Exhibit 10.4

 

INTELLECTUAL PROPERTY LICENSE AGREEMENT

By & between

 

MDI, Inc (“Licensor”)

&

Monitor Dynamics, Inc.  (“Licensee”)

 

This INTELLECTUAL PROPERTY LICENSE AGREEMENT (“Agreement”) is dated as of
September 8, 2009 (the “Effective Date”) between Monitor Dynamics, Inc., a Texas
corporation (“Licensee”), and MDI, Inc, a Delaware corporation (“Licensor”).
Licensor and Licensee are sometimes referred to herein individually as, “Party”
and collectively as, the “Parties.”

 

I                                                         RECITALS

 

WHEREAS, Licensee desires to obtain the right and license to use the Licensed IP
upon the terms and conditions set forth herein.

 

NOW THEREFORE, in consideration of the foregoing premises, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Parties hereto hereby covenant and agree as follows:

 

I.                                         DEFINITIONS: Whenever used in this
Agreement, the following terms have the meanings respectively assigned to them
in this Section:

 

(a)  “Affiliate” means a Person who directly or indirectly through one or more
intermediaries, controls, or is controlled by or is under common control with,
the Person specified.

 

(b)  “Control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person whether
through the ownership of voting securities, by contract, or otherwise.

 

(c)  “Person” means an individual, firm, partnership, joint venture,
corporation, bank, trust, unincorporated organization or governmental body.

 

(d)  “Licensed IP” means the following patent applications and any patent issued
thereon: (a) United States Patent Application “Security Operating System for
Networked Access Control with Single Board Computer Door Controller filed May 8,
2009; (b) United States Patent Application No. 10/843,180, titled “Integrated
Security Suite Architecture and System Software/Hardware”; (c) United States
Patent Application No. 11/268,880, titled “Integrated Security
Suite Architecture and System Software/Hardware. As used in this Agreement, the
term “Intellectual Property” expressly excludes Trademarks.

 

II.                                     LICENSE GRANT

 

2.1.                                           License Grant. From and after the
Effective Date, Licensor hereby grants to Licensee, and Licensee hereby accepts
from Licensor, subject to any licenses previously granted to third parties, a
perpetual, irrevocable, world-wide, fully paid-up, royalty-free license to use
the Licensed IP to make, have made, use, offer for sale, promote, distribute,
sell and otherwise commercially exploit the Licensed IP. Such license includes,
without limitation, the right to distribute, and create derivative works from
any copyrighted materials included in Licensed IP, the right to make, have made,
use, offer for sale, promote, distribute, sell and otherwise commercially
exploit any such derivative works and the right to use any trade secrets and
know-how included in Licensed IP.

 

--------------------------------------------------------------------------------

 

2.2.                                           Copies. Licensee may make such
number of copies of the applicable Licensed IP as is reasonably necessary to
accomplish the permitted uses set forth in Section 2.1. All copies shall be
subject to the terms and conditions of this Agreement.

 

2.3.                                           Exclusion of All Other Rights.
Except as expressly provided herein, Licensee is granted no rights or licenses
whatsoever in or to the Licensed IP or any other Licensor products, services or
other Licensor intellectual proprietary or personal rights. Licensor hereby
expressly reserves all rights and licenses not expressly granted in this
Agreement. In particular and without limiting the foregoing, nothing in this
Agreement will be deemed to convey to Licensee the legal title to any Licensed
IP.

 

