EXCLUSIVE PATENT AND TRADE SECRET LICENSE AGREEMENT
EXHIBIT
10.16
This Exclusive Patent and Trade Secret
License Agreement (this “Agreement”) is made effective as of April 2, 2008 by
and between: Visual Management Systems, Inc, a Nevada corporation ("Licensee"),
having its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇; and IDS Patent Holding, LLC, a New York limited liability
company ("the Licensor"), with a principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (each individually a “Party” to this Agreement or
jointly the “Parties”).
WITNESSETH:
WHEREAS, the Licensor desires to
license to the Licensee and the Licensee desires to obtain a license from the
Licensor to use the intellectual property owned or controlled by the
Licensor as described in U.S. Patent Application Serial Numbers: 10/145,058 and
10/279,279 (the “Patent Applications”) filed by the Licensor, and any related
Trade Secrets or know how (collectively, the “Licensed Technology”), and to
maintain said license as regards any issued patents included in the Licensed
Technology for the entire unexpired term of such patents, and as regards any
Trade Secret, perpetually.
WHEREAS, the Licensee desires to make
exclusive use of the Licensed Technology only in the business of the
manufacture, distribution, integration and installation of digital video
surveillance devices for the security industry (the “Licensed Use”), which
security industry (the “Industry”) is the Licensee’s normal line of business,
and Licensor desires to grant to Licensee an exclusive license for the Licensed
Use within the Industry, excepting that upon certain conditions as set forth
herein Licensor may grant third party licenses for the Licensed Use within the
Industry.
NOW, THEREFORE, in consideration of the
mutual covenants and promises contained herein and for good and valuable other
consideration the receipt and sufficiency of which is hereby acknowledged, the
parties hereto do hereby agree as follows:
ARTICLE
I — GRANTS OF LICENSES
1.01 Grant
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(a)
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Subject
to Section 1.01(b), Licensor grants to the Licensee and its Related
Companies an exclusive (subject to the terms of this Agreement) license to
the Licensed Technology to make, have made, use and sell products
utilizing the Licensed Technology and to practice the Licensed Technology
worldwide during the term of this Agreement, for the Licensed Use in the
Industry.
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(b)
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The
license granted in Section 1.01(a) shall be exclusive to Licensee for the
Licensed Use in the Industry, subject to Section
1.01(c)
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(c)
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The
Licensor shall not retain the right to use the Licensed Technology for the
Licensed Use in the Industry for any purpose whatsoever, except in the
case of settlement of any or all claims made by Licensor against
third-parties for infringement of any kind of the Licensed
Technology. Licensor retains the right, in such situations to,
in its reasonable business judgment, enter into one or more further
licenses of the Licensed Technology in the Industry, except where use of
any such Licensed Technology would compete in any material respect with
the then current business of
Licensee.
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1.02 Duration
All
licenses granted herein for any Licensed Patent component of the Licensed
Technology and any Licensed Use shall continue until expiration of any issued
patents that form a part of the Licensed Technology, subject in all respects to
Article II, below. All licenses granted herein for any Trade Secret
component of the Licensed Technology, for the lesser of (i) in perpetuity or
(ii) until the Trade Secret is no longer protectable as a trade secret, subject
in all respects to Article II, below.
1.03 Scope
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(a)
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The
licenses granted herein are licenses to (i) make, have made, use, lease,
sell, export and import digital video surveillance devices or other
Industry products utilizing the Licensed Technology (the “Licensed
Products”); (ii) make, have made, use, export and import machines, tools,
materials and other instrumentalities, insofar as such machines, tools,
materials and other instrumentalities are involved in, incidental to or
otherwise desirable for the development, manufacture, testing or repair of
Licensed Products which are or have been made, used, leased, owned, sold,
exported or imported by the grantee of such license; and (iii) convey to
any customer, with respect to any Licensed Product which is sold or leased
to such customer, rights to use and resell such Licensed Product as sold
or leased (whether or not as part of a larger combination), (iv) combine
and/or bundle such Licensed Products (as sold or leased) with any other
product utilized in the Industry, (v) a method or process which is other
than the inherent use of such Licensed Product itself (as sold or leased),
(vi) a method or process involving the use of a Licensed Product to
manufacture (including associated testing) any other product utilized in
the Industry, and (vii) all other rights in respect of the Licensed
Product held by the Licensor with respect to Industry
applications.
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(b)
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The
grant of each license hereunder includes the right to grant sublicenses
within the scope of such license. Any such sublicense may be
made effective retroactively, but not prior to the effective date
hereof.
