Exhibit 10.16
TECHNOLOGY LICENSE AND SUPPLY AGREEMENT
THIS TECHNOLOGY LICENSE AND SUPPLY AGREEMENT (this "Agreement"), dated as
of May 28, 2002 (the "Effective Date"), is between Spectra Systems Corporation,
a corporation organized under the laws of the State of Delaware ("Spectra"), and
De La Rue International Limited, a corporation organized under the laws of
England ("Licensee").
WHEREAS, Spectra is and warrants that it is the owner of rights in certain
technology and certain patent rights relating thereto and
WHEREAS, Spectra is willing to grant to the Licensee and Licensee desires
to acquire from Spectra an exclusive license to such technology and under such
patent rights for the purpose of allowing Licensee to develop and market
Products within the Field and within the Territory,
NOW, THEREFORE, in consideration of the mutual covenants set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Spectra and Licensee hereby agree as follows:
1. Definitions.
1.1. Definitions. As used herein, capitalized terms shall have the
respective meanings set forth below.
1.1.1. "Affiliate" of a Person shall mean a Person that directly,
or indirectly through one or more intermediaries, controls,
is controlled by or is under common control with such
Person. "Control" (and, with correlative meanings, the terms
"controlled by" and "under common control with") shall mean
the possession of the power to direct or cause the direction
of the management and policies of such Person, whether
through the ownership of voting stock, by contract or
otherwise. In the case of a corporation "control" shall
mean, among other things, the direct or indirect ownership
of more than fifty percent (50%) of its outstanding voting
stock.
1.1.2. "Bit" shall mean an electromagnetic radiation emitting and
amplifying multiphase optical gain material for providing a
laser-like emission being characteristic for this particular
material in accordance with the Licensed Technology.
1.1.3. "Bit Fibers" shall mean fibers suitable for incorporation
into [***] consisting of polymeric material being
doped with a Bit or Bits.
1.1.4. "Bit Material" shall mean a printing ink or coating
formulation for application to security threads and foil
transfers to be incorporated into [***] being doped with
a Bit or Bits.
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
1.1.5. "Confidential Information" shall mean all non-public
Technology or other information or documents that are of a
confidential nature disclosed by Spectra to Licensee or by
Licensee to Spectra, and shall include, without limitation,
the Licensed Technology.
1.1.6. "Covered by" shall mean, with respect to any act, an act
which would, in the absence of a license provided hereunder,
infringe a claim of a pending patent application, if issued
as a patent, or a patent which has not been held invalid or
unenforceable by a court of competent jurisdiction.
1.1.7. "Demonstrate" and "Demonstration" shall mean the validation
by dates as set forth in the Milestone Payments and Dates
section of this agreement (Subsection 5.1) by Licensee
representatives of the Bit Fibers which will be incorporated
by Licensee into [***] and which will be detected
by the specifically applicable STS Sensors, mounted on a
DLR/CSI [***] automation machine [***], at the intended
rates, [***], with false positive rates not greater than one
in ten thousand parts.
1.1.8. "Development" shall mean the testing, production and
application engineering to be undertaken by Spectra set out
in Section 5.
1.1.9. "Field" shall mean the field of: (a) [***].
1.1.10. "Force Majeure" shall mean any circumstance or event beyond
the reasonable control of the party relying upon such
circumstance or event, including acts of God, any accident,
explosion, fire, storm, earthquake, flood, drought, peril of
the sea, riot, embargo, war or foreign, federal, state or
municipal order of general application, seizure, requisition
or allocation, any failure or delay of transportation,
shortage of or inability to obtain supplies, equipment, fuel
or labor.
1.1.11. "Improvements" shall mean any modifications of, upgrades to,
or enhancements of the Licensed Technology.
1.1.12. "Licensee Improvements" shall mean Improvements owned by
Licensee that have application in the Field and shall
include: (a) any patent application having one or more
claims covering such Improvements; (b) any patent
application constituting an equivalent, counterpart,
reissue, extension or continuation of any of the foregoing
applications (including, without limitation, a continuation
in part or division); or (c) any patent issued or issuing
upon any of the foregoing applications.
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
1.1.13. "Licensed Technology" shall mean, collectively: (a) the
Spectra Patent Rights; (b) Technology owned by Spectra that
relates to distributed laser like security features capable
of being used in relation to [***] and equipment that
sense this technology; and (c) the Spectra Improvements.
1.1.14. "Large Area Sensor" shall mean a device operating on a
[***] sorting machine for detecting Bit Fibers in
[***] based on stimulation by laser illumination over a
large area of detection.
1.1.15. "Person" shall mean any individual, partnership,
corporation, firm, association, unincorporated organization,
joint venture, trust or other entity.
1.1.16. "Product" shall mean any product or process in the Field
which utilizes, makes use of, is based upon or arises out of
the inventions and other rights and concepts described in
the Licensed Technology including without limitation
[***], Bit Material, Bit Fibers, sensors and quality
control equipment.
1.1.17. [***]
1.1.18. "Spectra Patent Rights" shall mean: (a) the patents and/or
patent applications listed on Schedule 1.1(a) to this
Agreement; (b) any patent application constituting an
equivalent, counterpart, reissue, division, extension or
continuation of any of the foregoing applications; (c) any
patent issued or issuing upon any of the foregoing
applications; and (d) any patent rights subsisting in
Spectra Improvements.
1.1.19. "Spectra Improvements" shall mean Improvements owned by
Spectra that have application in the Field including the
Development and shall include: (a) any patent application
having one or more claims covering such Improvements; (b)
any patent application constituting an equivalent,
counterpart, reissue, extension or continuation of any of
the foregoing applications (including, without limitation, a
continuation in part or division); or (c) any patent issued
or issuing upon any of the foregoing applications.
1.1.20. "STS Sensor" shall mean a device operating on a [***]
sorting machine for detecting Bit Fibers or Bit Material
with performance meeting the De La Rue General Requirement
Specification for Authentication Detectors attached at
Schedule 1.1.20 exploiting the Licensed Technology based
upon: (a) illumination with ultra violet radiation to cause
fluorescence in a Bit Fiber or Bit Material incorporated
within [***] and thus identification of the specific
location of said Bit Fiber or Bit Material within [***];
(b) the application of a timing mechanism to track the
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
movement of said identified Bit Fiber or Bit Material to a
specific position within the detector assembly; and (c)
activation of a pulse of laser illumination to stimulate
characteristic lasing action within the Bit Fiber or Bit
Material and thus authentication of the specific material.
1.1.21. "Technology" shall mean public and non-public technical or
other information, trade secrets, know-how, processes,
formulations, concepts, ideas, data and testing results,
experimental methods, or results, assays, descriptions,
trade marks, business or scientific plans, depictions,
customer lists, inks, planchettes, fibers, threads,
distributed laser technology, materials, sensors, and any
other written, printed or electronically stored materials,
and any and all other intellectual property, including
copyright, database rights, sui generis rights, rights of
extraction and reutilization, discoveries, inventions,
patents and patent applications, of any nature whatsoever,
whether registrable or not, and all equivalent rights
existing in any country throughout the world.
1.1.22. "Territory" shall mean all countries with the exception of
the United States and Canada.
1.1.23. "Unique Bits" shall mean the four (4) versions of the Bit
that Spectra will develop for the Licensee pursuant to
Section 4.2(b) and in respect of which the Licensee will
have unrestricted worldwide exclusive rights. Specifications
regarding the Unique Bits are set forth on Schedule 1.1.23,
attached hereto. If requested by the Licensee to meet market
demand and the initial four (4) versions of Unique Bits have
already been commercialized, Spectra will use commercially
reasonable efforts to develop additional versions of the
Bits for the Licensee and in respect of which the Licensee
will have unrestricted worldwide exclusive rights. Such
additional unique versions of the Bits shall constitute
additional Unique Bits.
