PATENT LICENSE AGREEMENT
AGREEMENT made and
entered into as of the 1st day of
August 2004, with revisions dated December 33, 2004 by and between Applied
Cryptology, Inc., a Nevada corporation having its principal offices at [address]
(the “Licensor”), and SmartMetric, Inc., a Nevada corporation having its
principal offices at 00 Xxxx Xxxxxx, Xxxxx 00, Xxx Xxxx,
Xxx Xxxx 00000 (the “Company”).
WHEREAS, the
Licensor is the owner of certain technology which is the subject of a Patent
Cooperation Treaty Application filed on February 18, 2000 with the United States
Patent and Trademark Office, and originally the subject of an application filed
on February 18, 1999 with the Australian Patent and Trademark Office, a copy of
which is annexed hereto and made a part hereof as Exhibit A, and the recipient
of a patent from the United States Patent and Trademark office, dated September
14, 2004 which was filed on February 15, 2001, a copy of which is annexed hereto
and made a part hereof as Exhibit B, including adaptations, derivatives of, and
current and future technological developments thereto (the “Patent”);
and
WHEREAS, the
Licensor has agreed to license certain rights to use the Patent to the Company,
and the Company wishes to accept such rights to use from the Licensor, as more
fully described in Section 4.
NOW,
THEREFORE, in
consideration of the mutual covenants of the parties which are hereinafter set
forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged,
IT
IS AGREED:
1. Recitals. The
parties hereby adopt as part of this Agreement each of the recitals which is
contained in the WHEREAS clauses, and agree that such recitals shall be binding
upon the parties hereto by way of contract and not merely by way of recital or
inducement; and such clauses are hereby confirmed and ratified as being true and
accurate by each party as to himself, herself or itself.
2. Grant
of License.
A. Subject
to the terms and conditions of this Agreement, the Licensor grants to the
Company, and the Company accepts from the Licensor, a license (the “License”) to
utilize the Patent, including the use, manufacture and sub-license of products
which utilize the Patent and the patented technology within the Territory
(hereinafter defined). During this terms of this Agreement, Licensor shall not
grant any license of the Patent to any other company that directly, or
indirectly through a subsidiary, affiliate, licensee or otherwise provides users
with Internet access or sells, distribute or manufacturers smartcards, nor shall
Licensor use the Patent in any way so as to compete with the Company. Further,
Licensor may not transfer the Patent to any third party that may compete with
SmartMetric.
B. The
license herein granted to the Company shall be effective as of the date of this
Agreement. The Licensor agrees to execute any and all such other and further
instruments and documents, and to take any and all such further actions, which
are reasonably required to effectuate this Agreement and the intents and
purposes hereof. The Company and the Licensor each agree to execute any and all
instruments and documents, and to take any and all such further actions
reasonably required to effectuate this Agreement and the intents and purposes
hereof.
3. Reservation
of Rights. The
Licensor retains all rights to the Patent, except with respect to the license of
the specific rights granted pursuant to this Agreement as provided for in
Section 4.
4. Rights
to Use. The
license here stated is a license to make use of the Patent for the purpose of
developing software, systems and products to be used in the business of the
company, namely providing secure transactions over the Internet from home and
office computers and/or providing either or an automatic method for connecting
to remote computers and/or a method of delivering targeted advertising to home
and/or office computers and/or providing identity verification and access
control as provided for in the Patent.
5. Geographical
Scope. The
geographical scope of this Agreement shall be worldwide (the
“Territory”).
6. Royalty
Payments. In
consideration of the license and rights granted in this Agreement, the Company
shall pay to Licensor royalties in accordance with this Section 6.
A. Accrual.
Royalties shall accrue on the first use or putting into use of the Patent as
evidenced by (a) the sub-license of the Patent, or the (b) sale, lease or
provision to others of one or more products which utilize the Patent by the
Company (“Licensed Products”). No royalties may accrue until the first such use
of the Patent by the Company. The obligation to pay accrued Royalties shall
survive termination of this Agreement. Notwithstanding any other provision
hereunder, royalties shall accrue and be payable only to the extent that
enforcement of the Company’s obligation to pay such royalty would not be
prohibited by applicable law.
