Document:

Exhibit 10.9

{Note: A “[*]” indicates that
material has been omitted pursuant to a request for confidential treatment and
that the material has been filed separately.}

SOFTWARE DECODE LICENSE AGREEMENT

 

This Non-Exclusive Software Decode License Agreement is made and
entered into as of January 7, 2005 (this “Agreement”) by and between
Showlei Associates, a Nevada corporation whose mailing address is P.O. Box
891028, Temecula, CA 92589-1028 (hereinafter “Showlei”) and ICOP Digital, Inc.,
Commerce Terrace, 11011 King Street, Suite 260, Overland Park, Kansas
66210 (hereinafter “ICOP”)

 

RECITALS

 

WHEREAS, Showlei owns certain proprietary
technology in the form of algorithms, software and hardware designs, patents,
trade secrets and know-how, all relating to the field of image processing,
specifically to the efficient coding and compression, decoding and
decompression, of video images based on algorithms and methods (collectively, “Technology”,
as more specifically defined below), and;

 

WHEREAS, ICOP desires to acquire from
Showlei, and Showlei is willing to grant to ICOP, a non-exclusive right to use
Source Code for Software Decode, as more specifically defined below, and;

 

WHEREAS, ICOP desires to acquire from
Showlei, and Showlei is willing to grant to ICOP, a supply of VISA
semiconductor chips, as more specifically defined below, and;

 

NOW, THEREFORE, the parties hereto agree as
follows:

 

DEFINITIONS:

 

(i) TECHNOLOGY – Technology”, as used
herein, shall mean and refer to the algorithms, software and hardware designs,
and methods relating to the field of image processing, specifically to the
efficient coding and compression, decoding and decompression of video images,
described in Differential Order Video Encoding System, US Patent #5,739,861,
issued Apr.14, 1998.  Japan Patent
#3441736 issued Sept. 2, 2003. Canada Patent #2,252,545, issued July 13,
2004 and Patents Pending in E.U. and Korea, as well as certain related trade
secrets, including invention, know-how, trade secret, function, design and any
other features related to software that embody or are based upon the patents
referred to herein and/or other proprietary intellectual property contained in
Source Code.  The term “Technology” shall
not include, mean or refer to, and nothing contained anywhere in this Agreement
shall confer or be deemed to confer upon ICOP any rights in or to, any of the
algorithms, software and/or hardware designs, and methods relating to the field
of image processing described in US Patents 5,164,819 (Method and System for
Coding and Compressing Color Video Signals) issued November 17, 1992, and
US Patent 5,448,296 (Variable Parameter Block Coding and Data Compression
System) issued September. 5, 1995.

 

(ii) VISA SEMICONDUCTOR CHIPS – The term
“VISA chip(s)”, as used herein, shall mean and refer to the Semiconductors
manufactured for Showlei by third party(s) that incorporate or employ, in whole
or in part, Technology as a semiconductor product that performs the function

 

1

 

of encoding and/or decoding video images, more specifically described
in detail in the Specification for Video Encoder/Decoder ASIC (VISA) attached
hereto as “Attachment A” and made a part hereof.

 

(iii) SOFTWARE DECODE – The term “Software
Decode”, as used herein, shall mean software for use by a programmable computer
that performs the function, in whole or in part, of decoding, reconstructing
and displaying video images based on Technology as a software product
specifically excluding Software Encode and also specifically excluding VISA
chip.

 

(iv) SOFTWARE ENCODE - The term “Software
Encode”, as used herein, shall mean software for use by a programmable computer
that performs the function, in whole or in part, of encoding video images based
on Technology as a software product specifically excluding Software Decode and
also specifically excluding VISA chip.

 

(v) SOURCE CODE – The Term “Source Code”
as used herin shall mean the C language programs and supporting documentation
entitled SLview Source Code, attached hereto in the form of a CD copy as “Attachment
B” and made a part hereof.

