Exhibit 10.4
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THIS AGREEMENT MADE AND ENTERED INTO IN THE CITY AND DISTRICT OF MONTREAL,
ON THE 2ND DAY OF OCTOBER, 1996
BY AND BETWEEN: THE WIDECOM GROUP INC., a body politic and corporate,
duly incorporated according to the laws of the Province of
Ontario, having its head office and principal place of
business in the City of Mississauga, Ontario
(hereinafter referred to as "Licensor")
PARTY OF THE FIRST PART
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AND: 3294340 CANADA INC., a body politic and corporate, duly
incorporated according to the Canadian Business
Corporations Act, having its head office and principal
place of business in the City of Montreal, Province of
Quebec,
(hereinafter referred to as "Licensee")
PARTY OF THE SECOND PART
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SECTION 12 - PREAMBLE
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12.1 WHEREAS Licensor owns the Intellectual Property (as hereinafter
defined);
12.2 WHEREAS Licensee wishes to obtain from Licensor an exclusive license
to use the Intellectual Property for research and development purposes in
order to develop improvements, modifications, additions or alterations to
the Intellectual Property so as to improve the Plotter, the Scanner and the
Applications Software (as hereinafter defined) and to develop one or more
new marketable products, and Licensor wishes to grant such license to
Licensee subject to the terms and conditions set forth hereinafter;
12.3 WHEREAS Licensor wishes to obtain from Licensee, upon completion of
such research and development, an exclusive perpetual license to i) use the
improvements, modifications, additions or alterations to the Intellectual
Property developed by Licensee for research and development purposes in
order to develop improvements, modifications, additions or alterations to
the Intellectual Property developed by Licensee and the Plotter, the Scanner
and the Applications Software and any other product manufactured using same,
ii) manufacture, distribute, sell and market any improved product or other
product manufactured using such new intellectual property in the Territory
(as hereinafter defined), and iii) grant sub-licenses of those rights; and
12.4 WHEREAS Licensee wishes to grant the license referred to in
subsection 1.3 hereof to Licensor, subject to the terms and conditions set
forth in the license agreement entered into between Licensee and Licensor
simultaneously with the execution of this Agreement.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
SECTION 13 - INTERPRETATION
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13.1 Definitions. As used in this Agreement, initial capitalized terms
defined in Schedule "2.1" shall have the meaning set out in such Schedule.
13.2 Gender. Any reference in this Agreement to any gender shall include
both genders and the neutral, and words used herein importing the singular
number only shall include the plural and vice versa.
13.3 Headings. The division of this Agreement into Sections, subsections
and other subdivisions, and the insertion of headings are for convenience of
reference only and shall not affect or be utilized in the construction or
interpretation of this Agreement.
13.4 Severability. Any Section, subsection or other subdivision of this
Agreement or any other provision of this Agreement which is, or becomes,
illegal, invalid or unenforceable shall be severed therefrom and shall be
ineffective to the extent of such illegality, invalidity or unenforceability
and shall not affect or impair the remaining provisions hereof, which
provisions shall be severed from an illegal or unenforceable Section,
subsection or other subdivision of this Agreement or any other provisions of
this Agreement.
13.5 Entire Agreement. This Agreement together with any other
instruments to be delivered pursuant hereto, constitute the entire agreement
among the Parties pertaining to the subject matter hereof and supersede all
prior agreements, understandings, negotiations, and discussions, whether
oral or written, between the Parties.
13.6 Amendments. No amendment of this Agreement shall be binding unless
otherwise expressly provided in an instrument duly executed by each Party
hereto.
13.7 Waiver. Except as otherwise provided in this Agreement, no waiver
of any of the provisions of this Agreement shall be deemed to constitute a
waiver of any other provisions (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided in
an instrument duly executed by the Parties.
13.8 Delays. When calculating the period of time within which or
following which any act is to be done or step taken pursuant to this
Agreement, the day which is the reference day in calculating such period
shall be excluded. If the day on which such delay expires is not a Business
Day, then the delay shall be extended to the next succeeding Business Day.
13.9 Preamble. The preamble hereof shall form an integral part of this
Agreement.
