Document:

ex10-19.htm

Exhibit 10.19

 

TECHNOLOGY AND SERVICES AGREEMENT

 

TECHNOLOGY AND SERVICES AGREEMENT, dated as of December 31, 2012 (this “Agreement”), by and between LaserLock Technologies, Inc. (the “Company”), a Nevada corporation, and VerifyMe, Inc. (the “Licensor”), a Texas corporation.  In consideration of the premises and the mutual agreements and covenants hereinafter set forth, the Company and the Licensor hereby agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

SECTION 1.01  Definitions.  As used in this Agreement, the following terms shall have the following meanings:

 

“Affiliate” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.

 

“Common Stock” means the common stock, $0.001 par value per share, of the Company.

 

“Licensor Payment” means $1,000,000.

 

“Person” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

 

“Services” means those services to be performed by the Company pursuant to this Agreement.

 

“Technology” means the technology to be supported by the Company pursuant to this Agreement and the software to be further developed by the Company pursuant to this Agreement.

 

“Warrants” means the warrants to purchase shares of Common Stock as set forth in Section 2.01.

 

ARTICLE 2

 

TRANSACTIONS

 

SECTION 2.01  Consideration.  In consideration for the Services to be performed by the Company as set forth herein, in consideration for the support and further development of the Technology by the Company as set forth herein, and as consideration for the Company’s issuance to the Licensor of warrants to purchase 22,222,222 shares of Common Stock on terms consistent with the terms of the Warrant issued by the Company to the Licensor on the date hereof, the Licensor has paid the Licensor Payment to the Company on the terms set forth herein, the receipt of which is hereby acknowledged by the Company.

 

  

  

  

 

SECTION 2.02  Services.  The Licensor and the Company hereby agree as follows:

 

(a)           The Company shall support, both internally and externally, the Technology covered by the patents licensed by the Licensor to the Company under the Patent License Agreement, between the Licensor and the Company, dated as of the date hereof, and further develop the software heretofore developed by the Licensor and sold to the Company in the Asset Purchase Agreement, between the Licensor and the Company, dated as of the date hereof, such that the Company will take all commercially reasonable actions, which Company shall exercise in its sole discretion, to develop, support, sell, and market the technology and products created thereunder in the fields and markets for the Technology.

 

(b)           Concurrently with the execution of this Agreement, the Company shall execute a services agreement with Zaah Technologies, Inc. (“Zaah”) in substantially the form attached as Exhibit A.

 

(c)           The Company shall use up to $550,000 of the proceeds from the Licensor Payment for the purpose of the Company’s hiring, paying, and retaining (i) a full-time Chief Technology Officer or Chief Information Officer and (ii) two (2) full-time business developers who will have development, marketing and selling responsibilities; provided, that such proceeds shall not be used by the Company for the payment of any employment benefits, which benefits the Company shall be required to pay.  The Company shall employ persons in such roles as soon as practicable after the date hereof and for a period of at least twelve (12) months.  Such persons shall fulfill job responsibilities for the Company consistent with the responsibilities customarily associated with such job titles.  Licensor may make recommendations concerning the Company’s hires, provided, however, that (iii) the final hiring decision shall be in the sole discretion of the Company, and (iv) the Company may terminate the employment of anyone hired pursuant to this Section in its sole discretion, subject to compliance with all applicable laws, rules and regulations and this Agreement.

 

(d)           The Licensor shall use its commercially reasonable efforts to assist the Company in the development of its business and marketing of the products and technology to the extent directly relating to the Licensor’s commercial experience as of the date hereof, including referring relevant business opportunities to the Company of which the Licensor becomes aware, introducing the Company to relevant business contacts, and providing subject matter expertise to the Company.

 

SECTION 2.03  Company Representations.  The Company hereby represents and warrants to the Licensor as follows:

 

(a)           The Company has all necessary corporate power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby.  This Agreement has been duly executed and delivered by the Company, and (assuming due authorization, execution and delivery by the Licensor of this Agreement) shall constitute a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.

 

  

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(b)           The execution, delivery and performance of this Agreement by the Company will not result in any acceleration of, or requirement to repay, convert or exchange any of the indebtedness of the Company.

 

(c)           The Warrants are duly authorized by the Company.  The shares of Common Stock issuable upon exercise of the Warrants have been duly authorized and validly reserved for issuance and, upon issuance in accordance with the terms of the Warrants for the consideration expressed therein, will be duly and validly issued, fully paid, and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer that result from applicable state and federal securities laws.

 

SECTION 2.04  Further Action.  Each party hereto shall use its reasonable best efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things necessary, proper or advisable under applicable law, and execute and deliver such documents and other papers as may be reasonably required to carry out the provisions of this Agreement and consummate and make effective the transactions contemplated by this Agreement.