1.2. Singular and Plural. Singular and plural forms, as the case may be, of
terms defined herein shall have correlative meanings.
2. Grant of Licenses.
2.1. Grant of Licenses to Licensee.
2.1.1. Licensed Technology. Subject to the terms and conditions of
this Agreement, Spectra hereby grants to Licensee an
exclusive right, license and authority (to the exclusion of
all others including Spectra, its licensees and sublicensees
other than the Licensee) within the Territory (and, in
respect of the Unique Bits, worldwide), terminable only as
set forth herein, solely within the Field (and, in respect
of the Unique Bits, within and outside the Field) to develop
or have developed, manufacture or have manufactured, market
or have marketed, use or have used, sell or
have sold, copy and reproduce or have copied or
reproduced, distribute or have distributed, import or have
imported, supply or have supplied, any Products.
2.1.2. Sublicenses. Without limiting the generality of Section
2.1.1, Spectra agrees that Licensee's rights under this
Agreement shall include, without limitation, the exclusive
right to grant sublicenses to such Persons, within the
Territory and the Field (each a "Sublicensee"), and
provided that the Licensee ensures that all such
Sublicensees are bound by, and observe, the like
obligations and undertakings as are contained in this
Agreement, provided however, that Licensee shall pay to
Spectra [***] of all up front Sublicense fees and
royalties charged by Licensee in relation to the
Licensed Technology on the signing of the Sublicense, as
and when received from such Sublicensee.
2.1.3. Reservations. Spectra reserves the exclusive right to
employ the Licensed Technology for any use and any purpose
whatsoever, regardless of Field outside the Territory and
within the Territory outside the Field; except: (i)
Spectra shall not manufacture or employ the Unique Bits
for any purpose other than for sale to the Licensee and
(ii) as set forth in Section 4.2(b).
Nothing in this Section 2 shall restrict the Licensee
from, and the rights granted in this Section 2.1 shall
extend to entitling the Licensee and its Sublicensee to
manufacture, assemble and export equipment and parts
thereof that [***] in and from the United States of
America or Canada incorporating or which embodies or
makes use of the Licensed Technology.
2.2. Rights in Improvements.
2.2.1 Spectra Improvements. The parties agree that all right,
title and interest in and with respect to Spectra
Improvements shall be owned by Spectra; provided, however,
that, subject to the terms and conditions of this
Agreement, Spectra shall, to the extent that it is not
prohibited by law, promptly notify the Licensee in
writing, giving details of it, and provide to the Licensee
such information as the Licensee may reasonably require to
be able to effectively utilize the Spectra Improvements
anticipated by the grant set out in Section 2.1, and
hereby grants to Licensee an exclusive, right and license,
terminable only as set forth herein, solely within the
Field, and solely within the Territory in respect of the
Spectra Improvements, to develop or have developed,
manufacture or have manufactured, market or have marketed,
use or have used, sell or have sold, copy and reproduce or
have copied or reproduced, distribute or have distributed,
import or have imported, supply or have supplied, any
Products.
2.2.2 Licensee Improvements. If the Licensee shall at any time
devise, discover or acquire rights in any Licensee
Improvements, the Licensee shall, to the extent that it is
not prohibited by law,
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
promptly notify Spectra in writing, giving details of it, and
provide to Spectra such information as Spectra may reasonably
require to be able to effectively utilize the Licensee
Improvements, and the Licensee shall subject to Section 2.2.3
grant an irrevocable, non-exclusive, royalty free (within the
Field and royalty bearing outside the Field at such rates as the
parties shall from time to time agree) license under all rights
protecting such Licensee Improvements, throughout the world, for
the purpose of manufacturing, using and selling any article
throughout the world (but in relation to the Field only outside
the Territory).
2.2.3 Reservations. Except as set forth in Section 4.2(b),Spectra
reserves the exclusive right to employ Improvements for any use
and any purpose whatsoever, regardless of Field outside the
Territory and within the Territory outside the Field.
2.3 Restrictions Upon Use of Licensed Technology. Except as expressly
authorized by this Agreement or by the prior written consent of Spectra,
Licensee shall not, directly or indirectly, use any of the Licensed
Technology for any purpose whatsoever.
2.4 [***]
2.5 [***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
3. Sensors, Equipment and Maintenance. Within seventeen (17) months of the
Effective Date, Spectra shall supply and install an STS Sensor operating
on a Licensee sorting machine and authenticating and processing Bit
Fiber-laden [***] at standard machine rates and with performance
meeting the De La Rue General Requirement Specification for
Authentication Detectors attached at Schedule 1.1.20, to be mutually
agreed by the parties prior to commencement of detailed detector
development. At that time, Spectra shall also confirm the price and
schedule of delivery of production STS sensor units. The price target for
each STS Sensor shall be $8,200 and shall not exceed $16,200 (both
figures to be exclusive of royalty). The STS Sensors shall be delivered
in lots of ten (10). These prices shall be firm until March 31, 2004, and
thereafter should the prices for the STS Sensors become commercially
unreasonable for either the Licensee or Spectra, the parties agree to
review the prices for the STS sensors in good faith. In the event that
Spectra is not able to develop and offer for sale the STS Sensors for the
price of $10,200 (excluding royalty) then as an additional requirement to
the fifth milestone should this occur before the completion of the fifth
milestone and at any time thereafter should this occur later Spectra
shall at its cost develop a complete set of development and manufacturing
drawings and fully document such Technology as exists in the STS Sensor
and should the Licensee decide after a review of Spectra's manufacturing
activity that it may make or have made the STS Sensor provide one hard
copy and one electronic copy in such form as the Licensee shall
reasonably require to the Licensee, and provide to the Licensee such
additional information and assistance as the Licensee may reasonably
require to be able to effectively utilize the STS Sensor anticipated by
the grant set out in Section 2.1 including for the avoidance of doubt the
ability to manufacture and have manufactured by others the STS Sensors.
3.1 [***] License. In connection with the development of the STS sensors,
Licensee agrees to grant a royalty free, non-exclusive, limited license
to Spectra to use a [***] model solely for the purpose of developing the
STS sensor. The Licensee further agrees to loan to Spectra part or parts
of one (1) [***] at the Licensee's own expense as and when required,
starting within sixty (60) days of the Effective Date of this Agreement
and lasting for as long as reasonably necessary for the purpose of
developing the STS sensors. Licensee also agrees to provide Spectra's
personnel with training and instruction concerning the operation and use
of the [***] at
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
Spectra's facility at Licensee's own expense. Further, Licensee agrees
to make available, at its own expense, appropriate [***] at mutually
convenient times and locations as necessary for the development of the
STS sensors.
4. Obligations of the Parties.
4.1. Obligations of Licensee.
(a) Licensee shall use reasonable efforts consistent with sound
and reasonable business practices and judgment to effect introduction
of Products as soon as reasonably practicable.
(b) If the Licensee in competition with Spectra in the
Territory, actively promotes for use in relation to [***] alone
a new [***] which compete with the Products, Spectra may, by
notice, convert the license and right given to the Licensee under
Section 2.1 into a non-exclusive license and right. In such event, it
shall be under no obligation to license any Spectra Improvements made
subsequent to the date of conversion.
Nothing in this Section 4.1(b) shall restrict or limit the right of the
Licensee to sell or promote any [***] (or any enhancements
or revisions thereof) in the Field that exist as at the date of this
Agreement.
