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EXHIBIT 10.12
APCO Fed Project 25
Algorithm only
LICENSE AGREEMENT
This License Agreement is between Digital Voice Systems, Inc. ("DVSI"), a
corporation organized under the laws of the Commonwealth of Massachusetts, with
a principal office at Xxx Xxx xx Xxxxxx Xxxxx, Xxxxxxxxxx, XX 00000 and
Transcrypt International, Inc., Transcrypt International Limited, Transcrypt
International Washington and Transcrypt International Europe Limited, a limited
partnership organized under the laws of the State of Nebraska with principal
office at 0000 Xxxxx Xxxx Xxxxx Xxxxxx Xxxxxxx, Xxxxxxxx 00000 (hereinafter
called "Licensee").
The effective date of this Agreement is August 14, 1995.
PRELIMINARY STATEMENTS AND DEFINITIONS
(a) DVSI has developed a voice coding method and algorithm (the
"Technology") based on the Improved Multi-Band Excitation ("IMBE"(TM))
speech model;
(b) The Technology has been selected as the North American land mobile
radio standard for APCO Fed Project 25.
(c) DVSI has produced a written description of the Technology which has
been published by Telecommunications Industry Association ("TIA") in
document number IS102BABA, titled the APCO Project 25 Vocoder
Description. The Technology includes any updates and revisions which
are produced by DVSI and published by TIA as part of the APCO Project
25 Vocoder Description. The Technology does not include any method or
algorithm which is not specifically described in the APCO Project 25
Vocoder Description.
(d) DVSI claims certain "Proprietary Rights" in the Technology, including
patent rights trademarks and trade secrets. DVSI's Proprietary Rights
include patent rights granted under U.S. patents #5,226,084,
#5,216,747, #5,247,579, #5,081,681 and #5,226,108 and under DVSI's
pending applications, but only to the extent said patent rights cover
the Technology as described in the APCO Project 25 Vocoder
Description.
(e) "Project 25" applications are defined as those products that are
interoperable with the 7200 bps IMBE(TM) Voice Codec Standard and the
9600 bps Common Air Interface Standard established by APCO Fed Project
25.
(f) "Non-Project 25" applications are defined as all other products that
are not included in definition (e).
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein, the parties agree as follows:
1. LICENSE
1.1 DVSI hereby grants to Licensee a limited, non-exclusive,
worldwide right and license under DVSI's Proprietary Rights to
use the Technology solely for the purpose of developing,
manufacturing, integrating, marketing, selling and
incorporating the Technology in Licensee's hardware products.
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LICENSE AGREEMENT
1.2 Licensee shall have no right to sublicense the Technology to
any third party other than customers of hardware products
manufactured and sold by Licensee or its authorized
distributors for the limited purpose of using the Technology
without further modification on such products.
1.3 Licensee shall have no right to sublicense the Technology,
except as provided in Section 1.2 of this Agreement
1.4 Licensee shall affix in each such manufactured product or the
products owner's manual the following notice in such a manner
and location as to give reasonable notice to DVSI's claim of
intellectual property rights:
The IMBE(TM) voice coding technology embodied in this
product is protected by intellectual property rights
including patent rights of Digital Voice Systems,
Inc.
1.5 This Agreement shall continue indefinitely, unless sooner
terminated as provided in Section 7.
2. RESERVED RIGHTS
Except for the rights licensed hereunder to Licensee, neither Licensee
nor its customers shall acquire right, title or interest in the
Technology, or any applicable copyrights, trademarks, trade secret
rights, patents or patent applications.
3. PAYMENTS AND RECORDS
3.1 In consideration of the rights granted herein, Licensee agrees
to pay royalties to DVSI in accordance with the following
subsections of this Section 3.1 and Sections 3.2 and 3.3.
3.1.1 Commencing upon the effective date of this Agreement,
Licensee shall pay to DVSI a royalty due, and payable
within ninety (90) days of the last day of each of
four (4) calendar quarters based on the number of
embodiments (as determined in Sections 3.1.2-3.1.5
hereinafter called "Royalty Units") registered in
that calendar quarter.
3.1.2 The royalty due for Project 25 shall be U.S. $5 (Five
United States Dollars) per Royalty Unit so registered
for the first 000,000 Xxxxxxx Xxxxx, X.X. x0 (Xxxx
Xxxxxx Xxxxxx Dollars) per Royalty Unit so registered
above 100,000 Royalty Units and up to 1,000,000
Royalty Units and U.S. $3 (Three United States
Dollars) per Royalty Unit so registered above
1,000,000 Royalty Units.
3.1.3 The royalty due for Non-Project 25 shall be U.S. $25
(Twenty Five United States Dollars) per Royalty Unit
so registered for the first 0000 Xxxxxxx Xxxxx, X.X.
x00 (Xxxxxxxx Xxxxxx Xxxxxx Dollars) per Royalty Unit
so registered above 3,000 Royalty Units and up to
10,000 Royalty Units, U.S. $12 (Twelve United States
Dollars) per Royalty Unit so registered above 10,000
Royalty Units and up to 100,000 Royalty Units and
U.S. $8 (Eight United States Dollars) per Royalty
Unit so registered above 100,000 and up to 1,000,000
and U.S. $3 (Three United States Dollars) per Royalty
Unit so registered above 1,000,000 Royalty Units.
