data that is available to the Subcontractor, to
assist ISI to obtain such parts from another source.
H.15 SITE PREPARATION
Equipment environmental specifications shall conform exactly with the Section C
notice of INS' environment standards.
H.16 CONFLICTS WITH OTHER CONTRACTS
The Subcontractor is informed that services and supplies called for under this
Subcontract, other than the identified minimum amounts, shall not be ordered by
ISI or provided by the Subcontractor when this Subcontract conflicts with the
supplies or services available under a requirements type contract(s), as defined
by the Federal Acquisition Regulation (FAR) 16.5, which has been awarded by the
INS or to which the INS is party or subject. When this Subcontract duplicates
the supplies and services under another indefinite delivery, indefinite quantity
contract, ISI and the INS reserve the right to process those supplies or
services under either contract.
H.17 SUBCONTRACTING PLAN
In accordance with FAR 52.219-9 (as prescribed in FAR 19.7), a subcontracting
plan is required of the Subcontractor if this Subcontract is expected to exceed
$500,000 and if the Subcontractor is not a small business. The approved plan
will be incorporated into the Subcontract as Exhibit E at time of Subcontract
award.
25
<PAGE>
H.18 PRICING OF ADJUSTMENTS
When costs are a factor in any determination of a contract price adjustment
pursuant to the "Changes" Clause or any other clause of this Subcontract, such
costs shall be in accordance with the contract cost principles and procedures in
Part 31 of the FAR (48 CFR 31) in effect as of the date of this Subcontract.
H.19 RIGHTS IN TECHNICAL DATA
The INS shall have all rights in data related to the card production equipment,
supplies and consumables which were made solely for the INS under the
Subcontract. The INS will have all rights to color formulations and substrate
designs, color formulations and material compositions applicable to cards
generally, microline printing, embedded codes, holograms, RF tags and formulas
for specific IR and UV inks which are furnished to ISI and the INS as a part of
this Subcontract and which are unique to the INS. Further, the INS retains all
rights to the hologram artwork furnished by the INS and any sketches, designs,
changes, and products furnished by the Subcontractor in developing the hologram
for the INS.
Because of the potential for the production of counterfeit documents, the
Subcontractor shall not market or sell any of the unique supplies, consumables,
and data produced for this Subcontract. Further, the INS will have exclusive
intellectual and proprietary rights to all of the INS-unique features and
processes identified in Section C. The INS intends to protect its rights fully
and to prosecute violators of its rights to the maximum extent permitted by the
law. The Subcontractor shall insert this clause in any subcontract having to do
with the satisfaction of performance and/or deliveries under this Subcontract.
Subcontractor shall require the inclusion of this clause in any lower tier
subcontract. The Subcontractor shall be responsible for compliance with this
clause by the its lower tier subcontractor.
H.20 SECURITY REQUIREMENTS (NON-CLASSIFIED CONTRACT)
The Immigration and Naturalization Service shall have and exercise full and
complete control over granting, denying, withholding or terminating access for
Subcontractor employees. INS may, as it deems appropriate, authorize and grant
temporary access to employees of the Subcontractor or its lower tier
subcontractors, vendor, and/or volunteer. The granting of a waiver to commence
work shall not be considered as assurance that a full security authorization
will follow as a result thereof, and the granting of either a waiver or a full
employment suitability clearance shall in no way prevent, preclude or bar the
withdrawal or termination of any such access by INS, at any time during the term
of the contract. No employee of the Subcontractor, or its lower tier
---------------------------------------------------
subcontractor, vendor, or volunteer shall be allowed access without such
- ------------------------------------------------------------------------
employment suitability clearance.
- --------------------------------
All employees (to include subcontractors, temporary, part-time and replacement
employees) assigned to the performance of work under this Subcontract shall
undergo a position sensitivity analysis. The results of the position sensitivity
analysis shall identify the appropriate background investigation to be
conducted. At a minimum, each Subcontractor having involvement with the
fabrication, production, or processing of each card identified, shall undergo a
Limited Background Investigation (LBI). All background investigations will be
processed through the INS Contract Security Section. Subcontractor employees
hired under INS contracts requiring an investigation shall not commence work
under the contract until authorization has been issued by the INS Contract
Security Section to the INS Contracting Officer's Technical Representative
(COTR). All prospective Subcontractor employee shall submit the following
completed forms (no less than thirty-eight (38) days before the starting date of
the Subcontract):
(1) Standard Form 85P - "Questionnaire for Public Trust Positions"
(original plus a copy)
26
<PAGE>
(2) Supplemental "Foreign Born Relatives" statement relating to
individuals who have relatives in another country (original plus a copy)
(3) Proof of employment authorization (if non-U.S. citizen) or birth
certificate (if U.S. citizen)
(4) FD form 258, "Fingerprint Card" (2 copies)
(5) SF 171 "Application for Employment", Questions 3, 6, 19, 28, 36, 38-
44, 48 and 49 only. (original plus a copy)
(6) Pre-Employment suitability check. Form G-736 (five years employment)
The Subcontractor using form G-736 will also provide documentation that the
previous employers of all new contract employees have been interviewed to
ascertain the following information concerning the period five years prior to
application:
(1) Verification of employment history (dates, salary, job titles and
duties)
(2) Reason for leaving employment
(3) Whether employer would re-hire the applicant
(4) Name of person contacted
(5) Name of employee doing the interview on behalf of the Subcontractor
Necessary forms will be provided by ISI at the time of award of the Subcontract.
Only complete suitability packages will be accepted by INS Contract Security.
Specific instructions on submission of packages will be provided upon award of
the Subcontract. If an unsuitable report on any employee is received after
processing of the required forms, or if a prospective employee is found to be
unsuitable or unfit for his assigned duties, the COTR will advise the
Subcontractor that the employee shall not continue to work or be assigned to
work under this Subcontract.
Employees found suitable for employment through this process while employed by
one Subcontractor are not required to submit a new set of forms if subsequently
hired by a follow-on Subcontractor, unless specifically requested to do so by
the COTR.
INS and ISI reserve the right and prerogative to require the Subcontractor to
terminate the services and restrict access to the facility of any employee who
may be an offender, or whose personal habits, criminal history or inclinations
are in conflict with the DOJ standards of conduct, 28 CFR 45.731.1 through
45.731.26, or who otherwise may be a security risk.
The Subcontractor shall appoint a senior official to act as the Subcontractor's
Security Officer. This individual will interface with the ISI and INS Security
Office on all security matters, to include physical, personnel, and protection
of all information and data accessed by the Subcontractor.
The COTR, the INS Contract Security offices and ISI shall have the right to
inspect the procedures, methods, and facilities utilized by the Subcontractor in
complying with the security requirements under this Subcontract. Should the
COTR or ISI determine that the Subcontractor is not complying with the
27
<PAGE>
security requirements of this Subcontract, the Contracting Officer of ISI shall
inform the Subcontractor in writing of the proper action to be taken in order to
effect compliance with the requirements.
The Subcontractor must agree that each person employed by it or any
subcontractor(s) will have a social security card issued and approved by the
Social Security Administration and be a United States citizen or Legal Permanent
Residents (LPR's). INS will address the employment suitability of each
prospective employee on a case-by-case basis. Each employee of the
Subcontractor, and of any subcontractor(s), must complete and sign a form 1-9,
"Employment Eligibility Verification" before commencing work. The Contractor
will retain the original form 1-9 before the employee commences work. The
Subcontractor is responsible to the government and to ISI for acts and omissions
of its own employees and of any subcontractor employees.
H.21 EQUIPMENT MAINTENANCE
See Section C, Paragraph C.8.
H.22 WARRANTY FOR EQUIPMENT AND CONSUMABLE SUPPLIES
See Section C, Paragraph C.9.
H.23 SUBSTITUTION OF EQUIPMENT
Any substitutions proposed by the Subcontractor shall be complete and shall
therefore address all training, documentation, maintenance, and warranties as
required by Section C of this Subcontract.
This clause acknowledges that from time to time some of the contracted-for
equipment may not be readily available or may have gone out of production
permanently. The Subcontractor may request a one time or permanent substitution
of one or more contract line items. Such requests must be made in writing to
the ISI Contracting Representative. The following conditions must be met:
(a) The replacement item(s) must meet or exceed all contract
specifications applicable to the item(s) replaced;
(b) The replacement item(s) must be acceptable to the Contracting Officer,
to the Contracting Officer's Technical Representative; and the ISI
Contracting Representative.
(c) The replacement item(s) must be approved in writing by the ISI
Contracting Representative;
(d) The replacement item(s) shall carry the same or better warranty; and
(e) Replacement items proposed are subject to the provisions of Clause
H.24, Technical Refreshment, (a)(1) through (a)(7).
The fact that the Subcontractor requests a replacement shall not extend the
required delivery dates of any items. Upon acceptance of a replacement, the
Subcontractor may request a reasonable extension.
28
<PAGE>
H.24 TECHNOLOGY REFRESHMENT
Technology refreshments proposed by the Subcontractor shall be complete and
shall therefore address all training, documentation, maintenance, and warranties
as required by Section C of this Subcontract.
(a) The Subcontractor is responsible for developing and maintaining a
technology refreshment program throughout the course of the Subcontract.
This program shall require the Subcontractor to propose, and ISI and INS to
consider, alternate equipment and software which meets the following
requirements:
(1) Meets at a minimum all of the mandatory requirements of the
specification;
(2) Is functionally equivalent or superior to current components
under the Subcontract;
(3) Will maintain or improve successful performance of the total
system;
(4) Will facilitate or maintain ease of maintenance or ease of
use;
(5) Will be supportable for the life of the Prime Contract;
(6) Has been successfully utilized in actual performance in
accordance with the commercial availability requirements of
the Subcontract; and
(7) Will be provided at a cost per unit of value to ISI equal to
or less than the equipment or software currently under
Subcontract.
(b) The Subcontractor shall prepare and submit a plan in the proposal
setting forth their approach to technology refreshment. This plan shall,
at a minimum, address the following issues:
(1) Anticipated sources for new products and the procedures by
which current information will be supplied to the
Subcontractor.
(2) Procedures for verification of functionality;
(3) Procedures for performance testing prior to incorporation
into the network, including specification for a
Subcontractor-furnished test bed;
(4) Procedures for verifying supportability;
(5) Vendor or manufacturer responsibility;
(6) Procedures for informing ISI and INS on both a regular and
extraordinary basis of new product possibilities (e.g.,
meetings, reports, demonstrations, etc.);
(7) Personnel responsible for maintaining the technology
refreshment program and their qualifications;
(8) Procedures for guaranteeing system integrity; and
(9) Procedures for evaluation and enforcement of the technology
refreshment
29
<PAGE>
program.
(c) Technology refreshment under this clause is applicable only to
equipment and supplies or software not yet installed at the time the
improvement is accepted by INS. Replacement of already-installed
Subcontractor equipment or software will be considered by ISI and INS under
the Engineering Change Proposal Clause, should ISI, INS or the Contractor
so request.
(d) Equipment, software, and supplies installed pursuant to this clause
shall be subject to the same evaluation, warranties, maintenance credits,
downtime credit, liquidated damages and acceptance procedures as items
already under Subcontract.
(e) ISI will periodically evaluate the quality of the Subcontractor's
technology refreshment program, based upon the Subcontractor's approved
plan.
H.25 SPECIAL PROVISION CONCERNING CONTRACT COMPLETION OR TERMINATION
Upon Subcontract expiration or should this Subcontract be terminated for either
convenience or default, all INS-unique items as described in Section C
previously produced, currently controlled by the Subcontractor, will be
delivered to ISI in accordance with Section C.6.3 of this Subcontract.
H.26 KEY PERSONNEL
The personnel listed below (or specified in the Subcontract schedule) are
considered essential to the work being performed under this contract. Before
removing, replacing, or diverting any of the specified personnel or facilities,
the Subcontractor shall:
(a) Notify the ISI Contracting Representative reasonably (no less than 35
calendar days) in advance.
(b) Submit a detailed explanation or justification for the proposed
substitution.
(c) Furnish a resume for the substitute.
The explanation/justification and resume shall contain sufficient detail to
permit evaluation of the impact on this contract. The proposed substitute(s)
shall be of equal or superior qualifications to those of the person(s) being
replaced. The ISI Contracting Representative will notify the Subcontractor
within fifteen (15) calendar days after receipt of all required information of
the Government's decision on the proposed substitute(s).
The Subcontractor shall make no diversion without the ISI Contracting
Representative's written consent; provided, that the ISI Contracting
Representative may confirm in writing the proposed change, and that confirmation
shall constitute the ISI Contracting Representative's consent required by this
clause.
The list of personnel (shown below or as specified in the contract schedule)
may, with the consent of the Subcontracting parties, be amended from time-to-
time during the course of the Subcontract to add or delete personnel and/or
facilities.
30
<PAGE>
KEY PERSONNEL
Individual's Name Position
- ----------------- --------
H.27 KEY SUBCONTRACTORS
The subcontractors listed below (or specified in the contract schedule) are
considered essential to the work being performed under this Subcontract.
Before removing, replacing, or diverting any of the listed or specified
subcontractors, the Subcontractor shall:
(a) Notify the ISI contracting Representative reasonably (no less than, 35
calendar days) in advance.
(b) Submit a detailed explanation or justification for the proposed
substitution.
(c) Furnish a company information package or the substitute.
The explanation/justification and information package shall contain sufficient
detail to permit evaluation of the impact on this Subcontract. The proposed
substitute(s) shall be of equal or superior qualifications to those of the
subcontractor(s) being replaced. The ISI Contracting Representative will notify
the Subcontractor within fifteen (15) calendar days after receipt of all
required information of the decision on the proposed substitute(s).
The Subcontractor shall make no diversion without the ISI Contracting
Representative's written consent; provided, that the ISI Contracting
Representative may confirm in writing the proposed change, and that confirmation
shall constitute the ISI Contracting Representative's consent required by this
clause.
The list of subcontractors (shown below or as specified in the contract
schedule) may, with the consent of the contracting parties, be amended from
time-to-time during the course of the contract to add or delete subcontractors.
KEY SUBCONTRACTORS
------------------
Company Name Product or Service to be Furnished
- ------------ ----------------------------------
SECTION I. CONTRACT CLAUSES
----------------
I.1 CLAUSES INCORPORATED BY REFERENCE. (FAR 52.252-2) (JUNE 1988)
This Subcontract incorporates the FAR clauses identified in this section by this
reference, with the same force and effect as if they were given in full text,
subject to the following modifications.
I.1.1 Except as provided for in sections I.1.2 and I.1.3 below, whenever the
following terms are used in the clauses incorporated by reference in this
section, they shall have the meaning as set forth below:
(a) The term "Contract" shall mean "this Subcontract".
(b) The term "Subcontract" shall mean "lower tier subcontract".
31
<PAGE>
(c) The term "Government", "Contracting Officer" and equivalent terms
shall mean "Contractor".
(d) The term "Contractor" shall mean "Subcontractor", and if required by
the clause, "lower tier subcontractors".
I.1.2 The definitions in section I.1.1 shall not be applicable to the following
clauses or to the terms therein, to the extent specified:
(a) Whenever there is a reference to "Government Property", "Government
Equipment", or equivalent terms which refer to Government property, these
terms shall remain unchanged.
(b) Whenever there is a reference to the right to inspect, examine or
audit records, only the Government shall have that right.
(c) Whenever there is a reference to patents or copyrights, or
infringement of intellectual property rights, the related references in
the test of the clause to the Government or Contracting Officer shall
remain unchanged.
(d) Whenever there is a reference to the reimbursement of costs to a
Contractor or Subcontractor for liability, the related references in the
text of the clause to the Government or Contracting Officer shall remain
unchanged.
I.1.3 Notwishstanding any other provision of this Subcontract, including
sections I.1.1 and I.1.2 above, with respect to the risk of loss provision in
the "Government Property" clause, if any, in this Subcontract, the Subcontractor
shall assume the risk of, and be responsible for, any loss or destruction of, or
damage to, the Government property while in subcontractor's possession or
control as required by that provision. The Subcontractor shall return all
Government property in as good condition as when received, except for reasonable
wear and tear or for its use in accordance with the provisions of the Prime
Contract.
This Subcontract incorporates the following FAR clauses by reference, with the
same force and effect as if they were given in full text.
<TABLE>
<S> <C> <C>
52.202-1 Definitions SEP 1991
52.203-1 Officials Not to Benefit APR 1984
52.203-3 Gratuities APR 1984
52.203-5 Covenant Against Contingent Fees APR 1984
52.203-6 Restrictions on Subcontractor Sales to the Government JUL 1985
52.203-7 Anti-Kickback Procedures OCT 1988
52.203-10 Price or Fee Adjustment for Illegal or Improper Activity SEP 1990
52.208-1 Required Sources for Jewel Bearing and Related Items APR 1984
52.209-6 Protecting the Government's Interest When Subcontracting NOV 1992
with Contractors Debarred, Suspended, or Proposed for
Debarment
</TABLE>
32
<PAGE>
<TABLE>
<S> <C> <C>
52.210-5 New Material APR 1984
52.215-1 Examination of Records by Comptroller General FEB 1993
52.215-2 Audit -- Negotiation FEB 1993
52.215-23 Price Reduction for Defective Cost or Pricing Data - DEC 1994
Modifications
52.215-25 Subcontractor Cost or Pricing Data - Modifications DEC 1994
52.215-26 Integrity of Unit Prices APR 1991
52.217-8 Option to Extend Services [to be exercised by contract AUG 1989
modification prior to, or up to 30 days after,
expiration of the contract, provided that 30 days
preliminary notice is provided to Contractor in writing]
52.219-8 Utilization of Small Business Concerns and Small FEB 1990
Disadvantaged Business Concerns
52.219-9 Small Business and Small Disadvantaged Business FEB 1995
Subcontracting Plan
52.219-13 Utilization of Women-Owned Small Businesses AUG 1986
52.219-16 Liquidated Damages-Small Business Subcontracting Plan AUG 1989
52.220-3 Utilization of labor Surplus Area Concerns APR 1984
52.220-4 Labor Surplus Area Program Subcontracting Program APR 1984
52.222-3 Convict Labor APR 1984
52.222-4 Contract Work Hours and Safety Standards Act - Overtime MAR 1986
Compensation
52.222-20 Walsh-Healey Public Contracts Act APR 1984
52.222-26 Equal Opportunity APR 1984
52.222-35 Affirmative Action for Special Disabled and Vietnam Era APR 1984
Veterans
52.222-36 Affirmative Action for Handicapped Workers APR 1984
52.222-37 Employment Reports on Special Disabled Veterans and JAN 1988
Veterans of the Vietnam Era
52.223-2 Clean Air and Water APR 1984
52.223-6 Drug-Free Workplace JUL 1990
52.225-3 Buy American Act-Supplies JAN 1994
52.225-11 Restrictions on Certain Foreign Purchases MAY 1992
52.227-1 Authorization and Consent APR 1984
</TABLE>
33
<PAGE>
<TABLE>
<S> <C> <C>
52.227-2 Notice and Assistance Regarding Patent and Copyright APR 1984
Infringement
52.227-3 Patent Indemnity APR 1984
52.227-14 Rights in Data - General JUN 1987
52.227-19 Commercial Computer Software - Restricted Rights JUN 1987
52.227-23 Rights to Proposal Data (Technical) JUN 1987
52.228-5 Insurance - Work on a Government Installation SEP 1989
[(a) Workers compensation and employer's liability;
coverage of at least[(a) Workers $200,000 required,
(b) General liability; bodily injury liability on a
comprehensive policy of at least $500,000 per occurrence
required.]
52.229-3 Federal, State, and Local Taxes JAN 1991
52.229-5 Taxes - Contracts Performed in U.S. possessions or Puerto APR 1984
Rico
52.230-2 Cost Accounting Standards NOV 1993
52.230-5 Administration of Cost Accounting Standards DEC 1004
52.232-1 Payments APR 1984
52.232-8 Discounts for Prompt Payment APR 1989
52.232-11 Extras APR 1984
52.232-17 Interest JAN 1991
52.232-23 Assignment of Claims JAN 1986
2.233-3 Protest After Award AUG 1989
52.237-2 Protection of Government Buildings, Equipment and APR 1984
Vegetation
52.243-1 Changes - Fixed Price AUG 1987
52.244-1 Subcontract (Fixed-Price Contracts) FEB 1995
52.244-5 Competition in Subcontracting APR 1984
52.246-24 Limitation of Liability - High Value Item APR 1984
52.249-2 Termination for Convenience of the Government APR 1984
(Fixed-Price)
52.249-8 Default (Fixed-Price Supply and Service) APR 1984
</TABLE>
I.2 REQUIREMENT FOR CERTIFICATE OF PROCUREMENT INTEGRITY-
MODIFICATION (FAR 52.203-9) (NOV 1990)
See Exhibit D, clause FAR 52.203-8.
34
<PAGE>
I.3 RESERVED
I.4 ORDERING
(a) Any supplies and services to be furnished under this Subcontract
shall be ordered by issuance of Task Orders by the individuals or
activities designated in the Schedule. Such orders may be issued from
date of award through to the last day of the term of this Subcontract, as
long as the provisions of Paragraph F.3 (Period of Performance) are
upheld.
(b) All Task Orders are subject to the terms and conditions of this
Subcontract. In the event of conflict between a Task Order and this
Subcontract, the Subcontract shall control.
(c) If mailed or faxed, a Task Order is considered issued when ISI
deposits the order in the mail or faxes the order, respectively. Orders
may not be issued orally.
I.5 RESERVED
I.6 INDEFINITE QUANTITY SUBCONTRACT
(a) This is an indefinite-quantity Subcontract for the supplies or
services specified, and effective for the period stated, in the Schedule.
The quantities of supplies and services specified in the Schedule are
estimates only and are not purchased by this Subcontract.
(b) Delivery or performance shall be made only as authorized by Task
Orders issued in accordance with the Ordering clause. The Subcontractor
shall furnish to the ISI, when and if ordered, the supplies or services
specified in the Schedule up to and including the quantity designated in
the Schedule as the maximum.
(c) Except for any limitations in the Schedule, there is no limit on the
number of orders that may be issued. ISI may issue orders requiring
delivery to multiple destinations or performance at multiple locations.
(d) Any order issued during the effective period of this Subcontract and
not completed within that period shall be completed by the Subcontractor
within the time specified in the order. The Subcontract shall govern the
Subcontractor's and ISI's rights and obligations with respect to that
order to the same extent as if the order were completed during the
Subcontract's effective period: provided, that the Subcontractor shall
not be required to make any deliveries under this contract 60 days after
the expiration of this Subcontract.
I.7 OPTION TO EXTEND THE TERM OF THE SUBCONTRACT
(a) ISI may extend the term of this contract for the periods specified
in section F.3 by writtten notice to the Subcontractor prior to this
Subcontract's expiration.
(b) If ISI exercises this option, the extended contract shall be
considered to include this option provision.
35
<PAGE>
(c) The total duration of this Subcontract, including the exercise of
any options under this clause, shall not exceed 36 months.
I.8 RESERVED
I.9 BUY AMERICAN ACT - TRADE AGREEMENTS ACT - BALANCE OF PAYMENTS PROGRAM
(FAR 52.225-9) (JAN 1994)
(a) This clause implements the Buy American Act (41 U.S.C. 10), the
Trade Agreements Act of 1979 (19 U.S.C. 2501-2582), the North American
Free Trade Agreement (NAFTA) Implementation Act (Pub. L. 103-182, 107
Stat. 2057), and the Balance of Payments Program by providing a
preference for domestic end products over foreign end products, except
for certain foreign end products which meet the requirements for
classification as designated, NAFTA, or Caribbean Basin country end
products.
"Caribbean Basin country end product," as used in this clause, means an
article that: (1) Is wholly the growth, product, or manufacture of a
Caribbean Basin country (as defined in section 25.401 of the Federal
Acquisition Regulation (FAR)), or (2) in the case of an article which
consists in whole or in part of materials from another country or
instrumentality, has been substantially transformed into a new and
different article of commerce with a name, character, or use distinct
from that of the article or articles from which it was so transformed.
The term includes services (except transportation services) incidental to
its supply; provided that the value of those incidental services does not
exceed that of the product itself. It does not include service contracts
as such. The term excludes products that are excluded from duty free
treatment for Caribbean countries under the Caribbean Basin Economic
Recovery Act (19 U.S.C. 2703(b)).
These exclusions presently consist of (i) textiles and apparel articles that are
subject to textile agreements; (ii) footwear, handbags, luggage, flat goods,
work gloves, and leather wearing apparel not designated as eligible articles for
the purpose of the Generalized System of Preferences under title V of the Trade
Act of 1974; (iii) tuna, prepared or preserved in any manner in airtight
containers; (iv) petroleum, or any product derived from petroleum; and (v)
watches and watch parts (including cases, bracelets and straps), of whatever
type including, but not limited to, mechanical, quartz digital or quartz analog,
if such watches or watch parts contain any material that is the product of any
country to which the Tariff Schedule of the United States (TSUS) column 2 rates
of duty apply.
"Components," as used in this clause, means those articles, materials, and
supplies incorporated directly into the end products.
"Designated country end product," as used in this clause, means an article that
(1) is wholly the growth, product, or manufacture of the designated country (as
defined in section 25.401 of the Federal Acquisition Regulation (FAR)), or (2)
in the case of an article which consists in whole or in part of materials from
another country or instrumentality, has been substantially transformed into a
new and different article of commerce with a name, character, or use distinct
from that of the article or articles from which it was so transformed. The term
includes services (except transportation services) incidental to its supply,
provided that the value of those incidental services does not exceed that of the
product itself. It does not include service contracts as such.
36
<PAGE>
"Domestic end product," as used in this clause, means (1) an unmanufactured end
product mined or produced in the United States, or (2) and end product
manufactured in the United States, if the cost of its components mined,
produced, or manufactured in the United States exceeds 50 percent of the cost of
all its components. A component shall also be considered to have been mined,
produced, or manufactured in the United States (regardless of its source in
fact) if the end product in which it is incorporated is manufactured in the
United States and the component is of a class or kind (i) determined by the
Government to be not mined, produced, or manufactured in the United States in
sufficient and reasonably available commercial quantities of a satisfactory
quality, or (ii) to which the agency head concerned has determined that it would
be inconsistent with the public interest to apply the restrictions of the Buy
American Act.
"End products," as used in this clause, means those articles, materials, and
supplies to be acquired under this contract for public use.
"Foreign end product," as used in this clause, means an end product other than a
domestic end product.
"NAFTA country," as used in this clause, means Canada or Mexico.
"NAFTA country end product," as used in this clause means an article that (1) is
wholly the growth, product, or manufacture of a NAFTA country, or (2) in the
case of an article which consists in whole or in part of materials from another
country or instrumentality, has been substantially transformed in a NAFTA
country into a new and different article of commerce with a name, character, or
use distinct from that of the article or articles from which it was transformed.
The term includes services (except transportation services) incidental to its
supply; provided, that the value of those incidental services does not exceed
that of the product itself. It does not include service contracts as such.
(b) The Contracting Officer has determined that the Trade Agreements Act
and NAFTA apply to this acquisition. Unless otherwise specified, the Acts
apply to all items in the schedule. The Subcontractor agrees to deliver
under this Subcontract only domestic end products unless, in its offer,
it specifies delivery of foreign end products in the provision entitled
"Buy American Act - Trade Agreements - Balance of Payments Program
Certificate." An offer certifying that a designated, NAFTA, or Caribbean
Basin country end product will be supplied requires the Contractor to
supply a designated, NAFTA, or Caribbean Basin country end product or, at
the Contractor's option, a domestic end product. Contractors may not
supply a foreign end product for line item subject to the Trade
Agreements Act unless the foreign end product is a designated NAFTA, or
Caribbean end product (see FAR 25.401), or unless a waiver is granted
under section 302 of the Trade Agreements Act of 1979 (see FAR
25.402(c).)
(c) Offers will be evaluated in accordance with the policies and
procedures of Subpart 25.4 of the FAR.
I.10 RESERVED
I.11 WARRANTY EXCLUSION AND LIMITATION OF DAMAGES
Except as expressly set forth in writing in this Subcontract (see section C.1.1
and C.9 of this Subcontract and section C.8.1 of the Prime Contract) and except
for the implied warranty of merchantability, there are no warranties expressed
or implied. In no event will the Subcontractor be liable to ISI for
consequential
37
<PAGE>
damages as defined in the Uniform Commercial Code, Section 2-715,
in effect in the District of Columbia as of January 1, 1973; i.e.--
Consequential damage resulting from the seller's breach include--
(a) Any loss resulting from general or particular requirements and needs
of which the seller at the time of contracting had reason to know and
which could not reasonably be prevented by cover or otherwise; and
(b) Injury to person to property proximately resulting from any breach
of warranty.
I.13 SUBCONTRACTING
The Subcontractor shall not subcontract any portion of the work it has agreed to
perform under this Subcontract without the prior written approval of Contractor.
I.14 INDEPENDENT CONTRACTORS
At all times the Subcontractor and Contractor shall remain independent
Contractors, each responsible for its own employees.
I.15 PROPRIETARY DATA
(a) "Proprietary Information" for purposes of this clause is defined as
information which the disclosing person or entity at the time of
disclosure identifies in writing as Proprietary Information by means of a
proprietary legend, marking, stamp or other positive written notice
identifying the information to be proprietary. It includes, but is not
limited to, information so identified which are trade secrets,
confidential or privileged commercial or financial information, and
Government information identified as "Source Selection Information",
"Competition Sensitive" or "For Official Use Only". It also includes
Source Selection Information, whether or not marked, as prescribed and
identified in FAR 3.104-5. In order for other information disclosed
orally or visually to be Proprietary Information protected hereunder, the
disclosing person or entity shall identify the information as proprietary
at the time of disclosure, and, within thirty (30) days after such oral
or visual disclosure, reduce the subject matter of the disclosure to
writing, properly stamped with the proprietary legend, stamp or other
positive written notice and submit it to the receiving person or entity.
(b) The Subcontractor shall not use, publish or otherwise disclose
Proprietary Information except as required for performance of work
authorized under this Agreement and then only to the extend consistent
with law and applicable Government regulation.
(c) The Subcontractor shall take reasonable steps to protect the
Proprietary Information and prevent disclosure to third parties. The
Subcontractor agrees that it will use the same reasonable efforts to
protect Proprietary Information as are used to protect its own, but, in
any event, not less than reasonable care.
(d) The Subcontractor agrees to execute company-to-company written
agreements with companies providing Proprietary Information to the
Subcontractor in the performance of this Subcontract. These agreements
shall prescribe the scope of authorized use of such Proprietary
Information as well as necessary safeguards against unauthorized use or
disclosure, and other
38
<PAGE>
terms and conditions to be agreed upon. Two (2) copies of such
company-to-company agreements shall be furnished promptly after execution
to the Government Contracting Officer.
(e) In addition to the obligations under the Organizational Conflict of
Interest clause that may be included in this Subcontract, the
Subcontractor agrees not to use Proprietary Information obtained in the
performance of this Subcontract in supplying any system, subsystem or
component thereof or service, for the U.S. Government or any other person
or entity, as a prime Contractor, Subcontractor at any tier or vendor,
except as may be authorized in writing by the Contractor or by the owner
of the Proprietary Information.
(f) The Subcontractor agrees to inform and train its employees in
appropriate recognition, handling and protection of Proprietary
Information. The Subcontractor agrees to obtain from each of its
employees, who may be reasonably expected to have access to Proprietary
Information, an agreement in writing which provides that the employee
shall use and protect Proprietary Information in accordance with this
section.
(g) The Subcontractor agrees to hold the U.S. Government and the
Contractor harmless and indemnify them as to any cost or loss resulting
from the unauthorized use or disclosure of Proprietary Information by the
Subcontractor, its employees, its lower tiered subcontractors or agents.
(h) Notwithstanding the expiration or termination of this Agreement, the
Subcontractor's obligation to protect Proprietary Information shall
continue as long as that information continues to be Proprietary
Information.
(i) The Subcontractor agrees to flow down this clause to its
subcontractors at every tier who may have access to Proprietary
Information.