(c) Within three (3) months of completion of all of the
milestones set forth in this Agreement and thereafter, the Licensee
shall furnish to Spectra, on a semi-annual basis a non binding forecast
of its projected requirements for Products from Spectra which is not
binding upon the Licensee but enables Spectra to plan Product
production. Spectra undertakes to supply the Licensee with up to the
amount of Products identified in the Licensee's forecast referred to in
this Section.
(d) In the event that specific Bit Fibers or Bit Material are
manufactured by a party other than Spectra where this is requested by a
particular end user or the quality or price or lead time on Bit Fibers
or Bit Materials supplied by Spectra is not reasonably satisfactory to
the Licensee, Licensee will arrange for and Spectra shall use its
commercially reasonable efforts to train and transfer know-how to local
personnel of the manufacturer with respect to the manufacture of the
Bit Fibers or Bit Material, at Licensee's own expense, including but
not limited to reimbursement for travel expenses.
(e) Licensee, at its own expense, shall provide reasonable
assistance to Spectra in testing the Bit Fibers and Bit Material, as
made available by Spectra from time to time during the Development,
into [***].
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
(f) [***].
4.2 Obligations of Spectra. Spectra shall use diligent and commercially
reasonable efforts consistent with sound and reasonable business
practices and judgment to satisfy the following obligations:
(a) Spectra shall Demonstrate one fully operational Large Area
Sensor installed on a [***] within 8 months of the Effective Date for
detecting the Bit Fibers in [***] processed at standard machine rates of
no less than [***] per second and with performance meeting the De La Rue
General Requirement Specification for Authentication Detectors attached
at Schedule 1.1.20. (The Large Area Sensor, based on a larger and more
costly laser, is currently being used by a Spectra customer and will be
modified, in optics and in software, to detect the authentication
signatures falling under the purview of this Agreement.) The price of the
Large Area Sensor shall be $65,000 and shall be available for
demonstration units within eight (8) months of the Effective Date of this
Agreement. Additional copies of this modified and configured Large Area
Sensor may also be purchased at prices to be agreed between the parties,
in lots of ten (10), for authentication sensing in place of the STS
(Search, Time and Shoot) sensor. Spectra shall use commercially
reasonable good faith efforts to ensure that the price of the Large Area
Sensor does not exceed $65,000. Should the price for the Large Area
Sensor become commercially unreasonable for either the Licensee or
Spectra, the parties agree to review the prices for the Large Area Sensor
in good faith.
(b) Spectra shall employ its commercially reasonable efforts to
provide as many different versions of Bit Fibers as is necessary for the
commercialization of the Licensed Technology by the Licensee. Within six
(6) months of the Effective Date of this Agreement, Spectra shall give
all reasonable assistance to Licensee in embedding Bit Fibers into [***].
Although Spectra reserves the right to use the Licensed Technology in
relation to [***], it shall take all commercially reasonable steps and
precautions, in the same manner as it now does for [***], so as to ensure
that the security of Licensee's customers will not be compromised. In any
case, any other uses of the Licensed Technology shall have different
embodiments than are used in the [***]. It is agreed that Spectra may
employ the Licensed Technology other than in the form of Bit material or
Bit fibers (which for the purposes of this Section shall include threads
doped with or containing Bits) for use outside the Field but such use
shall not include the application of the Licensed Technology in relation
to
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***] and in so far as Spectra intends to use the licensed Technology
in other fields it will advise the Licensee of its intentions in a
timely manner and where Spectra contemplates using the Licensed
Technology other than in relation to [***] it will apprise Licensee
prior to such use and shall have due regard to and give proper
consideration to any concerns that the Licensee shall raise should the
Licensee reasonably believe the proposed use may prejudice the actual
or perceived security, reliability marketability or reputation of the
Licensed Technology in the Field.
(c) Spectra shall employ its commercially reasonable efforts to
provide as many different versions of Bit Material as is necessary for
the commercialization of the Licensed Technology by the Licensee and to
meet market demand.
(d) Spectra shall be responsible for absorbing the cost of the
variable amounts of Bit Fibers necessary per [***] in order to satisfy
the detection reliability of not more than [***]. Spectra shall not be
accountable for the waste that may be incurred in incorporating the Bit
Fibers into [***].
(e) Spectra undertakes to supply the Licensee with the amounts of
Products as per the Licensee's forecast, referred to in Subsection
4.1(c).
(f) Spectra will make available for sale, by eight (8) months of
the Effective Date, at a price of $175,000 per unit, for verification and
test purposes, an on-line Verifier-Densitometer (the specifications of
which are set forth in Schedule 4.2(f)), for purposes of testing
delivered Bit Fibers during incorporation into [***]. An off-line
verifier (the specifications of which are set forth in Schedule 4.2(f))
shall also be made available to Licensee at the same time and at the same
price. The on-line device shall take Bit Fiber density measurements every
[***] seconds and provide feedback to [***] process control system for
real-time decision making. Both devices shall be network-ready.
(g) Upon achievement of each relevant milestone as set forth in
Subsection 5.1, the relevant Bit Fibers and Bit Material will be
available for sale in mass production quantity within six (6) months of
the applicable milestone date. Spectra undertakes to supply Licensee with
a sufficient amount of Bit Fibers and Bit Material within such period of
time that Licensee is able to fulfill any particular contract for the
production of Products for any customer.
(h) Upon achievement of the relevant milestone as set forth in
Subsection 5.1, the STS Sensors will be available for sale in mass
production quantity within six (6) months of the applicable milestone
date.
5. Payments.
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
5.1 Milestone Payments and Dates. In consideration of the completion
by Spectra of the Development and its achievement of the
Milestones set forth in this Agreement, Licensee shall pay Spectra
the following milestone-based amounts. Milestone payments shall be
made on or before the fifteenth (15/th/) day following the
occurrence of an event giving rise to a payment obligation
hereunder. All payments shall be made by wire transfer in United
States Dollars to the credit of such bank account as may be
designated by Spectra in writing to Licensee. Any payment which
falls due on a date which is a legal holiday in the State of Rhode
Island may be made on the next succeeding day which is not a legal
holiday in the State of Rhode Island.
(a) $125,000 on or before 7 days of the signing of this
Agreement, for specific engineering development purposes.
(b) $125,000 before July 31, 2002, contingent upon a
successful [***] with the successful incorporation of Bit Fibers
into Licensee [***]. A successful trial shall be one in which the
Bit Fiber embedding process conforms with the [***] process at the
[***] and yields [***] with typical physicals expected under
industry standards and which when run on the Spectra test
transport and sensor bed are able to identify the Bit Fibers. The
sensor portion of the demonstration shall consist of a sample of
Bit Fiber-embedded [***]. Details of this acceptance test are
titled Bit Fiber-Acceptance Trial and set out in Schedule 5.1.
(c) $125,000 for installation of the Large Area Sensor
on a [***] within eight (8) months of the Effective Date, for
detecting the Bit Fibers in both [***] processed at standard
machine rates, providing signals to the [***] machine to direct
the [***] into the correct accept or reject pocket,. Details of
the acceptance test are titled Large Area Acceptance Test and set
out in Schedule 5.1.
(d) $125,000 for demonstration, within 8 months of the
Effective Date, of a prototype STS Sensor authenticating [***]
with Bit Fibers traveling on a Spectra test transport and sensor
bed operating at speeds consistent with the highest performing
[***]. The test bed will be a transport system that emulates a
[***] traveling on a typical [***]. The test of the prototype
sensor will concern detection of the Bit Fiber signature at
standard [***] transport speeds. Details of the acceptance test
are titled STS Sensor Acceptance Test and are set out in
Schedule 5.1.
