Exhibit 10.13
AGREEMENT
DATED MARCH 8, 1999
This agreement (the "AGREEMENT"), entered into as of November 1, 1998, by
and between Spectra Science Corporation, a Delaware corporation having its
principal place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as "SPECTRA"), and Crane & Co.,
Inc., a Massachusetts corporation having its principal place of business at ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as "CRANE").
SPECTRA and CRANE are jointly referred to in the present Agreement as the
"Parties" and individually as a "Party".
W I T N E S S E T H:
WHEREAS, SPECTRA has developed, and has exclusive worldwide proprietary
rights in and to certain PATENTS (as defined herein), and IMPROVEMENTS and KNOW
HOW relating thereto (the "TECHNOLOGIES"), which allow for [***];
WHEREAS, CRANE has participated over the past two years and will continue
to participate on an ongoing basis as the Parties may agree in (i) addressing
manufacturing issues associated with incorporating the TECHNOLOGIES into
security papers; (ii) validating SPECTRA's products for [***]; and (iii)
providing consulting and technical services and technical know-how ("CRANE's
KNOW-HOW") [***] involved in the design and issuance of secure documents;
WHEREAS, in consideration of the foregoing services received and to be
received, SPECTRA desires to pay to CRANE a fee for such services and CRANE's
KNOW-HOW; and
WHEREAS, the Parties also desire that all negotiations with [***] (or with
any of their vendors, suppliers, or agents) with respect to the TECHNOLOGIES
shall henceforth be conducted by SPECTRA; that SPECTRA has the final authority
to negotiate terms and conditions for the TECHNOLOGIES; and, further, that all
MATERIALS, as defined in Article 2.1 of this AGREEMENT, to be used in any
substrates by [***] (or by any of its vendors, suppliers, or agents including
but not limited to CRANE) shall be supplied directly by SPECTRA;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the sufficiency of which is hereby acknowledged, the Parties
hereto agree as follows:
DEFINITIONS
The Parties agree to the following definitions for purposes of this
AGREEMENT:
. PATENT or PATENTS means the patents and patent application pertaining
to
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
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[***] including any and all divisions, continuations,
continuations-in-part, extensions, substitutions, renewals,
confirmations, supplementary protection certificates, registrations,
revalidations, reissues or additions of or to any of the aforesaid
patents and patent applications, and any foreign counterparts to any
of the foregoing.
. IMPROVEMENT or IMPROVEMENTS means all enhancements or modifications
made by SPECTRA, to methods or products described in the PATENTS
which, if used or applied by another party, would infringe one or more
claims of an issued PATENT.
. SPECTRA's KNOW-HOW means all technical information data and
intellectual property rights of SPECTRA, relating to the use of
PATENTS or IMPROVEMENTS including existing intellectual property of
SPECTRA, for the purposes consistent with this AGREEMENT.
ARTICLE ONE
In the event that Crane is awarded a [***] contract that requires the use
of the TECHNOLOGIES, SPECTRA shall grant to CRANE a non-exclusive right to use
the TECHNOLOGIES for purposes consistent with the performance of CRANE's
obligations under this AGREEMENT and to incorporate MATERIALS containing said
TECHNOLOGIES into substrates manufactured by CRANE for sale to or use by [***].
It is understood that the rights granted to CRANE herein do not include the
right to make MATERIAL containing TECHNOLOGIES.
ARTICLE TWO
2.1 The Parties acknowledge and agree that from the date hereof, all
negotiations with [***] (or with any of their vendors, suppliers, or agents)
with respect to the TECHNOLOGIES shall henceforth be conducted by SPECTRA; that
SPECTRA has the final authority to negotiate pricing for the MATERIALS and
TECHNOLOGIES; and, further, that all MATERIALS to be used in any substrates by
[***] or by any of their vendors, suppliers, or agents (including but not
limited to CRANE) shall be supplied directly by SPECTRA. "MATERIALS" shall mean
all materials incorporating TECHNOLOGIES and containing [***].
2.2 In acknowledgement for and in consideration of CRANE's services to (i)
address manufacturing issues associated with incorporating the TECHNOLOGIES into
security papers, (ii) validate SPECTRA's products for [***] and (iii) providing
CRANE's KNOW-HOW to facilitate the incorporation of the TECHNOLOGIES into
products for [***] involved in the design and issuance of secure documents,
SPECTRA agrees to pay to CRANE fees as follows:
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
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(a)(1)(A) SPECTRA agrees to pay CRANE a fee of [***] of which is
payable by or before [***]. The balance of $[***] shall be paid by SPECTRA to
CRANE on or before the due date of the first fixed payment determined as set
forth in Section 2.2(a)(1)(B) below. The Parties shall determine the fee to be
paid to CRANE on an annual basis in accordance with the following fee adjustment
formula.