 

1.0  LICENSE

 

1.1) GRANT OF LICENSE – Showlei hereby grants
to ICOP the non-exclusive right to design, manufacture, use, sell, and
distribute Software Decode worldwide. 
The Source Code for Software Decode delivered to ICOP by Showlei is, and
shall remain, the sole proprietary property of Showlei.  Neither ICOP nor any of its customers shall
have any right to sublicense any third party to, or grant any form of license,
to disclose, duplicate, copy, or distribute the Source Code in any manner or
respect.  The foregoing notwithstanding,
ICOP shall have right to incorporate Source Code in software for use, sale and
distribution in its own products under the terms and subject to the conditions
herein.  Nothing contained herein shall
be construed as to grant the right to manufacture or produce, or cause to be
manufactured or produced, semiconductor chips employing Technology.

 

1.2) OTHER LICENSES – ICOP expressly
understands and agrees that Showlei has granted, or may grant in the future,
licenses to others for Software Decode covering the same or similar rights as
granted to ICOP hereunder.

 

1.3) SUPPLY of VISA CHIPS – Showlei hereby
agrees to sell VISA chips to ICOP as set forth herein.  OKI Denki (Electric) in Japan manufactures
VISA chips under contract with Showlei. 
ICOP will place Purchase Orders with Showlei Associates.  Shipment will be made directly to a
destination designated by ICOP.  Normal
delivery is 90 days after receipt of Purchase Order.  The minimum order quantity is [*].  Payment terms are 50% paid with Purchase
Order and balance due on delivery to destination.  The price per chip, F.O.B. Tokyo, Japan, will
be JP¥[*] each, plus Japan consumption tax, which is currently 5%.  Payment shall be made to Showlei Associates,
by electronic funds transfer to a bank designated by Showlei, in US$, converted
from JP¥ at the exchange rate reported by Bloomberg.com at the close of
business on the last business day before payment is made.  Showlei agrees to negotiate in good faith for
reductions in price and/or better terms and/or minimum order quantities less
than [*] for the sale of VISA chips to ICOP and

 

2

 

warrants that it will not sell VISA chips to others for prices or other
terms that are more favorable than those offered to ICOP.

 

1.4) WARRANTIES – Showlei warrants that
Showlei has sufficient right, title and interest in the Technology to make this
Agreement, and that Showlei is the sole person having the right to grant the
license provided in the Agreement.  To
Showlei’s best knowledge, ICOP shall have the right of quiet enjoyment of all
the rights granted by Showlei to ICOP under this Agreement without violation of
any third party copyright, trade secret, trademark or patent law of the United
States, and the grant of this license does not violate the intellectual
property rights of any third party under US law.  It is expressly agreed and understood that ICOP
will take full responsibility for any warranties provided by ICOP to any third
parties.  VISA chips will be warranted
against defects for 90 days from date of shipment.  The VISA chip warrantee shall be limited to
replacement or refund of the purchase price, at Showlei’s sole discretion, for
any defective chips returned to Showlei. 
In no case will Showlei be liable for incidental or consequential
damages arising out of any defective VISA chips.

 

2.0) OBLIGATIONS - Showlei’s obligations
pursuant to the license granted hereunder are limited to granting license for
use of the Technology as provided hereunder, providing a copy of Source Code
for Software Decode, providing reasonable engineering assistance for purposes
of explaining technical information to technical personnel of ICOP, and supplying
VISA chips on the terms and conditions as defined herein.  ICOP hereby agrees to take full
responsibility for any modification of, and the implementation, maintenance and
operation of, any information provided by Showlei, including Source Code.  Normally Source Code would be imbedded in a
software application including interface to data input, data output, and user
interface.  Showlei has no obligation
regarding the incorporation of Source Code into any specific application.  ICOP has satisfied themselves as to the
operability, fitness and function of Technology before entering into this
Agreement.  ICOP hereby agrees to
indemnify and hold harmless Showlei from any damages or disputes with third
parties arising out of the use of Technology by ICOP.  Showlei makes no representations as the
fitness or suitability of Technology for any particular purpose.