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LICENSE AGREEMENT
3.1.4 The, Royalty Unit count shall be determined as
follows:
Should Licensee or its authorized distributors,
agents or retailers sell or lease a system that
includes a speech analysis, quantization or synthesis
capability incorporating the Technology or any of
DVSI's Proprietary Rights, Licensee agrees to pay
DVSI a royalty based on the maximum number of Coders
or Decoders used in such system.
3.1.5 Royalty Units shall be counted only when first sold,
leased, invoiced, delivered, shipped or mailed to a
customer. Deductions shall be allowed for units
returned by or refused by a customer and shall only
be recounted when reinvoiced, released, redeveloped,
shipped or remailed.
3.1.6 Licensee shall be also obligated to make
non-refundable, minimum royalty payments to DVSI to
ensure that the total royalty paid to DVSI during the
first (3) three years is not less than Xxx Xxxxxxx
xxx Xxxxxx Xxxx Xxxxxxxx Xxxxxx Xxxxxx Dollars ( U.S.
$135,000). During this period, Licensee's minimum
royalty obligation shall accumulate at a rate of
Forty Five Thousand United States Dollars (U.S.
$45,000) per year. If upon the end of the first
three, years of this Agreement (measured from the
Effective Date) the cumulative royalty paid by
Licensee to DVSI under Sections 3.1.2-3.1.5 of this
Agreement is less than Licensee's said accumulated
minimum royalty obligation then Licensee shall pay
the difference to DVSI within thirty (30) days, and
such difference shall be credited towards any future
royalty due to DVSI from Licensee, provided that such
credit does not reduce Licensees minimum royalty
obligation as specified herein.
3.2 Licensee shall keep full, true and accurate records containing
all particulars which may be necessary for the purpose of
validating the royalty payable to DVSI. Said records shall be
retained by the Licensee for a period of three (3) years
following the end of the calendar year to which they pertain.
DVSI shall have the right to retain an independent,
professionally registered accountant for the sole purpose of
inspecting and examining said books and records insofar as may
be necessary to verify the accuracy of the same and the
statements provided herein. Such inspection and examination
shall be made during business hours upon reasonable notice.
Licensee holds such books and records and any abstracts
obtained thereof as Proprietary Information of Licensee and
disclosure to DVSI or any third party except as provided
above, is specifically prohibited by Licensee. The cost of
any inspection or examination performed under this Section
shall be paid by DVSI with the following exception: If an
error is discovered which has resulted in an underpayment in
royalties due to DVSI, the cost of the inspection up to the
amount of the underpayment is to be reimbursed to DVSI by
Licensee. In the event of an underpayment of royalties due to
DVSI, Licensee shall also pay interest on the underpayment at
an annual rate of eighteen (18) percent in addition to the
amount of the underpayment.
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LICENSE AGREEMENT
3.3 Licensee shall, within ninety (90) days after the close of
each calendar quarter of each year of this Agreement, deliver
to DVSI a true and accurate itemized statement giving such
particulars of the business conducted by Licensee during the
preceding calendar quarter as are pertinent to a royalty
accounting under this Agreement. These shall include at least
the following:
1. Total number of Royalty Units incorporating the
Technology (and any and all versions or parts
thereof), first sold.
2. The total amount of royalties due to DVSI.
3. Description of all products sold by Licensee that
incorporate the Technology for which royalties are
due and number of Royalty Units assigned each such
product.
4. REPRESENTATION AND WARRANTIES
4.1 DVSI disclaims all warranties expressed or implied, including
without limitation any implied warranty of merchantability or
fitness for a particular purpose.
4.2 DVSI disclaims and shall not be liable for any losses or
damages, whether direct, indirect, incidental, consequential,
special, or exemplary, arising from the design or use of any
of the Technology. DVSI's liability shall in any event be
limited to twenty percent (20%) of the aggregate amount of the
payments made to DVSI under this License.
4.3 DVSI accepts no responsibility for, and makes no
representations as to, the accuracy or reliability of any
communication encoded or decoded using the Technology.
4.4 Licensee assumes all risk as to the quality and performance of
the Technology. Licensee shall release DVSI from any claim,
damage, demand, or other liability arising from, or based
upon, the quality or performance of the Technology in
conjunction with the Licensee's product.
5. RELATIONSHIP OF THE PARTIES
Nothing contained herein shall be construed to place the parties in
the relationship of partners or joint venturers. Neither party has
the power to obligate or bind the other in any manner whatsoever.
6 NON-DISCLOSURE OF SOFTWARE
6.1 Nothing in this Agreement shall require DVSI to disclose,
provide, or grant any rights whatsoever with respect to any
methods or algorithms embodied in any software (including both
source and object codes) it has developed or may in the future
develop.
