Exhibit 6.03
LICENSE AGREEMENT
THIS AGREEMENT is made effective as of the 31st day of October, 1998
(the "Effective Date"), by and between ID Technologies Corporation, a North
Carolina corporation, having a place of business and address of 0000 Xxxx Xxxx
Xxxxxx, Xxxxx X, Xxxxxx, Xxxxx Xxxxxxxx 00000 (the "Licensor"), and Revolution
Labs, Inc. a Colorado corporation, having a place of business and address of 000
Xxxx 00xx Xxxxxx, Xxxxxx, Xxxxxxxx 00000 (the "Licensee") (together, the
"Parties").
WHEREAS, Licensor owns all right, title and interest in United States
Patent No. 5,623,552 (the `552 Patent), dated April 22, 1997, and entitled
"Self-Authenticating Identification Card With Fingerprint Identification".
WHEREAS, Information Resources Engineering, Inc. (IRE) located at 0000
Xxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, has a strong background in
technologies relating to the design, development, and manufacture of products
which can incorporate and has incorporated in such products with the cooperation
of Licensor the self-authenticating fingerprint identification technology as
described and claimed in the `552 Patent of Licensor.
WHEREAS, the aforementioned IRE owns rights to inventions and patents
pertaining to the same technology as that described and claimed, in the `552
Patent, and may own future inventions and patents pertaining thereto.
WHEREAS, Licensor has entered into an agreement granting IRE a license
under the `552 Patent in a defined exclusive field and has obtained from IRE an
exclusive license in the Field of License (defined below) to receive IRE
technology and use and practice IRE's present and future IRE inventions and
patent(s) (hereinafter referred to as "IRE Technology") for the full terms
thereof to the full extent to which they pertain to the subject matter described
and claimed in the `552 Patent and has further obtained from IRE the exclusive
right to sublicense such IRE Technology in said Field of License to the
Licensee.
WHEREAS, Licensor and IRE recognize that because of the complexity and
extensive potential applications of the technology covered by the `552 Patent it
will be desirable and mutually beneficial to all the parties that Licensor
coordinate the transfer of technology related to application of the '552 Patent
technology and that there be established Technology Development Partners
(defined below) to assist in the development and application of the technology
covered by the '552 Patent and that both IRE and Licensee will usefully serve
the role of being such a Technology Development Partner.
WHEREAS, Licensor anticipates obtaining from time to time from
Technology Development Partners certain additional technology and intellectual
property rights associated with and supportive of the practice of the '552
Patent.
WHEREAS, Licensor desires to license to Licensee the '552 Patent and
also the IRE Technology, and Technology Development Partner Technology to
facilitate Licensee's application of the `552 Patent technology, and Licensee
desires to receive such license, technology and assistance pursuant to the terms
of this Agreement.
NOW, THEREFORE, the Parties agree that for and in consideration of the
mutual covenants contained herein, and in consideration of the Initial Payment
(hereinafter defined) and other good and valuable considerations each to the
other have paid, the receipt and sufficiency of which is acknowledged the
Parties have covenanted and agreed, and do hereby covenant and agree as follows:
1.0 DEFINITIONS
1.1 "System" means Licensor's fingerprint identification technology
described and claimed in the `552 Patent and the Licensor Technology
(defined below).
1.2 "Licensed Patents" means the `552 Patent and other patents licensed to
Licensee hereunder.
1.3 "Subsidiary" means a corporation, company or other entity more than
fifty percent of whose outstanding shares or securities (representing
the right, other than as affected by events of default, to vote for the
election of directors or other managing authority) are now or
hereafter, owned or controlled directly by a corporation, company or
other entity which is a party to this Agreement (either by Licensee or
the Licensor), so long as such ownership or control exists.
1.4 "Technology Development Partner" (hereinafter referred to as "TDP")
means any individual, corporation, association, or other entity, other
than Licensor or a Subsidiary thereof, with whom Licensor is now or
hereafter becomes associated and to whom Licensor grants a license
under the '552 Patent and from whom the Licensor acquires or has the
right to acquire rights to certain of the TDP's intellectual property
for incorporation into the System.
1.5 "TDP Technology" means inventions, patents and other technology
developed by IRE or another TDP and licensed or otherwise transferred
to Licensor for incorporation into the System and with respect to which
Licensor has the right to license others.
1.6 "Licensee Technology" means presently existing or future developed
inventions, patents, and technology of Licensee relating to the subject
matter of the '552 Patent and licensed or otherwise transferred to
Licensor pursuant to this Agreement.
1.7 "IRE" means Information Resource Engineering, Inc., who shall be
treated as a Technology Development Partner of Licensor.
1.8 "Licensor Affiliate" shall mean a Subsidiary or Technology Development
Partner of Licensor.
1.9 "Licensor Technology" means and includes the Licensed Patents as well
as all present and future intellectual property including rights in
inventions, patents, trade secrets, copyrights and other technology,
and any portion thereof, associated with or supportive of use of the
System, which Licensor owns or is authorized to license or otherwise
transfer to Licensee under this Agreement and which Licensee receives
either from Licensor, IRE or a TDP with Licensor's assistance, and
includes present and future IRE
Technology, TDP Technology and Licensor Affiliate Technology as well as
other technology acquired by Licensor with respect to which Licensor
has the right to license.
1.10 "Field of License" means identification, access, and security cards,
associated systems and equipment of whatever type used for:
United States FAA approved airline and airport facilities throughout
the world, in particular, for airline and airport personnel
identification and security systems. The Licensee's Field of License
does not include general purpose credit and debit cards (Visa,
MasterCard, American Express, Discover Card, Xxxxx Xxxxxxx, Diners
Club, etc.) or general purpose bank-issued cards of various forms, and
also does not include use of the System for internet security.
1.11 "Licensed Product" means any product or component of a product which
incorporates some or all of Licensor's Technology, or whose
manufacture, sale or use would infringe directly, contributorily, or by
inducement any claim of the '552 Patent or any other patent licensed
hereunder.
1.12 (i) "Net Sales" means a) in the context of an arms-length transaction
for monetary consideration, the gross sums received by Licensee for the
sale or other transfer of Licensed Products or for the sublicense or
other transfer of the Licensor Technology, after applying credits for
freight, taxes, refunds, discounts, returns, and bad debts but without
any credit or deduction for commissions or broker fees paid by
Licensee, except as provided pursuant to Article 1.12(ii); b) in the
context of an arms-length transaction for non-monetary consideration,
the fair market value of the consideration received by Licensee in
exchange for the sale or other transfer of Licensed Products or for the
sublicense or other transfer of the Licensor Technology; c) in the
context of an arms-length transaction in which the Licensee combines or
includes Licensed Products in a commercial offering whereby the pricing
of the Licensed Products is some part of a greater total price, the
gross sums received by the Licensee, after applying credits for
freight, taxes, refunds, discounts, returns, and bad debts, attributed
to the sale or other transfer of the Licensed Products. In the event
that Licensed Products are disposed of in a manner other than an
arms-length transaction for money or other consideration, Net Sales
shall be measured by the price at which sales or other transfers of
similar Licensed Products are sold at arms-length by the Licensee.
(ii) Where Net Sales is to be determined for the sublicense or other
transfer of the Licensor Technology, as opposed to the sale or other
transfer of Licensed Products, Net Sales shall be further reduced by
the amount of fees Licensee pays to independent, third-party brokers in
such transactions.
