Exhibit 10.4
LICENSE AGREEMENT
THIS LICENSE AGREEMENT is dated the 15th day of October, 2001
BY AND BETWEEN THE XXX XXXXX COMPANY, INC., a corporation
duly organized and existing under the laws of Nevada,
with offices at 0000 X. Xxxxxx Xxxx Xxxx., Xxx Xxxxx,
Xxxxxx 00000 ("TBJ")
AND BOURGOGNE ET GRASSET, a corporation duly organized and
existing under the laws of France with offices at X.x.
Xxxxxx Xxxxxxx, 00000 Xxxxxx, XXXXXX
("BG")
(BG and TBJ shall hereinafter be
collectively referred to in the
singular as the LICENSEE)
AND LASER LOCK TECHNOLOGIES INC., a corporation duly
organized and existing under the laws of Nevada, with
offices at 000, Xxxxx Xxxx, Xxxx Xxxxxx, Xxxxxxxxxxxx,
00000, and its Affiliates as herein defined
(LICENSOR)
WITNESSETH:
WHEREAS, LICENSOR is the sole owner of a series of proprietary rights,
patents and patent applications dealing with and relating to,
amongst other things, technology relating to systems incorporating
luminescent pigments;
WHEREAS, LICENSOR wishes to enter into a contractual arrangement with
LICENSEE so as to provide LICENSEE with the non-exclusive use of the
LL Technology for the products hereinafter defined in clause 1.06.
NOW, THEREFORE, in consideration of the premises and of the mutual agreements,
provisions and covenants here contained, the parties hereto hereby agree as
follows:
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1. DEFINITIONS
1.01 "ACQUIRED" shall mean the number of casino chips and the
number of pairs of dice sold, delivered, invoiced and for
which payment has been received by LICENSEE;
1.02 "AFFILIATES" shall mean any corporation which owns either party
or is owned or controlled to the extent of at least fifty
percent (50%) of the issued and voting stock of such corporation
by either party;
1.03 "DESIGN RIGHTS" shall mean design rights (whether registered or
unregistered) which are owned or which may hereafter be owned by
the Licensor and which relate to the Laser Lock Technologies:
1.04 "EFFECTIVE DATE" of this Agreement shall be October 15, 2001;
1.05 "LICENSEE REPORT" shall mean a written report, which shall list
the customer (or customer code), and the number of units of
Non-Exclusive Products Acquired by such customer of the Licensee
during the preceding Quarterly Royalty Period;
1.06 "LL TECHNOLOGY" shall mean (i) the technology relating to the
systems incorporating luminescent pigments which are enacted by
near infrared (NIR), (ii) the technology relating to the
preparation and mixing of the LICENSOR'S "up-converters"
pigments and phosphors which convert NIR light into visible;
(iii) the technology relating to the excitation sources
necessary for up-converting phosphors and LICENSOR'S pigments;
(iv) all Design Rights and includes without limitation all
granted patents and patent applications together with any
granted patent arising from such applications {collectively, the
"PATENTS");
1.07 "NON-EXCLUSIVE PRODUCTS" shall mean and shall be restricted to
casino chips and pairs of casino dice which incorporate the LL
Technology when used for gambling purposes;
1.08 "QUARTERLY ROYALTY PERIOD" a shall mean the period of three (3)
calendar months commencing as of the Effective Date, and every
three (3) month period thereafter during the Term;
1.09 "ROYALTY PERIOD" shall mean a period of twelve (12) calendar
months commencing on the Effective Date and every twelve (12)
month period thereafter so long as this Agreement remains in
effect;
1.10 "TERM" shall mean the time period contemplated by Article 6;
l.11 "TERRITORY" shall mean the world.
