AGREEMENT FOR THE ACQUISITION OF INTELLECTUAL PROPERTY RIGHTS
BETWEEN:
IAT MULTIMEDIA INC a Delaware, USA corporation ("IATM")
and
IAT XX, XX-0000 Xxxxx ("AG"), a Swiss corporation, which is a wholly owned
subsidiary of IATM
and
XXXX XXXXXX XXXXXXX XX, Xx-0000 Xxxxxxxxx-Xxxxx ("AV AG"), a Swiss corporation
(formerly known as IAT Communication AG, "IATC")
and
ALGO VISION PLC, a company incorporated in England and Wales with its registered
office at 2 Xxxxxxxx'x Xxx, Xxxxxx XX0X 0XX ("AV plc")
RECITALS
(A) By a spin off agreement dated 11 March 1998 (the "Spin Off Agreement"), the
parties to which were IATM, AG, Xx Xxxxxx Xxxx, acting on his own behalf
and on behalf of IATC, and IATC, IATM agreed to transfer certain assets and
liabilities of AG to IATC. Under the Spin Off Agreement (i) AG agreed to
grant a licence of certain intellectual property rights to IATC and (ii) AG
granted IATC an option to acquire 50% ownership of the said intellectual
property rights, subject to necessary third party consents. The Spin Off
Agreement envisaged that AG would assist IATC in obtaining access to third
party
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intellectual property rights, including, if necessary and possible, by way
of sub-licence from AG.
(B) By this Agreement the company formerly known as IAT Communication AG and
now known as Algo Vision Schweiz AG wishes to renounce its option granted
to it by the Spin Off Agreement, with the parties instead entering into
further provisions regarding ownership and licensing of intellectual
property.
(C) This Agreement is entered into in the context of a further agreement or
series of agreements between IATM, AG and AV plc whereby AG will exchange
certain shareholdings in AV AG and Algo Vision Systems GmbH for 500,000
shares in AV plc and whereby AV AG will repay certain loans.
THE PARTIES AGREE AS FOLLOWS:
1. DEFINITIONS
1.1 "Additional Consideration" has the meaning set out in Article 6.2 of this
Agreement;
1.2 "Admission" has the meaning set out in Article 2.1 of this Agreement;
1.3 "Affiliate" means, with respect to any undertaking or legal person, any
other undertaking or legal person directly or indirectly controlling,
controlled by, or under common control with such undertaking or legal
person;
1.4 "AV AG Royalties" has the meaning set out in Article 6.1 of this Agreement;
1.5 "Call Date" means the date that falls no less than fourteen (14) calendar
days after the Effective Date of this Agreement and no later than thirty
(30) calendar days after the Effective Date of this Agreement;
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1.6 "Co-ownership Fee" means the Fee of one million US dollars (US $1m) to be
paid to AG for AV plc to exercise the New Option to acquire co-ownership of
the Intellectual Property and other rights;
1.7 "EASDAQ" the European Association of Securities Dealers Automated
Quotation;
1.8 "Effective Date" means the date of the fulfilment of the condition referred
to in Article 2.1 of this Agreement;
1.9 "IATM Group" means IATM and its Affiliates from time to time, including AG;
1.10 "Improvements" means improvements based essentially on the Intellectual
Property;
1.11 "The Intellectual Property" means the intellectual property owned or used
by AG at the date of the Spin Off Agreement together with intellectual
property owned or used by AG at the Effective Date, including but not
limited to, the Patents and the trade marks MOVING STILL IMAGE and WONDER
BOARD but, for the avoidance of doubt, not including any rights whatsoever
to the IAT name or xxxx, ownership of which shall remain exclusively in the
IATM Group (intellectual property meaning, without limitation, patents,
patent applications, copyrights, trademarks, trademark registrations,
service marks, service xxxx registrations, inventions, trade secrets and
licences of any of the foregoing);
1.12 "Licence Agreement" means the licence agreement dated 22 February 1999
between AG and IATC which put in place the Intellectual Property licensing
arrangements envisaged by the Spin Off Agreement;
1.13 "Net Turnover" means the gross price obtained by AV plc or its Affiliates
from sales of Products, after discounts for Product returns, price
reductions, sales taxes and other taxes and duties and transport and
insurance costs;
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1.14 "New Option" means the option granted hereunder to AV plc to acquire a 50%
share of ownership of the Intellectual Property;
1.15 "Patents" means patents and patent applications owned or in the name of a
member of the IATM Group relating to wavelet and still image transmission
technology;
1.16 "Products" means the products listed in the Schedule;
1.17 "Spin Off Agreement" means the spin off agreement referred to Recital (A)
above;
1.18 "Spin Off Agreement Option" means the option granted in the Spin Off
Agreement;
1.19 "Third Party Owned IP" has the meaning set out in Article 4.6.1;
2. CONDITION PRECEDENT
2.1 This Agreement shall be conditional upon the admission ("Admission") to
trading on EASDAQ of 14,464,654 shares of (pound)0.01 each, being the whole
of the issued ordinary share capital of AV plc and the shares forming part
of the authorised share capital but unissued share capital of AV plc
sufficient to satisfy obligations to issue further shares which it has
assumed as at Admission.
