AMENDED AND RESTATED TECHNOLOGY SUB-LICENCE AGREEMENT
AMENDED
AND RESTATED TECHNOLOGY SUB-LICENCE AGREEMENT
THIS
AMENDED AND RESTATED AGREEMENT,
is
dated for reference January 31, 2008 and is made:
BETWEEN:
FORTRESS
PAPER LTD.,
a
corporation organized under the laws of British Columbia having an office at
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇
("SubLicensor")
AND:
IDCENTRIX
INC.,
a
corporation organized under the laws of Delaware having an office at Suite
4240,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇
("SubLicensee")
WHEREAS:
A. Owner
(as
defined herein) is the sole owner of the intellectual property underlying the
Licensed Products (as defined herein) as embodied by the Licensed Technology
(as
defined herein);
B. Owner
has, pursuant to: (a) the Master Licence Agreement (as defined herein); (b)
a
subsequent assignment agreement between SubLicensor and Fortress Identification
Cards Ltd. dated April 24, 2007; and (c) a subsequent vertical amalgamation
of
Fortress Identification Cards Ltd. into SubLicensor, granted SubLicensor a
right
to sublicense the use of the Licensed Technology to manufacture and sell the
Licensed Products;
C. SubLicensor
and SubLicensee previously entered into a Technology Sub-Licence Agreement,
dated April 25, 2007, pursuant to which SubLicensee has sub-licensed from
SubLicensor, the right to use the Licensed Technology to manufacture and sell
Licensed Products in the Territory (as defined herein) (the "Original
Technology Sub-Licence Agreement");
D. The
parties are each desirous of amending and restating the Original Technology
Sub-Licence Agreement, effective as of the date first set forth above, to read
in its entirety as set forth herein; and
E. The
parties are simultaneously herewith entering into an additional Sub-Licence
Agreement relating to the sub-license of the intellectual property underlying
the Licensed Products (as defined herein) in the United States and Mexico on
an
exclusive basis and elsewhere in the world (excluding Canada, Switzerland and
Africa) on a non-exclusive basis (the "Additional
SubLicence").
NOW
THEREFORE THIS AGREEMENT WITNESSES
that in
consideration of the premises, mutual covenants and agreements herein contained
and other good and valuable consideration (the receipt and sufficiency of which
are hereby acknowledged), the parties covenant and agree as
follows:
ARTICLE
1
DEFINITIONS
Unless
the context requires otherwise, the following terms shall have the meanings
set
out below when used in this Agreement.
1.1 "Claw-back
Event"
shall
have the meaning ascribed to it in Section 8.2(a).
1.2 "Claw-back
Shares"
shall
have the meaning ascribed to it in Section 8.2(b).
1.3 "Effective
Date"
means
April 25, 2007.
1.4 "Infringement
Losses"
means
any and all claims, losses, liabilities, damages, judgments, awards or expenses
(including reasonable attorney's fees) incurred by SubLicensee, relating to,
in
connection with or in any way arising from any action, suit or proceeding
alleging that the Licensed Technology infringes the rights of any third party
in
the Territory.
1.5 "Licensed
Information"
means
any and all technical information, data, formulae, know-how, knowledge,
processes and/or trade secrets developed (or acquired) at anytime and from
time
to time by Owner or any of its Subsidiaries relating to the design, testing
and
manufacture of Licensed Products.
1.6 "Licensed
Patents"
means
the patents and/or patent applications listed in Schedule A relating to the
Licensed Products and all Owner Improvement Patents (and their foreign
counterparts, if any) and any divisions, extensions, continuations or
continuations-in-part thereof. Schedule A will be updated from time to time,
but
no less frequently than once every twelve (12) months to include all Owner
Improvement Patents or Sublicensee Improvements which have become subject to
the
licence granted to SubLicensee pursuant to Section 2.2 hereof in accordance
with
the provisions of this Agreement.
1.7 "Licensed
Products"
means
the "LQard I" and "LQard II" security cards and any related or ancillary
products owned by the Owner or any of its Subsidiaries.
1.8 "Licensed
Technology"
means
the Licensed Information and the Licensed Patents.
1.9 "LQ Branding"
means
the logos, trade names, trademarks and service marks of the Owner and the
SubLicensor now existing or hereafter established, whether registered or
unregistered, acquired or developed.
1.10 "Master
Licence Agreement" means
the
technology licence agreement dated April 24, 2007 between the Owner and
SubLicensor.
1.11 "Owner"
means
Landqart AG, a company formed under the laws of Switzerland.
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1.12 "Owner
Improvement Patents"
means
all patents licensable at any time by Owner or any of its Subsidiaries which
are
derived from or constitute improvements to the Licensed Patents and/or the
Licensed Information.
1.13 "Public
Company"
means a
company, partnership, trust or any other entity that is permitted to offer
any
of the classes of its securities for sale to the general public in any country
or seeks to obtain a listing or a quotation of its securities on an exchange
or
quotation system in North America or internationally.
1.14 "SubLicensee
Improvements"
means
any and all improvements on any of the Licensed Technology, designed, made
or
the ownership of which is acquired, by SubLicensee during the term of this
Agreement.