 

3.0)                             FEES AND ROYALTY FOR THE
RIGHTS GRANTED UNDER THIS AGREEMENT:

 

3.1) INITIATION FEE – As partial consideration for the rights granted
hereunder, ICOP shall issue 200,000 shares of common stock in ICOP.  The 200,000 shares shall be of the same kind,
class and restrictions as those shares sold by ICOP to private investors within
the previous 6 months.

 

3.2) ROYALTIES – As further consideration for
the license granted hereunder, ICOP shall pay to Showlei royalties for products
sold by ICOP that use Technology in amounts of [*] for each ICOP digital video
recording unit sold to third parties and [*] for each ICOP office system server
sold to third parties.

 

3.3) PAYMENT OF ROYALTIES – ICOP will pay, by
bank wire transfer to a bank account designated by Showlei, accrued royalties
to Showlei within one (1) month after the end of each 3-month period
ending March 31, June 30, September 30 and December 31.  The first such period may be less than 3
months, and payments will commence at the end of the first such period after
the

 

3

 

date of this Agreement.  Each
such payment period is hereinafter referred to as a “Royalty Payment Period”.

 

3.4) VERIFICATION OF ACCOUNTS – At the ending
of each Royalty Payment Period, ICOP will prepare and deliver to Showlei a
statement showing the total products or sold during the previous Royalty
Payment Period and the amount of Royalties payable thereon, signed by a
responsible representative of ICOP.  ICOP
shall maintain full and accurate records and accounts of all data necessary for
preparation of such statements and retain such records relating to each
statement submitted hereunder for three (3) full calendar years after
furnishing that statement to Showlei. 
Qualified accountants appointed and paid for by Showlei may audit
statements, records and accounts referred to herein, upon request of Showlei,
from time to time, but not more often than twice in any calendar year.  In the event that any such audit discloses a
deficiency in the amount of Royalties that should have been paid in respect of
one or more Royalty Payment Periods, ICOP shall pay to Showlei within 5
business days the full amount of any such deficiency, together with compound
interest on the amount of such deficiency calculated at the rate of ten percent
per annum in the event that the deficiency exceeds two percent of the amount of
Royalties that should have been paid in respect of the Royalty Payment Period
in question.

 

4.0) CHANGES – Showlei shall have the right
at all times to make changes to the “Technology” in the form of improvements,
additions, deletions or other modifications, and any such changes made by
Showlei will be made subject of the license granted hereunder.  Neither party will make or offer any new or
derivative technology that would circumvent this Agreement.

 

5.0) CONFIDENTIALITY – All Confidential
Information is the owning party’s property. 
Showlei and ICOP shall not disclose to a third party any confidential or
proprietary information obtained pursuant to this Agreement and will bind their
respective employees and/or agents to usual and customary Confidentiality
Agreements to enforce such confidentiality. 
The “Source Code” delivered hereunder is highly confidential and shall
not be disclosed by ICOP to any third party without the express written consent
of Showlei.  A Confidential and
Non-Disclosure Agreement shall accompany any request for such consent with any
such third party that is at least as restrictive as any Confidential and
Non-Disclosure Agreement between ICOP and Showlei.

 

6.0) TERM AND TERMINATION– This Agreement
shall become effective on the date first written above and shall remain in effect
for 10 years from effective date.  This
Agreement shall be automatically renewed for additional terms of ten years each
(each a “Renewal Term”) unless ICOP or Showlei gives written notice to the
other of its desire to have the Agreement expire at the end of initial term or
any Renewal Term at least ninety days prior to such expiration.  In the event any payments called for
hereunder remain unpaid for 90 days from the date that such payments should be
made, this Agreement shall automatically terminate without any action required
by either party.  Then, in that event,
ICOP shall return to Showlei all intellectual property, including, but not
limited to, Source Code, that may have been released to ICOP, free of any encumbrances
or claims, and ICOP shall cease immediately to use any such intellectual
property.

 

7.0) EFFORTS – ICOP agrees to use ICOP’s best
efforts to aggressively pursue all business opportunities for the sale or
distribution of products that employ Technology.

