EXHIBIT 10.2
PATENT LICENSE AGREEMENT CONFIDENTIAL TREATMENT REQUESTED
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THIS AGREEMENT is effective this October 5, 2001 by and between Koninklijke
Philips Electronics N.V., a corporation organized and existing under the Laws of
The Netherlands, having its principal place of business at Eindhoven, The
Netherlands (hereinafter referred to as "Philips") on the one part, and
Preferred Voice, Inc., a corporation organized and existing under the Laws of
Delaware, United States of America, having its principal place of business at
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"Licensee"), on the other part.
WHEREAS, the Philips' Group of Companies have developed at great expense the
Voice Activated Dialing (VAD) technology as described in the VAD Patents; and
WHEREAS, Philips is the assignee, owner or controller of all right, title and
interest in VAD Patents as hereinafter defined; and
WHEREAS, Licensee desires to acquire a license to provide VAD services protected
by Philips VAD Rights;
NOW, THEREFORE, the parties hereto have agreed as follows:
Article I Definitions
1.1 Licensed Patents shall mean the VAD Patents.
1.2 Licensee Host System shall mean the Licensee's owned, controlled and
maintained system capable of hosting VAD services to non-wireline
service providers and where such VAD system exclusively uses Philips
SpeechPearl product.
1.3 Licensed Services shall mean VAD services, covered by the Licensed
Patents, provided by Licensee using Licensee's Host System.
1.4 Customer shall mean a non-wireline service provider as set forth on
Annex 1 (or Annex 1A), attached hereto and incorporated herein by
referenced, for which Licensee is acting as a host to provide VAD
services using Licensee Host System.
1.5 End-Users shall mean the subscriber base of a Customer that have the
option or capability of subscribing to the Licensed Services.
1.6 Associated Company An Associated Company of a corporation, company or
other entity ("Parent") shall mean any corporation, company or other
legal entity, more than fifty percent (50%) of whose outstanding shares
or securities (representing the right to vote for the election of
directors or other managing authority) are, now or hereafter, owned or
controlled, directly or indirectly, by Licensee or Philips, but such
corporation, company or other legal entity shall be deemed an
Associated Company only so long as such ownership or control exists. In
addition, any entity which does not have outstanding
** "Confidential Treatment Requested" indicates portions of this document have
been deleted and have been separately filed with the Securities and
Exchange Commission.
shares or securities, as may be the case in a partnership, joint
venture or unincorporated association, but more than fifty percent
(50%) of whose ownership interest representing the right to make major
decisions for such entity is, now or hereafter, owned or controlled,
directly or indirectly, by Philips or Licensee, but such entity shall
be deemed an Associated Company only for so long as such ownership or
control exists.
1.7 VAD shall mean voice activated dialing. This includes any use of speech
recognition with any non-wireline telephone or non-wireline device to
activate dialing and/or completing a call, accessing any telephony
and/or content database, auto attendant services, follow me services,
reminder services and/or directory services.
1.8 VAD Patents shall mean United States Patent Numbers 5,297,183;
5,659,597 and 6,157,848 relating to Voice Activated Dialing, including
any patents resulting from continuations and divisionals thereof, and
any corresponding foreign patent rights owned or controlled by Philips.
1.9 VAD Patent Rights shall mean rights granted under the VAD Patents, as
granted in Article 2.
1.10 VAD Subscribers shall mean End-Users of Customers that are using and/or
paying Licensee to use the Licensed Services.
1.11 Existing VAD Contract shall mean an existing and effective contract for
Licensee to provide Licensed Services to a Customer that has an
effective date or an execution date (whichever is later) before the
effective date of this Agreement.
1.12 Existing Contract VAD Subscribers shall mean the sum, cumulative,
total, maximum number of VAD Subscribers that are using or paying to
use Licensed Services (whichever is greater) provided by Licensee
within a reporting quarter related to all Customers with an existing
VAD contract (ANNEX 1).
1.13 Future Contract VAD Subscribers shall mean the sum, cumulative, total,
maximum number of VAD Subscribers that are using or paying to use
Licensed Services (whichever is greater) provided by Licensee within a
reporting quarter related to all Customers without an existing VAD
contract (ANNEX 1A).
