PATENT AND
TECHNOLOGY LICENSE AGREEMENT
This PATENT AND TECHNOLOGY LICENSE
AGREEMENT (“Agreement”), dated as of May 27, 2005
(“Effective Date”) is entered into by and between
face2face animation, inc., a Delaware corporation
(“Licensor”), having a place of business at 2 Kent
Place Blvd., Summit, NJ 07901 and InMotion Biometrics, Inc., a
Delaware corporation (“Licensee”), a wholly owned
subsidiary of BudgetHotels Network Inc., a Nevada corporation
(which shall be renamed Edentify, Inc.) (“Parent”),
having a place of business at 74 West Broad Street, Suite 350,
Bethlehem, PA 18018.
WHEREAS, Licensor owns certain
Technology and Patents (as defined below), including hardware and
software, relating to identification of people and facial
recognition, and desires to grant to Licensee a license to the
Technology and Patents;
WHEREAS, Licensee desires to obtain a
license from Licensor to the Technology and Patents.
NOW, THEREFORE, in consideration of
the foregoing and the respective promises and covenants contained
in this Agreement, Licensor and Licensee hereby agree as
follows:
1. Definitions .
The following terms shall have the
meanings set forth below:
1.1 Affiliate .
“Affiliate” shall have the meaning ascribed to such
term under Rule 405 of the Securities Act of 1933.
1.2 Derivative Works .
“Derivative Works” means a work that is based upon one
or more pre-existing works relating to the Technology, such as a
revision, modification, translation, abridgment, condensation,
expansion or any other form in which such pre-existing works may be
recast, transformed, or adapted and that, if prepared, without
authorization of the owner of the rights in such pre-existing work,
would constitute infringement. For purposes hereof, a Derivative
Work shall also include any compilation that incorporates such a
pre-existing work or condensation or expansion of the Technology,
Licensed Software Products or Licensed Services or any form in
which such Technology may be recast, transformed, or adapted by or
for Licensee.
1.3 Development
Agreement . “Development Agreement” means the
development agreement between Licensor and Licensee of even date
herewith.
1.4 Gross Revenues .
“Gross Revenues” means any amounts received by
Licensee, directly or indirectly, in consideration for the
provision of, sale, license, lease, rental or use of the Licensed
Hardware Products, Licensed Software Products and/or Licensed
Services, as the case may be.
1.5 Improvements .
“Improvements” means all inventions protectable by
patent that are improvements or modifications to the Technology and
that are created or developed either independently or jointly by
Licensor and/or Licensee after expiration or termination of the
Development Agreement.
1.6 Licensed Hardware
Products . “Licensed Hardware Products” means
all products made, have made, used, offered for sale or sold by
Licensee incorporating or developed using the Licensed Technology
for Security Applications.
1.7 Licensed Services .
“Licensed Services” means all services provided by
Licensee incorporating or developed using the Licensed Technology
for Security Applications.
1.8 Licensed Software
Products . “Licensed Software Products” means
all products made, have made, used, offered for sale or sold by
Licensee incorporating or developed using the Licensed Technology
for Security Applications.
1.9 Licensed Technology
. “Licensed Technology” means all Licensor Technology,
Licensor Patents, Licensor Derivative Works, and Licensor
Improvements.
1.10 Patents .
“Patents” means all U.S. patents and patent
applications relating to the Technology, including all
continuations, continuations-in-part (only if filed in the USPTO
during the term of this Agreement), divisionals, reissues,
reexamination certificates, extensions and renewals, and including
all foreign counterparts thereto, owned by or licensed to Licensor
and/or Licensee or Parent, that relate to verifying identification
of people and facial recognition, including all patents and patent
applications identified in Exhibit A.
1.11 Person .
“Person” means an individual, a corporation, a
partnership, an association, a limited liability company, a trust,
any unincorporated organization or a government or a political
subdivision thereof.
1.12 Security
Applications . “Security Applications” means
any and all uses relating to (i) securing and/or providing
restricted access to information, systems, technology, locations or
things, and (ii) confirming or verifying identification or
authorization, and identifying individuals or authorized users,
each as more completely detailed in Appendix “A” to the
Edentify Business Plan, which is attached hereto as Exhibit
“B”.