1.15 "Subsidiary"
means a
corporation, company or other entity:
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(a)
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more
than fifty percent (50%) of whose outstanding shares or securities
(representing the right to vote for the election of directors or
other
managing authority) are, now or hereafter, owned or controlled, directly
or indirectly, by a party hereto, but such corporation, company or
other
entity shall be deemed to be a Subsidiary only so long as such ownership
or control exists; or
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(b)
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which
does not have outstanding shares or securities, as may be the case
in a
partnership, joint venture or unincorporated association, but more
than
fifty percent (50%) of whose ownership interest representing the
right to
make the decisions for such corporation, company or other entity
is, now
or hereafter, owned or controlled, directly or indirectly, by a party
hereto, but such corporation, company or other entity shall be deemed
to
be a Subsidiary only so long as such ownership or control
exists.
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1.16 "Term"
shall
have the meaning given to it in Section 6.1.
1.17 "Territory"
means
Canada.
ARTICLE
2
SUBLICENCE
GRANTS
2.1 Sublicence
to use Licensed Information.
SubLicensor hereby grants to SubLicensee, to the extent that it has a right
to
do so, a
personal, royalty-free, exclusive and non-transferable right and sublicence
to
use and to sublicense others to use within the Territory only, the Licensed
Information to: (i) make and have made Licensed Products for use or sale
exclusively within the Territory; and (ii) use any apparatus required to
manufacture and use Licensed Products in the Territory.
2.2 Sublicence
to use Licensed Patents. SubLicensor
hereby grants to SubLicensee, to the extent that it has a right to do so, a
personal, royalty-free, exclusive and non-transferable right and sublicence
to
use and to sublicense others to use, within the Territory only, the Licensed
Patents to make and have made Licensed Products for use or sale exclusively
within the Territory. The foregoing sublicence shall not extend to any
infringement of Owner's patents not sublicensed hereunder resulting from the
combination of Licensed Products with other products not sublicensed
herein.
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2.3 Additional
Patents. In
the
event that SubLicensee identifies in writing to SubLicensor any patents,
licensable by SubLicensor, which are necessarily infringed by SubLicensee's
exercise of the licenses granted in Sections 2.1
and
2.2,
and
SubLicensor, after a good faith analysis, agrees with SubLicensee's position,
then upon SubLicensor's written notification, Schedule A shall be automatically
amended to include such additional patents without further consideration payable
by SubLicensee. SubLicensor agrees to exercise any rights it may have pursuant
to Section 2.6 of the Master Licence Agreement to the extent necessary to allow
it to comply with the provisions of this Section 2.3.
In the
event that SubLicensor shall determine for any reason that such infringement
will not occur as to a licensable SubLicensor patent, SubLicensor shall
thereafter be estopped from making any claims of infringement against
SubLicensee, its Subsidiaries or its customers as to such SubLicensor patent
for
any exercise by SubLicensee of its rights under Section 2.1
and
2.2.
2.4 Payment
of Shares. In
consideration of the sublicences granted herein, SubLicensee has issued to
SubLicensor 3,500,000 fully paid and non-assessable common shares of SubLicensee
and has delivered to SubLicensor a share certificate representing such shares
registered in the name of SubLicensor.
2.5 No
Other Rights.
Except
as specifically granted in this Article
2,
this
Agreement does not grant any other sublicences or other rights, either directly
or indirectly, by implication, estoppel or otherwise, to SubLicensee with
respect to any of Owner’s or SubLicensor's patents or patent applications,
trademarks, copyrights, trade secrets, computer programs, know-how or other
intellectual property rights. For greater certainty, this Agreement does not
constitute a sale, assignment or transfer of the Licensed Patents or the
Licensed Information or any part thereof to SubLicensee or any other
party.
ARTICLE
3
USE
RESTRICTIONS/CONDITIONS
3.1 Best
efforts to Sell/Distribute.
SubLicensee agrees to use its best efforts to manufacture, sell, distribute
and
promote the Licensed Products within the Territory.
3.2 Outsourcing
Manufacture.
It is
acknowledged and agreed that the licenses granted to SubLicensee in Sections
2.1
and
2.2
include
the right to grant sublicences to third party manufacturers to the extent
necessary to enable such third party manufacturers to manufacture Licensed
Products for SubLicensee. The terms of any such sublicence to third party
manufacturers, however, shall be limited solely to the use of the Licensed
Information and Licensed Patents in connection with the manufacture of Licensed
Products for sale to SubLicensee and shall not permit such third party
manufacturer to use the Licensed Information or Licensed Products for any other
purpose or in connection with the production of any other products.
3.3 Territory.
SubLicensee acknowledges and agrees that the sublicences granted to it pursuant
to Article
2
may only
be exercised in connection with the manufacturing and selling of Licensed
Products within the Territory as set out herein.
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3.4 No
Contest of IP.
SubLicensee agrees not to contest (a) the validity of the Licensed Technology,
or (b) the right, title or interest of the Owner or SubLicensor in and to the
Licensed Technology and further agrees not to aid others in doing so. This
Section 3.4
shall
survive the termination or expiry of this Agreement.
3.5 Improvements.
SubLicensee agrees to assign and transfer to Owner any and all SubLicensee
Improvements during the term of this Agreement and SubLicensee shall transfer
to
Owner any and all papers or other materials necessary or proper to vest in
Owner
title to the SubLicensee Improvements and such SubLicensee Improvements shall
then become part of and be treated as Licensed Technology under this Agreement.
