Exhibit 10.12
JOINT PRODUCT DEVELOPMENT AND MARKETING AGREEMENT
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This Joint Product Development and Marketing Agreement ("Agreement") is entered
into this 10th day of November, 2004, by and between Applied DNA Sciences, Inc.
with offices at 0000 Xxxx Xxxxxx Xxxx., Xxxxx 000, Xxx Xxxxxxx, XX 00000
("ADNAS") and Hologrammas S.A. de C.V., with offices at 0000 Xxxxxx Xxxxxx
Xxxxx, Xxxxx 000, Xxx Xxxxx, XX 00000 ("HoloMex").
WHEREAS, ADNAS owns exclusive rights to certain proprietary technologies
involving the extraction, recombination, encapsulation, embedding and
preservation of botanical DNA, (the "Technologies").
WHEREAS, the Technologies are used to forensically authenticate products, to
detect and deter counterfeiting, to protect brands and intellectual property
assets, to provide enhanced security for physical plant, documents, ID's,
currencies, databases and other products and applications, and
WHEREAS, ADNAS desires to retain its exclusive rights to its Technologies, but
is willing to participate in the joint development of security holographic
products; and
WHEREAS. HoloMex is an established developer, manufacturer and distributor of
proprietary holographic packaging and labels which provide holographic security
and holographic authentication of products, and has proprietary interests in
certain intellectual property related to holographic antenna with applications
in the RFID industry, and
WHEREAS, Holomex desires to retain its exclusive rights to its intellectual
property, but is willing to participate in the joint development of security
holographic products; and
WHEREAS. the parties wish to jointly develop and market enhanced security
holographic products, including holographic-DNA-RFID antennae, all of which
products, (the "Products"), shall integrate the Technologies, and
NOW THEREFORE, this Agreement outlines the basic terms of a Joint Venture to
develop and market the Products.
ARTICLE I. NEW PRODUCT DEVELOPMENT
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A. HoloMex and ADNAS shall identify existing HoloMex products to be enhanced
by and combined with the Technologies.
B. HoloMex and ADNAS shall collaborate to develop new products (the
"Products") compatible with the business of the parties and which shall
contain the Technologies.
C. The parties shall: (i) define specifications of the Products; (ii) identify
applications for the Products; (iii) develop industrial processes and
technology parameters to insure the maximum performance and reliability of
the Products in any given security application; (iv) develop effective
authentication protocols and reader technology/equipment for the Products;
(v) develop and implement protocols to protect the IP of the Products and
to ensure secure storage, transportation and client custodial control and
accountability for the Products.
D. The projected costs to develop and patent the Products will be estimated by
the parties and budgeted accordingly. All major expenses shall be mutually
agreed on by the parties on a project by project basis. Actual expenses
incurred to develop the Products and to secure the IP shall be recorded by
each party.
E. The parties shall jointly own the IP and all rights, title and interest in
the Products and the IP.
F. ADNAS shall, at its cost, provide all DNA materials and expertise and
technology required to develop and test the Products.
G. HoloMex shall, at its cost. provide all holographic and RFID materials,
expertise and technology required to develop and test the Products.
H. The parties shall equally share all costs associated with the purchase of
"outside" materials, scientific, technical services, engineering services,
legal services, independent efficacy tests, pilot studies required by end
user clients, obtaining regulatory approvals and acquiring any licenses
required to develop, test and commercialize the Products. All major
expenses shall be mutually agreed on by the parties on a project by project
basis.
I. In return for scientific services and know-how required to develop the
holographic-DNA-RFID proprietary Product, which IPshall be jointly owned by
ADNAS and HoloMex, and exclusively marketed by ADNAS, and for consulting
services relaled to the development of optical security systems and for
providing assistance to ADNAS to develop and implement security protocols
for ADNAS clients. Xxxxxx Xxxxxxxxx, or his designee, shall receive a
one-time Consulting Fee of One Hundred and Fifty Thousand US Dollars (US
$150,000.00).