I.16 PUBLICITY
Subcontractor shall not in any manner advertise, publish, or release for
publication any statement mentioning Contractor or the fact that Subcontractor
has furnished or contracted to furnish Contractor items and or services required
by this subcontract. Subcontractor shall not disclose any information relating
to this Subcontract to any person not authorized by the Contractor to receive
it. Subcontractor shall use information supplied by the Contractor or the
Government only to accomplish services or products covered by this Subcontract.
Such information shall not be used for any other purposes.
I.17 SUBCONTRACTOR'S DUTY OF NOTICE AND NON-INFRINGEMENT
(a) The Subcontractor shall not, in the course of performing work under
this Subcontract, infringe or cause the Contractor to infringe any
patent, copyright, or trademark rights of others. In the event the
Subcontractor possesses information that the Subcontractor or Contractor
may infringe any patent, copyright, trademark, or trade secret, the
Subcontractor shall, in a reasonable and timely manner, give notice of
the facts known by the Subcontractor to the Contractor.
(b) If the Subcontractor receives notice of any legal actions or claim
in which Contractor may become involved, or of any Contractor right to
invention, discovery, copyright, or trade secret covered by the terms of
this Agreement, Subcontractor shall promptly give notice of the facts
known by Subcontractor to Contractor.
39
<PAGE>
I.18 ASSIGNMENTS
(a) No right under this Subcontract is assignable by Subcontractor
except the right to payments may be assigned to a United States financial
institution, provided written notice is made to Contractor and such
assignment is acknowledged by Contractor. Acknowledgment will not be
withheld or unreasonably delayed by Contractor.
I.19 TERMINATION
(a) This Subcontract will expire or terminate automatically upon the
occurrence of any of the following conditions, whichever first occurs and
is subject to the applicable provisions of FAR clause 52.249-2
(Termination for Convenience of the Government (Fixed Price)):
(b) Completion of the term or work of this Subcontract;
(c) Official announcement of the termination of the Prime Contract;
(d) Written notice of termination by the Contractor in the Contractor's
best interests;
(e) Debarment or suspension of the Subcontractor by the Government;
(f) Upon completion of the Prime Contract, unless options to continue
are exercised by the Government and corresponding options are executed by
ISI with respect to this Subcontract.
I.20 INCORPORATION BY REFERENCE
The provisions of the Prime Contract, to the extent specifically identified in
the sections of this Subcontract, are applicable to this Subcontract and are
hereby incorporated by reference, subject to the modifications identified in
section I.1 of this Subcontract.
I.21 INDEMNIFICATION
Subcontractor agrees that it shall indemnify Contractor and hold Contractor
harmless against any claim for which Subcontractor is adjudged responsible, and
for related expenses as a result of the application of the terms and conditions
of this Subcontract.
I.22 CLAIMS AND DISPUTES
(a) Claims or Disputes Between the Parties Under the Subcontract.
Except with respect to claims or disputes under section (b) below, any
claim or dispute concerning questions of fact or law arising out of this
Subcontract, or to an alleged breach thereof by a party, which is not
disposed of by mutual agreement within thirty (30) calendar days after
one party has provided written notice of the claim or dispute to the
other, shall be settled by arbitration in, and in accordance with the
laws of, the Commonwealth of Virginia. Such arbitration shall be by and
in accordance with the Rules of the American Arbitration Association. The
parties shall share equally in the cost of the arbitrator(s) and the cost
of recording any arbitration proceeding. Judgment on the award rendered
by the arbitrator(s) may be entered in any court having jurisdiction
thereof. Neither party shall institute any action or proceeding against
the other party in any court with respect to any claim or dispute which
is governed by this paragraph (a). The
40
<PAGE>
decision of the arbitrator(s) shall be conclusive and final and shall be
binding on the parties unless fraudulent, arbitrary or capricious, so
grossly erroneous as to necessarily imply bad faith, or contrary to law.
(b) Claims or Disputes With the Government Under the Prime Contract.
1. All Subcontractor claims or disputes arising out of the
Government's action or failure to act under the Prime
Contract shall be governed by this paragraph (b).
2. The Contractor shall notify the Subcontractor in writing
of a Government action or failure to act and any final
decision that has an adverse impact on the Subcontractor.
Any final decision of the Contracting Officer under the
Prime Contract shall be conclusive and binding upon
Subcontractor unless appealed pursuant to this paragraph
(b).
3. In the event a final decision of the Government's
Contracting Officer has an adverse impact on the
Subcontractor, the Contractor and Subcontractor shall seek
to agree on (1) whether a claim or appeal should be filed
and the forum in which the claim or appeal should be
filed; (2) whether the Subcontractor should be sponsored
by the Contractor in filing the claim or appeal; (3)
whether there is sufficient evidence that the claim is
made in good faith, all statements in the required
certification are accurate and complete and the amount
requested accurately reflects the contract adjustment
claimed; (4) the responsibility for the prosecution of the
claim and/or appeal, the support to be provided by each
party and the responsibility for the costs and liabilities
that may be incurred; and (5) other relevant matters.
(c) Pending the final disposition of a claim or dispute pursuant to
paragraphs (a) or (b) above, the Subcontractor shall proceed diligently
with the performance of this Subcontract in accordance with the
Contractor's written direction.
(d) Any decision upon such claim or appeal pursuant to paragraph (b)
above, by a Government Board of Contract appeals, the United States Court
of Federal Claims, or other forum having jurisdiction, shall be
conclusive and final and shall be binding on the parties unless appealed
to a court having jurisdiction. A final judgment in any such appeal,
shall be conclusive and final and shall be binding on the parties.
I.23 MODIFICATIONS
No modification of any part of this Subcontract shall be binding upon the
parties hereto, or either of them, unless such is in writing and duly signed by
those authorized to sign for the respective parties.
I.24 APPLICABLE LAW
This Subcontract shall be governed by the laws of the Commonwealth of Virginia.
I.25 ORDER OF PRECEDENCE
Any inconsistency in this Subcontract shall be resolved by giving precedence in
the following order:
41
<PAGE>
(a) Articles 1 through 25 of this Subcontract.
(b) Exhibits A and B.
(c) Exhibit C.
(d) Attachments to Exhibit C.
(e) Exhibits D, E and F.
I.26 ISI PROPERTY
(a) The Subcontractor agrees that ISI shall own and have all right, title and
interest in (i) the design of the following products, (ii) the identified
software, and (iii) the related operation and maintenance manuals (hereinafter
"Unique Products"):
1. The IC Chip module and its software.
2. The OCR-B verification module and its software.
3. The RF Probe module and its software.
4. The Worm Upgrade module and its software.
5. The related operation and maintenance manuals to the modules
identified in paragraphs 1 through 4 above.
(b) The Subcontractor shall provide to ISI on request, and in any event on
termination or expiration of this Subcontract, at no cost to ISI, one complete
set of specifications, drawings, and other related records of the design of the
Unique Products, the source code of the software, and the related operation and
maintenance manuals.
(c) The Subcontractor shall not use, duplicate, disclose or sell the
aforementioned design, software or manuals or manufacture or produce, or
authorize others to manufacture or produce, the Unique Products unless ISI gives
its written consent.
I.27 SUBCONTRACTORS PRODUCTS.
Notwithstanding anything in this Subcontract to the contrary, but subject to FAR
clauses FAR 52.227-14 "Rights In Data--General (JUN 1987)" and FAR 52.227-19
"Commercial Computer Software--Restricted Rights (JUN 1987)", the Subcontractor
shall own and have all right, title and interest in (i) the design of the
products, (ii) the identified software, and (iii) the data related to the
products identified on Exhibit F hereto (collectively the "Subcontractor's
Property"). The Subcontractor's Property has not been first produced in the
performance of this Subcontract and has been developed at private expense.
SECTION J. LIST OF ATTACHMENTS AND EXHIBITS
--------------------------------
NOTE: TECHNICAL ATTACHMENTS A AND B ARE FURNISHED FOR INFORMATION PURPOSES
ONLY. THESE DOCUMENTS ARE INTENDED TO FURNISH OFFERORS WITH A GRAPHICAL
REPRESENTATION OF ISI' VISION OF THE CARDS THAT WILL BE PRODUCED USING THE
INTEGRATED CARD PRODUCTION SYSTEM. IF THERE IS A CONFLICT BEEN THE
INFORMATION PRESENTED IN SECTION C AND THE INFORMATION SHOWN ON THE
ATTACHMENTS, THE INFORMATION CONTAINED IN SECTION C SHALL TAKE PRECEDENCE.
ALL ATTACHMENTS ARE CONTAINED IN THE PRIME CONTRACT, EXHIBIT C TO THIS
SUBCONTRACT, AND ARE HEREBY INCORPORATED BY THIS REFERENCE.
42
<PAGE>
ATTACHMENTS
-----------
<TABLE>
<S> <C>
Attachment A - Table C-1, Planned Card Types/Technologies(P)
Attachment B - Planned Card Types Sketches(P)
Attachment C - Physical Layout of Planned Facilities for Integrated Card Production Systems(P)
Attachment D - INS Information Systems Descriptions(P)
</TABLE>
EXHIBITS
--------
<TABLE>
<S> <C>
Exhibit A - Pricing Tables
Exhibit B - Statement of Work/Specification
Exhibit C - Prime Contract(P)
Exhibit D - Representations, Certificates or Other Statements of
Subcontractor
Exhibit E - Subcontracting Plan (if applicable; see H.17)
Exhibit F - Subcontractor's Products (see I.27)
</TABLE>
IN WITNESS WHEREOF, the parties have executed this Subcontract.
ATTEST:
for: LAU TECHNOLOGIES for: INFORMATION SPECTRUM, INC.
/s/: ROBERT C. HUGHES /s/: MARK GREEN
------------------------------- ---------------------
Name: ROBERT C. HUGHES Name: MARK GREEN
------------------------------- ----------------------
Title: PRES.,I.D. SYSTEMS DIV., LAU Title: PRESIDENT
------------------------------ ---------------------
Date: 11/15/1995 Date: 11/28/95
------------------------------- ---------------------
(P) Paper copy on file with the Securities and Exchange Commission
43
<PAGE>
Exhibit A
Use or Disclosure of proposal data is subject to the restriction on the title
page of this proposal
ISI/INS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Unburdened
- -----------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- -----------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Site Supplier
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
100 Base System (See Attachment A for System Configuration) C.1-C.4 System 1 6
- -----------------------------------------------------------------------------------------------------------------------------------
Delivery and Installation of Base Integrated Card
- -----------------------------------------------------------------------------------------------------------------------------------
Production System at INS Bass (See Section F)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
100a Site 1 Without RF (See Attachment A for System Configuration) System 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Sandia Imaging Systems 7R Printer (2 per alts) Pair 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
(2) Vision Inspection Station Each 1 1 $143,536 Lau
- -----------------------------------------------------------------------------------------------------------------------------------
(3) LAU Technologies Stuffer/Mailer Each 1 1 $306,512 Lau
- -----------------------------------------------------------------------------------------------------------------------------------
(4) 2-D Barcode Reader Pair 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
(5a) Non-Recurring Engineering Costs Each 1 1 $758,906 Lau
- -----------------------------------------------------------------------------------------------------------------------------------
(5b) EAD Development & Certification Cards without
RF (30,000 cards) Each 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
(5c) Development & Certification Consumables (30,000 cards) Set 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
(5d) Maintenance Spares (See Note 1 at end of spreadsheet) Set 1 1 See Note 1(b) Lau
- -----------------------------------------------------------------------------------------------------------------------------------
(5e) Annual Maintenance Fee (Base Period, Includes Weekends
& Federal Holidays) C.6 Year 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
(6a) Acceptance Test Each 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
(6b) Acceptance Test Each 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
(6c) Acceptance Test Each 1 1 $81,928 Lau
- -----------------------------------------------------------------------------------------------------------------------------------
(6d) Acceptance Test Cards, Supplies & Consumables-GFE Each 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
CUN 100a Sub-Total:
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
1006 Sites 2-6 Without RF System 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Sandie Imaging Systems 7R Printer (2 per alto) Pair 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
(2) Vision Inspection Station Each 0 6 $143,635 Lau
- -----------------------------------------------------------------------------------------------------------------------------------
(3) LAU Technologies Stuffer/Mailer Each 0 6 $308,612 Lau
- -----------------------------------------------------------------------------------------------------------------------------------
(4) 2-D Barcode Reader Pair 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
(5a) EAD Development & Certification Cards without
RF (20,000 cards) Each 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
(5b) Development & Certification Consumables (20,000 cards) Set 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
(5c) Maintenance Spares (See Note 1 at end of spreadsheet) Set 0 6 See Note 1(b) Lau
- -----------------------------------------------------------------------------------------------------------------------------------
(5d) Annual Maintenance Fee (Base Period, Includes Weekends
& Federal Holidays) C.6 Year 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
(6a) Acceptance Test Each 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
(6b) Acceptance Test Each 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
(6c) Acceptance Test Each 0 6 NSP Lau
- -----------------------------------------------------------------------------------------------------------------------------------
(6d) Acceptance Test Cards, Supplies & Consumables-GFE Each 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
CUN 100c Sub-Total:
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
110 OPTION: WORM white, installed-Unit #1 C.6.3.3 Upgrade 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
(1) WORM Reader/Writer Module (4 Reader/Writers per Module) Pair 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Use or Disclosure of proposal data is subject to the restriction on the title
page of this proposal
ISI/INS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Unburdened
- ------------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Site Supplier
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
(1a) WORM Reader/Writer Module Integration Pair 0 1 $151,107 Lau
- ------------------------------------------------------------------------------------------------------------------------------------
(1b) Sandia Base Kit (Frame) and Cabinet (WORM Reader/Writer) Pair 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(1c) Technical Support for Installation of WORM Pair 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(1d) WORM Development & Certification Cards (20,000) Set 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(1e) EAD Development & Certification Cards without RF (10,000 cards) Each 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
If EAD Development & Certification Cards require RF, replace (1e)
above with (1f) below:
- ------------------------------------------------------------------------------------------------------------------------------------
(1f) EAD Development & Certification Cards with RF (10,000 cards) Set 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(1g) Development & Certification Consumables (30,000 cards) Set 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(2a) Non-Recurring Engineering Costs for WORM Encoding Module Each 0 1 $318,132 Lau
- ------------------------------------------------------------------------------------------------------------------------------------
(2b) Non-Recurring INS Required Security Upgrade Each 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(2c) Non-Recurring Test Equipment Each 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(2d) Maintenance Spares - WORM Reader/Writer (1 pair per site) Pair 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(3a) Acceptance Test & Maintenance Training Each 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(3b) Acceptance Test Each 0 1 NSP Lau
- ------------------------------------------------------------------------------------------------------------------------------------
(3c) Acceptance Test & Maintenance Training Each 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(3d) Acceptance Test Cards, Supplies & Consumables - GFE Each 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 110 Sub-Total (Excludes EAD Cards with RF, CLIN 110(1f)):
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
111 OPTION: WORM Write, installed - Units #2-#6 C.5.3.3 Upgrade 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
(1) WORM Reader/Writer Module (4 Reader/Writers per Module) Pair 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
(1a) Sandia Base Kit (Frame) and Cabinet (WORM Reader/Writer) Pair 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
(1b) Technical Support for Installation of WORM Pair 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
(1c) WORM Development & Certification Cards (15,000) Set 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
(1d) EAD Development & Certification Cards without RF (5,000 cards) Each 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
If EAD Development & Certification Cards require RF, replace (1d)
above with (1e) below:
- ------------------------------------------------------------------------------------------------------------------------------------
(1e) EAD Development & Certification Cards with RF (5,000 cards) Set 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
(1f) Development & Certification Consumables (20,000 cards) Set 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
(2) WORM Encoding Module Pair 0 6 $151,107 Lau
- ------------------------------------------------------------------------------------------------------------------------------------
(3) Maintenance Spares - WORM Reader/Writer (1 pair per site) Pair 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
(4a) Acceptance Test & Maintenance Training Each 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
(4b) Acceptance Test Each 0 6 NSP Lau
- ------------------------------------------------------------------------------------------------------------------------------------
(5) Acceptance Test Cards, Supplies & Consumables - GFE Each 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 111 Sub-Total (Excludes EAD Cards with RF, CLIN 111(1e)):
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
112 OPTION: WORM Verification, installed - Unit #1 C.5.3.3 Upgrade 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
113 OPTION: WORM Verification, installed - Units #2-#6 C.5.3.3 Upgrade 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 2
<PAGE>
Use or Disclosure of proposal data is subject to the restriction on the title
page of this proposal
ISIANS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Unburdened
- ------------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Site Supplier
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
120 OPTION: RF Tags, Installed -- Unit #1 C.5.5(a) Upgrade 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
121 OPTION: RF Tags, Installed -- Units #2-#6 C.5.5(a) Upgrade 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
122 OPTION: RF Probe/Analysis, installed --
Unit #1 C.5.5(b) Upgrade 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(1a) EAD Development & Cerfitication Cards
with RF (30,000 cards) Set 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(1b) Development & Certification
Consumables (30,000 cards) Set 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
If WORM option was previously & separately
ordered, add CLIN 122(1c) & CLIN 122(1d)
- ------------------------------------------------------------------------------------------------------------------------------------
(1c) WORM Development & Certification
Cards with RF (10,000 cards) Set 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(1d) Development & Certification Consumables
(10,000 cards) Set 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
If IC Chip option was previously &
separately ordered, add CLIN 122(1e)
& CLIN 122(1f)
- ------------------------------------------------------------------------------------------------------------------------------------
(1e) IC Chip Development & Certification
Cards with RF (10,000 cards, 8kb) Set 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(1f) Development & Certification Consumaties
(10,000 cards) Set 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(2a) RF Probe Pair 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(2b) Sandi Base Kit(Frame) and Cabinet
(RF Probe) Pair 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(2c) Maintenance Spares - RF Probe
(1 per site) Each 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(3a) Technical Support for Installation
of RF Pair 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(3b) Technical Support for Installation
of RF Pair 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(4a) Non-Recurring Engineering for RF Probe Each 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(4b) Non-Recurring Engineering for RF Probe Each 0 1 $137,116 Lau
- ------------------------------------------------------------------------------------------------------------------------------------
(4c) Non-Recurring WORM/RF Upgrade Each 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(4d) Installation of RF Probe Each 0 1 $85,812 Lau
- ------------------------------------------------------------------------------------------------------------------------------------
(5a) Acceptance Test Each 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(5b) Acceptance Test Each 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(5c) Acceptance Test Each 0 1 NSP Lau
- ------------------------------------------------------------------------------------------------------------------------------------
(5d) Acceptance Test Each 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(6) Acceptance Test Cards, Supplies &
Consumables - GFE Each 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 122 Sub-Total (Excluding Contingencies,
CLIN 122(1c), (1d), (1e), (1f), (1g)):
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
123 OPTION: RF Probe/Analysis, Installed --
Units #2-#6 C.5.5(b) Upgrade 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
(1a) EAD Development & Certification Cards
with RF (10,000 cards) Set 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
(1b) Development & Cerficiation Consumables
(10,000 cards) Set 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
If WORM option was previously & separately
ordered, add CLIN 123(1c) & CLIN 123(1d)
- ------------------------------------------------------------------------------------------------------------------------------------
(1c) WORM Development & Cerfitication
Cards with RF (5,000 cards) Set 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
(1d) Development & Certification Consumables
(5,000 cards) Set 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
If IC Chip option was previously &
separately ordered, add CLIN 123 (1e)
& CLIN 123(1f)
- ------------------------------------------------------------------------------------------------------------------------------------
(1e) IC Chip Development & Certification Cards
with RF (5,000 cards, 8kb) Set 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
(1f) Development & Certification Consumables
(5,000 cards) Set 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 3
<PAGE>
Use or Disclosure of proposal data is subject to the restriction
on the title page of this proposal
ISUNS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Unburdened
- -------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- -------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Site Supplier
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
(2a)RF Probe Pair 0 6
- -------------------------------------------------------------------------------------------------------------------------------
(2b)Sandia Base Kit (Frame) and Cabinet (RF Probe) Pair 0 6
- -------------------------------------------------------------------------------------------------------------------------------
(2c)Maintenance Spares-RF Probe(1 per site) Each 0 6
- -------------------------------------------------------------------------------------------------------------------------------
(3a)Technical Support for Installation of RF Probe Pair 0 6
- -------------------------------------------------------------------------------------------------------------------------------
(3b)Technical Support for Installation of RF Probe Each 0 6
- -------------------------------------------------------------------------------------------------------------------------------
(4)Installation of RF Probe Each 0 6 $85,912 Lau
- -------------------------------------------------------------------------------------------------------------------------------
(5a)Acceptance Test Each 0 6
- -------------------------------------------------------------------------------------------------------------------------------
(5b)Acceptance Test Each 0 6
- -------------------------------------------------------------------------------------------------------------------------------
(5c)Acceptance Test Each 0 6 NSP Lau
- -------------------------------------------------------------------------------------------------------------------------------
(5d)Acceptance Test Each 0 6
- -------------------------------------------------------------------------------------------------------------------------------
(6)Acceptance Test Cards, Suppliers & Consummables-GFE Each 0 6
- -------------------------------------------------------------------------------------------------------------------------------
CLIN 123 Sub-Total (Excluding Contingencies,
CLIN(1c),(1d),(1e),(1f)
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
130 OPTION: OCR-B Verification Upgrade, installed-Unit#1 Upgrade 0 1
- -------------------------------------------------------------------------------------------------------------------------------
(1a)WORM Development & Certification Cards with RF
(10,000 cards) Set 0 1
- -------------------------------------------------------------------------------------------------------------------------------
(1b)Development & Certification Consummables(10,000 cards) Set 0 1
- -------------------------------------------------------------------------------------------------------------------------------
If IC Chip option was previously & separately ordered,
add CLIN 130(1c) and CLIN 130(1d) 0 1
- -------------------------------------------------------------------------------------------------------------------------------
(1c)IC Chip Development & Certification Cards with RF
(3,000 cards, 8kb) Set 0 1
- -------------------------------------------------------------------------------------------------------------------------------
(1d)Development & Certification Consummables(5,000 cards) Set 0 1
- -------------------------------------------------------------------------------------------------------------------------------
(2a)OCR-B Verification Reader (Set of 2) Pair 0 1
- -------------------------------------------------------------------------------------------------------------------------------
(2b)Sandia Base Kit (Frame) and Cabinet (OCR-B) Pair 0 1
- -------------------------------------------------------------------------------------------------------------------------------
(2c)Maintenance Spares-OCR-B Render (1 per site) Each 0 1
- -------------------------------------------------------------------------------------------------------------------------------
(3a)Technical Support for Installation of OCR-B Pair 0 1
- -------------------------------------------------------------------------------------------------------------------------------
(3b)Technical Support for Installation of OCR-B Pair 0 1
- -------------------------------------------------------------------------------------------------------------------------------
(3c)Non-Recurring Engineering for OCR-B Pair 0 1 $137,116 Lau
- -------------------------------------------------------------------------------------------------------------------------------
(3d)Installation of OCR-B Pair 0 1 $86,912 Lau
- -------------------------------------------------------------------------------------------------------------------------------
(4)Acceptance Test Cards, Supplies & Consummables-GFE Each 0 1
- -------------------------------------------------------------------------------------------------------------------------------
CLIN 130 Sub-Total(Excluding Contingencies,
CLIN 130(1c),(1d):
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
131 OPTION: OCR-B Verification Upgrade, Installed--Unties #2-#6 C.5.2(e) Upgrade 0 6
- -------------------------------------------------------------------------------------------------------------------------------
(1a)WORM Development & Certification Cards with RF
(10,000 cards) Set 0 6
- -------------------------------------------------------------------------------------------------------------------------------
(1b)Development & Certification Consummables (10,000 cards) Set 0 6
- -------------------------------------------------------------------------------------------------------------------------------
If IC Chip option was previously & separately ordered,
add CLIN 131(1c)&CLIN 131(1d) 0 6
- -------------------------------------------------------------------------------------------------------------------------------
(1c)IC Chip Development & Certification Cards with RF
(5,000 cards,8kb) Set 0 6
- -------------------------------------------------------------------------------------------------------------------------------
(1d)Development & Certification Consummables (5,000 cards) Set 0 6
- -------------------------------------------------------------------------------------------------------------------------------
(2a)OCR-B Verification Reorder (Set of 2) Pair 0 6
- -------------------------------------------------------------------------------------------------------------------------------
(2b)Sandia Base KR(Frame) and Cabinet (OCR-B0) Pair 0 6
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
Use or Disclosure of proposal data is subject to the restriction on the tile
page of this proposal
ISUIS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Unburdened
- ------------------------------------------------------------------------------------------------------------------------------------
Section C Min Max Unit Price
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Site Supplier
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
(3) Maintenance Spares - OCR-B Reader
(1 per site) Each 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(3a) Technical Support for Installation of OCR-B Pair 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(3b) Technical Support for Installation of
OCR-B Pair 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(3d) Installation of OCR-B Pair 0 0 $ 55,912 Lau
- ------------------------------------------------------------------------------------------------------------------------------------
(4) Acceptance Test Cards Supplies &
Communication - GFE Each 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 131 Sub-total (Excluding Contingencies,
CLIN 131(1c), (1d)):
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
132 OPTION: Multi-Color Text Printing C.5.2(f) Upgrade 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
135 OPTION: Embedded Magnetic Stripe - Units #1-#6 C.5.3.1(b) Upgrade 1 0
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
136 OPTION: 1C Chip Write (4kb), installed -
Unit #1 (300 per hour) C.5.3.2(b) Upgrade 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(1a) 1C Chip Development & Certification Cards
with RF (10,000 cards, 4kb) Set 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(1b) EAD Development & Certification Cards with RF
(10,000 cards) Set o 1
- ------------------------------------------------------------------------------------------------------------------------------------
(2c) Development's Certification Consumables (20,000 cards) Set o 1
- ------------------------------------------------------------------------------------------------------------------------------------
(1a) If WORM option was previously &
separately ordered, add CLIN 136(1d) & CLIN
136(1e)
- ------------------------------------------------------------------------------------------------------------------------------------
(1d) WORM Development & Certification Cards
with RF (5,000 cards) Set 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(1e) Development & Certification Consumables
(5,000 cards) Set 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(2a) IC Chip Write (8 Reader/Writers 4kb)
Peripherals Pair 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(2b) ICChip/SMARTCARD Development System Each 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(2c) Sandia Base Kit (Frame) and Cabinet
(IC Chip) Pair 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(2d) Maintenance Spares - IC Chip (2 per site) Pair 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(3) Technical Support for Installation of IC Chip Each 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
(4a) Non-Recurring Engineering for IC Chip
Module Each 0 1 $263,933 Lau
- ------------------------------------------------------------------------------------------------------------------------------------
(4b) IC Chip White (8 Reader/Writers, 4kb) Module Pair 0 1 $105,547 Lau
- ------------------------------------------------------------------------------------------------------------------------------------
(5) Acceptance Test Each 0 1 NSP Lau
- ------------------------------------------------------------------------------------------------------------------------------------
(6) Acceptance Test Cards, Supplies &
Consumables - GFE Each 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 136a Sub-Total (Excluding Contingencies,
CLIN 136(1d),(1e)):
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
137 OPTION: IC Chip White (4 kb), Installed -
Unit #2-#6 (300/Hr) Upgrade 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(1a) IC Chip Development & Certification Cards with
RF (10,000 cards, 4kb) Set 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(1b) EAD Development & Certification Cards with
RF (10,000 cards) Set 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(1c) Development & Certification Consumables
(20,000 cards) Set 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
If WORM option was previously & separately ordered, add
CLIN 137(1d) & CLIN 137(1e)
- -----------------------------------------------------------------------------------------------------------------------------------
(1d) WORM Development & Certification Cards with RF
(5,000 Cards) Set 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(1e) Development & Certification Consumables
(5,000 cards) Set 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(2a) Chip Write (6 Reader/Writers, 4kb) peripherals Set 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
Use or Disclosure of proposal data Is subject to the restriction on the title
page of this proposal
ISI/INS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Unburdened
- -----------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- -----------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Site Supplier
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
(2b) IChip/SMARTCARD Development System Each 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(2c) Sandia Base Kit (Frame) and Cabinet (IC CHIP) Pair 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(2d) Maintenance Spares - IC CHIP (2 per site) Pair 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(3) Technical Support for Installation of IC CHIP Each 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(4) IC Chip White (6 Reader/Writers, 4kb) Module Pair 0 0 $165,647 LAU
- -----------------------------------------------------------------------------------------------------------------------------------
(5) Acceptance Test Each 0 0 NSP LAU
- -----------------------------------------------------------------------------------------------------------------------------------
(6) Acceptance Test Cards, Supplies & Consumables-
GFE Each 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
CLIN 137a Sub-Total (Excluding Contingencies,
CLIN 137(1d), (1e)):
- -----------------------------------------------------------------------------------------------------------------------------------
138 OPTION: IC Chip Verification (4kb), installed-
Unit #1 C.5.3.2(c) 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
139 OPTION: IC Chip Verification (4kb), installed
Units #2,-#6 C.5.3.2(c) Upgrade 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
140 OPTION: IC Chip Write (8kb), Installed - Unit
#1 (300 per hour) C.5.3.2(b) Upgrade 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
(1a) IC CHIP Development & Certification Cards
with RF (10,000 cards, 8kb) Set 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
(1b) EAD Development & Certification Cards
with RF (10,000 cards) Set 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
(1c) Development & Certification Consumables
(20,000 cards) Set 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
If WORM option was previously & seperately ordered,
add CLIN 140(1d) & CLIN 140(1e)
- -----------------------------------------------------------------------------------------------------------------------------------
(1d) WORM Development & Certification Cards with
RF (5,000 cards) Set 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
(1e) Development & Certification Consumables
(5,000 cards) Set 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
(2a) IC Chip Write (6 Reader/Writers, 8kb)
Peripherals Pair 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
(2b) IC Chip/SMARTCARD Development System Each 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
(2c) Sandia Base Kit (Frame) and Cabinet (IC Chip) Pair 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
(2d) Maintenance Spares - IC Chip (2 per site) Pair 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
(3) Technical Support for Installation of IC Chip Each 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
(4a) Non-Recurring Engineering for IC Chip Module Each 0 1 $263,933 Lau
- -----------------------------------------------------------------------------------------------------------------------------------
(4b) IC Chip Write (6 Reader/Writers, 8kb) Module Pair 0 1 $165,547 Lau
- -----------------------------------------------------------------------------------------------------------------------------------
(5) Acceptance Test Each 0 1 NSP Lau
- -----------------------------------------------------------------------------------------------------------------------------------
(6) Acceptance Test Cards, Supplies & Consumables
GFE Each 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
CLIN 140a Sub-Total (Excluding Contingencies,
CLIN 140(1d), (1e)):
- -----------------------------------------------------------------------------------------------------------------------------------
141 OPTION: IC Chip White (8kb), Installed- Unit
#2 - #5 (300/HR) 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(1a) IC Chip Development & Certification Cards
with RF (10,000 cards, 8kb) Set 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(1b) EAD Development & Certification Cards
with RF (10,000 cards) Set 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(1c) Development & Certification Consumables
(20,000 cards) Set 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
If WORM option was previously & seperately ordered,
add CLIN 141(1d) & CLIN 141(1e)
- -----------------------------------------------------------------------------------------------------------------------------------
(1d) WORM Development & Certification Cards with RF
(5,000 cards) Set 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(1d) Development & Certification Consumables
(5,000 cards) Set 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
Use or Disclosure of proposal data is subject to the restriction on the
title page of this proposal
ISI/INS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Unburdened
- -----------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- -----------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Site
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(2a) IC Chip Write (6 Reader/Writers, 8kb) Peripherals Pair 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
(2b) IC Chip/SMARTCARD Developers System Each 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
(2c) Sandia Base Kit (Frame) and Cabinet (IC Chip) Pair 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
(2d) Maintenance Spares - IC Chip (2 per site) Pair 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
(3a) Technical Support for Installation of IC Chip Each 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
(3b) IC Chip Write (6 Reader/Writers, 8kb) Module Pair 0 6 $165,547
- -----------------------------------------------------------------------------------------------------------------------------------
(4) Program Support Each 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
(5) Acceptance Test Each 0 6 NSP
- -----------------------------------------------------------------------------------------------------------------------------------
(6) Acceptance Test Cards, Supplies & Consumables - GFE Each 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
CLIN 141a Sub-Total (Excluding Contingencies, CLIN 141(1d), (1e)):
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
142 OPTION: IC Chip Verification (8kb), installed - Unit #1 C.5.3.2(d) Upgrade 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
143 OPTION: IC Chip Verification (8kb), installed - Units #2-#6 C.5.3.2(d) Upgrade 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
150 OPTION: Tracking Information - Inventory Control of Blanks C.A.3.1.2(d) Upgrade 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
151 OPTION: Tracking Information - Failed Card Count C.A.3.1.2(e) Upgrade 1 6
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
155 OPTION: Microline Printing C.5.A.1.A Upgrade 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
156 OPTION: Mailer - Seal Envelopes C.2.3(d)(4) Upgrade 1 6
- -----------------------------------------------------------------------------------------------------------------------------------
157 OPTION: Mailer - Stamp Envelopes (Postal Meter) C.2.3(d)(5) Upgrade 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
160 System Documentation:
- -----------------------------------------------------------------------------------------------------------------------------------
161a Operator's Manual - Set #1 C.12 Manual 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Non-Recurring Documentation Development Each 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
(2) Reproduction Each 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
(3) Acquisition of Suppliers Manuals Each 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
161b Operator's Manual - Set #2 - #10 Manual 0 9
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Reproduction Each 0 9
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
162a Maintenance Manual - Set #1 C.12 Manual 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Non-Recurring Documentation Development Each 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
(2) Reproduction Each 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
(3) Acquisition of Suppliers Manuals Each 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
162b Maintenance Manual - Set #2 - #10 Manual 0 9
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 7
<PAGE>
Use or Disclosure of proposal data is subject to the restriction on the title
page of this proposal
ISI/INS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Unburdened
- -----------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- -----------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Site Supplier
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
(1)Reproduction Each 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
163a Software Manual - Set #1 C.12 Manual 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
(1)Non-Recurring Documentation Development Each 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
(2)Reproduction Each 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
(3)Acquisition of Suppliers Manuals Each 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
163b Software Manual - Set #2-#10 Manual 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
(1)Reproduction Each 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
200 Installation of RF Manufacturing Test Equipment (Necessary for the manufacture Each 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
of EAD and INSPASS substrate (cards) containing an RF core, refer to
- -----------------------------------------------------------------------------------------------------------------------------------
CLINS 231a, 234b, 234d, 242a, 245b, and 245d)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
201 Non-Recurring Facility Modifications & Re-Tooling (Necessary for the Each 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
manufacture of ARC and BCC substrate (cards). Refer to CLINs 232,
- -----------------------------------------------------------------------------------------------------------------------------------
232a, 232b, 232c, 233, 233a, 233b, and 233c.