SubLicensor shall grant to SubLicensee, to the extent that it has a right to
do
so, a royalty-free, personal, exclusive and non-transferable right to use,
make
and sell and to sublicense others to use,
make
and sell products embodying the SubLicensee Improvements in the Territory,
the
United States and Mexico, and a royalty-free, personal, non-exclusive and
non-transferable right to use, make and sell and to sublicense others to use,
make and sell products embodying the SubLicensee Improvements in the remainder
of the world (excluding Switzerland and Africa), and hereby agrees to use all
commercially reasonable efforts to obtain such right in order to make such
grants. The parties recognize and acknowledge that SubLicensee intends to
design, manufacture, sell and distribute additional products in the same
categories as the Licensed Products. Accordingly, the parties understand and
confirm that all formulae, methods, processes, techniques, designs, models,
construction, product components and materials, whether or not patentable,
originating with SubLicensee in connection with the design, manufacture, sale
or
distribution of such additional products and not in connection with the Licensed
Technology shall not be subject to the provisions of this Section 3.5
and
shall remain the sole and exclusive property of SubLicensee.
3.6 Co-operation.
Each
party hereto agrees to notify the other party promptly of each infringement
or
possible infringement of the Licensed Patents, as well as any facts which may
affect the validity, scope or enforceability of the Licensed Patents of which
such party becomes aware. SubLicensor and SubLicensee covenant with each other
to co-operate in all reasonable ways in a prompt and timely fashion in the
prosecution of any infringement suit by the Owner, SubLicensor or SubLicensee
and in any defence of any action, suit or proceeding instituted for the
impeachment of or for a declaration of infringement of the Licensed Patents.
SubLicensee covenants and agrees to co-operate with and assist Owner, at Owner's
expense, in the Owner's prosecution of patent, trademark and copyright
applications in connection with the Licensed Products.
In the
event that either SubLicensor or Owner concludes not to seek prosecution or
ceases to prosecute any complaint in connection with the Licensed Patents or
the
Licensed Products (a “Proceeding”), then SubLicensor or Owner shall notify
SubLicensee in writing of such conclusion, and thereafter, if SubLicensee so
elects by written notice to SubLicensor, SubLicensor shall permit SubLicensee
to
prosecute such Proceeding, at SubLicensee’s sole cost and expense. Any benefits
and/or damages awarded pursuant to SubLicensee’s prosecution shall be for the
sole benefit of SubLicensee and neither of SubLicensor nor Owner shall be
entitled to any benefits and/or such award.
3.7 No
Technical Assistance.
SubLicensee agrees that there are to be no training, technical assistance or
other services provided under this Agreement by SubLicensor in relation to
the
Licensed Products except where such services are rendered through any further
written agreement between the parties, and in that case, at a fee to be agreed
upon at the time the further written agreement may be entered into.
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3.8 Sublicensing
of Technology.
SubLicensee shall ensure that any sublicensing of the Licensed Technology be
subject to terms no less restrictive or less protective of SubLicensor's rights
relating to the Licensed Technology than this Agreement.
3.9 Public
Issuer. SubLicensee
shall seek and obtain SubLicensor's written consent, which may not be
unreasonably withheld, prior to becoming or seeking to become a Public Company.
3.10 Supply
of Materials.
SubLicensee shall source and purchase at reasonable prevailing market rates
all
security-related materials for the production of the Licensed Products,
including, but not limited to, security paper, security ink and polymer pouches
from SubLicensor and/or Owner pursuant to the terms and conditions of a supply
agreement to be negotiated between the parties in good faith, acting
reasonably.
3.11 Supply
of Equipment.
SubLicensee shall lease or purchase all security-related equipment or apparatus
required for the production of the Licensed Products, including, but not limited
to, "Fusinator" machines from SubLicensor, or at SubLicensor's discretion,
the
Owner, pursuant to the terms and conditions of agreements to be negotiated
between the parties in good faith from time to time, acting reasonably.
SubLicensee shall use all commercially reasonable efforts (including, if
necessary and where available, commercial recordings in the case of leases)
to
ensure that "Fusinator" machines leased or sold to its customers are subject
to
recovery in the event that the lessee or buyer is unable to satisfy the security
and confidentiality obligations relating to such machines as may be imposed
by
SubLicensor or Owner from time to time.
3.12 Non-Compete.
Neither
SubLicensor nor any of its Subsidiaries shall, either directly or indirectly,
in
any manner whatsoever, including either individually or in partnership or
jointly, or in conjunction, with any other person or persons, as principal,
agent, shareholder, employee, investor, creditor, director, officer or otherwise
or in any other manner whatsoever, directly or indirectly carry on, engage
in,
be interested in, be concerned with, advise, lend to, guarantee the obligations
of or otherwise have a financial interest in, any business which manufactures,
sells and/or distributes products which are substantially similar to or compete
with the Licensed Products in the Territory during the Term of this Agreement.
3.13 Research
and Development.
SubLicensor and SubLicensee will work together in good faith to actively
coordinate their research and development activities with respect to the
Licensed Products (the "R & D Activities") during the initial five (5) years
of the Term and will work in good faith to negotiate and enter into a research
and development agreement with respect thereto. The contemplated research and
development agreement will establish a coordinated roadmap and agenda for the
parties' R & D Activities. SubLicensee will commit to expend an aggregate of
at least $800,000 on R & D Activities during the first two (2) years of the
research and development agreement and an aggregate of at least $2,000,000
(including the $800,000 referred to above) during the five (5) year term of
the
research and development agreement. SubLicensee shall have the right, in its
sole discretion, to conduct the R & D Activities directly, through third
party contractors or by agreement with Owner; provided that any such contract
with a third party will be consistent with the terms of this Agreement. It
is
anticipated that the research and development agreement, including SubLicensee’s
funding commitment set forth above, will be terminated if this Agreement is
terminated for any reason, other than a breach hereof by SubLicensee or the
termination of this Agreement by SubLicensee pursuant to Section 6.3.
