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Exhibit 10.1
INTELLECTUAL PROPERTY LICENSE AGREEMENT
BETWEEN
INTELLI-CHECK, INC.
AND
CARDCOM, INC.
EFFECTIVE AS OF MARCH 12, 2003
RELATING TO AGE VERIFICATION PRODUCTS
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INTELLI-CHECK - CARDCOM
PATENT LICENSE AGREEMENT
TABLE OF CONTENTS
ARTICLE I - GRANTS OF LICENSES
1.01 Grant
1.02 Duration
1.03 Publicity
ARTICLE II - ROYALTY AND PAYMENTS
2.01 Royalty Calculation
2.02 Accrual
2.03 Records and Adjustments
2.04 Reports and Payments
ARTICLE III - TERMINATION
3.01 Breach
3.02 Voluntary Termination
3.03 Survival
ARTICLE IV - MISCELLANEOUS PROVISIONS
4.01 Disclaimer
4.02 Nonassignability
4.03 Addresses
4.04 Taxes
4.05 Choice of Law
4.06 Integration
4.07 Releases
4.08 Acknowledgment of Validity
4.09 Counterparts
DEFINITIONS APPENDIX
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INTELLI-CHECK - CARDCOM
INTELLECTUAL PROPERTY LICENSE AGREEMENT
Effective as of March 12, 2003, Intelli-Check Inc., a Delaware
corporation,
("INTELLI-CHECK"), having an office at 246 Crossways Park West,
Woodbury, New
York 11797 and Cardcom, Inc., a California corporation ("the
CORPORATION"),
having an office at 6301 Beach Blvd Ste 216, Buena Park, CA
90621 agree as
follows*:
ARTICLE I
GRANTS OF LICENSES
1.01 GRANT
(a) INTELLI-CHECK grants to the CORPORATION under
INTELLI-CHECK's PATENTS
personal, nonexclusive and nontransferable licenses to make,
have made, use,
sell, offer to sell, lease and import AGE VERIFICATION PRODUCTS
in THE
TERRITORY.
(b) The licenses granted in this Section 1.01 extend only to AGE
VERIFICATION
products and not to other products.
1.02 DURATION
All licenses granted herein shall commence on the effective date
and continue
for the LICENSE PERIOD. At the expiration of the LICENSE PERIOD,
all licenses
granted herein shall terminate. Notwithstanding the foregoing,
if the
CORPORATION desires that the licenses granted herein continue
after the
expiration of the LICENSE PERIOD, the CORPORATION shall notify
INTELLI-CHECK in
writing of this desire at least ninety (90) days prior to the
end of the LICENSE
PERIOD. Upon receiving such notice, the parties agree to enter
into good faith
negotiations for the terms and conditions of a "New Agreement"
which would be
effective upon the expiration of the LICENSE PERIOD and under
which the licenses
and rights granted by INTELLI-CHECK to the CORPORATION herein
would continue.
However, it is understood that all negotiations relative to this
New Agreement
shall be concluded by the end of the LICENSE PERIOD and
INTELLI-CHECK shall have
no obligations to continue negotiations with the CORPORATION
after the end of
the LICENSE PERIOD.
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*ANY TERM IN CAPITAL LETTERS WHICH IS DEFINED IN THE DEFINITIONS
APPENDIX SHALL
HAVE THE MEANING SPECIFIED THEREIN.
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INTELLI-CHECK-CARDCOM
1.03 PUBLICITY
Nothing in this Agreement shall be construed as conferring upon
the CORPORATION
any right to include in advertising, packaging or other
commercial activities
related to any product or service, any reference to
INTELLI-CHECK, its trade
names, trademarks or service marks in a manner which would be
likely to cause
confusion or to indicate that such product or service is in any
way certified by
INTELLI-CHECK.
Upon EXECUTION, the CORPORATION agrees to cease all
advertisements that state or
imply that any of its products provide document verification, or
document
authentication, or the like. It shall be permissible for the
CORPORATION to
advertise that any product provides age verification so long as
such
advertisement does not claim that such product provides document
verification or
document authentication.
ARTICLE II
ROYALTY AND PAYMENTS
2.01 ROYALTY CALCULATION
(a) In consideration of the rights granted herein under Section
1.01, the
CORPORATION agrees to pay INTELLI-CHECK a royalty equal to the
lesser of:
(i) ten percent (10%) applied to the NET SALES PRICE of each
AGE
VERIFICATION PRODUCT which is sold, leased or put into use by
the CORPORATION.
(ii) One hundred and thirty-five United States dollars (U.S.
