DEVELOPMENT AGREEMENT
This
Services Agreement (the “Agreement”) is made as of
May 27, 2005 (the “Effective Date”) by and between
FACE2FACE ANIMATION, INC., a Delaware corporation (the
“Company”) having its principal place of business at 2
Kent Place Blvd., Summit, NJ 07901, and InMotion Biometrics, Inc.,
a Delaware corporation (the “Sponsor”) having its
principal place of business at 74 West Broad Street,
Suite 350, Bethlehem, PA 18018.
In
consideration of the mutual promises and covenants contained in
this Agreement, the parties agree as follows:
1. DEFINITIONS
.
Capitalized terms used in this
Agreement have the meanings given to them in this
Section 1 (the “Definitions”) or as
otherwise specified in this agreement.
1.1. “AAA” shall have
the meaning set forth in Section 15.5 .
1.2. “Amendment”
shall have the meaning as set forth in Section 3.1
.
1.3. “Change Order
Request” shall have the meaning set forth in
Section 3.1 .
1.4. “Company Marks”
shall have the meaning set forth in Section 14.1
.
1.5. “Confidential
Information” shall have the meaning set forth in
Section 7.1 .
1.6. “Deliverable”
shall have the meaning set forth in Section 2.1.4
.
1.7. “Delivering
Party” shall have the meaning set forth in
Section 13.1 .
1.8. “Disclosing
Party” shall have the meaning set forth in
Section 7.2 .
1.9. “Dispute Notice”
shall have the meaning set forth in Section 13.1
.
1.10. “Effective
Date” shall have the meaning set forth in the
preamble.
1.11. “License
Agreement” shall mean the Patent and Technology License
Agreement entered into by the parties on May 27,
2005.
1.12. “Live
Environment” shall mean the use of the Product in a customer
environment under normal operating conditions, consistent with the
Product specifications.
1.13. “Non-Arbitrable
Claims” shall have the meaning set forth in
Section 15.5 .
1.14. “Notified
Party” shall have the meaning set forth in
Section 13.1 .
1.15. “Project
Manager” shall have the meaning set forth in
Section 2.2 .
1.16. “Receiving
Party” shall have the meaning set forth in
Section 7.2 .
1.17. “Residuals”
shall have the meaning set forth in Section 7.5
.
1.18. “Response
Notice” shall have the meaning set forth in
Section 13.2 .
1.19. “Services”
shall have the meaning set forth in Section 2.1
.
1.20. “Share Issuance
Agreement” means the agreement between the Company and Budget
Hotels Network Inc. (which shall be renamed Edentify, Inc., the
parent of Sponsor) (“Parent”) dated May 27, 2005
in which the Company is granted shares of the stock in
Parent.
2. SERVICES
.
2.1. Development
Services . The Company shall provide the following
development services for Sponsor (collectively, the
“Services”). Further details regarding the specific
tasks and timelines relating to the Services are set forth in
Exhibit A (attached hereto):
2.1.1. Hardware
Development . Design and development of a field
programmable gate array device, which is to be utilized in
conjunction with and integrated with the F2F Software and 3P
Software (“Hardware”).
2.1.2. Software
Development . Modification of the Company’s existing
visual speech recognition software (“F2F Software”) and
Integration of the F2F Software with the Hardware.
2.1.3. Integration of Third
Party Software . Integration of third party acoustic speech
and facial recognition software products (“3P
Software”) with the F2F Software and the Hardware.
2.1.4. Product
Development . Development of a commercial product that
combines and integrates the F2F Software, 3P Software and Hardware
to provide human identification capabilities and that can be used
for security applications (“Product”). A single unit of
the Product shall be provided to Sponsor for acceptance testing.
Upon acceptance of the Services and the Product, the Company shall
deliver to Sponsor a single unit of the Product together with the
Product drawings, engineering documentation and specifications
relating thereto (collectively, “Deliverable”). The
Product and Sponsor’s right to make, have made, use, offer
for sale, sell and import the Product shall be subject to the
License Agreement.
2.1.5. Maintenance
. The Company shall provide maintenance services for the
Product, which shall include Sponsor requested enhancements,
modifications and upgrades to the Product that fall outside the
scope of the Services as specified in Exhibit A, with the
exception of modifications addressed by warranties given by the
Company in this Agreement, pursuant to the terms of a separate
agreement to be negotiated by the parties. Any such maintenance
agreement shall provide for payments to the Company in an amount
not less than the Company’s actual costs for providing such
maintenance services.
2.2. Project Manager
. The project manager for each party (a “Project
Manager”) will be designated within thirty (30) days
from the Effective Date, and will be the sole contact for managing
the Services and provision of the Product.
2.3. Agreement to Perform
Services . The Company agrees, subject to the terms and
conditions of this Agreement, to use commercially reasonable
efforts to perform the Services. The Services provided by the
Company shall be limited to those Services described
herein.