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Supplies/Consummation:
- -----------------------------------------------------------------------------------------------------------------------------------
200 Substrate (per 10,000 cards) C.5.4.1 N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
201 Substrate with Magnetic Strips for EAD Cards C.5.4.1 Lot 1 140
- -----------------------------------------------------------------------------------------------------------------------------------
201a Substrate with Magnetic Strips for EAD Cards with RF Capability C.5.4.1 Lot 0 140
- -----------------------------------------------------------------------------------------------------------------------------------
202 OPTION: Substrate with WORM for BCCs C.5.4.1 Lot 0 140
- -----------------------------------------------------------------------------------------------------------------------------------
202a Substrate with WORM for BCCs with RF Capability C.5.4.1 Lot 0 140
- -----------------------------------------------------------------------------------------------------------------------------------
202b Substrate with WORM for BCC's with Microfine Printing on Front Surface C.5.4.1 Lot 0 140
- -----------------------------------------------------------------------------------------------------------------------------------
202c Substrate with WORM for BCC's with RF and Microfine Printing on Front Surface C.5.4.1 Lot 0 140
- -----------------------------------------------------------------------------------------------------------------------------------
203 OPTION: Substrate with WORM for ARCs C.5.4.1 Lot 0 140
- -----------------------------------------------------------------------------------------------------------------------------------
203a Substrate with WORM for ARCs with RF Capability C.5.4.1 Lot 0 140
- -----------------------------------------------------------------------------------------------------------------------------------
203b Substrate with WORM for ARC's with Microfine Printing on Front Surface C.5.4.1 Lot 0 140
- -----------------------------------------------------------------------------------------------------------------------------------
203c Substrate with WORM for ARC's with RF and Microfine Printing on Front Surface C.5.4.1 Lot 0 140
- -----------------------------------------------------------------------------------------------------------------------------------
204a OPTION: Card with IC Chip (4kb) for INSPASS Cards without RF C.5.4.1 Lot 0 140
- -----------------------------------------------------------------------------------------------------------------------------------
204b Card with IC Chip (4kb) for INSPASS Cards with RF C.5.4.1 Lot 0 140
- -----------------------------------------------------------------------------------------------------------------------------------
204c OPTION: Card with IC Chip (8kb) for INSPASS Cards without RF C.5.4.1 Lot 0 140
- -----------------------------------------------------------------------------------------------------------------------------------
204d Card with IC Chip (8kb) for INSPASS Cards with RF C.5.4.1 Lot 0 140
- -----------------------------------------------------------------------------------------------------------------------------------
205 DELETED
- -----------------------------------------------------------------------------------------------------------------------------------
CLIN 200 thru 206 Sub-total
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 8
<PAGE>
Use or Disclosure of proposal data is subject to the restriction on the title
page of this proposal
ISUINS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Unburdened
- -----------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- -----------------------------------------------------------------------------------------------------------------------------------
CUN Description Reference Unit Qty. Qty. Per Site Supplier
<C> <S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
210 Substrate (per 100,000 cards) C.5.4.1 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
211 Substrate with Magnetic Stripe for EAD Cards C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
211a Substrate with Magnetic Stripe for EAD Cards with RF Capability C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
212 OPTION: Substrate with WORM for BCCs C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
212a Substrate with WORM for BCCs with RF Capability C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
212b Substrate with WORM for BCCs with Microline Printing on Front
Surface C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
212c Substrate with WORM for BCCs with RF and Miroline Printing
on Front Surface C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
213 OPTION: Substrate with WORM for ARCs C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
213a Substrate with WORM for ARCs with RF Capability C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
213b Substrate with WORM for ARCs with Microline Printing on Front
Surface C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
213c Substrate with WORM for ARCs with RF and Microline Printing
on Front Surface C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
214a OPTION: Card with 1C Chip (4kb) for INSPASS Cards without RF C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
214b Card with 1C Chip (4kb) for INSPASS Cards without RF C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
214c OPTION: Card with 1C Chip (8kb) for INSPASS Cards without RF C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
214d Card with 1C Chip (8kb) for INSPASS Cards without RF C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
215 DELETED
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 210 thru 215 Sub-Total
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
*220 Substrate (per 500,000 cards) C.5.4.1 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
*221 Substrate with Magnetic Stripe for EAD Cards C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*221a add to EAD: RF Capability C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*222 OPTION: Substrate with WORM for BCCs C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*222a Substrate with WORM for BCCs with RF Capability C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*222b Substrate with WORM for BCCs with Microline Printing on Front
Surface C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*222c Substrate with WORM for BCCs with RF and Microline Printing on
Front Surface C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*223 OPTION: Substrate with WORM for ARCs C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*223a Substrate with WORM for ARCs with RF Capability C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*223b Substrate with WORM for ARCs with Microline Printing on
Front Surface C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*223c Substrate with WORM for ARCs with RF and Microline Printing
on Front Surface C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*224a OPTION: Card with IC Chip (4kb) for INSPASS Cards without RF C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*224b Card with IC Chip (4kb) for INSPASS Cards without RF C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*224c OPTION: Card with IC Chip (8kb) for INSPASS Cards without RF C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*224d Card with IC Chip (8kb) for INSPASS Cards without RF C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
225 DELETED
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 220 thru 225 Sub-Total:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Note: Please refer to Exhibit A credited INS Card Pricing-
Quick Reference for
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 9
<PAGE>
Use or Disclosure of proposal data is subject to the restriction on the
title page of this proposal
ISI/INS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Unburdened
- ------------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Site Supplier
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
WORM (OMC) Based Cards for discounts on cumulative production
- ------------------------------------------------------------------------------------------------------------------------------------
orders. This pricing offers INS significant savings on cumulative
- ------------------------------------------------------------------------------------------------------------------------------------
orders of 1 Million or more OMC Cards with staggered delivery.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
*230 Substrate (per 1,000,000 cards) C.5.4.1 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
*231 Substrate with Magnetic Stripe for EAD Cards C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*231a Substrate with Magnetic Stripe for EAD Cards with RF Capability C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*232 OPTION: Substrate with WORM for BCC's C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*232a Substrate with WORM for BCC's with RF Capability C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*232b Substrate with WORM for BCC's with Microline Printing on Front
Surface C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*232c Substrate with WORM for BCC's with RF and Microline Printing on
Front Surface C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*233 OPTION: Substrate with WORM for ARC's C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*233a Substrate with WORM for ARC's with RF Capability C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*233b Substrate with WORM for ARC's with Microline Printing on Front
Surface C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*233c Substrate with WORM for ARC's with RF and Microline Printing on
Front Surface C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*234a OPTION: Card with IC Chip (4kb) for INSPASS Cards without RF C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*234b Card with IC Chip (4kb) for INSPASS Cards with RF C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*234c OPTION: Card with IC Chip (8kb) for INSPASS Cards without RF C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
*234d Card with IC Chip (8kb) for INSPASS Cards with RF C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
235 DELETED
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 230 thru 235 Sub-Total:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Note: Without the prior coordination and mutual agreement of the
- ------------------------------------------------------------------------------------------------------------------------------------
parties, these prices require the delivery of no more than:
- ------------------------------------------------------------------------------------------------------------------------------------
(i) 250,000 items within the first 60 day period of the first order
- ------------------------------------------------------------------------------------------------------------------------------------
for these items, (ii) 300,000 items each 30 day period within the
- ------------------------------------------------------------------------------------------------------------------------------------
next 90 day period or, (iii) thereafter require the delivery of an
- ------------------------------------------------------------------------------------------------------------------------------------
incremental increase of no more than 50,000 items over the
- ------------------------------------------------------------------------------------------------------------------------------------
immediately preceding 30 day period (CLIN 220 thru CLIN 234d).
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Note: Please refer to Exhibit A entitled INS Card Pricing - Quick
- ------------------------------------------------------------------------------------------------------------------------------------
Reference for WORM (OMC) Based Cards for discounts on cumulative
- ------------------------------------------------------------------------------------------------------------------------------------
production orders. This pricing offers INS significant savings on
- ------------------------------------------------------------------------------------------------------------------------------------
cumulative orders of 1 Million or more OMC Cards with staggered
- ------------------------------------------------------------------------------------------------------------------------------------
delivery.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
**236 Substrate (per 500,000 cards) C.5.4.1 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
**237 Substrate with Magnetic Stripe for EAD Cards C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**237a add to EAD: RF Capability C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**238 OPTION: Substrate with WORM for BCC's C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 10
<PAGE>
Use or Disclosure of proposal data is subject to the restriction on the title
page of this proposal
ISI/INS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Unburdened
- ------------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Sale Supplier
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
**238a Substrate with WORM for BCCs with RF Capability C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**238b Substrate with WORM for BCCs with Microline Printing on Front Surface C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**238c Substrate with WORM for BCCs with RF and Microline Printing on Front
Surface C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**239 OPTION: Substrate with WORM for ARCs C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**239a Substrate with WORM for ARCs with RF Capability C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**239b Substrate with WORM for ARCs with Microline Printing on Front Surface C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**239c Substrate with WORM for ARCs with RF and Microline Printing on Front
Surface C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**240a OPTION: Card with IC Chip (4kb) for INSPASS Cards without RF C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**240b Cards with IC Chip (4kb) for INSPASS Cards with RF C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**240c OPTION: Card with IC Chip (8kb) for INSPASS Cards without RF C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**240d Card with IC Chip (8kb) for INSPASS Cards with RF C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 236 thru 240d Sub-Total:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Note: Please refer to Exhibit A entitled INS Card Pricing-Quick
- ------------------------------------------------------------------------------------------------------------------------------------
Reference for WORM (OMC) Based Cards for discounts on cumulative
- ------------------------------------------------------------------------------------------------------------------------------------
production orders. This pricing offers INS significant savings on
- ------------------------------------------------------------------------------------------------------------------------------------
cumulative orders of 1 Million or more OMC Cards with staggered
- ------------------------------------------------------------------------------------------------------------------------------------
delivery.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
**241 Substrate (per 1,000,000 cents) C.5.4.1 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
**242 Substrate with Magnetic Stripe for EAD Cards C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**242a Substrate with Magnetic Stripe for EAD Cards with RF Capability C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**243 OPTION: Substrate with WORM for BCCs C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**243a Substrate with WORM for BCCs with RF Capability C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**243b Substrate with WORM for BCCs with Microline Printing on Front Surface C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**243c Substrate with WORM for BCCs with RF and Microline Printing on Front
Surface C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**244 OPTION: Substrate with WORM for ARCs C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**244a Substrate with WORM for ARCs with RF Capability C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**244b Substrate with WORM for ARCs with Microline Printing on Front Surface C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**244c Substrate with WORM for ARCs with RF and Microline Printing on Front
Surface C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**245a OPTION: Card with IC Chip (4kb) for INSPASS Cards without RF C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**245b Card with IC Chip (4kb) for INSPASS Cards with RF C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**245c OPTION: Card with IC Chip (8kb) for INSPASS Cards without RF C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
**245d Card with IC Chip (8kb) for INSPASS Cards with RF C.5.4.1 Lot 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 241 thru 245d Sub-Total
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
** Note: These prices are the result of the requirement to deliver more
- ------------------------------------------------------------------------------------------------------------------------------------
than (i) 250,000 items within the first 60 day period of the first
- ------------------------------------------------------------------------------------------------------------------------------------
order for these forms, (ii) 300,000 items any 30 day
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 11
<PAGE>
Use or Disclosure of proposal data is subject to the restriction on the title
page of this proposal
ISI/INS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
period within the next 90 day period, or (iii) thereafter require the delivery of an incremental
increase of more than 50,000 items over the immediately preceding 30 day period,
(CLIN 236 through CLIN 245d)
- ------------------------------------------------------------------------------------------------------------------------------------
Unburdened
- ------------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Site Supplier
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
250 PVC (per 10,000 cards) N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
251 Inner Write Layer (plain) C.6.4.1 Lot 1 140
- ------------------------------------------------------------------------------------------------------------------------------------
252 Inner Write Layer for EAD C.5.4.1 Lot 1 140
- ------------------------------------------------------------------------------------------------------------------------------------
253 OPTION: Inner Write Layer for RCC C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
254 OPTION: Inner Write Layer for ARC C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
255 OPTION: Inner Write Layer for INSPASS C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
256 OPTION: RF Capability/Layer C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
257 OPTION: Microline Printing Capability C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
260 PVC (per 100,000 cards) N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
261 Inner Write Layer (plain) C.6.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
262 Inner Write Layer for EAD C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
263 OPTION: Inner Write Layer for RCC C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
264 OPTION: Inner Write Layer for ARC C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
265 OPTION: Inner Write Layer for INSPASS C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
266 OPTION: RF Capability/Layer C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
267 OPTION: Microline Printing Capability C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
270 PVC (per 500,000 cards) N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
271 Inner Write Layer (plain) C.6.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
272 Inner Write Layer for EAD C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
273 OPTION: Inner Write Layer for RCC C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
274 OPTION: Inner Write Layer for ARC C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
275 OPTION: Inner Write Layer for INSPASS C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
276 OPTION: RF Capability/Layer C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
277 OPTION: Microline Printing Capability C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
280 PVC (per 1,000,000 cards) N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
281 Inner Write Layer (plain) C.6.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
282 Inner Write Layer for EAD C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
283 OPTION: Inner Write Layer for RCC C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
284 OPTION: Inner Write Layer for ARC C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
285 OPTION: Inner Write Layer for INSPASS C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 12
<PAGE>
Use or Disclosure of proposal data is subject to the restriction on the title
page of this proposal
ISI/INS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Unburdened
- ------------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Site Supplier
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
286 OPTION: RF Capability/Layer C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
287 OPTION: Microline Printing Capability C.6.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
300 Hologram Development -- (one-time charge) C.5.4.1 Hologram 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
310 Hologram Laminate (per 10,000 cards) C.5.4.1 Lot 1 140
- ------------------------------------------------------------------------------------------------------------------------------------
311 Hologram Laminate (per 100,000 cards) C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
312 Hologram Laminate (per 500,000 cards) C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
313 Hologram Laminate (per 1,000,000 cards) C.5.4.1 Lot 1 140
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 310 thru 313 Sub-Total:
- ------------------------------------------------------------------------------------------------------------------------------------
350 Plain Laminate (10,000 cards) C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
351 Plain Laminate (100,000 cards) C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
352 Plain Laminate (500,000 cards) C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
353 Plain Laminate (1,000,000 cards) C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
354 Plain Laminate (2,000 images per roll) C.5.4.1
- ------------------------------------------------------------------------------------------------------------------------------------
354a 2,000-100,000 images - Overlay (1-50 Rolls) C.5.4.1 Roll 0 100
- ------------------------------------------------------------------------------------------------------------------------------------
354b 102,000-200,000 images - Overlay (51-100 Rolls) C.5.4.1 Roll 0 200
- ------------------------------------------------------------------------------------------------------------------------------------
354c 202,000-1,000,000 images - Overlay (101-500 Rolls) C.5.4.1 Roll 0 1,000
- ------------------------------------------------------------------------------------------------------------------------------------
354d 1,002,000-2,000,000 images - Overlay (501-1000 Rolls) C.5.4.1 Roll 0 2,000
- ------------------------------------------------------------------------------------------------------------------------------------
354e 2,002,000-3,000,000 images - Overlay (1001-1500 Rolls) C.5.4.1 Roll 0 3,000
- ------------------------------------------------------------------------------------------------------------------------------------
354f 3,002,000-5,000,000 images - Overlay (1501+Rolls) C.5.4.1 Roll 0 70,000
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 354a thru 354f Sub-Total:
- ------------------------------------------------------------------------------------------------------------------------------------
400 Color Dye Ribbon (10,000 cards, 10,000-1,400,000 images) C.5.4.1 Lot 1 140
- ------------------------------------------------------------------------------------------------------------------------------------
401 Color Dye Ribbon (100,000 cards, 100,000-14,000,000 images) C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
402 Color Dye Ribbon (500,000 cards, 500,000-70,000,000 images) C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
403 Color Dye Ribbon (1,000,000 cards, 1,000,000-140,000,000 images) C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
404 Color Dye Ribbon - Yellow
- ------------------------------------------------------------------------------------------------------------------------------------
404a 10,000-100,000 images - Yellow (5-50 Rolls) C.5.4.1 Roll 5 100
- ------------------------------------------------------------------------------------------------------------------------------------
404b 102,000-200,000 images - Yellow (51-100 Rolls) C.5.4.1 Roll 0 200
- ------------------------------------------------------------------------------------------------------------------------------------
404c 202,000-1,000,000 images - Yellow (101-500 Rolls) C.5.4.1 Roll 0 1,000
- ------------------------------------------------------------------------------------------------------------------------------------
404d 1,002,000-2,000,000 images - Yellow (501-1000 Rolls) C.5.4.1 Roll 0 2,000
- ------------------------------------------------------------------------------------------------------------------------------------
404e 2,002,000-3,000,000 images - Yellow (1001-1500 Rolls) C.5.4.1 Roll 0 3,000
- ------------------------------------------------------------------------------------------------------------------------------------
404f 3,002,000+ images - Yellow (1501+ Rolls) C.5.4.1 Roll 0 70,000
- ------------------------------------------------------------------------------------------------------------------------------------
405 Color Dye Ribbon - Magenta
- ------------------------------------------------------------------------------------------------------------------------------------
405a 10,000-100,000 images - Magenta (5-50 Rolls) C.5.4.1 Roll 5 100
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 13
<PAGE>
Use or disclosure of proposal data is subject to the restriction on the
title page of this proposal
USI/INS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Unburdened
Section C Min. Max Unit Price
CLIN Description Reference Unit Qty Qty Per Site Supplier
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
405b 102,000-200,000 Images - Magenta (51-100 Rolls) C.5.4.1 Roll 0 200
- ------------------------------------------------------------------------------------------------------------------------------------
405c 202,000-1,000,000 Images - Magenta (101-500 Rolls) C.5.4.1 Roll 0 1,000
- ------------------------------------------------------------------------------------------------------------------------------------
405d 1,002,000-2,000,000 Images - Magenta (501-1000 Rolls) C.5.4.1 Roll 0 2,000
- ------------------------------------------------------------------------------------------------------------------------------------
405e 2,002,000-3,000,000 Images - Magenta (1001-1500 Rolls) C.5.4.1 Roll 0 3,000
- ------------------------------------------------------------------------------------------------------------------------------------
405f 3,002,000 Images-Magenta (1501 + Rolls) C.5.4.1 Roll 0 70,000
- ------------------------------------------------------------------------------------------------------------------------------------
406 Color Dye Ribbon - Cyan
- ------------------------------------------------------------------------------------------------------------------------------------
406a 10,000-100,000 Images - Cyan (1-50 Rolls) C.5.4.1 Roll 0 100
- ------------------------------------------------------------------------------------------------------------------------------------
406b 102,000-200,000 Images - Cyan (51-100 Rolls) C.5.4.1 Roll 0 200
- ------------------------------------------------------------------------------------------------------------------------------------
406c 202,000-1,000,000 Images - Cyan (101-600 Rolls) C.5.4.1 Roll 0 1,000
- ------------------------------------------------------------------------------------------------------------------------------------
406d 1,002,000-2,000,000 Images - Cyan (501-1000 Rolls) C.5.4.1 Roll 0 2,000
- ------------------------------------------------------------------------------------------------------------------------------------
406e 2,002,00-3,000,000 Images - Cyan (1001-1500 Rolls) C.5.4.1 Roll 0 3,000
- ------------------------------------------------------------------------------------------------------------------------------------
406f 3,002,000 + Images - Cyan (1501 Rolls) C.5.4.1 Roll 0 70,000
- ------------------------------------------------------------------------------------------------------------------------------------
Shipping and Insurance on CLIN 350 through CLIN 406f
included in prices shown
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 404a thru 406f Sub-Total
- ------------------------------------------------------------------------------------------------------------------------------------
500 Inks (per 10,000 cards) C.5.4.1 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
501 R Ink C.5.4.1 Lot 1 140
- ------------------------------------------------------------------------------------------------------------------------------------
502 UV Ink C.5.4.1 Lot 1 140
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
510 Inks (per 100,000 cards) C.5.4.1 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
511 IR Ink C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
512 UV Ink C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
520 Inks (per 500,000 cards) C.5.4.1 N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
521 IR Ink C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
522 UV Ink C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
530 Ink (per 1,000,000 cards) C.5.4.1 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
531 Ink C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
532 UV Ink C.5.4.1 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
600 Mailing Supplies (per 10,000 cards) C.2.3 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
601 Mailer Inserts C.2.3 Lot 1 140
- ------------------------------------------------------------------------------------------------------------------------------------
602 Window Envelopes C.2.3 Lot 1 140
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
610 Mailing Supplies (per 100,000 cards) C.2.3 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
611 Mailer Inserts C.2.3 Lot 0 140
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 14
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Unburdened
- -----------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- -----------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Site Supplier
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
612 Window Envelopes C.2.3 Lot 0 140
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
620 Mailing Supplies (per 500,000 cards) C.2.3 N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
621 Mailer Inserts C.2.3 Lot 0 140
- -----------------------------------------------------------------------------------------------------------------------------------
622 Window Envelopes C.2.3 Lot 0 140
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
630 Mailing Supplies (per 1,000,000 cards) C.2.3 N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
631 Mailer Inserts C.2.3 Lot 0 140
- -----------------------------------------------------------------------------------------------------------------------------------
632 Window Envelopes C.2.3 Lot 0 140
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
700 Carbon Ribbon for OCR-B (per 10,000 cards) Ribbon 1 500
- -----------------------------------------------------------------------------------------------------------------------------------
701 Carbon Ribbon for OCR-B (per 100,000 cards) Ribbon 0 500
- -----------------------------------------------------------------------------------------------------------------------------------
702 Carbon Ribbon for OCR-B (per 500,000 cards) Ribbon 0 500
- -----------------------------------------------------------------------------------------------------------------------------------
703 Carbon Ribbon for OCR-B (per 1,000,000 cards) Ribbon 0 500
- -----------------------------------------------------------------------------------------------------------------------------------
704a Carbon Ribbon for OCR-B (10,000-100,000 cards,
5-50 Rolls) Roll 5 100
- -----------------------------------------------------------------------------------------------------------------------------------
704b Carbon Ribbon for OCR-B (102,000-200,000 cards,
51-100 Rolls) Roll 0 200
- -----------------------------------------------------------------------------------------------------------------------------------
704c Carbon Ribbon for OCR-B (202,000-1,000,000 cards,
101-500 Rolls) Roll 0 1,000
- -----------------------------------------------------------------------------------------------------------------------------------
704d Carbon Ribbon for OCR-B (1,002,000-2,000,000 cards,
501-1000 Rolls) Roll 0 2,000
- -----------------------------------------------------------------------------------------------------------------------------------
704e Carbon Ribbon for OCR-B (2,002,000-3,000,000 cards,
1001-1500 Rolls) Roll 0 3,000
- -----------------------------------------------------------------------------------------------------------------------------------
704f Carbon Ribbon for OCR-B (3,002,000+ cards, 1501+ Rolls) Roll 0 70,000
- -----------------------------------------------------------------------------------------------------------------------------------
704g Shipping and Insurance on CLIN 700 through CLIN 704f
included in prices shown
- -----------------------------------------------------------------------------------------------------------------------------------
CLIN 704e thru 704g Sub-Total:
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
750 Cleaning Tape for Card Production System Tape 1 500
- -----------------------------------------------------------------------------------------------------------------------------------
751 Cleaning Roller for Card Production System Roller 1 500
- -----------------------------------------------------------------------------------------------------------------------------------
752 Print Heads for Card Production Systems Print Head 1 500
- -----------------------------------------------------------------------------------------------------------------------------------
CLIN 750 thru 752 Sub-Total:
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
800 Card Readers: C.11 N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
801 OCR-B Reader Including Video Display Unit C.11 N/A 4 150
- -----------------------------------------------------------------------------------------------------------------------------------
801a OCR-B Reader Including Video Display Unit (Quantity 1-9) C.11 Each 4 16
- -----------------------------------------------------------------------------------------------------------------------------------
801b OCR-B Reader Including Video Display Unit
(Quantity 10-19) C.11 Each 0 35
- -----------------------------------------------------------------------------------------------------------------------------------
801c OCR-B Reader Including Video Display Unit
(Quantity 20-29) C.11 Each 0 68
- -----------------------------------------------------------------------------------------------------------------------------------
801d OCR-B Reader Including Video Display Unit
(Quantity 30-39) C.11 Each 0 78
- -----------------------------------------------------------------------------------------------------------------------------------
801e OCR-B Reader Including Video Display Unit
(Quantity 40-49) C.11 Each 0 96
- -----------------------------------------------------------------------------------------------------------------------------------
801f OCR-B Reader Including Video Display Unit (Quantity 50+) C.11 Each 0 150
- -----------------------------------------------------------------------------------------------------------------------------------
802a Point-of-Sale Reader with TTL Interface (Quantity 1-150) C.11 Each 4 150
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 15
<PAGE>
Use or Disclosure of proposal data is subject to the restriction on the title
page of this proposal
ISI/INS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Unburdened
- ------------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Site Supplier
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
802b Point-of-Sale Reader with RS-232 Interface C.11 Each 0 150
- ------------------------------------------------------------------------------------------------------------------------------------
803 WORM Reader C.11 Each 4 150
- ------------------------------------------------------------------------------------------------------------------------------------
804 IC Chip Reader C.11 Each 4 150
- ------------------------------------------------------------------------------------------------------------------------------------
805a RF Reader - With ABA Telephone Modem, 120VAC C.11 Each 0 100
- ------------------------------------------------------------------------------------------------------------------------------------
805b RF Reader - 805a + Cellular Phone, Smart Card Reader & 12VDC C.11 Each 0 100
- ------------------------------------------------------------------------------------------------------------------------------------
805c RF Reader - 805b + Battery Operation & Sealed C.11 Each 0 100
- ------------------------------------------------------------------------------------------------------------------------------------
806 2-D Barcode Reader C.11 Each 0 150
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 801a thru 806 Sub-Total:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
900 Card Counter N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
900a Card Counter Quantity 1-3 N/A Each 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
900b Card Counter Quantity 4-6 N/A Each 0 12
- ------------------------------------------------------------------------------------------------------------------------------------
900c Card Counter Quantity 7-10 N/A Each 0 20
- ------------------------------------------------------------------------------------------------------------------------------------
900d Card Counter Quantity 11+ N/A Each 0 30
- ------------------------------------------------------------------------------------------------------------------------------------
901 Storage Safe N/A Each 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
902 Humidity/Temperature Recorder N/A Each 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1000 Training - Only available if CLINS 151a, 152a & 163a are purchased N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
1001 System Operation at INS Site C.13 Course 1 10
- ------------------------------------------------------------------------------------------------------------------------------------
1002 System Maintenance at INS Site C.13 Course 1 10
- ------------------------------------------------------------------------------------------------------------------------------------
1003 Other (List) at INS Site C.13 Course 0 10
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1010 OPTION: System Operation at Contractor Site C.13 Course 0 10
- ------------------------------------------------------------------------------------------------------------------------------------
1011 OPTION: System Maintenance at Contractor Site C.13 Course 0 10
- ------------------------------------------------------------------------------------------------------------------------------------
1012 OPTION: Other (List) at Contractor Site C.13 Course 0 10
- ------------------------------------------------------------------------------------------------------------------------------------
Note: CLINs 1010 & 1011 require ICPS at Contractor Site (i.e. CLIN 6000)
- ------------------------------------------------------------------------------------------------------------------------------------
Note: CLINs 1010 & 1011 include $1,095 for classroom/office support at Lau Lau
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
2000 Consultant Service - OPTION N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
2001 OPTION: Software Engineer C.10 Hour 0 9000
- ------------------------------------------------------------------------------------------------------------------------------------
2002 OPTION: Hardware Engineer C.10 Hour 0 9000
- ------------------------------------------------------------------------------------------------------------------------------------
2003 OPTION: Technician C.10 Hour 0 9000
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
3000 Maintenance Services - OPTION C.8 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
3001 Annual Maintenance Fee - Option 1 (Year 2) C.8 Year 0 4
- ------------------------------------------------------------------------------------------------------------------------------------
3001a Annual Maintenance Fee - Includes Weekends & Federal Holidays (per site) C.8 Site 0 4
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - VIS, Combiner, Mailer/Supplier with Spare Parts
(per site) Site 0 4 $48,544 Lau
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 16
<PAGE>
Use or Disclosure of proposal data is subject to the restriction on the
title page of this proposal
ISUINS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Unburdened
- ------------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Site Supplier
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C>
Note: The above price is good for Lincoln, NE; Dallas, TX;
- ------------------------------------------------------------------------------------------------------------------------------------
Laguna Miguel, CA; and Acton, MA. For St. Albans, VT and other
- ------------------------------------------------------------------------------------------------------------------------------------
non-specified sites add $19,192 (Burdened).