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
(e) $125,000 for the demonstration, within 17 months of
the Effective Date, of an STS Sensor operating on a [***] and
authenticating and processing both [***] at standard [***]
machine rates, providing signals to the sorting machine to direct
the [***] into the correct accept or reject pocket, and
exhibiting performance as per the De La Rue General Requirement
Specification for Authentication Detectors attached at Schedule
1.1.20 varied as mutually agreed by the parties prior to
commencement of detailed detector development. Details of the
acceptance test are titled STS Sensor Acceptance Test and are set
out in Schedule 5.1.
(f) $125,000 for, within 17 months of the Effective
Date, confirmation of the STS Sensor price, not exceeding $18,000
and targeting $10,000 (both figures being inclusive of royalty);
schedule of delivery of production STS Sensor units; and proof of
the manufacturability of the STS Sensor. Such manufacturability
proof shall be achieved by a detailed review, by Licensee's
manufacturing representatives at Spectra's manufacturing facility,
of Spectra's planned manufacturing process for the STS Sensor. The
Licensee's manufacturing representatives shall use customary
methods that are mutually acceptable and reasonable within the
industry for the purpose of determining that the STS Sensor can be
manufactured in mass quantity.
5.2 Royalty. During the term of this Agreement the Licensee shall pay
to Spectra royalties at the rate set out in Part 1 of Schedule 5.4
in respect of each [***] as the case may be that it sells to its
customers that constitute or contain Products. During the term of
this Agreement the Licensee shall pay to Spectra royalties at the
rate set out in Part 3 of Schedule 5.4 in respect of each STS
Sensor delivered to, by or on behalf of the Licensee.
5.3 Annual Minimum Royalty. For the period commencing on the date
hereof through December 31, 2006 (the "Initial Period"), Licensee
agrees to pay or have paid to Spectra a minimum royalty of
[***]. Payment for or on account of royalties for the Initial
Period shall be made by April 15, 2004. In so far as any royalty
payment made by April 15, 2004 is in advance this advance payment
shall be credited against obligations to pay royalties on sales
made up to and including December 31, 2006 pursuant to Section
5.2. In so far as royalties due under Section 5.2 fall short of
the minimum royalty for the Initial Period then in discharge of
the Licensee's obligation Spectra shall retain the initial payment
made by April 15, 2004. For subsequent years, the minimum royalty
shall be as follows: [***] for the calendar year 2007; [***]
for the calendar year 2008; [***] for the calendar year 2009;
and [***] for the calendar year 2010. The minimum annual
royalty for subsequent years shall thereafter increase annually
over the prior year's dollar amount, based upon the then most
recent Consumer Price Index for the Boston metropolitan area, as
published by the United States Bureau of Labor Statistics. Once
Licensee
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
pays royalties of [***] (the "Target Royalty") in or in respect
of any given year, all future annual minimum royalties shall be
deemed achieved and paid. If the minimum royalty is not achieved
in any period by the payment of royalties pursuant to Section 5.2,
Licensee shall have the option to top this up by a payment, to be
made by the Licensee to Spectra by no later than January 31st of
the immediately following calendar year an amount equal to the
minimum royalty less the amount of royalties actually paid during
the course of the preceding period pursuant to Section 5.2;
however, the amount of such cash payment used to achieve a minimum
royalty shall not be counted towards the achievement of the Target
Royalty.
5.4 Price of Bit Fibers and Bit Material. During the term of this
Agreement, if required by Licensee, Spectra will supply to the
Licensee Bit Fibers and Bit Material from Spectra at prices as set
forth in Part 2 of Schedule 5.4 attached hereto. The prices shall
remain firm until March 31, 2004, and thereafter shall increase
annually based upon the then most recent Consumer Price Index for
the Boston metropolitan area, as published by the United States
Bureau of Labor Statistics but in no event shall the increase in
any year exceed 3%. he prices for the Bit Fibers Bit Material
become commercially u or Bit Material in good faith.
5.5 Timing of Royalty Payments; Withholding. (a) Any royalties payable
pursuant to this Section shall be due on or before the sixtieth
(60th) day following the close of each calendar quarter,
commencing on June 30, 2002.
(b) In the event that Licensee or any Sublicensee
manufactures or has manufactured locally the Bit Fibers, the Bit
material or the STS Sensors then the Licensee will pay royalties
to Spectra at the rate set out in Part 1 of Schedule 5.4 in
respect of [***] as the case may be and at the rate set out
in Part 3 of Schedule 5.4 in respect of each STS Sensor that
Sublicensee sells to its customers that constitute or contain
Products. Royalties will be payable within 30 days of the receipt
by the Licensee of royalty payments to it from its Sublicensee.
(c) Any income or other taxes which Licensee is required
by law to pay or withhold on behalf of Spectra with respect to
royalties payable to Spectra under this Agreement shall be
deducted from the amount of such royalties due and paid or
withheld, as appropriate, by Licensee on behalf of Spectra. Any
such tax required to be paid or withheld shall be an expense of,
and borne solely by, Spectra. Licensee will furnish Spectra with
reasonable evidence of such withholding payment, in electronic or
written form, as soon as practicable after such payment is made.
The parties hereto will reasonably cooperate in completing and
filing documents required under the provisions of any applicable
tax laws or under any other applicable law in connection with the
making of any required withholding payment, or any claim to a
refund of any such payment.
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
5.6 Currency. All payments hereunder shall be made in U.S. Dollars. If
at any time legal restrictions prevent the prompt remittance of
any payments with respect to any country where the Product is
sold, Licensee or its Affiliates or Sublicensees shall, with the
prior approval of Spectra, have the right and option to make such
payments by depositing the amount thereof in local currency to
Spectra's account in a bank or depository in such country, but
failure to make any payment required hereunder by reason of the
operation of any such legal restriction and Spectra's refusal to
approve payment in local currency shall not be deemed a breach of
this Agreement.
5.7 Audit. Licensee shall keep and shall cause to be kept accurate
records in sufficient detail to enable the amounts due hereunder
to be determined and to be verified as herein after appearing.
Upon the written request of Spectra, at Spectra's expense and not
more than once in or in respect of any calendar year, Licensee
shall permit unless prohibited by law or contract an independent
accountant of prominence in the United States and/or the
applicable country selected by Spectra, and approved by Licensee
(which approval shall not be unreasonably withheld), to have
access during normal business hours to those records of Licensee
as may be reasonably necessary to verify the accuracy of the
reports furnished by Licensee pursuant to Section 4.1(b), in
respect of any calendar year ending not more than twelve (12)
months prior to the date of such notice. Any report prepared
or made by the independent accountant, a copy of which shall be
sent or otherwise provided to Licensee at the same time it is sent
or otherwise provided to Spectra, shall contain the conclusions of
such independent accountant regarding the audit, only specifying
that the amounts paid to Spectra pursuant thereto were correct or,
if incorrect, the amount of any underpayment or overpayment. All
other confidential information of Licensee learned by the
independent accountant in the course of the audit will be held in
confidence and not disclosed. If the independent accountant's
report shows any underpayment, Licensee shall remit or shall cause
its Affiliates or Sublicensees to remit to Spectra within thirty
(30) days after Licensee's receipt of such report: (i) the amount
of such underpayment; and (ii) if such underpayment exceeds ten
percent (10%) of the total amount payable for the calendar year
then being audited, the reasonable and necessary fees and expenses
of the independent accountant performing the audit, subject to
reasonable substantiation thereof. Any overpayments shall be fully
creditable against amounts payable in subsequent payment periods
or remitted to Licensee, at Licensee's request. Spectra agrees
that all information subject to review under this Section 5 is
confidential and that Spectra shall retain and cause its
accountant to retain all such information in confidence. Licensee
shall cause all Sublicensees to comply with the provisions of this
section.