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ARTICLE
4
BRANDING
4.1 LQ
Branding - Conditions of Use.
SubLicensee acknowledges and agrees that: (i) the LQ Branding are and shall
remain the sole property of Owner and/or SubLicensor, (ii) nothing in this
Agreement or elsewhere shall confer upon SubLicensee any right of ownership
in
the LQ Branding, and (iii) it shall not now or in the future contest the
validity of the LQ Branding. The Owner and SubLicensor do not hereby grant
a
licence or authorize in any way whatsoever SubLicensee to use the LQ Branding,
and any proposed use of the LQ Branding (or any portion thereof) must be
approved in writing by the Owner and the SubLicensor prior to such
use.
ARTICLE
5
CONFIDENTIALITY
5.1 Protection
of Confidential Information.
Commencing as of the Effective Date and continuing until a period of ten (10)
years from the date that this Agreement is terminated, SubLicensee agrees to
use
the same degree of care and discretion, but at least a reasonable level of
care
and discretion, to avoid any disclosure, publication, or dissemination of any
part or all of the Licensed Information outside of SubLicensee, as SubLicensee
employs with information of its own which it regards as confidential and which
it does not desire to publish, disclose or disseminate. If any Licensed
Information of a third party requires a different standard of care and such
standard of care requirement is clearly delineated in writing with respect
to
such Licensed Information within thirty (30) days of the disclosure of such
Licensed Information, SubLicensee agrees to protect such third party's Licensed
Information in accordance with the terms of the agreement under which such
information was received by SubLicensor.
5.2 Exemptions.
Disclosure of Licensed Information shall not be precluded, if such disclosure
is:
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(a)
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in
response to a valid order of a court or other governmental body;
provided,
however, that SubLicensee shall first have given notice to SubLicensor
and
made a reasonable effort to obtain a protective order requiring that
the
information and/or documents so disclosed be used only for the purposes
for which the order was issued;
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(b)
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otherwise
required by law;
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(c)
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reasonably
necessary to establish rights under this Agreement (but only to the
extent
necessary to do so);
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(d)
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reasonably
necessary to exercise SubLicensee's sublicensed rights hereunder
and such
disclosure is made to an entity or other person that is bound as
to the
non-disclosure of such Licensed Information by a written agreement
that is
no less restrictive than this Article 5;
and
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(e)
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agreed
upon by prior written approval of the
discloser.
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5.3 No
Confidentiality Obligation.
No
obligation of confidentiality shall attach to:
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(a)
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any
information that SubLicensee already possesses, prior to the Effective
Date, without obligation of
confidentiality;
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(b)
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any
information SubLicensee rightfully receives from another person without
obligation of confidentiality;
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(c)
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any
information which is in the public domain, other than by way of breach
of
this Agreement;
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(d)
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any
information that is, or becomes, publicly available without breach
of this
Agreement; or
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(e)
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any
information received from a third party legally in a position to
provide
such information, provided, however that such information was not
obtained
by said third party directly or indirectly from the discloser under
an
obligation of confidentiality.
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ARTICLE
6
TERM,
TERMINATION AND ASSIGNMENT
6.1 Term.
This
Agreement shall become binding and effective when executed by the parties.
The
term of this Agreement shall start from the Effective Date and shall remain
in
effect until the date of expiration of the last patent to expire of the Licensed
Patents (the "Term"),
unless terminated earlier pursuant to the terms of this Agreement.
6.2 Cure
Period.
Notwithstanding anything else in this Agreement, if SubLicensee is in breach
of
its obligations hereunder and SubLicensor provides written notice to SubLicensee
specifying the nature of such breach, SubLicensee shall cure such breach within
sixty (60) days after such written notice. If SubLicensee fails to cure the
breach within sixty (60) days, SubLicensor shall have the right to terminate
this Agreement by giving written notice of termination to
SubLicensee.
6.3 Termination
by SubLicensee.
Notwithstanding anything else in this Agreement, SubLicensee shall have the
right to terminate this Agreement at any time upon giving written notice of
termination to SubLicensor no less than ninety (90) days prior to such
time.
6.4 Insolvency
of SubLicensee.
Notwithstanding Section 6.2,
and in
addition to the provisions set out in Section 6.2,
in the
event that SubLicensee engages in or suffers any of the following events of
default:
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(a)
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becomes
insolvent, is dissolved or liquidated, files or has filed against
it a
petition in bankruptcy, reorganization, dissolution or liquidation
or
similar action filed by or against it, is adjudicated as bankrupt,
or has
a receiver appointed for its business;
or
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(b)
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has
all or a substantial portion of its capital stock or assets expropriated
or attached by any government
entity,
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then
SubLicensee shall promptly notify SubLicensor in writing that such event has
occurred. If any default as specified above in this Section 6.4
is not
cured within ten (10) days after written notice from SubLicensor, SubLicensor
shall have the right to terminate this Agreement by giving written notice of
termination to SubLicensee.
6.5 Delay/Failure
to Terminate.
No
failure or delay on the part of SubLicensor in exercising its right of
termination hereunder for any one or more causes shall be construed to prejudice
its right of termination for such causes or any other or subsequent
causes.
6.6 Effect
of Termination.