B. Royalty
Reports and Payments. Within
forty-five (45) days after the end of each calendar quarter (i.e., within 45
days after March 31st, June
30th,
September 30th and
December 31st) during
the Term of this Agreement, the Company shall provide Licensor with a report
certified by a duly authorized officer of the Company (the “Royalty Report”)
which shall identify this Agreement and include the information set forth in
Schedule C as well as any other information Licensor may reasonably require from
time-to-time. If no Royalties were accrued during a calendar quarter, the
Royalty Report shall state that fact. Simultaneously with each Royalty Report
shall pay the Company the royalties accrued during such calendar quarter
(“Quarterly Payment”). In the event no royalties accrued during the quarter, no
funds shall be owed Licensor.
C. Method
of Payment and Reporting.
| (i) |
All
payments required hereunder shall be paid to Licensor by electronic bank
transfer to the following account: |
Bank Acct
Name:
Bank:
Bank
Number:
ABA:
| (ii) |
All
Royalty Reports shall be sent to Licensor as follows, with a copy sent to
the address indicated for receiving notice on the Cover Sheet (if
different than below): |
Applied
Cryptology, Inc.
000
Xxxxxxxx Xxxxxx
Xxxxxxxx,
Xxx Xxxx 00000
Licensor
may change the foregoing payment account and address upon written notice to the
Company.
D. Overdue
Payments.
Payments which are required hereunder and which are overdue shall be subject to
a late payment charge calculated at an annual rate of one percent (1%) over the
U.S. prime rate or successive U.S. prime rate (as posted in the Wall Street
Journal) during delinquency. If the amount of such charge exceeds the maximum
permitted by law, such charge shall be reduced to such maximum.
E. Currency. All
payments to be made under this Agreement shall be made in United States dollars
unless otherwise indicated. Any conversion to United States dollars for a
payment required under this Agreement shall be at the prevailing rate for bank
cable transfers as quoted for the day such payment is due under this Agreement
or, if paid earlier, the day actually paid, by leading United States banks in
New York City dealing in the foreign exchange market.
7. Duties
of Licensor. During
the Term, Licensor shall provide such other services to the Company as may be
necessary in order to implement the intent and purposes of this Agreement
including assisting the Company in obtaining the approval of the Patent in the
United States and in those other countries in which the Licensor determines to
file a patent.
8. Term. The term
of this Agreement (the “Term”) shall commence as of the date hereof and shall
remain in force in perpetuity, subject to the terms and conditions of this
Agreement, including, but not limited to, Article 13 of this
Agreement.
9. Licensor’s
Representations, Warranties and Covenants. The
Licensor warrants, represents and covenants to the Company as
follows:
A. The
Licensor is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada with full right, power and legal capacity
to enter into this Agreement. Licensor has no other business aside from owning
this Patent. The execution of this Agreement by the Licensor, its delivery to
the Company and the consummation of the transactions which are contemplated by
this Agreement have been approved and authorized by the Board of Directors of
Licensor and require no further authorization on the part of the Licensor for
the performance and consummation by the Licensor of the transactions which are
contemplated by this Agreement.
B. The
performance of this Agreement shall not result in any breach of, or constitute a
default under, or result in the imposition of any lien or encumbrance upon any
property of the Licensor or cause an acceleration under any arrangement,
agreement or other instrument to which the Licensor is a party or by which any
of his assets are bound. The Licensor has performed all of his obligations which
are required to be performed by him pursuant to the terms of any such agreement,
contract or commitment.
C. The
Licensor is the sole and exclusive owner and Licensor of the Patent which has
been approved by the United States Patent and Trademark Office with the
applicable authorities.
10. Company’s
Representations, Warranties and Covenants. The
Company represents, warrants and covenants to the Licensor as
follows:
A. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada, with all requisite power and authority to
carry on its business as presently conducted, to enter into this Agreement and
to carry out the transactions which are contemplated herein.
B. The
Company has full right, power and legal capacity to enter into this Agreement.
The execution of this Agreement by the Company and its delivery to the Licensor,
and the consummation of the transactions which are contemplated by this
Agreement have been duly approved and authorized by all necessary action by its
Board of Directors and no further authorization on the part of the Company for
the performance and consummation by the Company of the transactions which are
contemplated in this Agreement.
C. The
performance of this Agreement shall not result in any breach of, or constitute a
default under, or result in the imposition of any lien or encumbrance upon any
property of the Company or cause an acceleration under any arrangement,
agreement or other instrument to which the Company is a party or by which any of
its assets is bound.
11. Company’s
Obligations.
A. The
Company shall take such steps and bear the costs related thereto as may be
necessary to develop the software and/or products which is necessary to utilize
and exploit the Patent. All technological developments under, including, without
limitation, all software, and any improvements to, and derivatives of, the
Patent which are developed by the Company shall be the Company’s property.