1.14 Territory shall mean the World.
1.15 Phillps shall mean Koninklijke Philips Electronics N.V. a corporation
organized and existing under the laws of the Netherlands.
1.16 Other-Voice-Patents shall mean U.S. Patents **; **; **; **; **; and **
and any corresponding foreign patent rights owned or controlled by
Philips.
** "Confidential Treatment Requested" indicates portions of this document have
been deleted and have been separately filed with the Securities and
Exchange Commission.
Article 2 License
2.1 Philips grants to Licensee a non-exclusive, non-transferable license,
without the right to sublicense, under the VAD Patents to provide
Licensed Services for use in the Territory as of the effective date of
this Agreement.
2.2 Furthermore, for as long as this License Agreement is in effect and
conditioned upon receiving full payment of monies due pursuant to
Article 3, Philips agrees not to assert any claim for Infringement of
the VAD Patents, for use of the Licensed Services, against any existing
Customer of Licensee listed in Annex 1 (or future Customer to be listed
in Annex 1A) that has accepted this non-assertion provision by
executing the acknowledgement of Exhibit II (hereinafter
("Acknowledgement"). An executed Acknowledgement must be provided to
Philips for each Customer listed in Annex 1 within sixty (60) days of
the effective date of this Agreement. Licensee agrees to provide at
least 1 executed Acknowledgement of a Customer by October 5th, 2001.
2.3 Furthermore, for a period of four (4) years starting from the effective
date of this Agreement, Philips agrees not to assert any claim for
Infringement of the Other-Voice-Patents for services provided through
Licensee Host System against any existing Customer of Licensee listed
in Annex 1 (or future Customer to be listed in Annex 1A) that has
accepted this non-assertion provision by executing the Acknowledgement
(Exhibit II), conditioned upon receiving full payment of monies due
pursuant to Article 3. If this Agreement is terminated prior to the
expiration of such four (4) year period, this non-assert provision
shall also be terminated as of the termination date. At the end of such
four (4) year period, Licensee and Philips may negotiate a patent
license agreement related to the Other-Voice-Patents on reasonable
terms and conditions.
2.4 Furthermore, Philips hereby issues to Licensee seventy (70) Philips
Speech Pearl 1999 or Speech Pearl 2000 software copyright licenses upon
execution of this agreement at no additional charge. These software
copyright licenses are granted under the terms and conditions contained
in the Volume License Agreement entered into on the 17th day of January
2000, between Philips Speech Processing North America and License.
Article 3 Royalties
3.1 License Issue Fee: In consideration of the license granted under this
Agreement by Philips to Licensee, Licensee agrees to make a
non-refundable payment of ** to PSP within forty-five (45) days after
the effective date of this Agreement.
3.2 License Maintenance Fee: In further consideration of the license and
rights granted hereunder, Licensee agrees to pay ** payable on an
annual basis starting December 31, 2002, provided, however, License
Maintenance Fees may be credited to Running Royalties subsequently due
per paragraph 3.3 below for each said year, If any. License Maintenance
Fees paid in excess of Running Royalties shall not be creditable to
Running Royalties for future years.
** "Confidential Treatment Requested" indicates portions of this document have
been deleted and have been separately filed with the Securities and
Exchange Commission.
3.3 Running Royalties: In further consideration of the licenses and rights
granted hereunder, Licensee agrees to pay to Philips running royalties
of ** per month, per subscriber for Customers with an Existing VAD
Contract ** per month, per subscriber for future Customers, as the case
may be, for each VAD Subscriber. Two running royalties calculations
must be made, i.e., for the Current Contract VAD Subscribers and for
the Future Contract VAD Subscribers. No royalty shall be due or paid
for one-time, promotional periods offered by Licensee to Customers at
the initiation of providing Licensed Services, such periods shall not
exceed a maximum of sixty (60) days.
Article 4 Reports and Payments
4.1 Within thirty (30) days after of each calendar quarter during which
this Agreement shall be in force, Licensee hereby undertakes to submit
to Philips or to such person or body as Philips may designate from time
to time, even in the case of no sales, a statement in writing duly
certified by an authorized officer of Licensee, setting forth with
respect to Licensee and its Customers for the quarterly period
concerned:
a) the Current Contract VAD Subscribers and the End-Users on a per
Customer basis; b) the Future Contract VAD Subscribers and the
End-Users on a per Customer basis; c) an updated and current Annex 1
and Annex 1A with additional Acknowledgements (Exhibit II); and d) the
running royalty due to Philips.