 

ARTICLE 3

 

MISCELLANEOUS

 

SECTION 3.01  Amendment; Waiver.  This Agreement may not be amended, supplemented, modified or restated except by an instrument in writing signed by, or on behalf of, the parties hereto or by a waiver in accordance with this Section 3.01.  Any party to this Agreement may (a) extend the time for the performance of any of the obligations or other acts of any other party, (b) waive any inaccuracies in the representations and warranties of any other party contained herein or in any document delivered by any other party pursuant hereto or (c) waive compliance with any of the agreements of any other party or conditions to such party’s obligations contained herein.  Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby.  Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement.  The failure of any party to assert any of its rights hereunder shall not constitute a waiver of any of such rights.  All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

SECTION 3.02  Confidentiality.  The Licensor and the Company covenant and agree that they will not, and they will cause their principals, Affiliates, officers and other personnel and authorized representatives not to, use information concerning another party’s business, properties and personnel received in the course of negotiating this Agreement and investigation in connection with this transaction and will hold such information (and will cause the aforesaid persons to hold such information) in confidence until such information otherwise becomes publicly available or as may be required by applicable Law.

 

  

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SECTION 3.03  Expenses.  Except as otherwise specified in this Agreement, each party hereto shall bear its own costs and expenses incurred in connection with this Agreement, including the fees and expenses of their respective accountants and legal counsel.

 

SECTION 3.04  Notices.  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by telecopy, facsimile or registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 3.04):

 

(a)           if to the Company:

 

LaserLock Technologies, Inc.

837 Lindy Lane

Bala Cynwyd, PA 19004

Facsimile:  (610) 668-2771

Attention:  Norman Gardner

Attention:  Neil Alpert

 

with a copy to:

 

Morgan, Lewis & Bockius LLP

1701 Market Street

Philadelphia, PA 19103-2921

Facsimile:  (215) 963-5001

Attention:  Justin W. Chairman, Esq.

 

(b)           if to the Licensor:

 

VerifyMe, Inc.

205 Linda Drive

Daingerfield, TX  75638

Facsimile:  (212) 661-2146

Attention:  Shephard Lane

 

with a copy to:

 

Lane & Seidman LLP

2 Park Avenue, 14th Floor

New York, NY 10016

Facsimile:  (212) 249-6960

Attention:  Vanessa Seidman, Esq.

 

SECTION 3.05  Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless 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.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated by this Agreement are consummated as originally contemplated to the greatest extent possible.

 

  

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SECTION 3.06  Assignment.  This Agreement may not be assigned by the Company, by operation of law or otherwise, without the express written consent of the Licensor (which consent may be granted or withheld in the sole discretion of the Licensor).  The Licensor may assign this Agreement or any of its rights and obligations hereunder to one or more Affiliates without the consent of the Company or to a third party with the consent of the Company, which consent shall not be unreasonably withheld.

 

SECTION 3.07  Third Party Beneficiaries and Transfers.  This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person, any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

SECTION 3.08  Governing Law; Consent to Jurisdiction.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Florida.  The parties hereto hereby (a) submit to the exclusive jurisdiction of any state or federal court sitting in Broward County, Florida for the purpose of any action arising out of or relating to this Agreement brought by any party hereto, and (b) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above named courts, that its property is exempt or immune from attachment or execution, that the action is brought in an inconvenient forum, that the venue of the action is improper, or that this Agreement or the transactions contemplated by this Agreement may not be enforced in or by any of the above named courts.

 

SECTION 3.09  Waiver of Jury Trial.  Each of the parties hereto hereby irrevocably waives to the fullest extent permitted by applicable Law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement or the Ancillary Agreements.  Each of the parties hereto (a) certifies that no representative of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement and the Ancillary Agreements, as applicable, by, among other things, the mutual waivers and certifications in this Section 3.09.

 

SECTION 3.10  Entire Agreement.  This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, between the Company and the Licensor with respect to the subject matter hereof.

 

SECTION 3.11  Counterparts.  This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.

 

  

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SECTION 3.12  Public Announcements.  Subject to its obligations under Law (including requirements of stock exchanges and other similar regulatory bodies and the requirements of the Exchange Act), no party hereto shall make any announcement regarding the entering into of this Agreement or the Closing to the financial community, governmental entities, employees, customers or the general public without the prior consent of the other party, which shall not be unreasonably withheld; provided, that if a party hereto is required by any such obligations under Law to make any such announcement as contemplated by this Section 3.12, the parties hereto shall cooperate with each other regarding the contents and timing of any such announcement, and the non-announcing party shall have the opportunity to review and comment upon the language of the proposed announcement in advance of public disclosure.  Any such comments shall be considered in good faith by the announcing party.

 

SECTION 3.13  Termination.  This Agreement shall terminate five (5) years from the date hereof.

