Document:

Exhibit 10.31

 

PATENT RIGHTS AND ROYALTY AGREEMENT

 

THIS AGREEMENT

(“Agreement”) is entered into as of this 2nd day of January, 2002,

by and between Archon Corporation (“Archon”), a Nevada corporation, and David

G. Lowden (“Lowden”), an individual.

 

WHEREAS,

Archon is a gaming licensee in the State of Nevada possessing expertise in the

gaming business; and

 

WHEREAS,

Lowden has conceived of a new product idea, known as the “Slot Table,” for

incorporating a slot machine into a table game, and is the owner of Patent

Number 5,630,586 in the United States Patent Office for said game (entitled

“Combined Slot Machine and Table Game Apparatus and Method of Play,” filed

April 16, 1996, and granted May 20, 1997); and

 

WHEREAS Archon

and Lowden wish to enter into an agreement whereby Archon designs, develops,

manufactures, markets, and conducts gaming operations for the purpose of

exploiting the Slot Table exclusively in all jurisdictions worldwide allowing

such activities.

 

NOW THEREFORE,

in consideration of the foregoing and the mutual covenants and conditions

contained herein, Archon and Lowden agree as follows:

 

Article I – DEFINITIONS

 

As used in

this Agreement, the terms given below shall have the indicated meanings:

 

1.1                                 “Agreement”

means this Patent Rights and Royalty Agreement under which Lowden shall grant

Archon exclusive rights to the Slot Table,

 

1.2                               “Commencement

Date” means the date this Agreement is entered into as set forth above.

 

1.3                                 “Intellectual

Properties” shall mean patents, copyrights, trademarks, trade names,

service marks, ideas, designs concepts techniques, discoveries or improvements

including any and all devices and computer software, whether or not patentable

and applications pending thereto.

 

1.4                                 “Parties”

shall mean Archon and Lowden and their successors and assigns, and “Party”

shall mean either one of them.

 

 

 

1.5                                 “Licensing”

shall mean governmental licensing in any agreed upon jurisdiction to

manufacture, sell, lease, otherwise distribute, or conduct operation of the

Slot Table.

 

1.6                                 “Lowden

Patent Rights” shall mean U.S. Patent Number 5,630,586 all continuations,

continuations-in-part, foreign counterpart applications and divisions of such

application; all patents issuing from such applications, continuations,

continuations-in-part, foreign counterpart applications and divisions; and all

reissues, reexaminations, renewals or extensions of any of the foregoing.

 

1.7                                 “Licensed

Product Improvements” shall mean all improvements of the Slot Table made or

acquired by Lowden (to the extent that any improvements are transferable)

during the term of this Agreement, along with any Intellectual Properties

arising from said Licensed Product Improvements.

 

Article II – CERTAIN PROPRIETARY

TECHNOLOGY RIGHTS

 

2.1                                 Ownership

– Except as otherwise provided

in this Agreement, each party shall retain all rights to ownership, title or

interests to any proprietary information, any inventions and any Intellectual

Properties independently developed (without any design or technological input

from the other Party) by them prior to the Commencement Date of this Agreement

and during the term of this Agreement. 

All independently developed Intellectual Properties shall remain the

property of the Party that developed it. 

It is expressly agreed that all new jointly developed (with input from

the other Party) Intellectual Properties that are developed as a direct result

of this Agreement, shall be the jointly owned properties of the Parties.

 

Article III –GRANT OF RIGHTS

 

3.1                                 Lowden

Grant – Lowden shall grant to Archon exclusive worldwide rights, without

restriction, to make, have made, market, distribute, sell, lease, otherwise

distribute, install, use, service, and otherwise commercially exploit the

Lowden Patent Rights.  Transfer or

sublicensing of the Lowden Patent Rights by Archon is prohibited under the

terms of this Agreement, except where Lowden has approved, in his sole

discretion, such transfer or sublicensing by separate written agreement.

 

a.                                       Should

Archon fail to make any new sales, leases, or other commercial arrangements

with respect to the Slot Tables for a 

 

2

 

period of

ninety (90) days, then upon written notice from Lowden, and upon failure of

Archon to cure within thirty (30) days following said written notice from

Lowden, Lowden shall have the right to convert Archon’s rights to the Lowden

Patent from an exclusive to a non-exclusive basis.

 

b.                                      At

any time during the one (1) year period following one (1) year from the date of

final approval of the Slot Table (as designed and constructed by Archon) by the

Nevada Gaming Control Commission, in the event that the number of Slot Tables

on which Lowden is being paid royalty fees declines below twenty-five (25) or

during the remainder of this agreement declines below fifty (50), then Lowden

shall have the right to send a thirty (30) day written notice of termination of

this Agreement to Archon.

 

3.2                                 Improvements

– If Lowden develops any Licensed

Product Improvements during the term of this Agreement, and provided this

Agreement is still in force, the Licensed Product Improvements shall be made

available to Archon under the terms of this Agreement without additional fees

due and owing from Archon to Lowden.

 

3.3                                 Foreign

Patent Filings  – Lowden may

file such additional U.S. Patent Applications and foreign applications relating

to the Slot Table and any improvements thereon as Lowden sees fit.  In the event that Lowden wishes to file any

foreign applications relating to the Slot Table, Lowden shall first notify

Archon of his intent to file at least thirty (30) days prior to filing.  During the thirty-day notice period Archon

shall have the option to pay all the costs related to the filings, in which

case the intellectual property rights acquired shall be subject to the terms

and conditions of this Patent Royalty Agreement, the same as the rights to U.S.

Patent Number 5,630,586.  In the event

that Archon elects not to pay the costs, then the foreign rights acquired shall

not be subject to the terms of this Agreement. 

In either event, Lowden shall be the owner of the foreign rights

acquired.

 

3.4                                 Patent

Maintenance Fees  – All

maintenance costs for issued Lowden Patent Rights shall be paid by Archon

during the term of the Agreement. 

Archon shall have the right to notify Lowden that it has no further

interest in any particular patent requiring prosecution or maintenance

payments, and Lowden may then elect to make the maintenance payments himself or

abandon the patent.

 

3.5                                 Marking

– Archon shall mark the Lowden

Patent Number on all applicable Slot Table products.