(iii) Where Net Sales is to be determined pursuant to foregoing
subparagraph (i)(c) of this Article 1.12, that portion of the total
price of the commercial offering attributed to the sale or other
transfer of the Licensed Products shall be determined by agreement of
the Parties, assisted by their accounting professionals. Should the
Parties not agree within thirty (30) days from their initial
discussions regarding a particular commercial offering, then the
Parties agree that the matter shall be decided by a panel of accounting
professionals, whose decision shall be binding on the Parties. The
panel shall consist of one accounting professional selected by each of
the Parties. If, within fifteen days of submission of the dispute to
the panel, the panel cannot agree, the panel members are authorized to
select a third accounting professional, acceptable to each panel
member, to assist in determining what portion of the total price should
be attributed to sale of the Licensed Products. The expanded panel
shall decide the issue by a simple majority, within fifteen (15) days
of the addition of the third panel member. Each party shall pay
one-half the cost of forming the panel and obtaining a final panel
decision.
1.13 "Authorized Source" means a company selected by Licensor to manufacture
the Licensed Product or a company selected by Licensee with Licensor's
written approval pursuant to Article 4.2.below.
1.14 The Recitals set forth in the,"Whereas" provisions on pages 1 and 2 of
this Agreement are incorporated herein by reference and are made a part
of this Agreement herein.
2.0 GRANT OF TECHNOLOGY LICENSE
Licensor hereby grants and conveys to Licensee, subject to the express
limitations of this Agreement, a license to test, experiment with and use the
First Prototype referred to in Article 3.0 below and upon accepting said First
Prototype and making the Production Start-up Payment called for by Article 9.0,
a worldwide exclusive license to make, use, sell, sublicense, or otherwise
transfer the System or any component thereof in the Field of License but only in
the Field of License, to use such certification xxxx(s), trademark(s) and/or
other marking(s) on Licensed Products pursuant to Article 14, and to disclose
the System to its Authorized Sources and others necessary for its practice by
Licensee and its sublicensees, subject, however, to the confidentiality duty set
forth in Article 22. Except as provided by Article 8.4, Licensor acknowledges
and agrees that it will not grant any rights in the Field of License to any
person other than Licensee, nor will Licensor itself exercise any rights in the
Field of License with regard to the System.
3.0 DEVELOPMENT OF FIRST PROTOTYPE OF SYSTEM AND NINETY DAY ACCEPTANCE PERIOD
3.1 Immediately upon this Agreement coming into effect and receipt by
Licensor of the Initial Payment called for in Article 9.0, Licensor
shall use its best efforts to produce or have produced for Licensee and
deliver to Licensee within one (1) year of the Effective Date a first
prototype (First Prototype) of the System in the form described below:
The First Prototype shall be a card, which uses the System to
function as a self-contained verification process to enable
and disable access to information or data stored in a magnetic
strip or smart chip on the card. The First Prototype shall be
of standard credit card dimensions, appearance and durability,
and, specifically, shall have a thickness of 32 millimeters on
all portions of the card. The First Prototype shall be
functional in all standard magnetic strip and Veri-Phone type
readers must perform with an accuracy of one percent (1%) or
less false acceptances and one
percent (1%) or less false rejections. The First Prototype
shall be a card which could be made available to Licensee, at
its option, at a price of no more than $20.00 per card for
orders of 100,000 cards or more. The card shall meet current
ISO 7816 standards, except for flexibility in the biometric
sensing area of the card. Notwithstanding the foregoing,
development of the First Prototype shall not obligate Licensee
to purchase cards in any minimum quantity.
3.2 Licensee shall have ninety (90) days from the date it receives both i)
the First Prototype meeting the specification set forth in Article 3.1,
and ii) the name of one Authorized Source as provided in Article 4.1,
to accept such First Prototype. Acceptance of the First Prototype by
Licensee pursuant to Article 3.3 below shall entitle Licensee to make
the First Production Start-Up Payment called for by Article 9.1.2. In
the event that Licensee fails to accept the First Prototype and make
the aforesaid First Production Start-Up Payment within the aforesaid
ninety (90) day acceptance period, this License Agreement shall
automatically terminate, all rights granted to Licensee hereunder shall
revert to Licensor and Licensee shall be obligated to immediately
return to Licensor said First Prototype and all confidential
information received from Licensor or a TDP.
3.3 Acceptance of the First Prototype shall be effective upon Licensee
tendering to Licensor the Production Start-Up Payment described in
Article 9.1.2 in cash or certified funds.
3.4 If within one (1) year of the effective date of this Agreement Licensor
has not delivered the First Prototype to Licensee, this License
Agreement shall terminate.
4.0 AUTHORIZED SOURCE OF LICENSED PRODUCT
4.1 AUTHORIZED SOURCE LIST. Licensor shall provide Licensee within one (1)
year from the Effective Date of this Agreement the name and address of
at least one company with the expertise, skill, and knowledge to
manufacture and produce Licensee's designated ones of the Licensed
Products within Licensee's Field of License according to Licensee's
specifications and which Licensee is prepared to develop and market.
4.2 ADDITIONAL AUTHORIZED SOURCES. At any time during the term of this
Agreement, the Licensee may request adding to the list of Authorized
Sources one or more manufacturers of Licensed Products within
Licensee's Field of License. Such request shall affirmatively state
that the Licensee has investigated the proposed source and has an
adequate basis for believing that the proposed source can manufacture
the particular Licensed Product of interest to the Licensee to such
standards of quality and grade at least equal to and in all respects
not less reliable than the Authorized Sources identified in Article
4.1. Licensor, not more than thirty (30) days after it receives the
proposed Additional Authorized Sources from Licensee, shall advise
Licensee with respect to such request, and shall not unreasonably
reject such proposed source. In the event that the Licensor shall fail
to reply within said 30 days, the proposed additional source shall be
deemed an Authorized Source.
4.3 PROCUREMENT. Licensee shall procure the Licensed Product only from an
Authorized Source.
4.4 SAMPLES. With regard to Authorized Sources selected by Licensee, the
Licensee shall, at any time requested by the Licensor, either provide
to the Licensor random samples of the Licensed Product from each such
Authorized Source, or enable the Licensor to enter the Licensee's
premises, following reasonable notice, during the Licensee's ordinary
business hours and inspect the Licensed Product supplied by such
Authorized Source(s).
4.5 LICENSEE NOT OBLIGATED TO PURCHASE FROM PERSONS SELECTED BY LICENSOR.
The Licensee acknowledges that it is not required to obtain the product
from any person affiliated with the Licensor, and that it has a full
and sufficient opportunity to seek out alternative sources of the
product and will take such advantage of that opportunity as it
independently elects, relying exclusively on its own business judgment
and not on the recommendation of the Licensor for that purpose. The
Licensee further warrants that it will conduct its own inspection of
any Authorized Source whose identity is provided to the Licensee by the
Licensor, will independently determine the capability and quality of
such Authorized Source to meet the requirements of the Licensee and
will not rely on the judgment of the Licensor for that purpose. The
Licensor makes no warranty or representation whatsoever as to the
capabilities or performance of any Authorized Source, and expressly
disclaims all such warranties and representations.
5.0 LICENSEE'S RIGHT TO PROPOSE SPECIFICATIONS
The Licensee shall have the right to propose modifying Licensed Product
specifications in a manner that would permit the Licensed Product to better
service customers in the Field of License. Licensor has the right to reject such
modifications, if such modified specifications call for a Licensed Product of a
lesser grade or quality than desired by Licensor or a Licensed Product likely to
impair consumer acceptance of the Licensed Products.
6.0 DEVELOPMENT OF PROTOTYPES OF LICENSED PRODUCTS
6.1 Upon selection of an Authorized Source for the first selected Licensed
Product within Licensee's Field of License which Licensee stands ready
to procure, develop and market in commercial quantities, Licensee shall
promptly and forthwith proceed to procure such selected Licensed
Product in prototype form from such Authorized Source, and upon
procurement thereof provide Licensor with a sample thereof.