 

SECTION 3.14  Rules of Interpretation.  In this Agreement, except to the extent otherwise provided or that the context otherwise requires: (a) when a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference is to an Article or Section of, or an Exhibit or Schedule to, this Agreement; (b) the table of contents and headings for this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement; (c) whenever the words “include,” “includes” or “including” are used in this Agreement, they are deemed to be followed by the words “without limitation”; (d) the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement; (e) all terms defined in this Agreement have the defined meanings when used in any certificate or other document delivered or made available pursuant hereto, unless otherwise defined therein; (f) the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms; (g) references to a Person are also to its successors and permitted assigns; and (h) references to sums of money are expressed in lawful currency of the United States of America, and “$” refers to U.S. dollars.

 

[Remainder of page intentionally left blank]

 

  

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

 

	  	

LASERLOCK TECHNOLOGIES, INC. 

	  	  	  
	  	
By: 

	

/s/ Norman A. Gardner

	 	 	
Name:  Norman A. Gardner

	 	 	
Title:  Chief Executive Officer

	  	  	  	  
	  	

VERIFYME, INC.

	  	  	  	  
	  	
By: 

	

/s/ Claudio Ballard

	 	 	
Name: Claudio Ballard

	 	 	
Title:   President

 

 

[Signature Page to Services Agreement]ex10-20.htm

Exhibit 10.20

 

PATENT AND TECHNOLOGY LICENSE AGREEMENT

THIS AGREEMENT is made as of this 31st day of December, 2012 (the “Effective Date”), by and between VERIFYME, INC., a Texas corporation (“LICENSOR”) and LASERLOCK TECHNOLOGIES, INC., a Nevada corporation (“LICENSEE”) (collectively the “Parties”).

 

W I T N E S S E T H:

WHEREAS, LICENSOR is the sole and exclusive owner of certain technology relating to local, mobile and cloud-based biometric security systems and methods of providing same identified more fully in the attached Schedule A (collectively, the “Technology”) and has the right to license certain United States Letters Patents and applications therefor identified more fully in the attached Schedule A (collectively, the “Patents”); and

WHEREAS, LICENSEE desires to acquire an exclusive license under the Technology and under the Patents, for at least an initial period, and thereafter a non-exclusive license thereunder, for use in the development and sale of the types of products listed in the attached Schedule A (the “Licensed Products”);

WHEREAS, LICENSOR has the power and authority to grant to LICENSEE such license(s).

NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, the parties hereto agree as follows:

1.           LICENSE

A1.  Exclusive License: LICENSOR hereby grants to LICENSEE, upon and subject to all the terms and conditions of this Agreement, an exclusive license under the Technology and under the Patents to make, use, and sell the systems and methods embodying the Technology and the invention(s) described in the Patents, during the Exclusive Period, in the Licensed Territory, as set forth in the attached Schedule A, with the sole exception of U.S. Patent No. 7,519,558, under which LICENSOR instead hereby grants to LICENSEE a non-exclusive license to make, use, and sell the systems and methods embodying the invention(s) described in U.S. Patent No. 7,519,558, during the Exclusive Period, in the Licensed Territory.  For the avoidance of doubt, the exclusivity granted hereunder shall also apply to LICENSOR without reservation and LICENSOR shall not, during the Exclusive Period, make, use, and sell the systems and methods embodying the Technology and the invention(s) of the Patents, including U.S. Patent No. 7,519,558, nor shall LICENSOR license U.S. Patent No. 7,519,558 to any third parties.  The Exclusive Period shall begin on the Effective Date and shall expire as set forth below:

1.  If the Royalties actually paid by LICENSEE to LICENSOR under this Agreement between the Effective Date through January 1, 2015, total at least Two Million Dollars ($2,000,000), then the Exclusive Period shall expire on January 1, 2016, and thereafter be automatically renewed at expiration for a successive one (1) year period each time the Royalties actually paid by LICENSEE to LICENSOR under this Agreement during the year prior to said expiration total at least One Million Dollars ($1,000,000).  If the Exclusive Period is not renewed upon any expiration, it shall not be later reinstated, regardless of the amount of Royalties later paid.

 

  

  

  

 

2.  If the Royalties actually paid by LICENSEE to LICENSOR under this Agreement between the Effective Date through January 1, 2015, total less than Two Million Dollars ($2,000,000), then the Exclusive Period shall expire on January 1, 2015.

3.  For purposes of Sections 1.A1.1 and 1.A1.2, the “Royalties actually paid by LICENSEE to LICENSOR” during a given period shall include (i) amounts paid by LICENSEE to LICENSOR, during the given period, attributable to sales of Licensed Products in accordance with Section 3B plus (ii) any amounts (“Make-Up Amounts”) paid by LICENSEE to LICENSOR, during the given period, expressly designated “Make-Up Amounts” by LICENSEE, where such Make-Up Amounts are not attributable to Payments due under Section 3.A of this Agreement or any other obligations under this Agreement.  For the avoidance of doubt, the payment of any Make-Up Amounts is at LICENSEE’s option for the purpose of extending the Exclusive Period.