 

3.6                                 Notices

of Patent Prosecution  – Lowden

agrees to provide copies of all documents or correspondence sent to, or

received from, the United States Patent Office or 

 

3

 

any foreign Patent Office relating to the Lowden patent rights within

thirty (30) days of their mailing or receipt.

 

Article IV – PATENT ROYALTIES

 

4.1                                 Patent

Royalty Amounts  – As

consideration for the grant of exclusive rights to the Lowden Patent Rights,

Archon will pay to Lowden Three Hundred Dollars ($300.00) per month for each

Slot Table placed in operation by Archon and Three Hundred Fifty Dollars

($350.00) per month for each Slot Table placed in operation by Archon which is

linked to, or utilizes, a progressive jackpot.

 

4.2                                 Patent

Royalty Payments  – Archon will

pay Patent Royalties to Lowden on a quarterly basis.  More particularly, Archon will make Patent Royalty payments

within thirty (30) days after the close of each calendar quarter, namely on or

before January 30, April 30, July 30, and October 30 of the applicable

year.  Such payments will be for all

Patent Royalties accrued for the immediately preceding quarter.  Unless otherwise instructed by Lowden, these

payments will be made by check directly to Lowden at the following address:

 

David G. Lowden

3221 S. Torrey Pines

Las Vegas, NV 89146.

 

Simultaneously

with the payment of Patent Royalties, Archon will provide a Patent Royalty

report quantifying the Patent Royalty amounts accrued during the previous

quarter explaining the basis for such payments.  If no Patent Royalties Fees are due to Lowden for a particular

quarter, Archon will provide a report to Lowden so stating.

 

Article V – LOWDEN’S OBLIGATIONS

 

5.1                                 Consultation

– During the term of this

Agreement, Lowden agrees to provide ongoing consulting services to Archon

relating to the Slot Table product and any Licensed Product Improvements

developed by Lowden.

 

Article VI – WARRANTIES

 

6.1                                 Lowden

Warranties  – Lowden warrants

that:

 

4

 

(a)                                  he

is the owner of United States Patent Number 5,630,586 and he has the legal

authority to grant exclusive rights to the patent to Archon.

 

(b)                                 his

grant of the exclusive rights to Archon under the Lowden Patent Rights does not

violate the terms and conditions of any other agreements which Lowden has

entered into.

 

6.2                                 Archon

Warranties  – Archon warrants

that:

 

(a)                                  it

is a corporation in good standing under the laws of the State of Nevada.

 

(b)                                 by

entering into this Agreement, it is not violating the terms and conditions of

any other agreements which Archon has entered into.

 

(c)                                  its

signatory to this agreement has the authority to represent and bind Archon and,

to the extent necessary, has obtained the approval of the Board of Directors of

Archon.

 

6.3                                 NO

WARRANTY  – EXCEPT AS

SPECIFICALLY STATED IN ARTICLE VI, THE PARTIES MAKE NO EXPRESS OR IMPLIED

WARRANTY AS TO ANY MATTER WHATSOEVER, WHETHER TANGIBLE OR INTANGIBLE, DEVELOPED

UNDER THIS AGREEMENT, OR THE OWNERSHIP, MERCHANTABILITY, OR FITNESS FOR A

PARTICULAR PURPOSE OF ANY INVENTION, TEST, OR PRODUCT.

 

Article VII – CONFIDENTIALITY

 

7.1                                 Definition

of “CONFIDENTIAL INFORMATION”  –

For the purposes of this Agreement “CONFIDENTIAL INFORMATION” means all

proprietary concepts, designs, customer data bases, documents, information,

processes, procedures, data, results, conclusions, know-how and the like

(including knowledge of the terms of and actions taken pursuant to this

agreement) which is disclosed or submitted orally, in writing, or in other

tangible form which is designated as CONFIDENTIAL INFORMATION to one party by

the other in connection with this agreement. 

Lowden and Archon shall have no obligation with respect to any portion

of such CONFIDENTIAL INFORMATION which:

 

(a)                                  is

or later becomes generally available to the public by use, publication or the

like, through no fault of the party receiving the CONFIDENTIAL INFORMATION; or

 

(b)                                 is

obtained from a third party who had legal right to disclose the same to the

party; or

 

5

 

(c)                                  is

already possessed by the party as evidenced by the party’s written records,

predating receipt thereof from the other party; or

 

(d)                                 is

independently developed by the receiving party without reference to the

disclosed information.

 

7.2                                 Confidentiality

– The Parties agree that during

the term of and any subsequent extension of this Agreement and for a period of

three (3) years thereafter CONFIDENTIAL INFORMATION, as defined in Section 7.1,

to one party by the other shall not be disclosed to any third party or used for

any purpose other than those purposes specifically set forth in this Agreement,

without the prior written consent of the other party.  It is understood that Lowden and Archon shall have no obligation

with respect to any portion of such CONFIDENTIAL INFORMATION as described in

Section 7.1 (a)-(d).

 

Article VIII – TERM AND TERMINATION

 

8.1                                 Term

– The initial term of this

Agreement shall be for five (5) years, and shall be extended thereafter

automatically for additional two (2) year terms unless termination is effected

by Archon within thirty (30) days prior to the next succeeding renewal term, or

terminated earlier as specified in this Agreement.

 

8.2                                 Termination

by Mutual Consent  – Unless

otherwise agreed, this Agreement shall end on the date provided in Paragraph

8.1.  Archon and Lowden may elect to

terminate this Agreement, or portions thereof, by mutual written consent at any

earlier date, and such consent shall be effective when signed by authorized

signatories of both Parties.

 

8.3                                 Termination

for Cause  – If either party at

any time commits a material breach of any covenant or agreement contained

herein, and fails to remedy any such breach within ninety (90) days after

receiving notice thereof, which notice shall specify the manner in which the

Agreement has been breached by the other Party, such Party may, at its option

and in addition to any other remedy that it might be entitled to, terminate

this Agreement by notice in writing which will be effective upon receipt.

 

8.4                                 Termination

for Failure of Market Test  –

In the event that the Slot Table fails Archon’s market tests, or does not prove

to be a successfully marketable product despite Archon’s test efforts to market

the product, Archon shall be entitled to terminate this Agreement upon thirty

(30) days written notice.