Upon
termination of this Agreement, all sublicences granted under this Agreement
will
automatically terminate, and SubLicensee shall promptly return to SubLicensor
or
destroy all tangible information containing Licensed Information, provided
however, that in the event of expiration or earlier termination of this
Agreement for reasons other than a material breach by SubLicensee, SubLicensee
shall be entitled: (i) for a period of six (6) months from the date of such
termination or expiration, as the case may be, on a non-exclusive basis, to
continue to distribute and sell its then existing inventory of Licensed Products
in the Territory consistent with the terms and conditions of this Agreement;
and
(ii) for a period of six (6) months from the date of such termination or
expiration, as the case may be, to fulfill its obligations under then existing
commitments with respect to which it has placed orders with Owner or SubLicensor
under the supply agreement contemplated by Section 3.10
hereof.
6.7 Personal
Rights.
The
rights or sublicences granted herein are personal to the parties and, except
as
permitted by Section 12.2
hereof,
SubLicensee shall not assign, transfer, encumber or sublicense any of its rights
or privileges hereunder without the prior written consent of SubLicensor. Any
attempted act in derogation of the foregoing shall be considered
void.
6.8 Termination/Amendment
of Master Licence.
In the
event that the licence granted to SubLicensor under the Master Licence Agreement
is terminated for whatever reason, except as provided in Section 8.2,
this
Agreement shall immediately terminate and SubLicensor shall have no liability
to
SubLicensee arising from or related to the termination of this Agreement,
provided, however, that SubLicensor shall use commercially reasonable efforts
to
facilitate a direct sublicense agreement substantially in the form of this
Agreement between Owner and SubLicensee as applicable. Notwithstanding Section
11.2,
in the
event that any of the licences granted to SubLicensor under the Master Licence
Agreement is modified such that it is more restrictive than the corresponding
sublicence granted herein, such sublicence shall also be modified
accordingly.
6.9 SubLicensor
Remedies.
The
rights and remedies available to SubLicensor in this Article 6 are in addition
to, and do not limit, any and all remedies available to SubLicensor at law
or in
equity or pursuant to this Agreement.
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ARTICLE
7
REPRESENTATIONS
AND WARRANTIES
7.1 SubLicensor
Representations and Warranties.
SubLicensor represents and warrants to SubLicensee as follows and acknowledges
that SubLicensee is relying on such representations and warranties in entering
into this Agreement:
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(a)
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Organization
and Power:
SubLicensor is a duly organized and validly existing company in good
standing under the laws of British
Columbia and has the power, authority and capacity to enter into
this
Agreement on the terms and conditions herein set forth and to carry
out
the transactions contemplated by this
Agreement;
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(b)
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Due
Authorization:
the execution and delivery of this Agreement and the consummation
of the
transactions contemplated hereunder have been duly authorized by
all
necessary action on the part of SubLicensor;
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(c)
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Enforceable
Agreement:
this Agreement has been duly executed and delivered by SubLicensor
and
constitutes a legal, valid and binding obligation of SubLicensor,
enforceable by SubLicensee against SubLicensor in accordance with
its
terms, subject to the availability of equitable remedies and the
enforcement of creditors' rights generally, specific performance,
injunctive relief and other equitable remedies granted in the discretion
of a court of competent jurisdiction, indemnity and related rights
under
applicable law and that provisions relating to severing unenforceable
provisions may be limited by applicable law;
and
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(d)
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No
Infringement:
to SubLicensor's knowledge, the Licensed Technology as used by SubLicensor
immediately prior to the Effective Date, does not infringe or make
unauthorized use of any intellectual property rights of any third
party
and none of Owner, SubLicensor or any of their respective Subsidiaries
has
received any notice of infringement or conflict with asserted rights
of
others with respect thereto.
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7.2 SubLicensee
Representations and Warranties.
SubLicensee represents and warrants to SubLicensor as follows and acknowledges
that SubLicensor is relying on such representations and warranties in entering
into this Agreement:
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(a)
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Organization
and Power:
SubLicensee is a duly organized and validly existing company in good
standing under the laws of Delaware,
USA and
has the power, authority and capacity to enter into this Agreement
on the
terms and conditions herein set forth and to carry out the transactions
contemplated by this Agreement;
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(b)
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Due
Authorization:
the execution, delivery and performance by SubLicensee of its obligations
under this Agreement and the issuance, sale and delivery of the shares
delivered to SubLicensor pursuant to Section 2.4
by
SubLicensee:
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(i)
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have
been duly authorized by all necessary action on the part of
SubLicensee;
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(ii)
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do
not require the consent, approval, authorization, registration or
qualification of or with any governmental authority, stock exchange,
securities commission or other regulatory authority or other third
party,
except: (I) those which have been obtained; (II) those as may be
required
under applicable securities laws and will be obtained prior to the
Effective Date; or (III) those which have not been obtained and would
not
result in a material adverse effect on SubLicensee;
and
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(iii)
|
do
not and will not (or will not with the giving of notice, the lapse
of time
or the happening of any other event or condition) result in a material
breach or a violation of, or conflict with or result in a default
under,
or allow any other person to exercise any rights under, any of the
terms
or provisions of the articles, by-laws or resolutions of the board
of
directors (or any committee thereof) or security holders of SubLicensee,
or any judgment, decree, order or award of any court, governmental
body or
arbitrator having jurisdiction over any of them, or any material
agreement, licence or permit to which any of them is a
party;
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(c)
|
Enforceable
Agreement:
this Agreement has been duly executed and delivered by SubLicensee
and
constitutes a legal, valid and binding obligation of SubLicensee,
enforceable by SubLicensor against SubLicensee in accordance with
its
terms, subject to the availability of equitable remedies and the
enforcement of creditors' rights generally, specific performance,
injunctive relief and other equitable remedies granted in the discretion
of a court of competent jurisdiction, indemnity and related rights
under
applicable law and that provisions relating to severing unenforceable
provisions may be limited by applicable law;
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(d)
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Outstanding
Shares:
SubLicensee is authorized to issue 75,000,000 common shares of which,
as
of the Effective Date, 5,500,000 common shares were issued and outstanding
as fully paid and non-assessable shares of
SubLicensee;
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(e)
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Compliance
with Law:
SubLicensee has carried out its affairs in compliance in all material
respects with the terms and provisions of applicable law and is not
in
material violation of or in material default in the performance of
any
mortgage, note, indenture, deed of trust, contract, agreement (written
or
oral), instrument, lease, licence or other document to which it is
a party
or by which it is bound or to which its property or assets or any
of them
is subject;
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(f)
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Validly
Issued Shares:
the common shares to be issued pursuant to this Agreement have been,
or
prior to the Effective Date will be, duly created and, when issued,
delivered and paid for in full, will be validly issued as fully paid
common shares of SubLicensee, and will not have been issued in violation
of or subject to any pre-emptive rights or contractual rights to
purchase
securities issued by SubLicensee;
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(g)
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Funding:
SubLicensee will have a minimum net working capital of US$350,000
as of
the Effective Date; and
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11
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(h)
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No
Claims:
SubLicensee has not received any written claims or written notice
from any
third party which might impact SubLicensee’s ability to perform its
obligations hereunder.