6.2 Licensor shall within twenty-one (21) days after receipt of a sample of
Licensee's first selected Licensed Product in a prototype form suitable
for reproduction in commercial quantities promptly notify Licensee of
its approval or disapproval thereof. In the event that the Licensor
shall fail to reply within said twenty-one (21) days, the proposed
prototype form shall be deemed to be approved by Licensor. In the event
of approval, Licensee shall use its best efforts to commence
production, marketing and sale of such first selected Licensed Product
throughout the Field of License. In the event of disapproval, Licensor
shall inform Licensee of the reasons therefore and Licensee shall
promptly take such steps to improve such prototype of the first
selected Licensed Product and shall again submit such prototype to
Licensor for approval in accordance with the terms of this Article 6.2.
6.3 After introduction and marketing of the first selected Licensed Product
as referred to above, Licensee shall proceed to select the next and
subsequent Licensed Products in the same manner as set forth above and
shall again submit such prototype to Licensor for approval in
accordance with the terms of this Article 6.2.
7.0 WARRANTIES AND REPRESENTATIONS OF THE PARTIES
7.1 Licensors Warranties and Representations
7.1.1 Licensor Technology.
a. The Licensor warrants that it is the sole and
exclusive owner of all right, title and interest in
Letters Patent of the United States, No. 5,623,552
dated April 22, 1997, and entitled "Self
Authenticating Identification Card With Fingerprint
Identification," and has the sole and exclusive right
to grant licenses to others to manufacture, use, and
sell, products covered by the patent, and further
warrants that it has the right to license the System
to Licensee pursuant to the terms of this Agreement.
b. Licensor also warrants that it has obtained from IRE
a non-exclusive license in the Field of License to
receive IRE Technology and use and practice IRE's
present and future IRE inventions and patent(s) for
the full terms thereof to the full extent to which
they pertain to the subject matter described and
claimed in the '552 Patent and has further obtained
from IRE the right to sublicense such IRE Technology
in said Field of License to the Licensee, and that
such IRE Technology is covered by the royalty rate
identified in Article 9.3
c. Licensor fully warrants and shall warrant throughout
the term of this Agreement that it has full,
unrestricted right to grant to Licensee the rights
granted in Article 2.0, including without limitation
the right to grant a license to make, use, sell,
sub-license, or otherwise transfer the TDP Technology
which is or shall be incorporated into the System.
7.1.2 Prosecution of Licensor Patents. Licensor shall maintain the
'552 Patent and any other presently or future existing United
States or foreign patents owned by Licensor and relating to
the System.
7.1.3 Licensor Best Efforts. Licensor shall use its best efforts to
develop, improve, enhance and commercialize the System through
its dealings with Subsidiaries, Licensees, and Technology
Development Partners.
7.1.4 LICENSOR EMPLOYEES. Licensor represents and warrants that it
shall require its employees to assign to Licensor all
intellectual property rights to the inventions developed by
its employees relating to the System.
7.1.5 DEFENDING FIELD OF LICENSE. Licensor shall assist Licensee to
defend against any other of Licensor's Licensees of the System
("other Licensees") from using, practicing, selling, or
transferring the System in Licensee's Field of License.
7.1.6 DUE ORGANIZATION, GOOD STANDING, AUTHORITY OF LICENSOR.
Licensor is a corporation duly organized, validly existing,
and in good standing under the laws of North Carolina.
Licensor has full right, power, and authority to own its
properties and assets, and to carry on its business. To the
best of Licensor's knowledge, Licensor is duly licensed,
qualified and authorized to do business as a foreign
corporation, and is in good standing in each jurisdiction in
which the properties and assets owned by it or the nature of
the business conducted by it makes such licensing,
qualification and authorization legally necessary.
7.1.7 LICENSE NOT IN CONFLICT WITH OTHER INSTRUMENTS; REQUIRED
APPROVALS OBTAINED.
7.1.7.1 To the best of Licensor's knowledge, the execution
delivery, and performance of this License by Licensor
will not (a) violate or require any registration,
qualification or filing under, (i) any law, statute,
ordinance, rule or regulation ("Laws") of any
federal, state or local government ("Governments") or
any agency, bureau, commission or instrumentality of
any Governments, or (ii) any judgment, injunction,
order, writ or decree or any court, arbitrator, or
Government.
7.1.7.2 The execution, delivery, and performance of this
License by Licensor will not conflict with, require
any consent, approval, or filing under, result in the
breach or termination of any provision of, or
constitute a default under (i) any indenture,
mortgage, deed of trust, license, permit, approval,
consent, franchise, lease, contract, license or any
instrument or agreement to which the Licensor is a
party or is bound, or (iii) any judgment, injunction,
order, writ or decree of any court, arbitrator, or
government by which the Licensor or any of its assets
or properties is bound.
7.1.8 LEGAL PROCEEDINGS-LICENSOR. To the best of Licensor's
knowledge, there is no action, suit, proceeding, claim,
arbitration, or investigation by any Government or any other
person (i) pending to which the Licensor is a party, (ii)
threatened against or relating to the Licensor or any of the
Licensor's assets or businesses, (iii) challenging the
Licensor's right to execute, deliver, or perform under this
License, or (iv) asserting any right against Licensor with
respect to the System, and there is no basis for any such
action, suite, proceeding, claim, arbitration, or
investigation.
7.2 LICENSEE'S WARRANTIES AND REPRESENTATIONS
7.2.1 LICENSEE'S BEST EFFORTS. Licensee represents and warrants to
use its best efforts to proceed diligently with its
development, improvement, enhancement, manufacture and sale of
the Licensed Products and System throughout the Field of
License in accordance with the terms of this Agreement.
Licensee shall at its cost and expense use its best efforts
and all due diligence to energetically and aggressively
develop the market for the Licensed Products in the Field of
License, to promote the sale, sublicense, and use of the
Licensed Products and to enhance the reputation and goodwill
associated with the Licensed Products. In connection with its
obligations under this Article 7.2.1, Licensee shall maintain
facilities of a nature and style suitable in the Field of
License to facilitate the marketing, distribution, sale, and
sublicensing of the Licensed Products; shall provide
aggressive, dedicated, continuous representation throughout
the Field of License by means of sales and support staff
sufficient in number, qualifications, and training to
aggressively and effectively promote, market, and service the
Licensed Products.
7.2.2 LICENSEE TECHNOLOGY. Licensee represents and warrants in
recognition of mutual benefits to be derived by Licensee,
Licensor and the TDPs that it shall grant to the Licensor a
nonexclusive, royalty free license, with the right to
sublicense, to make, use, and sell outside the Field of
License any Licensee made improvement or enhancement to the
fingerprint card that is the Licensed product of this
Agreement. With regard to technology developed by Licensee,
Licensee represents and warrants that it shall have the sole
and exclusive right to grant the license to manufacture, use,
sell, and otherwise transfer Licensee's Technology relating to
the System to Licensor. It is understood and agreed that the
nonexclusive, royalty free license to Licensor under this
Article 7.2.2 is intended to apply to only those improvements
and enhancements to the fingerprint card itself that is the
Licensed Product of this Agreement, and not to technology
developed by Licensee that is not incorporated into the
fingerprint card itself.
7.2.3 QUALITY OF LICENSED PRODUCTS. Licensee represents, warrants
and covenants that it shall diligently inspect goods delivered
by Authorized Sources to assure conformity with
specifications, grade and quality satisfactory to Licensor,
and shall not procure goods from any unauthorized source.
Furthermore, Licensee shall not induce any Authorized Source
to engage in adulteration, substitution or other practices
that would constitute a variance from such specifications,
grade and quality and shall not knowingly countenance any such
practices.
7.2.4 LICENSE NOT IN CONFLICT WITH OTHER INSTRUMENTS; REQUIRED
APPROVALS OBTAINED.