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - SIS Multistation (per site) Site 0 4
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - 2D Barcode for ICPS (per site) Site 0 4
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - 2D Barcode for Field Readers & Q/A Station
(per unit) Unit 0 79
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - ICPS RF Probe (per unit) Unit 0 12
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - RF Field Reader (805A) & Q/A Station
(per unit) Unit 0 54
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - RF Field Reader (805B) (per unit) Unit 0 50
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - RF Field Reader (805C) (per unit) Unit 0 50
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - OCR-B ICPS and Field Reader Unit 0 87
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - Magnetic Stripe Reader for Q/A Station
(per unit) Unit 0 4
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - Magnetic Stripe Reader for POS Unit 0 75
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - IC Chip for ICPS Unit 0 56
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - IC Chip for Q/A Station, and Field Readers
(per unit) Unit 0 79
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - WORM (OMC) for ICPS (per site, quarterly
refurbish w/parts) Site 0 4
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - WORM (OMC) for Q/A Station (per site) Site 0 4
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - WORM (OMC) for Field Reader (per unit) Unit 0 75
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - Card Counter Unit 0 8
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - Temperature/Humidity Recorder (per site) Site 0 4
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
3002 Annual Maintenance Fee - Option 2 (Year 3) C.8 Year 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
3002a Annual Maintenance Fee - Includes Weekends & Federal Holidays
(per site) C.8 Site 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - VIS, Combiner; Mailer/Stuffer with Spare
Parts (per site) Site 0 6 $60,971 Lau
- ------------------------------------------------------------------------------------------------------------------------------------
Note: The above price is good for Lincoln, NE; Dallas, TX;
- ------------------------------------------------------------------------------------------------------------------------------------
Laguna Miguel, CA; and Acton, MA. For St. Albans, VT and other non-
- ------------------------------------------------------------------------------------------------------------------------------------
specified sites add $20,152 (Burdened).
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - SIS Multistation (per site) Site 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - 2D Barcode for ICPS (per site) Site 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - 2D Barcode for Field Readers & Q/A Station
(per unit) Unit 0 156
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - ICPS RF Probe (per unit) Unit 0 18
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - RF Field Reader (805A) & Q/A Station
(per unit) Unit 0 100
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - RF Field Reader (805B) (per unit) Unit 0 100
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - RF Field Reader (806C) (per unit) Unit 0 100
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - OCR-B ICPS and Field Reader Unit 0 160
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - Magnetic Stripe Reader for Q/A Station
(per unit) Unit 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - Magnetic Stripe Reader for POS Unit 0 160
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - IC Chip for ICPS Unit 0 64
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - IC Chip for Q/A Station, and Field Readers
(per unit) Unit 0 158
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 17
<PAGE>
Use or Disclosure of proposal data is subject to the restriction on the title
page of this proposal
ISI/INS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Unburdened
- ------------------------------------------------------------------------------------------------------------------------------------
Section C Mtn. Mtn. Unit Price
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Year Supplier
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - WORM (OMC) for
ICPS (per site, quarterly refurbish w/parts) Site 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - WORM (OMC) for
Q/A Station (per site) Site 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - WORM (OMC) for
Field Reader (per unit) Unit 0 150
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - Card Counter Unit 0 12
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee - Temperature/Humidity
Recorder (per site) Site 0 6
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 3002 Sub-Total
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
3010 Monthly Maintenance Fee - Option 1 (Year 2) C.8 Year 0 48
- ------------------------------------------------------------------------------------------------------------------------------------
3010a Monthly Maintenance Fee - Includes Weekends
& Federal Holidays (per site) C.6 Site 0 48
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - Vl8, Combiner, Mailer/
Stuffer with Spare Parts (per site) Site 0 48 $5,067 Lau
- ------------------------------------------------------------------------------------------------------------------------------------
Notes: The above price is good for Lincoln, NE;
Dallas, TX; Laguna Niguel, CA; and Acton, MA.
For St. Albams, VT and other non-specified sites
add $2,000 (Burdened).
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - SIS Multistation
(per site) Site 0 48
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - 2D Barcode for ICPS
(per site) Site 0 48
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - 2D Barcode for Field
Readers & Q/A Station (per unit) Unit 0 948
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - ICPS RF Probe (per unit) Unit 0 144
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - RF Field Reader (805A)
& Q/A Station (per unit) Unit 0 648
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - RF Field Reader (805B)
(per unit) Unit 0 600
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - RF Field Reader (805C)
(per unit) Unit 0 600
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - OCR-B ICPS and Field
Reader Unit 0 1044
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - Magnetic Stripe Reader
for Q/A Station (per unit) Unit 0 48
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - Magnetic Strip Reader
for POS Unit 0 900
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - IC Chip for ICPS Unit 0 672
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - IC Chip for Q/A Station,
and Field Readers (per unit) Unit 0 948
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - WORM (OMC) for ICPS (per
site, quarterly refurbish w/parts) Site 0 48
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - WORM (OMC) for Q/A
Station (per site) Site 0 48
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - WORM (OMC) for Field
Reader (per unit) Unit 0 900
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - Card Counter Unit 0 96
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - Temperature/Humidity
Recorder (per site) Unit 0 48
- ------------------------------------------------------------------------------------------------------------------------------------
3011 Monthly Maintenance Fee - Option 2 (Year 3) C.6 Year 0 72
- ------------------------------------------------------------------------------------------------------------------------------------
3011a Monthly Maintenance Fee - Includes Weekends
& Federal Holidays (per site) C.6 Site 0 72
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - VIS, Combiner,
Mailer/Stuffer with Spare Parts (per site) Site 0 72 $5,310 Lau
- ------------------------------------------------------------------------------------------------------------------------------------
Note: The above price is good for Lincoln, NE;
Dallas, TX; Laguna Niguel, CA; and Acton, MA.
For St Albams, VT and other non-specified sites
add $2,000 (Burdened).
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - SIS Multistation
(per site) Site 0 72
- ------------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee - 2D Barcode for ICPS
(per site) Site 0 72
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 18
<PAGE>
Use or Disclosure of proposal data is subject to the restriction on the title
page of this proposal
ISUINS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Unburdened
- -----------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- -----------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Site Supplier
<C> <S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee-2D Barcode for Field Readers & Q/A
Station (per unit) Unit 0 1872
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee-ICPS RF Probe (per unit) Unit 0 216
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee-RF Field Reader (805A) & Q/A Station
(per unit) Unit 0 1272
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee-RF Field Reader (805B)(per unit) Unit 0 1200
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee-RF Field Reader (805C)(per unit) Unit 0 1200
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee-OCR-B ICPS and Field Reader Unit 0 2016
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee-Magnetic Stripe Reader for Q/A
Station (per unit) Unit 0 72
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee-Magnetic Stripe Reader for POS Unit 0 1800
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee-IC Chip for ICPS Unit 0 1008
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee-IC Chip for Q/A Station, and Field
Readers (per unit) Unit 0 1872
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee-WORM (DMC) for ICPS (per site,
quarterly refurbished w/parts) Site 0 72
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee-WORM (DMC) for Q/A Station (per
site) Site 0 72
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee-WORM (DMC) for Field Reader (per
unit) Unit 0 1800
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee-Card Counter Unit 0 144
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Maintenance Fee-Temperature/Humidity Recorder
(per site) Site 0 72
- -----------------------------------------------------------------------------------------------------------------------------------
CLIN 3011 Sub-Total:
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
4000 Emergency Maintenance-4-hr. Response C.8 Call 0 96
- -----------------------------------------------------------------------------------------------------------------------------------
4000a Telephone Technical/Engineering Support C.8.1.3 Each 0 96
- -----------------------------------------------------------------------------------------------------------------------------------
4000b Corrective Maintenance-4-hr. Response C.8 Each 0 96
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
5000 Quality Assurance/Card Verification Station C.11 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
5000a 486-65MHz PC C.11 Each 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
5000b 2-D Barcode Reader C.11 Each 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
5000c 3-Track Magnetic Stripe Reader with RS-232 C.11 Each 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
5000d OPTION: RF Reader C.11 Each 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
5000e OPTION: 1C Chip Reader C.11 Each 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
5000f OPTION: OCR-B Reader C.11 Each 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
5000g OPTION: WORM Reader C.11 Each 0 6
- -----------------------------------------------------------------------------------------------------------------------------------
CLIN 5000a thru 5000g Sub-Total:
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
6000 Program Management Support Team (ISI):
- -----------------------------------------------------------------------------------------------------------------------------------
Program Manager Hour 1860 1860
- -----------------------------------------------------------------------------------------------------------------------------------
Software Integrator Hour 940 940
- -----------------------------------------------------------------------------------------------------------------------------------
Engineer Hour 3780 3780
- -----------------------------------------------------------------------------------------------------------------------------------
Training Specialist Hour 940 940
- -----------------------------------------------------------------------------------------------------------------------------------
Systems Analyst Hour 3780 3780
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 19
<PAGE>
Use or Disclosure of proposal data is subject to the restriction on the title
page of this proposal
ISUINS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Unburdened
- ------------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Site Supplier
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Security Administrator Hour 470 470
- ------------------------------------------------------------------------------------------------------------------------------------
Administrator Hour 1800 1800
- ------------------------------------------------------------------------------------------------------------------------------------
6001 Travel Lot 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 6000 Total:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
7000 Program Management Support Team (150):
- ------------------------------------------------------------------------------------------------------------------------------------
Program Manager Hour 1800 1880
- ------------------------------------------------------------------------------------------------------------------------------------
Software Integrator Hour 940 940
- ------------------------------------------------------------------------------------------------------------------------------------
Engineer Hour 3760 3760
- ------------------------------------------------------------------------------------------------------------------------------------
Training Specialist Hour 940 940
- ------------------------------------------------------------------------------------------------------------------------------------
Systems Analyst Hour 3760 3760
- ------------------------------------------------------------------------------------------------------------------------------------
Security Administrator Hour 470 470
- ------------------------------------------------------------------------------------------------------------------------------------
Administrator Hour 1880 1880
- ------------------------------------------------------------------------------------------------------------------------------------
7001 Travel Lot 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 7000 Sub-Total:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
8000 Program Support for Option 2 (Year 3) Year 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
8001 Travel Year 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 8000 Sub-Total:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
9000 OPTION: Hot Backup System at Lau
Technologies, Acton, MA Each 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Sandia Imaging Systems 7R Printer
(2 per site) Pair 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(2) VIS & Stuffer/Mailer - Includes
Integration & Acceptance Each 0 0 $510,047 Lau
- ------------------------------------------------------------------------------------------------------------------------------------
(3) Site Preparation Each 0 0 $46,423 Lau
- ------------------------------------------------------------------------------------------------------------------------------------
(4) 2-D Barcode Reader Pair 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(5a) Maintenance Spares (See Note 1
at end of spreadsheet) Set 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(5b) EAD Development & Certification
Cards without RF (20,000 cards) Each 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(5c) Development & Certification
Consumables (20,000 cards) Set 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Optional Acceptance Test (Includes
CLIN 8,000(5a), (5b) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Acceptance Test Each 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Acceptance Test Cards, Supplies &
Consumables - GFE Each 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
CLIN 9000 Sub-Total:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
9001: OPTION: Add WORM Option to Hot Backup
- ------------------------------------------------------------------------------------------------------------------------------------
This CLIN cannot be ordered without first
ordering CLIN 110.
- ------------------------------------------------------------------------------------------------------------------------------------
(1) WORM Reader/Writer Module (4 Reader/Writers
per Module) Pair 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(1b) WORM Encoding Module Integration Pair 0 0 $151,107 Lau
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 20
<PAGE>
Use or Disclosure of proposal data is subject to the restriction
on the title page of this proposal
ISI/INS CONFIDENTIAL PRICING (ALL YEARS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Unburdened
- ----------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- ----------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Site Supplier
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
(1c)Sandia Base Kit (Frame) and Cabinet (WORM Reader/Writer) Pair 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(2a)WORM Development & Certification Cards (15,000) Set 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(2b)EAD Development & Certification Cards without RF (5,000 cards) Each 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(2c)Development & Certification Consumables (20,000 cards) Set 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(3)Maintenance Spares-WORM Reader/Writer (1 pair per site) Pair 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Optional Acceptance Test (Includes CLIN 6001(4a),(4b)
- ----------------------------------------------------------------------------------------------------------------------------------
(4a)Acceptance Test Each 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(4d)Acceptance Test Cards, Supplies & Consumables-GFE Each 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
CLIN 9001 Sub-Total:
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
9002 OPTION: Add IC Chip Option to Hot Backup (8kb,300 cards/hour)
- ----------------------------------------------------------------------------------------------------------------------------------
This CLIN cannot be ordered without first ordering CLIN 136a
or CLIN 140a.
- ----------------------------------------------------------------------------------------------------------------------------------
(1a)IC Chip Write (6 Reader/Writers, 8kb) Module Pair 0 0 $165,547 Lau
- ----------------------------------------------------------------------------------------------------------------------------------
(1b)IC Chip Write (6 Reader/Writers, 8kb) Peripherals Pair 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(1c)IC Chip/SMARTCARD Developers System Each 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(1d)Sandia Base Kit (Frame) and Cabinet (IC Chip) Pair 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(2a)IC Chip Development & Certification Cards with RF
(10,000 cards, 8kb) Set 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(2b)EAD Development & Certification Cards with RF (5,000 cards) Each 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(2c)WORM Development & Certification Cards with RF (5,000 cards) Set 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(2d)Development & Certification Consumables (20,000 cards) Set 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(3)Maintenance Spares-IC Chip (2 per site) Pair 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Optional Acceptance Test (Includes CLIN 6002(4a),(4b))
- ----------------------------------------------------------------------------------------------------------------------------------
(4a)Acceptance Test Each 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(4d)Acceptance Test Cards, Supplies & Consumables-GFE Each 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
CLIN 9002 Sub-Total:
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
9003 OPTION: Add RF Probe Option to Hot Backup
- ----------------------------------------------------------------------------------------------------------------------------------
This CLIN cannot be ordered without first ordering CLIN 122
- ----------------------------------------------------------------------------------------------------------------------------------
(1a)RF Probe Pair 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(1b)Installation of RF Probe Each 0 0 $85,912 Lau
- ----------------------------------------------------------------------------------------------------------------------------------
(1c)Sandia Base Kit (Frame) and Cabinet (RF Probe) Pair 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(2a)WORM Development & Certification Cards with RF (5,000 cards) Set 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(2b)EAD Development & Certification Cards with RF (10,000 cards) Set 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(2c)IC Chip Development & Certification Cards with RF
(5,000 cards, 8kb) Set 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(2d)Development & Certification Consummables (20,000 cards) Set 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(2e)Maintenance Spares-RF Probe (1 per site) Each 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(3)Technical Support for Installation of RF Probe Each 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
Use or Disclosure of proposal data is subject to the restriction on the title
page of this proposal
ISI/INS CONFIDENTIAL PRICING (ALL YEAR)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Unburdened
- -----------------------------------------------------------------------------------------------------------------------------------
Section C Min. Max. Unit Price
- -----------------------------------------------------------------------------------------------------------------------------------
CLIN Description Reference Unit Qty. Qty. Per Site Supplier
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Optional Acceptance Test (Includes CLIN 6003(4a), (4b))
- -----------------------------------------------------------------------------------------------------------------------------------
(4a) Acceptance Test Each 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(4d) Acceptance Test Cards, Supplies & Consumables-GFE Each 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
CLIN 9003 Sub-Total:
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
9004 OPTION: Add OCR-B Option to Hot Backup
- -----------------------------------------------------------------------------------------------------------------------------------
This CLIN cannot be ordered without first ordering
CLIN 130.
- -----------------------------------------------------------------------------------------------------------------------------------
(1a) OCR-B Verification Reader (Set of 2) Pair 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(1b) Sandia Base Kit (Frame) and Cabinet (OCR-B) Pair 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(1c) Installation of OCR-B Pair 0 0 $85,912 Lau
- -----------------------------------------------------------------------------------------------------------------------------------
(2a) Technical Support for installation of OCR-B Pair 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(2b) Technical Support for installation of OCR-B Pair 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(2c) IC Chip Development & Certification Cards with RF
(5,000 cards, 8kb) Set 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(2d) WORM Development & Certification Cards with RF
(5,000 cards) Set 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(2e) Development & Certification Consumables (10,000 cards) Set 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(3) Maintenance Spares-OCR-B Reader (1 per site) Each 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
Optional Acceptance Test (Includes CLIN 6004(4a), (4b)
- -----------------------------------------------------------------------------------------------------------------------------------
(4a) Acceptance Test Each 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(4d) Acceptance Test Cards, Supplies & Consumables-GFE Each 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
CLIN 9004 Sub-Total:
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
9005 OPTION: Maintenance for Hot Backup System at Lau
Technologies, Acton, MA. Each 0 0 $57,808 Lau
- -----------------------------------------------------------------------------------------------------------------------------------
9006 OPTION: Maintenance for Hot Backup System at Lau
Technologies, Acton, MA. Each 0 0 $57,808 Lau
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
NOTE 1: Maintenance Spare (CLIN 100a(5d) and CLIN 100b(5c))
of $79,231
- -----------------------------------------------------------------------------------------------------------------------------------
(Fully Burdened Price) Includes the following:
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Multistation Print Module (2 per site) C.8 Pair 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(2) 300 DPI PCBA, 68000 board w/FM (1 per site) C.8 Each 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(3) Feeder PCBA (1 per site) C.8 Each 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(4) Rotator PCBA (1 per site) C.8 Each 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(5) Rotator Assembly (1 per site) C.8 Each 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(6) 300 DPI Thermal Interface (1 per site) C.8 Each 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(7) Mag Stripe Encoder Module (1 per site) C.8 Each 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(8) VIS, Combiner, Mailer/Stuffer (1 per site, Base
Year) (Year 1 = $48,825) C.8 Each 0 0 $48,414 Lau
- -----------------------------------------------------------------------------------------------------------------------------------
(9) 2-D Barcode (1 per site) C.8 Each 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
NOTE 1 Sub-Total:
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 22
<PAGE>
EXHIBIT B
STATEMENT OF WORK AND SPECIFICATIONS
LAU TECHNOLOGIES
August 21, 1995
Lau technologies shall provide to Information Spectrum, Inc. (ISI) the following
products and services to meet the requirements and delivery schedule of the
Integrated Card Production System (ICPS) and related products and services as
defined in the Immigration and Naturalization Service (INS) Solicitation Number
HQ-95-09, as amended (INS Solicitation). These products and services will be
provided upon ISI's issuance of an appropriate Task Order to LAU.
1. Basic ICPS (CLIN 100)
1.1 LAU shall provide (design, manufacture or purchase, deliver, install, and
test) for each ICPS ordered by ISI the mailer/stuffer, the Visual Inspection
Station, and the combiner as specified in the INS Solicitation and will
integrate these components with two Sandia 7R printers at LAU's facilities in
order to produce a functioning ICPS which meets the hardware and software
requirements of the INS Solicitation. Lau shall deliver, install, and test the
ICPS at INS sites within the Continental United States (contiguous 48 states).
ISI will supply the Sandia printers to LAU.
1.2 LAU shall deliver the ICPS (hardware and software) to ISI at the specified
INS locations in the quantities, and at the rate and times specified in Task
Orders issued by ISI in accordance with the INS Solicitation. The quantities
ordered shall not exceed the quantities identified in this Statement of Work, or
if not so identified, the quantities specified in the INS Solicitation. The
prices quoted to ISI include the costs of shipment (including Insurance) of the
ordered quantities to the destinations described above.
1.3 LAU shall develop software to control the flow of cards, inspect the cards,
and perform the automated stuffing and mailing that meets the requirements of
the INS Solicitation.
1.4 LAU shall develop software to be used to meet the reporting requirements
specified in the INS Solicitation.
1.5 LAU will provide to INS a perpetual license to use, modify, adapt, or
combine with other software, the software specified in Paragraphs 1.3 and 1.4
above. LAU will also provide to the INS a perpetual license to use, modify, and
adapt the source code for the software. The licenses will be limited to the
ICPS installed at each INS site. The license shall meet the requirements of the
INS Solicitation. A LAU warranty will not apply to any software which has been
altered.
<PAGE>
2. System Upgrades (CLINs 110 - 157).
2.1 LAU shall provide (design, manufacture or purchase, deliver, install, and
test) a card transport mechanism capable of supporting four Optical Memory Card
Reader/Writer Mechanisms. The combination of the four OMC Reader/Writers and the
card transport mechanism shall be known as an Optical Memory Card Reader/Writer
Module. The Module shall operate successfully in the Sandia Printer. Two OMC
Reader/Writer Modules will be provided for each ICPS ordered by INS.
2.2 LAU shall provide the engineering, integration, and software necessary to
insure that the Optical Memory Card Reader/Writer Module is compatible with the
Sandia 7R printer and meets the performance and reliability requirements of the
INS Solicitation. Optical Memory Card Reader/Writer Mechanisms which meet all
performance and reliability requirements of the INS Solicitation will be
supplied to LAU by ISI.
2.3 LAU shall provide (design, manufacture or purchase, deliver, install, and
test) a card transport mechanism capable of supporting six individual IC Chip
Card Reader/Writer Mechanisms. The combination of the six IC Chip Reader/Writers
and the card transport mechanism shall be known as an IC Chip Card Reader/Writer
Module. The Module shall operate successfully in the Sandia Printer. Two IC Chip
Card Reader/Writer Modules will be provided for each ICPS ordered by INS.
2.4 LAU shall provide the engineering, integration, and software necessary to
insure that the IC Chip Card Reader/Writer Module is compatible with the
Sandia 7R printer and meets the performance and reliability requirements of the
INS Solicitation, IC Chip Card Reader/Writer Mechanisms which meet all
performance and reliability requirements of the INS Solicitation will be
supplied to LAU by ISI.
2.5 LAU shall provide (design, manufacture or purchase, deliver, install, and
test) an OCR-B Reader Module capable of reading and verifying OCR-B text printed
on a card by the ICPS. The combination of an OCR-B Reader Mechanisms and its
housing and interface shall be known as an OCR-B Module. Two OCR-B Reader/Writer
Modules will be provided for each ICPS ordered by INS.
2.6 LAU shall provide the engineering, integration, and software necessary to
insure that the OCR-B Reader Module is compatible with the LAU VIS and meets the
performance and reliability requirements of the INS Solicitation. LAU shall
insure that a card containing OCR-B printed in the Sandia printer (and verified
by the VIS) can be read and verified on the AIT OCR-B Field Reader. OCR-B
Reader/Mechanisms which meet all performance and reliability requirements of the
INS Solicitation will be supplied to LAU by ISI.
2.7 LAU shall provide (design, manufacture or purchase, deliver, install, and
test) an RF Probe (Reader) Module capable of reading and verifying RF Taggants
embedded in a card during the card stock manufacturing process. The combination
of an RF Probe Mechanism and its housing and interface shall be known as an RF
Probe Module. The RF Probe Module shall operate successfully as a module in the
VIS and
<PAGE>
meet the performance and reliability requirements of the INS Solicitation. Two
RF Probe Modules will be provided for each ICPS ordered by INS.
2.8 LAU shall provide the engineering, integration, and software necessary to
insure that the RF Probe Module is compatible with the VIS and meets the
performance and reliability requirements of the INS Solicitation. RF Probe
Mechanisms which meet all performance and reliability requirements of the INS
Solicitation will be supplied to LAU by ISI.
2.9 LAU shall deliver, install, and test the System Upgrades described in
Sections 2.1 through 2.8 above to ISI at the INS locations specified in the INS
Solicitation in the quantities and at the rate and times specified in Task
Orders to be issued by ISI in accordance with the INS Solicitation. The
quantities ordered shall not exceed the quantities identified in this Statement
of Work, or if not so identified, the quantities specifies in the INS
Solicitation. The prices quoted to ISI include the costs of shipment (including
insurance) of the ordered quantities to the destinations described above.
3. System Documentation and Material/Consumables Documentation (CLINs
160-163).
3.1 LAU will provide appropriate user, system, maintenance, and software
documentation as required by the INS Solicitation. This documentation will
adequately describe the operation of the ICPS including its associated software,
the software routines and modules used to control the ICPS, and maintenance
procedures and diagrams sufficient for an on-site maintenance technician
(whether or not a LAU employee) to perform service on the equipment.
3.2 Materials/consumables documentation.
Not Applicable.
4. Supplies and Consumables(CLINs 200-799).
Not Applicable.
5. Maintenance Services (CLIN Series 3000 and 4000)
5.1 LAU will provide a telephone support line (24 hours per day, 365 days per
year) capable of answering technical questions when technical assistance is
required by the on-site maintenance technician (whether or not a LAU employee).
LAU shall promptly dispatch a qualified engineer or technician to an INS site at
ISI's request to provide technical assistance in maintaining the ICPS in order
for ISI to meet the Corrective Maintenance requirements of the INS Solicitation.
5.2 LAU shall provide spare parts at or near each site, in order to allow
defective modules to be promptly replaced.
5.3 LAU shall provide software upgrades, including bug fixes, upgraded
functionality, and new releases of software as provided in the INS Solicitation.
<PAGE>
5.4 LAU shall provide all documentation updates to documents previously
provided to the INS as required by the INS Solicitation.
6. Training (CLIN Series 1000).
LAU agrees to host and provide facilities for training activities for INS
personnel and other personnel identified by ISI at LAU's location. The training
will be done on a spare ICPS, (which will be identified as either the "Hot
Backup System" or an "Integration System") to be purchased by INS and to be
located at a LAU facility. ISI will provide the instructor to do the training.
LAU will provide the facilities and access to the spare ICPS. Facilities
includes, but is not limited to, a classroom, chairs, and tables for not more
than 10 students, and overhead projector, and a blackboard or equivalent.
7. Consultation Services (CLIN Series 2000).
7.1 LAU agrees to provide consultation Services as described in the INS
Solicitation when ordered by ISI.
8. Quality Assurance/Verification Systems (CLIN Series 800)
Not Applicable.
9. Certification, Acceptance Tests, and Standard of Performance
9.1 LAU shall provide its certification to ISI in accordance with Section
E.2.1 of the INS Solicitation that the integrated system that it provides meets
the criteria provided in that Section.
9.2 LAU will participate in achieving a successful Acceptance Test meeting
the Standard of Performance (as defined in the INS Solicitation) for each ICPS
and each System Upgrade ordered. Lau will fully participate to insure that the
products and services that it provides will result in successful Acceptance Test
and will meet the Standard of Performance.
9.3 Inspection and Testing of Consumables. (Section C.6.1)
Not Applicable.
10. Reports (Section F.11)
10.1 LAU shall contribute relevant information to enable IS to provide the
Management Reports to the INS required by Section G.7.1 of the INS Solicitation.
11. Hot Backup Site. The Hot Backup Site is intended to provide a complete
operating ICPS that has passed the INS Acceptance Test and Standard of
Performance in the event that one or more of the INS ICPS sites is unable to
produce
<PAGE>
cards. LAU shall provide a secure facility are for the Hot Backup Site at its
facility. The Hot Backup Site will be operated by INS personnel who will be
hosted by LAU at LAU's facility. LAU will provide all maintenance and repairs on
the Hot Backup Site.
12. LAU shall provide a warranty for the products and services that meet the
requirements in the INS Solicitation.
<PAGE>
EXHIBIT D
REPRESENTATIONS, CERTIFICATIONS, AND OTHER STATEMENTS OF
SUBCONTRACTOR
52.203-2 Certificate of Independent Price APR 1985
(a) The Offeror certifies that-
(1) The prices in this offer have been arrived at independently, without,
for the purpose of restricting competition, any consultation, communication, or
agreement with any other offeror or competitor relating to (i) those prices,
(ii) the intention to submit an offer, or (iii) the methods or factors used to
calculate the prices offered;
(2) The prices in this offer have not been and will not be knowingly
disclosed by the offeror, directly or indirectly to any other offeror or
competitor before bid opening (in the case of a sealed bid solicitation) or
contract award (in the case of a negotiated solicitation) unless otherwise
required by law; and
(3) No attempt has been made or will be made by the offeror to induce any
other concern to submit or not to submit an offer for the purpose of restricting
competition.
(b) Each signature on the offer is considered to be certification by the
signatory that the signatory-
(1) Is the person in the offeror's organization responsible for determining
the prices being offered in this bid or proposal, and that the signatory has not
participated and will not participate in any action contrary to subparagraphs
(a)(1) through (a)(3) above; or
(2) (i) Has been authorized, in writing, to act as agent for the following
principals in certifying that those principals have not participated, and will
not participate in any action contrary to subparagraphs (a)(1) through (a)(3)
above _________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
[Insert full name of person(s) in the offeror's organization responsible for
determining the prices offered in this bid or proposal, and the title of his or
her position in the offeror's organization];
(ii) As an authorized agent, does certify that the principals named in
subdivision (b)(2)(i) above have not participated, and will not participate, in
any action contrary to subparagraphs (a)(1) through (a)(3) above; and
(iii) As an agent, has not personally participated and will not participate,
in any action contrary to subparagraphs (a)(1) through (a)(3) above.
(c) If the offeror deletes or modifies subparagraph (a)(2) above, the offeror
must furnish with its offer a signed statement setting forth in detail the
circumstances of the disclosure.
52.203-4 Contingent Fee Representation and AgreementAPR 1984
<PAGE>
(a) Representation. The offeror represents that, except for full-time bona fide
employees working solely for the offeror, the offeror -
(Note: The offeror must check the appropriate boxes. For interpretation of the
representation, including the term bona fide employee, see subpart 3.4 of the
Federal Acquisition Regulation.)
(1) has, X has not employed or retained any person or company to solicit
--- ---
or obtain this contract; and
(2) has, X has not paid or agreed to pay to any person or company employed
--- ---
or retained to solicit or obtain this contract any commission, percentage,
brokerage, or other fee contingent upon or resulting from the award of this
contract.
(b) Agreement. The offeror agrees to provide information relating to the above
Representation as requested by the Contracting Officer and, when subparagraph
(a)(1) or (a)(2) is answered affirmatively, to promptly submit to the
Contracting Officer -
(1) A completed Standard Form 119, Statement of Contingent or Other Fees,
(SF 119);
or
(2) A signed statement indicating that the SF 119 was previously submitted
to the same contracting office, including the date and applicable solicitation
or contract number, and representing that the prior SF 119 applies to this offer
or quotation.
52.203-8 Requirement for Certificate of NOV 1990
Procurement Integrity -- Alternate I SEP 1990
(a) Definitions. The definitions at FAR 3.104-4 are hereby incorporated in this
provision.
(b) Certifications. As required in paragraph (c) of this provision, the officer
or employee responsible for this offer shall execute the following
certification:
CERTIFICATE OF PROCUREMENT INTEGRITY
(1) I, Robert C. Hughes (Name of certifier), am the officer or employee
-------------------
responsible for the preparation of this offer and hereby certify that, to the
best of my knowledge and belief, with the exception of any information described
in this certificate, I have no information concerning a violation or possible
violation of subsection 27(a), (b),(d), or (f) of the Office of Federal
Procurement Policy Act, as amended* (41 U.S.C. 423), (hereinafter referred to as
"the Act"), as implemented in the FAR, occurring during the conduct of this
procurement (solicitation number).
---------------
(2) As required by subsection 27(e)(1)(B) of the Act, I further certify
that, to the best of my knowledge and belief, each officer, employee, agent,
representative, and consultant of
<PAGE>
LAU Technologies (Name of Offeror) who has participated personally and
- ----------------
substantially in the preparation or submission of this offer has certified that
he or she is familiar with, and will comply with, the requirements of subsection
27(a) of the Act, as implemented in the FAR, and will report immediately to me
any information concerning a violation or possible violation of subsections 27
(a), (b), (d), or (f) of the Act, as implemented in the FAR, pertaining to this
procurement.
(3) Violations or possible violations: (Continue on plain bond paper if
necessary and label Certificate of Procurement Integrity (Continuation Sheet),
ENTER NONE IF NONE EXIST)
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
(4) I agree that, if awarded a contract under this solicitation, the
certifications required by subsection 27(e)(1)(B) of the Act shall be maintained
in accordance with paragraph (f) of this provision.
/s/ R.C. Hughes
- -------------------------------------------------------------------------
(Signature of the officer or employee responsible for the offer and date)
Robert C. Hughes
- -------------------------------------------------------------------------
(Typed name of the officer or employee responsible for the offer)
* Subsections 27 (a), (b), and (d) are effective on December 1, 1990. Subsection
27(f) is effective on June 1, 1991.
