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EXHIBIT 10.1
SOFTWARE LICENSE AND ROYALTY AGREEMENT
This Software License and Royalty Agreement (hereinafter " Agreement") is made
as of the 21 st day of January 2000 (hereinafter the "Effective Date") by and
between Harris Corporation, a corporation duly organized under the laws of the
State of Delaware, acting through its RF Communications Division with offices at
1680 University Avenue, Rochester, NY 14610 (hereinafter "Harris"), and Digital
Descriptor Systems Inc., a corporation duly organized under the laws of the
state of Delaware, with offices at 2010-F Cabot Boulevard West, Langhome, PA
19047 (hereinafter "DDSI").
ARTICLE 1
Defined Terms
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"Documentation" shall mean all documents, reports, instruments, memoranda or
papers, in any medium or manifestation, electronic or otherwise, including,
without limitation, research records and reports, development reports,
experimental records and reports, engineering records and reports, production
drawings, engineering drawings, board layout drawings, schematics, raw material
specifications, quality control reports and specifications, drawings,
photographs, models, simulations, test routines, test fixtures, test reports and
results, technical data, business plans, marketing studies, financial forecasts,
customer lists, books, records, view graphs and other written presentation
materials, user's manuals, databases, notes, and any other tangible information
owned or controlled by Harris, whether or not considered a Trade Secret, related
to, incorporated in or constituting the PowerMatch Technology.
"Governmental Person" shall mean the national government of any domestic or
foreign sovereign nation, and the government of any state, province, territory
or other political subdivision thereof including any agency, department, branch,
division, institution, ministry or other bureaucratic subdivision thereof.
"Harris" shall mean, collectively, Harris and any majority-owned subsidiary of
Harris.
"DDSI" shall mean, collectively, DDSI and any majority-owned subsidiary of DDSI.
"PowerMatch Product" means that PowerMatch Technology, which in combination with
other hardware and software comprise a fingerprint match engine licensed,
leased, bartered, or exchanged by DDSI as of the Effective Date including all
non-substantial improvements and derivatives thereof. Any fingerprint matching
software product designed or developed after the Effective Date, and based in
substantial part on a PowerMatch Technology, will be considered a Derivative
PowerMatch Product. Any fingerprint matching software product designed or
developed after the Effective Date and (i) uses no more than 10% of either the
PowerMatch Client Software or PowerMatch Server Software; and (ii) if it
operates in a substantially different manner or for a substantially different
purpose than a PowerMatch Product, will not be considered a PowerMatch Product
or a Derivative PowerMatch Product.
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"PowerMatch Technology" means the PowerMatch Software in the form as it existed
at the time of delivery to DDSI. DDSI expects to develop modified versions of
the PowerMatch technology both to integrate with its own installed base of users
and to meet the needs of customers who require enhanced features not currently
supported by PowerMatch.
"PowerMatch Software" shall mean the software of Harris, in source code and
object code form, and identified as:
(1) PowerMatch Client Software (Rev. Level 1.0); and
(2) PowerMatch Server Software (Rev. Level 1.0).
"Product" shall mean either a PowerMatch Product or a Derivative PowerMatch
Product.
"Territory" shall mean all the countries and territories of the world.
"Total Price" means DDSI's gross invoice price for the Product packed for
shipment without any deductions, except for the following items, to the extent
they are paid or allowed by DDSI:
(a) sales or turnover taxes on sales invoices;
(b) transportation charges and insurance on shipments to customers;
(c) trade or quantity discounts (but not cash discounts allowed to
customers and not agents' commissions); and (d) credits allowed for
PowerMatch Products returned or not accepted by customers.
(i) If a Product is included as a component of another product licensed or
leased by DDSI, then Total Price means the Total Price of such Product, as if
separately licensed or leased in an arm's length transaction or the most nearly
comparable Product that has been or would be licensed or leased in the ordinary
course of business.
(ii) When Products are licensed or leased by DDSI to any Affiliate (as that term
is defined by the Securities Act of 1933, as amended), or when Products are
bartered or exchanged for goods or services, then Total Price shall be the Total
Price at which comparable Products have been or would be licensed or leased in
the ordinary course of business.