7.2.4.1 To the best of Licensee's knowledge, the execution,
delivery, and performance of this License by Licensee
will not (a) violate or require any registration,
qualification. or filing under, (i) any law, statute,
ordinance, rule or regulation ("Laws") of any
federal, state or local government
("Governments") or any agency, bureau, commission or
instrumentality of any Governments, or (ii) any
judgment, injunction, order, writ or decree or any
court, arbitrator, or Government.
7.2.4.2 The execution, delivery and performance of this
license by Licensee will not conflict with, require
any consent, approval, or filing under, result in the
breach or termination of any provision of, or
constitute a default under (i) any indenture,
mortgage, deed of trust, license, permit, approval,
consent, franchise, lease, contract, license or any
instrument or agreement to which the Licensee is a
party or is bound, or (ii) any judgment, injunction,
order, writ, or decree of any court, arbitrator, or
government by which the Licensee or any of its assets
or properties is bound.
7.2.5 LEGAL PROCEEDINGS-LICENSEE. To the best of Licensee's
knowledge, there is no action, suit, proceeding, claim,
arbitration, or investigation by any Government or any other
person (i) pending to which the Licensee is a party, (ii)
threatened against or relating to the Licensee or any of the
Licensee's assets or businesses, (iii) challenging the
Licensee's right to execute, deliver, or perform under this
License, or (iv) asserting any right against Licensee with
respect to the System and there is no basis for any such
action, suite, proceeding, claim, arbitration, or
investigation.
7.2.6 DUE ORGANIZATION, GOOD STANDING, AUTHORITY OF LICENSEE.
Licensee is a corporation duly organized, validly existing,
and in good standing under the laws of Colorado Licensee has
full right, power, and authority to own its properties and
assets, and to carry on its business. To the best of
Licensee's knowledge, Licensee is duly licensed, qualified and
authorized to do business as a foreign corporation, and is in
good standing in each jurisdiction in which the properties and
assets owned by it or the nature of the business conducted by
it makes such licensing, qualification and authorization
legally necessary.
8.0 SUBLICENSING AND THE UNDERSERVED FIELD OF LICENSE
8.1 ASSIGNMENT. This Agreement may be assigned by either party without the
consent of the non-assigning party, provided the assignee is an
affiliate of the assigning party. Otherwise, neither this Agreement nor
any rights conveyed to Licensee or Licensor hereunder shall be assigned
by either party except with the prior written consent of the other
party, such consent not to be unreasonably withheld. An "affiliate" for
purposes of this Article 8.1, means any person or entity directly or
indirectly controlled by, or under common control with the assigning
party.
8.2 SUBLICENSING. Licensee may sub-license all or any portion of the System
to any individual, corporation, or other entity for development, use,
manufacture, sale, or further sub-license of the System solely in the
Field of License. Licensee shall have the same responsibility for the
activities of a sublicensee under any such arrangement as if the
activities were directly those of the Licensee. For example, and not by
way of limitation, royalties shall be paid to Licensor by Licensee with
regard to the activities of such
sublicenses as if those activities were the Licensee's, and each
sublicensee shall be restricted to using, manufacturing, selling, and
further sublicensing the System to the Field of License defined in
Article 1.10 above.
8.3 SUBLICENSING CONDITIONS. In the event that Licensee desires to
exercises its right to sublicense its rights as granted herein,
Licensee shall, unless otherwise agreed by Licensor and Licensee,
negotiate an agreement on terms, which insofar as practical are
substantially consistent with the terms of this Agreement, and shall
also
a. Require royalty payment to Licensee of no less than the
royalty required by Licensor to be negotiated on a case by
case basis, which Licensor's agreed share shall be remitted to
Licensor.
b. Require the sublicensee to keep Licensor informed concerning
infringement by outside parties of the properties transferred,
any potential product fault, improper use and the like.
c. Require the sublicensee to give both Licensee and Licensor the
right to audit the sublicensee's books and records.
d. Include a confidentiality provision in the sublicensee
Agreement comparable to that contained in this Agreement.
e. Require that sublicensee not reverse engineer or disassemble
the Licensed Product.
8.4 UNSERVED AND/OR UNDERSERVED FIELD OF LICENSE.
a. At any time after the first year during the term of this
License (or any extensions thereof) following Licensor's
delivery of the First Prototype to Licensee, should Licensor
determine that some area or areas within the "'Field of
License" are not being served or are being underserved by
Licensee, Licensor may notify Licensee in writing of such
determination. This notification shall clearly reference this
Article 8.4 of the Agreement as its basis and give reasonable
evidence in support of Licensor's determination of such
unserved and/or underserved areas.
b. Licensee shall acknowledge this notice in writing within ten
(10) business days and respond to this same notice in writing
within ninety (90) days setting forth Licensee's plans to
serve or better serve the subject area. Should Licensor and
Licensee agree on plan(s) proposed by Licensee or Licensor, no
further action under this provision of this Article 8.4 will
be necessary. Should Licensor and Licensee fail to agree on
such plan(s) within thirty (30) days of Licensor's receipt of
such plan(s), and should Licensor believe the subject area to
be materially unserved or underserved to the detriment of all
parties, then the matter will be submitted to arbitration
under Article 22 of this Agreement.
c. Should such arbitration process result in the determination
that Licensor's position is correct, Licensee shall 1)
sublicense the unserved area(s) to parties reasonably
capable of and willing to deliver such services and/or 2)
allow the relicensing of these areas, splitting all revenues
therefrom between Licensor and Licensee on a fifty/fifty
(50/50) basis. Should such arbitration process result in the
determination that Licensor's position is correct, then
Licensee shall also pay Licensor's costs and expenses
(including reasonable attorneys fees) incurred in such
arbitration process. However, should such arbitration process
result in the determination that Licensee's position is
correct, then Licensor shall pay Licensee's costs and expenses
(including reasonable attorneys fees) incurred in such
arbitration process.
9.0 PAYMENTS, ROYALTIES AND COMPENSATION
9.1 INITIAL PAYMENT
9.1.1 Licensee shall pay Licensor upon execution of this Agreement
and as an Initial Payment and in order to make this Agreement
effective, the non-refundable amount of Twenty-Two Thousand
and Five Hundred Dollars ($22,500). Licensee shall pay a
second payment of Twenty-Two Thousand and Five Hundred Dollars
($22,500) on or before October 30, 1998. The Parties
acknowledge and agree that Licensee has already paid as part
of the Initial Payment, the non-refundable amount of Five
Thousand Dollars ($5,000), and that the total Initial Payment
is Fifty Thousand Dollars ($50,000).
9.1.2 It is understood and agreed that should licensee not pay the
second payment of Twenty-Two Thousand and Five Hundred Dollars
($22,500) on or before October 30, 1998 pursuant to Article
9.1.1, then this License Agreement and all obligations
hereunder shall automatically terminate.
9.1.3 It is understood and agreed that the Initial Payment paid by
Licensee pursuant to Article.9.1.1 extends the deadline to
enter into the two Option Agreements for the fields of license
previously identified as "identification and security systems
for the traveling public" and "airline passenger ticketing
systems" until the close of business (5:00 EST) on October
30, 1998. There will be no rights of either party to extend
this deadline except with written consent of the other party.
9.1.4 Upon delivery and acceptance by Licensee of the First
Prototype in accordance with Article 3.0, Licensee shall pay
Licensor the First Production Start-Up Payment of Two Hundred
Twenty-Five Thousand Dollars ($225,000) for Licensee to have
the right to start commercial production under the license
granted by Article 2.0 and represents Licensee's payment for
the worldwide exclusive license granted thereunder, which
Production Start-Up Payment shall be made subject to the terms
of Article 3.0. Within two hundred seventy (270) days from the
date it receives the First Prototype meeting the specification
set forth in Article 3.1, Licensee shall pay Licensor the
Second Production Start-Up Payment of Two Hundred Twenty-Five
Thousand Dollars ($225,000).
