SOFTWARE DEVELOPMENT/LICENSE AGREEMENT
by and between ADVANCED PRECISION TECHNOLOGY, INC.
& LEX SOLUTIONS, INC,
This Agreement is dated as of the FIFTEENTH day of JULY, 1997, which is
the effective date thereof. This Agreement is by and between ADVANCED
PRECISION TECHNOLOGY, INC., a Nevada corporation, ("APT"), with offices at
4669 Hillside Drive; Castro Valley, CA 94546, and LEX SOLUTIONS, INC., a State
of Virginia corporation in good standing having its corporate office at 9420
Braddock Road, Fairfax, VA 22032, (hereinafter referred to as "LEX").
WITNESSETH
WHEREAS, APT is the owner of all right, title and interest in and to
certain inventions, and any and all trade secrets related thereto and any and
all letters patent of the United States and foreign countries which may issue
or have issued forth including U.S. Patent #5,095,194, granted March 10, 1992
for holographic credit card with automatical authentication and approval, U.S.
Patent #5,138,468, granted August 11, 1992 for keyless holographic lock, and
U.S. Patent #5629764 for Prism Fingerprint Sensor using a Holographic Optical
Element granted 5/13/97, and patent applications pending for multi-access
holographic card, and miniature fingerprint sensor using a trapezoidal prism,
and a holographic optical element, and other intellectual properties,
("Patents"); and
WHEREAS, LEX's President, Danny Chu, has an extensive background in
software architecture, and applications to the requirements of single
fingerprint capturing, displaying, and storing dynamic link library ("DLL"),
and wishes to engage his expertise for APT on a continuing basis, under the
terms and conditions of this Agreement;
WHEREAS, LEX employs several highly-trained software experts, some of whom
initially wrote APT's APrinT single fingerprint capturing, displaying, and
storing software, and has considerable knowledge and expertise in applying
such software to the requirements of APT scanners, card and lock products, and
other products of interest to APT; and
WHEREAS, APT and LEX desire that APT have the exclusive worldwide rights
to use, distribute and market software products, developed by and in
cooperation with LEX subject to the
Page 1 of 5
<PAGE>
conditions in this agreement;
NOW, THEREFORE, in consideration of the foregoing, and the mutual
covenants herein and other good and valuable consideration, the parties agree
as follows:
1. Exclusive License to Use, Market and Distribute Software.
--------------------------------------------------------
(a) Grant of License. LEX hereby grants to APT an exclusive license
to use, market and distribute the single fingerprint image capturing,
displaying, and storing using Integral Flash Point Lite, Marrox, and MRT
PCMCIA frame grabber software developed by LEX pursuant to this Agreement.
This license is worldwide, and unlimited except by the terms and conditions in
this agreement, and shall continue for the term of this Agreement which is
understood herein to mean the original term plus any renewals or extensions of
this Agreement.
(b) APT's Role. APT shall brand, develop software sublicenses,
product data sheets, and take such other actions as it deems warranted to
market and distribute the single fingerprint image capturing, displaying, and
storing software produced hereunder.
(c) Transfer of Technology. LEX shall provide to APT such
information, advice, calculations, diagrams, schematics, documentation,
instructions, and the like, as shall be necessary for, or reasonably requested
by APT in order to effectively use, package, apply, integrate with user
systems, debug, market, and distribute the software covered by this Agreement.
All the foregoing shall he in writing, and will reflect the highest
professional standards and usage.
(d) Best Efforts. LEX shall diligently and continuously use its best
efforts to perform its functions as an independent contractor as described in
this Agreement. As a material condition of this Agreement, LEX is entitled to
independently contract for its services without any restriction, provided that
during the term of this Agreement and any period during which LEX is entitled
to receive payments hereunder, LEX shall not engage, directly or indirectly,
in providing software or software consulting to any other fingerprint capture
manufacturer or distributor. However, LEX shall be entitled to sell portions
of the DLL code as executable module in design and setup of LEXs other
customer's systems for such customers' use.
2. Software Development/Support/Ownership .
--------------------------------------
Page 2 of 5
<PAGE>
a. APT agrees to pay to LEX One Hundred Thousand (100,000) shares
of its common stock upon the execution of this Agreement. APT also shall pay
LEX the sum of Twelve Thousand Five Hundred Dollars ($12,500.00) per month,
payable monthly, which is One Hundred Fifty Thousand Dollars ($150,000.00) for
the first year for LEX's services in product generation, designing, testing,
enhancing, maintaining, supporting, documenting, upgrading from the current
WINDOWS/95 and WINDOWS/NT levels, and performing LEX's other functions
hereunder, including any of LEX's out-of-pocket costs.
b. By or before the anniversary date of each contract year
hereunder, LEX and APT shall meet and confer to determine their mutual
willingness to renew this contract for an additional one-year term. The
parties shall endeavor to find a mutually acceptable price, including money
and APT stock, which will allow them to renew this agreement.
c. LEX will retain ownership of the base source codes which LEX
develops at its own costs, and shall provide it in executable form to APT
pursuant to this Agreement
3. Work For Hire.
--------------
LEX shall provide APT with integratable modules for "matching" DLL's
that allow one-to-one and one-to-many searches. LEX will be an agent for a
vendor or vendors of the codes and algorithms, and LEX will provide APT and
its resellers with DLL's at LEX's actual cost plus a profit margin
commensurate with the market to be mutually agreed to in writing by the
parties. These vendor's codes will not hamper customers, resellers, APT, or
LEX from using other vendors' comparable DLL's according to each's discretion.