J. The Consulting Fee shall be paid as follows:
(i) An initial payment of Fifty Thousand dollars (US $50,000.00) within
four (4) calendar months of signing this Agreement;
(ii) Fifty Thousand dollars (US $50,000.00) to be paid thirty (30) days
after the initial payment has been made; and
(iii) Fifty Thousand dollars (US $50,000.00) to be paid Ninety (90) days
after the initial payment has been made.
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ARTICLE ll...MATERIALS SUPPLY DURING PRODUCT DEVELOPMENT
A. For purposes of Product development. HoloMex may request ADNAS to provide
Technologies and related materials, including but not limited to, DNA
materials ("ADNAS Materials"). ADNAS, at its cost, agrees to provide ADNAS
Materials as reasonably requested by HoloMex. HoloMex agrees that the ADNAS
Materials shall be used only for the purpose of evaluating and developing
Products and shall be used for no other purpose without the prior written
consent of ADNAS, and any such use shall be under terms that shall
equitably accommodate the financial interests of ADNAS. HoloMex agrees to
comply with all reasonable security and chain of custody requirements
imposed in writing by ADNAS governing the proper protection, security and
control of the ADNAS Materials.
B. For purposes of Product development, ADNAS may request HoloMex to provide
samples of HoloMex's current security holograms, RFID holograms or
proprietary information thereto, ("HoloMex Materials"). HoloMex. at its
cost, agrees to provide HoloMex Materials as reasonably requested by ADNAS.
ADNAS agrees that the HoloMex Materials shall be used only for the purpose
of evaluating and developing Products and shall be used for no other
purpose without the prior written consent of HoloMex, and any such use
shall be under terms that shall equitably accommodate the financial
interests of HoloMex. ADNAS agrees to comply with all reasonable security
and chain of custody requirements imposed in writing by HoloMex governing
the proper protection, security and control of the HoloMex Materials.
C. To the extent either party does not have formal security or chain of
custody requirements, the parties agree to develop mutually acceptable
protocols for the secure storage and custody of any ADNAS Materials and/or
HoloMex Materials transferred in accordance with this Agreement.
D. Unless otherwise agreed, ADNAS and HoloMex will each provide Materials
required to develop the Products as samples at no cost to ADNAS and to
HoloMex, respectively. However, the cost of such Materials may be recorded
and a financial adjustment based on relative contributions shall be
accommodated.
ARTICLE III...PRODUCT PRICING AND PROFITS OR LOSSES
The parties shall determine and agree on a Product by Product basis an amount to
be paid to ADNAS in the form of a royalty.
ARTICLE IV. .MATERIALS INVENTORY AND SECURITY
A. DNA Material Supply. The parties agree to jointly determine material
stockpile requirements sufficient to meet the production requirements of
HoloMex. ADNAS shall stockpile in the US sufficient DNA materials to ensure
at all times the adequate and on-time supply of DNA material in quantities
sufficient to fully meet the production requirements of HoloMex in a timely
manner, The amount of DNA material to be stockpiled by ADNAS shall be
determined in advance by the parties for each quarterly sales period.
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B. Security. The supporting inventory of any ADNAS Materials will be held by
ADNAS at secure US storage facilities, such as Brinks, SGS or other
selected by ADNAS and acceptable to HoloMex. Delivery to HoloMex will be
made under secure transportation conditions by the selected security
storage and transportation company.
C. ADNAS and HoloMex shall develop mutually acceptable protocols for the
secure storage and custody of ADNAS Materials at the production facilities
of HoloMex in Mexico, at the facilities of any HoloMex subcontractor (if
any) and at the facilities of clients.
D. ADNAS aud HoloMex shall arrange Product Liability and other risk insurance
(loss in transit, client risk, etc) as necessary with a first class
Insurer.
E. ADNAS and HoloMex shall agree procedures for the periodic audit and
monitoring of storage, custody, accounting, application and consumption of
the ADNAS Materials held at the production facilities of HoloMex, its
subcontractors and at the facilities of clients.
ARTICLE V. .MARKET ANALYSIS AND DEVELOPMENT
A. The parties shall establish an agenda to identify specific Products to be
developed.