13.10 Governing Law. This Agreement shall be governed by and interpreted
and enforced in accordance with the laws of the Province of Quebec and the
laws of Canada applicable therein.
SECTION 14 - GRANT OF RIGHTS
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14.1 Licensor hereby grants to Licensee, and Licensee hereby accepts, the
exclusive right to use the Intellectual Property for research and
development purposes in order to develop improvements, modifications,
additions or alterations to the Intellectual Property, including, without
limitation, a print head to be comprised in the Plotter which would enhance
the print speed of the Plotter, as well as the development of a full contact
scan chip to be comprised in the Scanner, so as to improve the Plotter and
the Scanner and to develop one or more new marketable products (hereinafter
called the "Rights") during the Term.
14.2 During the Term of this Agreement, Licensor, including any of its
Affiliates, shareholders, directors, employees or consultants, shall not,
directly or indirectly, without Licensee's prior written consent, use the
Intellectual Property for research and development purposes as contemplated
in this Agreement, nor shall it grant all or a portion of the Rights to any
Person.
SECTION 15 - LICENSOR'S OBLIGATIONS
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15.1 Following the execution of this Agreement, and at any other time
upon request by Licensee, Licensor shall disclose to Licensee the
Intellectual Property and all other documents, information and data required
by Licensee pursuant to the execution of this Agreement, including, without
limitation, the source-code of the Software and the Applications Software.
SECTION 16 - LICENSEE'S OBLIGATIONS
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16.1 Licensee undertakes to use the Intellectual Property for research
and development purposes in order to develop improvements, modifications,
additions or alterations to the Intellectual Property in the manner
described in section 3.1 hereof so as to improve the Plotter, the Scanner
and the Applications Software and to develop one or more new marketable
products.
SECTION 17 - IMPROVEMENTS, MODIFICATIONS AND ADDITIONS
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17.1 The Parties hereby agree that any improvements, modifications,
additions and alterations made to the Intellectual Property and any patents,
technology, know-how and trade secrets resulting from such improvements,
modifications, additions and alterations developed by or on behalf of
Licensee, its agents, employees, consultants or representatives at any time
during the Term shall be the exclusive property of Licensee. Licensor shall
cooperate fully with and assist Licensee in obtaining, at Licensor's
expense, patents, copyrights, industrial designs, trademarks and other
intellectual property registration with respect to such improvements,
modifications, additions and alterations. The Parties further agree that, in
consideration for the grant of the Rights, Licensee shall, simultaneously
with the execution of this Agreement, execute and deliver a license
agreement, pursuant to which Licensee shall grant to Licensor an exclusive
perpetual license to i) use the improvements, modifications, additions or
alterations to the Intellectual Property developed by Licensee for research
and development purposes in order to develop improvements, modifications,
additions or alterations to the Intellectual Property developed by Licensee,
the Plotter, the Scanner, the Applications Software and any other product
manufactured using same, ii) manufacture, distribute, sell and market any
improved product and other product manufactured using such new intellectual
property in the Territory, and iii) grant sub-licenses of those rights.
SECTION 18 - CONFIDENTIAL INFORMATION
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18.1 Each Party hereby acknowledges that it may receive Confidential
Information from the other Party (the "Disclosing Party"). Each Party
hereby acknowledges, accepts and agrees that:
18.1.1 the Confidential Information is non public and confidential
and shall at all times remain the property of the Disclosing Party;
18.1.2 the disclosure by the Disclosing Party of the Confidential
Information to the other Party (the "Receiving Party") is for the sole
purpose of enabling it to carry out its obligations under the terms of
this Agreement; and
18.1.3 the Receiving Party shall not assert, directly or
indirectly, any right with respect to the Confidential Information
which may impair or be adverse to the Disclosing Party's ownership
thereof.
18.2 Each Party shall keep the Confidential Information, and the fact
that the Confidential Information has been provided, confidential at all
times (regardless of the extent or duration of the relationship of the
Parties and regardless of whether such Confidential Information was
disclosed before or after the date of this Agreement) and shall not disclose
such Confidential Information, in whole or in part, to any person other than
to its sub-licensees, agents, employees and other authorized representatives
(collectively herein referred to as the "Representatives") who need to know
such information in connection with the performance of its obligations under
the terms of this Agreement, without the prior written consent of the
Disclosing Party. Each Party agrees to use, and shall use its best efforts
to ensure that its Representatives use, the same degree of care as such
Party uses to protect its own Confidential Information. Each Party shall
inform its Representatives of the confidential nature of the Confidential
Information and shall require such Representatives to keep such information
confidential. Each Party shall be fully responsible for any breach of this
Agreement by its Representatives.