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2. LICENSE
2.01 THE LICENSOR hereby licenses and grants to LICENSEE the
non-exclusive right to use the LL Technology to market, promote,
sell, manufacture, and have manufactured Non-Exclusive Products
or components of Non-Exclusive Products in the Territory;
3. SUPPLY OF RAW MATERIALS
3.01 THE LICENSOR shall sell to LICENSEE all pigment required by
LICENSEE in order that the LICENSEE may mix its own ink for use
on and with Non-Exclusive Products, the whole at the LICENSOR'S
then prevailing most favorable selling price of pigment to any
other party. The pigment selling price as of the Effective Date
is Three Hundred Forty-Nine dollars (US$349.00) per kilo, and no
changes to the selling price will be made except upon written
notice given to LICENSEE at least thirty (30) days prior to the
effective date of such change;
3.02 THE LICENSOR also agrees to supply the LICENSEE with such amount
of laser lights as LICENSEE may require, provided that the
LICENSEE gives the LICENSOR sufficient and adequate notice so as
to allow LICENSOR sufficient time to supply the requested amount
to the LICENSEE. The LICENSEE shall pay the LICENSOR'S cost for
such laser lights plus fifteen percent (15%) of LICENSOR'S cost.
The current LICENSOR'S cost is $150.00 (plus the 15% if ordered
by the LICENSEE);
3.03 LICENSEE shall pay LICENSOR for the pigments ordered in
compliance with clause 3.01 and for laser lights ordered in
compliance with clause 3.02 within a period of forty-five (45)
days following the date of invoice;
3.04 Should LICENSOR'S cost for the laser lights be increased, then
the LICENSOR shall give the LICENSEE a notice of such need to
change price. The new price shall continue to be based upon the
actual cost to the LICENSOR, whose records for laser lights
costing shall be subject to inspection and audit by the LICENSEE
or its duly authorized representatives. In any and all cases the
price should always be the actual cost of purchase by the
Licensor from third parties (plus fifteen percent (15% of
LICENSOR'S cost)):
3.05 LICENSOR warrants that all pigments and laser lights shipped and
delivered to the LICENSEE will be in accordance with samples
previously submitted to the LICENSEE, who hereby acknowledges
having received and inspected same. It is agreed that no implied
warranty or warranties shall arise out of or in connection with
any sale or sales by the LICENSEE to third parties; and the
liability of the LICENSOR shall at all times and for whatever
occurrence be limited to the replacement of defective material
within a reasonable time after being notified in writing by the
LICENSEE:
4. CONSIDERATION
4.01 In consideration of the rights granted to LICENSEE under this
Agreement for the LL Technology. LICENSEE agrees to pay to the
LICENSOR royalties in accordance with the clauses hereinafter
following;
4.02 For each Royalty Period commencing on the Effective Date.
LICENSEE shall pay to LICENSOR at the times and in the manner
set out in clauses 4.03 and 5.02 hereof
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either (1) the minimum annual royalty of $25,000.00 (as set
forth in clause 4.03) or (2) the sum of $0.02 for each
casino chip and $0.03 per pair of dice, which incorporate
the LL Technology, Acquired by LICENSEE's customers
during the Royalty Period; whichever amount is greater;
4.03 The minimum annual royalty fee of Twenty-Five Thousand Dollars
($25,000.00) shall be paid by LICENSEE to LICENSOR by way of
four quarterly payments of Six Thousand Two Hundred and Fifty
Dollars ($6,250.00) ("Quarterly Minimum Royalty") for each
Quarterly Royalty Period with payment beginning on the Effective
Date and thereafter payment shall continue to be made on the
first day of each succeeding quarter;
4.04 In addition to the minimum royalty fee to be paid by the
LICENSEE to the LICENSOR in accordance with clause 4.02 and 5.02
hereof, the LICENSEE shall pay to the LICENSOR during each
Quarterly Royalty Period the amount arrived at by multiplying
the number of units of the Non-Exclusive Products Acquired by
LICENSEE's customers in such Quarterly Royalty Period by two
cents ($0.02) (in the case of casino chips) or three cents
($0.03) (in the case of pairs of dice) less the Quarterly
Minimum Royalty; however, in no event shall the total quarterly
royalty be less than $6,250.00;
4.05 Notwithstanding anything to the contrary herein, the maximum
royalty for any Royalty Period shall not exceed the sum of $0.02
for each casino chip Acquired and $0.03 for each pair of dice
Acquired by LICENSEE's customers during the Royalty Period;
consequently, any necessary adjustment will be made to the
fourth quarterly royalty payment in each Royalty Period.