LEX will provide separate licensing authority to reflect these third party
rights, at the time these work-for-hire agreements ate executed.
For these integratable modules or DLL's required by APT, and/or
required by resellers via APT, and/or for LEX consulting services specifically
contracted for by APT in separate agreements, LEX will provide APT with price
quotes for each specific task including, but not limited to, providing a
software module, software enhancement, consulting, preparing a special report
evaluation, recommendations, etc. APT will then evaluate the cost-
effectiveness of LEX's quote, and will have the option to accept or decline
LEX's proposed separate agreement. Any acceptance by APT shall be in a writing
signed by the President of APT, or his representative as the APT President
authorizes in writing.
Since APT shall pay the costs thereof, APT shall own all rights to
property developed under these work-for-hire agreements and APT may
accordingly include such in base APrint product offerings.
4. Term of Agreement.
-----------------
a. The term of this Contract shall be for twelve months from its
effective date, and it shall
Page 3 of 5
<PAGE>
be renewable each year thereafter for successive one year terms based upon
mutual written agreement of the parties. The parties shall regularly monitor
progress under this Agreement and, at the end of each three month period, the
parties shall confer to determine the needs of the parties, whether all work
is on target, and what (if any) additional written terms and conditions the
parties may mutually agree shall apply to this Agreement. Consideration shall
be given by the parties to the work accomplished to date, the work remaining
to be accomplished, the respective needs of the parties, market requirements,
customer needs, and the availability and adequacy of funds.
b. This Agreement may be terminated at any time upon the event of
a material breach in its terms by either party, after thirty (30) working days
notice to the breaching party, and a reasonable opportunity to cure any such
breach, should such breach not be cured. It may also be terminated by the
other party upon the inability of a party to perform the terms and conditions
of this Agreement, or otherwise by mutual agreement of the parties.
5. Mediation/Arbitration.
------------------------
(a) The parties will first make a good faith attempt to negotiate a
fair settlement of any dispute, controversy or claim arising under or in
connection with this Agreement, or the breach thereof. If negotiation does not
resolve the matter, the parties will submit it to non-binding Mediation using
a mediator acceptable to both parties.
(b) If negotiation and mediation does not resolve the matter, any
dispute, controversy or claim arising under or in connection with this
Agreement, including but not limited to, the interpretation of this Agreement,
shall be settled exclusively by binding arbitration by an arbitrator accepted
by both parties, or if no such arbitrator is promptly accepted by both
parties, the matter shall be resolved in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect. Said
arbitration may be conducted by such arbitrator as is chosen in accordance
with said A.A.A. Rules.
(c) Accordingly, both parties hereto hereby waive any and all rights
----------------------------------------------------------------
settle any disputes in connection with this Agreement through Courts of Law,
----------------------------------------------------------------------------
judges, and/or juries.
----------------------
(d) The Civil Discovery Rules of the Stale of California shall
apply, with such variations for the convenience of the parties as they may
stipulate to by written agreement.
(e) Judgment upon the arbitrator award may be entered in any court
having jurisdiction thereof to ensure the enforcement thereof. Any arbitration
held pursuant to this Agreement shall take place in San Francisco County,
California, or a mutually convenient location in the United States.
6. Assignment. This Agreement is not transferable by either party except
with other party's prior written consent; any attempt to assign obligations
and rights hereunder without such consent shall be null and void. This
Agreement will be binding upon and inure to the benefit of
Page 4 of 5
<PAGE>
the respective successors in the interest and legal representatives of the
parties hereto.
7. Indemnification. Each party agrees to indemnify and hold the other
party harmless from and against any and all liability, costs, judgments
(including reasonable attorney's fees) arising out of the intentional and/or
negligent wrongful acts.
8. Miscellaneous.
---------------
(a) Governing Law. The validity, construction and performance of
this Agreement shall be governed by, and interpreted in accordance with, the
laws of the State of California, United States of America. However, this
Agreement shall be deemed the product of all parties, and no adverse
presumption shall be implied against any party for authoring any part of it.
Both parties are advised to seek separate legal counsel before entering into
this Agreement.
(b) Confidentiality. LEX (including all of LEX's employees) agrees
to take all reasonable steps to maintain the strict confidentiality of all
information relating to the Patents and techniques relating to the manufacture
of Products and how they are marketed, which data is not generally available
to the public, which data shall be deemed to be trade secrets belonging to
APT. LEX's obligations pursuant to this Section will survive the termination
of this Agreement.
(c) No Implied Rights. LEX shall have those rights spelled out in
this Agreement, but no others unless such are specified in a writing signed by
the President of AFT.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to set their hands and seals as of the day and year first written
above;
ADVANCED PRECISION TECHNOLOGY, INC. BY: /s/ Bruce Pastorius
Title: President
LEX SOLUTIONS, INC. BY: /s/ Danny Chou
Title: President
Page 5 of 5