B. The parties agree to develop and undertake joint sales and marketing
efforts to promote the Products into the target markets and to target
clients. The parties shall develop a marketing plan to identify and
prioritize clients, to define product categories and applications, to
establish price structures and payment terms, to implement marketing
activities, news releases, trade show participation, web seminars, direct
electronic mailing campaigns, etc.
C. ADNAS and HoloMex agree to introduce each other to their respective clients
and strategic marketing partners.
D. At it's own cost, each of the parties shall provide technical sales support
to the other party and each shall make appropriate staff available to
participate in sales calls and meetings with target clients. If the
respective costs any party to provide such sales support shall be
determined to be significantly disproportionate to the contribution of the
other party, then the parties shall agree an equitable adjustment and
reimbursement of expenses. Each party shall monitor the cost of technical
sales support and attendance at sales meetings and receipts shall be kept
for all related travel and accommodation expenses. At the end of each
calendar quarter following the execution of this Agreement the parties
shall submit, compare and adjust their respective contributions.
E The parties agree to create both industry-specific and customer -specific
marketing and presentation materials for the Products as they are
developed. All major expenses in connection therewith shall be mutually
agreed on by the parties on a project by project basis.
F. The parties agree to mount comprehensive trade publicity programs for the
Products as they are developed. All major expenses in connection therewith
shall be mutually agreed on by the parties on a project by project basis.
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ARTICLE VI. MATERIALS WARRANTY.
A. ADNAS, at its expense, shall defend any suit brought against HoloMex on the
grounds that use of the ADNAS Materials or Technologies for the intended
purpose or purposes, as furnished by ADNAS infringes any United States
patent and shall pay the amount of any judgement that may be awarded
against HoloMex in any such suit provided and upon condition that HoloMex
shall (a) promptly deliver to ADNAS all infringement notices and other
papers received by or served upon HoloMex, (b) permit ADNAS to take charge
of the defense of such suit and compromise the same, if deemed advisable by
ADNAS, and (c) assist in every reasonable way in the conduct of such
defense. In the event that HoloMex shall be enjoined by a court of
competent jurisdiction from which no appeal can be taken, from selling or
using the product for the intended purpose or purposes on the ground that
such sale or use of the product infringes any such United States patent, or
it is established to ADNAS satisfaction, upon due investigation, that sale
or use of the product infringes any such United States patent, ADNAS at its
option may either (1) procure for HoloMex a license to sell and/or use the
product, (ii) modify the product so as to make it non-infringing without
seriously impairing its performance, (iii) replace the product with a
product that is substantially equal but non-infringing, or (iv) accept the
return of the product from HoloMex.
B. HoloMex shall extend to ADNAS reciprocity of protection as set forth above
in respect of Materials or Technologies supplied by HoloMex.
ARTICLE VII. CONFIDENTIALITY
The parties recognize that each party shall disclose to the other
information concerning suppliers, clients, distributors, agents, brokers,
buyers, sellers, technical data, performance data, pricing details,
comnissions, discounts, information relating to competitors and other
information which the parties have acquired through their investment of
time, expense and effort. The parties acknowledge and agree that during the
term of this Agreement, and in the course of the discharge of the duties
hereunder, the parties shall have access to and become acquainted with
information concerning the operation of the other party, including,
financial, personnel, sales, manufacturing, buying, planning, and other
information owned by and regularly used in the operation of the business of
each party and each party shall also receive information of a proprietary
nature regarding the constitution, formulation, pricing and effectiveness
of the Products and both parties hereto accept that such information as
outlined above constitutes the Confidential Information of the providing
party. The parties hereto agree not to disclose any such Confidential
Information, directly or indirectly, to any other person or party, except
as may be necessary for such person or party to pursue sales as a function
of this Agreement and such person or party shall have executed a
Confidentiality Agreement binding that person or party to conditions of
confidentiality identical to those contain in this Agreement. The
obligations of confidentiality contained in this Section 6 shall survive
expiration or earlier termination of this Agreement.