 

6

 

Article – IX – MISCELLANEOUS

 

9.1                                 Public

Relations/Use of Name  – Each

Party shall have the right to publicize the existence of this Agreement and use

the name of the other Party with prior written consent of the other Party for

the furtherance of the interests of this agreement.  Each Party agrees to furnish each other with the exact text to be

used in publicity regarding the Slot Table and for approval, which will not be

unreasonably withheld, prior to use. 

Each Party agrees to promptly complete a review of the proposed

publicity and deliver a response thereto.

 

9.2                                 Notices

– All notices pertaining to or

required by this Agreement shall be in writing and shall be signed by an

authorized representative.  They shall

be delivered by hand or sent by certified mail, return receipt requested, with

postage prepaid, addressed as follows:

 

If to Lowden:

David G.

Lowden

3221 S. Torrey

Pines

Las Vegas, NV

89146

 

If to Archon:

Thomas K.

Land, Senior Vice President & CFO

Archon

Corporation

3993 Howard

Hughes Parkway, Suite 630

Las Vegas, NV

89109.

 

Either Party

may change the addressee or address by notice in writing given to the other

Party.

 

9.3                                 Best

Efforts  – Archon and Lowden

agree that each will use their best efforts to ensure the success of the

exploitation of the Slot Table.

 

9.4                                 Auditing

Rights  – Lowden shall have the

right to seek an independent audit of the Archon financial and accounting

records relating to the Slot Table.

 

9.5                                 Designated

Successors  – The terms and

conditions contained in this Agreement shall be binding upon and shall inure to

the benefit of the Parties hereto and their lawful legal representatives and

successors and assigns.

 

7

 

9.6                                 Enforceability

of Provisions  – If any

covenant, obligation or provision contained in this Agreement or the

application thereof to any person or circumstance shall to any extent be

found to be invalid or unenforceable, the remainder of this Agreement or the

application of the offending provision to any other person or circumstance,

shall not be affected thereby and each covenant, obligation and provision of

this Agreement shall be separately valid and enforceable to the fullest extent

permitted by law.

 

9.7                                 Entire

Agreement  – This Agreement

constitutes the entire agreement between the Parties and supersedes all prior

contracts, agreements and undertakings relating to the subject matter of this

Agreement between the Parties.  There

are no representations, warranties, collateral agreements or conditions

affecting this transaction other than as expressed or referred to herein in

writing.

 

9.8                                 Headings

– The headings herein contained

are intended for convenience of reference only and shall not form a part hereof

nor affect the interpretation of this Agreement.

 

9.9                                 Jurisdiction

– This Agreement shall be governed

by and interpreted in accordance with the laws in force in the State of

Nevada.  The Parties, as well as any of

their employees or representatives, irrevocably agree to the exclusive

jurisdiction of the Courts of the state of Nevada (or such judicial district of

a court of the United states as shall include the same) for the determination

of all matters arising hereunder.

 

9.10                           Modification

– None of the terms of this

Agreement may be waived or modified except by an express agreement in writing

signed by authorized signatories of each Party.  The failure or delay of either Party in enforcing any of its

rights under this Agreement shall not be deemed a continuing waiver or a

modification by such Party of such right.

 

9.11                           Severability

– Any term or provision of this

Agreement which is invalid or unenforceable in any jurisdiction shall, as to

such jurisdiction, be ineffective to the extent of such invalidity or

unenforceability without rendering invalid or unenforceable the remaining terms

and provisions of this Agreement or affecting the validity or enforceability of

any of the terms or provisions of this Agreement in any other jurisdictions, it

being intended that all rights and obligations of the parties hereunder shall

be enforceable to the fullest extent permitted by law.

 

9.12                           Interpretation

– All defined terms herein include

the plural as well as the singular.  All

references in this Agreement to designated “Sections” or “Paragraphs” and other

subdivisions are to the designated Sections and Paragraphs and other

subdivisions of this Agreement.  All

references in 

 

8

 

this Agreement

to any party shall include all permitted transferees of such party.  This agreement shall not be construed for or

against either party by reason of the authorship or alleged authorship of any

provisions hereof or by reason of the status of the respective parties.  This Agreement shall be construed reasonably

to carry out its intent without presumption against or in favor of either

party.

 

9.13                           Public

Disclosure  – Unless otherwise

required by law, any public disclosure of the subject matter of this Agreement

shall be approved by the parties hereto prior to release, provided that such

approval shall not be unreasonably withheld or delayed.

 

IN WITNESS

WHEREOF, the Parties have caused this Agreement to be executed by their duly

authorized representatives as follows:

 

	

  LOWDEN

  	

  ARCHON

  CORPORATION

  
	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  By:

  	

   

  
	

  David G. Lowden

  	

   

  
	

   

  	

   

  
	

  Dated:

  	

   

  	

   

  	

  Dated:

  	

   

  
							

 

9Finder's Agreement

         This agreement ("Agreement"), effective January 1, 2000, executed
September 20, 2000, is between a North Carolina corporation, ID Technologies
Corporation ("the Company"), and Mark Kevin Seifert ("Finder").

                                    Recitals

         Whereas Finder represents that he will endeavor to introduce the
Company to one or more Targets (as defined in section 2(b) below) who may be
interested in engaging in a financing arrangement or a business combination with
the Company which may include a loan, merger or purchase of some or all of the
stock or assets of the Company; or a licensing agreement, joint venture,
distribution agreement or product purchase arrangement involving the Company and
a Target (singularly and in combination, a "Transaction"); and

         WHEREAS, the Company desires to engage the services of Finder to
provide an introduction to such Targets in accordance with the terms and
conditions set forth in this Agreement.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, and for other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.       The Company engages Finder as one of the Company's non-exclusive
         finders, to find Targets interested in effecting a Transaction. Finder
         will endeavor to introduce the Company to such Targets.

2.       (a) In order to coordinate the Company's and Finder's respective
         efforts during the period of engagement hereunder, Finder will from
         time to time notify the Company of potential Targets he is contacting.
         The Company will promptly inform Finder whether it is interested in
         being introduced to such potential Targets. If so, Finder will
         introduce representatives of the Company to representatives of such
         Targets.

         (b) For the purposes of this Agreement, "Targets" shall mean
         individuals or entities introduced to the Company by Finder.