 

4

 

8.0) GENERAL

 

8.1) ASSIGNMENT – This Agreement shall not be
assigned, in whole or in part, by ICOP without the prior written consent of the
Showlei.  Showlei reserves the right to
assign this Agreement for any reasonable business purpose, and if such
assignment is made, ICOP agrees to make any payments due hereunder to any such
assignee.

 

8.2) FORCE MAJEURE – Neither party shall be
responsible for the failure of performance due to causes beyond its control,
including, but not limited to, accidents, acts of God, labor disputes, actions
of any Government agency and shortage of materials.

 

8.3) COMMUNICATIONS – All communications
shall be delivered by hand, by courier services, by registered or certified
mail, or by Facsimile, addressed to the other party at the address given in
this Agreement or to another address which may subsequently be specified in
writing by a party.  Communications shall
be effective as of the date it is delivered personally, by Facsimile, by hand,
or by courier service or for communications sent by mail, the earlier of the
date of receipt, or five (5) business days after the postmark date.

 

8.4) ENTIRE AGREEMENT – This Agreement
supersedes and merges all prior proposals and understandings, written or oral,
relating to the subject matter of this Agreement.  This Agreement may not be modified except in
writing, signed by Authorized Executive Officers of both parties, and expressly
referring to this Agreement.

 

8.5) PURCHASE ORDERS – Any purchase order or
other document issued by ICOP to Showlei is for administrative convenience
only.  In the event of any conflicting
term or condition between this Agreement and any purchase order or other
document issued by ICOP, this Agreement shall prevail.

 

8.6) WAIVER – The waiver of one breach or
default shall not constitute the waiver of any subsequent breach or default,
shall not act to amend or negate the rights of the parties.

 

8.7) DEFINITION AND SECTION HEADINGS –
Singular terms shall be construed as plural, and vice versa, where the context
requires.  Sections are a matter of
convenience and shall not be considered part of this Agreement.

 

8.8) GOVERNING LAW AND VENUE – This Agreement
shall be governed by and construed in all respects in accordance with the laws
of the State of California, excluding choice of law provisions thereof. The
parties agree that all actions or proceedings arising in connection with this
Agreement shall be tried and litigated exclusively in the Federal or State of
California Courts.  The aforementioned
choice of venue is intended by the parties to be mandatory and not permissive
in nature, thereby precluding the possibility of litigation between the parties
with respect to or arising out of this Agreement in any jurisdiction other than
those specified in this section.  Each
party hereby waives any right it may have to assert the doctrine of forum non
conveniens or similar doctrine or to object to venue with respect to any
proceeding brought in accordance with this section, and stipulates that the
Federal and State of California courts shall have in personam jurisdiction and
venue over each of them for the purpose of litigating any dispute, controversy
or

 

5

 

proceeding arising out of or related to this Agreement.  Each party hereby authorizes and accepts
service of process sufficient for personal jurisdiction in any action against
it as contemplated by this paragraph by registered or certified mail, return
receipt requested, postage prepaid, to its address for the giving of notices as
set forth in this Agreement.  Any final
judgment rendered against a party in any action or proceeding shall be
conclusive as to the subject of such final judgment and may be enforced in
other jurisdictions in any manner provided by law.  The prevailing party in any suit instituted
under this Agreement will be entitled to recover all costs, expenses and
reasonable attorney’s fees incurred in such suit.

 

8.9) EFFECT OF INVALID SECTION – If any
provision of this Agreement is declared invalid by any tribunal, then such
provision shall automatically be adjusted to the minimum extent necessary to
the requirements for validity as declared at such time and as so adjusted,
shall be deemed a provision of Agreement as though originally included herein.  In the event that the provision invalidated
is of such a nature that it cannot be so adjusted, the provision shall be
deemed deleted from this Agreement as though such provision had never been
included herein.  In either case, the
remaining provisions of this Agreement shall remain in effect.