B. The
Company shall bear the costs related to both defending and enforcing the Patent,
including, but not limited to, legal fees and filing fees with patent
offices.
12. Non-Use
and Non-Disclosure of Confidential Information.
A. As used
in this Agreement, “Confidential Information” means information which is
disclosed to the Company or known by the Company as a result of or through this
Agreement, and not generally known by the public about the Patent, including
without limitation, all documentation and software relating thereto, and all
know-how and technology required to use the Patent and information and data in
written, graphic and/or machine readable form, processes and services, including
information with respect to research, development, inventions, manufacture,
purchasing, accounting, engineering, marketing, merchandising and selling
regardless of whether patentable, trademarkable or copyrightable, including, but
not limited to, any information acquired by the Company from any source prior to
the commencement of this Agreement.
B. Except as
required in order to exploit the Patent pursuant to this Agreement, the Company
will not, during or after the term of this Agreement, directly or indirectly,
use any Confidential Information or disseminate or disclose any Confidential
Information to any person, firm, corporation, association or other entity except
in accordance with this Agreement. The foregoing prohibition shall not apply to
any Confidential Information which (i) becomes publicly available through
no act or omission of the Company, (ii) is reasonably required to be
disclosed in a proceeding to enforce the Company’s rights under this Agreement,
(iii) is required to be disclosed by court order or by any law,
(iv) is or becomes available to the Company from third parties who in
making such disclosure breach no confidentiality relationships, or (v) is
intentionally disclosed by the Licensor on an unrestricted basis to any entity
not a party to this Agreement.
C. Upon the
termination of this Agreement, all documents, records, notebooks and similar
repositories of or containing Confidential Information, including copies
thereof, then in the Company’s possession, whether prepared by it or others,
will be delivered to the Licensor.
D. The
Company hereby waives, now and for the future, any rights under or with respect
to any discoveries, concepts or ideas, or improvements or know-how which relate
to the Patent.
13. Rescission.
A. If there
occurs a rescission of this Agreement pursuant to Paragraph B of this
Article 13, the Licensor, upon written notice to the Company pursuant to
Paragraph C of Article 15, may:
|
(i) |
Require
that the Company cease any further use of the Patent;
and |
|
(ii) |
Cease
performance of all the Licensor’s obligations hereunder without liability
to the Company. |
B. The
Licensor may rescind this Agreement and reclaim all rights and interest in the
Patent if:
| (i) |
the
Company admits in writing that it is unable to pay its debts as they
mature; |
| (ii) |
the
Company files a petition for protection as a debtor under the bankruptcy
laws, or a petition to take advantage of any insolvency
act; |
| (iii) |
the
Company makes an assignment for the benefit of its
creditors; |
| (iv) |
the
Company consents to the appointment of, or possession by, a custodian for
the whole or any substantial part of its
property; |
| (v) |
the
Company, with regard to a petition filed with or without the Company’s
consent by a third party to subject the Company as a debtor to the
bankruptcy laws, fails to have such petition dismissed within
sixty (60) days from the date that such petition is
filed; |
| (vi) |
notwithstanding
the sixty (60) day provision in subparagraph v of this
paragraph B of this Article 13, the Company, pursuant to a
petition in bankruptcy filed against it, is adjudicated a bankrupt;
or |
| (vii) |
the
Company files a petition or answer seeking reorganization or similar aid
or relief under the bankruptcy laws or any state or the federal law for
the relief of debtors, or if the Company fails in a timely fashion to deny
the material allegations of a petition filed against it for any such
relief; or |
| (viii) |
a
court of competent jurisdiction shall enter an order, judgment or decree
appointing, with or without the Company’s consent, a custodian for the
whole or any substantial part of the Company’s property, or approving a
petition filed against the Company seeking reorganization or similar aid
or relief under any bankruptcy or insolvency laws or any state or the
federal law for the relief of debtors, and such order, judgment or decree
shall not be vacated, set aside or stayed within sixty (60) days from
the date of entry thereof; or |
| (ix) |
under
the provisions of any law for the relief of debtors, any court of
competent jurisdiction, or a custodian, shall assume custody or control of
the whole or any substantial part of the Company’s property, with or
without the Company’s consent, and such custody or control shall not be
terminated or stayed within sixty (60) days from the date of
assumption of such custody or control; or |
| (x) |
any
creditor of the Company commences a proceeding to foreclose a security
interest in, or lien on, any property or assets of the Company;
or |
| (xi) |
a
court of competent jurisdiction shall enter a final judgment for the
payment of money by the Company and such judgment shall not be vacated,
set aside or stayed within sixty (60) days from the date of entry
thereof; or |
| (xii) |
there
is an imposition of any attachment or levy, or the issuance of any note of
eviction against the assets or properties of the
Company. |
C. The
foregoing rights and remedies of the Licensor shall be cumulative and in
addition to all other rights and remedies available to the Licensor in law and
equity.
