Exhibit 10.4
TECHNOLOGY LICENSE AGREEMENT
THIS LICENSE AGREEMENT is made as
of the 21 st day of August, 2009 by and between
SecureCare Technologies, INC., a Nevada corporation, with offices
at 1617 West 6th Street, Suite C, Austin, TX 78703 (hereinafter,
“SECURECARE” or “Licensor”), and SecureCare
Technologies UK Limited, a United Kingdom corporation having a
principal place of business at c/o 2C The Courtyard, Main Cross
Road, Great Yarmouth, Norfolk, NR30 3NZ, United Kingdom
(hereinafter, “NEWCO” or” Licensee”).
SECURECARE and NEWCO may be referred to as a “Party”
or, collectively, as “Parties.”
RECITALS
WHEREAS
SECURECARE is engaged in the development of methods for secure
transmission of client data presently used primarily in the medical
industry but with potential application in other industries all as
set forth on Schedule A hereto (the “SECURECARE
Technology”);
WHEREAS
NEWCO wishes to obtain a license under the SECURECARE Technology to
undertake development of products and services utilizing the
SECURECARE Technology in all of the world excluding the Reserved
Territory; and
WHEREAS
SECURECARE is willing to grant such a license under the terms and
conditions set forth herein.
NOW,
THEREFORE, in consideration of the premises and mutual covenants
contained herein, and INTENDING TO BE LEGALLY BOUND HEREBY, the
Parties agree as follows:
ARTICLE
I
DEFINITIONS
1.1
The following terms, as used herein, shall have the following
meanings:
“Affiliate”
means, when used with reference to a Party, any person directly or
indirectly Controlling, Controlled by or under common Control with
a Party.
“Bankruptcy
Event” means the person in question becomes insolvent, or
voluntary or involuntary proceedings by or against such person are
instituted in bankruptcy or under any insolvency law, or a receiver
or custodian is appointed for such person, or proceedings are
instituted by or against such person for corporate reorganization
or the dissolution of such person, which proceedings, if
involuntary, shall not have been dismissed within one hundred
eighty days after the date or filing, or such person makes an
assignment for the benefit of creditors, or substantially all of
the assets of such person are seized or attached and not released
within one hundred eighty days thereafter.
“SECURECARE
Know-How” shall mean any and all present and future
information and any materials, including, without limitation,
processes procedures and applications, techniques, software,
equipment designs, know-how, patents, design rights, trade marks,
copyrights, database rights, and trade secrets, patentable or
otherwise, tangible or intangible and all other rights in the
nature of intellectual property rights (whether registered or
unregistered) and all applications for the same, anywhere in the
world, that are owned or controlled by Licensor that relate to
secure data transmission, storage or the Product.
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“SECURECARE
Technology” means the Product, SECURECARE Know-How and any
hereafter developed Improvements thereto.
“Calendar
Quarter” means each three-month period, or any portion
thereof, beginning on January 1, April 1, July 1 and October
1.
“Confidential
Information” means (i) SECURECARE Technology, (ii) any other
information or material in tangible form that is confidential or
proprietary to the furnishing Party at the time it is delivered to
the receiving Party, (iii) proprietary information of the
furnishing party, (iv) information that is furnished orally if the
furnishing party identifies such information as confidential or
proprietary when it is disclosed, and (v) patent applications not
yet in the public domain.
“Control”,
“Controlling,” and “Controlled by” mean the
direct or indirect ownership of or beneficial interest in over 50%
of the outstanding voting securities of an entity, or the right to
receive over 50% of the profits or earnings of a person, or the
right to control the policy decisions of a person.
“Disposal”
the sale or transfer of shares (or the right to exercise the votes
attaching to shares) (with a series of related sales or transfers
being treated as a single sale or transfer) which in consequence of
the sale or transfer entitles the transferee (alone or in
conjunction with persons acting in concert with it as defined by
the City Code on Takeovers and Mergers) to a controlling interest
in the total voting rights conferred by all Shares in the capital
of the Company for the time being in issue; or the sale or transfer
(with a series of related sales or transfers being treated as a
single sale or transfer) of the whole or substantially the whole of
the business, assets and undertaking of the business which is for
the time being carried on by the Company to a person which is not
connected with the Company.