6. Representations and Warranties.
6.1 Representations, Warranties and Covenants of Spectra. Spectra
represents, warrants and covenants to Licensee as follows:
6.1.1. Spectra is a corporation duly organized, validly existing
and in good standing under the laws of the State of
Delaware with corporate power to execute and deliver, and
perform its obligations under, this Agreement;
6.1.2. the execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action
on the part of Spectra;
6.1.3. this Agreement has been duly executed and delivered by
Spectra and is a legal, valid and binding obligation of
Spectra, enforceable against Spectra in accordance with its
terms; and
6.1.4. the execution, delivery and performance of this Agreement
do not and will not conflict with or contravene any
provision of the charter documents or by-laws of Spectra or
any agreement, document, instrument, indenture or other
obligation of Spectra.
6.2 Representations, Warranties and Covenants of Licensee. Licensee
represents, warrants and covenants to Spectra as follows:
6.2.1. Licensee is a corporation duly organized, validly existing
and in good standing under the laws of England with
corporate power to execute and deliver, and perform its
obligations under, this Agreement;
6.2.2 the execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action
on the part of Licensee;
6.2.3. this Agreement has been duly executed and delivered by
Licensee and is a legal, valid and binding obligation of
Licensee, enforceable against Licensee in accordance with
its terms; and
6.2.4. the execution, delivery and performance of this Agreement
do not and will not conflict with or contravene any
provision of the charter documents or by-laws of Licensee
or any agreement, document, instrument, indenture or other
obligation of Licensee.
7. Patents.
7.1. Prosecution and Enforcement of Patents. All right, title, and
interest in the Licensed Technology shall remain in Spectra, and
Spectra shall subject to the provisions of Section 8.2, have the
exclusive right to prepare, prosecute and maintain patent
applications, and to maintain and enforce patents issued thereon
with respect to Licensed Technology.
7.2. Cooperation. Licensee shall, at Spectra's request and cost,
cooperate with Spectra regarding the prosecution of patent cases,
and shall take all reasonable steps necessary to assist Spectra
with the maintenance of the Licensed Technology, including causing
each of its employees and agents to take all actions and to
execute, acknowledge and deliver all instruments
or agreements reasonably requested by Spectra, and necessary
for the perfection, maintenance, enforcement or defense of
Spectra's rights as set forth above.
7.3. Confidential Information. Any party receiving Confidential
Information shall maintain the confidential and proprietary
status of such Confidential Information, keep such
Confidential Information and each part thereof within its
possession or under its control sufficient to prevent any
activity with respect to the Confidential Information that
is not specifically authorized by this Agreement, use
commercially reasonable efforts, in each case, to prevent
the disclosure of any Confidential Information to any other
Person, and use commercially reasonable efforts to ensure
that such Confidential Information is used only for those
purposes specifically authorized herein; provided, however,
that such restrictions shall not apply to any Confidential
Information which is: (a) independently developed by the
receiving party or which is outside the scope of this
Agreement; (b) in the public domain at the time of its
receipt or thereafter becomes part of the public domain
through no fault of the receiving party; (c) received
without an obligation of confidentiality from a third party
having the right to disclose such information; (d) released
from the restrictions of this Section 7.3 by the express
written consent of the other party hereto; (e) disclosed to
any permitted assignee, permitted Sublicensee or permitted
subcontractor of either Spectra or Licensee hereunder (if
such assignee, Sublicensee or subcontractor is subject to
the provisions of this Section 7.3 or comparable provisions
of other documents); or (f) required by law, statute, rule
or court order to be disclosed (the disclosing party shall,
however, use commercially reasonable efforts to obtain
confidential treatment of any such disclosure).
7.4. Permitted Disclosures. Notwithstanding the provisions of
Section 7.3 hereof, Spectra and Licensee may, to the extent
necessary, disclose and use Confidential Information,
consistent with the rights of Spectra and Licensee otherwise
granted hereunder: (a) for the purpose of securing
institutional or governmental approval to engage in
research, development, validation, sale, trial, importation,
commercialization or marketing of any Product; (b) for the
purpose of either party securing patent protection for an
invention within the scope of the Licensed Technology or for
any Improvement; or (c) to the extent necessary or useful in
the commercialization of any Products, if the party hereto
disclosing such Confidential Information uses commercially
reasonable efforts to obtain an agreement from any Person to
whom such Confidential Information is disclosed to preserve
the confidentiality thereof upon terms reasonably equivalent
to those set forth herein; provided, however, that in each
such instance the other party hereto shall have been
notified of the permitted disclosure.
8. Patent Infringement.
8.1 Notification of Infringement. Each party shall notify the
other of any infringement by any Person of any patent rights
forming part of the Licensed Technology ("Patent Rights") of
which it becomes aware and
shall provide the other with the available evidence, if any,
of such infringement.
8.2 Enforcement of Patent Rights. If Spectra or Licensee has
actual notice of infringement by any Person of Patent
Rights, the respective officers of Spectra and Licensee
shall confer to determine in good faith an appropriate
course of action to enforce such Patent Rights or otherwise
xxxxx the infringement thereof. If Spectra determines that
enforcement of Patent Rights is appropriate, Spectra shall
have the right, but not the obligation, at its own expense,
to take appropriate action to enforce such Patent Rights;
provided, however, that, if Spectra elects to so act,
Licensee shall have the right to participate in the
enforcement of such Patent Rights by agreeing to bear a
percentage of the costs of such enforcement in such amount
as the parties shall determine. All amounts recovered in any
action to enforce Patent Rights undertaken by Spectra and
Licensee, whether by judgment or settlement, shall be
retained by Spectra and Licensee pro rata according to the
respective percentages of expenses borne by them in
enforcing such Patent Rights. If, within six (6) months
after notice of infringement, Spectra has not commenced
action to enforce such Patent Rights or thereafter ceases to
diligently pursue such action, Licensee shall have the right
but not the obligation, at its expense, to take appropriate
action to enforce such Patent Rights as its sole remedy
hereunder. Spectra and Licensee shall fully cooperate with
each other in the planning and execution of any action to
enforce Patent Rights. Neither Spectra nor Licensee shall
enter into any settlement that includes the grant of a
license under, agreement not to enforce, or any statement
prejudicial to the validity or enforceability of any Patent
Rights without the consent of the other, which consent shall
not be withheld unreasonably.
8.3 Disclaimer of Warranty; Consequential Damages.
8.3.1. Spectra warrants that it is the sole beneficial
owner of the Licensed Technology and that Spectra
does not know of any impediment or potential
impediment to the full exercise of the right and
license therein and herein granted.
8.3.2 Spectra warrants that Schedule 1.1(a) hereto sets
out full details of all patents owned by Spectra
relating to the Bits and the Licensed Technology.