 

8.10) INDEMNIFICATION –Showlei agrees to hold
ICOP harmless from any claim by third parties if such claim is based on willful
or negligent conduct of Showlei.  ICOP
agrees to hold Showlei harmless from any claim by third parties of such claim
is based on willful or negligent conduct of ICOP.  Both ICOP and Showlei agree to act in concert
with each other in the defense of any such claims or any lawsuits by third
parties, arising out of this Agreement.

 

8.11) INSOLVENCY – In the event of
liquidation, dissolution, bankruptcy proceeding, assignment for benefit of
creditors or inability to satisfy financial obligations hereunder by either
party, this Agreement shall become null and void and neither party shall have any
future obligation under this Agreement. 
In any such event by ICOP, ICOP shall return to Showlei all intellectual
property that may have been released to ICOP by Showlei free of any
encumbrances or claims.

 

8.11) ATTORNEY FEES AND COSTS – The
prevailing party in any suit instituted under this Agreement will be entitled
to recover all costs, expenses and reasonable attorney’s fees incurred in such
suit.

 

IN WITNESS WHEREOF, the parties hereto have
executed duplicate originals of this Agreement as of the day and year first
above written by their duly authorized representatives.

 

 

	
  “SHOWLEI”

  	
  “ICOP”

  
	
  Showlei Associates

  	
  ICOP Digital, Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ John Music

  	
   

  	
  By:

  	
  /s/ David C. Owen

  	
   

  
	
  John Music, President

  	
  David C. Owen, President

  
						

 

6Exhibit 10.10

 

{Note: A “[*]” indicates
that material has been omitted pursuant to a request for confidential treatment
and that the material has been filed separately.}

 

MEMORANDUM OF UNDERSTANDING

Between

ICOP Digital, Inc.

And

TriSquare Communications (Hong Kong) Co., Ltd.

 

THIS MEMORANDUM OF
UNDERSTANDING (MOU) is entered into as of this 11th day of February,
2004 (Effective Date) between ICOP Digital, Inc. (ICOP) and TriSquare
Communications (Hong Kong) Co., Ltd. (TriSquare).  Whereas, ICOP desires to engage TriSquare to
deliver certain products and services as more specifically described below.

 

1.                                      Product
and Services Description

 

TriSquare will provide
electronic circuit and mechanical design and manufacturing services for a 900
MHz ISM band wireless microphone system designed to operate as an integral part
of ICOP’s digital video recorder system. 
The wireless microphone is identified as the WMIC 20/20.  The features, functions, and operating specifications
are attached as Exhibit A, Wireless Microphone System.

 

2.                                      Product
Development Charges and Tooling 

 

TriSquare will charge a Development Fee of [*] to be
paid in equal installments of [*] due at each of the three identified milestone
dates on the Product Development Schedule (attached as Exhibit B).  This Development Fee is fully refundable as a
[*] credit per WMIC 20/20 SKU of the first [*] units on purchase orders
received within one calendar year of mass-production start date.

 

There will be a non-refundable charge for the product
specific tooling required to produce the ICOP branded WMIC 20/20.  Once total payment is received, the tooling
will remain the exclusive property of ICOP and will not be used for any purpose
other than manufacturing WMIC 20/20 units for delivery to ICOP.  Tooling quotes will be provided as soon as
possible after design details are fixed and prior to actual tooling start.  It is anticipated that the total tooling
charges would not exceed USD [*] and that the tooling will be sufficient to
produce a minimum of [*] complete units at acceptable quality levels.  A tooling maintenance charge will be invoiced
in any year that the volume of product orders falls below [*] units.  The tooling charges are immediately due upon
invoice and will be invoiced within the product development schedule as
follows:

 

A).  First 30% invoiced upon approval of tooling
drawings to start tool making.

b).  Second 30% invoiced upon presentation of
first shot samples to ICOP.

c).  Balance of 40% invoiced upon ICOP approval of
parts for starting production. 

 

3).                                  Finished Product Definition and
Pricing

 

The WMIC 20/20
finished product and accessories are defined as follows:

 

A).  Remote Unit (battery powered
transceiver with microphone and internal antenna).