(a)(1)(B) The Parties shall determine a fixed fee to be paid to CRANE
on an annual basis (within 90 days after the end of the calendar year to which
the fee relates), for each year following the first year in which SPECTRA
receives revenues from [***] in connection with the sale of MATERIALS
for use in [***]. The fixed fee for any year shall be determined
as follows:
(i) [***] multiplied by
(ii) an amount equal to revenues actually received by SPECTRA
from [***] in the preceding year on account of sale
of MATERIALS for use in [***], less SPECTRA's actual fully
loaded costs (defined as direct labor, direct material, and
allocable indirect costs in accordance with Generally
Accepted Accounting Principles and such other accounting
principles or regulations as may apply, including SPECTRA's
incurred independent research & development costs required
in order to develop, at the request of [***] new "codes"/1/
for MATERIALS other than the [***] currently developed) of
MATERIALS supplied to [***] for the preceding year for use
[***] plus a [***] markup on fully loaded costs.
(a)(2) In the event that the [***] terminates all use of the
TECHNOLOGIES in [***], and Spectra receives no further revenue from sales of
MATERIALS after such termination, no fees shall be due to Crane for any period
after such termination.
(b)(1) In the event that a [***] agrees to purchase directly from
CRANE any paper or substrate (excluding [***]) containing the MATERIALS, then
SPECTRA agrees to and shall supply CRANE with all MATERIALS required for use in
the manufacture and/or sale of such [***]. SPECTRA and CRANE shall in each such
case negotiate in good faith and agree to (i) a paper price per pound quote (the
"QUOTE") which reflects the added value of the MATERIALS (including SPECTRA's
cost to manufacture the MATERIALS) and the TECHNOLOGIES and (ii) the
differential amount (the "DIFFERENTIAL") of the QUOTE associated with the
TECHNOLOGIES, the MATERIALS, and inclusion of the MATERIALS in the paper or
substrate. CRANE agrees to provide all information in its possession or
reasonably available to it
----------
/1/ A "code" is a unique combination of wavelengths emitted from MATERIALS
incorporated in a substrate. The entire amount of the above-described
independent research & development costs for any year for purposes of this
section 2.2(a)(1)(B)(ii) shall not exceed [***].
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
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to assist SPECTRA in their joint effort of calculating the QUOTE and the
DIFFERENTIAL, including but not limited to previous contract prices for similar
paper or substrate lacking the TECHNOLOGIES and the MATERIALS and any
information as to comparable prices of other suppliers. No quote will be
submitted for paper or substrate containing materials without mutual agreement
by CRANE and SPECTRA on the amount of the DIFFERENTIAL.
(b)(2) CRANE and SPECTRA agree to negotiate in good faith the price at
which SPECTRA will provide the MATERIALS, to be paid after delivery of the paper
or substrate to [***].
(b)(2)(i) The parties shall negotiate a fixed price for Crane to pay
to Spectra for the first year in which the event in (b)(1)
occurs. That negotiated fixed price shall be the product of:
(A) the estimated DIFFERENTIAL for the first year;
(B) the estimated pounds of paper to be provided by Crane
to [***] during the first year; and
(C) a factor of [***]
(b)(2)(ii) For any subsequent year in which the event in(b)(1) occurs,
the Parties shall determine such year's fixed price by using
the formula in (b)(2)(i), substituting the preceding year's
actual DIFFERENTIAL in (A), and actual pounds of paper
provided by CRANE in (B).
2.3 Spectra agrees to keep accurate books and records in sufficient detail
to enable the terms of this AGREEMENT to be satisfactorily performed. Spectra
shall permit an independent public accountant designated by CRANE, upon CRANE's
prior written request (given reasonably in advanced under the circumstances) and
at CRANE's expense, to have access during normal business hours to its books and
records as may be reasonably necessary to verify satisfactory performance of
this AGREEMENT. Such access to books and records shall occur not more than once
each fiscal year of SPECTRA.
ARTICLE THREE
3.1 The Parties each recognize and hereby acknowledge that in the
performance of this AGREEMENT, each Party and its employees and/or agents may
have access to secret or proprietary information owned and controlled by the
other Party ("CONFIDENTIAL INFORMATION"). The Parties agree that all such
CONFIDENTIAL INFORMATION acquired by one Party (hereinafter "the receiving
Party") shall remain the disclosing Party's exclusive property and the receiving
Party shall keep and have its employees and/or agents keep any and all such
information confidential and shall not copy or publish or disclose it to others
or authorize its employees, agents, or anyone else to copy, publish or disclose
it to others, without the disclosing Party's prior written approval.
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
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3.2 All CONFIDENTIAL INFORMATION in tangible form shall be returned to the
disclosing Party upon request or upon termination of this AGREEMENT.
3.3 The obligations and provisions of this Article Three shall survive
Termination of this AGREEMENT.
ARTICLE FOUR
4.1 This AGREEMENT shall commence on the date hereof and shall terminate
fifteen (15) years from the date [***] commences the use of the TECHNOLOGIES in
[***], but in no event shall this Agreement extend more than twenty (20) years
from the date hereof (the "TERM"), unless earlier terminated in accordance with
Section 4.2 hereof. SPECTRA further agrees to enter into good faith negotiations
with CRANE to renegotiate another agreement after this AGREEMENT has expired.