8.3.3. Nothing in this Agreement shall be construed as a
representation made or warranty given by either
party hereto that any patents will issue based on
pending applications within the Patent Rights, or
that any such Patent Rights which do issue will be
valid, or that the practice by the other party
hereto of any license granted hereunder, or that
the use of any Licensed Technology licensed
hereunder, will not infringe the patent or
proprietary rights of any other Person. In
addition, once Licensee or Sublicensee has accepted
the Bit Fibers security threads and foil transfers
or security borne Bit Material as in compliance
with agreed
standards, as defined later in this section, or, in
the case where Bit Fibers are manufactured by a
party other than Spectra or an Affiliate of
Spectra, once the know-how and training has been
transferred to the other manufacturer for local
production of Bit Fibers security threads and foil
transfers or security borne Bit Material, Licensee
acknowledges that the Licensed Technology is
licensed to Licensee as is, and Licensee expressly
disclaims and hereby waives, releases and renounces
any warranty, express or implied, with respect to
such licensed technology, including, without
limitation, any warranty of merchantability or
fitness for a particular purpose. With respect to
the Licensee's acceptance of delivered Bit Fibers
security threads and foil transfers or security
borne Bit Material from Spectra, Licensee shall
have fifteen (15) days to refuse the material as
not in compliance with standard material, at the
expiration of which time the material shall save in
respect of latent defects be deemed accepted. The
standards for acceptable material shall be
materials that are consistent with that
demonstrated to and accepted by Licensee as ready
for production at the time of the milestone
demonstrations set forth in Section 5.1. To
determine that the material meets standards upon
receipt, the Licensee or Sublicensee shall use
Spectra Quality Control equipment, including
verifiers, for testing the Bit Fibers or security
borne Bit Material.
8.3.4. NEITHER PARTY TO THIS AGREEMENT SHALL BE ENTITLED
TO RECOVER FROM THE OTHER ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES
9. Term, Termination and Breach.
9.1. Term. This Agreement shall be effective as of the date
hereof and shall in relation to each Product and each
country in the Territory continue in full force and effect
until the expiry of the last to expire Spectra Patent Rights
in relation to that Product and in that country unless
terminated by the mutual agreement of the parties or as
otherwise provided herein.
9.2. Termination. Either party shall have the right to terminate
this Agreement effective immediately upon written notice of
termination to the other party in the event that:
9.2.1 the other party fails to perform or observe or
otherwise breaches any of its material obligations
under this Agreement (which for the avoidance of
doubt would include the failure of the Licensee to
pay the minimum royalty set out in Section 5.3) and
such failure or breach continues unremedied for a
period of sixty (60) days after receipt by such
party of written notice thereof from the
non-breaching party in which notice it states it is
served pursuant to this section and details the
alleged material breach and requires its remedy;
9.2.2. the other party shall: (i) seek the liquidation,
reorganization, dissolution or winding-up of itself
(other than for the purpose of solvent
reorganization, amalgamation or reconstruction) or
the composition or readjustment of its debts; (ii)
apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a
substantial part of its assets; (iii) make a
general assignment for the benefit of its
creditors; (iv) commence a voluntary case under the
bankruptcy laws of the United States; (v) file a
petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization,
winding-up or composition or readjustment of debts;
or (vi) adopt any resolution of its Board of
Directors or stockholders for the purpose of
effecting any of the foregoing;
9.2.3 a proceeding or case shall be commenced without the
application or consent of the other party and such
proceeding or case shall continue undismissed, or
an order, judgment or decree approving or ordering
any of the following shall be entered and continue
unstayed and in effect, for a period of forty-five
(45) days from and after the date service of
process is effected upon the other party, seeking:
(i) the other party's liquidation, reorganization,
dissolution or winding-up, or the composition or
readjustment of its debts; (ii) the appointment of
a trustee, receiver, custodian, liquidator or the
like of the other party or of all or any
substantial part of its assets; or (iii) similar
relief in respect of the other party under any law
relating to bankruptcy, insolvency, reorganization,
winding up or the composition or readjustment of
debts; or
9.2.4 anything analogous to any of the foregoing under
the law of any jurisdiction occurs in relation to
either party.
9.3. Effect of Termination. If Spectra properly terminates this
Agreement, Sections 2, 3, 4, 5, 7.2, 8.1 and 8.2 shall
terminate, all other provisions of this Agreement shall
survive, and automatically and without any other action by
the parties, all rights granted hereunder in and to the
Licensed Technology shall revert to Spectra, save that the
Licensee and its Sublicenses shall be entitled to take all
such steps and the license under Section 2.1 and Spectra's
obligations under Section 4.2(e) shall (provided that the
Licensee meets and continues to meet it obligations to pay
royalties under Section 5.2) continue for a period of ten
(10) years from the date that this Agreement terminates for
whatever reason in so far as it is necessary to enable the
Licensee to fulfill any contracts with its customers or
Sublicensee then signed but not completely fulfilled and to
supply STS Sensors, [***] containing Bit Fibers and Bit
Material in respect of further orders where this has
previously been provided to the customer or Sublicensee
under earlier contracts
If the Licensee properly terminates this Agreement, Sections, 2, 3,
4, 5, 7.2, 8.1 and 8.2 shall terminate, all other provisions of
this Agreement shall survive and automatically and without any
other action by the parties all
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
rights granted hereunder in and to the Licensee Improvements
shall revert to the Licensee.
9.3 Breach. Without prejudice to the Licensee's rights under
Section 9.2 or any other rights of the Licensee, if Spectra
fails to perform or observe or otherwise breaches any of its
material obligations under this Agreement (which for the
avoidance of doubt would include the failure of Spectra to
supply Product pursuant to Section 4.2(b)) and such failure
or breach continues unremedied for a period of sixty (60)
days after receipt by Spectra of written notice thereof from
the Licensee in which notice it states it is served pursuant
to this section and details the alleged material breach and
requires its remedy, the Licensee's obligations to pay
annual minimum royalties pursuant to Section 5.3 and to
license Licensee Improvements to Spectra pursuant to Section
2.2.2 shall cease.
9.4 Escrow. At each milestone and thereafter as Improvements are
made Spectra shall lodge with a law firm selected by Spectra
full details containing any secret formulation,
manufacturing know how, details of all materials, processes
employed and manufacturing techniques and equipment
necessary to produce Unique Bits, Bit Fibers, Bit Materials
and STS Sensors pursuant to the escrow agreement attached
hereto.
10. No Implied Waivers; Rights Cumulative. No failure on the part of
Spectra or Licensee to exercise and no delay in exercising any
right, power, remedy or privilege under this Agreement, or provided
by statute or at law or in equity or otherwise, including, without
limitation, the right or power to terminate this Agreement, shall
impair, prejudice or constitute a waiver of any such right, power,
remedy or privilege or be construed as a waiver of any breach of
this Agreement or as an acquiescence therein, nor shall any single
or partial exercise of any such right, power, remedy or privilege
preclude any other or further exercise thereof or the exercise of
any other right, power, remedy or privilege.
11. Force Majeure. Spectra and Licensee shall each be excused for any
failure or delay in performing any of its respective obligations
under this Agreement, if such failure or delay is caused by Force
Majeure
12. Notices. All notices, requests and other communications to Spectra
or Licensee hereunder shall be in writing (including facsimile or
similar electronic transmissions), shall refer specifically to this
Agreement and shall be personally delivered or sent by facsimile or
similar electronic transmission (provided that in the case of a
notice sent by facsimile or other electronic transmission, a copy
of the notice is sent within three (3) days thereof by first class
or equivalent prepaid mail) or by registered mail or certified
mail, return receipt requested, postage prepaid, in each case to
the respective address specified below (or to such address as may
be specified in writing to the other party hereto):
Spectra Systems Corporation
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
XXX
Attention: President
Fax No.: (000) 000-0000
Email Address: xxxxxxxx@xxxxxxxxxxxxxxxxxx.xxx
De La Rue International Limited
De La Xxx Xxxxx, Xxxx Xxxxx
Xxxxxxxxxxx
Xxxxxxxxx XX00 0XX, Xxxxxxx
Attention: Xxxxxxxx Xxxx, Managing Director - Centres
[***]
Fax No. x00 0000 000 000
Email Address: xxxxxxxx.xxxx@xx.xxxxxxx.xxx
Any notice or communication given in conformity with this Section
12 shall be deemed to be effective when received by the addressee,
if delivered by hand. Notices sent by facsimile or other electronic
transmission will be deemed sent and received at the time stated in
any transmission report and three (3) days after mailing, if
mailed.