1.13 Share Issuance
Agreement . “Share Issuance Agreement” means an
agreement between the parties, as annexed hereto as
Exhibit C.
1.14 Technology .
“Technology” means the technology, processes, ideas,
concepts, inventions, invention disclosures, laboratory notebooks,
know-how, discoveries, trade secrets, improvements, design
information, drawings, plans, technical data, shop rights,
engineering documentation, engineering notebooks, specifications,
blueprints, mask works, flow charts, diagrams, software (in object
and source code), models, prototypes and other intellectual
property developed (i) by Licensor either prior to, during or
after the term of the Development Agreement, (ii) by Licensee
or Parent during the term of the Development Agreement or
(iii) jointly by Licensor and Licensee or Parent during the
term of the Development Agreement, pertaining to any and all
Security Applications.
2. License .
2.1 Licensed Technology
Grant . Licensor grants Licensee a worldwide,
non-divisible, perpetual (subject to Section 5.1, 5.2, 5.3 and
9), irrevocable (subject to Sections 5.1, 5.2, 5.3 and 9),
exclusive license to use the Licensed Technology as herein provided
to make, have made, use, offer to sell, sell and import Licensed
Hardware Products and Licensed Software Products, and provide
Licensed Services, only for Security Applications, except as
limited herein. Licensor also grants Licensee the limited right to
grant sub-licenses as set forth in Section 2.2 below.
2.2 Sublicenses . Upon
the prior written request by Licensee, Licensor shall have the
option, at its sole and absolute discretion, to allow Licensee to
grant one or more sub-licenses under the Licensed Technology
commensurate in scope with the license granted hereunder, which
shall not be unreasonably withheld. Notice of the disallowance of
any sub-licenses that Licensee has requested pursuant to this
Section 2.2 shall be provided to Licensee in writing no later
three (3) business days after receipt of such request by Licensor.
If Licensor does not respond to Licensee’s request within
such period, the sub-license shall be deemed to be consented to by
Licensor, provided , however, that the terms of any
sub-license shall be no less restrictive on any sub-licensee than
the terms of this Agreement are on Licensee. All sublicenses shall
transfer to Licensor upon termination of this Agreement.
2.3 Consideration . As
consideration for Licensor granting Licensee the rights provided
for in this Agreement, Licensee shall, subject to the other
provisions of this Agreement pay Licensor the royalty amounts as
set forth in Section 3.1.
2.4 Restrictions on Joint
Technology .
a. Licensee agrees that it
shall not use or license the right to use the Joint Technology, nor
shall it or shall it allow a third party to make, have made, use,
offer to sell, sell, have sold or import any products or services
using the Joint Technology for other than Security Applications.
All revenues derived by Licensee from the use or license of the
Joint Technology as provided for hereunder shall belong to
Licensee.
b. Licensor agrees that it
shall not use or license the right to use the Joint Technology, nor
shall it or shall it allow a third party to make, have made, use,
offer to sell, sell, have sold or import any products or services
using the Joint Technology for Security Applications. All revenues
derived by Licensor from the use or license of the Joint Technology
as provided for hereunder shall belong to Licensor.
3. Payments .
3.1 Pass Through Royalties and
Fees . All royalties and fees assessed against, accrued or
payable by Licensor to a third party relating to the Licensed
Software Products, the Licensed Hardware Products and the Licensed
Services shall be paid to Licensor by Licensee, at least five
(5) business days before any such royalties or fees are
payable by Licensor to such third party. All royalty and fee
amounts shall be paid by check or in cash in U.S. dollars. Each
payment shall be accompanied by a report identifying all sales, in
dollars and in number of units, that form the basis for such
royalty calculations or fees payable, and amounts paid.
4. Taxes .
Licensor is not responsible for any
sales, use, value-added, personal property or other taxes imposed
on either Licensee’s use, possession, offer for sale, or sale
of Licensed Products. Each party shall be solely responsible for
any taxes based on its own net income.