4.  Make-Up Amounts are payable, at LICENSEE’s option, in:

(a) cash; or

(b) by issuing (i) a number of shares of Common Stock, par value $.001 per shares (“Shares”), of LaserLock Technologies, Inc., equal to (x) the Make Up Amount (in dollars) divided by (y) a price which equals a 10% discount to market and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years

A2.  Non-Exclusive License: LICENSOR hereby grants to LICENSEE, upon and subject to all the terms and conditions of this Agreement, a nonexclusive license under the Technology and under the Patents to make, use, and sell the systems and methods embodying the Technology and the invention(s) described in the Patents, beginning immediately at expiration of the Exclusive Period and until the end of the Term, in the Licensed Territory, as set forth in the attached Schedule A.

B.  As used in the Agreement, the Patents shall mean and include the United States Letters Patents identified more fully in the attached Schedule A, along with any patents on improvements thereof.  In addition, the Patents shall mean and include the following:

1.  Any divisional, continuation, reexamination, reissue or substitute U.S. patent application that shall be based on any of the Patents; and

2.  Any patents that shall issue on any of the above-described patent applications or on any improvements thereof, and any reexaminations and reissues and extensions thereof.

C.  LICENSEE may grant sublicenses under this Agreement to the extent required to sell, license, market or otherwise commercially exploit any Licensed Products, including but not limited to sublicenses required for distribution or manufacturing channels and to any end users of the Licensed Products, subject to the written consent of LICENSOR.

D. Sale of Patents or Technology.  In the event LICENSOR sells the Technology or any of the Patents to a third party during the Exclusive Period, LICENSOR shall pay to LICENSEE the greater of (i) ten percent (10%) of the value of the net proceeds derived from such sale or (ii) an amount equal to the sum of the Payments actually paid prior to the time of such sale by LICENSEE to LICENSOR under Subsection 3.A.  For the avoidance of doubt, the sum of the Payments referred to in Subsection (ii) of this Section 1.D. excludes any Royalties paid by LICENSEE to LICENSOR.

 

  

	
PATENT AND TECHNOLOGY LICENSE AGREEMENT 

	Page 2 of 12

  

 

2.  TERM

A.  This Agreement shall be effective as of the Effective Date and shall continue through a Primary Term and a Secondary Term, unless sooner terminated by the Parties pursuant to the terms of this Agreement (collectively, the Primary Term combined with the Secondary Term being the “Term”).

B.  The Primary Term shall begin on the Effective Date and expire simultaneously with the expiration of the longest-lived patent or the rejection or abandonment beyond further appeal of the last-remaining patent application comprised within the Patents, whichever occurs later.

C.  A Secondary Term shall begin immediately at expiration of the Initial Term and continue for a period of one (1) year thereafter, the Secondary Term renewing automatically for a successive one (1) year period unless terminated in writing by one of the Parties pursuant to the terms of this Agreement.

3.  COMPENSATION

A.  Payments: In consideration for the licenses granted hereunder, LICENSEE agrees to pay to LICENSOR cash and securities (collectively “Payments”) as follows:

1.  Payment 1, payable upon execution of the Agreement: The sum of One Hundred Thousand Dollars ($100,000), to be paid by issuing (i) a number of shares of Common Stock, par value $.001 per shares (“Shares”), of LaserLock Technologies, Inc., equal to (x) $100,000 divided by (y) $0.045 and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years.

2.  Payment 2, payable on January 1, 2014: The sum of Four Hundred Thousand Dollars ($400,000), to be paid by issuing (i) a number of Shares equal to (x) $400,000 divided by (y) a price which equals a 10% discount to market and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years.

3.  Payment 3, payable on January 1, 2015:  The sum of Four Million Five Hundred Thousand Dollars ($4,500,000), to be paid by issuing (i) a number of Shares equal to (x) $4,500,000 divided by (y) a price which equals a 10% discount to market and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years.

4.  Future Payments Contingent:  LICENSEE’s payment of Payment 2 and Payment 3 of this Subsection 3.A. is contingent.  To the extent that LICENSOR does not develop and license to LICENSEE, at a time subsequent to Payment 1, further technology and/or a further patent right related to the local, mobile and cloud based biometric security systems, then any payments not already paid, will not longer by due to LICENSOR hereunder, this nonperformance being a likelihood, more likely than not.

 

  

	
PATENT AND TECHNOLOGY LICENSE AGREEMENT 

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5.  The Payments set forth in this Subsection 3.A. are in addition to any Royalties payable pursuant to Subsection 3.B. and Schedule A, and do not apply towards the Royalties paid requirement necessary to extend and/or renew the Exclusive Period pursuant to Subsection 1.A1.