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ARTICLE
8
INDEMNITY
AND LIMITATIONS OF LIABILITY
8.1 Indemnification
for Infringement Losses.
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(a)
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Any
provision of Section 3.6
or
Section 8.3
to
the contrary notwithstanding, SubLicensor will indemnify, defend
and hold
harmless SubLicensee from and against Infringement Losses incurred
by
SubLicensee from time to time in an aggregate amount up to, but not
in
excess of, $200,000. It is understood, acknowledged and agreed by
the
parties that the $200,000 amount referenced above in this Section
8.1(a)
is
an aggregate and cumulative limitation on: (i) SubLicensor’s obligation to
indemnify SubLicensee against Infringement Losses set forth in this
Section 8.1;
and (ii) SubLicensor's obligation to indemnify SubLicensee against
"Infringement Losses" (as such term is defined in the Additional
SubLicence) pursuant to the terms of the Additional
SubLicence.
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(b)
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SubLicensee
shall give notice to SubLicensor promptly, and in any event not later
than
twenty (20) days, after SubLicensee receives written notice of any
claim,
event or matter (an "Indemnification Claim") as to which SubLicensee
may
seek indemnity under paragraph (a) of this Section 8.1;
provided that the failure to give notice as provided in this paragraph
(b)
shall not relieve SubLicensor of its obligations under this Section
8.1
except to the extent that such failure prejudices the rights of
SubLicensor. In the event of any claim, action, suit, proceeding
or demand
asserted by any person who is not a party to this Agreement which
is or
gives rise to an Indemnification Claim, SubLicensor may elect to
assume
the defense of any such claim and SubLicensee shall have the right
to
participate in such defense at SubLicensee’s own expense, which shall
include counsel of its choice. If SubLicensor (1) elects not to defend,
compromise or settle an Indemnification Claim, or (2) having elected
to
defend an Indemnification Claim, fails to retain counsel to prosecute
the
action within thirty (30) days of such election, then in each case,
SubLicensee shall have the right to defend such claim at the risk
of
SubLicensor. SubLicensee shall not settle or compromise any
Indemnification Claim without the prior written consent of SubLicensor,
which consent shall not be unreasonably withheld and SubLicensor
shall not
settle or compromise any Indemnification Claim for an amount in excess
of
$200,000 without the prior written consent of SubLicensee, which
consent
shall not be unreasonably withheld.
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12
8.2 Claw-back.
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(a)
|
Any
provision of Sections 6.8,
8.3
or
8.5
to
the contrary notwithstanding, in the event that, prior to January
31,
2012, (i) this Agreement shall be terminated by reason of the termination
of the Master Licence Agreement and is not replaced by a direct licence
between Owner and SubLicensee in substantially the form of this Agreement,
as applicable or (ii) SubLicensee is prevented from practicing or
utilizing the Licensed Technology in the Territory by reason of any
infringement by the Licensed Technology of the rights of third parties
(either of such events, a “Claw-back Event”), SubLicensor will convey to
SubLicensee a number of Claw-back Shares (as defined in paragraph
(b)
below) determined in accordance with the following
schedule:
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(i)
|
if
the Claw-back Event occurs prior to January 31, 2009, 6,500,000 Claw-back
Shares;
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|
(ii)
|
if
the Claw-back Event occurs on or after January 31, 2009, but prior
to
January 31, 2010, 6,000,000 Claw-back
Shares;
|
|
(iii)
|
if
the Claw-back Event occurs on or after January 31, 2010, but prior
to
January 31, 2011, 4,000,000 Claw-back Shares;
and
|
|
(iv)
|
if
the Claw-back Event occurs on or after January 31, 2011, but prior
to
January 31, 2012, 2,000,000 Claw-back
Shares.
|
For
greater certainty, the Claw-back Event shall only be a one time
occurrence.
|
(b)
|
As
used in this Section 8.2,
“Claw-back Shares” means shares of common stock of SubLicensee or any
shares or other securities of SubLicensee or any third party into
which
the common stock of SubLicensee may have been converted or for which
shares of common stock of SubLicensee may have been exchanged as
a result
of any transaction occurring on or after the date hereof and prior
to
January 31, 2012. The respective numbers of Claw-back Shares set
forth in clauses (i) through (iv) of paragraph (a) of this Section
8.2
shall be appropriately and proportionately adjusted to reflect any
stock
splits, reverse stock splits, conversions or exchanges or other capital
adjustments which may have occurred with respect to the Claw-back
Shares,
including applicable conversion and exchange
ratios.