THIS CERTIFICATION CONCERNS A MATTER WITHIN THE JURISDICTION OF AN AGENCY OF THE
UNITED STATES AND THE MAKING OF A FALSE, FICTITIOUS, OR FRAUDULENT CERTIFICATION
MAY RENDER THE MAKER SUBJECT TO PROSECUTION UNDER TITLE 18, UNITED STATES CODE,
SECTION 1001. (End of certification)
(c) For procurements, including contract modifications, in excess of $100,000
made using procedures other than sealed bidding, the signed certifications shall
be submitted by the successful Offeror to the Contracting Officer within the
time period specified by the Contracting Officer when requesting the
certificates except as provided in subparagraphs (c)(1) through (c)(5) of this
clause. In no event shall the certificate be submitted subsequent to award of a
contract or execution of a contract modification:
(1) For letter contracts, other unpriced contracts, or unpriced contract
modifications, whether or not the unpriced contract or modification contains a
maximum or not to exceed price,
<PAGE>
the signed certifications shall be submitted prior to the award of the letter
contract, unpriced contract, or unpriced contract modification, and prior to the
definitization of the letter contract or the establishment of the price of the
unpriced contract or unpriced contract modification. The second certification
shall apply only to the period between award of the letter contract and
execution of the document definitizing the letter contract, or award of the
unpriced contract or unpriced contract modification and execution of the
document establishing the definitive price of such unpriced contract or unpriced
contract modification.
(2) For basic ordering agreements, prior to the execution of a priced
order; prior to the execution of an unpriced order, whether or not the unpriced
order contains a maximum or not to exceed price; and, prior to establishing the
price of an unpriced order. The second certificate to be submitted for unpriced
orders shall apply only to the period between award of the unpriced order and
execution of the document establishing the definitive price for such order.
(3) A certificate is not required for indefinite delivery contracts (see
Subpart 16.5) unless the total estimated value of all orders eventually to be
placed under the contract is expected to exceed $100,000.
(4) For contract and contract modifications which include options, a
certificate is required when the aggregate value of the contract or contract
modification and all options (see 3.104-4(e)) exceeds $100,000.
(5) For purposes of contracts entered into under section 8(a) of the SBA,
the business entity with whom the SBA contracts, and not the SBA, shall be
required to comply with the certification requirements of subsection 27(e). The
SBA shall obtain the signed certificate from the business entity and forward the
certificate to the Contracting Officer prior to the award of a contract to the
SBA.
(6) Failure of an Offeror to submit the signed certificate within the time
prescribed by the Contracting Officer shall cause the offer to be rejected.
(d) Pursuant to FAR 3.104-9(d), the Offeror may be requested to execute
additional certifications at the request of the Government. Failure of an
Offeror to submit the additional certifications shall cause its offer to be
rejected.
(e) A certification containing a disclosure of a violation or possible violation
will not necessarily result in the withholding of award under this solicitation.
However, the Government, after evaluation of the disclosure, may cancel this
procurement or take any other appropriate actions in the interests of the
Government, such as disqualification of the Offeror.
(f) In making the certification in paragraph (2) of the certificate, the officer
or employee of the competing Contractor responsible for the offer may rely upon
a one-time certification from each individual required to submit a certification
to the competing Contractor, supplemented by periodic training. These
certifications shall be obtained at the earliest possible date after an
individual required to certify begins employment or association with the
Contractor. If a Contractor decides to rely on a certification executed prior to
the suspension of section 27 (i.e.,
<PAGE>
prior to December 1, 1989), the Contractor shall ensure that an individual who
has so certified is notified that section 27 has been reinstated. These
certifications shall be maintained by the Contractor for 6 years from the date a
certifying employee's employment with the company ends or, for an agent,
representative, or consultant, 6 years from the date such individual ceases to
act on behalf of the Contractor.
(g) Certifications under paragraphs (b) and (d) of this provision are material
representations of fact upon which reliance will be placed in awarding a
contract.
52.203-11 Certification and Disclosure Regarding Payments to APR 1991
Influence Certain Federal Transactions
52.204-3 Taxpayer Identification MAR 1994
(a) Definitions.
"Common parent," as used in this solicitation provision, means that corporate
entity that owns or controls an affiliated group of corporations that files its
Federal income tax returns on a consolidated basis, and of which the offeror is
a member.
"Corporate status," as used in this solicitation provision, means a designation
as to whether the offeror is a corporate entity, an unincorporated entity (e.g.,
sole proprietorship or partnership), or a corporation providing medical and
health care services.
"Taxpayer Identification Number (TIN)," as used in this solicitation provision,
means the number required by the IRS to be used by the offeror in reporting
income tax and other returns.
(b) All offerors are required to submit the information required in paragraphs
(c) through (e) of this solicitation provision in order to comply with reporting
requirements of 26 U.S.C. 6041, 6041A, and 6050M and implementing regulations
issued by the Internal Revenue Service (IRS). If the resulting contract is
subject to reporting requirements described in FAR 4.903, the failure or refusal
by the offeror to furnish the information may result in a 20 percent reduction
of payments otherwise due under the contract.
(c) Taxpayer Identification Number (TIN).
X TIN: 04-3072930
- ----- -----------
TIN has been applied for.
- -----
TIN is not required because:
- -----
Offeror is a nonresident alien, foreign corporation, or foreign
- -----
partnership that does not have income effectively connected with the conduct of
a trade or business in the U.S. and does not have an office or place of business
or a fiscal paying agent in the U.S.;
<PAGE>
Offeror is an agency or instrumentality of a foreign government;
- -----
Offeror is an agency or instrumentality of a Federal, state or local
- -----
Government; Other. State basis.
---- --------------------
(d) Corporate Status.
Corporation providing medical and health care services, or engaged in
- -----
the billing and collecting of payments for such services;
X Other corporate entity;
- -----
Not a corporate entity;
- -----
Sole proprietorship
- -----
Partnership
- -----
Hospital or extended care facility described in 26 CFR 501(c)(3) that is
- -----
exempt for taxation under 26 CFR 501(a).
(e) Common Parent.
X Offeror is not owned or controlled by a common parent as defined in
- -----
paragraph (a) of this clause.
Name and TIN of common parent:
- -----
Name
--------------------------------
TIN
--------------------------------
52.209-5 Certification Regarding Debarment, Suspension, FEB 1995
Proposed Debarment, and Other Responsibility Matters
(a)(1) The Offeror certifies, to the best of its knowledge and belief, that -
(i) The Offeror and/or any of its Principals -
(A) Are are not X presently debarred, suspended, proposed for
--- ---
debarment, or declared ineligible for the award of contracts by any Federal
agency;
(B) Have have not X , within a 3-year period preceding this
--- ---
offer, been convicted of or had a civil judgment rendered against them for:
commission of fraud or criminal offense in connection with obtaining, attempting
to obtain, or performing a public (Federal, state, or local) contract or
subcontract; violation of Federal or state antitrust statutes relating to the
<PAGE>
submission of offers; or commission of embezzlement, theft, forgery, bribery,
falsification or destruction of records, making false statements, or receiving
stolen property; and
(C) Are are not X presently indicted for, or otherwise
--- ---
criminally or civilly charged by a Governmental entity with, commission of any
of the offenses enumerated in subdivision (a)(l)(i)(B) of this provision.
(ii) The Offeror has has not X , within a 3-year period preceding
--- ---
this offer, had one or more contracts terminated for default by any Federal
agency.
(2) "Principals," for the purposes of this certification, means officers;
directors; owners; partners; and, persons having primary management or
supervisory responsibilities within a business entity (e.g., general manager,
plant manager; head of a subsidiary, division, or business segment, and similar
positions).
This certification concerns a matter within the jurisdiction of an agency
of the United States and the making of a false, fictitious, or fraudulent
certification may render the maker subject to prosecution under section 1001,
title 18, United States Code.
(b) The Offeror shall provide immediate written notice to the Contracting
Officer if, at any time prior to contract award, the Offeror learns that its
certification was erroneous when submitted or has become erroneous by reason of
changed circumstances.
(c) A certification that any of the items in paragraph (a) of this provision
exists will not necessarily result in withholding of an award under this
solicitation. However, the certification will be considered in connection with
a determination of the Offeror's responsibility. Failure of the Offeror to
furnish a certification or provide such additional information as requested by
the Contracting Officer may render the Offeror nonresponsible.
(d) Nothing contained in the foregoing shall be construed to require
establishment of a system of records in order to render, in good faith, the
certification required by paragraph (a) of this provision. The knowledge and
information of an Offeror is not required to exceed that which is normally
possessed by a prudent person in the ordinary course of business dealings.
(e) The certification in paragraph (a) of this provision is a material
representation of fact upon which reliance was placed when making award. If it
is later determined that the Offeror knowingly rendered an erroneous
certification, in addition to other remedies available to the Government, the
Contracting Officer may terminate the contract resulting from this solicitation
for default.
52.215-6 Type of Business Organization JUL 1987
The offeror or quoter, by checking the applicable box, represents that
<PAGE>
(a) It operates as X a corporation incorporated under the laws of the State
---
of MA an individual, a partnership, a nonprofit organization, or a joint
-- --- ---
venture; or
(b) If the offeror or quoter is a foreign entity, it operates as an
---
individual, a partnership, a nonprofit organization, a joint
--- --- ---
venture, or a corporation, registered for business in
--- ------------------
(country).
52.215-20 Place of Performance APR 1984
(a) The offeror or quoter, in the performance of any contract resulting from
this solicitation, intends, does not intend (check applicable block) to
--- ---
use one or more plants or facilities located at a different address from the
address of the offeror or quoter as indicated in this proposal or quotation.
(b) If the offeror or quoter checks intends in paragraph (a) above, it shall
insert in the spaces provided below the required information:
Place of Performance Name and address of Owner
(Street Address, City, and Operator of the Plant or
County, State, Zip Code) Facility if Other than
Offeror or Quoter
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
52.219-1 Small Business Concern Representation FEB 1995
(a) Representation. The offeror represents and certifies as part of its offer
that it X is, is not a small business concern and that all, X not
--- --- --- ---
all end items to be furnished will be manufactured or produced by a small
business concern in the United States, its territories or possessions, Puerto
Rico, or the Trust Territory of the Pacific Islands.
(b) Definition. "Small business concern," as used in this provision, means a
concern, including its affiliates, that is independently owned and operated, not
dominant in the field of operation in which it is bidding on Government
contracts, and qualified as a small business under the criteria and size
standards in this solicitation.
(c) Notice. Under 15 U.S.C. 645(d), any person who misrepresents a firm's
status as a small business concern in order to obtain a contract to be awarded
under the preference programs established pursuant to sections 8(a), 8(d), 9, or
15 of the Small Business Act or any other provision of Federal law that
specifically references section 8(d) for a definition of program eligibility,
shall--
(1) Be punished by imposition of fine, imprisonment, or both;
<PAGE>
(2) Be subject to administrative remedies, including suspension and
debarment; and
(3) Be ineligible for participation in programs conducted under the
authority of the Act.
52.219-2 Small Disadvantaged Business Concern Representation FEB 1990
(a) Representation. The offeror represents that it X is, ____ is not a small
---
disadvantaged business concern.
(b) Definitions.
"Asian Pacific Americans," as used in this provision, means United States
citizens whose origins are in Japan, China, the Philippines, Vietnam, Korea,
Samoa, Guam, the U.S. Trust Territory of the Pacific Islands (Republic of
Palau), the Northern Mariana Islands, Laos, Kampuchea (Cambodia), Taiwan, Burma,
Thailand, Malaysia, Indonesia, Singapore, Brunei, Republic of the Marshall
Islands, or the Federated States of Micronesia.
"Indian tribe," as used in this provision, means any Indian tribe, band,
nation, or other organized group or community of Indians, including any Alaska
Native Corporation as defined in 13 CFR 124.100 which is recognized as eligible
for the special programs and services provided by the U.S. to Indians because of
their status as Indians, or which is recognized as such by the State in which
such tribe, band, nation, group, or community resides.
"Native Americans," as used in this provision, means American Indians, Eskimos,
Aleuts, and native Hawaiians.
"Native Hawaiian Organization," as used in this provision, means any community
service organization serving Native Hawaiians in, and chartered as a
not-for-profit organization by, the State of Hawaii, which is controlled by
Native Hawaiians, and whose business activities will principally benefit such
Native Hawaiians.
"Small business concern," as used in this provision, means a concern, including
its affiliates, that is independently owned and operated, not dominant in the
field of operation in which it is bidding on Government contracts, and qualified
as a small business under the criteria and size standards in 13 CFR part 121.
"Small disadvantaged business concern," as used in this provision, means a small
business concern that (a) is at least 51 percent unconditionally owned by one or
more individuals who are both socially and economically disadvantaged, or a
publicly owned business having at least 51 percent of its stock unconditionally
owned by one or more socially and economically disadvantaged individuals and (b)
has its management and daily business controlled by one or more such
individuals. This term also means a small business concern that is at least 51
percent unconditionally owned by an economically disadvantaged Indian tribe or
Native Hawaiian Organization, or a publicly owned business having at least 51
percent of its stock unconditionally owned by one of these entities which has
its management and daily business controlled by
<PAGE>
members of an economically disadvantaged Indian tribe or Native Hawaiian
Organization, and which meets the requirements of 13 CFR part 124.
"Subcontinent Asian Americans," as used in this provision, means United States
citizens whose origins are in India, Pakistan, Bangladesh, Sri Lanka, Bhutan, or
Nepal.
(c) Qualified groups. The offeror shall presume that socially and economically
disadvantaged individuals include Black Americans, Hispanic Americans, Native
Americans, Asian-Pacific Americans, Subcontinent Asian Americans, and other
individuals found to be qualified by SBA under 13 CFR 124. The offeror shall
presume that socially and economically disadvantaged entities also include
Indian tribes and Native Hawaiian Organizations.
52.219-3 Women-Owned Small Business Representation APR 1984
(a) Representation. The offeror represents that it X is, is not a women-owned
--- ---
small business concern.
(b) Definitions.
"Small business concern," as used in this provision, means a concern, including
its affiliates, that is independently owned and operated, not dominant in the
field of operation in which it is bidding on Government contracts, and qualified
as a small business under the criteria and size standards in 13 CFR 121.
"Women Owned," as used in this provision, means a small business that is at
least 51 percent owned by a woman or women who are U.S. citizens and who also
control and operate the business.
52.222-19 Walsh-Healey Public Contracts Act Representation APR 1984
The offeror represents as a part of this offer that the offeror is or is
---
not a regular dealer in, of Is a manufacturer of, the supplies offered.
--- --
52.222-21 Certification of Nonsegregated Facilities APR 1984
52.222-22 Previous Contracts and Compliance Reports APR 1984
The offeror represents that -
(a) It X has, has not participated in a previous contract or subcontract
--- ---
subject either to the Equal Opportunity clause of this solicitation, the clause
originally contained in Section 310 of Executive Order No. 10925, or the clause
contained in Section 201 of Executive Order No. 11114;
(b) It X has, has not, filed all required compliance reports; and
--- ---
<PAGE>
(c) Representations indicating submission of required compliance reports, signed
by proposed subcontractors, will be obtained before subcontract awards.
52.222-25 Affirmative Action Compliance APR 1984
The offeror represents that (a) it X has developed and has on file, has not
--- ---
developed and does not have on file, at each establishment, affirmative action
programs required by the rules and regulations of the Secretary of Labor (41 CFR
60-1 and 60-2), or (b) it has not previously had contracts subject to the
---
written affirmative action programs requirement of the rules and regulations of
the Secretary of Labor.
52.223-1 Clean Air and Water Certification APR 1984
The Offeror certifies that
(a) Any facility to be used in the performance of this proposed contract is
is not X listed on the Environmental Protection Agency (EPA) List of
- --- ---
Violating Facilities;
(b) The Offeror will immediately notify the Contracting Officer, before award,
of the receipt of any communication from the Administrator, or a designee, of
the EPA, indicating that any facility that the Offeror proposes to use for the
performance of the contract is under consideration to be listed on the EPA List
of Violating Facilities; and
(c) The Offeror will include a certification substantially the same as this
certification, including this paragraph (c), in every nonexempt subcontract.
52.223-5 Certification Regarding A Drug-Free Workplace JUL 1990
52.225-1 Buy American Certificate DEC 1989
The offeror certifies that each end product, except those listed below, is a
domestic end product (as defined in the clause entitled Buy American Act-
Supplies), and that components of unknown origin are considered to have been
mined, produced, or manufactured outside the United States.
Excluded End Products Country of Origin
- -------------------------------- ----------------------------
- -------------------------------- ----------------------------
- -------------------------------- ----------------------------
- -------------------------------- ----------------------------
(List as necessary)
Offerors may obtain from the contracting officer lists of articles, materials,
and supplies excepted from the Buy American Act.
<PAGE>
52.230-1 Cost Accounting Standards Notices and Certification AUG 1992
Note: This notice does not apply to small businesses or foreign governments.
This notice is in four parts, identified by Roman numerals I through IV
Offerors shall examine each part and provide the requested information in order
to determine Cost Accounting Standards (CAS) requirements applicable to any
resultant contract.
I. Disclosure Statement - Cost Accounting Practices and Certification
(a) Any contract in excess of $500,000 resulting from this solicitation, except
contracts in which the price negotiated is based on (1) established catalog or
market prices of commercial items sold in substantial quantities to the general
public, or (2) prices set by law or regulation, will be subject to the
requirements of 48 CFR parts 9903 and 9904 except for those contracts which are
exempt as specified in 48 CFR, Subpart 9903,201-1.
(b) Any offeror submitting a proposal which, if accepted, will result in a
contract subject to the requirements of 48 CFR parts 9903 and 9904 must, as a
condition of contracting, submit a Disclosure Statement as required by 48 CFR
Subpart 9903.202. The Disclosure Statement must be submitted as a part of the
offeror's proposal under this solicitation unless the offeror has already
submitted a Disclosure Statement disclosing the practices used in connection
with the pricing of this proposal. If an applicable Disclosure Statement has
already been submitted, the offeror may satisfy the requirement for submission
by providing the information requested in paragraph (c) of Part I of this
provision.
Caution: In the absence of specific regulations or agreement, a practice
disclosed in a Disclosure Statement shall not, by virtue of such disclosure, be
deemed to be a proper, approved, or agreed-to-practice for pricing proposals or
accumulating and reporting contract performance cost data.
(c) Check the appropriate box below:
- ------ (1) Certificate of Concurrent Submission of Disclosure Statement.
The offeror hereby certifies that, as a part of the offer, copies of the
Disclosure Statement have been submitted as follows: (i) original and one copy
of the cognizant Administrative Contracting Officer (ACO), and (ii) one copy to
the cognizant contract auditor.
(Disclosure must be on Form No. CASB DS-1. Forms may be obtained from the
cognizant ACO.)
Date of Disclosure Statement:
- ------------------------------------------------------------
Name and Address of Cognizant ACO where filed: -----
<PAGE>
The offeror further certifies that practices used in estimating costs in pricing
this proposal are consistent with the cost accounting practices disclosed in the
Disclosure Statement.
(2) Certificate of Previously Submitted Disclosure Statement.
- -----
The offeror hereby certifies that Disclosure Statement was filed as follows:
Date of Disclosure Statement:
- ------------------------------------------------
Name and Address of Cognizant ACO where filed:
-----
The offeror further certifies that the practices used in estimating costs in
pricing this proposal are consistent with the cost accounting practices
disclosed in the applicable disclosure statement.
(3) Certificate of Monetary Exemption.
- -----
The offeror hereby certifies that the offeror, together with all divisions,
subsidiaries, and affiliates under common control, did not receive net awards of
negotiated prime contracts and subcontracts subject to CAS totaling more than
$10 million in the cost accounting period immediately preceding the period in
which this proposal was submitted. The offeror further certifies that if such
status changes before an award resulting from this proposal, the offeror will
advise the Contracting Officer immediately.
(4) Certificate of Interim Exemption.
- -----
The offeror hereby certifies that (i) the offeror first exceeded the monetary
exemption for disclosure, as defined in (3) of this subsection, in the cost
accounting period immediately preceding the period in which this offer was
submitted and (ii) in accordance with 48 CFR. Subpart 9903.202-1, the offeror is
not yet required to submit a Disclosure Statement. The offeror further certifies
that if an award resulting from this proposal has not been made within 90 days
after the end of that period, the offeror will immediately submit a revised
certificate to the Contracting Officer, in the form specified under subparagraph
(c)(1) or (c)(2) of Part I of this provision, as appropriate, to verify
submission of a completed Disclosure Statement.
Caution: Offerors currently required to disclose because they were awarded a
CAS-covered prime contract or subcontract of $10 million or more in the current
cost accounting period may not claim this exemption (4). Further, the exemption
applies only in connection with proposals submitted before expiration of the
90-day period following the cost accounting period in which the monetary
exemption was exceeded.
II. Cost Accounting Standards - Exemption for Contracts of $500,000 or Less.
If this proposal is expected to result in the award of a contract of $500,000 or
less, the offeror shall indicate whether the exemption below is claimed. Failure
to check the box below shall
<PAGE>
mean that the resultant contract is subject to CAS requirements or that the
offeror elects to comply with such requirements.
The offeror hereby claims an exemption from the CAS requirements under the
- ----
provisions of 48 CFR, Subpart 9903.201-1(b)(2).
III. Cost Accounting Standards - Eligibility for Modified Contract Coverage
If the offeror is eligible to use the modified provisions of 48 CFR, Subpart
9903.201-2(b) and elects to do so, the offeror shall indicate by checking the
box below. Checking the box below shall mean that the resultant contract is
subject to the Disclosure and Consistency of Cost Accounting Practices clause in
lieu of the Cost Accounting Standards clause.
The offeror hereby claims an exemption from the Cost Accounting Standards
- ----
clause under the provisions of 48 CFR, Subpart 9903.201-2(b) and certifies that
the offeror is eligible for use of the Disclosure and Consistency of Cost
Accounting Practices clause because (i) during the cost accounting period
immediately preceding the period in which this proposal was submitted, the
offeror received less than $ 10 million in awards of CAS-covered prime contracts
and subcontracts, and (ii) the sum of such awards equaled less than 10 percent
of total sales during that cost accounting period. The offeror further certifies
that if such status changes before an award resulting from this proposal, the
offeror will advise the Contracting Officer immediately.
Caution: An offeror may not claim the above eligibility for modified contract
coverage if this proposal is expected to result in the award of a CAS-covered
contract $10 million or more or if, during its current cost accounting period,
the offeror has been awarded a single CAS-covered prime contract or subcontract
of $10 million or more.
IV. Additional Cost Accounting Standards Applicable to Existing Contracts.
The offeror shall indicate below whether award of the contemplated contract
would, in accordance with subparagraph (a)(3) of the Cost Accounting Standards
clause, require a change in established cost accounting practices affecting
existing contracts and subcontracts.
Yes No.
- ---- ----
INSLAU.SUB
October 17, 1995
<PAGE>
EXHIBIT E
SUBCONTRACTING PLAN
(Not required. See Section H.17.)
<PAGE>
EXHIBIT F
SCHEDULE OF SUBCONTRACTOR'S PRODUCTS
The following items are LAU Technologies' Property developed at private expense
and not first used in the performance of this Subcontract:
1) LAU Technologies(TM) Visual Inspection Station (VIS) Software and
Hardware (Patent Pending).
2) LAU Technologies(TM) Manufacturing Executive Software, portions of which
are also known as "Network Job Builder", or "Central Manufacturing
Executive".
3) LAU Technologies(TM) Image Capture Workstation (ICWS) Software
4) LAU Technologies(TM) SensorMast(TM) Hardware (Patent Pending).
<PAGE>
EXHIBIT 10.15
PURCHASE AGREEMENT
This Purchase Agreement ("Agreement") is entered into as of September 12,
---------
1996 by and between Lau Acquisition Corp., doing business under the assumed
names of Lau Technologies and Viisage Technology, having a principal place of
business located at 531 Main Street, Acton Massachusetts 01720. ("Viisage") and
-------
Sanwa Business Credit Corporation, having a principal place of business located
at One South Wacker Drive, Suite 3900, Chicago Illinois 60606 ("SBCC").
----
WHEREAS, Viisage is engaged in the development of digital imaging software,
and the integration and provision, by sale, lease or otherwise, of digital
imaging systems to Viisage's customers; and
WHEREAS, Viisage may from time to time offer to sell and SBCC in its sole
discretion may from time to time agree to buy certain Systems covered by leases,
installment sale contracts and other chattel paper arising out of such business
and the property covered thereby; and
WHEREAS, SBCC and Viisage desire to set forth the terms and conditions
under which such purchases and sales may be conducted;
NOW THEREFORE, in consideration of the promises contained herein and for
other valuable consideration received, SBCC and Viisage hereby agree as follows:
1. PURCHASE.
--------
(a) Offering. Viisage may offer SBCC the right to purchase any Systems
--------
which it places in service under Contracts, together with the Payments under the
Contract and Assigned Rights, and SBCC may elect to purchase or decline to
purchase any Systems, Payments and Assigned Rights so offered. If SBCC for any
reason refuses to buy any System, Payments and Assigned Rights offered to SBCC
within ten (10) days after the offer has been made, then Viisage may offer them
to any other purchaser. The "Purchase Price" of any Systems, Payments and
--------------
Assigned Rights shall be determined as of the date of purchase according to the
System Purchase Price methodology shown on Schedule A (as the same may be
revised from time to time by mutually agreed upon written revisions). On the
date of SBCC's purchase of a System, SBCC may first apply the Purchase Price to
be paid by it against any payments Viisage is then required to make to SBCC and
then SBCC will pay any remainder to Viisage in cash.
(b) Advance Credit Determinations. Viisage may request that SBCC
-----------------------------
determine credit acceptability for prospective Customers under prospective
Contracts and SBCC may, in its sole discretion, evaluate such requests. Credit
approvals will be valid for a period of six (6) months after the date when
rendered unless a different time is specified in connection with the approval.
Any credit approval will be subject to any terms specified by SBCC in connection
with the approval. SBCC's credit approval for any prospective Customer will not
constitute an approval or commitment with respect to any Contract terms, System,
or with respect to the acceptability of
1 of 30
<PAGE>
or purchase price to be paid for any System, Payments and Assigned Rights, and
SBCC's determination to ultimately purchase any System may be exercised or
deferred by SBCC in its sole discretion.
(c) Advance Contract and System Determinations. In connection with its
------------------------------------------
request for an advance credit approval of a proposed Customer under a Contract,
Viisage may request that SBCC determine the acceptability of the System proposed
to be offered to such Customer under a Contract and to SBCC for purchase, and
the form of proposed Contract to be entered into with respect to the System.
SBCC may, in its sole discretion, evaluate such requests and may, in addition to
an advance credit determination, approve the form of Contract and System to be
provided under the Contract. Any approval so rendered will be coterminous with
the credit approval for the proposed transaction and will become ineffective
upon termination of the credit approval. Contract and System approvals will be
specific only to the exact form of Contract and the exact configuration of the
System approved, and may be subject to other conditions specified by SBCC in
connection with the approval and/or the payment of mutually agreed fees. SBCC's
approval of any System will not constitute an approval or commitment with
respect to any Contract or the credit of any proposed Customer. SBCC's approval
of any Contract will not constitute an approval or commitment with respect to
any System or the credit of any proposed Customer.
(d) Evaluation Information. In connection with any request for a
----------------------
credit, Contract or System approval, Viisage will make a full, accurate and
continuing disclosure to SBCC of all information and documents known to Viisage
or in its possession which relate to the requested approval and/or the
underlying transaction.
(e) Revocation of Approvals. Credit, System and/or Contract approvals
-----------------------
may be revokedat SBCC's sole and absolute discretion, and of no further effect
if, after the date of approval, (i) a material change (as determined by SBCC in
its sole discretion) is recognized in the Contract, System configuration or in
the structure of the proposed transaction from that understood by SBCC at the
time of approval, (ii) there has occurred an adverse change (as determined by
SBCC in its sole discretion) in the creditworthiness of such Customer from that
shown in the materials presented to SBCC in connection with its credit
evaluation, (iii) any of the materials, information, statements and/or
representations provided to SBCC in connection with its review or approval are
false, misleading or incomplete; (iv) Viisage is in default of any of its
obligations, covenants and agreements under this Agreement, any Assignment, or
any other instrument document or agreement with SBCC, or any event has occurred
which with the passage of time or giving of notice or both would constitute such
an event of default; (v) Viisage or any other provider is in default under, or
System performance or viability issues have been raised under similar System
Contracts or installations with other of Viisage's customers; (vi) any default
under the Contract (or any related support or maintenance agreement) has
occurred, or any event has occurred which with the passage of time or giving of
notice or both would constitute such a default, (vi) SBCC determines that both
(A) the approved Contract or approved System fails to satisfy each of the
eligibility requirements which would be applicable thereto if the System were to
be purchased under this Agreement and (B) such failure is unlikely to be cured
or satisfied prior to expiration of the applicable approval period; (viii) any
System components or technology or
2 of 30
<PAGE>
Software will not, as of the proposed date of purchase, be current generation,
warranted-as-new, latest production or release versions of products offered by
the manufacturers or developers thereof, unless otherwise agreed by SBCC; (ix)
there has occurred an adverse change (as determined by SBCC in its sole
discretion) in the business or financial condition of Viisage; or (x) any
condition specific to the approval is not satisfied.
(f) Conditions. SBCC's purchase of any System subject to one or more
----------
approvals under this Section shall be subject to all of the following conditions
being satisfied on the date of purchase:
(i) the creditworthiness of the Customer, the acceptability of the
Contract and related documents, and the offered System are as required by
the approval (which must be current and in effect on the purchase date) or
otherwise acceptable to SBCC in its sole discretion; and
(ii) SBCC receives the following documents:
(A) an Assignment of the Contract;
(B) the Contract;
(C) financing statements (or copies of filed financing
statements) and other documents necessary or reasonably desirable to
perfect or evidence SBCC's, the lessor's, or vendor's rights in the
Equipment covered by the Contract;
(D) evidence of the delivery and acceptance of the System or
of the satisfaction of all conditions required of the provider(s), and
of Viisage's payment for components provided by other parties;
(E) complete copies of all contracts pertaining to the
maintenance and service of the System;
(F) evidence of insurance for the System;
(G) evidence of the payment of applicable taxes with respect
to the System and Contract;
(H) evidence of the due authorization and execution of the
Contract by the parties thereto and of the validity and enforceability
thereof;
(I) an executed notice of assignment as provided under Section
2; and
(J) such other instruments, documents and agreements as SBCC
has required in connection with any approval and /or as SBCC may
reasonably require in its sole discretion.
(g) General. Approvals will not be effective unless in writing and signed
-------
by SBCC. Neither SBCC's rendering of an approval, nor purchase of any System,
nor knowledge of any unsatisfied conditions, representations or warranties with
respect to a Contract will constitute a waiver of any of the representations,
warranties, conditions or rights provided under this agreement or any applicable
Assignment with respect to the Contract.
2. ASSIGNMENT OF SYSTEMS, PAYMENTS AND ASSIGNED RIGHTS.
---------------------------------------------------
3 of 30
<PAGE>
(a) Assignment. At the time of SBCC's purchase of a System, Payments and
----------
Assigned Rights, Viisage will:
(i) transfer, sell and assign to SBCC all of such System and all
accessions, accessories, parts, additions and attachments attached thereto
or used in connection therewith (to the extent that the same are not
removable without affecting the capacity, specifications, performance or
configuration of the System), and all replacements and substitutions
thereof or therefor, provided that for Systems which have not been fully
-------------
developed or installed and for which interim purchase price payments are to
be made under Section 2(d), the foregoing condition need be satisfied only
at the time the final purchase price payment is made, and that at the time
of SBCC's interim payments, Viisage shall transfer such interest in the
System as it then may have; and
(ii) assign to SBCC all of Viisage's right, title and interest in,
to the Payments with respect to the System and under any related Contract
thereunder, and all related Customer Guaranties, and
(iii) assign to SBCC all of Viisage's right, title and interest in,
to and under all Assigned Rights with respect to the System.
all by executing such form of bill of sale and assignment (an "Assignment") in
----------
the Form of Exhibit A hereto or such other form as shall be acceptable to SBCC.