B.  Royalty:  In further consideration for the licenses granted hereunder, LICENSEE agrees to pay to LICENSOR during the Term of the Agreement, on an installment basis, the royalty recited in Schedule A (Royalty), namely, (i) an amount (the “Net Royalty”) equal to (w) LICENSEE’s Net Sales of Licensed Products during the relevant period multiplied by (x) the Net Royalty Rate recited in Schedule A, or (ii) an amount (the “Gross Royalty”) equal to (y) LICENSEE’s Gross Sales of Licensed products during the relevant period multiplied by (z) the Gross Royalty Rate recited in Schedule A, whichever (of the Net Royalty or Gross Royalty) is greater.

1.  Only one Royalty shall be paid hereunder as to Licensed Product whether or not it is covered by the Technology, a single patent or multiple patents of the Patents.

2.  The Royalty owed LICENSOR shall be calculated on a semiannual calendar basis (Royalty Period) and shall be payable no later than 30 days after the termination of the preceding full semiannual period, i.e., commencing on January 1 and June 15, except that the first and last calendar periods may be “short,” depending on the effective date of this Agreement.

3.  Notwithstanding the provisions of Subsection 3.B.2., payment of all Royalties accruing from the Effective Date until December 31, 2013, shall be deferred until January 1, 2014.  Such accrued Royalties shall become payable immediately on January 1, 2014.

C.  For each Royalty Period, LICENSEE shall provide LICENSOR with a written Royalty statement in a form acceptable to LICENSOR.  Such Royalty statement shall be certified as accurate by a duly authorized officer of LICENSEE reciting, on a country-by-country basis, the stock number, item, units sold, description, quantity shipped, gross invoice, amount billed customers less discounts, allowances, returns, and reportable sales for each Licensed Product.  Such statements shall be furnished to LICENSOR regardless of whether any Licensed Products were sold during the Royalty Period or whether any actual Royalty was owed.

D.  “Net Sales” shall mean LICENSEE’s gross sales (the gross invoice amount billed customers) of Licensed Products, less excise taxes, discounts, and allowances actually shown on the invoice (except cash discounts that are not deductible in the calculation of Royalty) and, further, less any bona fide returns (net of all returns actually made or allowed as supported by credit memoranda actually issued to the customers) up to the amount of the actual sales of the Licensed Products during the Royalty Period.  No other costs incurred in the manufacturing, selling, advertising, and distribution of the Licensed Products shall be deducted nor shall any deduction be allowed for any uncollectible accounts or allowances.

E.  A Royalty obligation shall accrue upon the sale of the Licensed Products regardless of the time of collection by LICENSEE.  A Licensed Product shall be considered “sold” when such Licensed Product is billed, invoiced, shipped, or paid for, whichever occurs first.

F.  If LICENSEE sells any Licensed Products to any affiliated or related party at a price less than the regular price charged to other parties, the Royalty shall be computed at the regular price.

 

  

	
PATENT AND TECHNOLOGY LICENSE AGREEMENT 

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G.  The receipt or acceptance by LICENSOR of any Royalty statement or payment shall not prevent LICENSOR from subsequently challenging the validity or accuracy of such statement or payment.

H.  Upon expiration or termination of this Agreement, all Royalty obligations, including the Guaranteed Minimum Royalty, shall be accelerated and shall immediately become due and payable.

I.  All payments due LICENSOR shall be made in United States currency by check drawn on a U.S. bank, unless otherwise specified by LICENSOR.

J.  In the event that currency regulations of a country in which sales are made prohibit the deposit or payment of Royalties to LICENSOR or its nominee, no Royalty payment shall accrue or be due and payable by LICENSEE with respect to such sales for so long as such restrictions prevail.

K.  Late payments shall incur interest at One Percent (1.0%) per month from the date such payments were originally due, or at the maximum rate of interest allowable by the State of Texas, whichever is lower, provided that any payments in excess of the maximum rate allowable by the State of Texas will be automatically considered as advance payments against future Royalties.

4.  RECORD INSPECTION AND AUDIT

A.  LICENSOR shall have the right, upon reasonable notice, to inspect LICENSEE’s books and records and all other documents and material in LICENSEE’s possession or control with respect to the subject matter of this Agreement.  LICENSOR shall have free and full access thereto for such purposes and may make copies thereof.  In no event shall LICENSOR have the right to examine information with respect to LICENSEE’s costs, pricing formulas, or percentages of markup.  LICENSEE shall impose similar obligations on its sublicensees for the benefit of itself and of LICENSOR.

B.  In the event that such inspection reveals an underpayment by LICENSEE of the actual Royalty owed LICENSOR, LICENSEE shall pay the difference, plus interest calculated at the rate of One Percent (1.0 %) per month, or at the maximum rate of interest allowable by the State of Texas, whichever is lower, provided that any payments in excess of the maximum rate allowable by the State of Texas will be automatically considered as advance payments against future underpayments.  If such underpayment is in excess of Five Thousand Dollars ($5,000) for any Royalty Period, LICENSEE shall also reimburse LICENSOR for the cost of such inspection.