D. The
Company agrees to execute any and all other instruments and documents, and to
take any and all further actions, which may be reasonably required to effectuate
this Agreement and the intents and purposes hereof.
14. Survival. All
covenants, agreements, representations and warranties made in or in connection
with this Agreement shall survive its termination, and shall continue in full
force and effect after its termination, it being understood and agreed that each
of such covenants, agreements, representations and warranties is of the essence
of this Agreement and the same shall be binding upon and shall inure to the
benefit of the parties hereto, their successors and assigns.
15. Miscellaneous.
A. Headings. Headings
contained in this Agreement are for reference only and shall not in any way
affect the meaning or interpretation of this Agreement.
B. Enforceability. If any
provision of this Agreement should, for any reason, be held to be invalid or
unenforceable under the laws of any jurisdiction, this Agreement shall be
construed as if such invalid or unenforceable provisions are not contained
herein.
C. Notices. Any
notice or other communication required or permitted hereunder must be in writing
and sent by either (i) registered or certified mail, postage prepaid,
return receipt requested, (ii) overnight delivery with confirmation of
delivery or (iii) facsimile transmission with an original mailed by first
class mail, postage prepaid, in each case addressed as follows:
|
To
the Licensor: |
Applied
Cryptology, Inc. |
|
c/o
Xxxxx Xxxxxxxx, President | |
|
000
Xxxxxxxx Xxxxxx | |
|
Xxxxxxxx,
Xxx Xxxx 00000 | |
|
To
the Company: |
|
|
00
Xxxx Xxxxxx, Xxxxx 00 | |
|
Xxx
Xxxx, Xxx Xxxx 00000 | |
|
Attn:
Xxxxx Xxxxxxxx, President | |
|
Facsimile
No.: 917.591.3226 | |
|
Copy
to: |
Xxxxxxxxx
& Xxxxxxxxx, L.L.P. |
|
00
Xxxx Xxxxxx, Xxxxx 000 | |
|
Xxx
Xxxx, Xxx Xxxx 00000 | |
|
Facsimile
No.: 212.344.1600 |
or in
each case to such other address and facsimile number as shall have last been
furnished by like notice. If mailing is impossible due to an absence of postal
service, notice shall be in writing and personally delivered to the aforesaid
addresses. Each notice or communication shall be deemed to have been given as of
three (3) days after the date so mailed or as of the date delivered, as the case
may be.
D. Governing
Law; Disputes. This
Agreement shall in all respects be construed, governed, applied and enforced in
accordance with the laws of the State of New York without giving effect to
the principles of conflicts of laws thereof and shall be deemed to be an
agreement made pursuant to the laws of the State of New York entered into
in the State of New York. The parties hereby consent to and submit to
personal jurisdiction over each of them by the courts of the State of
New York in any action or proceeding, waive personal service of any and all
process and specifically consent that in any such action or proceeding any
service of process may be effectuated upon any of them by certified mail, return
receipt requested, in accordance with paragraph C of this Article 14.
The parties agree, further, that the prevailing party in any action or
proceeding as determined by the tribunal making the final and nonappealable
determination of the matter in dispute, shall be entitled to reimbursement of
all of its reasonable fees, costs and expenses, including, without limitation,
legal fees and disbursements, in connection with such matter. In connection with
the tribunal’s determination for the purpose of which party, if any, is the
prevailing party, the tribunal shall take into account all of the factors and
circumstances including, without limitation, the relief sought, and by whom, and
the relief, if any, awarded, and to whom. In addition, and notwithstanding the
foregoing sentence, a party shall not be deemed to be the prevailing party in a
claim seeking monetary damages unless the amount of the final determination
exceeds the amount offered in a writing by the other party by fifteen percent
(15%) or more. For example, if the party initiating a claim (“A”) seeks damages
of $100,000 plus costs and expenses, and the other party (“B”) has offered A
$50,000 prior to the commencement of the proceeding, if the tribunal awards any
amount less than $57,500 to A, the tribunal should determine that B has
prevailed.
E. Modification. This
Agreement may not be changed, modified, extended, terminated or discharged
except in writing, signed by each of the parties hereto.