18.3 Any Confidential Information disclosed by the Disclosing Party shall
remain the sole and exclusive property of the Disclosing Party.
18.4 Any Confidential Information supplied to the Receiving Party by the
Disclosing Party prior to the execution of this Agreement shall be
considered in the same manner and be subject to the same treatment as the
Confidential Information made available after the execution of this
Agreement.
18.5 In the event of a material breach of the undertakings of either
Party under this Section 7, money damages may be inadequate and the
Disclosing Party shall be entitled to seek injunctive relief and specific
performance. Such remedy shall not be deemed to be the exclusive remedy for
any such breach but shall be in addition to all other remedies available at
law. The Disclosing Party shall be entitled to reasonable legal fees
(including reasonable attorney's fees and expenses) and other costs
reasonably incurred to remedy any and all material breaches by the Receiving
Party of this Agreement.
SECTION 19 - TERM AND TERMINATION
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19.1 Term. Subject to the provisions of Section 8.2 hereof, the grant
herein of the Rights shall be for a term commencing on the date of execution
hereof and terminating on the earlier of i) the date of Completion of the
Research and Development, or ii) the date on which no more funds shall be
available to Licensee to pursue the research and development contemplated in
this Agreement, or iii) the expiration of a five (5)-year period (the
"Term").
19.2 Default. Without prejudice to any other remedy available at law,
either Party (the "Notifying Party") shall have the right to terminate this
Agreement immediately upon written notice to the other (the "Defaulting
Party") if:
19.2.1 there is a material breach by the Defaulting Party of any
provision of this Agreement other than the provisions of Section 7,
provided such breach continues unremedied for at least sixty (60) days
after written notice of such is given to the Defaulting Party;
19.2.2 there is a breach by the Defaulting Party of any provision
of Section 7; or
19.2.3 an Event of Default occurs with respect to the Defaulting
Party.
19.3 Upon termination of this Agreement:
19.3.1 Licensee will cease to hold any interest in the Rights
granted to it in this Agreement and the Intellectual Property;
19.3.2 Licensee will immediately deliver to Licensor all
documentation or other information provided to Licensee under this
Agreement, without retaining any copy or record of them.
19.4 Termination of this Agreement for any reason whatsoever will not
release the Parties from any obligation which remains unfulfilled at that
time or release the Parties from those obligations which survive such
termination including, without limiting the foregoing, the obligations set
forth in Sections 7 and 11.
SECTION 20 - REPRESENTATIONS AND WARRANTIES
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20.1 Licensor hereby represents and warrants:
20.1.1 that it owns the Intellectual Property, and that the
Intellectual Property constitutes all the intellectual property
required to perform the research and development contemplated by this
Agreement;
20.1.2 that it has the right to grant the Rights;
20.1.3 that, as of the date hereof, the Intellectual Property is
free and clear of any hypothecs, liens or encumbrances. However, in
the event that Licensor wishes to hypothecate or encumber any of the
Intellectual Property, Licensor hereby agrees and undertakes to inform
its creditors of the existence of this Agreement;
20.1.4 that the Patents have been duly filed with the appropriate
Authorities and such filing remains in full force and effect;
20.1.5 that the execution, delivery and performance of this
Agreement, the granting of the Rights and the consummation of the
transactions contemplated hereby will not breach, violate or conflict
with any instrument or agreement, written or oral, governing the
Intellectual Property and will not cause the forfeiture or termination
or give rise to a right of forfeiture or termination of Licensor'
rights to the Intellectual Property or in any way impair the right of
Licensor to bring any action for the infringement of the Intellectual
Property or any part thereof;
20.1.6 that there are no pending or, to the best of Licensor's
knowledge, threatened proceedings, litigation or other adverse claims
affecting, or with respect to, the Intellectual Property or any part
thereof and no Person is, to the best of Licensor's knowledge,
infringing the Intellectual Property;
20.1.7 that it has all the rights and power to enter into this
Agreement;
20.1.8 that the undersigned officer has full authority to execute
this Agreement.