C.  All books and records relative to LICENSEE’s obligations hereunder shall be maintained and made accessible to LICENSOR for inspection at a location in the United States for at least five years after termination of this Agreement.

5.  INTELLECTUAL PROPERTY PROTECTION

All patent applications comprised within the Patents shall be prosecuted to issuance or final rejection by LICENSOR at LICENSOR’s reasonable cost and expense.  Any taxes, annuities, working fees, maintenance fees, and/or renewal and extension charges with respect to each patent application and patent subject to this Agreement shall be paid by LICENSOR.

 

  

	
PATENT AND TECHNOLOGY LICENSE AGREEMENT 

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6. WARRANTIES AND OBLIGATIONS

A.  LICENSOR represents and warrants that, to the best of its knowledge and belief, it has the right and power to grant the licenses granted herein; that there are no other agreements with any other party in conflict with such grant; and that it knows of no prior art that would invalidate the Patents.

B.  LICENSOR further represents and warrants that, to the best of its knowledge and belief, LICENSEE’s contemplated use of the Patents as represented to LICENSOR does not infringe any valid rights of any third party, and that there are no actions for infringement against LICENSOR with respect to the Patents.

C.  LICENSOR EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES CONCERNING THE PATENTS AND THE TECHNOLOGY, INCLUDING ANY WARRANTIES OF MERCHANTABILITY AND/OR FITNESS FOR ANY PARTICULAR PURPOSE, AND WARRANTIES OF PERFORMANCE, AND ANY WARRANTY THAT MIGHT OTHERWISE ARISE FROM COURSE OF DEALING OR USAGE OF TRADE. NO WARRANTY IS EITHER EXPRESS OR IMPLIED WITH RESPECT TO THE USE OF THE PATENTS AND THE TECHNOLOGY. Under no circumstances shall LICENSOR be liable for incidental, special, indirect, direct or consequential damages or loss of profits, interruption of business, or related expenses which may arise from use of the Patents or the Technology, including but not limited to those resulting from defects in the Patents or the Technology of any kind

D.  LICENSEE acknowledges and agrees that the Patents and Technology are licensed “AS IS”.

E.  LICENSEE acknowledges and agrees to use its reasonable best efforts to use the Patent and Technology licensed herein in accordance with applicable laws, customary good business practices, and in a manner consistent with the use of the patents and technology owned by LICENCEE.

F.  LICENSEE shall be solely responsible for the manufacture, production, sale, and distribution of the Licensed Products and will bear all costs associated therewith.

G.  In the event that LICENSOR shall develop any improvement to the apparatus claimed in the Patents, and later incorporate it into an improved or modified product by LICENSEE, such improved product shall be subject to the payment of a Royalty. All improvement made by the LICENSEE shall be promptly disclosed to LICENSOR and shall hereinafter become the property of LICENSOR. LICENSEE hereby agrees to execute any and all documents necessary to perfect LICENSOR’s rights in such improvements.

7.  MARKING AND SAMPLES

A.  LICENSEE shall, and agrees to require its sublicensees to, fully comply with the patent marking provisions of the intellectual property laws of the applicable countries in the Licensed Territory.

B.  At least once during each calendar year, LICENSEE shall submit to LICENSOR two samples of each of the Licensed Products.

 

  

	
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8.  TERMINATION

The following termination rights are in addition to the termination rights that may be provided elsewhere in the Agreement:

A.  Immediate Right of Termination.  LICENSOR shall have the right to immediately terminate this Agreement by giving written notice to LICENSEE in the event that LICENSEE does any of the following:

1. Fails to obtain or maintain product liability insurance in the amount and of the type provided for herein;

2. Files a petition in bankruptcy or is adjudicated a bankrupt or insolvent, or makes an assignment for the benefit of creditors or an arrangement pursuant to any bankruptcy law, or if the LICENSEE discontinues or dissolves its business or if a receiver is appointed for LICENSEE or for LICENSEE’s business and such receiver is not discharged within thirty (30) days;

3. Fails to commence the shipment of Licensed Products within eighteen (18) months from the Effective Date of this Agreement; or

4. Upon the commencement of sale of Licensed Products, fails to sell any Licensed Products for three (3) or more consecutive Royalty Periods.

B.  Right to Terminate Upon Notice.  Either party may terminate this Agreement upon thirty (30) days’ written notice to the other party in the event of a breach of any provision of this Agreement by the other party, provided that, during the thirty-day period, the breaching party fails to cure such breach.

C.  LICENSEE Right to Terminate.  LICENSEE shall have the right to terminate this Agreement at any time upon sixty (60) days’ written notice to LICENSOR, such termination to become effective at the conclusion of such sixty-day period.