(b) Security Interest. As security for all of its obligations to SBCC
-----------------
under this Agreement Viisage hereby grants or assigns to SBCC a Security
interest in all of the following, whether now or in the future owned by Viisage:
(i) all Systems purchased by SBCC and all Payments, Customer
Guaranties and Assigned Rights related to such Systems;
(ii) subject to Section 2(c) of this Agreement, all rights, whether
against the Customer or any licensor, developer or servicer, and whether
construed as accounts, general intangibles, contract rights or otherwise,
to use and re-license the use of the Software to a user of the Systems or
components thereof, together with the rights of enforcement against any
user in the event of a breach or violation of the related Contract; and all
proceeds of any of the foregoing.
(iii) all additions, parts, accessions or attachments (to the extent
that the same are not removable without affecting the capacity,
specifications, performance or configuration of the Systems) and all
replacements, substitutions to or for such property; and
(iv) all proceeds of any of the foregoing.
4 of 30
<PAGE>
(c) Special Limitations on Assignments of Software. Notwithstanding any
----------------------------------------------
other provision of this Agreement, an Assignment of or security interest granted
in any Software or technology will not be construed as a conveyance of any
---
ownership in or proprietary rights in any Software, patents, copyrights, or
intellectual property except (i) the right to receive payments (whether license
------
payments or otherwise, and whether due from the original Customer or otherwise)
with respect to the Software and technology components of purchased Systems,
(ii) all rights (whether deemed contract rights, accounts, general intangibles
or otherwise) with respect to such payments, whether arising under the
applicable Contract or otherwise, including the rights of enforcement and
remedies, and (iii) a right to re-license or compel the relicensing of such
Software, and transfer the use of such technology, at no additional cost, to any
user(s) of the Equipment components of the Systems. SBCC's rights in Software
will not extend to any copies of Software which are not used or to be used in
connection with the purchased Systems.
(d) Interim Purchase Price Payments. Viisage and SBCC may mutually
-------------------------------
agree to provide for interim conditional payments of the Purchase Price for
Systems which are to be implemented over a period of time not exceeding twelve
(12) months. In order to effect interim payments, the following conditions must
be satisfied:
(i) Viisage and a Customer shall have irrevocably entered into a
Contract which provides for the development, delivery and installation of a
System by Viisage for the Customer and satisfies all provisions of this
Agreement (save for such development, delivery, installation and/or
acceptance of the System);
(ii) The Contract provides that the Customer will become bound to the
entire Contract for its entire term (subject only [i] to appropriation of
fiscal funds, in the case of any Customer which is a governmental body and
[ii] to termination of the Contract in the event of a material, uncured and
continuing default of performance obligations by Viisage) upon Viisage's
completion of installation and delivery benchmarks on or before a specified
date;
(iii) Viisage has provided SBCC with a schedule of installation or
delivery dates, or other benchmarks for System components and deliverables
to be provided by Viisage and its projected direct System costs and months
in which such costs are to be incurred, and Viisage and SBCC have mutually
agreed upon a schedule of dates and amounts for SBCC's interim payment and
final payment of the Purchase Price;
(iv) The System, Payments, Assigned Rights and Customer Guarantees shall
have been assigned from Viisage to SBCC;
(v) This Agreement is in full force and effect and has not expired, or
been terminated or revoked (or if it has expired or terminated, the
commitment to purchase such System remains in effect);
(vi) All of the requirements of this Agreement which must be true or be
performed as of the date of SBCC's purchase with respect to the Contract,
System, Payments,
5 of 30
<PAGE>
Equipment, Assigned Rights and Customer, including but not limited to the
eligibility requirements set forth in Section 4, shall be satisfied,
excepting only those requirements which relate to Viisage's scheduled
development, delivery and installation of the System and the Customer's
acceptance of the System;
(vii) Viisage is not in default of any of its obligations, duties or
agreements under this Agreement, any Assignment, or any other instrument
document or agreement with SBCC, nor has any event occurred which with the
passage of time or giving of notice or both would constitute such an event
of default, nor is Viisage or any other provider in default under, nor have
System performance or viability issues been raised under, similar System
Contracts or installations with other of Viisage's customers;
(viii) There has been no default, nor event which with the passage of time
or giving of notice or both would constitute a default under the Contract,
by any party to the applicable Contract; and
(ix) Any additional conditions or requirements agreed upon in writing by
SBCC and Viisage have been satisfied.
SBCC will make payment of scheduled interim Purchase Price payments at the times
and in the amounts provided under clause (iii) above (but only to the extent of
Viisage's costs therefor) upon Viisage's request for payment, accompanied by its
certification of invoices, checks and other evidence that Viisage has actually
incurred such costs and its certification that Viisage has performed and
satisfied each of the Contract's benchmarks and conditions to be performed as of
the date of the interim payment request.
(e) Closing Out Interim Purchase Price Arrangements. If, on or before
the date for final payment of the Purchase Price (under Section 2(d)(iii)
above), (i) all of the conditions described under Section 2(d) with respect to
the purchase have been and continue to be satisfied, and (ii) all acceptances
and conditions required to cause the Contract and the Payments provided
thereunder to become unconditional, fully satisfied obligations of the Customer
have been satisfied, then SBCC will remit the balance of the Purchase Price to
----
Viisage and the Assignment will become unconditionally effective. If any of the
conditions specified under Section 2(d) are not satisfied on the scheduled date
for an interim Purchase Price advance or cease to be fully satisfied after an
interim Purchase Price advance has been paid, or any of the conditions specified
in the preceding sentence are not satisfied as of the date for final payment of
the Purchase Price, then SBCC's remaining obligation to purchase the System,
----
Payments and Assigned Rights shall become void and of no further effect, and
Viisage will immediately make payment to SBCC of the amount of any interim
Purchase Price advances made by SBCC, plus interest thereon from the date of the
advance to the date of payment at a rate equal to the Prime Rate, and, upon
SBCC's receipt of such payment, the remaining provisions of the Assignment will
be canceled and of no further effect.
6 of 30
<PAGE>
(f) No Assumption by SBCC. SBCC shall not be deemed to have assumed any
---------------------
of Viisage's, or any lessor's, developer's, licensor's or vendor's, obligations
under any Contract or with respect to any Systems.
(g) Use of Purchased Systems. SBCC acknowledges that the Systems to be
------------------------
purchased under this Agreement will be subject to Contracts under which the
Customers will have rights to use and enjoy the Systems. SBCC agrees that,
absent a default under the Contract or related documents by the Customer, and so
long as the Contract remains in effect, SBCC will not interfere with the
Customers' use and enjoyment of the Systems.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
Viisage hereby represents and warrants (each representation and warranty
shall be considered as having been made concurrently with each purchase made
pursuant to this Agreement as an inducement to SBCC to make such purchase) that:
(a) Organized and Existing. Viisage is a corporation duly organized,
----------------------
validly existing and in good standing under the laws of Massachusetts, and
Viisage is duly qualified and in good standing as a foreign corporation
authorized to do business in each state or jurisdiction where such qualification
is necessary.
(b) Due Authorization; No Conflict. Viisage is duly authorized to execute
------------------------------
and deliver this Agreement, and is and will (as long as this Agreement is in
effect and thereafter until no further payment or performance obligations are
owed to SBCC under this Agreement or any Assignment) continue to be, duly
authorized to perform all of its obligations under this Agreement and under each
instrument and document delivered in connection with this Agreement. Viisage's
execution, delivery and performance of this Agreement does not and will not
conflict with any law, rule or regulation, Viisage's charter or by-laws, or any
agreement or court or administrative order, judgment or decree.
(c) Financial Information. Viisage has delivered to SBCC copies of
---------------------
Viisage's most recent quarterly and annual financial statements, in the form
required by Section 5(a).
(d) Principal Place of Business. Unless and until changed in accordance
---------------------------
with Section 5(g), Viisage's chief executive office and principal place of
business is located at the address set forth on the first page of this
Agreement.
4. ELIGIBILITY REQUIREMENTS.
------------------------
All of the following conditions must be true, correct and satisfied with
respect to each System purchased under this Agreement, the Payments with respect
to the System and the related Contract and Assigned Rights, and if such
conditions thereafter shall cease to be true with respect to such System, then
the provisions of Section 9 shall apply to such System. The satisfaction or
failure of satisfaction of the any of the following conditions will be
determined independently of, and without regard to, whether or not a Credit
Default has occurred.
7 of 30
<PAGE>
(a) Assignable Original; Related Agreements. Viisage has delivered to
---------------------------------------
SBCC all assignable originals of the Contract, together with true and accurate
copies of all agreements (including third party Services agreements) entered
into in connection with the Contract.
(b) Accurate Description of System, Services and Payments; Acceptance.
-----------------------------------------------------------------
Except as otherwise contemplated under Section 2(d) or 2(e), the Contract
accurately describes the System covered by, the Payments due under, and the
Services to be rendered in connection with, the purchased System, the System
complies with the requirements of the Contract and has been delivered to and
unqualifiedly accepted by the Customer thereunder, or, if acceptance is not
required by the Contract, all performance conditions necessary to cause the
Contract to become fixed and unconditional against the Customer have been
satisfied; all Services required or to be rendered in connection with a Contract
or any System have been and will be timely and fully provided and unqualifiedly
accepted by the Customer, or, if acceptance is not required by the Contract,
received by the Customer without objection.
(c) No Default. At the time of SBCC's purchase, no default or event which
----------
with the passage of time or giving of notice or both would become a default
under the terms of the Contract existed, and Viisage had no knowledge of any
fact that might impair the Contract's or Assigned Rights' validity.
(d) No Prepayments. At the time of SBCC's purchase, no amounts have been
--------------
prepaid on the Contract except advance payments required by the Contract.
(e) No Setoffs; Non-cancellable. No setoffs, counterclaims or defenses
---------------------------
exist to any claims against or obligations of any Customer under the Contract or
any related Customer Guaranty; the Contract has not been canceled or terminated
by any Customer; and, if the Contract is one under which the Customer is a
governmental entity, the Contract will not be canceled, terminated or permitted
to lapse or expire due to non-renewal prior to the original projected term of
the Contract or the term of any renewal or extension in effect, regardless of
whether such cancellation, termination or non-renewal is permitted by the
Contract, any related agreement, or by applicable law or regulation.
(f) Valid, Binding, Enforceable. The Contract and each related Customer
---------------------------
Guaranty are genuine, valid, binding and enforceable in accordance with their
terms.
(g) Complies with Laws. The Contract and the System and Services covered
------------------
by the Contract comply with all applicable laws and regulations.
(h) Title; Liens; Right to License Software; Perfection. Viisage has
---------------------------------------------------
conveyed to SBCC good title to the System, Payments, Assigned Rights and
Customer Guaranties and all proceeds thereof, free and clear of any lien, claim
or security interest excepting tax liens for which Viisage has fully reserved
payment and which Viisage is contesting in good faith and by appropriate
proceedings; Viisage will not convey to any other party (besides the Customer)
any interest in any related System, Contract, Payments, Assigned Rights or
Customer Guaranties, or
8 of 30
<PAGE>
any proceeds thereof; and at the time of purchase, Viisage has taken, at its
expense, all steps necessary or deemed by SBCC to be desirable to perfect SBCC's
security interest or other interest in the System, Payments, Assigned Rights and
Customer Guaranties. Viisage has an unimpaired fully paid right to perpetually
license the related Software to any user of the Equipment components of the
System, subject only to the interest, if any, of the developer or third-party
licensor of the Software to whom or which all license fees and/or royalties have
been and will be paid by Viisage when due.
(i) No Impairment of Rights or Value. Viisage has not done anything that
--------------------------------
might impair the value of the System, Contract, Payments, Assigned Rights any
related Customer Guaranty, or any of SBCC's rights thereunder.
(j) No Amendments. Neither the Contract nor any related Customer Guaranty
-------------
has been, or will be, altered, modified, changed or amended without SBCC's prior
written consent, which consent will not be unreasonably withheld if the
amendment does not modify the Payments or rights of enforcement under the
Contract, or release any party under or security for the Contract, or provide
for a modification of the System under the Contract. If Viisage requests SBCC's
consent to any proposed amendment, SBCC will be deemed to have consented to the
amendment if SBCC has not denied consent within five (5) business days from its
receipt of Viisage's written request therefor.
(k) Insurance. Viisage will maintain or cause the Customer to maintain
---------
insurance with respect to the Equipment components of the System and otherwise
to such extent and against such risks, hazards and liabilities as is commonly
maintained by companies similarly situated (provided, however, that in no event
shall the amount of insurance which is required to be maintained against damage
to or loss of any System or component thereof be less than the Termination
Amount thereof).
(l) Taxes. All taxes, assessments, fines, fees and other liabilities
-----
relating to the Contract, the Payments due under the Contract, the related
System and Services; and any related Customer Guaranty have been paid when due,
and all related filings have been timely made.
(m) Service Agreements. Viisage has provided full and complete copies of,
------------------
and obtained SBCC's concurrence (which may be given or withheld by SBCC in its
sole discretion) with any contract or agreement under which third parties are to
perform or be responsible for any Services to be rendered in connection with the
Contract or System. SBCC will be deemed to have concurred with any such
contract or agreement if it has not noted its disapproval within ten (10) days
after receipt thereof.
5. DUTIES.
------
Until the termination of this Agreement and for as long as any Payments or
Assigned Rights purchased under this Agreement have not been fully paid or
satisfied, or any System or component thereof is owned by SBCC and has not been
abandoned, Viisage will:
9 of 30
<PAGE>
(a) Financial Information. Furnish to SBCC:
---------------------
(i) as soon as available, but not later than sixty (60) days after
the end of each quarter (except the last) of each fiscal year, quarterly
unaudited financial statements concerning Viisage's business, prepared in
accordance with generally accepted accounting principles and applicable
Securities and Exchange Commission rules and regulations, applied on a
basis consistent with that of the preceding fiscal quarter, presenting
fairly its financial condition as at the end of that quarter and containing
such data as may be requested by SBCC, and certified as true and correct by
its Chief Financial Officer;
(ii) as soon as available, but not later than one hundred-five (105)
days after the end of each fiscal year, a copy of Viisage's annual audit
report for that year, prepared in conformity with generally accepted
accounting principles and applicable Securities and Exchange Commission
rules and regulations, applied on a basis consistent with that of the
preceding fiscal year and presenting fairly its financial condition as at
the end of that fiscal year and the results of its operations for the
twelve (l2) month period then ended and signed by independent certified
public accountants of recognized standing or otherwise satisfactory to
SBCC; and
(iii) any other information as SBCC may reasonably request from time
to time.
(b) Notice of Adverse Events. Notify SBCC promptly upon Viisage's
------------------------
learning of:
(i) any change in the name of any Customer;
(ii) the default or violation by any Customer under any Contract or
other related document;
(iii) any adverse credit information, which Viisage may acquire or
have knowledge of, with respect to any Customer under any Contract;
(iv) the occurrence of any Termination Event or event which, with
the passage of time or with notice or both would become a Termination
Event.
(c) Books and Records. Permit SBCC reasonable access, upon reasonable
-----------------
notice and during normal business hours, to Viisage's books and records as they
relate to Systems, Payments, Assigned Rights or Customer Guaranties purchased by
SBCC, or any related Contracts.
(d) Continuity of Business. Subject to Section 13(f), not (i) cease to
----------------------
engage in substantially the same line of business in which Viisage is engaged on
the date of this Agreement, (ii) cease to engage in the provision of Systems and
related Services, or (iii) sell, transfer or convey a substantial part of
Viisage's assets, or effect or be a party to any merger or consolidation if the
effect thereof, determined by SBCC in its sole discretion, would adversely
affect any of SBCC's rights under this Agreement, any Assignment or in any
property or rights covered by an
10 of 30
<PAGE>
Assignment, or adversely affect Viisage's ability to perform or satisfy any of
its duties and obligations under this Agreement, any Assignment, or any
Contract.
(e) Defaults Under Loan Agreements. Not default under that certain Fourth
------------------------------
Amended and Restated Loan and Conditional Security Agreement between Lau
Acquisition Corporation and the First National Bank of Boston, N.A., or any
related document or agreement, or under any other primary working capital credit
agreement or arrangement hereafter substituted by Viisage therefor, with the
result that any indebtedness with respect to such agreement shall have been
declared due and payable prior to the date on which it would otherwise become
due and payable, and such default is not cured or waived before SBCC has acted
upon such a default as a Termination Event or condition for repurchase of a
System under Section 9 of this Agreement.
(f) Performance of Obligations Under Contracts. Perform or cause any
------------------------------------------
supplier, vendor or developer of System components or Services to perform all of
Viisage's or any such supplier's, vendor's or developer's obligations arising by
contract or imposed by applicable law, rule or regulation with respect to the
Contracts and the related Systems.
(g) Changed Locations. Notify SBCC at least ten (10) days prior to:
-----------------
(i) Viisage's changing the location of its principal place of
business or chief executive office; or
(ii) Viisage's opening or closing any places of business in any
jurisdictions where such openings or closings might affect the place where
a UCC financing statement or similar document would need to be filed in
order to perfect or protect SBCC's security interest or other interest in
any Systems, Payments or Assigned Rights.
(h) Further Assurances. From time to time execute and deliver such
------------------
further documents and take such actions as SBCC may reasonably request in order
to fully effect the purposes of this Agreement and to protect SBCC's interest in
the Systems, Payments and Assigned Rights.
(i) Qualification to Do Business. Subject to Section 13(f), maintain in
----------------------------
full effect its corporate existence and qualification, in each state or
jurisdiction where the failure to do so would have an adverse effect upon
Viisage's rights under this Agreement, any Assignment, any Contract, or with
respect to any Systems, Payments or Assigned Rights, to conduct business under
Viisage's name, the names Lau Technologies and Viisage Technologies, and any
other name under which Viisage conducts business.
6. AGREEMENT TO INDEMNIFY.
----------------------
(a) Scope of Indemnity. Viisage agrees to indemnify and save SBCC
------------------
harmless of, from and against any losses, damages, penalties, forfeitures,
claims, costs, expenses (including court costs and reasonable attorneys' fees)
or liabilities, excepting those arising solely out of SBCC's gross negligence or
willful misconduct, which may at any time be brought, incurred,
11 of 30
<PAGE>
assessed or adjudged against SBCC, related to or arising from the purchased
Systems, the related Contracts and Services, or any breach by Viisage of any of
its representations, warranties, duties or other obligations or agreements
contained in this Agreement, any Assignment or any other agreement with SBCC.
(b) Indemnity Notification. SBCC and Viisage will each give the other
----------------------
notice of any event or condition that requires indemnification by Viisage, or
any allegation that such event or condition exists, promptly upon obtaining
knowledge thereof.
(c) Control of Proceedings. If Viisage is otherwise in compliance with
----------------------
the terms of this Agreement, Viisage shall be subrogated to SBCC's rights with
respect to such event or condition and shall have the right to control, and
determine the settlement of claims upon related litigation, so long as Viisage
does not impose any liability upon SBCC without SBCC's consent (acting in SBCC's
sole discretion).
(d) Survival of Indemnity Obligations. All of the indemnities and
---------------------------------
agreements contained in this Section shall survive and continue in full force
and effect notwithstanding termination of this Agreement or of any Contract.
7. ADMINISTRATION AND COLLECTIONS.
------------------------------
(a) Generally. Viisage agrees to collect Payments and to administer the
---------
Contracts generally. Viisage will undertake such collections and administration
as an independent contractor and not as SBCC's agent, and in connection
therewith will, at Viisage's sole cost and expense, diligently monitor and
verify the amount of usage under Per-Use Contracts, and perform all billing and
collecting for amounts due and to become due with respect to such Contracts.
Viisage will bill Customers and perform such administration in accordance with
its standard procedures.
(b) Billings; Remittances. Subject to Section 2(d), Viisage shall render
---------------------
billings to Customers such that rental, license or usage Payments for any month
during the term of a Contract for a System purchased hereunder will be due not
later than thirty (30) days after the end of such month. Within ten (10) days
after its receipt of any Payment under a Contract or otherwise with respect to a
System purchased hereunder, Visage will remit to SBCC (but only to the extent of
such Payment) the total of unpaid Remittance Amounts for such System for the
month in which paid and for any prior month(s). If Viisage has not received and
remitted the full Remittance Amount to SBCC for each of the first three (3)
respective months in any Contract's term, Viisage shall, within thirty (30) days
after the end of each such month and regardless of whether corresponding
Payments have been received from the Customer, make payment to SBCC of the
unpaid Remittance Amount for such System for such month. Viisage shall be
entitled to receive back the amount of any such forced payments made to SBCC
upon a Credit Default under the Contract, together with interest thereon at the
Prime Rate. All payments made to SBCC shall, unless otherwise specified by SBCC
in writing, be made to SBCC by wire transfer to SBCC's account at Harris Trust
and Savings Bank, ABA Number 071000288, Account Number 4016895.
12 of 30
<PAGE>
(c) Viisage's Recovery of Remittance Amounts. Viisage may, unless SBCC has
----------------------------------------
terminated Viisage's authority to collect for Payments under Section 7(f), or
unless a breach has occurred under this Agreement or any Assignment, retain the
excess by which Payments (excepting prepayments) received by Viisage exceed the
Remittance Amounts attributed to the purchased Systems through such period. If
SBCC has terminated Viisage's authority to bill and collect for Payments under
Section 7(f) or if a breach under this Agreement or any Assignment has occurred,
then SBCC shall receive and may retain all Payments with respect to all Systems
which are subject to the Termination Event. To the extent that any such
Payments retained by SBCC exceed the Remittance Amounts then due with respect to
the Systems to which they relate, SBCC shall apply any such excess Payments
first against the Termination Amount with respect to the System in the inverse
order of maturity until the Termination Amount is zero, and second, against the
Termination Amount(s) (in inverse order of maturity) of any other System(s) then
subject to a Termination Event, with any remaining excess to Viisage. If a
Termination Event is remedied after SBCC has terminated Viisage's authority to
bill and collect for Payments, and SBCC has elected to continue billing and
collecting for Payments, SBCC may, in its sole discretion, remit back to Viisage
the amount of excess Payments collected.
(d) Collection Reports. So long as Viisage shall administer Payments
------------------
purchased by SBCC, Viisage shall maintain books and records pertaining to all
related Contracts and provide SBCC with summaries of monthly billings to the
Customer involved and summaries of the Payments due under and Payments received
under such Contracts, of the usage (compared to the number of usage units
projected for such period under the Contract) and payment amounts under each
Per-Use Contract, and, as requested by SBCC, other source information from which
the aforementioned summaries are prepared. Such reports shall be provided to
SBCC on or before the twentieth (20th) calendar day of each month.
(e) Taxes. Viisage will make or cause the Customer to make all filings in
-----
respect of, and file or cause the Customer to file for and remit payments
received on account of, any and all personal property taxes, license, permit and
registration fees, sales, use, excise, or similar taxes, together with any
penalties or interest in connection therewith, now or hereafter imposed by any
state, Federal or other government or agency on any Contract, System, Assigned
Rights, Services or Payment covered under this Agreement, whether the same shall
be payable by or billed or assessed to the Customer, Viisage or SBCC.
(f) Termination of Billing and Collections. SBCC may terminate Viisage's
--------------------------------------
authority to bill, collect and administer under this Section 7 as to any or all
System Contracts upon the occurrence of a Termination Event, provided that if
the Termination Event results solely out of a default by a Customer under a
Contract, then SBCC may terminate such authority only with respect to the
affected System. If Viisage's authority is terminated by SBCC, SBCC may deliver
to the applicable Customers the notices delivered to SBCC or prepared by SBCC
pursuant to this Agreement and bill for and collect all amounts payable under
the applicable Contracts or with respect to any related Systems. If, despite a
termination of Viisage's authority under this Section 7(f), Viisage subsequently
receives any Payment, Viisage agrees to immediately forward the Payment to SBCC
in kind, and until such Payment is forwarded to SBCC, to hold the Payment in
trust for SBCC. If SBCC has terminated Viisage's billing and collection
authority under this
13 of 30
<PAGE>
Section, Viisage shall not interfere or attempt to interfere with the issuance
of notices with respect to, or the billing and collection of sums due under the
applicable Contracts or with respect to any related Systems. Furthermore,
following termination of Viisage's authority to bill and collect, Viisage agrees
to cooperate and assist SBCC in efforts with respect to billing and collection.
SBCC's right to send notices and bill and collect for Payments and other amounts
shall be specifically enforceable by SBCC.
(g) Notice Letters and Billing Information; Contacts with Customers.
---------------------------------------------------------------
Viisage agrees to provide to each applicable Customer, at the time of SBCC's
purchase of a System, an original notice in the form of Exhibit B hereto. Upon
the occurrence of a Termination Event, Viisage irrevocably authorizes SBCC, in
connection with any notification of Customers as provided in this Section 7, to
deliver the same as an original to each Customer to whom notice under this
Section may be given.
(h) Power of Attorney. For as long as any amounts are owing to SBCC under
-----------------
this or any related agreements, Viisage hereby irrevocably constitutes and
appoints SBCC as Viisage's true and lawful attorney with respect to any System
for which a Termination Event has occurred, with full power of substitution, for
Viisage and in Viisage's name, place and stead, to ask, demand, collect,
receive, receipt for, sue for, compound and give acquittance for any and all
Payments and other sums due with respect to such Systems under Section 7(f), and
to endorse, in writing or by stamp, Viisage's name or otherwise on all checks,
collections, receipts or instruments given in payment or part payment thereof.
(i) SBCC's Discretion. Upon the occurrence of a Termination Event and
-----------------
SBCC's subsequent undertaking to bill and collect for Payments, SBCC may, in
accordance with its ordinary practices and procedures, take or forego whatever
action with respect to the collection of such Payments and receipt of such funds
as SBCC, in its sole discretion, shall deem proper. In addition thereto, SBCC
or its designees may take such actions as SBCC deems appropriate to provide
ongoing verification of usage under Per-Use Contracts and to satisfy any
conditions and/or perform any obligations which may be required in order to
recognize Payments under and/or give effect to such Contract. Regardless of any
such action SBCC may take or forego, the provisions of this Agreement which
govern repurchase will remain in force and shall be unaffected by any such
action or failure to act on SBCC's part.
(j) Reimbursement of Collection Expenses. If SBCC has terminated
------------------------------------
Viisage's authority to bill, collect and administer for Payments under Section
7(f), SBCC will be entitled to receive and retain out of collected amounts any
out-of-pocket expenses and costs which have been reasonably incurred in
connection with SBCC's billing and collection of, performance of administrative
functions with respect to, and verification of usage under any related
Contracts. Viisage will not have any direct liability for such costs and
expenses incurred by SBCC.
(k) Post Termination Repurchases. Viisage will have the right, within
----------------------------
sixty (60) days after SBCC's termination of authority to collect and administer
any Contract, to repurchase the related System and Payments for cash for a price
equal to the then applicable Termination Amount of the System. Such repurchases
may be made pursuant to Section 9A with respect to
14 of 30
<PAGE>
terminations based upon the occurence of a Credit Default. After SBCC receives
the Termination Amount for any repurchased System, SBCC will reassign to Viisage
all of its right, title and interest in the repurchased System and any Payments
due thereunder without representations or warranties by SBCC of any kind
whatsoever, except that SBCC shall represent and warrant that it has not granted
or conveyed any interest therein to any third party (other than interests that
have been fully and finally released). The existence of such a right on
Viisage's part will not (until the right is exercised) impair, limit or effect
SBCC's authority to conduct collections and administration as provided above.
8. PREPAYMENTS.
-----------
Viisage has no right to repurchase any System or prepay any Contract,
whether in whole or in part. If a Contract covering a System purchased by SBCC
is prepaid in full for any reason, SBCC shall be entitled to receive, in
connection with the prepayment, an amount equal to the Termination Amount with
respect to the System.
9. REPURCHASE.
----------
(a) Ineligible Systems, Payments or Contracts. If any of the conditions
-----------------------------------------
specified in Section 4 shall not be or shall cease to be true, correct or
satisfied, SBCC may request or demand that Viisage repurchase the related or
affected System and Payments. If any such condition remains untrue, incorrect
or unsatisfied for sixty (60) days after SBCC's written request or demand, then
Viisage will immediately after expiration of the sixty (60) day period,
repurchase the System and Payments for cash for a price equal to the then
applicable Termination Amount of the related System.
(b) Repurchase of All Systems and Payments. Upon any breach of Viisage's
--------------------------------------
duties or agreements in this Agreement (other than any duty set forth in Section
5(d) or 5(e)) and the continuation of such breach for sixty (60) days after
written notice from SBCC, or upon a breach of any duty set forth in Section 5(d)
or 5(e), Viisage will immediately repurchase all Systems and Payments for cash
for a price equal to the total of then applicable Termination Amounts of all
such Systems.
(c) Per-Use Payment Shortfall. If the Payments actually due under any
-------------------------
Per-Use Contract over any three (3) consecutive-month period are less in the
aggregate than the total of Remittance Amounts for the such period and no Credit
Default exists (other than a Credit Default existing solely because the Customer
has failed or refused to make payments, and not in connection with any other
Credit Default), and upon SBCC's written request to do so, Viisage will
repurchase the related System and Payments for cash for a price equal to the
then applicable Termination Amount.
(d) Reassignment by SBCC. After SBCC receives the Termination Amount for
--------------------
any repurchased System, SBCC will reassign to Viisage all of its right, title
and interest in the repurchased System and any Payments due thereunder without
representations or warranties by SBCC of any kind whatsoever, except that SBCC
shall represent and warrant that it has not
15 of 30
<PAGE>
granted or conveyed any interest therein to any third party (other than
interests that have been fully and finally released).
9A. Term Repurchases'
----------------
(a) Request for Term Repurchase. Upon written request to SBCC within the
---------------------------
time provided for the repurchase of a System and Payments under Section 9(a)
or 9(c), as applicable, Viisage may elect to discharge its repurchase payment
obligations under Section 9(a) or 9(c) over a period of time by making periodic
payments not greater than the related Remittance Amounts to SBCC over a term not
less than the projected term of the related Contract. Unless a different amount
or term are agreed to in writing by SBCC and Viisage, the periodic payment
amount and term for repayment will be equal to the unpaid Remittance Amounts and
remaining term of the Contract. Any difference between the unpaid Termination
Amount due for the repurchase and the present value of the periodic payments
(determined using the Discount Rate used to originally determine the Purchase
Price for the System) must be paid at the time the first deferred payment is
due.
(b) Retained Security Interest. SBCC will retain a security interest in the
--------------------------
Systems, Payments, Assigned Rights, and Customer Guaranties which are
repurchased by payments under this Section 9A and in all proceeds thereof. Said
security interest will be automatically released and of no further effect upon
final payment of all deferred payments with respect to the repurchased System,
Assigned Rights and Customer Guaranties.
(c) Conditions for Deferred Repurchase; Deferral Effective Only While
-----------------------------------------------------------------
Conditions are Satisfied. Viisage's right to defer its repurchase payments
- ------------------------
under this Section 9A will be effective and may be exercised only if each of the
following conditions is and remains fully satisfied. In the event that any of
the following conditions is not satisfied or at any time ceases to be satisfied,
Viisage will not be able to exercise any right to defer payment of its
repurchase obligations under Section 9 and the full unpaid amount of all
---
repurchase obligations deferred under this Section 9A will immediately become
due and be payable to SBCC without further notice or demand. These conditions
are as follows:
(i) Viisage's Debt to Worth Ratio shall equal or be less than 3 to 1;
(ii) Viisage's Debt Service Coverage Ratio shall equal or exceed 1.5 to 1;
(iii) Viisage's EBITDA to Interest Ratio shall equal or exceed 2.5 to 1;
(iv) Viisage's EBITDA to Funded Debt Ratio shall equal or exceed 0.20 to
1;
(v) Viisage's Interest Coverage Ratio shall equal or exceed 1.5 to 1;
(vi) Viisage is not in default of any of its obligations, covenants and
agreements under this Agreement, any Assignment, or any other instrument
document or agreement with
16 of 30
<PAGE>
SBCC, nor has any event occurred which with the passage of time or giving
of notice or both would constitute such an event of default.