5. RECORD AND REPORTS
5.01 LICENSEE agrees to keep accurate accounts and complete records
in sufficient detail to record the number of Non-Exclusive
Products Acquired by its customers for the Territory during each
Quarterly Royalty Period or so that the amount of the additional
payments due to LICENSOR may be ascertained.
5.02 LICENSEE shall deliver to LICENSOR:
i) commencing with the Quarterly Royalty Period beginning on
the Effective Date, no later than sixty (60) days after
the close of each Quarterly Royalty Period; and
ii) after the termination of this agreement
a statement specifying the information referred to in
clause 5.01 hereof and in such form and containing such
details as LICENSOR reasonably requires substantiating
the number of Non-Exclusive Products Acquired by
LICENSEE's customers in the Territory during the
preceding Quarterly Royalty Period. LICENSEE shall, at
the same time as providing the said statement, also remit
the amount of any royalties due in accordance with the
statement. The receipt or acceptance by LICENSOR of any
statements furnished pursuant to this Agreement or any
royalty payments paid hereunder (or the cashing of any
checks paid hereunder) shall not preclude LICENSOR from
questioning the correctness thereof at any time and in
the event that inconsistencies or mistakes are discovered
in such statements or payments, they shall be rectified
and appropriate payments shall immediately be made by
LICENSEE or credit given to LICENSEE by LICENSOR, as may
be appropriate;
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5.03 If LICENSEE fails to deliver such a statement to LICENSOR within
sixty (60) days of the end of the particular period, LICENSOR,
in addition to any other rights and on not less than ten (10)
days prior notice to LICENSEE may employ an independent auditor
qualified to practice and practicing in the United States, to
examine such books and records of LICENSEE as may be necessary
to enable him to report upon and certify the amount of
Non-Exclusive Products Acquired by LICENSEE's customers and
LICENSEE will promptly pay to LICENSOR the cost thereof as
additional royalty;
5.04 LICENSEE agrees, upon request by LICENSOR, to permit an auditor
qualified to practice and practicing in the United States, who
may be designated by either party, to have access during normal
business hours at least once annually on twenty (20) business
days' notice, to audit such books and records as may be
necessary to determine the correctness of any report or payment
made under this Agreement. On request, with reasonable notice,
LICENSEE will make available at its offices, all relevant books
of account and records;
5.05 If any audit reveals a discrepancy between the amount payable to
LICENSOR and the amounts actually paid to LICENSOR and if that
discrepancy exceeds five percent (5%) of the amounts payable as
determined in the audit, LICENSEE shall pay all of LICENSOR'S
reasonable costs associated with such audit. Otherwise, all
costs associated with any audit shall be the responsibility of
LICENSOR;
5.06 LICENSEE shall be entitled to receive copies of all audit
reports prepared pursuant to this Article 5.