$135.00) for each AGE VERIFICATION PRODUCT which is sold, leased
or put into use
by the CORPORATION.
(b) In further consideration of the licenses and rights granted
in this
Agreement, the CORPORATION agrees to provide contract
manufacturing and product
development for INTELLI-CHECK under terms and conditions to be
incorporated in a
written "Contract Manufacturing Agreement". This written
Contract Manufacturing
Agreement shall include a provision allowing for termination in
the event of a
material breach and further including "notice and cure
provisions" The notice
provision shall provide that if a party considers the other
party to be in
material breach of its obligations under the Contract
Manufacturing Agreement,
such party ("the notifying party") shall inform the other party
of this position
in a writing which shall specify the nature of the breach. The
cure provision
shall then give such other party a period of not less than
forty-five (45) days
from the date of the notice to cure the breach and if the breach
is not cured
within the forty-five day
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INTELLI-CHECK-CARDCOM
period, the notifying party may hold the other party to be in
default of its
obligations under the Contract Manufacturing Agreement. Any such
manufacturing
and/or product development shall arise only upon INTELLI-CHECK's
election, such
election being communicated in writing to the CORPORATION.
INTELLI-CHECK shall
have no liability to the CORPORATION if INTELLI-CHECK decides
not to use the
CORPORATION for contract manufacturing and/or product
development.
2.02 ACCRUAL
(a) Royalty shall accrue on any AGE VERIFICATION PRODUCT upon
its manufacture
and shall become payable upon the first sale, lease or putting
into use of such
product. (Rebuilding or enlarging any product, but not repair,
shall be deemed
to be a first putting into use of such product Repair of an AGE
VERIFICATION
PRODUCT is the replacement of a worn out or broken part in such
product or the
replacement of this entire product such that (i) there is no
change in the
functionality or capability of the product from that originally
provided by the
CORPORATION and (ii) there is no charge for such service other
than shipping
and/or taxes. Rebuilding or enlarging of an AGE VERIFICATION
PRODUCT is a change
to such product other than repair.) Obligations to pay accrued
royalties shall
survive termination of licenses and rights pursuant to Article
III.
(b) Notwithstanding any other provisions hereunder, royalty
shall accrue and be
payable only to the extent that enforcement of the CORPORATION's
obligation to
pay such royalty would not be prohibited by applicable law.
2.03 RECORDS AND ADJUSTMENTS
The CORPORATION shall keep full, clear and accurate records with
respect to all
AGE VERIFICATION PRODUCTS and shall furnish any information
which INTELLI-CHECK
may reasonably prescribe from time to time to enable
INTELLI-CHECK to ascertain
the proper royalty due hereunder on account of products sold,
leased and put
into use by the CORPORATION. The CORPORATION shall retain such
records with
respect to each AGE VERIFICATION PRODUCT for at least five (5)
years from the
sale, lease or putting into use of such product. After 14 days'
notice,
INTELLI-CHECK shall have the right through its accredited
auditors to make an
examination, during normal business hours, of all records and
accounts bearing
upon the amount of royalty payable to it hereunder. Prompt
adjustment shall be
made to compensate for any errors or omissions disclosed by such
examination.
All documents, materials and information provided by the
CORPORATION to the
auditors shall be kept confidential. INTELLI-CHECK will pay for
the costs of any
audit unless such audit reveals underpayment by the CORPORATION
of ten percent
(10%) or more, in which case the CORPORATION shall reimburse
INTELLI-CHECK for
the costs of any audit.
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INTELLI-CHECK-CARDOM
2.04 REPORTS AND PAYMENTS
(a) Within fifteen (15) days after the end of each quarter
ending on March 31st,
June 30th, September 30th and December 31st of each calendar
year, beginning
with the quarter in which this Agreement is executed by the
CORPORATION, the
CORPORATION shall furnish to INTELLI-CHECK at the address
specified in Section
4.03 a statement certified by a responsible official of the
CORPORATION showing
in a reasonable manner:
(i) all AGE VERIFICATION PRODUCTS which were sold, leased or put
into
use during such quarter;
(ii) the NET SALES PRICE of each such product; and
(iii) the amount of royalty payable thereon.
If no AGE VERIFICATION PRODUCT has been so sold, leased or put
into use, the
statement shall show that fact. The first quarterly report shall
include an
accounting and royalties for AGE VERIFICATION PRODUCTS in that
quarter as well
as an accounting and royalty payment for such products from the
effective date
of this Agreement to the beginning of that quarter. All such
statements shall be
kept confidential.
(b
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