(d) Prepayments. All prepayment amounts and other amounts received on
-----------
account of any System, Assigned Rights or Customer Guaranty repurchased by
payments under this Section 9A, or under any related Contract must be paid to
SBCC by Viisage upon Viisage's receipt thereof. Such amounts will be applied in
inverse order against the periodic payments for such System.
10. UPGRADES; FIRST OPPORTUNITY; DISPLACEMENTS.
------------------------------------------
(a) First Opportunity. Whenever a Customer wishes to upgrade any
-----------------
components of a System to a different capacity or model number (an "Upgrade"),
-------
or wishes to add any separately identifiable additional Equipment or Software to
a System (an "Add-On") which will result in additional Payments to become due
------
under the Contract, Viisage will provide SBCC with the first opportunity to, and
SBCC may, in its sole discretion, purchase the Upgrade or Add-On and any
Payments and/or Assigned Rights arising from the lease or financing thereof
(which may, with SBCC's consent, be in the form of an amendment to or
replacement of the original Contract). If SBCC declines to make such purchase,
Viisage may, at its election, either (i) repurchase the existing System and
Payments by paying SBCC the Termination Amount, without any prepayment fee, or
(ii) fund the applicable Upgrade or Add-On itself or from funding sources other
than SBCC (provided that in so doing, none of the eligibility conditions with
respect to the System owned by SBCC are violated and Viisage does not breach any
duty or agreement hereunder or under any Assignment). Upon receipt of such
payment from Viisage, SBCC will reassign all of its right, title and interest in
the System, any unpaid Payments due thereunder, and any related Assigned Rights,
without recourse to and without representations or warranties by SBCC of any
kind whatsoever, except that SBCC shall represent and warrant that it has not
granted or conveyed any interest therein to any third party (other than
interests that have been fully and finally released).
(b) No Displacements. Viisage agrees that it will not, without SBCC's
----------------
written consent, solicit, counsel, offer or encourage any Customer to replace,
reconfigure or consolidate System components in such a manner that existing
System components are replaced or rendered surplus to the ordinary operation of
the existing System.
11. REMARKETING.
-----------
(a) Appointment, Priority. SBCC hereby appoints Viisage as its sole
---------------------
agent, to Remarket Systems purchased by SBCC for a term commencing with the
date of this Agreement and continuing until all of the Systems subject to
Remarketing are sold to the then Customer or other end user, and the provisions
of this Section will apply with respect to the Remarketing of Systems during
such term. The terms "Remarket" or "Remarketing" as used herein will mean the
-------- -----------
re-lease, rental, lease and sale of Systems as provided in this Section, on
prices, terms and conditions acceptable to SBCC and consistent with Viisage's
business practice. Viisage shall use its best commercially reasonable efforts
to Remarket Systems. No priority is required to be given
17 of 30
<PAGE>
by Viisage to Remarket Systems owned by SBCC, but Viisage shall not discriminate
against SBCC in favor of any comparable Systems or components, or upgrades
owned, managed or remarketed by Viisage. Viisage will not replace any System
component owned by SBCC with components owned by Viisage or any other third
party that performs substantially the same functions as SBCC's related System
components (e.g. no "like for like" replacements). Viisage's Remarketing duties
shall, unless terminated earlier by SBCC in accordance with Section 11(k), be
effective with respect to each System and its components until the Termination
Amount with respect to such System has been reduced to zero or, if earlier, the
System has been finally disposed of.
(b) Reporting. For any period beginning after December 31, 1996, Viisage
---------
will provide periodic market reports to SBCC, which will be prepared to the best
of Viisage's knowledge and will show summaries of market information for goods
comparable to any Systems which were offered, represented, sold or brokered by
Viisage during the previous period. Such reports will be considered
confidential and covered by that certain confidentiality agreement dated as of
October 11, 1995, between SBCC and Viisage. Viisage also will provide to SBCC,
within 30 days after the end of any month in which Remarketing has been
conducted, a monthly Remarketing report, which will cover in detail a listing of
Systems which became Off-Lease and Systems or items which were Remarketed during
the prior month.
(c) Remarketing to Existing Customers. If provided for under the
---------------------------------
Assignment related to a System, Viisage may agree to extensions and/or renewals
of the term of the Contract with the Customer thereunder. Any such extension or
renewal must be entered into and become effective prior to the time that the
System becomes Off-Lease and the periodic payments required to be paid by the
Customer on account of the extension or renewal must equal or exceed the amount
specified in the Assignment as the Renewal Rental Amount. If any such renewal
or extension is entered into, all rent and other proceeds of Remarketing, net of
sales, use, property, excise, ad valorem, or similar taxes shall be SBCC's
property, and shall be remitted to SBCC, provided however, that Viisage may
----------------
retain any Payments which are in excess of the Renewal Rental Amounts required
to be paid to SBCC.
(d) Off-Lease Systems, Duties. At such time as a System ceases to be
-------------------------
subject to a Contract or any renewal or extension of a Contract, whether due to
the expiration or termination of the Contract or after a default by the
Customer, the System covered by such Contract or agreement will be deemed "Off-
---
Lease" and Viisage will diligently perform the following Remarketing services
- -----
with respect to each such item of the System:
(i) Take possession of Off-Lease Equipment and/or Software as it
becomes Off-Lease and exercise such of the lessor's or vendor's remedies
under the appropriate Contract as SBCC may request.
(ii) Transport, store, refurbish, insure, perform such service and
repairs as necessary to place the System in proper working order and
otherwise perform such duties as set forth in Section 11(d);
18 of 30
<PAGE>
(iii) Certify the System components to the Remarketing lessee or
purchaser for inclusion under the manufacturer's standard maintenance
policy for equipment of like kind if available to the commercial market;
(iv) Seek new rental customers or purchasers for the System and/or
the components thereof (including, but not limited to, arranging for the
transportation, storage, maintenance and installation of the System, re-
licensing the Software components of the System, and making available to
any lessee, purchaser or user such operating and other Software, service,
and maintenance, spare parts, and training as necessary).
(e) Removal, Refurbishing. Viisage's refurbishment duties for Off-Lease
---------------------
Systems shall include, but are not limited to, a duty to return the Equipment to
an attractive appearance suitable for Remarketing, and a duty to cause the Off-
Lease Systems to perform in accordance with applicable product and certification
specifications for a System of the same model, version or release. Viisage
shall refurbish Off-Lease Systems on a schedule sufficient to make items of
refurbished Systems available to satisfy orders for Equipment or Systems of the
same type as the same are received by SBCC or Viisage. Upon the re-lease or
sale of any System or component of a System (whether Off-Lease or subject to
extensions or renewals of an existing Contract), Viisage shall, at no additional
charge, re-license any Software used in connection with the transferred
Equipment to the purchaser, lessee or user of such Equipment for the full term
of use of such Equipment and shall install or cause to be installed, such System
at the lessee or purchaser's place of business. Viisage shall also, subject to
SBCC's prior approval, (i) update Systems (in accordance with Viisage's standard
service procedures for said Equipment) to incorporate changes or new version
releases of Software and/or microcode which affects the System's value,
compatibility, performance, ability to be upgraded, or ability to accept
interchangeable parts in the same manner Viisage does for other comparable
equipment, and (ii) provide all engineering changes made to substantially all
other Equipment of the same model. SBCC shall not pay greater charges for
products and services covered under Sections 11 (d) and 11(e) than Viisage's
reasonable and customary charges for any such services and products for Systems
similar to such System..
(f) Terms of Remarketing. Subject to the provisions of Section 11(c), any
--------------------
proposed Remarketing of a System will be with parties and upon terms (including
but not limited to price or rental term) and conditions satisfactory to SBCC in
its discretion. Viisage will transmit to SBCC for approval:
(i) The identity of those prospective lessees, users or purchasers
who are considered reasonable prospects to lease or purchase Systems,
setting forth the name (and address if reasonably available) of each such
party;
(ii) A copy of each proposed lease, renewal, extension or contract
for the sale of the System, as the case may be, together with a copy of any
other agreement that may exist or be under consideration between Viisage
and each proposed lessee, user or purchaser, as the case may be, relating
to the System or the leasing or sale thereof; and
19 of 30
<PAGE>
(iii) Sufficient credit information (as may be reasonably requested
by SBCC and which can be reasonably provided by Viisage) with respect to
each proposed lessee, user or installment purchaser to enable SBCC to make
an informed judgment as to the prospective lessee's, user's or purchaser's
creditworthiness, it being understood that any such information will be
provided without any warranty as to the accuracy of such information.
SBCC will notify Viisage in writing of its approval of any Remarketing
transaction proposed by Viisage. If such approval is not given prior to the
seventh (7) business day after SBCC receives the information, SBCC will be
deemed to have not approved the proposed transaction.
(g) Documentation. Upon the Remarketing of any System or portion of a
-------------
System, Viisage will promptly deliver to SBCC, in the case of a cash sale, the
executed contract for the sale of the Equipment and all other documents
effecting or evidencing such sale, and the collected sale proceeds, and, in the
case of a re-lease, installment sale or other arrangement, Viisage will promptly
deliver:
(i) Each assignable original executed lease or document of
extension or renewal with respect to the System;
(ii) All other documents, including executed financing statements in
appropriate form for filing and releases of any liens, necessary or
appropriate to evidence and record SBCC's title and interest in the System,
all moneys due with respect to the System, and rights under all contracts
and agreements concerning the System, and all proceeds of all of the
foregoing;
(iii) An executed assignment to SBCC of each lease or extension,
renewal agreement or Remarketing document;
(iv) If the re-lease is not to an existing Customer, an installation
certificate to the effect that such System has been installed and is ready
for use by the lessee or user; and a letter to each lessee from Viisage and
signed by an authorized representative of Viisage notifying such lessee of
the assignment to SBCC of Viisage's rights under the lease or agreement.
(h) Rates. In establishing rental or sales rates for Remarketing (except
-----
as provided in Section 11(c), Viisage shall apply rates that, in its best
commercial judgment, are the reasonable commercially available rates obtainable
for Systems of the same type. Viisage shall not offer any credits or discounts
to lessees or purchasers of Off-Lease stems not normally granted to like
customers.
(i) Remarketing Proceeds. All proceeds of any Remarketing, net of sales,
--------------------
use, property, excise, ad valorem, or similar taxes ("Remarketing Proceeds")
--------------------
shall be SBCC's property and shall, except as provided under Section 11(c), if
received by Viisage, be immediately remitted
20 of 30
<PAGE>
to SBCC by Viisage, in the form in which they were received. Except for Systems
Remarketed pursuant to Section 11(c), Viisage will be entitled to retain out of
Remarketing Proceeds for any System the amount of Viisage's direct costs of
Remarketing for such System (including sales commissions) up to five percent
(5%) of the original purchase price paid by SBCC for such System, plus (ii) such
of Viisage's documented direct costs as have been approved by SBCC and incurred
in connection with the services covered under Section 11(d) and Section11(e).
Viisage will not be entitled to any additional Remarketing Proceeds except as
provided under Section 11(m) or as otherwise agreed by SBCC in writing.
(j) Communications With Customers. SBCC may communicate directly with
-----------------------------
existing or prospective Customers, lessees or users of Systems if Viisage fails
to perform any of its Remarketing duties with respect to the System.
(k) Brokers; Termination of Remarketing. With respect to any Off-Lease
-----------------------------------
System and with prior notice to Viisage, SBCC may arrange sales to brokers or
dealers. If SBCC arranges a sale of any such System and notifies Viisage before
Viisage Remarkets such System to an end-user, SBCC will be free to conclude such
sale. Further, if any item of a System subject to Remarketing due to the
occurrence of a Customer default is Off-Lease for a period of ninety (90) days
or more, or if any item of a System subject to Remarketing due to any other
reason is Off-Lease for a period of ninety (90) days or more, SBCC may, upon ten
(10) days prior written notice, notify Viisage of SBCC's intention to Remarket
such System. If Viisage fails to Remarket the item within such ten (10) days,
SBCC or its designee may remarket such System on its own behalf. In the event
SBCC arranges a sale of a System or portion thereof to a broker or dealer or
undertakes to remarket any System, Viisage shall only be entitled to receive
payment of its permitted costs and expenses as provided under Section 11(i).
Viisage will not be entitled to any other compensation or residual sharing in
connection with the Remarketing of such System and all Remarketing Proceeds will
be for SBCC's account. Notwithstanding any sale to a broker or dealer or any
undertaking to remarket by SBCC, Viisage agrees that it will make available to
SBCC and to any lessee, purchaser or user of a remarketed System or component,
at prevailing commercial rates, all services, parts, attachments, maintenance
and upgrades as it generally makes available to owners or users of similar
Systems or components. Any Software to be remarketed as part of a System by SBCC
or by a broker or dealer shall be licensed, at no additional cost, to the end
user(s) of the Equipment components of the System. SBCC agrees that it will not
Remarket any Systems to any person or entity that is directly engaged in
competition with Viisage's digital identification system business
(l) Overseas Transactions. If conversion of any System component to a
---------------------
different model or modification of the System to allow its use in any country
other than the United States is required in connection with any remarketing,
Viisage will undertake such conversion, with SBCC's prior written approval, but
the cost thereof will be paid by SBCC. SBCC may require that some or all of
such Off-Lease System be transported by Viisage to destinations outside the
United States. In the event SBCC requests that items be transported outside the
United States, then SBCC will be responsible for the costs of such
transportation export permits, customs fee and duties.
21 of 30
<PAGE>
(m) Revenue Sharing. Provided that Viisage continues to Remarket any
---------------
System which is subject to this Agreement; after the Termination Amount with
respect to such System has been reduced to zero, all Remarketing Proceeds and
other proceeds received by SBCC from or on account of such System shall be paid
one half to SBCC and one-half to Viisage.
12. TERMINATION.
-----------
This Agreement shall continue in effect until terminated and may be
terminated by either party at any time upon thirty (30) days' written notice to
the other, provided, however, that all indemnities and all of the rights and
obligations of the parties which apply to the Systems, Payments and Assigned
Rights assigned and/or approvals and commitments given prior to such termination
shall survive such termination.
13. MISCELLANEOUS.
-------------
(a) Costs and Expenses. Viisage agrees to pay all reasonable costs and
------------------
expenses, including reasonable attorneys' and paralegals' fees, expenses and
court costs incurred by SBCC in enforcing any of the provisions of this
Agreement or in enforcing any of Viisage's obligations under any Assignment
(b) Waiver of Notice of Customer Default. Viisage waives further notice of
------------------------------------
any Customer Default under any Contract for a System purchased hereunder for
which SBCC has undertaken to effect collections under Section 7(f). Viisage
further consents and agrees that with regard to any Contract for which Viisage's
collection rights have terminated under Section 7(f) hereof, and that, without
affecting any of its liabilities or obligations under this Agreement or under
any Assignment, SBCC may agree with any Customer as to any modification,
alteration, release, compromise, extension, waiver, consent, or other similar or
dissimilar indulgence of, or with respect to any Contract.
(c) Notices. Any notice under this Agreement shall be in writing and shall
-------
be delivered in person, by overnight air courier or by United States first class
mail, postage prepaid, and addressed:
(i) if to Viisage, at Viisage's address set forth on the first page of
this Agreement, with a copy to Charles J. Johnson, Esq., Finnegan, Hickey,
Dinsmoor & Johnson, P.C., 20 Beacon Street, Boston, Massachusetts 02110;
(ii) if to SBCC, at One South Wacker Drive, Chicago, Illinois 60606, Attn:
Senior Credit Officer; and
(iii) to either party at any other address as such party may, by notice as
herein provided, received by the other, designate as its address for all
notices under this Agreement.
22 of 30
<PAGE>
(d) Jury; Venue; Jurisdiction. This Agreement has been delivered for
-------------------------
acceptance by SBCC in Chicago, Illinois and shall be governed by and construed
in accordance with the internal laws of the State of Illinois. VIISAGE AND SBCC
EACH:
(I) WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION ARISING FROM
---
OR RELATED TO THIS AGREEMENT;
(II) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED IN COOK COUNTY, ILLINOIS, OVER ANY ACTION OR PROCEEDING
ARISING FROM OR RELATED TO THIS AGREEMENT;
(III) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT VIISAGE MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE
OF ANY SUCH ACTION OR PROCEEDING;
(IV) AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTIONS BY SUIT
ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW; AND
(V) AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST
SBCC'S DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR PROPERTY, CONCERNING ANY
MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT OTHER THAN
ONE LOCATED IN COOK COUNTY, ILLINOIS.
Nothing in this Section shall affect or impair either party's right to serve
legal process in any manner permitted by law or to bring any action or
proceeding against the other in the courts of any other jurisdiction.
(e) Successors and Assigns; SBCC's Assignment. This Agreement shall be
-----------------------------------------
binding on, and inure to the benefit of, SBCC and Viisage and their respective
successors and assigns and contains their entire understanding and agreement
with respect to the subject matter of this Agreement. It is understood and
agreed that from time to time SBCC may, without notice to Viisage:
(i) decide that any or all of the purchases pursuant to this
Agreement shall be made by one or more of SBCC's affiliates, subsidiaries,
or subsidiaries of SBCC's affiliates;
(ii) assign or transfer all or a part of SBCC's right, title and
interest in any Systems, Payments or Assigned Rights and any related rights
under this Agreement, to any person; and
(iii) assign this Agreement in whole or in part and/or assign all or
part of SBCC's rights and benefits under this Agreement to one or more of
SBCC's affiliates, subsidiaries or subsidiaries of SBCC's affiliates.
23 of 30
<PAGE>
If one or more of SBCC's affiliates, subsidiaries or subsidiaries of SBCC's
affiliates purchase any Systems, Payments or Assigned Rights, the purchase or
purchases shall be made under the terms and conditions of this Agreement.
Despite the foregoing, SBCC agrees that it shall not to make any assignment
hereunder to any person or entity that is directly engaged in competition with
Viisage's digital identification system business.
(f) Viisage's Assignment. This Agreement is not assignable by Viisage;
--------------------
provided, however, that Viisage may assign and delegate all of its rights and
obligations hereunder to Viisage Technology, Inc., a Delaware corporation
("Viisage Delaware"), in connection with the transfer of the Viisage Technology
- ------------------
Division (being Viisage's digital imaging division) by Lau Acquisition Corp. to
Viisage Delaware, such transfer to be made in consideration of shares of Viisage
Delaware's common stock in a transaction that is intended to qualify under
Section 351 of the Internal Revenue Code of 1986, as amended, provided that (i)
-------------
Viisage Delaware shall, immediately following completion of the transaction,
have assets and liabilities substantially similar to those shown in pro forma
financial statements previously disclosed to SBCC, and (ii) the transfer shall
be consented to by SBCC. From and after the date of such assignment, Viisage
Delaware shall become, and Lau Acquisition Corp. shall cease to be, bound
hereunder and under any Assignment or other instrument, document or agreement
made or entered into by Viisage in connection herewith, and references herein to
Viisage shall be deemed to mean Viisage Delaware. Upon such assignment, Viisage
Delaware shall enter such agreements of assumption of this Agreement and shall
execute and deliver to SBCC such Uniform Commercial Code financing statements
consistent herewith for Systems purchased by SBCC hereunder as SBCC reasonably
may request to confirm Viisage Delaware's obligations hereunder.
(g) Reliance. All of the covenants, agreements, representations and
--------
warranties made by Viisage in this Agreement shall, notwithstanding any
investigation by SBCC, be deemed material and to have been relied upon by SBCC
with respect to each purchase made pursuant to this Agreement.
(h) Waivers. SBCC's knowledge of any breach of or non-compliance with any
-------
of Viisage's duties, agreements, representations or warranties shall not
constitute a waiver by SBCC. None of SBCC's rights under this Agreement will be
waived except in a writing signed by SBCC and any such waiver will be effective
only as to the matters expressly set forth in such writing.
(i) Illegality. SBCC's obligation to perform under this Agreement is
----------
limited by and subject to any and all applicable laws, rules and regulations.
Wherever possible, each provision of this Agreement shall be interpreted as
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Agreement.
SBCC and Viisage intend to comply with the laws of the State of Illinois, and
notwithstanding any provision to the contrary, Viisage shall not be required to
pay and SBCC shall not be permitted to collect interest in excess of the maximum
amount of interest permitted by law. If any excess interest is determined to
have been provided for by a court of competent jurisdiction, then: (i) Viisage
shall not be obligated to pay any excess
24 of 30
<PAGE>
interest; (ii) any excess interest that SBCC may have received shall be applied
against any of Viisage's outstanding obligations or refunded to Viisage; (iii)
the interest rate(s) shall be automatically reduced to the maximum lawful rate
allowed under applicable law, and this Agreement and any related agreements
shall be deemed to have been, and shall be, reformed and modified to reflect
such reduction; and (iv) Viisage shall not have any action against SBCC for any
damages arising out of the payment or collection of any excess interest.
14. DEFINITIONS.
-----------
The following terms, wherever used in this Agreement, shall have the
meanings given to them in this Section. To the extent applicable, all of the
terms shall be determined in accordance with, and each of the components used
therein shall be afforded the meaning given under, generally accepted accounting
principles consistently applied with respect to prior periods:
"Add-On" has the meaning given in Section 10(a).
------
"Assigned Rights" with respect to a System means all rights with respect to
---------------
the ownership of the System, except as otherwise provided under Section 2(c),
including the rights under any Contract related to the System, all rights with
respect to any Payments related to the System, rights of enforcement and
remedies with respect to any Contract and/or Payments, and all related rights
under or with respect to any of the foregoing (whether deemed contract rights,
accounts, general intangibles or otherwise).
"Assignment" has the meaning given in Section 2(a).
----------
"Assumed Residual" means the projected value of a System purchased by SBCC,
----------------
as of the end of the projected term or renewal term of the Contract. The
Assumed Residual will be determined at the date of purchase and will be shown on
the Assignment relating to the System.
"Contract" means:
--------
(i) a non-cancelable lease agreement arising out of a lease of a
System or
(ii) an installment sale contract, other installment payment
agreement;
(iii) a Per Use Contract;
(iv) other chattel paper arising out of the sale, provision or
financing of a System
"Credit Default" with respect to any particular Contract or the Customer
--------------
thereunder means any payment default by such Customer which continues for a
period of 90 days, default by the Customer under the terms of the Contract (but
not including any default arising solely from the Customer's failure to make
Payments), the filing of a voluntary or involuntary bankruptcy petition naming
such Customer as debtor thereunder, the commencement of any other insolvency
25 of 30
<PAGE>
proceedings by or against such Customer, the failure by such Customer to
continue its business or legal existence, the meeting by such Customer with a
committee of its creditors, the making of any assignment or the appointment of
any receiver for any such Creditor or its property, or any other similar event
evidencing an insolvency of or imposing upon or seeking any insolvency relief
for such Customer.
"Customer" means any party obligated with respect to a System other than
--------
the lessor, provider or vendor of the System covered thereby.
"Customer Guaranty" means any guaranty given to Viisage (or under which
-----------------
Viisage has rights) by any person or entity guaranteeing the payment and/or
performance of a Contract.
"Current Maturities of Long Term Debt" for an accounting period means the
------------------------------------
sum of the current portions of long term debt, capitalized leases and operating
leases due and to become due in such period.
"Debt to Worth Ratio" shall mean the ratio calculated as Liabilities
-------------------
divided by Tangible Net Worth.
- ----------
"Debt Service Coverage Ratio" shall be determined as of the end of fiscal
---------------------------
quarters, and, as of the end of a fiscal quarter, means the ratio calculated as
Operating Income for the four quarters ending as of the relevant fiscal quarter
divided by the Current Maturities of Long Term Debt for such 12-month period.
- ----------
"Discount Rate" for any System means the rate, as of the date of SBCC's
-------------
purchase, specified as the Discount Rate in Schedule A to this Agreement.
Changes to the Discount Rate may be announced by SBCC from time to time and will
apply prospectively to purchases made after the announced effective date.
"EBITDA" shall be determined as of the end of fiscal quarters, and, as of
------
the end of a fiscal quarter, means the net income for the four quarters ending
as of the relevant fiscal quarter plus the amounts by which gross income was, in
determining net income, reduced on account of depreciation, interest,
amortization and federal, state and local income tax expenses and/or tax
reserves.
"EBITDA to Interest Ratio" shall be determined as of the end of fiscal
------------------------
quarters, and, as of the end of a fiscal quarter, means the ratio calculated as
EBITDA for the four quarters ending as of the relevant fiscal quarter divided by
----------
interest expense for such 12-month period.
"EBITDA to Funded Debt Ratio" shall be determined as of the end of fiscal
---------------------------
quarters, and, as of the end of a fiscal quarter, means the ratio calculated as
EBITDA for the four quarters ending as of the relevant fiscal quarter, divided
-------
by the sum of current and deferred portions of long term debt, capital leases
- --
and operating leases for the such 12-month period.
26 of 30
<PAGE>
"Equipment" means digital imaging equipment and/or other goods which are
---------
sold or leased by Viisage under a Contract together with all additions,
replacements, substitutions, parts, repairs, accessories, accessions or
attachments to such property.
"Interest Coverage Ratio" shall be determined as of the end of fiscal
-----------------------
quarters, and, as of the end of a fiscal quarter, means the ratio calculated as
Operating Income for the four quarters ending as of the relevant fiscal quarter,
divided by interest expense for such 12-month period.
- ----------
"Liabilities" means all consolidated liabilities, obligations and
-----------
indebtedness to any person or entity of any and every kind and nature, whether
primary, secondary, direct, indirect, absolute, contingent, fixed, or otherwise,
heretofore, now or hereafter owing, due, or payable, however evidenced, created,
incurred, acquired or owing and however arising, whether under written or oral
agreement, by operation of law, or otherwise. Liabilities specifically includes
(i) all obligations or liabilities of any person or entity that are secured by
any lien, claim, encumbrance, or security interest upon property owned by
Viisage, even though Viisage has not assumed or become liable for the payment
thereof, (ii) all obligations or liabilities created or arising under any lease
of real or personal property, or conditional sale or other title retention
agreement with respect to property used or acquired, even though the rights and
remedies of the lessor, seller or lender thereunder are limited to repossession
of such property, (iii) all unfunded pension fund obligations and liabilities
and (iv) deferred taxes.
"Off-Lease System" has the meaning given in Section 11.
----------------
"Operating Income" shall be determined as of the end of fiscal quarters,
----------------
and, as of the end of a fiscal quarter, means net income for the four quarters
ending as of the relevant fiscal quarter, plus the amounts by which gross income
was, in determining net income, reduced on account of depreciation and
amortization
"Payment" means any payment, whether or not earned by performance,
-------
receivable by the vendor, lessor or provider on account of any related System
purchased by SBCC, including but not limited to all payments receivable under
any Contract covering or related to the System.
"Per-Use Contract" means a Contract under which the Payments to become due
----------------
(or some portion of the Payments) will be calculated by multiplying (i) the
amount or extent of System usage or production, measured numerically, by (ii) a
per-use, per-cycle, per-unit, etc., rate.
"Prime Rate" means the highest "Prime Rate" of interest quoted, from time
----------
to time, by The Wall Street Journal. If The Wall Street Journal ceases quoting
----------------------- -----------------------
a "Prime Rate", "Prime Rate" shall be determined by SBCC in good faith using
Statistical Release H.15 (519) published by the Board of Governors of the
Federal Reserve System or a comparable index chosen by SBCC. The "Prime Rate"
shall change effective on the date of the publication of any change in the
applicable index by which such "Prime Rate" is determined.
"Purchase Price" of a System covered by a Contract shall be computed as of
--------------
the date of purchase (or, if interim payments of the Purchase Price are made, on
the date of the first payment
27 of 30
<PAGE>
of any interim payments of the Purchase Price) and shall be an amount equal to
the sum of (i) the present value of the Remittance Amounts for the System,
calculated using the Discount Rate, plus (ii) the present value of the Assumed
Residual of the System calculated using the Residual Discount Rate.
"Remarket" has the meaning given in Section 11.
--------
"Remarketing Proceeds" has the meaning given in Section 11.
--------------------
"Remittance Amount" means, with respect to any System for any period of
-----------------
time, the amount specified in the Assignment applicable to the System as the
"Remittance Amount" for such period, plus any prepayments or other amounts
received on account of the System, plus any additional amounts then due to SBCC
under the Contract or otherwise with respect to the System, plus, for any
Remittance Amount which is projected to be paid, but is not paid within ten (10)
days after the end of the month in which payment is projected, a monthly late
payment amount equal to one percent of the unpaid Remittance Amount as of the
end of the preceding month. If the Assignment does not specify a Remittance
Amount, the Remittance Amount for a System for a specified period will be an
amount determined in good faith to provide to SBCC an internal rate of return on
the System's Purchase Price, based on the originally anticipated Contract term,
equal to the Discount Rate.
"Renewal Rental Amount" means, with respect to any particular System
---------------------
purchased by SBCC hereunder, the periodic dollar amount to be paid by Viisage to
SBCC during Contract renewals and extensions, if any, for such System under
Section 11(c) hereof, which dollar amount shall be specified in the Assignment
for such System.
"Residual Discount Rate" for any System means the rate, as of the date of
----------------------
SBCC's purchase, specified as the Residual Discount Rate in Schedule A to this
Agreement. Changes to the Residual Discount Rate may be announced by SBCC from
time to time and will apply prospectively to purchases made by SBCC after the
announced effective date.
"Services" means design, installation, analysis, testing, monitoring,
--------
maintenance, development, training, support engineering, consulting or other
services taken or to be taken by Viisage, its designees and/or parties other
than the Customer under or in connection with a System or Contract.
"Software" means operating and applications Software products or code used
--------
in connection with the Equipment comprising a part of a System, together with
all upgrades, enhancements or supplements thereto.
"System" means a digital identification system that is designed, developed
------
or implemented by Viisage and that is sold, leased or otherwise made available
to a Customer, and includes Equipment, rights to use solutions and Software in
connection therewith, and other property which is sold, provided or leased by
Viisage, together with all additions, replacements, substitutions, parts,
repairs, accessories, accessions or attachments thereto.
28 of 30
<PAGE>
"Tangible Net Worth" shall mean, as of any particular date, the
-------------------
difference between (a) total assets excluding all values attributable to
goodwill, patents, copyrights, trademarks, licenses, prepaid expense, other
general intangibles and accounts due from affiliated entities and (b) total
liabilities and deferred charges, including as liabilities all guarantees of the
indebtedness of affiliated entities.
"Termination Amount" with respect to any System will be an amount equal to
------------------
the sum of (i) the present value of any Remittance Amounts with respect to the
System which have not been received by SBCC, calculated using the Discount Rate
in effect on the date that the Purchase Price of the System was determined, plus
(ii) the present value of any unpaid Assumed Residual of the System, calculated
using the Residual Discount Rate in effect on the date that the Purchase Price
for the System was determined plus (iii) the amount of any costs, expenses or
sums payable to or recoverable by SBCC with respect to the System and any
related Contract.
"Termination Event" means: (i) Viisage's failure to timely pay any amount
-----------------
due under this Agreement or any Assignment, which failure is not remedied within
ten (10) business days; (ii) the breach or violation of any duties set forth in
Section 5(d) or 5(e) of this Agreement; (iii) the breach or violation of any
other of Viisage's duties set forth in this Agreement or any Assignment, and the
continuation thereof for sixty (60) days after written notice from SBCC; (iv)
Viisage's insolvency, inability to pay debts as they mature, making of an
assignment for the benefit of creditors, or the institution of any proceeding by
Viisage alleging that Viisage is insolvent or unable to pay Viisage's debts as
they mature, (v) the institution of any proceeding against Viisage alleging
that Viisage is insolvent or unable to pay its debts as they mature, which is
consented to by Viisage or under which Viisage is adjudicated to be a debtor in
a Bankruptcy case, or which is not withdrawn or dismissed within one hundred
eighty (180) days after its institution; or (vi) with respect to the affected
Contract only, the default, breach or violation of the Contract by any Customer.
"Upgrade" has the meaning given in Section 10(a).
-------
IN WITNESS WHEREOF, SBCC and Viisage have executed this Purchase Agreement
effective as of September 12, 1996.