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(c)
|
It
is understood, acknowledged and agreed by the parties that the liability
pertaining to the conveyance of the Claw-back Shares referenced in
Section
8.2(a)
is
a one-time occurrence limitation on: (i) SubLicensor’s obligation to
convey the Claw-back Shares to SubLicensee in the event of the occurrence
of a Claw-back Event pursuant to the terms of this Agreement; and
(ii)
SubLicensor's obligation to convey the Claw-back Shares to SubLicensee
in
the event of the occurrence of a "Claw-back Event" (as such term
is
defined in the Additional SubLicence) pursuant to the terms of the
Additional SubLicence. For greater certainty, the occurrence of a
Claw-back Event or a "Claw-back Event" (as defined in the Additional
SubLicence) shall result in only a single conveyance of Claw-back
Shares
in accordance with the schedule set forth in Section 8.2(a)
and shall not be duplicative with any similar liability or obligation
contained in the Additional
SubLicence.
|
13
8.3 No
Warranties.
Nothing
in this Agreement is or shall be construed as: (i) a warranty or representation
by SubLicensor as to the validity or scope of the Licensed Patents; (ii) any
warranty or representation by SubLicensor that anything made, used, sold or
otherwise disposed of under any sublicence granted in this Agreement is or
will
be free from infringement of patents, trademarks, copyrights and other rights
of
third parties; (iii) an obligation on the part of SubLicensor to bring or
prosecute actions or suits against third parties for infringement; or (iv)
granting by implication, estoppel or otherwise any licenses or sublicenses
other
than the Licensed Patents defined in this Agreement, regardless of whether
such
patents are dominant or subordinate to the Licensed Patents. EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT, SUBLICENSOR MAKES NO REPRESENTATIONS AND EXTENDS
NO
WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED. THERE ARE NO EXPRESS OR
IMPLIED WARRANTIES OF MERCHANTABILITY, DURABILITY, TITLE OR FITNESS FOR A
PARTICULAR PURPOSE, OR THAT THE USE OF THE LICENSED PRODUCTS OR THEIR PROCESS
OF
MANUFACTURE WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK OR OTHER RIGHTS.
Any warranty made by SubLicensee to its customers, users of the Licensed
Products or any third parties are made by SubLicensee alone and shall not bind
SubLicensor or be deemed or treated as having been made by SubLicensor and
service of any such warranty shall be the sole responsibility of
SubLicensee.
8.4 No
Special Damages.
IN NO
EVENT WILL SUBLICENSOR OR OWNER BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL
OR
CONSEQUENTIAL DAMAGES WHICH SUBLICENSEE MAY INCUR OR EXPERIENCE ON ACCOUNT
OF
ENTERING INTO OR RELYING UPON THIS AGREEMENT EVEN IF SUBLICENSOR OR OWNER HAVE
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
8.5 Limitation
of Liability. EXCEPT
AS
OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, SUBLICENSOR’S OR OWNER’S
LIABILITY FOR CLAIMS, COSTS, LOSSES, DAMAGES, OF ANY KIND OR ANY OTHER CAUSE,
INCLUDING BUT NOT LIMITED TO LIABILITY FOR ANY FUNDAMENTAL BREACH OF THIS
AGREEMENT AND REGARDLESS OF THE FORM OF ACTION, SHALL NOT EXCEED $500; PROVIDED,
THAT SUCH $500 LIMITATION SHALL NOT APPLY IN THE EVENT THAT SUBLICENSOR SHALL
(i) BREACH ITS OBLIGATIONS UNDER SECTIONS 8.1
OR
8.2
HEREOF
OR (ii) WILFULLY TERMINATE THIS AGREEMENT OR OTHERWISE WILLFULLY REFUSE TO
OBSERVE ITS OBLIGATIONS HEREUNDER, ACTING IN BAD FAITH.
ARTICLE
9
COMMUNICATIONS
9.1 Mode
of Payment and Communication.
All
payments due after the Effective Date shall be made by electronic funds
transfer. Any notice or other communication required or permitted to be made
or
given to either party hereto pursuant to this Agreement shall be sent to such
party by facsimile or by registered airmail (except that registered or certified
mail may be used where delivery is in the same country as mailing), postage
prepaid, addressed to it at its address set forth below, or to such other
address as it shall designate by written notice given to the other party.
Payments shall be deemed to be made on the date of electronic funds transfer.
Notices or other communications shall be deemed to have been given or provided
on the date of sending. The addresses are as follows:
14
|
(a)
|
If
to SubLicensor:
|
Fortress
Paper Ltd.
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇
▇▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
with
a
copy to:
Sangra
Moller LLP
Barristers
& Solicitors
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇
▇▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇▇▇
|
(b)
|
if
to SubLicensee:
|
iDcentrix
Inc.
Suite
4240, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Chief Executive Officer
ARTICLE
10
APPLICABLE
LAW AND VENUE
10.1 Governing
Law.