9.2 ROYALTY PAYMENTS.
a. Licensee shall pay to Licensor royalties, after acceptance of
the First Prototype at the Royalty Rate provided in Article
9.3 below for the term of this Agreement according to Article
12 below.
b. Licensee shall determine and pay actual royalties, computed
pursuant to the Royalty Rates set forth below, to Licensor on
a quarterly basis within sixty (60) days after the end of each
quarter ("Actual Royalties"). In addition, within sixty days
after the day or each calendar year, beginning after the year
2000, Licensee shall pay to Licensor the difference, if any,
between the total Actual Royalties to be paid by Licensee to
Licensor during the course of the most-recently concluded
calendar year for that quarter and Sixty Thousand Dollars
($60,000), which the Parties hereby agree shall be the minimum
royalty amount payable by Licensee during each calendar year
of the term hereof. Minimum royalties shall begin to accrue on
April 1, 2000, and Minimum Royalties for the calendar year
2000 shall be pro-rated accordingly. Notwithstanding the
foregoing, if Licensor has separately agreed to supply
Licensee with Licensed Products, Licensee shall not be
responsible for paying Minimum Royalties for any period during
a calendar year in which Licensed Products reasonably
necessary to fill orders to Licensee's customers are not
available from Licensor for use by Licensee when such period
extends for a period of at least one hundred and twenty (120)
days after placing such orders. The Minimum Royalties amount
due for any calendar year shall be prorated to exclude said
time period in which Licensed Products were unavailable to
Licensee.
9.3 ROYALTY RATE. Actual Royalties shall be computed at the rate of six
(6%) of Licensee's Net Sales during the applicable quarterly period
(the "Royalty Rate").
9.4 REPORTS AND AUDITS OF LICENSEE'S NET SALES.
a. Licensee agrees that, within sixty (60) days after the end of
each quarter, in each and every calendar year, commencing with
the first quarter following acceptance of the First Prototype
and continuing for the duration of Licensee's obligation to
make Royalty payments, Licensee will furnish to Licensor
written reports specifying the Licensee's Net Sales during the
preceding quarter (the "Quarterly Reports"). Such reports
shall provide adequate details to allow Licensor to reasonably
determine that its business with Licensee has been accurately
reported by Licensee's financial system.
b. Licensee, agrees to have its auditors verify in writing the
accuracy of the Quarterly Reports for each calendar year,
which written verification is to be submitted to Licensor no
later than ninety (90) days after the end of each calendar
year (the "Licensee's Auditor's Verification").
c. Licensee agrees to allow an independent certified public
accountant or other audit professional selected by Licensor to
audit and analyze Licensee's accounting
records during regular business hours to determine the
accuracy of Licensee's Quarterly Reports (an "Independent
Audit"). Such audits shall not be requested by Licensor more
than twice per calendar year, may be conducted only upon ten
(10) business days written notice to Licensee, and must be
conducted so as not to interfere unreasonably with Licensee's
business activities.
d. The Independent Audit shall be at the expense of Licensor,
unless a variation or error exceeds five percent (5%) of the
Net Sales for the Quarter in which the error occurs, whereupon
all costs of the Independent Audit shall be paid by Licensee.
e. If Licensor fails to request an Independent Audit within two
years after receipt of the Licensee's Auditor's Verification,
then the Licensee's Auditor's Verification shall be
conclusively determinative of the Net Sales for that calendar
year for the purposes of calculating Actual Royalties, and
Licensor may not thereafter dispute the accuracy of the Net
Sales figure reported by Licensee and verified by Licensee's
Auditor.
9.5 LATE PAYMENT INTEREST. Any payment not paid in full when due shall, as
to that portion thereof not paid when due, bear interest for each day
late at the rate of eighteen percent (18%) per annum, compounded
monthly, or at the maximum rate allowed by law, if said maximum amount
is less. The calculation of a daily rate shall be made based upon a
year of three hundred and sixty (360) days and a month of thirty (30)
days. Payments not made when due because of a dispute as to the correct
amount thereof shall nonetheless be considered late if ultimately
adjudged to be due, and interest shall be paid thereon as set out
above.
10.0 INFRINGEMENT AND INDEMNIFICATION
10.1 INFRINGEMENT CLAIMED BY THIRD PARTIES.
10.1.1 If the Licensee shall be sued for infringement by reason of
the Licensee's activities under the license granted in this
Agreement, the Licensee shall immediately notify the Licensor
and the Licensor shall defend, indemnify, and hold the
Licensee harmless against any such claims, which, if proven,
would constitute a breach of any of the Licensor's
representations or warranties of Article 7.1 above. Provided,
however, that the Licensor shall not have a duty to defend if
the claim of infringement is based upon acts of the Licensee
which go beyond the scope of the Licenses granted, such as by
reason of combination of practice under the license and
authorized practices, with additional activity, which combined
licensed and unlicensed activity shall be the subject matter
of the infringement action. Without limiting the foregoing,
the Licensor shall have the control of any such defense and
the right to enter into any settlement and compromise of any
such claim or action provided, however, that the Licensee
shall assume no further royalty or other obligation, whether
to the Licensor or to any third party, by reason of such
settlement. The Licensee shall, if requested by Licensor, make
such reasonable modifications in the practice of the license
granted under this Agreement such as would enable the parties
to avoid or mitigate any third-party claims of infringement or
misappropriation.
10.1.2 If Licensor shall be sued for infringement by reason of the
Licensor's activities under any cross-license anticipated by
this Agreement, the Licensor shall immediately notify the
Licensee and the Licensee shall defend, indemnify, and hold
the Licensor harmless against any such claims, which, if
proven, would constitute a breach of any of the Licensee's
representations or warranties of Article 7.2 above. Provided,
however, that the Licensee shall not have a duty to defend if
the claim of infringement is based upon acts of the Licensor
which go beyond the scope of the Licenses granted, such as by
reason of combination of practice under the license and
authorized practices, with additional activity, which combined
licensed and unlicensed activity shall be the subject matter
of the infringement action. Without limiting the foregoing,
the Licensee shall have the control of any such defense and
the right to enter into any settlement and compromise of any
such claim or action provided, however, that the Licensor
shall assume no further royalty or other obligation, whether
to the Licensee or to any third-party, by reason of such
settlement. The Licensor shall, if requested by Licensee, make
such reasonable modifications in the practice of the license
granted under this Agreement such as would enable the parties
to avoid or mitigate any third-party claims of infringement or
misappropriation.
10.2 INFRINGEMENT BY THIRD PARTIES.
10.2.1 Licensee shall have the right, but not the obligation, to
institute and prosecute any and all suits to enjoin any and
all infringers of the licensed patents, where such
infringements affects the Licensee's use of the Technology in
the Field of License; and from time to time during the
continuance of this Agreement, and at its own expense, may
institute any suit or suits which it may deem necessary. The
Licensee shall have the right to institute and prosecute such
suits and to employ its own counsel for such suits; and
Licensee shall pay for all services rendered by counsel so
retained, and for all incidental costs and expenses. Licensee
agrees that Licensor may join as a party plaintiff in any suit
initiated by Licensee regarding the System, at Licensor's sole
expense, where Licensor deems that joining as a party
plaintiff is necessary and in Licensor's best interests.
10.2.2 Except to the extent that Licensee has instituted or plans to
institute a suit under Article 10.2.1, Licensor shall have the
right, but not the obligation, to institute and prosecute any
and all suits to enjoin any and all infringers of the '552
Patent where such infringement affects Licensor's use, sale,
or rights to the System, and from time to time during the
continuance of this Agreement, and at its own expense, may
institute any suit or suits it may deem necessary. The
Licensor shall have the right to institute and prosecute such
suits, and to employ its own counsel for such suits; and
Licensor shall pay for all services rendered by counsel so
retained, and for all incidental costs and expenses. Licensor
agrees that Licensee may join as a party plaintiff in any suit
initiated by Licensor pertaining to infringement in the Field
of License regarding the System, at Licensee's sole
expense, where Licensee deems that joining as a party
plaintiff is necessary and in Licensee's best interests.