“Disposal
Proceeds” the total consideration (in cash or otherwise)
offered or paid or payable in respect of a Disposal plus any other
consideration (in cash or otherwise) received or receivable by any
Shareholder, which, having regard to the substance of the Disposal
as a whole, can be reasonably regarded as additional to the total
price paid or payable in respect of the Disposal less any fees,
costs, expenses or liability to taxation which the Licensee may
pay, suffer or incur and which arise out of or in connection with
the Disposal.
“Escrow
Agreement” the escrow agreement in the form agreed between
the parties to be entered into between SECURECARE and the nominated
agent, and shall also include, without limitation, any variation,
amendment, deletion or substitution thereto, and any item expressly
incorporated by reference therein.
“Improvement”
shall mean all additions, improvements, modifications or
adaptations to any part of the SECURECARE Technology whether
patentable or not, coming into existence during the term of this
License Agreement which may take the form of, without limitation,
new or improved interfaces or data structures intended to comply
with new regulations.
“Net
Sales Value” the invoiced Sales price of the Products (after
deduction of normal trade discounts actually granted; any rebates;
discounts or credits actually given by the Licensee for returned or
defective goods; any costs of packing, insurance, carriage,
freight, export/import duties and value added tax or any other
applicable sales tax or government levies) or such other price
which is deemed to be the Net Sales Value pursuant to Section
3.2.
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“Person”
or “Persons” means any corporation, partnership, joint
venture or natural person.
“Product”
the computer programmes listed in Schedule A and all user
documentation in respect of such programmes and any Improvements
made to the Product and such further products as may be added by
agreement.
“Quarter”
the period of 3 months commencing on the date of this License
Agreement and each consecutive period of 3 months thereafter, or
any shorter period commencing on a day immediately following the
end of a Quarter and ending on the termination of this License
Agreement, and “Quarterly” shall be construed
accordingly.
“Relevant
Event” an event or occurrence of which shall entitle NEWCO to
apply to the nominated escrow agent for release of the source codes
and any other information, documentation or materials held pursuant
to the Escrow Agreement.
“Reserved
Territory” shall mean all of the countries and territories of
North America (inclusive of Canada) and South America.
“Royalty
Year” each period of 12 months ending on the anniversary of
the date on which the Licensor received payment in full of the
consideration set out in Section 3.1.1.
“Sale”
or any variation thereof means the sale, assignment, lease or other
disposition of a Product by Licensee to a non-Affiliate. A Product
shall be deemed to have been sold for purposes of calculating
royalties under Article III hereof upon the first to occur of the
following: (i) the transfer of title in the Product from Licensee
to a non-Affiliate; or (ii) shipment of the Product from the
manufacturing facilities of Licensee to a non-Affiliate.
“Shareholder”
any registered holders of shares in the Company at the relevant
time.
“Shares”
shares in the capital of the Licensee.
“Territory”
shall mean all countries and territories of the world except the
Reserved Territory.
“Use
Patents” shall mean any patent granted in the Territory for
the use of the Product.
ARTICLE
II
GRANT
OF LICENSE
2.1
Grant of License. Subject to the terms and conditions contained in
this License Agreement, and subject to the Licensor receiving
payment in full of the amount of consideration set out in Section
3.1.1, the Licensor hereby grants to Licensee a sole and exclusive,
worldwide (except in the Reserved Territory), license of the
SECURECARE Technology with the right to sublicense, to make, have
made, use, develop, maintain, market and sell Products in the
Territory pursuant to the terms and conditions of this License
Agreement.
2.2
Disclosure of SECURECARE Know-How. Promptly following the Effective
Date SECURECARE shall make available to Licensee any and all
SECURECARE Know How.
2.3
The Licensor shall promptly issue the Licensee with any
Improvements without any cost to the Licensee.
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ARTICLE
III
PAYMENTS
IN CONSIDERATION FOR LICENSE
3.1
Payments. In consideration for the license rights granted
hereunder, Licensee shall:
3.1.1
pay the Licensor fees in the sum of $100,000 (“License
Fee”). The License Fee shall be payable in 5 equal
installments and payment shall be made monthly in advance on or
before the first day of the month in question. The Licensee may
prepay part or all of the License Fee without any premium or
penalty.