20.2 Licensee hereby represents and warrants:
20.2.1 that it has all the rights and power to enter into this
Agreement;
20.2.2 that the undersigned officer has full authority to execute
this Agreement;
20.2.3 that this Agreement does not violate the terms of any other
agreement to which Licensee is subject or to which Licensee is bound.
SECTION 21 - VALIDITY AND INFRINGEMENT OF THE INTELLECTUAL PROPERTY
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21.1 Licensor will maintain the validity of the Patents, and take all
steps to register the Patents in any jurisdictions as may be required by
Licensee from time to time, by paying all required maintenance fees and
other costs associated with maintaining the validity and registering the
Patents.
21.2 Each Party shall promptly notify the other of any infringement or
threatened infringement by a third party of the Intellectual Property as
well as any action to invalidate or revoke the Intellectual Property which
may come to its attention.
21.3 The Parties shall consult with one another with respect to each
infringement or violation of the Intellectual Property. Whenever the
Parties conclude that proceedings should be taken with respect to any such
infringement or violation, they shall promptly and diligently prosecute same
and each party shall assume one-half (1/2) of the costs and expenses related
thereto and be entitled to one-half (1/2) of all recoveries and awards
therefrom. Whenever a Party advises the other Party that it does not intend
to participate in any such proceedings, the other Party shall be free to
prosecute same and shall pay all costs and expenses related thereto and be
entitled to all recoveries and awards therefrom. Licensor shall, however,
be entitled to join in any such proceedings at any time. The parties shall
at all times fully cooperate in the prosecution of all such proceedings.
21.4 If only one of the Parties decides to institute suit or action, it
is understood that the Party that did not institute suit or action shall
render all reasonable assistance to the Party that did institute suit or
action, including, but not limited to, executing all documents as may be
reasonably requested by the Party that did institute such suit or action,
and providing all necessary documentation evidencing the infringement that
such Party has in its possession or may acquire thereafter.
21.5 In the event that Licensee initiates any and all lawsuits involving
or relating to the Intellectual Property, it shall do so in good faith and
to the best of its ability.
21.6 Licensee shall not contest the ownership or validity of the
Intellectual Property, whether directly or indirectly, at any time during
the Term or at any time thereafter.
SECTION 22 - INDEMNIFICATION
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22.1 Licensee shall indemnify and save and hold Licensor harmless from
and against any debts, liabilities, claims, actions, causes of actions,
suits, damages, losses, costs and expenses, including injury or death to
persons, damage to property and reasonable attorneys' fees and expenses,
which Licensor is or may become liable for or be compelled to pay as a
result or by reason of any act or omission of Licensee or its directors,
officers, servants, agents or employees in connection with Licensee's
performance under the terms of this Agreement, or arising or resulting in
any way from the use of the Intellectual Property, subject to the provisions
of subsection 11.2 hereof.
22.2 Licensor shall indemnify and save and hold Licensee harmless from
and against any debts, liabilities, claims, actions, causes of action,
suits, damages, losses, costs and expenses, including injury or death to
persons, damage to property and reasonable attorneys' fees and expenses,
which Licensee is or may become liable for or be compelled to pay as a
result or by reason of any act or omission of Licensor or its directors,
officers, servants, agents or employees in connection with Licensor'
performance under the terms of this Agreement, or any defects of the
Intellectual Property, or by reason of any proceeding of a third party
claiming that the use of all or any part of the Intellectual Property by
Licensee constitutes an infringement of its rights.
22.3 Throughout the Term and for a period of two (2) years after its
termination, each Party shall maintain comprehensive general public
liability insurance, including blanket contractual liability and personal
injury liability endorsements, against claims for product liability and such
other claims as are contemplated herein. Such insurances shall be for no
less than one million CDN dollars ($1,000,000 CDN) per occurrence and shall
be written with a reputable insurer. The other Party shall be named as an
additional insured, as its interest may appear, under each such policy of
insurance. Each such policy shall contain an endorsement providing that
coverage thereunder shall not be amended, reduced or cancelled without
thirty (30) days prior written notice having been provided to the other
Party.