11.0 LIMITATIONS OF LIABILITY AND CONSEQUENTIAL DAMAGES.
In no event, whether based on contract, indemnity, warranty, tort
(including negligence), strict liability or otherwise, shall Licensor or
Licensee or their subcontractors or suppliers, or any of their respective
directors, officers, employees or agents, be liable for (i) special, exemplary,
or punitive damages; or (ii) any losses or damages arising out of, connected
with, or resulting from (A) the performance of any third party not hired by
Licensor or Licensee, (B) any software, hardware or other product or component
provided by any third party, or (C) the reliance by Licensor or Licensee on any
statement or representation made by Licensee or Licensor regarding a third party
vendor.
12.0 TERM OF AGREEMENT AND RENEWAL
The term of this Agreement shall be twenty (20) years from the
Effective Date, with the right of Licensee to renew for subsequent periods of
five (5) years thereafter, provided that for each renewal:
a. the Field of License is not then unserved or underserved and
such unserved or underserved Field of License has not been
cured or is not being cured in accordance with Article 8.4;
b. there is no uncured Licensee breach of this Agreement; and
c. Licensee shall pay Licensor One Hundred Twenty-Five Thousand
Dollars ($125,000).
13.0 TERMINATION
13.1 This Agreement may be terminated as follows:
a. By mutual Agreement of the Parties.
b. By Licensee if Licensor fails to deliver the First Prototype
within one (1) year following the effective date of this
Agreement or if the First Prototype delivered by Licensor to
Licensee is not satisfactory to Licensee.
c. By Licensor upon Licensee failing to pay Licensor the Minimum
Royalty pursuant to Article 9.2, whereupon Licensee's failure
to make such payment, Licensor shall give notice to Licensee
of such failure. This License Agreement shall terminate 10
days from Licensee's receipt of such notice unless Licensee,
within said 10-day period, remedies such default.
d. If the Licensee shall (i) commence a voluntary case under the
federal or state bankruptcy laws, (ii) file a petition seeking
to take advantage of any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding
up or composition for adjustment of debts, (iii) consent to or
fail to contest in a timely and appropriate manner any
petition filed against it in an involuntary case under such
bankruptcy laws or other laws, (iv) apply for or consent to,
or fail to contest in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver,
custodian, trustee, or liquidator of itself or of a
substantial part of its property, domestic or foreign, (v)
admit in writing its inability to pay its debts as they become
due, (vi) make a general assignment for the benefit of
creditors, (vii) take any corporate action authorizing any of
the foregoing, (viii) become the subject of a case or other
proceeding in any court of competent jurisdiction seeking
relief under the federal bankruptcy laws or under any other
laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts, which
proceeding shall continue undismissed or unstayed for a period
of sixty consecutive calendar days, or an order granting the
relief requested shall be entered, or (ix) become the subject
of the appointment of a trustee, receiver, custodian,
liquidator or the like, which appointment shall continue
undismissed or unstayed for a period of sixty consecutive
calendar days.
e. If Licensee, without having first terminated this Agreement
and ceased obtaining any of the benefits of this Agreement
challenges the validity of any patent purported to be licensed
by the Licensee under this Agreement.
f. By either party due to the other party's material breach of
its obligations under this Agreement, upon giving written
notice, except as limited below:
(i) Where the breach relates solely to Licensee's non-payment
of Royalties, the Licensor's right to terminate this Agreement
is limited as follows:
(aa) Before the Licensor may terminate this Agreement
solely for Licensee's non-payment of Royalties, except for the
automatic termination rights provided by Article 13.1c. above,
Licensor must give Licensee written notice of default and make
a demand for immediate payment, describing the time period at
issue, the amount due, and how the Licensor determined that
the amount demanded is due (the "Licensor's Demand"). To avoid
termination of this Agreement for non-payment of the Royalties
demanded, Licensee must within ten days either: 1) pay to
Licensor the full amount demanded as due; or 2) respond to
Licensor's Demand with an explanation of why no additional
amount is due (the "Licensee's Response").
(bb) If, within thirty (30) days of Licensor's
receipt of the Licensee's Response, the Parties cannot resolve
their dispute, then the Licensor shall submit to Licensee a
list of five (5) independent certified public accountants
acceptable to the Licensor and, within five (5) days
thereafter, Licensee shall select one independent certified
public accountant from said list, and upon agreement of said
accountant to serve, that accountant shall serve as the
Royalties Arbitrator.
(cc) Within five (5) days of selection of the
Royalties Arbitrator, each party shall forward to the
Royalties Arbitrator copies of this Agreement, the Licensor's
Demand, the Licensee's Response, and any other supporting
documentation and shall jointly request that the Royalties
Arbitrator conduct an expedited review of the documents
submitted to resolve the dispute and to provide a written
determination as to Royalties due, if any.
(dd) The Parties hereby agree to abide by the
Royalties Arbitrator's written decision as to the amount of
Royalties due, if any. Upon a written determination by the
Royalties Arbitrator that some amount of Royalties is due,
Licensee shall pay that amount to Licensor within three (3)
days of receipt of the Royalties Arbitrator's written decision
and shall be responsible for any fees charged or costs
incurred by the Royalties Arbitrator in resolving the dispute.
Upon a written determination by the Royalties Arbitrator that
no Royalties are due, Licensor shall be responsible for any
fees charged or costs incurred by the Royalties Arbitrator in
resolving the dispute. Each party shall otherwise bear its own
fees and costs.
(ee) The Licensor shall be released from its
obligation to follow the foregoing procedure upon a) after a
single determination by the Royalties Arbitrator that the
Licensee's Response was groundless and wholly without
justification or b) upon receipt from the Royalties Arbitrator
its written decisions in two Royalties disputes that the
amount demanded in the Licensor's Demand was in fact the
amount of Royalties due.
ii. Where the breach relates, in whole or in part, to
obligations other than Licensee's nonpayment of Royalties,
then prior to terminating this agreement, the. non-breaching
party must provide written notice of the breach and must
permit the other party thirty days from the date of the
written notice to cure such breach. Each party shall be
released from this obligation of notice and cure after that
party has complied with this provision with respect to the
first two breaches within any successive five year period by
the other party.
g. By the Licensee upon giving Licensor thirty (30) days written
notice of Licensee's intent to terminate and paying all Actual
Royalties owed to the date of termination or the Minimum
Royalties, whichever is greater.
13.2 Upon termination of this Agreement, any and all rights which the
Licensee shall have or possess under this Agreement, including
sublicenses thereunder, shall permanently cease and be by it
relinquished and surrendered to the Licensor. If such termination is
not due to a Licensee breach of this Agreement, Licensee shall have the
right to sell all Licensed Products already manufactured and in its
possession for a period of three (3) months following the termination
date, upon which royalties will be paid as provided above. Should
termination of this Agreement be due to a Licensee breach, then
Licensee shall, upon termination, transfer all Licensed Products to
Licensor, and pay all royalties it owes Licensor.
14.0 MARKING
The Licensee shall use such certification xxxx(s), trademark(s) and/or
other marking(s) as may from time to time be adopted by the Licensor to indicate
to the public that the Licensed Products are genuine licensed products, and/or
to indicate the patent protection applicable thereto. The Licensee shall in any
event when requested by Licensor xxxx the patent number of each patent covering
the Licensed Products, on each licensed product manufactured, sold or otherwise
distributed by the Licensee in a manner satisfactory to Licensor; and shall use
the trademark registration symbol adjacent any registered trademark to the
extent permitted by law.