4.2 Licensee shall pay to Philips in U.S. dollars the royalty due hereunder
concurrently with the submission of the above-mentioned statement
4.3 All payments to Philips referred to in this Agreement shall be effected
by transfer of such currency, convertible in the sense of Article VIII
and XIX of the Articles of Agreement of the International Monetary
Fund, as designated by Philips. The rate of exchange for converting the
currency of a particular country shall be the telegraphic transfer
selling rate of the designated currency (or other convertible currency
as the case may be) in terms of currency of that country officially
quoted by the officially authorized foreign exchange bank of that
country for payment of current transactions on the day of transfer. The
stipulations made in this paragraph for payment shall apply mutatis
mutandis to all other payment procedures agreed between Philips and
Licensee, which will be indicated by Philips in accordance with
currency regulations and payment agreements from time to time in force.
Payment of License Maintenance Fees (section 3.2) and Running Royalties
(Section 3.3) shall be made by wire transfer,
** "Confidential Treatment Requested" indicates portions of this document have
been deleted and have been separately filed with the Securities and
Exchange Commission.
To Philips' account:
Citibank N.A., New York
Koninklijke Philips Electronics N.V. - Licenses
Account Number: 4067-1001
Swift Code: ▇▇▇▇▇▇▇▇, ABA021000089
4.4 All costs, such as stamp duties, taxes and other similar levies
originating from or in connection with the conclusion of this Agreement
shall be borne by Licensee. However, in the event that the government
of a country imposes any income taxes on payments hereunder by Licensee
to Philips and requires Licensee to withhold such tax from such
payments, Licensee may deduct such tax from such payments. In such
event, Licensee shall promptly furnish Philips with tax receipts issued
by appropriate tax authorities so as to enable Philips to support a
claim for credit against income taxes which may be payable by Philips
and/or its Associated Companies in the Netherlands.
4.5 In order that the statements and reports provided for in this Article
may be verified, Licensee shall keep and maintain for a period of at
least three (3) years, full, complete and accurate books and records
recording the information required in Section 4.1 on a quarterly basis.
Licensee shall permit such books and records to be audited from time to
time, but not more than once in each calendar year by an independent
certified public accountant appointed by Philips and reasonably
acceptable to Licensee, to the extent necessary to verify the accuracy
of the aforementioned statements and reports and the payments made by
Licensee based thereon. Such inspection shall be completed at Philips'
own expense, provided that if any discrepancy or error exceeding three
(3) percent of the money actually due is found in connection with the
computation, the cost of such inspection shall be borne by Licensee.
4.6 Any statement and/or report provided for in this Article shall be
deemed to be sufficiently given or rendered when sent by registered
mail, postage prepaid, and if given or rendered to Philips, addressed
to:
Corporate Intellectual Property
Philips Electronics North America Corporation
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4.7 Notwithstanding the provisions of Section 4.1 hereof, Licensee shall
furnish whatever additional information as Philips may reasonably
request from time to time to enable Philips to ascertain proper payment
of royalties to Philips under this Agreement, the VAD Patents which
have been utilized by Licensee, and the amount of royalties payable.
4.8 Payments which are not made on the dates specified herein, shall accrue
interest at the rate of 2.0 percent per month.
** "Confidential Treatment Requested" indicates portions of this document have
been deleted and have been separately filed with the Securities and
Exchange Commission.
Article 5 Term of Agreement
5.1 Unless terminated earlier in accordance with the provisions of Article
8, this Agreement shall continue in force and effect for the life of
the VAD Patents.
5.2 In the event that this Agreement is terminated in accordance with
Article 8, all rights of the breaching party under this Agreement shall
terminate, but the obligations of the breaching party set forth in
Articles 3, 4 and 6 shall continue.