9.  POST TERMINATION RIGHTS

Upon expiration or termination of this Agreement, LICENSEE shall thereafter immediately, except for reason of termination because of expiration or a declaration of patent invalidity, cease all further use of the Patents and all rights granted to LICENSEE or its sublicensees under this Agreement shall forthwith terminate and immediately revert to LICENSOR.

10.  INFRINGEMENTS

A.  LICENSOR shall have the sole and exclusive right, in its discretion, to institute and prosecute lawsuits against third persons for infringement of the rights licensed in this Agreement.  All sums recovered in any such lawsuits, whether by judgment, settlement or otherwise, in excess of the amount of reasonable attorneys’ fees and other out of pocket expenses of such suit, shall be retained solely by LICENSOR.

B.  LICENSEE agrees to fully cooperate with LICENSOR in the prosecution of any such suit against a third party and shall execute all papers, testify on all matters, and otherwise cooperate in every way necessary and desirable for the prosecution of any such lawsuit.  The LICENSOR shall reimburse the LICENSEE for any expenses incurred as a result of such cooperation.

 

  

	
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11.  CONFIDENTIALITY

A.  “Confidential Information” shall mean any confidential technical data, trade secret, know-how or other confidential information disclosed by any party hereunder in writing, orally, or by drawing or other form and which shall be marked by the disclosing party as “Confidential” or “Proprietary.” If such information is disclosed orally, or through demonstration, in order to be deemed Confidential Information, it must be specifically designated as being of a confidential nature at the time of disclosure and reduced in writing and delivered to the receiving party within thirty (30) days of such disclosure.

B.  Notwithstanding the foregoing, Confidential Information shall not include information which: (i) is known to the receiving party at the time of disclosure or becomes known to the receiving party without breach of this Agreement; (ii) is or becomes publicly known through no wrongful act of the receiving party or any subsidiary of the receiving party; (iii) is rightfully received from a third party without restriction on disclosure; (iv) is independently developed by the receiving party or any of its subsidiary; (v) is furnished to any third party by the disclosing party without restriction on its disclosure; (vi) is approved for release upon a prior written consent of the disclosing party; (vii) is disclosed pursuant to judicial order, requirement of a governmental agency or by operation of law.

C.  The receiving party agrees that it will not disclose any Confidential Information to any third party and will not use Confidential Information of the disclosing party for any purpose other than for the performance of the rights and obligations hereunder during the term of this Agreement and for a period of five (5) years thereafter, without the prior written consent of the disclosing party. The receiving party further agrees that Confidential Information shall remain the sole property of the disclosing party and that it will take all reasonable precautions to prevent any unauthorized disclosure of Confidential Information by its employees. No license shall be granted by the disclosing party to the receiving party with respect to Confidential Information disclosed hereunder unless otherwise expressly provided herein.

D.  Upon the request of the disclosing party, the receiving party will promptly return all Confidential Information furnished hereunder and all copies thereof.

E.  The Parties agree that all publicity and public announcements concerning the formation and existence of this Agreement shall be jointly planned and coordinated by and among the Parties. Neither party shall disclose any of the specific terms of this Agreement to any third party without the prior written consent of the other party, which consent shall not be withheld unreasonably. Notwithstanding the foregoing, any party may disclose information concerning this Agreement as required by the rules, orders, regulations, subpoenas or directives of a court, government or governmental agency, after giving prior notice to the other party.

F.  If a party breaches any of its obligations with respect to confidentiality and unauthorized use of Confidential Information hereunder, the non-breaching party shall be entitled to equitable relief to protect its interest therein, including but not limited to injunctive relief, as well as money damages notwithstanding anything to the contrary contained herein.

 

  

	
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G.  Except as otherwise set forth in this Agreement, neither party will make any public statement, press release or other announcement relating to the terms of or existence of this Agreement without the prior written approval of the other.

12.  INDEMNITY

A.  LICENSEE agrees to defend, indemnify and hold LICENSOR and its officers, directors, agents, and employees, harmless against all costs, expenses, and losses (including reasonable attorney fees and costs) incurred through claims of third parties against LICENSOR based on the manufacture or sale of the Licensed Products including, but not limited to, actions founded on product liability.

B.  LICENSOR agrees to defend, indemnify and hold LICENSEE and its officers, directors, agents, sublicensees, employees, and customers, harmless against all costs, expenses, and losses (including reasonable attorney fees and costs) incurred through claims of third parties against LICENSEE based on a breach by LICENSOR of any representation and warranty made in this Agreement, provided, however, any provision herein to the contrary notwithstanding, the maximum liability of LICENSOR to any person, firm or corporation whatsoever arising out of or in the connection with any sale, license, use or other employment of the Patents and the Technology licensed to LICENSEE hereunder, whether such liability arises from any claim based on breach or repudiation of contract, warranty, tort or otherwise, shall in no case exceed the actual amounts paid to LICENSOR by LICENSEE under this Agreement. The essential purpose of this provision is to limit the potential liability of LICENSOR arising out of this Agreement. The parties acknowledge that the limitations set forth in this Section are integral to the amount of consideration levied in connection with the license of the Patents and the Technology and any services rendered hereunder and that, were LICENSOR to assume any further liability other than as set forth herein, such consideration would of necessity be set substantially higher.