3.       In the event of a consummated Transaction, the Company shall pay to
         Finder a cash fee equal to 5% (five percent) of the consideration paid
         in such Transaction. "Consideration paid in such Transaction" for the
         purposes of this Agreement shall mean the value of: (a) all
         consideration paid to the Company and the stockholders of the Company
         in connection with a Transaction, including cash, securities or other
         consideration exchanged or paid at closing; assumption of debt; and any
         deferred payments including without limitation notes, contingent
         payments, license fees or royalty payments; and (b) the aggregate
         amount of any loan made
<PAGE>
FINDER'S AGREEMENT
ID Technologies Corporation & Mark K. Seifert
Effective January 1, 2000
Page 2 of 4

         by the Target to the Company, investment in the Company by the Target,
         or by the Company and the Target in a joint venture. Payment of the
         applicable fee set forth above will be made at the closing of the
         related Transaction. The fee shall be payable in cash and any
         consideration other than cash which is paid in the consummated
         Transaction shall be valued at its fair market value.

         In the event that a Transaction or other business arrangement between
         the Company and a Target includes: a) licensing of the Company's
         intellectual property or technology and agreement by the Target to make
         future royalty payments which are variable in amount depending on
         sales, or, b) purchase of the Company's products by a Target, the
         Company shall pay to Finder, promptly upon receipt of all such royalty
         or product purchase payments, a cash fee of 5% (five percent) of said
         payments.

         In the event that any fees due Finder are not paid when due, the
         Company shall also be liable for interest on the amount due at the
         annual rate of three percent over the prime rate, accruing on a daily
         basis from the date of closing, plus all of Finder's reasonable legal
         fees and expenses in connection with collection of said fees.

4.       This Agreement shall remain in full force and effect, automatically
         renewed for successive 12-month periods, until terminated in writing by
         either party at least 30 days prior to the anniversary of the effective
         date. Provided, however, that the Finder shall be entitled to receive
         the full fee set forth in paragraph three (3) hereof in the event
         discussions are held with a Target during the term of this Agreement
         and a Transaction or other business arrangement is consummated with
         such Target within two years from the termination of this Agreement.

5.       The Company shall not be liable for any retainers, costs, expenses or
         other charges incurred by Finder or third parties at the request of
         Finder unless the Company has authorized such costs or expenses. Such
         authorized costs shall be paid upon invoicing.

6.       (a) Finder is an independent contractor and advisor and is not an
         employee or agent of the Company and shall have no authority to bind
         the Company in any manner whatsoever.

         (b)      The Company shall furnish Finder with such information
                  believed by the Company to be complete and up-to-date, as
                  Finder may request and believes appropriate to be disclosed
                  concerning the business of the Company.

         (c)      The Company acknowledges that Finder has not done any due
                  diligence with respect to any Target and that Finder makes no
                  representations whatsoever

<PAGE>
FINDER'S AGREEMENT
ID Technologies Corporation & Mark K. Seifert
Effective January 1, 2000
Page 3 of 4
                  with respect to any Target (including without limitation its
                  financial condition or its ability to perform any obligations
                  to which it is or may become bound), and the Company expressly
                  agrees that Finder shall have no liability whatsoever in
                  connection with any Transaction it may enter into with at
                  Target.

         (d)      Because Finder will be acting on behalf of the Company, the
                  Company agrees to the following indemnification provisions. If
                  Finder becomes involved in any capacity in any action or legal
                  proceeding in connection with any Transaction subject to this
                  Agreement, the Company agrees to indemnify and hold harmless
                  Finder for any and all losses, claims, damages, liabilities
                  (including amounts paid in settlement approved in writing by
                  the Company of any action, suit, arbitration, proceeding,
                  demand or claim), joint or several, or actions or threatened
                  actions based upon or arising out of any Transaction or
                  Finder's services hereunder to which Finder may become subject
                  under the securities laws or otherwise; provided, however,
                  that the Company shall not be liable under the foregoing
                  indemnity agreement i) in respect to any loss, claim, damage
                  or liability to the extent that a court having jurisdiction
                  shall have determined by a final judgment that such loss,
                  claim, damage, or liability resulted from the willful
                  misfeasance or gross negligence of Finder, or ii) unless
                  Finder gives the Company prompt written notice of the claim or
                  action and control of the defense thereto.

7.       This Agreement shall be governed by and construed in accordance with
         the laws of the State of North Carolina.

8.       This Agreement constitutes the entire agreement between the parties and
         supersedes any prior agreements, whether written or oral, between the
         parties. No modification, extension or change in the Agreement shall be
         effective unless it is in writing and signed by both Finder and the
         Company.

9.       The provisions of this Agreement shall be binding upon and shall inure
         to the benefit of the parties hereto, there heirs, legal
         representatives, successors and assigns. This Agreement may not be
         assigned except upon the prior written consent of the other party to
         this Agreement.

10.      Any notice hereunder shall be in writing and delivery thereof shall be
         complete if delivered in person, by facsimile, or mailed by overnight
         mail, or registered or certified mail, postage prepaid to the following
         addresses (unless changed by written notice).

<PAGE>
FINDER'S AGREEMENT
ID Technologies Corporation & Mark K. Seifert
Effective January 1, 2000
Page 3 of 4

         Finder:           Mark K. Seifert
                           107 Saint Brides Court
                           Cary, NC 27511

         Company:          ID Technologies Corporation
                           NCSU Centennial Campus
                           920 Main Campus Drive, Ste. 400
                           Raleigh, NC 27606

         IN WITNESS WHEREOF, this Agreement has been executed this the 20th day
of September 2000 by the parties hereto, effective as of the date first above
written.

By:                                                      By:

            --------------------                              ------------------
         J. Phillips L. Johnston                              Mark K. Seifert
         President & CEO
         ID Technologies Corporation

<PAGE>

                               PATENT & TRADEMARK
                              ASSIGNMENT AGREEMENT

         THIS AGREEMENT made and entered into this 8th day of November 2001 by
and between ID Technologies Corporation, a North Carolina corporation whose
principal address is NCSU Centennial Campus, 920 Main Campus Dri0ve, Suite 400,
Raleigh, North Carolina 27606 (hereinafter referred to as "IDTEK"), and Mark
Kevin Seifert, 107 Saint Brides Court, Cary, NC 27511 (hereinafter referred to
as "SEIFERT").