ARTICLE 2
Licenses & Royalties
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License: Harris hereby grants to DDSI a royalty bearing, worldwide,
non-exclusive right and license to use the PowerMatch Software and all
Documentation with respect to the foregoing, to make, have made, use, improve,
market and license products and to provide services solely to Governmental
Persons or to Persons whose ultimate end customers are known to DDSI to be
solely Governmental Persons in the Territory .If requested to do so in writing
by Harris in order to preserve valuable rights, and if commercially feasible,
DDSI shall use reasonable efforts to cause all products manufactured by it or
its Affiliates that are designated by Harris and that
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incorporate or embody inventions covered by the claims of licensed patents to be
marked or labeled with appropriate references to such patents.
Royalties: DDSI shall pay to Harris a royalty of thirty percent (30%) of the
Total Price for each PowerMatch Product licensed, leased, bartered, or exchanged
by DDSI from the Effective Date. A PowerMatch Product shall be considered
licensed or leased on the date of shipment or the date of an invoice, whichever
is earlier. A PowerMatch Product shall be considered bartered or exchanged on
the date of shipment. Only one royalty shall be due for each PowerMatch Product.
This royalty obligation shall continue for the duration of this Agreement.
DDSI shall pay to Harris a royalty of fifteen percent (15%) of the
Total Price for each Derivative PowerMatch Product licensed, leased,
bartered, or exchanged by DDSI from the Effective Date. A Derivative
PowerMatch Product shall be considered licensed or leased on the date
of shipment or the date of an invoice, whichever is earlier. A
Derivative PowerMatch Product shall be considered bartered or exchanged
on the date of shipment. Only one royalty shall be due for each
Derivative PowerMatch Product. This royalty obligation shall continue
for the duration of this Agreement.
No royalty payments will be due on: (a) product samples, (b) evaluation
boards, (c) products designed by and purchased from a third party and
subsequently resold by DDSI as a component of a product, and ( d)
non-recurring engineering funds received from a third party in return
for the design, development or modification of a product.
DDSI shall pay all the royalty due under this Agreement for each
calendar quarter within forty-five (45) days after the end of such
calendar quarter. Payment shall be addressed to the attention of :
Controller
Harris RF Communications Division
1680 University Ave.
Rochester, NY 14610
All royalty due hereunder shall be paid in United States funds. For
purposes of computing the Total Price and royalty on licenses in the
international Territory , the Total Price of the royalty bearing
Product hereunder shall first be determined in the local currency of
the country in which licensed or leased and then converted into its
equivalent in United States funds at the bank buying rate for such
local currency, as published by Chemical Bank, N .A. for the last
business day of each accounting period.
Licensing of Derivative Products: DDSI agrees that it will offer to Harris
licensing of Derivative Products which it produces on substantially the same
terms as in this Agreement, i.e., 30% royalty paid to DDSI on the Total Price
realized from the licensing or sale to an end customer, or other terms as may be
negotiated.
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Correction of Errors: Harris and DDSI agree that errors ("bugs") in PowerMatch
Software discovered and fixed will be shared upon request by either party. No
reporting, tracking or configuration management requirements are created by this
agreement.
Governmental Withholding: Any sum required under the laws of any governmental
authority to be withheld by DDSI, its Subsidiaries or Licensees from payment for
the account of Harris shall be promptly paid by DDSI for and on behalf of Harris
to the appropriate tax or other governmental authority and DDSI shall furnish
Harris with copies of official tax receipts or other appropriate evidence issued
by the appropriate tax or other governmental authorities to enable Harris to
support a claim for tax or other credit or refund in respect of any sum so
withheld.
Records: DDSI shall keep, and shall cause DDSI Affiliates to keep, full, clear
and accurate records which are sufficient to permit determination of the
royalties due hereunder .