13. Further Assurances. Each of Spectra and Licensee agrees to duly
execute and deliver, or cause to be duly executed and delivered,
such further instruments and do and cause to be done such further
acts and things, including, without limitation, the filing of such
additional assignments, agreements, documents and instruments, that
may be necessary in connection with this Agreement
14. Successors and Assigns. The terms and provisions of this Agreement
shall inure to the benefit of, and be binding upon, Spectra,
Licensee, and their respective successors and assigns; provided,
however, that neither Spectra nor Licensee may assign or otherwise
transfer any of its rights and interests, nor delegate any of its
respective obligations hereunder, without the prior written consent
of the other party hereto; provided further, however, that either
party may without consent fully assign its rights and interests,
and delegate its obligations, hereunder, effective upon written
notice thereof: (a) to an Affiliate if such Affiliate assumes all
of the obligations of the assigning party hereunder; or (b) to any
Person which acquires all or substantially all of the assets of the
assigning party or which is the surviving Person in a merger or
consolidation with the assigning party. Any attempt to assign or
delegate any portion of this Agreement in violation of this Section
14 shall be null and void. Subject to the foregoing, any reference
to Spectra and Licensee hereunder shall be deemed to include the
successors thereto and assigns thereof.
15. Amendments. No amendment, modification, waiver, termination or
discharge of any provision of this Agreement, nor consent to any
departure by Spectra or Licensee therefrom, shall in any event be
effective unless the same shall be in writing specifically
identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by
Spectra and Licensee, and each such amendment, modification,
waiver, termination or
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
discharge shall be effective only in the specific instance and for
the specific purpose for which given. No provision of this
Agreement shall be varied, contradicted or explained by any oral
agreement, course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by Spectra and
Licensee.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to
internal principles of conflicts of laws.
17. Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any respect in any jurisdiction, then,
to the fullest extent permitted by law: (a) all other provisions
hereof shall remain in full force and effect in such jurisdiction
and shall be liberally construed in order to carry out the
intentions of the parties hereto as nearly as may be possible; and
(b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision
in any other jurisdiction. To the extent permitted by applicable
law, Spectra and Licensee hereby waive any provision of law that
would render any provision hereof prohibited or unenforceable in
any respect.
18. Headings. Headings used herein are for convenience only and shall
not in any way affect the construction of, or be taken into
consideration in interpreting, this Agreement.
19. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original, and all
of which counterparts, taken together, shall constitute one and the
same instrument.
[Signature page follows]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal and delivered as of the date first above written.
SPECTRA SYSTEMS CORPORATION
By: /s/ Xx. Xxxxx X. Xxxxxxx
-------------------------------
Name: Xx. Xxxxx X. Xxxxxxx
Title: President & CEO
DE LA RUE INTERNATIONAL LIMITED
By: /s/ illegible
-------------------------------
Name: [***]
Title: [***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
TECHNOLOGY LICENSE AND SUPPLY AGREEMENT
SCHEDULE 1.1(a)
SPECTRA PATENT RIGHTS
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***]
(*) Covered under European application
(++) Request to publish approved 2/23/01 under [***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
TECHNOLOGY LICENSE AND SUPPLY AGREEMENT
SCHEDULE 1.1.23
BIT FIBERS SPECIFICATION
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
TECHNOLOGY LICENSE AND SUPPLY AGREEMENT
SCHEDULE 2.5
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
SCHEDULE 1.1.20
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
CONTENTS
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
SCHEDULE 5.1
Acceptance Trials
Bit Fibers
1. Spectra shall provide an agreed quantity of fibers comprising 2 different
Bits for incorporation into approximately [***] of a typical furnish and
specification in accordance with standard [***] practice for [***]. The
introduction of the fibers will not result in any non-standard process
requirement or cost, other than the purchase cost of the fibers, including the
processes required to [***] and treatment of effluent.
2. Introduction of the Spectra fibers will not significantly (in the reasonable
judgment of Licensee consistent with [***] industry standards) alter the
physical properties [***] (other than the optical properties conforming to the
Licensed Technology).
3. The resultant [***] shall be processed in one of the Licensee's factories.
Approximately [***] containing each Bit type shall be processed at standard
production speeds through the standard [***]. A representative quantity shall
also be processed though the additional operations of [***]. During these
processes, the Spectra fibers shall not become detached from [***], contaminate
the [***], cause a requirement for additional wash-ups, reduce the transfer or
adhesion of any [***] or otherwise reduce the manufacturing speed and throughput
compared to standard [***] of a similar type with similar type fibers embedded.
4. Licensee will make available to Spectra representative samples of [***] of
both Bit types for authentication tests utilizing a Large Area Detector. The
samples will include [***] that have been subjected to the mechanical and
chemical durability tests defined in the Annex. All samples shall be accepted on
the authentication system, or enough samples shall be detected such that
Licensee shall feel satisfied with the robustness of feature. Spectra shall also
demonstrate that the authentication system is not impaired by the presence of
[***].
Spectra shall demonstrate the performance of the authentication system against
the tests defined in this clause 4 at Spectra's premises to a nominee of the
Licensee.
5. Licensee shall provide to Spectra samples comprising materials that in
Licensee's opinion may be used by [***]. Spectra shall demonstrate to Licensee's
satisfaction and judgment that sufficient samples are rejected by the
authentication system at the same sensitivity setting used for the tests
conducted under clause 4. The [***] analysis shall include an assessment of the
ease with which genuine Bit Fibers can be removed from [***] and affixed to
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***] such that they are accepted by the authentication system.
6. ACCEPTANCE MILESTONE. Subject to a fully satisfactory performance under
clauses 1-5, Licensee shall deem acceptance of the Bit Fibers.
7. In the event that Licensee accepts the FiberLase system as inherently sound
under clause 6 and wishes to progress the Development but requires improved
performance, Licensee shall provide tests and samples to guide Spectra's further
development.
8. Subsequent to the initial acceptance tests, fibers conforming to the Licensed
Technology comprising subsequent batches of the approved Bits and/or
new/additional Bits developed in accordance with this Agreement, or as
subsequently agreed between Spectra and Licensee, shall conform to the
performance criteria defined in the above clauses. There shall be a maximum
variation of [***] in the peak wavelength and [***] peak amplitude/emission
intensity between batches of fibers when measured in [***]. No changes
shall be made to the polymeric base of the Bit Fibers, nor to other physical and
chemical properties of the Bit Fibers (other than to meet agreed characteristic
lasing performance) without prior written agreement with Licensee.
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
Bit Material (to be activated as and when necessary)
1. Spectra will provide Licensee with an agreed quantity of Bit Material
suitable for application to polymeric film (including but not limited to
polyester) by means of [***] or other process as agreed between Spectra and
Licensee's Affiliates [***].
2. [***] will manufacture sufficient [***] to produce [***] and supply the [***]
or De La Rue factory as appropriate.
3. Licensee will incorporate the security thread into a [***]. The introduction
of the security thread will not result in any non-standard process requirement
or cost, other than the purchase cost of the Bit Material and consequent
security thread, including the processes required to [***].