6.2 Licensee shall not decompile, reverse engineer or disassemble
any DVSI product which embodies the Technology. This
includes, but is not limited to, DVSI's VC-10 and VC-20 voice
codecs.
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LICENSE AGREEMENT
7. TERMINATION
7.1 DVSI may terminate this Agreement for cause if:
7.1.1 Licensee materially breaches the Agreement, including
without limitation if it fails to pay the required
royalties when due, or if it fails to comply with the
protection and security provisions of Section 3 of
the Agreement, provided DVSI gives a written notice
to cure such failure(s) and Licensee has not cured
within thirty (30) days after its receipt.
7.1.2 There occurs the making or filing of an application
to wind up Licensee (other than for the purpose of
reconstruction or amalgamation) under any law or
government regulation relating to bankruptcy or
insolvency.
7.2 Licensee may terminate this Agreement for cause if:
7.2.1 DVSI materially breaches the Agreement, provided
Licensee gives a written notice to cure such
failure(s) and DVSI has not cured within thirty (30)
days after its receipt.
7.2.2 There occurs the making or filing of an application
to wind up DVSI (other than for the purpose of
reconstruction or amalgamation) under any law or
government regulation relating to bankruptcy or
insolvency.
7.3 Termination shall be effected by the serving of notice, by
certified mail at the address designated in Section 8 of this
Agreement.
7.4 Upon any termination of this Agreement, all rights and
licenses granted by this Agreement shall immediately cease
upon the effective date of said termination, and all past
royalties and payments accrued to the date of said termination
plus any other obligations, including Licensees total minimum
royalty obligation ($135,000) as specified in Section 3.1.6
herein, shall be paid to DVSI within thirty (30) days from the
effective date of said termination.
7.5 This Agreement shall terminate after all Proprietary Rights in
the Technology are lost through no fault of Licensee.
7.6 Licensee may terminate this Agreement without cause upon
giving ninety (90) days written notice to DVSI as specified in
Section 8.
8. NOTICES
Any notice or other communication pursuant to this Agreement shall be
sufficiently made or given on the date of mailing if sent to such
party by certified mail, postage prepaid, addressed to the party to
whom notice is being given at its address below or as it shall
designate by written notice given to the other party.
In the case of DVSI:
Xxx Xxx, Chairman of the Board, or
Xxxx X. Xxxxxxxx, President,
Digital Voice Systems, Inc.
Xxx Xxx xx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
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LICENSE AGREEMENT
In the case of Licensee:
Xxxx Xxxxxx
President and Chief Operations Officer
Transcrypt International
0000 Xxxxx Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
9. EXPORT CONTROL
9.1 U.S. export laws and regulations prohibit the exportation of
technical data which may be received from DVSI under this
Agreement from the United States to certain countries, except
under a special validated license. As of September 22, 1994
the restricted countries are: Libya, Cuba, North Korea, Iraq,
Serbia, Montenegro, and Haiti. Licensee hereby gives its
assurance to DVSI that Licensee win not knowingly, unless
prior authorization is obtained from the appropriate U.S.
export authority, export or re-export directly or indirectly
to any restricted countries the technical data received from
DVSI under this Agreement in violation of said Export Laws and
Regulations.
9.2 DVSI neither represents that a license is not required nor
that, if required, it will be issued by the U.S. Department of
Commerce. Licensee shall assume complete and sole
responsibility for obtaining any licenses required for export
purposes.
10. MISCELLANEOUS
10.1 Neither this Agreement nor any rights hereunder may be
assigned or otherwise transferred in any manner by Licensee
without the prior written consent of DVSI.
10.2 The parties hereto acknowledge that this instrument sets forth
the entire Agreement and understanding of the parties as to
the subject matter hereof and shall not be subject to any
change or modification, except by a written agreement signed
by the parties hereto.
10.3 In the event that any provisions are determined to be invalid
or unenforceable under any controlling body of law, such
invalidity or unenforceability shall not in any way affect the
validity or enforceability of the remaining provisions.
10.4 No waiver by either party of any rights hereunder shall be
valid unless it is in writing signed by that party. The
omission by either party to insist upon strict performance of
any provision of this Agreement shall not be construed as a
waiver of such provision.
10.5 Each party agrees not to disclose, publicize, or use for
promotional purposes the existence of terms of this Agreement
without the prior written consent of the other which consent
shall not be unreasonably withheld.
10.6 This Agreement shall be read and construed according to the
laws of the Commonwealth of Massachusetts, United States of
America, and the parties submit to the jurisdiction of the
courts of said Commonwealth.
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LICENSE AGREEMENT
IN WITNESS WHEREOF, the parties hereto set their hands and seals and duly
execute this License Agreement as of the day and year first above written.
Digital Voice Systems, Inc.
XXXX X. XXXXXXXX 21 August 1995
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Xxxx X. Xxxxxxxx, President Date
Licensee
Transcrypt International Ltd.
XXXXXXX X. XXXXXX 8/14/95
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Xxxxxxx X. Xxxxxx Date
President and COO
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