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(c)
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Notwithstanding
anything to the contrary contained herein, the licenses granted hereunder
and all other terms and conditions hereof shall be subject to all
restrictions imposed by all other agreements between the Parties and any
restrictions imposed on the Licensor by law.
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(d)
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If
the scope of the license provided for in this Agreement is found by any
court having jurisdiction to be too broad or too restrictive, then the
license shall nevertheless remain effective, but shall be considered
amended to a point considered by said court as reasonable and, as so
amended, shall be fully
enforceable.
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1.04 Future
Licensor Patents and Trade Secrets
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(a)
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Licensor
shall give Licensee prompt written notice of all material developments in
the Patent Applications. Licensor shall, at Licensee’s expense,
provided Licensee with such additional information and documents with
regard to any Licensor Patents and Trade Secrets which Licensee may
reasonably request from time to time.
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(b)
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Licensor
hereby grants and agrees to grant to Licensee and its Related Companies
and their duly authorized agents, under 37 CFR § 1.14(a) and comparable
rules of foreign patent practice, a power of inspection of all U.S. and
foreign patent applications included in the Licensed Patents and Licensor
further agrees to execute and deliver to Licensee and its Related
Companies such further documents and take such further action as may be
requested to carry out the intent of this provision. Licensor
shall keep Licensee fully informed of the progress of the prosecution of
all such Licensed Patents.
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1.05 Confidentiality
of Trade Secrets
The
parties hereto shall hold the Trade Secrets in confidence, shall reproduce the
Trade Secrets only to the extent necessary or desirable for the exercise of its
rights hereunder or for further research and development related to the Trade
Secrets and shall restrict disclosure of such Trade Secrets to those individuals
who have a reasonable need to know, provided, however, that confidentiality
obligations hereunder shall not apply to any Trade Secrets which (a) have been
or become published or otherwise known to the public or in the industry through
no breach of this Agreement on the part of a party, (b) are independently
developed by the Licensee or its Related Companies
without the use of or reference to any Trade Secrets provided by
Licensor, or (c) are required to be disclosed pursuant to a valid and proper
requirement of a governmental agency or court of competent
jurisdiction. The parties shall use reasonable efforts to provide
each other with prompt written notice of any requirement of a governmental
agency or court to disclose such Trade Secrets after receipt of written notice
thereof and shall use reasonable efforts to assist the other party in preventing
such disclosure or limiting the disclosure, if prevention is not
possible.
1.06 Ability
to Provide Licenses
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(a)
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Licensor
warrants that, upon execution hereof by it and as of the effective date
hereof, there are no commitments or restrictions which will limit the
licenses and rights which are purported to be granted hereunder by it,
except, as otherwise imposed upon the Licensor by law.
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(b)
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Licensor’s
failure to meet any obligation hereunder, due to the assignment of title
to any Licensed Patent, or the granting of any licenses, to the United
States Government or any agency or designee thereof pursuant to a statute
or regulation of, or contract with, such Government or agency, shall not
constitute a breach of this
Agreement.
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1.07 Representations
of Licensor
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(a)
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Licensee
acknowledges and understands that the Patent Applications as filed with
the United States Patent and Trademark Office (the “USPTO”) were finally
rejected by the USPTO examiner, and that such rejections are currently the
subject of an appeal by the Licensor. As such, Licensor gives
no assurances that a patent will be issued with respect to one or both of
the Patent Applications. The Licensee agrees that the use of
the Licensed Technology is at Licensee’s risk. The Licensed
Technology is provided “AS IS” “WITH ALL FAULTS” and without warranty of
any kind.
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(b)
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LICENSOR
MAKES NO WARRANTY OF ANY KIND TO LICENSEE OR ANY THIRD PARTY, EXPRESS,
IMPLIED OR STATUTORY, WITH RESPECT TO THE LICENSED TECHNOLOGY, OR OUTPUT
OF OR RESULTS OBTAINED FROM THE LICENSED TECHNOLOGY, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, ACCURACY, OPERABILITY OR NON-INFRINGEMENT AND ALL SUCH
WARRANTIES ARE HEREBY EXCLUDED BY LICENSOR AND WAIVED BY
LICENSEE.