4. The resultant paper shall be processed in one of the Licensee's factories.
Approximately [***] shall be processed at standard production speeds through the
standard [***] processes of [***]. A representative quantity shall also be
processed though the additional operations of [***].
Throughout these processes, the thread incorporating the Bit Material shall not
reduce the manufacturing speed and throughput compared to [***] of a similar
type.
5. The Licensee will make available to Spectra representative samples of [***]
incorporating the security thread comprising the Bit Material for authentication
tests utilizing an STS Sensor. The samples will include [***] that have been
subjected to the mechanical and chemical hazard tests defined in the Annex. All
samples shall be accepted on the STS Sensor, or enough samples shall be detected
such that Licensee shall feel satisfied with the robustness of feature. Spectra
shall also demonstrate that the authentication system is not impaired by the
presence of [***]. Spectra shall demonstrate the performance of the STS Sensor
against the tests defined in this clause 5 at Spectra's premises to a nominee of
the Licensee.
6. The Licensee shall provide to Spectra samples comprising materials that in
Licensee's opinion may be used by counterfeiters to simulate the salient
properties of the Bit Materials as applied to a [***]. Spectra shall demonstrate
to Licensee's satisfaction and judgment that sufficient samples are rejected by
the STS Sensor at the same sensitivity setting used for the tests conducted
under clause 5.
7. ACCEPTANCE MILESTONE. Subject to a fully satisfactory performance under
clauses 1-6, Licensee shall deem acceptance of the Bit Materials.
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
8. Subsequent to the initial acceptance tests, Bit Material conforming to the
Licensed Technology comprising new/additional Bits developed in accordance with
this Agreement, or as subsequently agreed between Spectra and Licensee, shall
conform to the performance criteria defined in the above clauses. No changes
shall be made to the formulation of the Bit Material, nor to other physical and
chemical properties of the Bit Material (other than to meet agreed
characteristic lasing performance) without prior written agreement with
Licensee.
Annex Durability tests
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
Large Area Sensor
1. Spectra shall, if so required by Licensee, install one of its Large Area
Sensors on a [***] to be specified by [***] for detecting the Bit Fibers in
[***].
2. The Large Area Sensor shall authenticate [***] processed at standard machine
rates of no less than [***] per second and linear transport speed of up to [***]
per second.
3. The Large Area Sensor shall conform to the De La Rue General Requirement
Specification for Spectra FiberLase Detectors issue 21.5.2002.
4. Fitment and operation of the Large Area Sensor shall not reduce the operating
speed or throughput of the [***] machine, other than for reasons of correct
rejection of [***] that do not contain the correct Bit or Bits.
5. The Large Area Sensor shall not incorrectly reject genuine [***] containing
the correct Bit at a rate of more than [***].
6. The Large Area Sensor shall not incorrectly accept [***] not containing
the correct Bit at a rate of more than [***] not containing the relevant Bit.
7. The Large Area Sensor shall reject Bits which do not conform to the specific
Bit utilized for any given [***]. Maximum coding misclassification [***].
8. Spectra shall demonstrate correct operation of the Large Area Sensor fitted
to a [***] to a nominee of the Licensee. Acceptance testing shall require
processing of [***], in a range of conditions, to be provided by Licensee as
follows:
Licensee will provide [***]. These will be passed a minimum of [***] through the
[***].
Licensee will provide a pack of chemically and mechanically abused [***] and
[***]. These will be passed a minimum of [***] through the [***].
Spectra shall demonstrate that the function of the Large Area Sensor is not
impaired by the presence of [***].
9. ACCEPTANCE MILESTONE. Subject to a fully satisfactory performance under
clauses 1-8, Licensee shall deem acceptance of the Large Area Sensor.
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
10. Additional copies of the Large Area Sensor conforming to the approved
initial unit will be made available by Spectra, at prices to be agreed between
the parties, in lots of ten. No change to the specification or construction of
the sensors shall be made by Spectra unless agreed in writing with Licensee.
11. Spectra shall provide for each unit purchased a full technical manual to
Licensee detailing operational specification, drawings for dimensions,
cleaning/maintenance schedule, diagnostic procedures and interface protocol.
STS Sensor
1. Spectra shall develop a prototype STS sensor capable of authentication of
[***] containing Bit Fibers when fitted to a test transport at Spectra's
premises.
2. The STS prototype shall be capable of authenticating [***] at a linear
transport speed of up to [***] per second.
3. Spectra shall demonstrate that the signal processing function is capable of
accommodating a feed rate of [***] per second.
4. Spectra shall demonstrate to Licensee's satisfaction and judgment correct
operation of the STS prototype to a nominee of the Licensee. Acceptance testing
shall require processing of [***], in a range of conditions, to be provided by
Licensee as follows:
Licensee will provide [***] which will be passed at least once through the
prototype system.
Licensee will provide a pack of chemically and mechanically [***] and [***].
These will be passed a minimum of once through the prototype sensor test bed.
5. Spectra shall demonstrate to Licensee's satisfaction and judgment that the
STS sensor is capable of rejecting any Bit which does not conform to the
specific correct Bit utilized for a given currency or denomination.
6. ACCEPTANCE MILESTONE. Subject to a fully satisfactory performance under
clauses 1-5, Licensee shall deem acceptance of the design principles of the STS
prototype sensor.
7. Spectra shall install one fully developed STS Sensor on a [***] to be
specified by [***] for detecting the Bit Fibers in [***].
8. The STS Sensor shall authenticate [***] processed at standard machine
rates of no less than [***] per second and linear transport speed
of up to [***] per second.
9. The STS Sensor shall conform to the De La Rue General Requirement
Specification for Spectra FiberLase Detectors issue 23.5.2002.
10. Fitment and operation of the STS Sensor shall not reduce the operating speed
or throughput of the [***] machine, other than for reasons of correct
rejection of [***] that do not contain the correct Bit.
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
11. The STS Sensor shall not incorrectly reject [***] containing the
correct Bit at a rate of more than [***].
12. The STS Sensor shall not incorrectly accept [***] not containing the
correct Bit at a rate of more than [***].
13. The STS sensor shall reject Bits which do not conform to the specific Bit
utilized for any given [***]. Maximum coding misclassification [***].
14. Spectra shall demonstrate to Licensee's satisfaction and judgment correct
operation of the STS Sensor fitted to a [***] to a nominee of the Licensee.
Acceptance testing shall require processing of genuine and simulated documents,
in a range of conditions, to be provided by Licensee as follows:
Licensee will provide [***]. These will be passed a minimum of [***] through the
[***].
Licensee will provide a pack of chemically and mechanically abused [***] and
[***]. These will be passed a minimum of [***] through the [***].
Spectra shall demonstrate that the function of the STS Sensor is not impaired by
the presence of [***].
15. ACCEPTANCE MILESTONE. Subject to a fully satisfactory performance under
clauses 7-14, Licensee shall deem acceptance of the STS Sensor.
16. Additional copies of the STS Sensor conforming to the approved initial unit
will be made available by Spectra, at prices to be agreed between the parties,
in lots of ten. No change to the specification or construction of the sensors
shall be made by Spectra unless agreed in writing with Licensee.
17. Spectra shall provide for each unit purchased a full technical manual to
Licensee detailing operational specification, drawings for dimensions,
cleaning/maintenance schedule, diagnostic procedures and interface protocol.
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
SCHEDULE 4.2(f)
Specification for the On-Line and Off-Line Verifier-Densitometer
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
TECHNOLOGY LICENSE AND SUPPLY AGREEMENT
SCHEDULE 5.4
SUPPLY TERMS AND BIT FIBER AND BIT MATERIAL PRICES
Part 1
[***]
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