                               W I T N E S S E T H

         WHEREAS, IDTEK has expended considerable effort and funds developing
fingerprint identification technologies, and has applied for patent protection
therefor, and

         WHEREAS, SEIFERT has since October 2000 served as IDTEK's Secretary,
advised its Board of Directors, developed familiarity with IDTEK's technologies,
and has invented additional related technologies, and

         WHEREAS, IDTEK and SEIFERT are interested in applying for patent
protection for SEIFERT's additional related technologies, and

         WHEREAS, IDTEK is interested in licensing, developing, producing and
selling products and/or rights in such fingerprint identification technologies;
and

         WHEREAS, SEIFERT is willing to assign any rights in SEIFERT's
additional related technologies to IDTEK under the conditions hereinafter set
forth;

         WHEREAS, the parties are desirous of recording their agreement
concerning such an assignment of intellectual property in SEIFERT's related
technologies and IDTEK's development and marketing thereof.

         NOW, THEREFORE, for good and valuable consideration, the receipt
sufficiency of which is hereby acknowledged, it is agreed as follows:

                             ARTICLE 1 - DEFINITIONS

         Terms in this Agreement (other than names of parties and Article
headings) which are set forth in upper case letters have the meanings
established in the succeeding paragraphs of this Article 1.

         A. "BIOMETRIC AUTHENTICATION TECHNOLOGY" means the technology relating
to self-authenticating card/panel systems that provides for the biometric
identification of individuals/users independently and by positive match of
fingerprint characteristics encrypted and stored onboard the self-authenticating
card/panel systems with the issuer's database containing the fingerprint
characteristics of each person registered by whatever means, providing the
appropriate account information, authorizing and recording the transaction,
updating status, applying and confirming appropriate charges for database
searches and account updates, and alerting the issuer to any duplicate
fingerprint characteristics found in the database.

<PAGE>

         B. "SEIFERT TRADEMARK" means any improvements made by SEIFERT or a
third party to SEIFERT TECHNOLOGY, including the patent, trade secret and other
proprietary rights associated therewith that SEIFERT owns, or in which SEIFERT
has an interest.

         C. "SEIFERT TECHNOLOGY" means all patents, copyright, trade secret and
other proprietary rights associated with BIOMETRIC AUTHENTICATION TECHNOLOGY
that SEIFERT owns, including, without limitation, the SEIFERT PATENTS.

         D. "IDTEK IMPROVEMENTS" means any improvements made by IDTEK or a third
party on behalf of IDTEK to SEIFERT TECHNOLOGY, including the patent, trade
secret and other proprietary rights associated therewith that IDTEK owns, or in
which IDTEK has an interest.

         E. "SEIFERT TRADEMARK" means any trademark, tradename, or trade dress
associated with SEIFERT TECHNOLOGY or SEIFERT TRADEMARK.

         F. "NET RECEIPTS" of a UNIT means the total of the gross amount billed
or invoiced, and received, on the first sale or other disposition of a UNIT by
IDTEK to a third party less:

         1.       trade, quantity or cash discounts and rebates actually given;

         2.       rebates, refunds and credits taken by reason of rejection or
                  return of such UNIT or retroactive reductions in the price of
                  such UNIT;

         3.       actual freight and insurance costs of transporting such UNIT
                  to a third party if separately stated on a bill or invoice and
                  paid by the third party;

         4.       sales, value-added, excise and other direct taxes, customs
                  duties and other government charges incurred and paid if
                  separately stated on a bill or invoice and paid by the third
                  party.

The "gross amount billed or invoiced" for calculating NET RECEIPTS of any UNIT
means:

                  (a)      if a UNIT is sold by IDTEK to a third party other
                           than a SPECIAL PARTY, IDTEK's actual billing or
                           invoice amount for such UNIT;

                  (b)      if a UNIT is sold by IDTEK's licensee to a third
                           party, the greater of IDTEK's actual billing or
                           invoice amount or the licensee's actual billing or
                           invoice amount for such UNIT;

                  (c)      if a UNIT is sold to a SPECIAL PARTY for subsequent
                           resale by or for such SPECIAL PARTY, the greater of
                           IDTEK's actual billing or invoice amount or the
                           SPECIAL PARTY's actual billing or invoice amount for
                           such UNIT; or

                                  Page 2 of 10
<PAGE>

                  (d)      if the UNIT is sold to a SPECIAL PARTY for use by
                           such SPECIAL PARTY, the billing or invoice amount
                           that would have resulted from a hypothetical
                           arm's-length sale by IDTEK to a third party if such
                           third party were not a SPECIAL PARTY.

         G. "LICENSE, ROYALTY AND INCREMENTAL RECEIPTS" means the total of the
gross amount billed or invoiced by IDTEK in consideration for any license of the
SEIFERT TECHNOLOGY, in royalty under such a license or sublicense on first sale
or other disposition of a UNIT, or any other incremental payment or value IDTEK
receives from any third party related to the disposition or use of a UNIT or to
any other aspect of the SEIFERT TECHNOLOGY.

         H. "SEIFERT PATENTS" means (i) any patents and patent applications now
or hereafter owned by SEIFERT, or in which SEIFERT has any interest claiming
SEIFERT TECHNOLOGY, (ii) any patents and patent applications now or hereafter
owned by SEIFERT, or in which SEIFERT has any interest, claiming SEIFERT
TRADEMARK, and (iii) any reissues, renewals, extensions, divisionals,
continuations, continuations-in-part and foreign counterparts of the foregoing
and any Patent Cooperation Treaty international applications claiming the
priority of the foregoing.

         I. "SPECIAL PARTY" means (i) any corporation, company, or other entity
in which IDTEK owns or controls at least fifty percent (50%) of the stock
entitled to vote in election of members of the Board of Directors, or (ii) any
corporation, company, or other entity which owns or controls at least fifty
percent (50%) of IDTEK's voting stock.

         J. "UNIT" means a commercial product that embodies any SEIFERT
TECHNOLOGY.

                             ARTICLE 2 - ASSIGNMENT

         SEIFERT hereby assigns to IDTEK his rights in the SEIFERT TECHNOLOGY
and any SEIFERT TRADEMARK thereof in accordance with the terms of this
Agreement.