C.  The provisions of Subsection 12.B. notwithstanding, unless LICENSEE uses the Patents and Technology licensed hereunder in accordance with this Agreement, and until such time as LICENSEE has commenced the sale of Licensed Products pursuant to this Agreement, LICENSOR shall have no obligation to defend, indemnify or hold harmless LICENSEE and its officers, directors, agents, sublicensees, employees, and customers, against any costs, expenses, and losses (including reasonable attorney fees and costs) incurred through claims of third parties against LICENSEE arising out of or in the connection with this Agreement or with any sale, license, use or other employment of the Patents and the Technology licensed to LICENSEE hereunder.

13. INSURANCE

LICENSEE shall, throughout the Term of the Agreement, obtain and maintain at its own cost and expense from a qualified insurance company licensed to do business in Texas and having a Moody’s rating of B+ or better, standard Product Liability Insurance naming LICENSOR, and its officers, directors, employees, agents, and shareholders, as an additional insured.  Such policy shall provide protection against all claims, demands, and causes of action arising out of any defects or failure to perform, alleged or otherwise, of the Licensed Products or any material used in connection therewith or any use thereof.  The amount of coverage shall be as specified in Schedule A attached hereto.  The policy shall provide for thirty (30) days’ notice to LICENSOR from the insurer by registered or certified mail, return receipt requested, in the event of any modification, cancellation, or termination thereof.  LICENSEE agrees to furnish LICENSOR a certificate of insurance evidencing same within thirty (30) days after execution of this Agreement and, in no event, shall LICENSEE manufacture, distribute, or sell the Licensed Products prior to receipt by LICENSOR of such evidence of insurance.

 

  

	
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14.  NOTICE AND PAYMENT

A.  Any notice required to be given under this Agreement shall be in writing and delivered personally to the other designated party at the above-stated address or mailed by certified, registered or Express mail, return receipt requested or by Federal Express.

B. Either party may change the address to which notice or payment is to be sent by written notice to the other under any provision of this paragraph.

15.  JURISDICTION/DISPUTES

This Agreement shall be governed in accordance with the laws of the State of Texas.  All disputes under this Agreement shall be resolved by litigation in the courts in Morris County in the State of Texas including the federal courts therein and the Parties all consent to the jurisdiction of such courts, agree to accept service of process by mail, and hereby waive any jurisdictional or venue defenses otherwise available to it.  With respect to litigation in the federal courts where multiple districts within the State of Texas have jurisdiction, the Parties agree to jurisdiction in the Eastern District of Texas.

16. AGREEMENT BINDING ON SUCCESSORS

The provisions of the Agreement shall be binding upon and shall inure to the benefit of the Parties hereto, their heirs, administrators, successors and assigns.

17.  ASSIGNABILITY

Neither party may assign this Agreement or the rights and obligations thereunder to any third party without the prior express written approval of the other party which shall not be unreasonably withheld.

18.  WAIVER

No waiver by either party of any default shall be deemed as a waiver of prior or subsequent default of the same or other provisions of this Agreement.

19.  SEVERABILITY

If any term, clause or provision hereof is held invalid or unenforceable by a court of competent jurisdiction, such invalidity shall not affect the validity or operation of any other term, clause or provision and such invalid term, clause or provision shall be deemed to be severed from the Agreement.

20.  INTEGRATION

This Agreement constitutes the entire understanding of the Parties, and revokes and supersedes all prior agreements between the Parties and is intended as a final expression of their Agreement.  It shall not be modified or amended except in writing signed by the Parties hereto and specifically referring to this Agreement.  This Agreement shall take precedence over any other documents which may conflict with this Agreement.

 

  

	
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21.  COUNTERPARTS AND FACSIMILE SIGNATURES

This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement. Facsimile execution and delivery of this Agreement by any of the Parties shall be legal, valid and binding execution and delivery of such document for all purposes.

 

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IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound hereby, have each caused to be affixed hereto its or his/her hand and seal the day indicated.

	  	  	  	  	  	  	  	  
	VERIFYME, INC.  	 	LASERLOCK TECHNOLOGIES, INC.
	 	 	 	 	 	 	 	 
	
By: 

	
/s/ Claudio Ballard

	  	  	
By: 

	
/s/ Norman A. Gardner

	
Title: 

	
President

	 	 	
Title: 

	
Chief Executive Officer

	
Date: 

	
December 31, 2012

	  	  	
Date: 

	
December 31, 2012

 

 

	

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