June 11, 2007 Mr. Patrick White Chief Executive Officer Document Security Systems, Inc. Suite #1525 Rochester, NY 14614 Subject: Letter Agreement for the Appointment of DSS as Non-Exclusive Licensee/Reseller of BTI Products in the United States Dear...
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June
11,
2007
Mr.
Xxxxxxx Xxxxx
Chief
Executive Officer
Document
Security Systems, Inc.
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Xxxx
Xxxxxx Xxxx
Xxxxx
#0000
Xxxxxxxxx,
XX 00000
Subject:
Letter
Agreement for the Appointment of DSS as Non-Exclusive Licensee/Reseller of
BTI
Products in the United States
Dear
Xxxxxxx,
This
letter agreement (the “Letter Agreement”) sets forth the fundamental terms and
conditions whereby Document Security Systems, Inc. (DSS) is authorized as a
limited, non-exclusive distributor of International Barcode Corporation (d/b/a
“BTI”) products as integrated components of DSS’ own products. This agreement is
intended to be temporary in that we anticipate negotiating a Comprehensive
License Agreement within sixty (60) days from the date herein that will
supersede this Letter Agreement. However, the terms in this Letter Agreement
shall be binding on both parties and, as applicable, shall be included in the
Comprehensive Agreement.
1 Definitions
1.1 "BTI
End-User License Agreement”
or“BTI
XXXX" shall
mean the form of BTI’s agreement under which BTI directly grants to a DSS
Customer a non-exclusive, limited license and right to use BTI Products as
integrated components of Enhanced DSS Products.
1.2 “BTI
Products” shall mean, but shall not necessarily be limited to, the
following:
| a) |
Photo
In Barcode™ — barcode superimposed on ID portrait to insure authenticity,
and
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| b) |
RSS
Barcode Generation Software - a customizable, value added commercially
supported software package installed on network servers that dynamically
generates barcode images for custom applications and uses
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1.3 “DSS
Customers” shall mean third parties that have purchased Enhanced DSS Products
for the third party’s own use (and not for redistribution, remarketing,
timesharing, or service bureau use) within the Territory in accordance with
the
terms of the BTI XXXX and this Letter Agreement.
1.4 “DSS
Products” shall mean, but shall not necessarily be limited to, the
following:
| a) |
AuthentiGuard
Blockout
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| b) |
AuthentiGuard
Prism
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| c) |
AuthentiGuard
Pantograph 5000
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1.5 “Enhanced
DSS Products” shall mean the combination of one or more BTI Product(s) with one
or more DSS Product(s) that adds value to the DSS offering.
1.6 “Territory”
shall mean the United States.
2 Term
2.1
The term
of this Letter Agreement will begin on the date of the last signature in the
signature block below (“the Effective Date”) and shall be superseded by the
Comprehensive Agreement which the Parties agree to work in good faith to
negotiate and execute within sixty (60) days from the Effective
Date.
2.2
The
term
of the grant of a license to distribute BTI Products under the Comprehensive
Agreement will be for five (5) years commencing as of the Effective
Date.
3 License
Terms and Conditions
3.1 BTI
hereby grants to DSS, for the Term, a limited, non-exclusive, royalty-bearing,
non-transferable license and right within the Territory to (a) combine and
integrate BTI Products with DSS Products for the sole and exclusive purpose
of
creating, selling, and supporting Enhanced DSS Products; and (b) use BTI
Trademarks, as agreed by the Parties, where in DSS’ business judgment such use
will enhance DSS’ ability to market, promote and sell the Enhanced DSS Products
(“the License”).
3.2 DSS
Customers shall execute and return to BTI, either directly or through DSS,
an
executed BTI XXXX as a precondition to receiving any license or right to receive
or use the Enhanced DSS Products.
3.3 DSS
shall
not, and shall not permit others to, decompile, disassemble, translate, reverse
engineer or otherwise attempt to discover or expose the trade secrets or other
intellectual property imbedded in or associated with BTI Products without the
express written consent of BTI in each instance.