2.4.                                           Right to Sublicense. Licensee
shall be free to grant sublicenses to any majority-owned subsidiary or Affiliate
of Licensee for so long as such Person remains a majority-owned subsidiary or an
Affiliate of Licensee. Any such sublicense shall be subordinate to and conform
to the terms and conditions of this Agreement, and shall not include the right
for such sublicensee to grant sublicenses to persons who are not also
majority-owned subsidiaries or Affiliates of Licensee. Licensee shall also be
free to grant sublicenses to persons who are not majority-owned subsidiaries or
Affiliates of Licensee to the extent necessary to exercise its “have made”
rights as provided in Section 2.1. Any such sublicense shall be subordinate to
and conform to the terms and conditions of this License; shall not include the
right for such sublicensee to grant sublicenses to other persons; and shall not
include the right for such sublicensee to make, sell or distribute products made
using the Licensed IP for such sublicensee’s own account or the account of any
person other than Licensee or a majority-owned subsidiary or Affiliate of
Licensee. In addition, Licensee shall require that any such sublicensee
implement and maintain practices and policies sufficient to preserve the
confidentiality of all Licensed IP provided to such sublicensee by Licensee, and
Licensee shall be solely responsible, as between Licensee and Licensor, for any
breach of confidentiality with respect to the Licensed IP by any such
sublicensee. Except as expressly set forth in this provision, Licensee shall
not, without the prior written approval of Licensor, which approval shall not be
unreasonably withheld, delayed, or conditioned, sublicense or transfer in any
way any Licensed IP.

 

2.5.                                           Intellectual Property Notices and
Markings. Licensee shall accurately produce and reproduce all Licensor
intellectual property notices on all copies Licensee produces or reproduces of
the Licensed IP.

 

III.                                              OWNERSHIP

 

3.1.                                           Licensed IP. Licensee
acknowledges and agrees that, as between the Parties and subject to the rights
and licenses granted herein, Licensor is, and at all times shall remain, the
sole and exclusive owner of all right, title and interest, throughout the world
(including all intellectual property and other proprietary rights), in and to
all Licensed IP, and any copies of the Licensed IP, whether made by or on behalf
of Licensor or Licensee.

 

3.2                                              Derivative Works. Licensor
acknowledges and agrees that, as between the Parties, any derivative works of
Licensed IP created by or on behalf of Licensee are and shall remain the sole
and exclusive property of Licensee.

 

IV.                                              PROTECTION OF LICENSED
TECHNOLOGY

 

4.1.                                           Protection of Intellectual
Property Rights.

 

(a)  Licensor and the Licensee shall cooperate to police diligently the Licensed
IP. The Parties shall promptly notify each other in writing of any unauthorized
use, infringement, misappropriation, dilution or other violation of the Licensed
IP of which it becomes aware.

 

(b)  Licensor shall have the primary right, but not the obligation, to bring and
control any suits against any unauthorized use, infringement, misappropriation,
dilution or other violation of the Licensed IP. Licensee agrees to cooperate
with Licensor in any litigation or other enforcement action that Licensor may
undertake to enforce or protect the Licensed IP and, upon Licensor’s request, to
execute, file and deliver all documents and proof necessary for such purpose,
including being named as a Party to such litigation as required by law. Licensee
shall have the right to participate and be represented in any such action, suit
or proceeding by its own counsel and at its own cost and expense. Licensee shall
have no claim of any kind against Licensor based on or arising out of Licensor’s
handling of or decisions concerning any such action, suit, proceeding,
settlement, or compromise, and the Licensee

 

--------------------------------------------------------------------------------

 

hereby irrevocably releases Licensor from any such claim; provided, however,
that Licensor shall not settle, compromise or voluntarily dispose of any such
action, suit or proceeding in a manner that would materially restrict the rights
or benefits of Licensee pursuant to this agreement without the prior consent of
Licensee, which consent shall not be unreasonably withheld, delayed or
conditioned. In the event Licensor elects not to exercise this right, Licensee,
upon prior written approval from Licensor, may bring such suit, and Licensor
agrees to reasonably cooperate with Licensee, including being named as a party
to such suit. If Licensee elects to bring such suit, it shall be entitled to
that portion of any award based upon the actual damage to its business directly
resulting from such unauthorized use, infringement, misappropriation, dilution
or other violation of the Licensed IP.

 

(c)  Unless the parties should otherwise agree, each Party shall bear the costs,
fees and expenses incurred by it in complying with the provisions of
Section 4.1, including those incurred in bringing or controlling any such suits.

 

V.                                                  REPRESENTATIONS AND
WARRANTIES

 

5.1.                                           Each Party hereto represents and
warrants that (i) it is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation, (ii) it has the
corporate power and authority to enter into this Agreement, and the execution,
delivery and performance of this Agreement and the transactions and other
documents contemplated hereby have been duly authorized by all necessary
corporate action on the part of Licensor, and (iii) this Agreement has been duly
executed and delivered by the authorized officers of such Party, and constitutes
a legal, valid and binding obligation of the Party, fully enforceable against
such Party in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium, and similar laws of general
applicability relating to or affecting creditors’ rights, and general equity
principles.