4.2 If either SPECTRA, on the one hand, or CRANE, on the other hand, shall
be in default of any material obligation hereunder or shall be adjudged
bankrupt, or become insolvent, or make an assignment for the benefit of
creditors, or be placed in the hands of a receiver or a trustee in bankruptcy,
the other Party may terminate this AGREEMENT by giving sixty (60) days' notice
to the first Party, specifying the basis for termination. If within sixty (60)
days after the receipt of such notice, the Party receiving it shall remedy the
condition forming the basis for termination, such notice shall cease to be
operative and this AGREEMENT shall continue in full force.
4.3 Termination or expiration of this AGREEMENT for any reason will not
affect (i) SPECTRA's intellectual property rights with respect to the
TECHNOLOGIES and (ii) the parties' confidentiality obligations under Article III
hereof, which shall survive termination or expiration.
ARTICLE FIVE
5.1 Dispute Resolution. In the event of any controversy or claim arising
out of or relating to any provision of this AGREEMENT or the breach thereof, the
Parties shall try to settle their differences amicably between themselves. Any
such controversy or claim which the Parties are unable to resolve shall
initially be submitted for review and resolution by the Chief Executive Officers
of SPECTRA and CRANE prior to the initiation by either Party of any legal
action.
5.2 Severability. If any part, term, or provision of this AGREEMENT shall
be found invalid or unenforceable under any valid controlling law, the AGREEMENT
shall be construed as if the invalid or unenforceable provisions had been
deleted, and the AGREEMENT shall be deemed modified to the extent necessary to
render the surviving provisions enforceable to the fullest extent permitted by
law. In the event the legality of any provision of this AGREEMENT is otherwise
brought into question because of a decision by a court of competent
jurisdiction, SPECTRA, on the one hand, or CRANE, on the other hand, by written
notice to and agreement with the other Party, may revise the provision in
question or may delete it entirely so as to comply with the decision of the
court.
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
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5.3 Governing Law. This AGREEMENT shall be construed and governed according
to the laws of the Commonwealth of Massachusetts. The courts and authorities of
the Commonwealth of Massachusetts shall have exclusive jurisdiction over all
controversies that may arise under or in relation to this AGREEMENT and the
execution and interpretation thereof and compliance therewith.
5.4 Force Majeure. Neither Party shall be responsible to the other for any
failure or delay in performing any of its obligations under this AGREEMENT if
such delay or nonperformance is caused by strike, labor stoppage, lockout or
other labor trouble, fire, flood, accident, act of God or of the Government, or
by other cause unavoidable or beyond the control of such Party, provided that
prompt notice is given of the cause of the delay or nonperformance and diligent
continuing efforts are made to resume performance.
5.5 Nonassignability. This AGREEMENT shall not be assignable by either
Party hereto, except to a wholly-owned subsidiary or to a successor to all or
substantially all of such Party's business, without the prior written consent of
the other Party.
5.6 Entire Agreement; Modification. This AGREEMENT constitutes the entire
understanding between the Parties hereto with respect to the subject matter
hereof. In particular, this AGREEMENT supercedes that certain Patent License
Agreement dated as of March 1, 1997, by and between SPECTRA and CRANE, as that
Agreement was amended by 1etter from SPECTRA to CRANE dated as of June 23, 1998
(as so amended, the "Prior Agreement"), which Prior Agreement is hereby
terminated. No modification or amendment hereof shall be valid or binding upon
the Parties hereto unless made in writing and duly executed on behalf of both
Parties.
5.7 Waiver. No actual waiver of breach or default by a Party of any
provision of this AGREEMENT shall be deemed or construed to be a waiver of any
succeeding breach or default of the same or any other provision.
5.8 Notices. Notices, where permitted or required hereunder, shall be
sufficiently given if sent by Certified Mail, return receipt requested and
postage prepaid, or if delivered by hand, if sent by facsimile transmission with
a copy deposited in the U.S. mails, first class and postage prepaid, or if sent
by overnight courier:
If to SPECTRA, to: SPECTRA SCIENCE CORPORATION
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
Warner & ▇▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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If to CRANE, to:
CRANE & CO. INC.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Attorney at Law
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Notices so given shall be deemed to have been received by the addressee on the
fourth day after deposit as Certified Mail, on the day after dispatch by
overnight courier, and on the day of delivery by hand or the day of transmittal
by facsimile transmission.
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IN WITNESS WHEREOF, the Parties hereby execute this Agreement, in
triplicate, through the representatives listed below:
ACCEPTED AND AGREED TO BY:
SPECTRA SCIENCE CORPORATION CRANE & CO., INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 30 South Street
Providence, RI 02903 ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By /s/ Illegible
-------------------- ------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ CFO
President & CEO
Date Signed: 3/8/99 Date Signed: 3/8/99
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