                       ARTICLE 3 - PAYMENTS AND STATEMENTS

         A. In consideration for SEIFERT entering in this Agreement, IDTEK
agrees to pay SEIFERT in United States dollars, as follows:

                  1. RUNNING ROYALTIES. IDTEK shall pay to SEIFERT a royalty of
         three percent (3%) of NET RECEIPTS for each UNIT sold or otherwise
         distributed by IDTEK and ten percent (10%) of LICENSE, ROYALTY AND
         INCREMENTAL RECEIPTS.

                  2. PAYMENT SCHEDULE. For the calendar year in which the first
         sale of a UNIT occurs, such royalty shall be payable within thirty (30)
         days

                                  Page 3 of 10
<PAGE>

         after the end of such year. Thereafter, such royalty shall be payable
         on a quarterly basis thirty (30) days after the end of each calendar
         quarter; provided however, that if such quarterly payments exceed
         $50,000 for two (2) successive quarters, payments shall be required
         monthly thereafter, and shall be due within thirty (30) days of the end
         of each month. IDTEK shall provide SEIFERT with reports certified by
         IDTEK's chief accounting officer detailing its calculations of NET
         RECEIPTS and LICENSE, ROYALTY AND INCREMENTAL RECEIPTS in a form and
         containing such information as SEIFERT may reasonably require
         accompanying the appropriate royalty payments as set forth in this
         Agreement.

         B. IDTEK's royalty payments to SEIFERT shall equal at least $150,000
for at least one year within the first five (5) years of the life of the patent.
If that minimum royalty payment to SEIFERT of $150,000 for at least one year
within the first five (5) years is not satisfied, then IDTEK's rights in SEIFERT
TECHNOLOGY, SEIFERT TRADEMARK, and SEIFERT PATENT will revert to SEIFERT,
provided IDTEK does not exercise its option under Article 3, clause C.

         C. If within the first five (5) years of the life of the patent IDTEK's
royalty payments to SEIFERT do not equal at least $150,000 during at least one
calendar year, then IDTEK, at its option, has the right to make direct payment
to SEIFERT in order to meet the minimum royalty payment amount of $150,000
within thirty (30) days of the royalty period.

         D. If no royalties are payable, IDTEK's statements shall so state.

         E. IDTEK shall keep full and accurate books of account and records
consistent with sound business and accounting principles and practices and in
such form and detail as to enable a determination of the amounts payable by
IDTEK to SEIFERT hereunder. IDTEK shall make available such books of account and
records to SEIFERT upon SEIFERT's request for inspection by independent
certified public accountants retained by SEIFERT during normal business hours
and upon reasonable notice no more than once each calendar year for the purpose
of verifying IDTEK's reports and payments under this Agreement. All cost
associated with such inspection by SEIFERT shall be borne by SEIFERT. Books of
account and records shall be kept for at least three (3) years following the end
of the calendar year to which they pertain. IDTEK shall make prompt adjustments
to reflect the results of such audits and, when the audit results reveal that
IDTEK has understated and underpaid the royalties or other payments due SEIFERT
by at least five percent (5%), IDTEK shall reimburse SEIFERT for the reasonable
expenses of such audit along with the shortfall in payments and interest on such
shortfall as set forth in Article 4.

                        ARTICLE 4 - LATE PAYMENT & TAXES

         A. If IDTEK fails to pay any royalty or other payment required under
this Agreement on or before the date thirty (30) days after such royalty or
other payment is due, IDTEK shall pay interest on such amount at the rate of one
percent (1%) per month, which interest shall accrue from the date the payment is
due until the date such payment is made in full.

         B. Any payments received by SEIFERT shall be applied first to the
satisfaction of any unpaid, accrued interest and second to the satisfaction of
any unpaid principal.

                                  Page 4 of 10
<PAGE>

         C. If any law or regulation requires the withholding of any taxes
levied on the transfer of any royalties or other payments payable under this
Agreement, such taxes shall be deducted by IDTEK from the amount otherwise
payable to SEIFERT and paid by IDTEK to the proper taxing authority. IDTEK shall
secure proof of any such tax payment, and send such proof to SEIFERT as evidence
of such payment together with such other documents as SEIFERT may reasonably
require in order to secure a refund of or credit for the amount of such payment.
Except for the foregoing, each Party shall be responsible for any taxes that are
levied on it in connection with its obligations under this Agreement.

         D. No part of any amount owed SEIFERT hereunder may be reduced due to
any counterclaim, set-off, adjustment, or other right that IDTEK may have
against SEIFERT.

                       ARTICLE 5 - GENERAL PATENT MATTERS

         A. PROSECUTION AND MAINTENANCE OF PATENTS. IDTEK shall, at IDTEK's sole
cost and expense, immediately prepare and file the application for the SEIFERT
PATENT upon receipt of disclosure documents and all reasonably necessary
information to be supplied by SEIFERT and shall diligently prosecute the
application to final approval and thereafter, for so long as IDTEK remains the
assignee, shall maintain and defend the patent from any and all claims lodged
against it or in any venue and against any infringement

         B. NOTICE OF INFRINGEMENT. Each party shall act in good faith to inform
the other party of any infringement of which it becomes aware by any third party
of any of the SEIFERT TECHNOLOGY and, for so long as it remains an assignee,
IDTEK shall take all appropriate steps to prevent such infringement.

         C.       ENFORCEMENT AND DEFENSE BY IDTEK

                  1.          IDTEK shall at its sole cost and expense enforce
                  any of the SEIFERT TECHNOLOGY or SEIFERT PATENTS against
                  infringement by a third party.

                  2.          If a third party commences an action challenging
                  any of the SEIFERT TECHNOLOGY or SEIFERT PATENTS, IDTEK shall
                  at its sole cost and expense defend the SEIFERT TECHNOLOGY or
                  SEIFERT PATENTS against such challenge.

                  3.          SEIFERT shall reasonably cooperate with IDTEK in
                  the settlement or defense of any suit or dispute involving
                  infringement or asserted infringement by a third party of any
                  of the SEIFERT TECHNOLOGY or by IDTEK of a third party's
                  patent or other proprietary rights, and SEIFERT shall supply
                  all assistance reasonably requested by IDTEK in connection
                  with such suit or dispute, including by making available to
                  IDTEK all relevant personnel, records, information, samples,
                  seeds, specimens and the like.