 

VI.                                              INDEMNIFICATION

 

6.1.                                           No Duty to Indemnify. Licensor
shall not under any circumstances, be obligated to indemnify, defend, or hold
Licensee, its Affiliates, or their respective representatives, officers,
directors, stockholders, employees, or agents (the “Licensee Parties”), harmless
from any liability, claims, demands, causes of action, judgments, damages, or
expenses (including reasonable attorneys’ and experts’ fees and costs) which the
Licensee Parties may incur or become liable for as a result of Licensee’s and
its sublicensees’ use of the Licensed IP in accordance with this Agreement.

 

6.2.                                           Licensee’s Duty to Indemnify.
Licensee shall indemnify, defend, and hold Licensor, its Affiliates, and their
respective representatives, officers, directors, stockholders, employees, and
agents (the “Licensor Parties”), harmless from any and all liability, claims,
demands, causes of action, judgments, damages, and expenses (including
reasonable attorneys’ and experts’ fees and costs) which the Licensor Parties
may incur or become liable for as a result of claims by any Person to the extent
arising from Licensee’s and its sublicensees’ use of Licensed IP other than any
third party claims covered by Section 6.1; provided, however, that Licensee
shall not be obligated to defend or hold harmless any Licensor Parties in the
event that such claims, demands, causes of action, judgments, damages and,
expenses arose out of willful misconduct, gross negligence, or bad faith by any
Licensor Parties.

 

VII.                                          LIMITATIONS ON LIABILITY

 

7.1.                                           Disclaimer of Consequential and
Special Damages. TO THE MAXIMUM EXTENT PERMITTED BY LAW, NEITHER PARTY, NOR ANY
RELATED ENTITY THEREOF, SHALL BE LIABLE UNDER THIS AGREEMENT TO THE OTHER PARTY,
ANY RELATED ENTITY THEREOF, OR ANY OTHER THIRD PERSON, FOR ANY INDIRECT,
INCIDENTAL,CONSEQUENTIAL, SPECIAL, RELIANCE OR PUNITIVE DAMAGES OR LOST OR
IMPUTED PROFITS, LOST DATA OR COST OF PROCUREMENT OF SUBSTITUTE GOODS OR
SERVICES, WHETHER LIABILITY IS ASSERTED IN CONTRACT, TORT (INCLUDING NEGLIGENCE
AND STRICT PRODUCT LIABILITY) INDEMNITY OR CONTRIBUTION, AND IRRESPECTIVE OF
WHETHER A PARTY OR ANY RELATED ENTITY HAS BEEN ADVISED OF THE POSSIBILITY OF ANY
SUCH LOSS OR DAMAGE.

 

--------------------------------------------------------------------------------

 

VIII.                                      MISCELLANEOUS

 

8.1.                                           Notices. All notices, requests
and other communications to any Party hereunder shall be in writing (including
facsimile transmission) and shall be given (i) by personal delivery to the
appropriate address as set forth below (or at such other address for the Party
as shall have been previously specified in writing to the other Party), (ii) by
reliable overnight courier service (with confirmation) to the appropriate
address as set forth below (or at such other address for the Party as shall have
been previously specified in writing to the other Party), or (iii) by facsimile
transmission (with confirmation) to the appropriate facsimile number set forth
below (or at such other facsimile number for the Party as shall have been
previously specified in writing to the other Party) with follow-up copy by
reliable overnight courier service the next Business Day:

 

if to Licensee, to:

 

Monitor Dynamics, Inc.

12500 Network Blvd., Suite 306

San Antonio, Texas 78249

Facsimile No.: 210-579-1554

Attention:  President

 

and

 

if to Licensor, to:

 

MDI, Inc.

c/o Carmelo Gordian

Andrews & Kurth LLP

111 Congress Avenue

Suite 1700

Austin, Texas 78701

Facsimile No.: (512) 320-9292

 

All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5 p.m. (local
time, place of receipt) and such day is a Business Day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding Business Day in the place of receipt.