6. TERM AND TERMINATION
6.01 This Agreement shall commence on October 15, 2001, "and shall
continue until 7:00 o'clock in the afternoon (Las Vegas time) of
October 15, 2002 (unless terminated as hereinafter provided);
and shall thereafter automatically renew from year to year,
unless and until terminated as provided for in clause 6.02 or
clause 6.03 hereof;
6.02 Only LICENSEE shall have the option of terminating this
Agreement in the following circumstance:
6.02.1 by not less than ninety (90) days' notice in advance and
in writing, to LICENSOR prior to October 15, 2002 or
prior to each October 15th thereafter as may be
applicable;
6.03 Either LICENSEE or LICENSOR shall have the option of
terminating this Agreement in the following circumstances:
6.03.1 If a party shall go into liquidation whether voluntary or
compulsory, shall be commenced, then the other party may
within 60 days, at its sole and absolute discretion, by
notice in writing, forthwith terminate this Agreement,
failing which notice this Agreement shall continue to
remain in full force and effect;
6.03.2 If a party shall breach any material term or condition of
this Agreement, and shall fail to cure or initiate the
cure of such material breach within thirty (30) days
after receipt of written notice from the other party
specifying the nature of the material in full detail, the
non-breaching party may
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forthwith terminate this Agreement by notice in writing,
failing which notice this Agreement shall continue to
remain in full force and effect. Notwithstanding the
foregoing, in the event of a dispute between LICENSEE and
LICENSOR as to whether a material breach has occurred or
been cured, LICENSOR shall continue to manufacture and
supply inks to LICENSEE and LICENSEE shall continue to
pay for such inks, pursuant to Articles 3 and 11, until
and unless otherwise directed by the arbitrators pursuant
to Article 14 thereof;
7. WARRANTIES, LIMITATIONS OF LIABILITY, AND HOLD HARMLESS
7.01 Each party expressly saves and holds the other party, and any
Affiliates, harmless from any and all liability of any kind or
nature whatsoever to customers and to other third parties which
may arise from its negligent acts or omissions;
7.02 LICENSOR warrants that (a) LICENSOR is the sole and exclusive
owner of the LL Technology, including without limitation any
PATENTS associated therewith (b) LICENSOR has the unqualified
right to enter into this Agreement and perform its terms, (c)
LICENSOR has not and will not enter into any agreement which is
inconsistent with "LICENSOR'S" obligations and undertakings to
LICENSEE under this Agreement, (d) any pigment sold to LICENSEE
will conform to samples previously provided, and (e) the
licenses and rights granted pursuant to this Agreement, when
used as intended and without unauthorized modification, do not
violate any right or infringe any patent, copyright or other
protection of intellectual property belonging to any third
party. LICENSOR agrees to defend, indemnify, and hold harmless
the LICENSEE and LICENSEE's principals, directors, officers,
employees, and/or agents from and against any and all
liabilities, penalties, claims, demands, suits, and causes of
action of any nature whatsoever, whether groundless or otherwise
(collectively, "Claims"), and any and all damages, costs and
expenses sustained or incurred (including cost of defense,
settlement, and attorney's fees) asserted by or on behalf of any
person or entity arising out of the licenses or rights or
intended uses granted by LICENSOR pursuant to this Agreement, or
the LL Technology applied pursuant to this Agreement, including,
without limitation, any Claim asserted against LICENSEE that its
use of the rights and/or technology contemplated in the
Agreement infringe any patent copyright or as otherwise needed
for the protection of intellectual property generally, whether
such Claim is valid or baseless and wherever it may arise;
7.03 Except as herein expressly stated (a) there are no warranties,
expressed or implied, by operation of law or otherwise for any
item furnished hereunder, (b) LICENSOR disclaims any implied
warranty of merchantability or fitness for a particular purpose,
and (c) in no event shall LICENSOR or its Affiliates, be liable
for any incidental, indirect or consequential damages in
connection with or arising out of this Agreement;
7.04 LICENSOR hereby represents and warrants that the LL Technology,
including the luminescent pigments, the NIR, the
"up-converters," and all other materials which incorporate the
LL Technology as contemplated by this Agreement, when used in
the intended manner as per the instructions to be provided by
LICENSOR; are neither harmful nor dangerous. The representations
and warranties expressed herein continue beyond the Effective
Date.