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1.08 Patent
Maintenance and Other Fees
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(a)
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Licensor
shall pay all sums required and necessary for payment of all fees,
including, without limitation, governmental and attorneys’, and other
amounts payable and/or owing to any entity relating to prosecution of the
Licensed Technology and for maintenance fees for all of the Licensed
Technology, including without limitation any and all fees related to
Licensed Patent maintenance, provided, however, that such obligation is
subject to the Licensor receiving capital contributions from its members
sufficient for such purposes. Licensor shall provide Licensee with a list
of all United States and foreign patents now or hereafter included within
the Licensed Technology that are issued by the USPTO or any foreign patent
office and the dates upon which maintenance fees are due, should any such
patents issue. Licensor shall supplement this list upon the
issuance of any new patents in the future which are included within the
Licensed Technology. Licensor shall provide Licensee with
written confirmation of payment of all maintenance fees within 5 business
days of payment thereof. If, for any reason, Licensor fails to
make a required maintenance fee payment, Licensee and/or its Related
Companies may, in its sole discretion, make the required maintenance fee
payment. Licensor hereby appoints Licensee and its Related
Companies as Licensor’s attorney-in-fact for the purpose of making any
such maintenance fee payment.
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ARTICLE
II — TERMINATION
2.01 Breach
or Bankruptcy
In the
event of a breach of this agreement by or bankruptcy of either party, the other
party may, in addition to any other remedies that it may have, at any time
terminate this Agreement by not less than thirty days' written notice specifying
such breach, unless within the period of such notice all breaches specified
therein shall have been remedied.
2.02 Voluntary
Termination
By
written notice from the Licensee to the Licensor, the Licensee may voluntarily
terminate all or a specified portion of the licenses and rights granted to it
hereunder. Such notice shall specify the effective date (not more
than six (6) months prior to the giving of said notice) of such termination and
shall clearly specify any affected Licensed Patent, Trade Secret, Invention or
product.
2.03 Abandonment
The
Licensee shall be deemed to have abandoned those rights granted hereunder if
both the Licensee and its Related Companies exercise none of their rights
hereunder in respect of any (i) Licensed Technology within four years from the
date on which the first of the Licensed Patents, if granted, is issued by the
USPTO and the Licensee has received notice thereof pursuant to Section 1.04(a)
or (ii) Trade Secret within four years from the date of this
Agreement. If the Licensee and its Related Companies abandon
any of their rights hereunder, the Licensor may terminate (by written notice
from the Licensor to the Licensee) all or a specified portion of only those
rights granted hereunder which have been abandoned. Such notice shall
specify the effective date of such termination and shall clearly specify the
Licensed Patent and/or Trade Secret rights to which it applies.
2.04 Expiration
of Term
This
Agreement shall continue from the date hereof until terminated pursuant to its
terms.
2.05 Breach
By Licensee of Other Agreements
In the
event that the Licensee fails to perform any obligation or otherwise breaches
any agreement under the terms of either (a) that certain Unsecured Convertible
Promissory Note, issued by the Licensee to Intelligent Digital Systems, LLC,
dated as of the date hereof (the “Note”), (b) that certain Operating Agreement
of Licensor, dated as of the date hereof (the “IPH Operating Agreement), or (c)
that certain Consulting Agreement, by and between the Licensee and ▇▇▇ ▇▇▇▇,
dated as of the date hereof (the “Consulting Agreement,” and together with the
Note and the IPH Operating Agreement , the “IDS Agreements”), and in the case of
(a) above, such failure constitutes an “event of default” (as such term is
defined in the Note) under such Note, then in any such case, Licensor shall have
the right, exercisable by delivery of written notice thereof to the Licensee in
accordance with the terms of Section 3.09 of this Agreement, to immediately
terminate this Agreement and all of Licensor’s obligations hereunder without
liability of any kind.
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2.06 Survival
Any
termination of licenses and rights of a party under the provisions of this
Article II shall not affect such party's licenses, rights and obligations with
respect to any Licensed Product made prior to such termination, and shall not
affect the other party's licenses and rights (and obligations related thereto)
hereunder.
ARTICLE
III — MISCELLANEOUS PROVISIONS
3.01 Disclaimer
Licensor
makes no representations, extends no warranties of any kind, and confers no
right by implication, estoppel or otherwise, other than the licenses, rights and
warranties herein expressly granted.
3.02 Negative
Covenant
Licensor
shall not, without the prior written consent of the Licensee, engage in any
research or development activities relating to the Licensed Technology for the
benefit of any third party other than Licensee or governmental authorities and
not-for-profit entities providing funding therefor.