2.4. Acceptance of Services
and Product . Sponsor shall undertake testing of the
Product after delivery by the Company. Sponsor shall notify the
Company with respect to any deficiencies in the performance of any
of the Services or the Product within sixty (60) days of
completion of such Services and delivery of the Product. Each of
the Services shall automatically be deemed satisfactorily performed
as of sixty (60) days from the completion of such Services,
and the Product will automatically be deemed accepted by Sponsor as
of sixty (60) days from the date of delivery of the Product to
Sponsor, should Sponsor fail to provide the above notification to
the Company. Sponsor may also notify the Company that it requires
an additional sixty (60) days to complete testing of the
Product, in which case, Sponsor shall complete testing within
ninety (90) days from delivery of the Product and the time period
for notification and automatic acceptance provided for in this
Section 2.4 shall be extended by thirty (30) days.
Notwithstanding the foregoing, nothing set forth in this paragraph
shall be deemed to supercede or otherwise abrogate Sponsor’s
claims under the warranties given by the Company in this
Agreement.
2.5. Progress Reporting
. The Company shall provide to Sponsor monthly reports on the
progress of the development of the Product.
2.6. Failure to Perform
. Should Sponsor notify the Company of a failure to perform the
Services or provide the Product as a result of the acceptance
testing, the Company shall have up to sixty (60) days after
such notification to remedy such failure. Should the Company fail
to remedy such failure, the Company shall be considered in material
breach of the Share Issuance Agreement, provided that should
Company dispute Sponsor’s determination relating to
performance of the Services or providing of the Product, Company
may initiate dispute resolution proceedings pursuant to
Section 13 hereunder and the sixty (60) day remedy period
shall only begin upon resolution of such dispute, if
necessary.
3. CHANGES TO
STATEMENTS OF WORK .
3.1. Change Order
Requests . In the event the Sponsor requests a modification
to the Product or the Services specified herein, the Sponsor may
provide to the Company a change order request (a “Change
Order Request”) requesting such a modification,
provided that a correction to comply with the specifications
as set forth in a notice of deficiency pursuant to Section 2.4
shall not require a Change Order Request. Each Change Order Request
shall describe the nature of the proposed changes in reasonable
detail. A Change Order Request will become effective only when a
written acceptance of such Change Order Request (an
“Amendment”) is executed by both the Company and the
Sponsor.
3.2. Response to Change
Order Request . The Company agrees to consider each Change
Order Request submitted by the Sponsor. The Company will notify the
Sponsor within ten (10) business days after receiving a Change
Order Request whether the Company will agree to implement the
Change Order Request as received or as amended by the Company and
the cost of such implementation. The parties may revise the Change
Order Request based on such response from the Company. All Change
Order Requests will be in writing and no modifications to the
Services will be allowed or provided by the Company without an
Amendment. If the parties are unable to agree to the terms and
conditions of the proposed Amendment, then the original Services as
set forth herein shall remain in full force and effect.
3.3. Other Effects of
Changes . In the event an Amendment is executed by the
parties pursuant to a Change Order Request, then the services
described in the Amendment shall be “Services” for
purposes of this Agreement.
4. SPONSOR
ASSISTANCE .
The Sponsor agrees (i) upon
receiving reasonable advance written notice from Company to make
available, when reasonably practicable, any and all Sponsor
personnel necessary to assist and enable the Company to complete
the performance of the Services and the provision of the Product,
and (ii) to make reasonable efforts to request and facilitate
the participation, as necessary, of any third party vendors,
solution providers, or other resources familiar with the
Sponsor’s systems and software related to the performance of
the Services and the provision of the Product, if any. The Sponsor
further agrees to allow the Company full and free access to the
Sponsor’s premises where Services are to be performed, the
Sponsor’s relevant information and materials as requested by
the Company to enable the Company to perform the Services and
provide the Product, and access to the Sponsor’s systems,
software and databases as requested and where reasonably necessary
to enable the Company to perform the Services and provide the
Product. The Sponsor acknowledges and agrees that the
Company’s ability to perform the Services and provide the
Product in accordance with the terms of this Agreement is dependent
upon and subject to the Sponsor’s timely performance of its
obligations under this Agreement and each Amendment.
5. FEES AND LATE
PAYMENTS .
5.1. Fees for Services
. In exchange for Company’s performance of the Services
and providing to the Sponsor the Deliverable, Sponsor shall:
(a) pay the Company $1,000 upon execution of this Agreement;
(b) provide the Company with confirmation (to the
Company’s reasonable satisfaction) of the existence (both at
the time of execution of this Agreement and during the Term) of
deposit(s) held in a federally insured bank account in the name of
or for the benefit of Sponsor in the amount of $250,000; and
(c) shall enter into the Share Issuance Agreement. The
Company’s ability to obtain $250,000 in grant funds from the
government of the State of New Jersey is conditional upon
certification of the above amounts by Sponsor in such bank account.