SANWA BUSINESS CREDIT CORPORATION ("SBCC")
By: /s/ Tom McGlinch
___________________________________________
Title: Vice President, Vendor Finance Division
________________________________________
LAU ACQUISITION CORP. ("VIISAGE")
By: /s/ William A. Marshall
___________________________________________
Title: CFO, Viisage
________________________________________
29 of 30
<PAGE>
Attachments:
Schedule A
Exhibit A (form of Assignment)
Exhibit B(form of notification letter)
30 of 30
<PAGE>
Exhibits to
Exhibit 10.15
-------------
EXHIBIT A TO PURCHASE AGREEMENT
BILL OF SALE AND ASSIGNMENT
FOR VALUE RECEIVED and pursuant to a Purchase Agreement dated (the "Agreement"),
Lau Acquisition Corp., doing business under the assumed names of Lau
Technologies and Viisage Technology, ("Viisage") hereby sells, assigns and
transfers to Sanwa Business Credit Corporation ("SBCC") all right, title and
interest of Viisage in and to
(i) the digital identification system identified on Schedule hereto,
including equipment, rights to use solutions and software products or code
in connection therewith, and other property which is sold, provided or
leased by Viisage to ("Customer") under the Contract (as defined below),
together with all accessions, accessories, parts, additions and attachments
attached thereto or used in connection therewith (to the extent that the
same are not removable without affecting the capacity, specifications,
performance or configuration of the System), and all replacements and
substitutions thereof or therefor, (all collectively the "System");
(ii) all payments, whether or not earned by performance, receivable by
Viisage or any vendor, lessor or provider on account of the System,
including but not limited to all payments receivable under the Contract
covering or related to the System ("Payments");
(iii) all rights with respect to the ownership of the System, except as
otherwise provided under Section 2(c) of that certain Purchase Agreement
between Viisage and SBCC which more specifically limits the scope of SBCC's
interest in proprietary rights, patents, copyrights and intellectual
property, including the rights under that certain between Viisage and the
Customer ("Contract") related to the System, all rights with respect to any
Payments related to the System, rights of enforcement and remedies with
respect to the Contract and/or Payments, and all related rights under or
with respect to any of the foregoing (whether deemed contract rights,
accounts, general intangibles or otherwise) collectively,
(iv) all guaranties given to Viisage (or under which Viisage has rights)
by any person or entity guaranteeing the payment and/or performance of the
Contract.
Notwithstanding anything herein or in the Agreement to the contrary,
Viisage has not assigned or delegated, and SBCC has not assumed or promised to
perform, any of Viisage's duties or
<PAGE>
obligations under the Contract or with respect to any property referred to in or
covered by the Contract.
This Bill of Sale and Assignment is intended by the parties as an agreement
for the sale of the System and the assignment of the Contract referred to above.
However, in the event it is determined that this Bill Of Sale And Assignment is
an agreement for the making of a loan or loans, then as collateral security for
the payment of all amounts due and to become due to SBCC in connection with this
Bill Of Sale And Assignment and/or the Agreement, Viisage hereby grants to SBCC
a security interest in and to
(i) the System, Payments, Customer Guaranties and Assigned Rights
related to such System;
(ii) subject to Section 2(c) of the Purchase Agreement (which more
specifically limits the scope of SBCC's interest in proprietary rights,
patents, copyrights and intellectual property), all rights to receive
payments with respect to the Software and technology components of the
System and all rights, whether against the Customer or any licensor,
developer or servicer, and whether construed as accounts, general
intangibles, contract rights or otherwise, to use and re-license the use of
the Software to a user of the System or components thereof, together with
the rights of enforcement against any user in the event of a breach or
violation of the Contract; and all proceeds of any of the foregoing;
(iii) all additions, parts, accessions or attachments (to the extent that
the same are not removable without affecting the capacity, specifications,
performance or configuration of the System) and all replacements,
substitutions to or for such property; and
(iv) all proceeds of any of the foregoing.
The terms and conditions of this Bill Of Sale And Assignment, including,
but not limited to, Viisage's warranties with respect to the Contract and
System, Viisage's obligations to SBCC with respect to such Contract and System,
are as provided for in the Agreement, to which reference is hereby made for a
statement thereof All capitalized terms used in this Bill Of Sale And Assignment
shall have the same meaning herein as in the Agreement, unless a different
definition is specifically provided in this Bill of Sale and Assignment.
The "Remittance Amounts" for the Contract are specified by date and amount
on Schedule hereto, which is incorporated in full by this reference.
The projected initial term of the Contract is expected to run through the
month of
<PAGE>
- ----------------------- begin optional terms ----------------
[optional] The "Assumed Residual" of the System covered by this Bill of
Sale and Assignment is S which is assumed to be paid on
[optional] The Contract is a "Per-Use Contract". Schedule hereto, (which
is incorporated in full by this reference) sets forth the value and number of
usage units projected under the Contract.
[optional] As provided for under Section 11(c) of the Agreement, Viisage
may agree to extensions and/or renewals of the term of the Contract with the
Customer. Any such extension or renewal must be entered into and become
effective prior to the time that the System becomes Off-Lease and the periodic
"Renewal Rental Amount" payments required on account of the extension or renewal
must equal or exceed the amount specified in Schedule as the renewal rental
amount.
[optional] Interim payments of the Purchase Price will be made as provided
in the Agreement. The total Purchase Price for the System is
$________________________. Interim payments in the amounts specified on
Schedule ____ hereto (which is incorporated in full by this reference) will be
made on the dates specified therefor on Schedule ___. Final payment of the
Purchase Price will be made on _______________________________. Schedule ___
hereto (which is incorporated in full by this reference) provides a schedule of
installation or delivery dates or other benchmarks for System components and
deliverables to be provided by Viisage, together with a schedule of Viisage's
projected direct System costs and months in which such costs are to be incurred.
If any of the conditions specified under Section 2(d) of the Agreement are not
satisfied on the scheduled date for any interim or final Purchase Price payment
or cease to be fully satisfied after an interim Purchase Price payment has been
paid, then SBCC's remaining obligation to purchase the System, Payments and
Assigned Rights shall become void and of no further effect, and Viisage will
immediately make payment to SBCC as provided in Section 2(e) of the Agreement.
- ---------------------------- end of optional terms -----------------------------
This Bill Of Sale And Assignment shall be governed by and construed in
accordance with the internal laws (as opposed to the conflicts of law
provisions) of the State of Illinois.
<PAGE>
This Bill Of Sale And Assignment shall be binding upon and inure to the
benefit of Viisage and SBCC and their respective successors and assigns.
Dated: Lau Acquisition Corp. (Viisage)
---------------
By:
--------------------------------------------------
Title:
-----------------------------------------------
ATTACHMENT: SCHEDULE A [optional] Show renewal rental amount if applicable;
[optional] show usage projections if applicable
[optional] SCHEDULE(S) _____ [schedules of interim and final
purchase price payments and conditions/benchmarks and costs]
<PAGE>
SCHEDULE A
ATTACHED TO AND MADE A PART OF THAT CERTAIN PURCHASE
AGREEMENT
(THE "AGREEMENT") DATED SEPTEMBER 12,1996
BETWEEN LAU ACQUISITION CORPORATION
AND SANWA BUSINESS CREDIT CORPORATION ("SBCC")
1. Discount Rate. Contracts purchased pursuant to the Agreement will be
-------------
discounted to yield to SBCC a simple per annum interest rate equal to the sum of
the "Index Rate" plus 3 10 basis points.
2. Residual Discount Rate. Means a simple per annum interest rate equal
----------------------
to the sum of the "Index Rate" plus 500 basis points.
The "Index Rate" will be the "yield rate" as quoted in the most recent
----------
(prior to the purchase date or, if interim payments of the Purchase Price are
made, on the date of the first payment of any interim payments) edition of
Statistical Release H. 15 (519), as published by the Board of Governors of the
Federal Reserve System, for "This week" for "Treasury Constant Maturities"
having a maturity of five (5) years. In the event that the Board of Governors
ceases publishing H. 15 (519), the Index Rate will be determined using a
comparable index chosen by SBCC in good faith.
Agreed to this day of 1996.
---------------
LAU ACQUISITION CORP. SANWA BUSINESS CREDIT CORPORATION
By: By:
------------------------ --------------------------------
Title: Title:
--------------------- -----------------------------
<PAGE>
EXHIBIT B TO PURCHASE AGREEMENT
NOTICE AND CONSENT TO ASSIGNMENT
--------------------------------
, 19
------------ ---
- -------------------------
- -------------------------
- -------------------------
Re: _______________________ dated __________, 19__ (the "Agreement")
---------
between Lau Acquisition Corporation ("Lau") and __________________ ("User")
--- ----
Lau gives notice to User that pursuant to the terms of an Assignment (the
"Assignment") it has assigned and transferred to Sanwa Business Credit
----------
Corporation ("SBCC") all of Lau's right, title and interest in and to the
----
equipment and other goods provided to User under the Contract and the right to
license related software to the user of such equipment and goods, together with
certain accessions, accessories, parts, additions and attachments attached
thereto or used in connection therewith (the "System"). Lau has also assigned
------
to SBCC all of Lau's right to receive payments with respect to the System and
all rights with respect to the ownership of the System, (excepting intellectual
property rights in the software and technology), including rights of enforcement
and remedies with respect to the Agreement and/or payments.
The Assignment does not relieve Lau from the performance of any of its
obligations under the Agreement, nor shall the Assignment make or cause SBCC to
be liable for such obligations. User should settle all claims against Lau,
whether arising under or related to the Agreement or otherwise, directly with
Lau.
Lau hereby irrevocably directs User, upon notice from Lau or SBCC, to make
any and all payments required or permitted to be made pursuant to the Agreement
directly to SBCC at the following address: Sanwa Business Credit Corporation,
One South Wacker Drive, Suite 3900, Chicago, Illinois 60606, or to such other
address as SBCC may specify. Lau agrees that payment to SBCC in accordance with
the foregoing instructions will relieve User of its obligation to make such
payment to Lau pursuant to the Agreement. UNTIL YOU RECEIVE NOTICE FROM LAU OR
SBCC THAT PAYMENTS ARE TO BE MADE TO SBCC, YOU SHOULD CONTINUE TO FORWARD
PAYMENT TO LAU AS CONTEMPLATED IN THE AGREEMENT.
User should not, without SBCC's prior written consent: (i) modify or amend
the Agreement, (ii) assign, encumber or sublet its rights under the Agreement or
in the System, or (iii) exercise any of its rights under the Agreement which are
exercisable only with the consent of Lau.
<PAGE>
A copy of each notice which User is required to give Lau under the terms of
the Agreement should be sent by User to SBCC at its address set forth above by
certified mail, postage prepaid, or at such other address as SBCC may hereafter
notify User.
("Lau")
-----------------------
By:
-------------------------------------
Name and Title:
-------------------------
<PAGE>
EXHIBIT A
ATTACHED TO AND MADE A PART OF THE FINANCING STATEMENT
EXECUTED BY LAU ACQUISITION CORP. (also doing business as Lau
Technologies and Viisage Technology) AS DEBTOR AND SHOWING
SANWA BUSINESS CREDIT CORPORATION AS SECURED PARTY
This Financing Statement covers all of Debtor's right, title and interest
whatsoever in and to all of the following, whether now or hereafter existing or
acquired and wherever located:
(i) the digital identification system identified on Schedule A hereto,
including equipment, rights to use solutions and software products or code in
connection therewith, and other property which is sold, provided or leased by
Debtor to ______________________ ("Customer") under the Contract (as defined
below), together with all accessions, accessories, parts, additions and
attachments attached thereto or used in connection therewith (to the extent that
the same are not removable without affecting the capacity, specifications,
performance or configuration of the System), and all replacements and
substitutions thereof or therefor, (all collectively the "System");
(ii) all payments, whether or not earned by performance, receivable by
the Debtor or any vendor, lessor or provider on account of the System, including
but not limited to all payments receivable under the Contract covering or
related to the System ("Payments");
(iii) all rights with respect to the ownership of the System, except as
otherwise provided under Section 2(c) of the Purchase Agreement between Debtor
and Secured Party dated September 12,1996 which more specifically limits the
scope of SBCC's interest in proprietary rights, patents, copyrights and
intellectual property), including the rights under that certain between Debtor
and the Customer ("Contract") related to the System, all rights with respect to
any Payments related to the System, rights of enforcement and remedies with
respect to any Contract and/or Payments, and all related rights under or with
respect to any of the foregoing (whether deemed contract lights, accounts,
general intangibles or otherwise) (collectively, 00 11);
(iv) all rights to receive payments with respect to the software and
technology components of the System and all rights, whether against the Customer
or any licensor, developer or servicer, and whether construed as accounts,
general intangibles, contract rights or otherwise, to use and re-license the use
of the software to a user of the System or components thereof, together with the
rights of enforcement against any user in the event of a breach or violation of
the Contract,
DEBTOR'S INITIALS:
-----
<PAGE>
(v) all guaranties given to Debtor (or under which Debtor has rights)
by any person or entity guaranteeing the payment and/or performance of the
Contract.
(vi) all additions, parts, accessions or attachments (to the extent that
the same are not removable without affecting the capacity, specifications,
performance or configuration of the System) and all replacements, substitutions
to or for such property; and
(vii) all proceeds of any of the foregoing.
DEBTOR'S INITIALS:
-----
<PAGE>
Exhibit 10.16
-------------
December 8, 1994
Lau Technologies
531 Main Street
Acton, Massachusetts 01720
Attention: Denis K. Berube
Re: New York CBIC Funding
-------------------------
Dear Denis:
The New York Department of Social Services executed a contract dated as of
November 2, 1994 with Continental Currency Services, Inc. ("Continental") under
which Transactive Corporation ("Transactive") will subcontract with Continental
for the provision of common benefit identification cards ("CBICs") and related
services. As we have discussed, it is contemplated that Lau will act as a
subcontractor to Transactive pursuant to a subcontract to be negotiated in good
faith between us. In light of the immediate need for Lau to begin performance,
which includes ordering substantial equipment from Lau's suppliers, before our
subcontract can be completed, this interim letter agreement is required.
1. Funding Authorization. Transactive hereby authorizes Lau to make
---------------------
expenditures and incur obligations of up to $1,862,039 for the purchase of
equipment and supplies for the CBICs system. Lau is not authorized to make
expenditures or incur obligations which exceed this funding limitation without
the prior written consent of Transactive. The estimated schedule of
expenditures by milestones is attached as Exhibit A to this letter agreement.
---------
Lau will provide Transactive with copies of the invoices evidencing the
expenditures authorized herein and Transactive will pay Lau the invoiced amount
within 20 days of receipt. All amounts which are not paid when due will bear
interest at the then current prime rate published in The Wall Street Journal
-----------------------
plus one percent per annum.
2. Termination Liability. In the event that Transactive and Lau fail to
---------------------
enter into a mutually agreeable subcontract by February 1, 1995 (which date may
be extended by the mutual agreement of Transactive and Lau), (i) Transactive
will be entitled to all equipment and supplies acquired by Lau for the CBICs
system with the funding authorized above (with transportation and delivery costs
to be paid by Transactive), (ii) Lau will be responsible for paying its
suppliers for such equipment and supplies, and (iii) Transactive will pay Lau,
within three business days of the termination date, a termination payment which
is based on expenditures in accordance with the termination liability schedule
attached as Exhibit B to this letter agreement. If the expenditure is between
---------
the milestone amounts set forth on Exhibit A, the termination payment will be
---------
subject to equitable pro rata adjustment using the schedule on Exhibit B.
--- ---- ---------
<PAGE>
3. Definitive Agreement. We will endeavor to negotiate a definitive
--------------------
subcontract as promptly as possible which will more completely set forth our
respective obligations regarding the CBICs system for the New York Department of
Social Services and supersede this interim agreement.
Please acknowledge your agreement as to the foregoing by executing this
letter agreement in the space provided below.
Very truly yours,
TRANSACTIVE CORPORATION
By: /s/ Michael Lavigna
AGREED TO AND ACCEPTED:
LAU TECHNOLOGIES
By: /s/ Denis K. Berube
<PAGE>
EXHIBIT A
---------
LAU TECHNOLOGIES
FUNDING AUTHORIZATION AMOUNT
GTECH - NY DSS ID CARD SYSTEM
12/08/94
<TABLE>
<CAPTION>
FUNDING AUTHORIZATION
-----------------------
INCREMENTAL CUMULATIVE
EVENT AMT AMT
<S> <C> <C>
MILESTONE 1 293,999 293,999
MILESTONE 2 596,908 890,907
MILESTONE 3 142,813 1,033,720
MILESTONE 4 238,022 1,271,743
MILESTONE 5 238,022 1,509,765
MILESTONE 6 233,262 1,743,027
MILESTONE 7 119,011 1,862,039
---------
1,862,039
</TABLE>
<PAGE>
August 8, 1996
Mr. Joseph Barbieri
Vice President
Transactive Corporation
2006 Nooseneck Hill Road
Coventry, RI 02816
Re: Lau/Transactive Contract for New York DSS CBIC Program
- -----------------------------------------------------------
Subject: Contract Modification
- -------------------------------
Dear Joe:
In order to move the above referenced contract forward, and meet what is
estimated to be a very aggressive implementation schedule desired by the New
York Department of Social Services ("DSS"), we are proposing the following
modification to the attached letter agreement dated December 8, 1994 ("Letter
Agreement"). That Letter Agreement authorized Lau to make expenditures and
incur obligations up to a specified amount in preparation for its acting as a
subcontractor for Transactive under the Common Benefit Identification Card
("CBIC") contract between DSS and Continental Currency Services, Inc. (the "CBIC
Contract"). It further set a date (which has since been extended by the
parties) for execution of a subcontract between Lau and Transactive, and
indicated Lau's rights in the event that the parties fail to reach agreement.
We acknowledge that Transactive is presently negotiating an amendment to the
CBIC Contract, which has been necessitated as a result of material changes by
DSS to the equipment and services to be provided by Transactive (and therefore
Lau). These discussions between Transactive and DSS include negotiations
regarding the amounts to be reimbursed to Transactive for amounts expended in
connection with DSS' unsuccessful efforts to develop a combined AFIS/CBIC
workstation. Lau has provided Transactive with a breakdown of its costs
incurred, and proposed future costs, in support of the CBIC Contract, which are
summarized below in Section 1, and Transactive has submitted those costs, along
with its own, to DSS approval. However, it is possible that DSS may reject some
or all of such costs. Therefore, we acknowledge and agree that the proposed
amendments that follow are contingent upon the amount for reimbursed costs which
Transactive is able to collect from DSS, and that the sums set forth below will
be reduced proportionately based upon those Lau costs actually reimbursed. The
following amounts may be further subject to change based upon implementation
schedule modifications agreed to by Transactive and DSS. In no event will
Transactive be entitled to the return of any amounts previously paid by
Transactive to Lau pursuant to the Letter Agreement.
<PAGE>
Conditional upon the foregoing and upon your acceptance by signing below, we
propose the following changes to the Letter Agreement.
1.0 FUNDING AUTHORIZATION
- -------------------------
It is agreed that the maximum amount which Transactive will owe Lau for
costs incurred is as follows:
1.1 Workstation and initial Interface phase (Base amount before Finance
costs for late payment following receipt of invoice assessed according to
Section 1 of the Letter Agreement, such invoices not to be delivered to
Transactive until completion of negotiations between Transactive and DSS and the
receipt by Transactive of reimbursement by DSS for Transactive's and Lau's
costs).
Not-to-Exceed $4,190,305 ($618,723 of which has already been paid)
1.2 CBIC Program - System Implementation & Card Consumables delivery
Not-to-Exceed $13,032,216 ($1,243,315 of which has already been paid,
and excluding any card security options which may be requested by DSS
and which are separately priced)
1.3 AFIS/CBIC Combined Workstation Evaluation
$465,925
TOTAL MAXIMUM CONTRACT VALUE $17,688,446 ($1,862,038 of which has already
been paid)
2.0 TERMINATION LIABILITY
--------------------------
It is agreed that the maximum amount of expenditures payable as a
termination payment under Section 2 of the Letter Agreement will not exceed
Contract Value of $17,688,446 ($1,862,038 of which has already been paid). This
amount replaces the original Letter Agreement amount of $2,714,844. The parties
agree and confirm that the date set forth in Section 2 of the Letter Agreement
for execution of the Transactive-Lau subcontract is hereby deleted, and that the
termination liability provisions set forth in Section 2 shall apply in the event
that the CBIC Contract is terminated, or in the event that following good faith
negotiations as set forth in Section 3 below, the parties agree that they are
unable to reach agreement as to a final Transactive-Lau subcontract.
<PAGE>
3.0 DEFINITIVE AGREEMENT
-------------------------
Lau and Transactive agree to complete negotiations for a final
subcontract, including payment terms, as promptly as possible after the current
CBIC Contract negotiations between Transactive and DSS are completed.
Please acknowledge your agreement to the foregoing by executing the enclosed
duplicate copy of this letter in the space provided below.
Sincerely yours, AGREED AND ACCEPTED
Lau Technologies Transactive Corporation
By: /s/ Paul T. Principato By: /s/ Joseph Barbieri
- --------------------------- ------------------------
Paul T. Principato Joseph Barbieri
Chief Financial Officer Vice President
<PAGE>
October 18, 1996
Mr. Joseph D. Barbieri
Vice President
Transactive Corporation
2006 Nooseneck Hill Road
Coventry, RI 02186
Re: Lau/Transactive Contract for New York State DSS CBIC Program
Subject: Contract Modification No. 2
Dear Joe:
In order to meet the very aggressive implementation schedule that is in the
process of being finalized with the New York State Department of Social Services
("DSS") in connection with your negotiations of a contract amendment to the
original Common Benefit Identification Card ("CBIC") contract between DSS and
Continental Currency Services, Inc. (the "CBIC Contract"), we are proposing the
following modifications to the Letter Agreement between the Transactive and Lau
dated December 8, 1994 (the "Letter Agreement"), as modified by subsequent
letter agreement dated August 8, 1996 ("Original Contract Modification"). The
Letter Agreement authorized Lau Technologies (Lau) to make expenditures and
incur obligations up to a specified amount as a subcontractor for Transactive
Corporation under the CBIC Contract. It further set a date (which has since
been extended by the parties) for execution of a subcontract between Lau and
Transactive, and indicated Lau's rights in the event that the parties fail to
reach agreement. The Original Contract Modification, among other things,
increased the funding authorization to a total of $17,688,446, subject to final
negotiations with DSS, increased the termination payment under section 2 of the
Letter Agreement to a maximum of $17,688,446, and provided that Lau and
Transactive would negotiate a final subcontract as soon as possible after
completion of negotiations with DSS.
We have agreed to the following changes to the Letter Agreement and the Original
Contract Modification in order for additional expenditures and obligations to be
incurred. As with the Original Contract Modification, the amendments that
follow are contingent upon the amounts which DSS has currently agreed to pay in
negotiations of the amendment to the CBIC contract.
<PAGE>
1.0 FUNDING AUTHORIZATION
- --- ---------------------
It is agreed that the total amount which Transactive will owe Lau for costs
incurred related to 1.1 Workstation and Initial Interface Phase, 1.2 CBIC
Program-System Implementation and Card Consumables Delivery and 1.3 AFIS/CBIC
Combined Workstation Evaluation, as defined in the Original Contract
Modification, will be $13,662,555 of which $1,862,038 has already been paid.
This amount replaces the Original Contract Modification total maximum amount of
$17,688,446. The revised amount of $13,662,555 excludes separately priced
options that DSS may elect and any subsequent change orders negotiated between
Transactive and Lau for additional work and assumes that only 10,400,000 cards
will be produced.
2.0 TERMINATION LIABILITY
- --- ---------------------
If DSS terminates the CBIC Contract in accordance with Article XIII, section C
thereof, Transactive will reimburse Lau for its portion of reasonable and
appropriate expenses, including reasonable and appropriate profit, incurred in
good faith, for which Transactive is paid by DSS pursuant to that CBIC Contract
provision, not to exceed the total maximum amount of $13,662,555 (of which
$1,862,038 has already been paid), reduced by any payments received by Lau from
Transactive related to this Contract Modification No. 2 (excluding the Progress
Payment). Lau will provide Transactive with detailed support for the expenses
it claims, and will assist and support Transactive in justifying said amounts to
DSS, including taking part in negotiations with DSS as requested by Transactive.
Transactive agrees that it shall not, without Lau's prior written consent, which
shall not be unreasonably withheld, settle with DSS for reimbursement of Lau
expenses less than the amount claimed by Lau. In the event that Transactive
agrees to a termination settlement with DSS without obtaining Lau's prior
written consent, then Lau will not be bound or limited to amounts approved by
DSS. In addition, Transactive will be entitled to all equipment and supplies
acquired by Lau for the CBIC system with the funding authorized pursuant to the
Letter Agreement. This section 2.0 supersedes the similar section 2.0 in the
Letter Agreement and the Original Contract Modification.
3.0 DEFINITIVE AGREEMENT
- --- --------------------
Lau and Transactive agree to complete negotiations and execute a final
subcontract, including all terms specified in the Letter Agreement, as modified
by the Original Contract Modification and this Contract Modification No. 2,
within 30 days of the signing of this Contract Modification No. 2.
4.0 CONTRACT PAYMENT TERMS
- --- ----------------------
Transactive has previously paid to Lau $1,862,038 of the minimum subcontract
value of $13,662,555, leaving a remaining balance due of $11,800,517.
Transactive shall pay Lau the balance due of $11,800,517 by monthly payments
based on a per card price as set
<PAGE>
forth below.
Additionally, in exchange for a pricing discount, Transactive agrees to make a
progress payment to Lau in the amount of $1,327,961 ("Progress Payment"), which
shall be paid to Lau immediately upon execution by both parties of this Contract
Modification No. 2. The pricing discount will be equivalent to a 14% annual
rate on the unliquidated portion of the Progress Payment, to be calculated
starting as of the date of receipt by Lau of the Progress Payment. The
following sets forth the per card price and liquidation schedule for the
Progress Payment:
(1) In the event that DSS makes an up front payment to Transactive, Lau will be
entitled to receive their portion of the up front payment, which is
expected to be $1,276,984. Such up front payment will reduce the remaining
contract value from $11,800,517 to $10,523,533, which shall be paid monthly
based on a per card price of $1.0119. The $1,327,961 Progress Payment,
plus the pricing discount, will be substantially liquidated by Lau's
portion of the up front payment made by DSS. The remaining balance will be
liquidated based on card production as Transactive will not be required to
pay Lau for cards produced until the remaining Progress Payment, plus the
pricing discount, has been liquidated.
(2) In the event that DSS does not make an up front payment to Transactive, Lau
will be paid monthly based on a per card price of $1.1347. The $1,327,961
Progress Payment, plus the pricing discount, will be liquidated based on
card production as described in (1) above.
(3) In the event that (i) DSS terminates the CBIC Contract; or (ii) Lau
terminates this Letter Agreement, as amended, or the subcontract when
executed; or (iii) Transactive terminates this Letter Agreement, as
amended, or the subcontract when executed, in accordance with the terms
thereof as a result of the default of Lau, then Lau will, within ten (10)
calendar days following such termination, refund to Transactive any
remaining unliquidated Progress Payment plus pricing discount.
The minimum amount due for monthly card billings is $11,800,517 which represents
a minimum card volume of 10,400,000 DSS cards. Additional DSS cards in excess
of 10,400,000 will be billed separately at the rate of $0.400 per card. The
amount of $11,800,517 for card production is guaranteed by Transactive and GTECH
Corporation (GTECH). Payment to Lau for monthly card billings will be due
within 10 days after Transactive's receipt from DSS of their corresponding
monthly card billing. If DSS is late in payment of their monthly card billing
and pays Transactive interest on amounts due in accordance with the CBIC
Contract and Article XI-A of the New York State Finance Law, Transactive will
pay Lau a pro rata share of such interest payment equal to the percentage of
Lau's pro rata share of the contract payment. Transactive shall make such
interest payment to Lau within ten (10)
<PAGE>
days of Transactive's receipt of such interest from DSS.
Lau will be paid for such cards in accordance with the yearly guaranteed card
volumes that Transactive has agreed to with DSS.
5.0 LIQUIDATED DAMAGES
- --- ------------------
The CBIC Contract sets forth certain liquidated damages payable by Transactive
in the event of certain failures to perform, including failure to conduct the
contingency test in connection with the ability to cut over to the back-up site
or to respond to deficiencies identified in that test. Lau shall demonstrate
the ability to cut over to the back-up site in a contingency test within the
time period required by the CBIC Contract and annually thereafter. If Lau fails
to conduct such contingency tests as required under the CBIC Contract, or
reasonably respond to deficiencies identified in said required contingency tests
(unless Lau is prevented from doing so by Transactive or DSS), then Lau shall
indemnify and hold harmless Transactive for liquidated damages assessed against
Transactive as a result of said failures pursuant to the CBIC Contract.
In addition, DSS and Transactive have tentatively reached agreement that
Transactive will be assessed liquidated damages in an amount up to $10,000 per
day for each day that specified milestone performance dates and the scheduled
card production start date are not met based on dates expected to be set forth
in Appendix D to the amended CBIC Contract. Lau agrees to comply with those
milestone performance dates and scheduled card production date. Lau agrees
that Transactive may assess Lau up to 50% of the per day liquidated damages
assessments by DSS to Transactive that relate to Lau's failure to meet any of
the agreed upon milestone performance dates or the scheduled card production
start date, provided that no damages will be assessed to Lau if the failure to
meet the milestone performance dates or the scheduled card production start date
is caused by (i) factors beyond Lau's control or (ii) if Lau has met its
requirements, based on approved test plans, and the failure to meet a specific
date is not Lau's responsibility. The maximum per day liquidated damages that
may be assessed by Transactive to Lau under this provision of the amended CBIC
Contract will be 50% of $10,000 or $5,000, up to a total maximum of $1 million.
No liquidated damages will be assessed to Lau unless liquidated damages are
assessed to Transactive by DSS and paid by Transactive. Lau and Transactive
also agree that any liquidated damages that are assessed to Lau will be paid for
by the same means as Transactive is required to pay such liquidated damages to
the DSS (e.g., by a lump sum if Transactive pays said damages by a lump sum).
In addition, Lau and Transactive may agree to substitute additional services in
lieu of any cash assessment if DSS agrees that Transactive may pay liquidated
damages in such manner.
If either party terminates this Letter Agreement, as amended, or
<PAGE>
the subcontract when executed, for any reason other than termination for the
default of the other party in accordance with the terms thereof, the terminating
party agrees that it shall defend, indemnify and hold harmless the other party
for any loss, liability, damage, fee or expense (collectively, "loss") incurred
by, or claimed by any third party or entity (including without limitation DSS)
against the indemnified party as a result of or arising out of said termination,
said indemnification not to exceed the value of this agreement as set forth
herein. The indemnified party shall promptly notify the indemnifying party, in
writing, of any such claim and shall reasonably cooperate with the indemnifying
party in the defense and settlement thereof.
Transactive has endeavored in its final negotiations with DSS to reduce the
amount of liquidated damages by proposing to DSS, among other things, that the
$10,000 per day be applicable only to business days (which DSS has declined to
accept) or in the alternative that they will provide reasonable cooperation
should nonbusiness day work be necessary to minimize liquidated damages. DSS is
considering language under which liquidated damages for failure to meet specific
milestone performance dates will be reduced or waived in the event that the
scheduled card production start date is met.
Upon receipt of an executed copy of this agreement and of the Progress Payment
of $1,327,961 outlined in section 4.0, Lau will restart the program for a period
of 30 days during which time the final subcontract will be negotiated.
Please acknowledge your agreement to the foregoing by executing the enclosed
duplicate copy of this letter in the spaces provided below.
Sincerely yours,
Lau Technologies
By /s/ Denis K. Berube
--------------------------
Denis K. Berube
AGREED TO AND ACCEPTED: AGREED TO AND ACCEPTED:
Transactive Corporation GTECH Corporation
By/s/ Joseph D. Barbieri By/s/ Thomas Blackshire
-------------------------- -------------------------
Joseph D. Barbieri
Vice President Title Treasurer
---------------------
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Viisage Technology, Inc.:
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
registration statement.
Boston, Massachusetts
November 4, 1996
ARTHUR ANDERSEN LLP