SECTION 23 - NOTICES
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23.1 Notices. All notices, requests, demands and other communications
hereunder shall be given in writing and shall be given by telecopier, or
delivered by hand, to the other Party at the following addresses:
if to Licensor: THE WIDECOM GROUP INC.
55, City Centre Dr.
Suite 500
Mississauga, Ontario
L5B 1M3
Attention: The President
Telecopier: (905) 566-0181
if to Licensee: 3294340 CANADA INC.
c/o Raja Tuli
55, City Centre Dr.
Suite 500
Mississauga, Ontario
L5B 1M3
Attention: The President
Telecopier: (905) 566-0181
with a copy in all cases to: LAPOINTE ROSENSTEIN
1250 Rene-Levesque Blvd. West
Suite 1400
Montreal, Quebec
H3B 5E9
Attention: Perry Kliot
Telecopier: (514) 925-9001
or at such other address as the parties may have previously indicated to the
other Party in writing in conformity with the foregoing. Any such notice,
request, demand or other communication shall be deemed to have been received
on the date of delivery if delivered by hand, or the next Business Day
immediately following the date of transmission if sent by telecopier. The
original copy of any notice sent by telecopier shall be forwarded to the
other Party by registered mail, receipt return requested.
SECTION 24 - MISCELLANEOUS PROVISIONS
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24.1 Press release. Any press release or any public announcement,
statement or publicity with respect to the transaction contemplated in this
Agreement shall be made only with the prior consent of both Parties.
24.2 Further documents. Each Party upon the request of the other, shall
do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged or delivered all such further acts, deeds, documents,
assignments, transfers, conveyances, powers of attorney and assurances as
may be reasonably necessary or desirable to effect complete consummation of
the transactions contemplated by this Agreement.
24.3 Successors and assigns. This Agreement and the provisions hereof
shall enure to the benefit of and be binding upon the Parties and their
respective successors and permitted assigns. Licensee shall not assign any
of its rights, title and interest in and to this Agreement without Licensor'
prior written consent, which consent shall not be unreasonably withheld or
delayed.
24.4 Time of the essence. Time shall be of the essence in this
Agreement.
24.5 Arbitration. Any dispute or controversy between the Parties
relating to any matter arising out of or connected with the rights and
obligations of the Parties hereto under this Agreement shall be settled in
accordance with the provisions of subsection 6.11 and Section 18 of the
Shareholders Agreement.
24.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same document.
24.7 Language. The parties hereto confirm their consent that this
Agreement as well as all documentation contemplated hereby or pertaining
hereto or to be executed in connection herewith be drawn up in the English
language; les parties consentent a ce que cette convention de meme que tous
documents envisages par les presentes ou y ayant trait ou qui seront signes
relativement aux presentes soient rediges en anglais.
IN WITNESS WHEREOF, the Parties have signed at the place and on the date
first hereinabove mentioned.