15.0 NO BUSINESS OPPORTUNITY OR FRANCHISE
This Agreement is not intended to be, and shall not be construed to be,
the granting of a business opportunity or of a franchise under the laws of the
United States or any state or territory thereof. The Licensee warrants to the
Licensor that the Licensee possesses business expertise relevant to the field in
which it will engage pursuant to the license granted herein. The Licensee
acknowledges that the Licensor is not obligated by this Agreement to provide any
business advice or business assistance of any kind or nature whatsoever,
including not limited to the provision of a prescribed marketing plan or system,
and warrants that the Licensee has not received, and does not expect to receive,
any business advice or assistance from Licensor on which it has relied or
intends to rely in any manner whatsoever. The Licensee further acknowledges that
the Licensee, in evaluating the propriety of entering into this Agreement, has
relied exclusively on its own advisors and not on any representations made by
the Licensor except such representations as are expressly stated in the words of
this Agreement.
16.0 NO INVESTMENT OR SECURITIES OFFERING
The Licensee represents and warrants that the Licensor shall not, by
reason of entering into this license with the Licensee, be or become obligated
to file a registration statement with the Securities and Exchange Commission to
qualify the License to fall under the blue sky laws of any state. Furthermore,
notwithstanding any other provision of this Agreement, the Licensee shall not
enter into any transaction regarding the License that would require the Licensor
to file a registration statement with the Securities and Exchange Commission to
qualify the License to fall under the blue sky laws of any state. Any violation
of this Article 16.0 is a material default that shall entitle the Licensor to
terminate this Agreement.
17.0 CONSENT TO ADVERTISING AND PUBLICITY
The Licensor may issue and disseminate to the public information
describing the license entered into with the Licensee, including the name and
address of the Licensee, the general terms of the agreement, and a general
description of the Licensee's business.
18.0 GOVERNING LAW
This Agreement shall be interpreted and construed in accordance with
the laws of the United States and the laws of the State of North Carolina.
19.0 INDEPENDENT CONTRACTORS
The Parties to this Agreement are independent contractors. Nothing in
this Agreement is to be construed as making either party an agent of or joint
venturer with the other.
20.0 COMPLETE AGREEMENT AND MODIFICATION
This Agreement represents the entire agreement, both written and oral
of the Parties, and supersedes and replaces any prior written or oral agreements
between Licensee and Licensor. This Agreement may be amended only in a writing
stating that it is an amendment or modification of this Agreement, and signed by
an authorized representative of each of the Parties hereto.
21.0 NOTICES
Any notice required to be given under this Agreement shall be properly
given if delivered by first-class mail as follows:
ID Technologies Corporation Revolution Labs, Inc.
0000 Xxxx Xxxx Xxxxxx, Xxxxx X 000 Xxxx 00xx Xxxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000 Xxxxxx, Xxxxxxxx 00000
Attention: President Attention: President
22.0 CONFIDENTIALITY
The Parties acknowledge that in order to carry out the License granted
hereunder, it may be necessary for either Parties to transfer or disclose
certain trade secrets that have been developed by Licensor and/or a TDP at great
expense and that have required considerable effort of skilled professionals. The
Parties acknowledge and agree that in no event shall either Party disclose any
such trade secrets to any third party. In the event that it is necessary to
transfer or otherwise disclose such trade secret and confidential information to
either Party, an Authorized Source or sublicensee of Licensee then the party
disclosing such trade secrets or confidential information shall require the
party to which the information is being disclosed to sign a confidentiality
agreement requiring that in no event shall the receiving party disclose any such
trade secrets and confidential information to a third party. Confidential
information shall be that information disclosed or transferred to either Party
that is marked "Confidential," or information disclosed or transferred to either
party that at the time of such disclosure or transfer the party receiving such
disclosure was informed that the information must be treated by the receiving
Party as confidential.
23.0 ARBITRATION
Any dispute under this Agreement not resolved within thirty (30) days
of notice to the other party shall be submitted to binding arbitration under the
rules of the American Arbitration Associated then in effect. There shall be no
appeal from the decision other than for gross violation of due process or fraud
in the conduct of the arbitration. Judgment upon the decision may be entered in
a state or federal court, as may be appropriate, selected by the party of whom
arbitration was requested or, if that party declines to promptly select such a
court, in a court selected by the party who had requested arbitration. The
parties irrevocably agree, for this purpose only, to submit to the jurisdiction
of such a court, or application may be made to such court for confirmation of
the decision, for judicial acceptance thereof, for an order of enforcement, or
for any other legal remedies that may be necessary to effectuate the decision.
Except as otherwise specified in Article 8.4.c., the expense of the arbitration
and/or arbitrators shall be shared equally by the Parties. Except as otherwise
specified. in Article 8.4.c., each of the Parties shall bear its own arbitration
costs, including without limitation its own costs of preparation, attorneys'
fees, and witness fees and expenses. In the event of litigation between the
Parties, arbitration may be so requested at any time prior to the beginning of a
trial. Any required arbitration shall be held in Research Triangle Park, North
Carolina.
24.0 SEVERABILITY
If any provisions of this Agreement shall be construed to be illegal or
invalid, the legality of the validity of any other provisions hereof shall not
be affected hereby. Any illegal or invalid provision of this Agreement shall be
severable, and all provisions shall remain in full force and effect.
25.0 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All of the, representations and warranties of the parties contained in
this Agreement, the indemnification provisions of Article 10.0, and the
Limitations of Liability and Consequential Damages provisions of Article 11
shall survive termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have through a duly authorized
officer thereof duly executed this Agreement on the dates indicated below to be
effective as of the day first indicated above:
ID Technologies Corporation (Licensor) Revolution Labs Inc. (Licensee)
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------- -----------------------------
Xxxxxxx X. Xxxx Xxxxxxx X. Xxxxxxx
Title: President Title: President
Date: October 29, 1998 Date: October 31, 1998
------------------------------ ----------------------------
PROTECTIVE TECHNOLOGIES INC.,
000 XXXXX XXXXXX XXXXX XXXXX 000
XXXXX, XXXXXXX 00000
AGREEMENT TO PURCHASE
Revolution Labs, Inc.
33500 W.C.R. # 16
Xxxxxxxxxx, Xxxxxxxx 00000
Attn. Xxxxx Xxxxxxxxxxxx
This Agreement is intended to set forth an understanding between Protective
Technologies, Inc. ("PROTEK"), a Delaware corporation, Revolution Labs, Inc.
("RLI") a Colorado corporation, and ID Technologies, ("IDTEK") a North Carolina
corporation.
1. Overall Structure. PROTEK's goal is to purchase the Exclusive Airport
Field of License for IDTEK's Fingerprint Smart Card Technology from RLI
as set forth in the attached Term Sheet. PROTEK is in the process of
securing capital for certain ongoing operations and wishes to purchase
the Exclusive Field of License at a total cost of $75,000.00. Payable
to RLI, Less 50% of the IDTEK transfer Fee of $17,500 or $8,750 paid
directly to IDTEK as set forth in the attached Term Sheet. The balance
remaining of $450,000 will be paid to IDTEK from PROTEK as provided for
in the Airport Field of License Agreement with PROTEK License credits.
2. IDTEK will extend the termination date of Oct 31, 1999 for RLI's
Exclusive license for a period of 120 Days from the date of this
Agreement until February 28, 2000. This extension is for the sole
purpose of PROTEK's completion of the terms and conditions as set forth
in the attached Term Sheet for the license purchase. PROTEK anticipates
that a firm commitment on the bridge funding will be consummated by
October 31, 1999 and complete funding will be consummated by February
28, 2000. The Parties will use their best efforts to consummate this
transaction with an anticipated closing of February 28, 2000. RLI
agrees not to negotiate with any other party during the term of this
Agreement. Should no transfer or conversion of the present license be
consummated by May 31, 2000 the license will revert back to IDTEK.