3.1.2
during the continuance of this License pay to the Licensor a
royalty of 5% of the Net Sales Value of all Products supplied by
the Licensee for money or money’s worth in each Royalty
Year.
3.3
Payments due under Section 3.1.2 shall be made within 60 days of
the end of each Quarter in respect of royalties accruing on
Products invoiced in that Quarter.
3.4
The Licensee shall submit to the Licensor within 60 days of the end
of each Quarter a statement indicating the Net Sales Value of the
Products during that period.
3.5
Within 90 days of the end of each Royalty Year, the Licensee shall
deliver to the Licensor a written statement certified by its
accountants (“Accountants’ Certificate”) of the
aggregate Net Sales Value of the Products sold or otherwise
disposed of by the Licensee in that year and the payment due for
that Royalty Year under Section 3.1.2. In the event that the
Accountants’ Certificate shows that the payments made for the
Royalty Year covered by the Auditors’ Certificate are less
than the payment due for that year under Section 3.1.2, the
Licensee shall pay the Licensor, within 30 days of delivery of the
Accountants’ Certificate, an amount equivalent to the
difference between the amount paid and the payment due.
3.6
The Licensee shall keep separate records of all sales of the
Products to enable the Licensor to check the accuracy of the
information due from the Licensee. After giving written notice of
10 clear days, the Licensor, or any other person authorised by the
Licensor, may inspect the Licensee’s records during normal
business hours and take away copies in order to verify the
information provided by the Licensee.
3.7
After given written notice of 10 clear days, the Licensee, or any
other person authorised by the Licensee, may inspect the
Licensor’s records during normal business and take away
copies in order to verify the records.
3.8
If at any time following the date of this License a Disposal
occurs, the Licensee shall by way of further consideration for the
license granted hereunder make (or procure the making of) an
additional payment (“Additional Consideration”) to the
Licensor, such payment to be equal to 5% of the Disposal Proceeds
received or at any time receivable from such Disposal.
3.9
The Additional Consideration shall (to the extent that the Disposal
Proceeds are payable in cash) be paid in cash and shall (to the
extent that the Disposal Proceeds are paid otherwise than in cash)
be satisfied, within 3 business days of completion of the
Disposal.
3.10
For the purpose of Section 3.7 and 3.8, if the whole or
substantially the whole of the business, assets and undertaking of
the business which is for the time being carried on by the Company,
or a Controlling Interest in the Company, is transferred to an
Affiliate, and that Affiliate subsequently ceases to be connected
(within the meaning of section 839 of ICTA 1988) with the
Purchaser, or that entity transfers the whole or substantially the
whole of the business, assets and undertaking of such business to
an entity which is not connected with the Licensee, then the
circumstances under which it ceases to be so connected shall also
be deemed to constitute a Disposal, provided always that any public
offering of a Controlling interest on the Alternative Investment
Market of the London Stock Exchange shall not be deemed to
constitute a Disposal.
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ARTICLE
IV
CERTAIN
OBLIGATIONS OF LICENSEE
4.1
Government Approvals. Licensee will be responsible for obtaining,
at its cost and expense, all governmental approvals required for
marketing and sale of Products in the Territory.
4.2
Licensee Efforts.
(a)
Licensee shall use its reasonable best efforts to develop for
commercial sale and to market Products in the Territory, and to
continue to market Products as long as commercially viable, all in
a manner consistent with sound and reasonable business
practices.
(b)
Licensee shall notify Licensor within ten (10) days after the first
commercial sale of a Product and of any formal written notice from
the FDA or other equivalent regulatory authority
(“Regulator”) in any nation within the
Territory.
4.3
During the continuance of this License the Licensor shall have the
right to appoint and maintain in office one natural person as the
Licensor may from time to time direct as a director on the board of
the Licensee (and as a member of any committee of the board of the
Licensee) and to remove any director so appointed and, upon his
removal whether by the Licensor or otherwise, to appoint another
person to act as a director in his place.
ARTICLE
V
WARRANTIES
AND REPRESENTATIONS
5.1
Mutual Representations. Each of the Parties hereto represents,
warrants and covenants:
(i)
It is a corporation or entity duly organized and validly existing
under the laws of the state or other jurisdiction of its
incorporation or formation.