3.03 Infringement
Upon
learning of any infringement by any third party of any claim of any Licensed
Patent or the unauthorized disclosure of any Trade Secret to any person or
entity (other than the parties hereto and their employees), the party learning
of such infringement or disclosure shall promptly notify the other party hereto
in writing thereof providing factual details thereof. The right to
proceed against third parties and/or institute a suit for any cause arising out
of such unlicensed use or settle any such suit or dispute rests with
Licensor. Licensee agrees to reasonably cooperate with Licensor in
all respects, including to be named as a plaintiff in any suit or proceeding
brought against any third party, to have any of Licensee’s employees testify
when requested by Licensor, and to make available any records, papers,
information, specimens, and the like, each at Licensor’s sole cost and
expense. Any recovery received pursuant to such suit, proceeding or
settlement shall belong exclusively to Licensor. Should Licensor fail
to institute a suit or undertake actions to prevent the continuation of the
unlicensed use within two (2) months of notification by Licensee, then Licensee
shall have the right to initiate a suit, proceeding and/or settlement, Licensee
shall have the right to control and manage such suit, proceeding and/or
settlement and Licensor agrees to be named as a plaintiff (if necessary) and
assist and cooperate with Licensee in all respects as reasonably requested by
Licensee in bringing and proceeding with any such suit, at Licensee’s sole cost
and expense. Any recovery received pursuant to such suit, proceeding
or settlement shall be allocated among the parties as follows: To
first pay for or reimburse Licensee for all costs and expenses relating to such
suit or proceeding initiated by Licensee; and second, any remaining balance to
Licensor.
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3.04 Patent
Reexamination
Upon
learning of the filing of any petition with the USPTO or any foreign
governmental patent authority for the reexamination of a Licensed Patent
included in the Licensed Technology (a “Reexamination”), the party learning of
such Reexamination shall promptly notify the other party hereto in writing
thereof providing factual details thereof. Licensor and Licensee
and/or their Related Companies shall each have the option either alone or
jointly to take such measures as may be required to defend such Reexamination or
otherwise protect such Licensed Patent(s). If both parties elect to
defend any such Reexamination, they shall cooperate and assist in the
preparation and defense of such proceeding and any other related
action. Costs and expenses, including attorneys’ and experts’ fees
shall be split evenly by the Licensor and the Licensee.
3.05 Commercialization
of Licensed Products
Licensee
and its Related Companies shall have no obligation to commercialize, develop,
market and sell Licensed Products, and shall be free to sell such Licensed
Products at any price determined by the Licensee and/or its Related Companies in
its sole and absolute discretion, except to the extent any such obligation is
otherwise imposed upon Licensor by law.
3.06 Indemnification
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(a)
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Licensee
shall defend, indemnify and hold Licensor harmless from all liabilities,
losses and expenses arising from (i) any act or omission of Licensee which
results in the breach of any restriction imposed by law on the Licensor
arising in connection with the Licensee’s acquisition or development of
the Licensed Technology, or (ii) the use by Licensee of any of the rights
granted hereunder.
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(b)
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The
parties shall defend, indemnify and hold each other harmless from all
liabilities, losses and expenses arising from any negligent act of
omission which results in the misappropriation of any Trade
Secret.
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(c)
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If
in connection with any infringement action, Reexamination or related
action, one party elects not to participate in such action, then the party
pursuing such action shall defend, indemnify and hold the other party
harmless from all liabilities, losses and expenses arising from such
infringement action, Reexamination or related action, other than liability
for costs and expenses (including reasonable attorney’s fees) otherwise
expressly provided for herein.
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3.07 Further
Assurances
The
parties hereto agree to execute and deliver any and all further documents and to
perform such other acts as may be necessary or desirable to carry out and make
effective the transactions contemplated by this Agreement and to protect the
rights of the parties hereunder. Without limiting the generality of
the foregoing, Licensor shall, at Licensee’s expense, execute such assignments,
memoranda or other documents to be recorded with the U.S. Patent and Trademark
Office and/or the U.S. Copyright Office as the Licensee may reasonably
request.
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3.08 Nonassignability
The
parties hereto have entered into this Agreement in contemplation of personal
performance, each by the other, and intend that the licenses and rights granted
hereunder to a party not be extended to entities (other than the Licensee’s
Related Companies) without the other party's express written
consent. Notwithstanding the foregoing, Licensee and its Related
Companies shall have the right to grant exclusive or nonexclusive sublicenses
within the scope of this license in any country upon such terms and conditions
as Licensee and/or its Related Companies deems appropriate.
3.09 Addresses
Any
notice or other communication hereunder shall be sufficiently given to the
Licensee when sent by certified mail addressed to:
Visual
Management Systems, Inc.
▇▇▇▇
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or to
Licensor when sent by certified mail addressed to:
IDS
Patent Holding, LLC
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
Changes
in such addresses may be specified by written notice.