3. Should PROTEK not consummate its anticipated funding and notifies IDTEK
and RLI of it's decision not to complete the purchase of the Airport
Field of License, IDTEK will extend the extended termination date by an
additional 90 days from the end of first 120 days to allow RLI time to
resell the Airport license. All monies and credits paid to IDTEK and
RLI by PROTEK will be returned to PROTEK upon the successful conversion
or resale of the Airport license.
4. If PROTEK defaults for any unforeseen reasons after the initial deposit
to RLI and before the deposit to IDTEK, the deposit will be refunded to
PROTEK if RLI is able to market the license in the next 90 days. If
this market attempt is unsuccessful, RLI will retain the deposit. If
Protek defaults for any unforeseen reason after they have achieved
partial scheduled percentages by installment, RLI will refund the
deposit and installments if successful in marketing the license. If the
sale is less than the purchase cost to PROTEK,
PROTEK will share in the sale of the license in schedule percentages of
license ownership. RLI and PROTEK will negotiate in good faith any
alternative solutions that may benefit both parties in case of an
interim default by PROTEK for the total purchase of the license. If
there is an unforeseen default mid payments by PROTEK and the good
faith joint efforts of RLI and PROTEK to sell the license or maintain
the license with IDTEK, RLI will not refund payments to that date. In
case of a mid term default and no sale of the license is possible or
not desirable, PROTEK and RLI will negotiate in good faith to find a
way to retain the license in a joint ownership that is positive to both
parties.
5. Confidentiality of Negotiations. The Parties shall use best efforts to
maintain at all times as confidential information the fact that you or
we have executed this Agreement, the terms of this Agreement and the
existence and content of any negotiations between us except that both
Parties may (i) inform advisors, counsel, and employees with a need to
know as each Parry deems necessary, and (ii) make appropriate
disclosures if required by applicable securities laws. RLI agrees not
to negotiate with other parties during the first 120 day period but
reserves the right to solicit interest in the license.
6. Governing Law. The substantive laws of the State of Florida shall
govern this letter.
7. This Agreement. Here to and their affiliates with respect to its
subject matter and supersedes all prior or contemporaneous agreements,
representations, warranties and understandings of such Parties (whether
oral or written). No promise, inducement, representation or agreement,
other than as expressly set forth herein, has been made to or by the
Parties hereto. This letter and its exhibit hereto may be amended only
by written agreement, signed by the Parties to be bound by the
amendment. Parol evidence and extrinsic evidence shall be inadmissible
to show agreement by and between such Parties to any term or condition
contrary to, or in addition to, the terms and conditions contained in
this Agreement and its exhibit.
8. Construction. This letter shall be construed according to its fair
meaning and not strictly for or against either Party. This letter does,
and is intended to, impose binding obligations on the Parties. The
Parties shall be bound by the terms of this letter.
9. If the terms and conditions of this letter are acceptable, please sign
and return to us a copy of this letter so that we can move forward with
our discussions.
/s/ Xxxxxx Xxxxxxx
--------------------------------
By: Xxxxxx Xxxxxxx
Title: CEO
Accepted and Agreed:
Revolution Labs, Inc.
--------------------------------
By:
Title: CEO
Accepted and Agreed:
ID Technologies, Inc.
/s/ X. Xxxxxxxx X. Xxxxxxxx
--------------------------------
By: X. Xxxxxxxx X. Xxxxxxxx
Title: President
Protective Technologies Inc.
000 Xxxxx Xxxxxx Xxxxx Xxxxx 000
Xxxxx, Xxxxxxx 00000
Agreement to Purchase
Revolution Labs, Inc.
33500 W.C.R. # 16
Xxxxxxxxxx, Xxxxxxxx 00000 10-26-99
TERM SHEET
This term sheet summarizes the principal terms with respect to the agreed
purchase from Revolution Labs, Inc. ("RLI") of an Exclusive Airport Field of
License of the technology under patents of ID Technologies, Inc. ("IDTEK")
("Exclusive License") by Protective Technologies, Inc. ("PROTEK"), PROTEK and
RLI are referred to collectively herein as the "Parties." The Parties have
negotiated a mutually acceptable license purchase and sale agreement as is set
forth herein (the "Agreement").
The Parties are in agreement to a transaction on the following terms:
General: RLI is currently seeking qualified purchasers for its Exclusive
License. PROTEK is interested and intends to acquire the Exclusive License for
$75,000.00. less $8,750.00 to IDTEK for RLI's portion of the transfer fee. Each
Party agrees that it is in their mutual best interest to consummate the
Agreement, as promptly as possible.
Financing Structure, Use of Funds: RLI requires $75,000.00, as funds expended to
date, for the purchase of the fully transferable Exclusive License. ID
Technologies, Inc., the patent and Master Licensor company, has expressed their
desire for the transfer of Exclusive License and has assessed a transfer fee of
$17,500.00 and shall not attempt to void any terms thereto. Payment of the
Exclusive License is proposed as follows: (i) $8,750.00 upon bridge financing
(expected no later than November 15, 1999) paid to RLI and $8,750 paid to IDTEK
(paid no later than November 15, 1999).
(ii) the balance payable upon complete funding as set forth in the PROTEK Letter
of Intent with Square Moon, Inc. PROTEK shall have the sole and exclusive
option, upon the payments of $17,500 or as per the payment schedule to below to
elect to maintain its pro rata ownership of the Exclusive License subject to the
terms and condition therein, and shall be obligated to perform in accordance
with such Exclusive License including its obligation for PROTEK's share of pro
rata payments to ID Technologies, Inc. to maintain the Exclusive License in good
standing. PROTEK, subject to the Conditions of Closing below, intends to
purchase the Exclusive License based on the general parameters as set forth
herein.
Confidentiality: Each Party shall, at all times use its best efforts to
safeguard the secrecy of any of any confidential information, including
marketing plans, customer information, specialized information, or financial
information.
Representations and Warranties: The Parties will make a number of
representations and warranties, including (a) qualification and authorization to
enter into the Agreement, (b) accuracy and adequacy of the statements made in
the ID Technology patent and the Exclusive License ownership, (c) other
representations and warranties concerning the business, liabilities, and good
standing of the Parties, and (d) other representations and warranties typically
obtained in transactions of this type. The Parties will agree to indemnify and
hold harmless the other Party for any losses or liabilities arising from any
breach of a representation or warranty.
Conditions to Closing:
25.1 Truth and accuracy of representations and warranties and performance of
all obligations by the Parties.
25.2 Exclusive Field of License in good standing.
25.3 Satisfactory conclusion of due diligence investigation.
25.4 Agreement on PROTEK financing and the ancillary agreements.
25.5 No litigation or governmental proceeding pending or threatened.
25.6 Receipt of any needed regulatory approval.
25.7 Other customary conditions.
Expenses: Each Party will bear its own legal fees and expenses in connection
with this transaction.
Schedule: The expected time schedule is as follows:
Event Amount Date Retained %
Letter of Agreement and first payment to RLI $ 8,750.00 11-15-99 10%
Letter of Agreement and first payment to IDTEK $ 8,750.00 11-15-99
Second payment to IDTEK for RLI $ 8,750.00 12-15-99 20%
-------------------------------
Second payment to RLI $13,333.00 12-15-99 30%
--------------------- ---------------------------------
Third payment to RLI $22,083.00 01-30-00 60%
-------------------- ---------------------------------
Final payment to RLI $22,083.00 02-28-00 100%
-------------------- ---------------------------------
Total to RLI in cash and credits $75,000.00
---------------------------------