(ii)
The execution, delivery and performance of this License Agreement
by such Party has been duly authorized by all requisite corporate
action.
(iii)
It has the power and authority to execute and deliver this License
Agreement and perform its obligations hereunder.
(iv)
The execution, delivery and performance by such Party of this
License Agreement does not and will not conflict with or result in
breach of the terms and provisions of any other agreement or
constitute a default under (a) a loan agreement, guaranty,
financing agreement, affecting a product or other agreement or
instrument binding or affecting it or its property; (b) the
provisions of its charter or operative documents or bylaws; or (c)
any order, writ, injunction or decree of any court or governmental
authority entered against it or by which any of its property is
bound.
(v)
The execution, delivery and performance of this License Agreement
by such Party does not require the consent, approval or
authorization of, or notice, declaration, filing or registration
with, any governmental or regulatory authority in the Territory and
the execution, delivery and performance of this License Agreement
does not violate any law, rule or regulation applicable to such
Party.
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(vi)
This License Agreement has been duly authorized, executed and
delivered and constitutes such Party’s legal, valid, and
binding obligation enforceable against it in accordance with its
terms subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to
or affecting creditors’ rights and to the availability of
particular remedies under general equity principles.
(vii)
It shall comply in all material respects with all applicable laws
and regulations relating to its activities under this License
Agreement.
5.2 SECURECARE Warranties.
SECURECARE represents and warrants that: (a) SECURECARE is the sole
owner of all right, title and interest in and to the SECURECARE
Technology; and (b) SECURECARE has not received any written notice
that the SECURECARE Technology infringes the proprietary rights of
any third-party nor is the Licensor in any other way aware of any
infringement of third-party proprietary rights; (d) there are no
claims, judgments or settlements against or owed by SECURECARE, or
pending or threatened claims, or litigation, relating to SECURECARE
Technology; (e) it has the right to enter into this License
Agreement and to grant to the NEWCO the license of the SECURECARE
Technology as contemplated by this License Agreement; (f) the
Product will conform in all material respects with Schedule A and
be free from defects; (g) the Product and the media on which the
Product is delivered will be free from viruses and other malicious
code and free from defects. Notwithstanding the foregoing,
SECURECARE advises NEWCO that a former officer of SECURECARE was
listed as an inventor on a provisional patent application for the
printer driver digital signature system and method filed by
SECURECARE in May 2009. SECURECARE believes the inclusion of this
officer as an inventor was an error and will correct such error
when filing the utility patent application. However, no assurance
can be given that the former officer might not challenge the
utility patent application by SECURECARE and seek to claim partial
ownership of the invention.
5.3 The Warranties and
representations in Section 5.1 shall apply to any Improvement made
to the Product as though references to the date of this License
Agreement were references to the date on which such Improvement was
made.
5.4 If NEWCO notifies SECURECARE
of any defect or fault in the Product in consequence of which it
fails to comply with any of the Warranties in Section 5.1, then
SECURECARE shall, at NEWCO’s option, promptly repair or
replace the Product.
5.5 SECURECARE shall promptly
issue NEWCO with any Improvements without cost to NEWCO.
ARTICLE
VI
INDEMNIFICATION
6.1
Indemnification by SECURECARE. SECURECARE will indemnify and hold
NEWCO, its directors, officers, employees and agents harmless
against any and all liability, damage, loss, cost or expense
(including reasonable attorney’s fees) resulting from any
third-party claims made or suits brought against NEWCO which arise
from an act or failure to act by SECURECARE or SECURECARE’s
breach of its representations, warranties or agreements contained
herein.
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6.2
Limitations on Indemnification Obligations. SECURECARE AND NEWCO
EACH AGREE THAT IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER FOR INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES
RESULTING FROM A DEFAULT OR BREACH OF THIS LICENSE
AGREEMENT.
6.3
Procedures. The indemnified Party shall notify the indemnifying
Party of any claim or action giving rise to a liability within
fifteen (15) days after receipt of knowledge of the claim. If
notice is not given within fifteen (15) days, the indemnifying
Party shall main