                  4.          IDTEK shall be entitled to keep any amounts
                  awarded in connection with any enforcement action commenced
                  and maintained by IDTEK, except that

                                  Page 5 of 10
<PAGE>

                  SEIFERT shall be entitled to receive royalties pursuant to
                  Article 3 on all royalty amounts awarded to IDTEK. Such
                  royalties shall be determined by deducting from the amounts
                  awarded to IDTEK all reasonable out-of-pocket and internal
                  costs and expenses (including attorneys' fees) incurred by
                  IDTEK in connection with such enforcement action, with the
                  balance being treated as NET RECEIPTS of UNITs or LICENSE,
                  ROYALTY AND INCREMENTAL RECEIPTS, as appropriate, for purposes
                  of calculating the royalties payable to SEIFERT.

         D. INFRINGEMENT OF THIRD PARTY RIGHTS. SEIFERT shall promptly notify
IDTEK in writing of any known infringement, or claim of infringement, by IDTEK
of any third party's patent or other proprietary rights.

         E. RECORDATION. IDTEK may record a copy of this Agreement in any
country that permits or requires such recordation.

            ARTICLE 6 - TECHNICAL ASSISTANCE TO BE PROVIDED TO IDTEK

         SEIFERT shall assist IDTEK'S efforts by making available to IDTEK
technical consultation as deemed reasonable and necessary by both parties and at
fees mutually agreed to by the parties.

                            ARTICLE 7 - BEST EFFORTS

         IDTEK shall use its best efforts to develop, seek out, establish and
fill the demand for licensing, developing, producing, and/or selling products
that will generate revenues for IDTEK and corresponding royalties for SEIFERT.

                          ARTICLE 8 - USE OF TRADEMARKS

         A. IDTEK shall develop at its expense all signs, labels, packaging
material, advertising, or the like bearing any SEIFERT Trademark necessary for
IDTEK'S commercial operations.

         B. IDTEK is entitled to the use of all graphics, artwork, logos, etc.
developed by SEIFERT in connection with the SEIFERT TECHNOLOGY or SEIFERT
TRADEMARK.

                        ARTICLE 9 - IMPROVEMENTS

         A. Any improvements made or acquired by SEIFERT related to BIOMETRIC
AUTHENTICATION TECHNOLOGY shall be included hereunder as part of the SEIFERT
TECHNOLOGY and SEIFERT TRADEMARK and are assignable to IDTEK, including the
right and license to manufacture, use and sell such improvements without the
payment of any royalty in addition to that required by Article 3 of this
Agreement.

         B. Any improvements made or acquired solely by IDTEK shall remain the
property of IDTEK.

                                  Page 6 of 10
<PAGE>

         C. From time to time, there may be specific improvements by SEIFERT for
which IDTEK wishes SEIFERT to have additional patent applications prepared and
filed. SEIFERT agrees to sign all papers and drawings, take all rightful oaths,
and do all acts necessary or required to be done for the procurement of valid
Letters Patent for such inventions, or for the reissue of the same without
charge to IDTEK. However, the preparation of suitable patent applications on
such improvements shall be at IDTEK's expense, except as otherwise provided for
in this Agreement.

                    ARTICLE 10 - RELATIONSHIP OF THE PARTIES

         This Agreement establishes the relations of the parties as
ASSIGNOR-ASSIGNEE.

                          ARTICLE 11 - CONFIDENTIALITY

         The confidentiality/non-disclosure agreement established between the
parties on or about January 25, 2001 remains in full force and effect and is
incorporated herein by reference in its entirety.
                    ARTICLE 12 - REPRESENTATIONS & WARRANTIES

         A. REPRESENTATIONS AND WARRANTIES OF SEIFERT. SEIFERT hereby represents
and warrants to IDTEK that:

         1.          SEIFERT has not granted any conflicting rights in the
         SEIFERT TECHNOLOGY, SEIFERT TRADEMARK, or the SEIFERT Trademark to
         third parties;

         2.          This Agreement, when executed and delivered by SEIFERT in
         accordance with the provisions hereof, will be a legal, valid and
         binding obligation of SEIFERT, enforceable against SEIFERT in
         accordance with its terms;

         3.          To SEIFERT's knowledge, IDTEK's practice of any of the
         SEIFERT TECHNOLOGY as contemplated in this Agreement will not infringe
         any patent or other proprietary rights of a third person.

         B. REPRESENTATIONS AND WARRANTIES OF IDTEK. IDTEK hereby represents and
warrants to SEIFERT that:

         1.          The execution, delivery and performance of this Agreement
         by IDTEK has been duly authorized by all necessary action on the part
         of IDTEK;

         2.          This Agreement, when executed and delivered by IDTEK in
         accordance with the provisions hereof, will be a legal, valid and
         binding obligation of IDTEK, enforceable against IDTEK in accordance
         with its terms; and

         3.          IDTEK's execution and performance of this Agreement shall
         not constitute a breach or default under any contract, instrument or
         agreement to which IDTEK is a party or by which IDTEK is bound.

                                  Page 7 of 10
<PAGE>

                          ARTICLE 13 - PATENT VALIDITY

         SEIFERT shall not contest the validity of any U.S. patents coming
within IDTEK's patent rights in court or in arbitration on any grounds which the
U.S. Patent and Trademark Office would be likely to grant reexamination, without
first requesting such reexamination and providing the Patent and Trademark
Office an opportunity to consider the asserted grounds.

                            ARTICLE 14 - TERMINATION

         This Agreement may be terminated prior to the termination of the patent
life on the occurrence of any of the following events:

         A. Any material breach by one party of the terms of this Agreement,
provided the other party is the one seeking termination and the other party
gives written notice thereof in accordance with Article 19 herein, which notice
shall state the fault or breach on which that party relies. Termination shall
become effective ninety (90) days following receipt of the notice by the party
against whom termination is sought, if such breach is not rectified to the
reasonable satisfaction of the aggrieved party within that time; or

         B. Default by IDTEK in payment of any amount due herein, provided
SEIFERT is the party seeking termination and gives written notice thereof in
accordance with Article 19 herein. The termination shall become effective thirty
(30) days following receipt of the notice, unless the amount due and unpaid is
paid in full before the expiration of the 30-day period.