This
Agreement shall be construed, interpreted and enforced in accordance with,
and
the respective rights and obligations of the parties hereto shall be governed
by, the laws of the Province of British Columbia and the federal laws of Canada
applicable therein without giving effect to any choice or conflict of law
provision or rule (whether of the Province of British Columbia or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the laws of the Province of British Columbia and the federal laws
of
Canada applicable therein.
10.2 Venue.
Each of
the parties consents to the exclusive jurisdiction of any court of competent
jurisdiction located within the Province of British Columbia. Each of the
parties hereby: (i) waives trial by jury, (ii) waives any objection to venue
of
any action instituted hereunder and (iii) consents to the granting of such
legal
or equitable relief as is deemed appropriate by any aforementioned court.
Notwithstanding the foregoing, SubLicensor shall have the right to commence
and
prosecute any legal or equitable action or proceeding before any court of
competent jurisdiction to obtain injunctive or other relief in the event that,
in the opinion of SubLicensor, such action is necessary or
desirable.
15
ARTICLE
11
INTERPRETATION
11.1 Promotional
Rights.
Nothing
contained in this Agreement shall be construed as conferring any right to use
in
advertising, publicity, or other promotional activities any name, trade name,
trademark, trade dress or other designation of either party hereto (including
any contraction, abbreviation or simulation of any of the foregoing), save
as
expressly stated herein. Each party hereto agrees not to use or refer to this
Agreement or any provision hereof in any promotional activity associated with
apparatus sublicensed hereunder, without the express written approval of the
other party.
11.2 Entire
Agreement.
No
amendment or modification hereof shall be valid or binding upon the parties
unless made in writing and signed by both parties. This Agreement embodies
the
entire understanding of the parties with respect to the subject matter hereof
and supersedes all prior and contemporaneous written or oral negotiations and
agreements between them regarding the subject matter hereof, and neither of
the
parties shall be bound by any conditions, definitions, warranties,
understandings or representations with respect to the subject matter hereof
other than as expressly provided herein.
11.3 Currency.
All
references to currency in this Agreement are to US dollars unless otherwise
stated.
11.4 Headings.
The
headings inserted herein are for convenience of reference only and are not
intended to be a part of or to affect the meaning of interpretation of this
Agreement.
11.5 Gender
and Number.
In this
Agreement, words importing the singular include the plural and vice versa;
and
words importing gender include all genders.
11.6 Survival.
Any
provision of this Agreement which expressly states it is to continue in effect
after termination or expiration of this Agreement, or which by nature would
survive the termination or expiration of this Agreement shall do so.
11.7 Joint
Participation.
The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as drafted jointly by the parties
and
no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any of the provisions of this
Agreement.
ARTICLE
12
MISCELLANEOUS
12.1 Export/Re-export.
SubLicensee agrees not to export or re-export, or cause to be exported or
re-exported, any technical data received hereunder, or the direct product of
such technical data, to any country or person which, under the laws of the
United States or Canada, are or may be prohibited from receiving such technical
data or the direct product thereof.
16
12.2 Assignment.
Except
as provided herein, SubLicensee may not assign its rights and obligations under
this Agreement without the prior written consent of the SubLicensor, provided,
however, that SubLicensee may assign its rights and obligations hereunder to
any
Subsidiary or parent of SubLicensee. Despite any assignment, SubLicensee shall
remain bound by this Agreement and is liable for the performance or
non-performance of the assignee as if that performance or non-performance was
that of the SubLicensee itself. SubLicensor may perform all obligations to
be
performed under this Agreement directly or may have some or all obligations
performed by its contractor, subcontractor or affiliates.
12.3 Severability.
If any
part of this Agreement is found by competent authority to be invalid, illegal
or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such part in every other respect and the remainder of
this
Agreement shall continue in effect so long as the Agreement still expresses
the
intent of the parties. If the intent of the parties cannot be preserved, this
Agreement shall be either renegotiated or terminated.
12.4 Force
Majeure.
Neither
party shall be responsible for any failure to perform hereunder which is caused
by circumstances reasonably beyond the control of such party, including but
not
limited to Acts of God, war, riot, embargoes, fire, flood, earthquake(s),
strikes or labour shortages or acts of sabotage. This provision shall not be
construed as excusing non-performance of any obligation by either party to
make
payment to the other party under this Agreement.
12.5 Further
Assurances.
Each
party will, at its own expense, execute and deliver such further agreements
and
documents and do such further acts and things as may be reasonably required
to
give effect to this Agreement.
12.6 Enurement.
This
Agreement shall enure to the benefit of and shall be binding upon the parties
hereto and their respective successors and assigns.
12.7 Time
of Essence.
Time
shall be of the essence of this Agreement.
17
12.8 Counterparts.
This
Agreement may be executed in any number of counterparts with the same effect as
if all parties had signed the same document. All counterparts will constitute
one and the same agreement. This Agreement may be executed and transmitted
by
facsimile transmission or electronic mail (including pdf) and if so executed
and
transmitted this Agreement will be for all purposes as effective as if the
parties had delivered an executed original Agreement.
IN
WITNESS WHEREOF,
the
parties hereto have caused this Agreement to be duly signed as of the date
first
written above.
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FORTRESS
PAPER LTD.
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IDCENTRIX
INC.
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By:
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By:
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Name:
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Name:
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Title:
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Title:
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18
SCHEDULE
A
LICENSED
PATENTS
Patents/Applications
relating to LQard II
Patent
Application: Canada national phase entry filed March 19, 2007 – Serial
Number:
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