F. Further
Actions. The
parties hereto agree to execute any and all instruments and documents, and to
take any and all such further actions reasonably required, to effectuate this
Agreement and the intents and purposes hereof.
G. Binding
Agreement. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their successors and assigns.
H. Non-Waiver. Except
as otherwise expressly provided herein, no waiver of any covenant, condition, or
provision of this Agreement shall be deemed to have been made unless expressly
made in writing and signed by the party against whom such waiver is charged. The
failure of any party to insist upon the performance of any of the provisions,
covenants, or conditions of this Agreement or to exercise any option herein
contained, shall not be construed as a waiver or relinquishment in the future of
such provision, covenant, or condition. The acceptance by a party, made with
such party’s knowledge of the breach or failure of any covenant, condition, or
provision hereof, of performance by the other party, shall not be deemed a
waiver by the accepting party of such breach or failure. The waiver by one party
of breach by the other party shall not be construed as a waiver of any other or
any subsequent breach.
I. Counterparts. This
Agreement may be executed simultaneously in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
J. Entire
Agreement. The
parties have not made any representations, warranties, or covenants about the
subject matter hereof which is not set forth herein, and this Agreement,
together with any instruments executed simultaneously herewith, constitutes the
entire Agreement between them about the subject matter hereof. All
understandings and agreements heretofore had between the parties about the
subject matter hereof are merged in this Agreement and any instrument executed
simultaneously herewith.
-- SmartMetric/License
Agreement August1, 2004
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
duly authorized officers, as of the day, month and year first above
written.
|
Licensor | |
|
/s/
Xxxxx Xxxxxxxx | |
|
Xxxxx
Xxxxxxxx | |
|
Attest: |
|
|
By:/s/
Xxxxx Xxxxxxxx |
-- SmartMetric/License
Agreement August1, 2004
SCHEDULE
A
The
following patent, as well as all continuations and reissues thereof, are
“Licensed Patents” under the Agreement:
|
U.S.
Patent No. |
Issue
Date |
Title |
|
6,325,285 |
Sept.
14, 2004 |
Smart
Card With Integrated Fingerprint Reader |
|
Signature
below by both Parties indicates that this |
|
|
Schedule
is agreed to and accepted by them as part of the patent License
Agreement. |
|
|
THE
COMPANY: |
LICENSOR: |
|
By:
/s/
Xxxxx Xxxxxxxx |
By:
/s/
Xxxxx Xxxxxxxx |
|
(Authorized
Signature) |
(Authorized
Signature) |
|
Xxxxx
Xxxxxxxx |
Xxxxx
Xxxxxxxx |
|
(Typed
or Printed Name) |
(Typed
or Printed Name) |
|
(Date)
12/22/04 |
(Date)
12/22/04 |
-- SmartMetric/License
Agreement August1, 2004
SCHEDULE
C
| 1. |
Royalties |
For each
product made by or for the Company or a sub-license of the Company which
products utilize the Patent pursuant to this Agreement, royalties shall be Two
Percent (2%) of the greater of
| (a) |
The
sales price of such Licensed Product; OR |
| (b) |
The
Fair Market Value of such Licensed Product, where “Fair Market Value”
shall mean the selling price which a seller would realize from an
unaffiliated buyer in an arms-length sale of the licensed product at the
time of the making of the Product, and wherein such selling price is not
discounted or diminished by any other agreement or arrangement between
such buyer and seller, including agreements or arrangements relating to
any other product, service, or benefit furnished or provided by the seller
to the buyer. |
| 2. |
Royalty
Report |
Each
Royal Report required under the Agreement shall identify the gross receipts of
the Company in accordance with this Agreement, as well as, for the Company, the
number of products manufactured in accordance with this Agreement; the identity
of each customer who is furnished such product(s), the number of units of
licensed product furnished to each such customer (such units identified by type
and model number), the price charged to each such customer for each such unit to
licensed product, and the date such units of Licensed Product were furnished to
each such customer.
|
Signature
below by both Parties indicates that this |
|
|
Schedule
is agreed to and accepted by them as part of the patent License
Agreement. |
|
|
THE
COMPANY: |
LICENSOR: |
|
By:
/s/
Xxxxx Xxxxxxxx |
By:
/s/
Xxxxx Xxxxxxxx |
|
(Authorized
Signature) |
(Authorized
Signature) |
|
Xxxxx
Xxxxxxxx |
Xxxxx
Xxxxxxxx |
|
(Typed
or Printed Name) |
(Typed
or Printed Name) |
|
(Date)
12/22/04 |
(Date)
12/22/04 |