Article 6 Proprietary Information
6.1 Each party will treat and safeguard any proprietary information
received from the other, whether verbal or in writing (provided that it
is properly identified as such in accordance with Section 6.2 of this
Article 6), in the same manner as the receiving party safeguards its
own proprietary information and shall not disseminate same without
prior written authorization from the disclosing party, unless the
receiving party can prove and to the extent it can prove that:
a) such information was in its possession or in the possession of
any of its Associated Companies prior to the receipt thereof,
or
b) such information lawfully is or becomes public knowledge
through no breach of this Agreement by the receiving party; or
c) such information is provided without confidentiality
obligation to any arm's length third party with a bona fide
right to do so; or
d) such information is independently developed by the receiving
party or any of its Associated Companies prior to the receipt
of such information; or
e) such information is necessarily disclosed through the
marketing or use of Licensed Services; or
f) such information is disclosed pursuant to judicial order or
other lawful government action; or
g) such information has been in the possession of the receiving
party for a period of five years after receipt.
6.2 Each party will give notice to the other party of information disclosed
to such other party which the disclosing party deems proprietary as
follows:
a) all written proprietary information shall be labeled as such;
and
b) all verbal proprietary information shall be reduced to writing
and sent to the receiving party within thirty days after the
verbal disclosure, labeled as being proprietary information.
Article 7 Miscellaneous
7.1 This Agreement embodies the entire understanding of the parties as it
relates to the subject matter of this Agreement, and this Agreement
supersedes any prior agreement or understandings between the parties
with respect to such subject matter. No amendment or modification of
this Agreement shall be valid or binding upon the parties unless signed
by their respective, duly authorized, officers.
** "Confidential Treatment Requested" indicates portions of this document have
been deleted and have been separately filed with the Securities and
Exchange Commission.
7.2 Philips makes no representation or warranty whatsoever that Licensed
Services will be free from infringement of any industrial or
intellectual property rights owned or controlled by any third party, or
industrial or intellectual property rights owned or controlled by
Philips and/or an Associated Company of Philips, other than the
Licensed Patents. Philips, however, is not aware of any other patents
owned or controlled by Philips for which a license is essential to
provide the Licensed Services.
7.3 The parties to this Agreement recognize that third parties may own
industrial or intellectual property rights in the field of Licensed
Services and Licensee accepts that Philips makes no warranty whatsoever
that any use, sale or other disposition of Licensed Services will be
free from infringement of any industrial or intellectual property
rights other than the Licensed Patents. Licensee and its Associated
Companies shall hold Philips and its Associated Companies harmless from
any product liability claim with respect to the Licensed Services
manufactures, used, sold or otherwise disposed of by Licensee.
7.4 Nothing contained in this Agreement shall be construed as conferring by
implication, estoppel or otherwise upon either party hereunder any
license or other right except the licenses and rights expressly granted
hereunder to a party hereto.
7.5 This Agreement cannot be assigned by Licensee without the written
consent of Philips and should any assignment be made without the
written consent of Philips such assignment will be null and void.
7.6 Any notice hereunder shall be deemed to be sufficiently given or
rendered when sent by registered mail, postage prepaid, and if given or
rendered to Philips, addressed to:
Corporate Intellectual Property Counsel
Philips Electronics North America Corporation
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Fax. No. ▇▇▇-▇▇▇-▇▇▇▇
or, if given or rendered to Licensee, addressed to:
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President & COO
Preferred Voice, Inc.
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and sent in each case by facsimile or telecopy, and Certified Mail,
postage prepaid. The date of mailing shall be deemed to be the date on
which such notice or request has been given. Either party may give
written notice of change of address, and after notice of such change
has been received, any notice or request required to be given shall
thereafter be given to such party at such changed address in the manner
as provided above.
** "Confidential Treatment Requested" indicates portions of this document have
been deleted and have been separately filed with the Securities and
Exchange Commission.
7.7 Further, Philips agrees that once Philips has received an executed
Acknowledgement from a Customer and conditioned upon receiving full
payment of monies due pursuant to Article 3, Philips will not initiate
any direct contact with that Customer regarding the Licensed Patents in
relation to Licensed Services, as long as this Agreement is in effect,
or for the period specified in Section 2.3 for the Other-Voice-Patents.
If Philips is contacted by any such Customer regarding the Licensed
Patents or the Other-Voice Patents during such time, Philips will
notify Licensee before any response is made to such Customer.