3.4 DSS
shall
identify, in advance, any third party that DSS wishes to market, promote, or
sell Enhanced DSS Products (the “Opportunity”). BTI has the right to approve or
disapprove any Opportunity. BTI agrees to consider all Opportunities presented
by DSS in good faith and to respond to any such DSS request in a timely manner.
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4 Royalties
DSS
shall
pay to BTI a royalty (“Royalty”) on each sale of an Enhanced DSS Product an
amount agreed to by the parties in each instance prior to any quotation to
a
third party. The Royalty shall be equal to either (a) twenty five percent (25%)
of the Net Margin of such sale, or (b) a negotiated price between BTI and DSS.
“Net margin” is defined as the sale price less the cost of other third party
items included in the sale. All such Royalties shall be due to BTI promptly
upon
collection of the invoiced amount for such sales.
5 Amended
Warrant
As
additional consideration for BTI’s grant of the Appointment, DSS agrees to take
all necessary action to extend the Expiration Date of Warrant No. B-1, dated
June 16, 2006, issued by DSS to BTI (the “Warrant”) pursuant to a 2006 Letter
Agreement between BTI and DSS from “June 16, 2007” to “December 31, 2007.”
6 Rights
in the BTI Products
DSS
acknowledges and agrees that BTI is the sole and exclusive owner of the BTI
Products and BTI retains all rights, title and interest to the BTI Products
and
the trade secrets and intellectual property associated with the BTI Products
(including any improvements thereto) as well as any current or future patents,
trademarks, servicemarks, and copyrights pertaining to the BTI Products.
7 BTI
Support to DSS Customers
BTI
may
provide services and support to DSS Customers as needed to support the
implementation solutions using the BTI component of the Enhanced DSS Products
for a fee to be agreed to by the parties as well as reimbursement for any travel
related expenses.
8 Miscellaneous
8.1
DSS and
BTI are separate and distinct corporate entities under this Letter Agreement
and
nothing in this Letter Agreement may be construed to create a partnership,
joint
venture, or agency relationship between the parties.
8.2
Neither
Party may assign any rights nor obligations under this Letter Agreement to
any
third party without the prior express written approval of the non-assigning
party.
8.3
Either
party may terminate the License by providing sixty (60) days notice to the
other
Party in the event that a third party acquires all or substantially all of
a
Party’s assets.
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8.4 BTI
hereby indemnifies and holds DSS harmless from any liability, cost, loss, or
expense of any kind, and agrees to defend any suit or proceeding against BTI,
to
the extent arising out of or based on any claim, demand, or action alleging
that
the DSS Products or any portion thereof, infringes any third-party rights in
copyrights, patents, trade secrets or intellectual property rights.
8.5 Any
claim
or dispute between the Parties pertaining to this Agreement shall be arbitrated
in New York City before a single neutral arbitrator under the Commercial
Arbitration Rules of the American Arbitration Association (the “AAA”). Any
arbitration award may be entered as a judgment in any court of competent
jurisdiction, or application may be made to such court for a judicial acceptance
of the award and enforcement, as the law of such jurisdiction may require or
allow.
8.6 This
Letter Agreement shall be construed and interpreted in accordance with the
laws
of the State of New York without reference to principles of conflict of laws.
We
agree
that this Letter Agreement reflects our agreements on these matters, is to
the
mutual benefit of both DSS and BTI, and will have full force and effect until
such time as the anticipated Comprehensive License Agreement referenced above
is
executed. If this meets your understanding, please sign below and return via
fax
to (585) 000- 0000.
Sincerely,
______________________
Xxxx
Xxxxx
Chief
Executive Officer
___________________________________________________________________________
Acknowledged
and Agreed to:
DOCUMENT
SECURITY SYSTEMS, INC.
______________________ _______________________
Xxxxxxx
Xxxxx Date
Chief
Executive Officer
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