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EXHIBIT 10.16
 
 
EXCLUSIVE PATENT AND TRADE SECRET LICENSE AGREEMENT
 
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 1000 Industrial Way North Suite C, Toms River, NJ 08755; and IDS Patent
Holding, LLC, a New York limited liability company ("the Licensor"), with a
principal place of business at 543 Broadway, Massapequa, New York 11758 (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
 

 
(a)
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.
       
(b)
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)
       
(c)
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
 

 
(a)
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.
       
(b)
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.
       
(c)
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.
       
(d)
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
 

 
(a)
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.
       
(b)
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.

 
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
 

 
(a)
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.
       
(b)
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
 

 
(a)
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.
       
(b)
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.

 
1.08           Patent Maintenance and Other Fees
 

 
(a)
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 Jay Russ, 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
 

 
(a)
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.
       
(b)
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.
       
(c)
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.

 
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.
1000 Industrial Way North Suite C
Toms River, NJ 08755

or to Licensor when sent by certified mail addressed to:
 
IDS Patent Holding, LLC
 
Facsimile: (516) 541-1077
 

 
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: Jason Gonzalez
Title: President
Date: April 2, 2008
 
IDS Patent Holding, LLC.
By:  Intelligent Digital Systems, LLC, its Managing Member
 

 
By: _______________________________
Name: Jay Russ
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:
 

 
(i)
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
       
(ii)
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).

 
 
“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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