Any breach of this provision will be considered a material breach
of this Agreement.
5.2. Other
Expenses. Company shall bear all other expenses with
respect to the development undertaken pursuant to this Agreement
and the transactions contemplated hereby.
5.3. Overages .
Other than as provided in Section 3, any overruns in the
budget for the Services or the Deliverable, as set forth in
Exhibit A, shall be the sole responsibility of the
Company.
6. LIMITED WARRANTY
AND DISCLAIMERS .
6.1. Limited Service
Warranty . The Company warrants to the Sponsor that the
Services will be performed in a professional and workmanlike
manner, and in accordance with the requirements, if any, specified
herein and in any Amendment.
6.2. Limited Product
Warranty . The Company warrants to the Sponsor that the
Product will function in accordance with the requirements as set
forth in Exhibit A. To the extent that the Product does not
function in accordance with the requirements as set forth in
Exhibit A, the Company shall modify and/or replace the Product
or any part thereof as it deems reasonably necessary, at its sole
discretion, as required for the Product to function in accordance
with the requirements as set forth in Exhibit A. This warranty
shall remain in effect for sixty (60) days from the date that
the Product is accepted as set forth in paragraph 2.4 of this
Agreement and shall cover any deficiencies identified to the
Company in writing by the Sponsor during such period.
6.3. No Warranty for Third
Party Materials . The Company makes no representation or
warranty regarding third party services, or any software or
hardware acquired by the Sponsor or the Company from a third party,
and all such third party services, software and hardware is
provided “AS IS” and “WITH ALL FAULTS.” To
the extent that any warranties for third party hardware or software
are provided to the Company, the Company shall pass such warranties
through to the Sponsor, to the extent that it is able. Company
shall include no third party components in the Deliverable unless,
through the exercise of reasonable commercial diligence by Company,
such third party component will function according to the
specifications as provided to Company for the functionality of the
component.
6.4. No Other Warranty;
Disclaimer . EXCEPT FOR THE FOREGOING LIMITED WARRANTY, THE
COMPANY MAKES NO OTHER WARRANTY OF ANY KIND TO THE SPONSOR,
EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO THE SERVICES, THE
DELIVERABLE, THE RESULTS OBTAINED FROM THE SERVICES OR ANY SOFTWARE
USED BY THE SPONSOR, IF ANY, INCLUDING, WITHOUT LIMITATION, ANY
IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR NON-INFRINGEMENT AND ALL SUCH WARRANTIES ARE HEREBY
EXCLUDED BY THE COMPANY AND WAIVED BY THE SPONSOR.
7. CONFIDENTIAL
INFORMATION .
7.1. Definition of
Confidential Information . “Confidential
Information” as used in this Agreement shall mean (whether
disclosed orally or in writing and whether or not marked or
designated as confidential) any and all technical and non-technical
information, including patent, copyright, trade secret and
proprietary information, techniques, sketches, drawings, models,
inventions, know-how, processes, apparatus, equipment, algorithms,
software programs, source code, object code, software source
documents, and formulae, related to the current, future and
proposed products and services of a party, a party’s
suppliers and Sponsors, and includes, without limitation, a
party’s information concerning research, experimental work,
development, design details and specifications, engineering,
financial information, procurement requirements, purchasing,
manufacturing, Sponsor lists, business forecasts, sales,
merchandising, marketing and business plans and information.
Confidential Information shall include any third party information
that is provided by the Disclosing Party and designated by the
Disclosing Party as Confidential Information. The terms of this
Agreement and any Amendment are also Confidential
Information.
7.2. Nondisclosure and
Nonuse Obligations . Except as permitted in this Agreement,
neither party (the “Receiving Party”) shall use nor
disclose the Confidential Information of the other party (the
“Disclosing Party”) to any third party without the
prior written consent of the Disclosing Party. The Receiving Party
agrees that it shall treat all Confidential Information of the
Disclosing Party with the same degree of care as the Receiving
Party accords to its own Confidential Information, but in no case
less than reasonable care. The Receiving Party may disclose
Confidential Information only to those of its employees and
contractors who need to know such information, and only to those
employees and contractors that have previously agreed as a
condition of employment or do agree in order to obtain the
Confidential Information, to be bound by terms and conditions
substantially similar to those terms and conditions applicable to
the Receiving Party under this Section 7 . The
Disclosing Party agrees not to communicate any information to the
Receiving Party in violation of the proprietary rights of any third
party. The Receiving Party will immediately give notice to the
Disclosing Party of any unauthorized use or disclosure of the
Confidential Information. The Receiving Party agrees to assist the
Disclosing Party in remedying any such unauthorized use or
disclosure of the Confidential Information. The parties hereby
agree that breach of this Section 7.2 b