3.10 Choice
of Law
The
parties desire and agree that the law of the State of New York (without regard
to principles of conflicts of laws) shall apply in any dispute arising with
respect to this Agreement.
3.11 Integration
This
Agreement sets forth the entire agreement and understanding between the parties
as to the subject matter hereof and merges all prior discussions between
them. Neither of the parties shall be bound by any warranties,
understandings or representations with respect to such subject matter other than
as expressly provided herein or in a writing signed with or subsequent to
execution hereof by an authorized representative of the party to be bound
thereby.
3.12 Cumulative
Rights
The
rights, powers and remedies of each party shall be in addition to, and not in
limitation of, all rights, powers and remedies provided at law or in equity, or
under any other agreement between the parties hereto. All of such
rights, powers and remedies shall be cumulative, and may be exercised
successively or concurrently.
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3.13 Counterparts
This
Agreement may be executed in any number of copies or counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument.
[Signature
page follows]
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IN WITNESS WHEREOF, each of the parties
has caused this Exclusive Patent and Trade Secret License Agreement to be
executed in duplicate originals by its duly authorized representatives on the
respective dates entered below.
Visual
Management Systems, Inc.
By: _______________________________
Name:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
President
Date:
April 2, 2008
IDS
Patent Holding, LLC.
By: Intelligent
Digital Systems, LLC, its Managing Member
By: _______________________________
Name: ▇▇▇
▇▇▇▇
Title:
Managing Member
Date:
April 2, 2008
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DEFINITIONS
APPENDIX
GENERAL
DEFINITIONS:
“Invention”
means any idea, discovery, or other invention in which Licensor has rights and
that are covered by the Patent Applications, including without limitation those
patentable, covered by a patent or any application for patent filed in any
country prior to the termination of this Agreement or otherwise protectable
under Title 35 of the United States Code (or any comparable foreign laws), or
any federal and/or state laws relating to ideas, discoveries, inventions or
trade secrets, specifically including, without limitation, any new process,
method, machine, manufacture or composition of matter or any improvement of any
of the foregoing.
“Licensed
Patents” means all patents issued (including, without limitation, any reissues,
extensions or reexaminations thereof) in respect of the Patent Applications or
applied for in any or all countries of the world for Inventions:
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(i)
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which
Inventions are owned (either solely or jointly with others), licensed or
controlled at any time by Licensor or any of Licensor’s Related Companies,
or
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(ii)
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with
respect to which Inventions Licensor shall at any time otherwise have the
right to grant the licenses and rights which are herein granted by
Licensor (but only to the extent of such
right).
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“Licensed
Product” means any tangible property, the manufacture or sale of which by the
Licensee or any of its Related Companies would, but for licenses or rights under
this Agreement, constitute (i) infringement of Licensed Patents or Trade Secrets
by the Licensee or such Related Company or (ii) any other violation of
applicable law by the Licensee or such Related Company for which Licensor would
be entitled to compensation or other remedy on account thereof.
“misappropriated”
and “misappropriation” shall have the meaning ascribed to such terms under the
UTSA.
“Related
Companies” of an entity are those entities so designated by notice given by the
Licensee to the Licensor together with the now existing or hereafter arising
Subsidiaries and affiliates of such entity for so long as such Subsidiaries and
affiliates constitute Subsidiaries and affiliates of such entity.
“Subsidiary”
means a corporation or other legal entity (i) the majority of whose shares or
other securities entitled to vote for election of directors (or other managing
authority) is now or hereafter controlled by such company either directly or
indirectly; or (ii) which does not have outstanding shares or securities but the
majority of whose ownership interest representing the right to manage such
corporation or other legal entity is now or hereafter owned and controlled by
such company either directly or indirectly; but any such corporation or other
legal entity shall be deemed to be a Subsidiary of such company only as long as
such control or ownership and control exists.
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“Trade
Secrets” means all of Licensor’s trade secrets (as defined under the UTSA),
know-how, and other confidential information, including, without limitation,
applications, technical and business data, know-how, formulae, processes,
models, designs, plans, drawings, specifications, samples, reports, data charts,
customer lists, studies, price lists, findings, inventions and ideas relating to
any of the Licensed Patents or Inventions and all copyright in any of the
foregoing (a) which are owned (either solely or jointly with others), licensed
or controlled at any time by Licensor or any of Licensor’s Related Companies, or
(b) with respect to which Inventions Licensor shall at any time otherwise have
the right to grant the licenses and rights which are herein granted by Licensor
(but only to the extent of such right).
“UTSA”
means the Uniform Trade Secret Act adopted by the National Commissioners on
Uniform State Laws in 1979, as amended in 1985.
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