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ARTICLE VIII. NON-CIRCUMVENTION AND NON-COMPETITION
A. In Consideration of this Agreement each party agrees not to attempt in any
manner to commercially exploit, either directly or indirectly, the proposed
and existing business concepts and technologies or any of the Confidential
Information without the other party's prior written consent. The parties
specifically understand and agree that this prohibition is specifically
intended to include any direct or indirect contact by either party's then
current Providers, Suppliers, Agents, Employees and/or Representatives.
B. HoloMex hereby undertakes not, directly or indirectly, to promote products
deemed by ADNAS to be competitive with the DNA products of ADNAS, nor to
enter into any business with any company insofar as such business will
employ products deemed by ADNAS to be competitive with the DNA products of
ADNAS.
C. ADNAS hereby undertakes not, directly or indirectly, to promote products
deemed by HoloMex to be competitive with the holographic products of
HoloMex, nor to enter into any business with any company insofar as such
business will employ products deemed by HoloMex to compete with the
holographic products of HoloMex.
D. Neither ADNAS nor HoloMex shall develop or promote any DNA-Holographic nor
DNA-RFID-Holographic products with any third party company.
2. ARTICLE IX. TERM
A. The term of this Agreement shall be for as long as the individual patents
for the Products and their extensions and modifications remain in force
and/or for as long as the parties continue to produce and market the
Products, whichever is the longer.
B. In the event one party wishes to withdraw, the other party shall be granted
a one hundred and twenty (120) day exclusive period in which to purchase
from the other party all rights, title and interest in the Products and IP,
or to reach an alternative settlement, including but not limited to, a
License and Royalty Agreement enabling the Licensor to manufacture the
Products, or cause them to be manufactured, and to distribute the Products.
C. In the event the rights, title and interest in the Products and IP are
purchased, the purchase price shall be determined by an independent
Appraiser acceptable to both parties.
ARTICLE X. CHOICE OF LAW AND JURISDICTION.
This Agreement is entered into in the State of California and the parties hereby
consent to the jurisdiction of the courts of California for the purpose of the
entry and enforcement of any judgment that may arise. This Agreement shall be
construed and enforced in accordance with the laws of the State of California.
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ARTICLE XI. ARBITRATION
In the event of any controversy or claim between the parties hereto arising out
of or relating to this agreement including without limitation any tort claim,
and if the parties are unable to agree to a settlement of such disputes by
direct negotiations, the parties shall promptly mediate any such disagreement or
dispute in San Diego under the Commercial Mediation Rules of the American
Arbitration Association. If the parties are unable to resolve such disagreement
or dispute through mediation, then such disagreement or dispute shall be
submitted to binding arbitration in San Diego under the Commercial Arbitration
Rules of the American Arbitration Association and Title 9 of the California Code
of Civil Procedure and shall be administered by the American Arbitration
Association. A panel of one neutral arbitrator shall be appointed under the
Commercial Arbitration Rules of the American Arbitration Association. The
arbitrators shall have the discretion to allocate in their award the costs of
arbitration, arbitrators' fees and the respective attorneys' fees and costs,
including expert witness fees and costs, including expert witness and consultant
costs, of each party between the parties as they see fit.
ARTICLE XII. MISCELLANEOUS.
No Party may assign any of its rights or delegates any of its obligations under
this Agreement, except with the prior written consent of the other Party. This
Agreement supersedes all previous oral and written agreements, if any, among the
Parties regarding the subject matter hereof. The Parties acknowledge that a
violation or threatened violation of this Agreement or any of its provisions may
cause irreparable injury; that money damages alone would be an inadequate
remedy; and that, in addition to any other remedies available at law or in
equity, such actions may be subject to a restraining order, injunctive relief or
other similar remedy in order to specifically enforce the provisions of this
Agreement.
IN WITNESS WHEREOF, each of the Parties below, has caused this Agreement to be
executed by its duly authorized representatives on this 8th day of November,
2005.
For Hologrammas S.A. de C.V. by: For ADNAS by:
/s/ XXXXXX XXXXXXXXX /s/ XXXXX XXXXXXXXXX
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Name: Xxxxxx Xxxxxxxxx Name: Xxxxx Xxxxxxxxxx
Title: CEO Title: President
Witness: /s/ XXXXXX XXXXXXX
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Name: Xxxxxx Xxxxxxx
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