Quarterly Reports: Within forty-five (45) days after the end of each calendar
quarter ending on March 31st, June 30th, September 30th and December 31st,
commencing with the quarter in which the Effective Date occurs and continuing
thereafter until all royalties payable hereunder shall have been reported and
paid, DDSI shall furnish to Harris a statement showing all said Product that was
licensed, leased, bartered, or exchanged during such quarter, and the amount of
royalties payable thereon. If no Product has been licensed, leased, bartered, or
exchanged that shall be shown on such statement. DDSI shall provide the method
of calculation, along with reasonable supporting documentation, for the royalty
due.
Audit of Records: Harris shall have the right to audit the DDSI books and
records related to Products at Harris' expense, by an independent auditor. Said
audit shall be conducted during normal business hours with 5 days written
advance notice provided by Harris. The designated auditor shall retain in
confidence the information in the books of account and shall report to Harris
only the accuracy or inaccuracy of the reports rendered to Harris. If such audit
discloses that the amounts paid to Harris were understated by more than 5% in
any quarter, then DDSI shall reimburse Harris for the cost of the audit and pay
the amount of such understated royalties.
Late Payments: For any late payment, DDSI shall pay Harris interest at the prime
rate. The prime rate will be as established by Chemical Bank, N .A. on the date
the payment was due.
Trademarks: DDSI has no right to use, and agrees not to use or adopt, any mark
that is confusingly similar to any trademark owned or used by Harris or
Authentec, Inc. of Melbourne, FL.
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ARTICLE 3
Transfer Documentation and Other Materials
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Delivery. Subject to the terms of the Agreement, Harris agrees to provide DDSI
with one human or machine readable copy of all PowerMatch Technology
Documentation, including source code and object code, to the extent the same is
within the physical possession or control ofHarris. A representative of Harris'
RF Comm. Division will be responsible for identifying, assembling and delivering
such Documentation to DDSI. This representative is Director, Administration,
Secure Products Business Line, and as of the date of this Agreement is Mr. James
Yake.
Additional Transfers to DDSI. If, subsequent to the Effective Date, either party
identifies any materials that are specific to the operation of PowerMatch
Technology and not specifically delivered to DDSI, then upon written notice
thereof, Harris shall promptly deliver such specific materials to the extent
Harris is able to do so. The obligation of Harris under this Paragraph shall be
DDSI's sole remedy for any failure to identify or deliver such materials.
ARTICLE 4
Representations. Warranties & Limitations on Damages
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Authority. Harris and DDSI have the authority to enter into and execute this
Agreement and to perform its obligations hereunder. This Agreement constitutes a
legal, valid and binding obligation, and is enforceable against Harris and DDSI
in accordance with its terms.
Indemnification of Harris. DDSI shall indemnify and hold harmless Harris and its
successors and assigns (collectively , the "Harris Indemnitees"), from and
against any and all damages, claims, losses, expenses, costs, obligations and
liabilities suffered or incurred by the Harris Indemnitees directly or
indirectly as a result of any injury to or death of any person, any loss or
damage to property, or any other litigation or claim by any third party relating
in any way to the manufacture, use or licensing of products that incorporate the
PowerMatch Technology by DDSI.
Limitation of Liability: HARRIS SHALL NOT BE LIABLE TO DDSI OR ANY THIRD PARTY,
WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR
OTHERWISE, FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND,
INCLUDING, BUT NOT LIMITED TO, LOSS OF ANTICIPATED PROFITS, EVEN IF HARRIS HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH POTENTIAL LOSS OR DAMAGE.
Maximum Liability: Harris' maximum liability for damages relating to this
Agreement shall be limited to the payments made by DDSI hereunder. This Article
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liability shall survive the expiration, termination, or cancellation of this
Agreement.