3294340 CANADA INC. THE WIDECOM GROUP INC.
Per: Per:
Raja S. Tuli Raja S. Tuli
Licence Agreement
SCHEDULE "2.1"
DEFINITIONS
"Affiliate" of a Person means an entity which controls, is controlled by, or
is under common control with such Person; however, the Parties shall not be
deemed to be "Affiliates" of one another for the purposes of this Agreement;
"Applications Software" means the two applications software packages owned
by Licensor, namely i) the software known as the "WIDEview" software, which
is designed to enhance the user's documents imaging capabilities and which
is generally sold together with the Scanner, and ii) the software known as
the "SLC-OVLY" software, which enables users to scan documents into AutoCAD
software and edit documents by converting the scanned image from raster
format to vector format;
"Authorities" means, in any jurisdiction, all applicable governmental or
regulatory bodies, agencies, officials, and other authorities in such
jurisdiction;
"Business Day" means any day, other than a Saturday or Sunday or a day on
which the principal commercial banks in the Province of Quebec are not open
for business during normal banking hours;
"Completion of the Research and Development" means the date on which
Licensor shall have confirmed to Licensee that the research and development
contemplated by this Agreement has been completed to its satisfaction;
"Confidential Information" means all concepts, methods, procedures,
inventions, know-how, secrets, data and other information, whether in
written, printed, electronic, unrecorded or any other form whatsoever, and
whether known now or developed throughout the duration of this Agreement and
which relates in any way to the Intellectual Property, including processes,
research and development, manufacture and use thereof, and all
communications and documentation relevant to the Intellectual Property, or
which relates in any way to the business of the Disclosing Party, except for
information that the Receiving Party can reasonably demonstrate:
a) is in the public domain (provided that information in the
public domain has not or does not come into the public domain as the
result of disclosure by a receiving Party);
b) is known to the Receiving Party prior to disclosure by the
other Party;
c) becomes available to a Party on a non-confidential basis
from a source other than the Disclosing Party; or
d) is independently developed by the Receiving Party through
Persons who have not had access to, or knowledge of the Confidential
Information of the Disclosing Party;
"Event of Default" means, with respect to any Defaulting Party, the
occurrence of any of the following events:
a) an order is made or a resolution or other action is taken
for the dissolution, liquidation, winding up or other termination of
the corporate existence of the Defaulting Party; or
b) the Defaulting Party commits an act of bankruptcy, becomes
insolvent; makes an assignment for the benefit of its creditors or
proposes to its creditors a reorganization, arrangement, composition
or readjustment of its debts or obligations or otherwise proposes to
take advantage of or shelter under any legislation for the protection
of debtors; or
c) if any proceeding is taken with respect to a compromise or
arrangement, or to have the Defaulting Party declared bankrupt or to
have a receiver appointed in respect of the Defaulting Party or a
substantial portion of its property such proceeding is instituted by
the Defaulting Party or is not opposed by the Defaulting Party or such
proceeding is instituted by a Person other than the Defaulting Party
and the Defaulting Party does not proceed diligently and in good faith
to have such proceeding withdrawn forthwith; or
d) the Defaulting Party is placed under judicial management,
provisionally or finally, or a receiver or a receiver and manager of
any of the assets of the Defaulting Party is appointed and such
receiver, receiver and manager is not removed within sixty (60) days
of such appointment unless the Defaulting Party diligently contest, in
good faith, the validity of the appointment of such receiver or
receiver and manager; or
e) the Defaulting Party ceases or takes steps to cease to carry
on its business;
"Intellectual Property" means the Patents, the Know-How and the Software;
"Know-How" means all present technical knowledge, unpatented inventions,
manufacturing and trade secrets, secret processes, manufacturing procedures,
methods, as well as current and accumulated experience acquired by Licensor
as a result of research, practical experience or otherwise, with respect to
the Plotter, the Scanner and the Applications Software;
"Parties" means Licensee and Licensor and their respective successors and
permitted assigns and "Party" means any one of them;
"Patents" means the issued patents and patent applications or parts thereof
which describe or claim subject matter conceived or reduced to practice by
Licensor bearing numbers US 08403177, US 08510510, US 08546788 and US
08546785 attached hereto, and any reissues, extensions, substitutions,
confirmations, registrations, revalidations, additions, or continuations,
continuations-in-part, and divisions of the foregoing which are granted
hereafter;
"Person" means an individual, partnership, joint venture, trustee, trust,
corporation, division of a corporation, unincorporated organization or other
entity or a government, state or agency or political subdivision thereof,
and pronouns have a similarly extended meaning;
"Plotter" means a 36-inch-wide plain paper printer developed by Licensor and
known as the "WIDEfax Plotter";
"Scanner" means a color wide format scanner capable of scanning a document
up to 36" wide and known as the "WIDEfax Scan";
"Shareholders Agreement" means the Memorandum of Agreement of even date
among the Parties, 3294412 Canada Inc., 3294421 Canada Inc. and Societe
Innovatech du Grand Montreal, setting forth the terms and conditions which
will govern the relationship of Licensor, 3294412 Canada Inc., 3294421
Canada Inc. and Societe Innovatech du Grand Montreal as shareholders of
Licensee;
"Software" means any software, other than the Applications Software,
required to perform the research and development contemplated in this
Agreement;
"Territory" means the world, except for the Province of Quebec, in Canada.