B).  In-Car (base) Unit (12 V
automotive supply transceiver with integral external antenna).

C).  In-Car Charge Cradle (single
well charge cradle and circuit – 12 Volt supply)

 

 

D).  In-Station Multiple Charge Cradle
(six well charge cradle and circuit for use in-station powered by a/c wall cube
adapter with 12 V transformer).

E).  Cigar Plug Charger/circuit
with 2.5 mm plug to charge the Remote unit battery through the external
microphone/charge jack on the side of the unit.

F).  Remote A/C wall cube
charger/circuit to charge the Remote unit battery through the external
microphone/charge jack on the side of the unit.

 

The standard SKU
of the WMIC 20/20 (priced below) includes two each Remote Units, an In-Car (base)
Unit, an In-Car charge cradle, Remote A/C Wall Cube Charger and a Cigar Plug
Charger.  The In-Station Multiple Charge
Cradle is priced as a separate accessory.

 

	
  WMIC 20/20 SKU

  	
   

  	
  FOB/FCA Hong Kong, [*].

  
	
   

  	
   

  	
   

  
	
  In-Station Charge Cradle

  	
   

  	
  FOB/FCA Hong Kong, [*].

  

 

Purchase order lead time is 75 days to shipment (from
Hong Kong/China) after the product is production ready.  Payment terms for finished products are NET
30 days from shipment and all payments are made via wire-transfer to TriSquare’s
bank account in Hong Kong.  A rolling
six-month forecast (updated monthly) is requested from ICOP to facilitate
planning for long lead time materials.

 

4).  Product Development
Schedule

 

The major milestone product development schedule is attached as Exhibit B
and C.  The Exhibit B schedule is
the best case and target scenario.  The Exhibit C
schedule represents a back-up plan that comes into play if there is any
reason that the first factory test build (GA1) does not result in saleable
product that can be delivered to ICOP. 
Only if the first build (GA1) is unsuccessful, a second factory test
build (GA2) will be undertaken as shown in Exhibit C.  TriSquare will need to be granted timely
access to a complete ICOP DVR system that represents final interface software
and hardware starting in two weeks and continuing until after the GA1 build to
ensure for complete product functional verification.

 

The parties below, as legal representatives of the companies of ICOP
Digital, Inc. and TriSquare Communications (Hong Kong) Co. Ltd. have
executed this agreement (MOU) effective as of the issue date indicated in the
first paragraph above.

 

ICOP Digital, Inc.:

 

 

	
  /s/ Charles A. Ross, Sr.

  	
   

  	
  Charles A. Ross, Sr.

  	
   

  	
  CEO

  
	
  (Signature)

  	
   

  	
  (Printed Name)

  	
   

  	
  (Title)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TriSquare
  Communications (Hong Kong) Co., Ltd.:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ W. Gary Staley

  	
   

  	
  W. Gary Staley

  	
   

  	
  Managing Director

  
	
  (Signature)

  	
   

  	
  (Printed Name)

  	
   

  	
  (Title)

  

 

 

EXHIBIT A

 

Wireless Microphone System Specification

 

 

Engineering
Department

Device
Specification

 

	
  Title:      WIRELESS
  MICROPHONE SYSTEM

  

 

	
  DOC:                   600-00001-00

  	
  REV:  5

  	
  ISSUE              11/26/03

  	
  CO

  

 

	
  Approvals:

  	
   

  	
  Signature:

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  /     /

  	
   

  
	
  Ken McCoy

  	
   

  	
   

  	
   

  	
  /     /

  	
   

  
	
  Keith Pierce

  	
   

  	
   

  	
   

  	
  /     /

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  /     /

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  /     /

  	
   

  
	
  Filename:

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  ICOP
  Digital, Inc.

  	
   

  	
  CONFIDENTIAL

  	
   

  
	
   

  	
   

  	
  This document
  contains preliminary design

  specifications for internal use only.

  	
   

  
	
  Olathe, Kansas
  66061, U.S.A.

  	
   

  	
   

  

 

4

 

[*] (14 pages)

 

18

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