Article 8 Termination
8.1 Either party may terminate this Agreement at any time on thirty (30)
days notice to the other party in the event that such other party has
committed a material breach of any of its obligations under this
Agreement, and such material breach is not cured within thirty (30)
days after receipt of a written notice specifying the nature of such
material breach. Such right of termination shall not be exclusive of
any other remedies or means of redress to which the non-breaching party
may be lawfully entitled, it being intended that all such remedies
shall be cumulative. Any such termination shall not affect any
payments, the rights to which may have become due under this Agreement
prior to such termination.
8.2 If Licensee should be dissolved, file a voluntary petition in
bankruptcy, seek any court or governmental protection from creditors,
make any assignment for creditors or should an order be entered
pursuant to any law relating to bankruptcy or insolvency appointing a
receiver or trustee of Licensee, and if any such receivership is not
terminated within sixty (60) days, then, Philips may give written
notice to Licensee terminating this Agreement, and this Agreement shall
be terminated in accordance with such notice.
8.3 As a result of a change of control, change of ownership or in
conjunction with the sale or transfer of the majority of assets
associated with the Licensee, the running royalties due (for current
and future Customers) pursuant to section 3.3 shall be ** per month,
per subscriber for each VAD Subscriber as of the effective date of the
change of control or ownership or transfer, if such change of control
or ownership or transfer is to (1) a direct competitor of Philips
Speech Processing or related Associated Company in the speech
processing field, or (2) a person or entity that has been given notice
of infringement concerning one or more of Philips' patent rights. Such
acquisition by a third party shall not relieve that third party from
any liability for past infringement of Philips' patent rights.
Article 9 Delegation
9.1 Philips may delegate the performance of one or more of its obligations
under this Agreement to any of its Associated Companies.
Article 10 Waiver/Severability
10.1 The waiver by either party of a breach or default in any of the
provisions of this Agreement by the other party shall not be construed
as a waiver by such party of any succeeding breach of the same or other
provisions nor shall any delay or omission on the part of either party
to exercise or avail itself of any right, power or privilege that it
has or may have hereunder operate as a waiver of any right, power or
privilege by such party.
** "Confidential Treatment Requested" indicates portions of this document have
been deleted and have been separately filed with the Securities and
Exchange Commission.
10.2 If any term, clause or provision of this Agreement shall be judged to
be invalid the validity of any other term, clause or provision shall
not be thereby affected and such invalid term, clause or provision
shall be deemed deleted from this Agreement.
Article 11 Applicable Law
11.1 This Agreement shall be governed by the laws of New York exclusive of
it conflict of law rules.
Article 12 Press Release and Confidentiality
12.1 Except as may otherwise be required by law or as reasonably necessary
for performance hereunder, each party shall keep this Agreement and its
provisions confidential; and shall not disclose this Agreement or its
provisions without first obtaining the written consent of the other
party, which consent shall not be unreasonably withheld. The
confidentiality obligations hereunder do not apply to the existence of
this Agreement or the fact that Philips and Licensee have executed this
Agreement, but do apply to the terms and conditions of this Agreement.
Any press release or other announcement by either party concerning this
Agreement shall be subject to the prior written approval of other
party, which approval shall not be unreasonably withheld.
12.2 Notwithstanding the foregoing, PSP may make a press release or other
public announcement to the effect that Licensee is one of Philips'
licensees for Voice Activated Dialing technology and Philips will also
have the right to mention the names of Licensees Customers who have
signed Exhibit II in this press release.
In Witness Whereof, the parties hereof have caused this agreement to be signed
on the date first above written.
Koninklijke Philips Electronics N.V. Licensee
Signature /s/ H.F.M. Beckers Signature /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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Name H.F.M. Beckers Name ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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Title Patent Licensing Director Title President and COO
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** "Confidential Treatment Requested" indicates portions of this document have
been deleted and have been separately filed with the Securities and
Exchange Commission.
Annex 1
**
** "Confidential Treatment Requested" indicates portions of this document have
been deleted and have been separately filed with the Securities and
Exchange Commission.
Annex 2
**
** "Confidential Treatment Requested" indicates portions of this document have
been deleted and have been separately filed with the Securities and
Exchange Commission.
Annex 1A
New Customers
Effective Date or Execution date
(whichever is later) of the
contact of between Licensee and
Customer.