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8. CONFIDENTIALITY
8.01 LICENSEE shall keep secret and confidential the LL Technology
and/or Design Rights made available to it by LICENSOR and shall
not disclose the same other than to permitted sublicenses, ink
manufacturers, and those Directors and employees of LICENSEE or
any Affiliate of LICENSEE who may be deemed to have a legitimate
reason to be party to the LL Technology and/or Design Rights;
8.02 LICENSOR shall keep secret and confidential the terms and
conditions of this Agreement and any information which LICENSEE
passes to LICENSOR hereunder, and not disclose the same except
to its own employees as necessary to carry out the purposes of
this Agreement, or, with respect to the terms and conditions of
this Agreement, as may be necessary to comply with applicable
federal securities or other laws;
8.03 The obligations of secrecy undertaken by both parties pursuant
to this Article 8 shall not apply to information which:
8.03.1 is already, or which subsequently becomes
generally known to the public through no fault of the
recipient; or
8.03.2 the recipient can demonstrate was known to the recipient
prior to the date disclosed. For the purposes hereof,
that which the recipient can demonstrate was known will
be that which the recipient can establish by written
evidence was known to it at the date disclosed; or
8.03.3 is received from a third party, provided that such third
party is lawfully entitled to disclose the same; or
8.03.4 is disclosed in any patent or patent application which
may publish;
8.04 The obligations of secrecy pursuant to this Article 8 will
expire on the tenth anniversary of the termination of this
Agreement as hereinabove provided;
8.05 The provisions of this Article 8 contain the entire
understanding and agreement between the parties with respect to
matters dealing with confidentiality and cannot be amended,
modified or supplanted in any respect except by a subsequent
written agreement entered into by both parties. If either party
is required by a court of law or government agency to disclose
information otherwise deemed confidential under this Article 8,
it
shall give the other party prompt written notice of such
requirement prior to such disclosure and assistance in obtaining
and order protecting the information from public disclosure;
9. IMPROVEMENTS
9.01 During the term of this Agreement, each party shall disclose to
the other party any improvements to the LL Technology and/or
Design Rights which the first party may discover or which comes
into its possession. Any such improvements shall, from the time
of the party's knowledge, conception or development, be the
property of LICENSOR. Upon request by LICENSOR,
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the LICENSEE shall execute and deliver to LICENSOR such
instrument as LICENSOR may reasonably request in order to
achieve such industrial or intellectual property status as
LICENSOR shall deem appropriate to perfect the assignment of the
rights so granted by the LICENSEE to LICENSOR; provided,
however, that LICENSEE shall have a perpetual, irrevocable,
non-exclusive, and royalty-free license for any such
improvements which LICENSEE discovers or which come into its
possession;
10. MISCELLANEOUS
10.01 Neither the LICENSEE nor LICENSOR shall be in default under this
Agreement nor be liable for any failure to perform or for any
delay in performance resulting from any cause beyond its/their
reasonable control including compliance with any regulations,
orders or act of any federal, provincial, state or municipal
government, or any department or agency thereof, civil or
military authority, acts of God, acts or omissions of the other
party, fires, floods or weather, strikes or lockouts, factory
shutdowns, embargoes, wars, hostilities or riots, delays or
shortages in transportation or inability to obtain labor,
manufacturing facilities or material;
10.02 Each of the parties shall bear all taxes imposed on each of them
as a result of the existence or operation of this Agreement
including, but not restricted to, any tax on or measured by any
payment required to be made by it hereunder, any registration
tax, any tax imposed with respect to the granting of, or
transfer of, licenses or other rights or payments hereunder;
10.03 This Agreement may be varied or amended only by the written
agreement of the parties hereto through their duly authorized
officers or representatives;
10.04 In any case where any notice or other communication is required
or permitted to be given hereunder, such notice or communication
shall be in writing and:
i) Personally delivered;
ii) Sent by postage prepaid registered mail, or
iii) Transmitted by telex or facsimile to the parties at the
addresses first hereinbefore listed or to such other
addresses as the parties may notify each other.
10.05 The relationship between the parties shall be governed by the
terms of this Agreement, and the terms of a certain Escrow
Agreement being executed contemporaneously, and shall not extend
to other activities, transactions or contracts;
10.06 If any provision of this Agreement is held illegal, such
provision shall be severed from this Agreement and shall be
inoperative. The parties shall use their best endeavors to
replace the severed provision with a new provision which is not
illegal and which follows the principles of the severed
provision as closely as legally possible. The remainder of this
Agreement shall remain binding on the parties hereto;
10.07 No waiver of breach of any of the provisions of this Agreement
shall be construed to be a waiver of any succeeding breach of
the same or any other provision;