         C.       The mutual written consent of the parties.

         D. Upon the early termination of this Agreement as provided herein, all
rights in and to the SEIFERT TECHNOLOGY, SEIFERT PATENTS, and SEIFERT TRADEMARK
revert to SEIFERT and IDTEK hereby assigns all such rights in and to the SEIFERT
TECHNOLOGY, SEIFERT PATENTS, and SEIFERT TRADEMARK to SEIFERT upon such
termination.

                    ARTICLE 15 - EFFECT OF EARLY TERMINATION

         A. The termination of any right or assignment granted hereby shall not
release either party from the obligation to pay the other party any accrued sums
owed to the other party or from fulfilling any accrued obligation. Additionally,
such termination shall be without prejudice to any right or remedy that either
party may have against the other party.

         B. In no case, shall either party have any claims for repayment of any
sum or sums that shall have been paid as provided under the terms of this
Agreement.

         C. In the event of termination of this Agreement for any reason
whatsoever, IDTEK shall cease to exploit in any manner the rights granted in
this Agreement, whether by the further manufacture and sale of products or
otherwise, except that IDTEK may, subject to payment of appropriate royalties,
use or dispose of any products on hand or for which components have been
purchased in the normal course of business prior to the date of termination of
this Agreement;

                                  Page 8 of 10
<PAGE>

also, any license(s) or sublicense(s) made by IDTEK or its licensee(s) will
continue to be honored as legally binding and valid on SEIFERT.

                         ARTICLE 16 - FURTHER ASSIGNMENT

         This Agreement shall inure to the benefit of and be binding upon the
parties, their successors and legal representatives, and shall be assignable as
follows: IDTEK may without need for approval from SEIFERT license and/or assign
its rights under this Agreement to any other individual or business entity.

                          ARTICLE 17 - CONTROLLING LAW

         This Agreement and all terms and conditions hereof and all questions
arising hereunder shall be construed according to the laws of the State of North
Carolina.

                            ARTICLE 18 - ARBITRATION

         Any claim or controversy arising out or relating to this Agreement, or
the breach thereof, including any dispute relating to patent validity or
infringement arising under this Agreement shall be solely and finally settled by
arbitration in Raleigh, North Carolina in accordance with the Patent Arbitration
Rules of the American Arbitration Association. Judgment on the award rendered by
the Arbitrator may be entered in any court having jurisdiction or application
may be made to such court for judicial acceptance of the award and an order of
enforcement, as the case may be.

                            ARTICLE 19 - NOTIFICATION

         Any notice hereunder must be in writing and may be personally
delivered, delivered by overnight courier, telexed or telefaxed or may be given
by certified letter and shall be deemed to have been given when such certified
letter, properly addressed, is mailed return receipt requested, and receipt
acknowledged. If given otherwise than by certified letter, it shall be deemed to
have been given when delivered, if contemporaneously documented. If such notice
is to be given to SEIFERT, it shall be addressed to SEIFERT at the address given
above; if given to IDTEK, it shall be addressed to IDTEK at its address given
above. Either party hereto may at any time by thirty (30) days notice to the
other designate any other address for itself in place of those above given.

                          ARTICLE 20- ENTIRE AGREEMENT

         This instrument contains the entire Agreement between SEIFERT and IDTEK
and no modification hereof shall be binding on the parties unless it is in
writing and signed by a duly authorized officer of the parties to be bound.

                             ARTICLE 21 - INVALIDITY

         If a court of competent jurisdiction shall declare any provision of
this Agreement invalid, such determination shall not affect the remaining
provisions of this Agreement.

                                  Page 9 of 10
<PAGE>

                         ARTICLE 22 - FURTHER DOCUMENTS

         Each of the parties hereto agree to execute and deliver all such
documents and to do any and all acts, matters and things as may be necessary or
proper in order to carry out the intent and purposes of this Agreement.

                             ARTICLE 23 - BANKRUPTCY

         Each party must inform the other party of any intentions on its part to
file a voluntary petition of bankruptcy or another intention to file an
involuntary petition of bankruptcy to be received at least thirty (30) days
prior to filing such a petition. A party's filing without conforming to this
requirement, and IDTEK's notice of such intentions, shall each be deemed to be a
material, pre-petition incurable breach which shall automatically terminate this
Agreement as of the date of such failure to inform or of such notice.

                               ARTICLE 24 - WAIVER

         Failure of the parties to enforce at any time any of the provisions of
this Agreement shall in no way be considered a waiver of such provisions or of
any provisions or any other provisions or in any way affect the validity of this
Agreement.

         IN WITNESS WHEREOF, the parties hereto have affixed their names and
seals, by the executive officers thereto duly authorized, effective as of the
day and year first above written.

                                                By: ________________________
                                                      Mark Kevin Seifert
ATTEST:

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

FOR IDTEK:
                                                By: ________________________
                                                      J. Phillips L. Johnston
                                                      President & CEO

ATTEST:

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

                                 Page 10 of 10
<PAGE>
                                 Mark K. Seifert
                                 ATTORNEY AT LAW

107 SAINT BRIDES COURT                              TELEPHONE:  (919) 362-4452
CARY, NORTH CAROLINA  27511                                markkseifert@cs.com

                                January 16, 2002

Mr. J. Phillips L. Johnston
President & CEO
ID Technologies Corporation
920 Main Campus Drive, Suite 400
Raleigh, North Carolina 27606

Dear Phil:

For the time being, I propose to continue working for ID Technologies
Corporation (IDTEK) during 2002 under terms similar to our 2001 arrangement.
Until we raise money, I am prepared to accept payment for services rendered this
year on a monthly basis in the form of an acknowledgement of indebtedness
convertible at my option to payment in the common voting stock of IDTEK in lieu
of cash. Either party can terminate this agreement upon 90 days' written notice.

Under the proposed arrangement, IDTEK would pay me at a rate $70 per hour
multiplied by 15 hours per week. With each month containing 4.33 weeks, the
monthly rate would be $4,546. The shares would be valued at the average closing
price of the stock during the first week of each calendar quarter, but never at
a rate less than $0.26 per share. Calculated at $0.26 per share, the Company
would issue 3.846153846153846153846153846153 shares to the dollar, amounting to
17,484 shares per month, if I request payment in that form.

Thank you for giving me the opportunity to serve IDTEK. I look forward to a
great 2002!

                                   Sincerely,

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