 

8.2.                                           Amendments and Waivers. This
Agreement may not be modified or amended except by an instrument or instruments
in writing signed by an authorized officer of each Party. Except as otherwise
provided in this Agreement, any failure of any of the Parties to comply with any
obligation, covenant, agreement or condition herein may be waived by the Party
entitled to benefits thereof only by a written instrument signed by an
authorized officer of the Party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.

 

8.3.                                           Headings. The article, section,
paragraph and other headings contained in this Agreement are inserted for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

8.4.                                           Counterparts. This Agreement may
be executed in two or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same agreement.

 

8.5.                                           Entire Agreement. This Agreement,
the Stock Purchase Agreement and the other ancillary agreements constitute the
entire agreement between the Parties hereto with respect to the subject matter
hereof, and supersede and cancel all prior agreements, negotiations,
correspondence, undertakings, understandings and communications of the Parties,
oral and written, with respect to the subject matter hereof.

 

--------------------------------------------------------------------------------

 

8.6.                                           Governing Law and Jurisdiction. 
This Agreement is governed by and will be construed and enforced in accordance
with the laws of the State of Texas regardless of the jurisdiction in which
litigation relating to the subject matter hereof is initiated or continued.  In
the event any action is brought based on this Agreement the venue for any such
action will be any court of competent jurisdiction of the State of Texas located
in Bexar, County, Texas.

 

8.7.                                           Waiver of Jury Trial. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

8.8.                                           Assignment. This Agreement may
not be assigned by any Party hereto without the written consent of the other
Party; provided, however, that each Party may assign this Agreement to a
purchaser of substantially all of the Party’s shares or assets or to that
Party’s parent, controlled subsidiary or controlled affiliate, provided that
such purchaser agrees to be bound by all of the terms and conditions of this
Agreement. No assignment shall relieve either Party of any of its rights and
obligations hereunder.

 

8.9.                                           Fees and Expenses. Whether or not
the transactions contemplated by this Agreement are consummated, each Party
shall bear its own fees and expenses incurred in connection with the
transactions contemplated by this Agreement.

 

8.10.                                     Binding Nature; Third-Party
Beneficiaries. This Agreement shall be binding upon and inure solely to the
benefit of the Parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, express or implied, is intended to or shall
confer upon any other Person or Persons any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement.

 

8.11.                                     Severability. This Agreement shall be
deemed severable; the invalidity or unenforceability of any term or provision of
this Agreement shall not affect the validity or enforceability of this Agreement
or of any other term hereof, which shall remain in full force and effect, for so
long as the economic or legal substance of the transactions contemplated by this
Agreement is not affected in any manner materially adverse to any Party. If it
is ever held that any restriction hereunder is too broad to permit enforcement
of such restriction to its fullest extent, each Party agrees that such
restriction may be enforced to the maximum extent permitted by law, and each
Party hereby consents and agrees that such scope may be judicially modified
accordingly in any proceeding brought to enforce such restriction.

 

8.12.                                     Specific Performance. The Parties
hereto agree that irreparable damage would occur in the event that any provision
of this Agreement was not performed in accordance with the terms hereof and that
the Parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.

 

8.13.                                     Construction. 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 if 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 provisions of this Agreement.

 

8.14.                                     Interpretation.  Any reference to any
federal, state, local or non-U.S. statute or law shall be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context
otherwise requires.

 

8.15                                        Legal Fees and Costs.  In the event
suit is instituted for breach or default of any of the conditions of this
Agreement, then and in that event, the party prevailing in any action, in law or
equity, will be entitled to reasonable attorneys’ fees and court costs.

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the date first written above by their respective officers thereunto duly
authorized.

 

 

LICENSEE

 

 

 

MONITOR DYNAMICS, INC.

 

 

 

 

 

/s/ J. Collier Sparks

 

By: J. Collier Sparks

 

Its: President

 

 

 

LICENSOR

 

 

 

MDI, INC.

 

 

 

 

 

/s/ John Linton

 

By: John Linton

 

Its: Officer

 

 

--------------------------------------------------------------------------------