10.08 This Agreement may be executed in any number of counterparts.
Any single counterpart or set of counterparts signed, in either
case, by the parties hereto, shall constitute a full and
original Agreement for all purposes;
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10.09 The descriptive heading of the several articles of this
Agreement are inserted for convenience only and do not
constitute a part of this Agreement. Capitalized terms not
otherwise defined in this Agreement shall have the meaning set
forth in the Escrow Agreement;
10.10 The preamble hereof shall be deemed to form part of this
Agreement for all purposes;
10.11 Laser Lock agrees to proceed in good faith, at its own cost, to
develop new laser lights which will better facilitate use in the
casinos, e.g., hands-free fixed base lights which will
automatically turn on when a chip is waved in front of the light
10.12 The parties to this Agreement acknowledge that prior to the
execution of this Agreement approximately 150,000 casino chips
using the LL Technology have already been ordered (with an
anticipated delivery date in late October 2001); therefore, the
parties agree that every term and condition of this Agreement
will be applied to said casino chips.
11. SUPPLY OF PIGMENTS
11.01 LICENSOR agrees that it will timely supply LICENSEE with pigment
proprietary to LICENSOR in accordance with the terms and
conditions of clause 3.01 hereof. The obligation to supply such
pigments shall apply only for that quantity of pigment that is
ordered, by a purchase order emanating from the LICENSEE and
which is received by LICENSOR at least fourteen (14) days prior
to the requested delivery date;
11.02 LICENSOR further agrees that upon request by LICENSEE it will
provide statements justifying its most favorable selling price
for the pigments;
12. GOVERNING LAW.
12.01 This Agreement shall be governed by the laws of the State of
Nevada. Any action in equity seeking to enforce or interpret
this Agreement shall only be brought in a state or federal court
serving Xxxxx County, Nevada, and both parties hereby consent to
personal jurisdiction and venue in Xxxxx County, Nevada;
13. BINDING EFFECT ASSIGNMENT
13.01 This Agreement may not be assigned or otherwise transferred by
either party, in whole or in part, whether voluntarily or by
operation of law, without the written consent of the other
party, which consent shall not be unreasonably withheld, except
that the LICENSEE or the LICENSOR may assign this Agreement to
an Affiliate without consent;
14. ARBITRATION
14.01 In the event of any dispute, difference or question arising
between the parties in connection with this Agreement, or any
clause or the construction thereof, or the rights, duties or
liabilities of either party, which cannot be amicably resolved
by the parties then and in every such case, unless the parties
concur in the appointment of a single arbitrator, the matter of
difference shall be referred to three (3) arbitrators, one to be
appointed by each party, and the third to be nominated by the
two so selected by the parties, or if they cannot agree on a
third, by the Las Vegas, NV office of the American Arbitration
Association ("AAA")
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14.02 In the event that either party, within thirty (30) days of any
notification made to it of the demand for arbitration by the
other party, shall not have appointed its arbitrator, such
arbitrator shall be appointed by the AAA. Arbitration shall take
place at the AAA's Las Vegas, NV office (or closest office
thereto) under the AAA's Commercial Rules. The arbitrators must
base their decision on this Agreement and their decision shall
be binding on both parties and may he enforced by any court of
competent jurisdiction;
15. ATTORNEY'S FEES
15.01 If any proceeding is instituted to enforce or construe the terms
of this Agreement, the prevailing party shall be entitled to an
award of reasonable attorney's fees and costs.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective representatives thereunto duly authorized
as of the date first hereinabove written.
THE XXX XXXXX COMPANY, INC,
/s/ [graphic of signature]
--------------------
By: Xxxxxx X. Xxxxxxxx
Its: President/CEO
BOURGOGNE ET GRASSET
/s/ [graphic of signature]
--------------------
By: Xxxxxx X. Xxxxxxxx
Its: President/CEO
LASERLOCK TECHNOLOGIES, INC.
/s/ [graphic of signature]
--------------------
By: Xxxxxx Xxxxxx
Its: President
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