5. Term and Termination .
5.1 Licensor may terminate this
Agreement after written notice to Licensee indicating that Licensee
has materially breached any of the terms or conditions of this
Agreement, and such breach is not cured within thirty
(30) days after receipt of such notice.
5.2 Should Parent fail to issue to
Licensor the full amount of shares and warrants or deliver the
proper amounts of shares and warrants as required by paragraph 1(a)
of the Share Issuance Agreement, upon thirty (30) days’
written notice Licensor shall have the right to terminate this
Agreement unless such breach is cured by Parent during such thirty
(30) day period, provided , that should Licensee
dispute whether there has been a material breach of this Agreement
by Licensee, such dispute shall be decided by arbitration under the
rules of the American Arbitration Association (“AAA”)
with a single arbitrator, to be agreed upon by the parties, or if
not selected within thirty (30) days, to be selected according
to the AAA rules, with the parties endeavoring to conclude such
arbitration within six (6) months from initiation of the
arbitration. All arbitration fees, costs and expenses shall be paid
by the losing party to any such arbitration.
5.3 Licensee may terminate this
Agreement at any time upon sixty (60) days prior written
notice to Licensor, provided however that if such termination by
Licensee results from a material breach of this Agreement by
Licensor, or a change of control of Licensor that is not consented
to in writing by Licensee resulting in Licensor becoming controlled
by a direct competitor of Licensee, and Licensee is not in material
breach of this Agreement or the Share Issuance Agreement, upon
thirty (30) days’ written notice by Licensee and a
failure during such thirty (30) day period for Licensor to
cure, Licensor will forfeit all stock issued to Licensor pursuant
to the Stock Issuance Agreement and in the event that Licensor has
transferred the common stock issued pursuant to such Stock Issuance
Agreement to a third party prior to the time of such breach or
change of control, as the case may be, Licensor shall pay Licensee,
as full liquidated damages, the sum of $100,000, provided ,
that should Licensor dispute whether there has been a material
breach of this Agreement by Licensor, such dispute shall be decided
by arbitration under the rules of the American Arbitration
Association (“AAA”) with a single arbitrator, to be
agreed upon by the parties, or if not selected within thirty
(30) days, to be selected according to the AAA rules, with the
parties endeavoring to conclude such arbitration within six
(6) months from initiation of the arbitration. All arbitration
fees, costs and expenses shall be paid by the losing party to any
such arbitration. Notwithstanding the above, upon a change of
control of Licensor that is not consented to by Licensee resulting
in Licensor becoming controlled by a direct competitor of Licensee,
Licensee shall have thirty (30) days from obtaining knowledge
of such change of control to provide Licensor with notice of
termination of this Agreement, provided that should Licensee
fail to provide Licensor with notice of termination during such
thirty (30) day period, Licensee shall forfeit its right to
terminate the Agreement as a result of such change of control.
5.4 Upon termination of this
Agreement, Licensee shall immediately cease all manufacture, use,
sale and providing of Licensed Hardware Products, Licensed Software
Products and Licensed Services and, to the extent reasonably
practicable, each party shall promptly return and deliver to the
other party all Licensed Technology and Confidential Information
belonging to such party that is in its possession, and shall
certify in writing that it has not knowingly retained any copies of
such.
6. Ownership of Rights .
6.1 Ownership of Licensed
Technology . Licensee acknowledges and agrees that title to
and ownership of the Licensed Technology and all of the applicable
intellectual property rights in and to the Licensed Technology
shall be as follows:
a. All Technology developed
solely by Licensor (“Licensor Technology”) and
Improvements developed by Licensor (“Licensor
Improvements”) shall be owned by and remain the sole and
exclusive property of Licensor. Licensee acknowledges that this
Agreement does not convey any interest in and to the Licensor
Technology or Licensor Improvements or the intellectual property
rights therein other than the license rights set forth in
Sections 2.1, 2.2 and 2.3 herein.
b. All Technology developed
solely by Licensee (“Licensee Technology”) and
Improvements developed by Licensee (“Licensee
Improvements”) shall be owned by and remain the sole and
exclusive property of Licensee. Licensor acknowledges that this
Agreement does not convey any interest in and to the Licensee
Tech