No Other Warranties. EXCEPT AS PROVIDED FOR IN THIS AGREEMENT, HARRIS DISCLAIMS
ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE WARRANTY
OF MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. HARRIS
SPECIFICALL Y DISCLAIMS ANY WARRANTY OF FITNESS OR SUITABILITY OF ANY HARRIS
INVENTIONS, HARRIS PATENT APPLICATIONS, DOCUMENTATION, KNOW-HOW OR HARRIS
SOFTWARE FOR ANY PURPOSE. DDSI ACKNOWLEDGES THAT IT HAS READ AND FULL Y
UNDERSTANDS THE ABOVE DISCLAIMERS
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ARTICLE 5
Miscellaneous
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Agency or Partnership Between Harris and DDSI. Nothing in this Agreement or any
of the transactions, obligations or relationships contemplated hereby shall, in
and of itself, constitute either Harris or DDSI as the agent, employee or legal
representative for the other for any purpose whatsoever, nor shall any party to
this Agreement hold itself out as such. This Agreement does not create and shall
not be deemed to create a relationship of partners, joint venturers, associates
or principal-and-agent between Harris and DDSI, and each of the parties hereto
acknowledges that it is acting as a principal hereunder .
Amendment: This Agreement may not be amended, supplemented or otherwise modified
except by an instrument in writing signed by both parties.
Assignment. DDSI shall not assign its rights or obligations under this
Agreement, in whole or in part, to any Person without the prior written consent
of Harris.
Confidentiality: DDSI agrees that all physical, software and contractual
security it maintains for its other software products will be maintained for the
PowerMatch Software. DDSI agrees to use its best efforts to prevent third
parties from modifying, adapting, translating, reverse engineering, decompiling,
disassembling or otherwise attempting to discover the source code of the
PowerMatch Software except as expressly permitted by this Agreement.
Costs and Expenses. Unless otherwise specified in this Agreement, each party
hereto shall bear its own costs and expenses (including, but not limited to,
attorneys' fees) in connection with the negotiation, preparation, execution,
delivery and performance of this Agreement, and the consummation of the
transactions contemplated hereby.
Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed an original and all of which, taken together, shall
constitute one and the same instrument.
Entire Understanding: This Agreement sets forth the entire understanding between
Harris and DDSI pertaining to its subject matter and supersedes and replaces all
prior oral or written agreements between Harris and DDSI pertaining to such
subject matter.
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Governing Law: This Agreement shall be governed by and interpreted under the
laws of the State of Florida and the Florida courts, without regard to choice of
laws. The forum for any dispute shall be limited to a Florida court having
subject matter jurisdiction and closest to Melbourne, Florida.
Notices: Any notice required or permitted hereunder shall be given in writing by
personal delivery or by registered or certified mail, return receipt requested,
postage prepaid, and, if sent by mail, shall be effective upon delivery to the
following addresses:
Corporate Secretary
Harris Corporation
1025 West NASA Boulevard
Melbourne, Florida 32919
With a copy to:
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Director
Secure Products Business Unit
Harris Corporation, RF Comm. Division
1680 University Avenue
Rochester, NY 14610
President
Digital Descriptor Systems Inc.
2010- F Cabot Boulevard West
Langhorne, P A 19047
Severability: If any provision of this Agreement is held by a court of competent
jurisdiction to be illegal, invalid or unenforceable under present or future
laws effective during the term hereof, such provisions shall be fully severable,
and this Agreement shall be construed and enforced as if such illegal, invalid
or unenforceable provision never comprised a part hereof, and the remaining
provisions shall remain in full force and effect and shall not be affected by
the illegal, invalid or unenforceable provision or by its severance.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there
shall be added automatically as part of this Agreement a provision as similar in
its terms to such illegal, invalid or unenforceable provision as may be possible
and be legal, valid and enforceable.
Termination: This Agreement may be terminated at any time by mutual agreement of
the parties or may be terminated by either party with eighteen (18) months
notice to the other party. In addition, Harris may terminate the agreement if
DDSI breaches its obligations to pay royalties due hereunder with 90 (ninety)
days notice. However, should DDSI fully pay all royalties due at that time
within the 90-day notice period, then DDSI shall have cured the breach and this
Agreement shall not terminate. Any PowerMatch customer licensing agreements
entered into by DDSI and for which Harris has been paid all royalties due will
remain in effect and not be revoked by termination of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
HARRIS CORPORATION DIGITAL DESCRIPTOR SYSTEMS INC.
By: By:
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Name: Chris Fedde Name: Garrett Cohn
Title: Director, Secure Products Title: President and C.E.O.
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