2.2 In the event that the condition referred to in Article 2.1 shall not have
been fulfilled prior to 31 July 1999 (unless a later date shall be
unanimously agreed by IATM, AG, AV AG and AV plc) the parties hereto shall
not be bound to proceed with the terms and provisions of this Agreement and
this Agreement shall cease to be of any effect, except Articles 10.2 and 16
which shall remain in force and save in respect of claims arising out of
any antecedent breach of this Agreement.
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3. EXERCISE OF OPTION
3.1 Subject to Article 2, AV AG hereby renounces the Spin Off Agreement Option
on the basis that AG hereby grants a New Option to AV plc on the same terms
as the Spin Off Agreement Option, save that instead of the parties being AG
and IATC, the party accepting the New Option is AV plc. Subject to Article
2, AV plc hereby exercises the New Option.
4. TRANSFER OF INTELLECTUAL PROPERTY INTO CO-OWNERSHIP
4.1 Pursuant to the exercise by AV plc of the New Option and on the basis of
the further terms herein which supplement the New Option, and in
consideration of the Co-ownership Fee and the AV AG Royalty, AG will, on or
within 7 days of Admission, transfer, or where applicable procure that its
Affiliates will transfer, the Intellectual Property into the joint names of
AG and AV plc, such that after the said transfer AG and AV plc will each
own the said Intellectual Property in the form of 50% co-ownership
(Miteigentum).
4.2 The agreed form of co-ownership shall entitle both co-owners and their
Affiliates to exploit the co-owned Intellectual Property themselves and to
grant non-exclusive, sub-licensable licences of the same, save that in the
case of the sub-licences granted after the date of this Agreement by the
IATM Group, the consent of AV plc shall be required. Any sublicenses of
trademarks, trade names or service marks, shall require the consent of both
AV plc and of the IATM Group in order to assure that the quality control
provisions of any such sublicense are appropriate and acceptable to both
owners of the marks and names, such consent not to be unreasonably
withheld. AG and the IATM Group shall not be entitled to charge, sell,
assign or otherwise transfer any part of the co-owned Intellectual Property
or of this Agreement without the consent of AV plc (which AV plc may
withhold in its absolute discretion). AV plc shall be entitled to charge,
sell, assign and otherwise transfer the co-owned Intellectual Property and
its rights under this Agreement, or any portion thereof, without the
consent of AG or the IATM Group.
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4.3 During the period of the co-ownership AV plc shall be entitled to receive
half of all the royalty income received by AG or other members of the IATM
Group from licensing of the co-owned Intellectual Property, except
royalties received by AG from (i) members of the IATM Group which do not
derive from third parties, and (ii) from AV plc or its Affiliates.
4.4 The parties shall ensure that any licences of the Intellectual Property to
non-Affiliated third parties contain termination provisions whereby any
serious breach of the licence (including breach of requirements of
confidentiality, which shall also be included) gives a right to terminate
the licence.
4.5 During the period of co-ownership AV plc shall take the lead in ensuring
the protection of the co-owned Intellectual Property, including by
prosecuting relevant patent applications. AV plc shall be entitled to call
upon AG to co-operate with such protection. The costs of pursuing such
protection shall be borne equally by each co-owner.
4.6 Where, as at the Effective Date, any part of the Intellectual Property is
not owned by the IATM Group as then constituted, or where at such date the
consent of one or more third parties is required to transfer ownership of
the Intellectual Property, IATM undertakes on its own behalf and on behalf
of the IATM Group as follows:
4.6.1 In relation to items of the Intellectual Property not owned by the IATM
Group (the "Third Party Owned IP"), the IATM Group and AV plc will
co-operate in using their best commercially reasonable efforts to
procure a perpetual (or if this is not legally possible, a long term
renewable), worldwide, sub-licensable and assignable and, where
possible, exclusive licence from the relevant owner or licensor for the
benefit of AV plc and its Affiliates to use in the manufacture and sale
of the Products, or the nearest to such licence that can be obtained on
the basis of such efforts. Such licence shall preferably be a direct
licence, but in the absence of this shall be a sub-licence via AG or a
member of the IATM Group.
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Where a sub-licence is granted, the relevant IATM Group company shall
request, and use its best commercially reasonable efforts to have
included, within the relevant head licence (to the extent the same are
not already included) terms whereby in the event of termination of the
licence from the third party to the relevant IATM Group member, a
direct licence shall be granted on similar terms to AV plc. The
obligations on the IATM Group in this Article 4.6.1 shall not apply
where AV plc indicates that it or one of its Affiliates will obtain
without assistance, or that it or one of its Affiliates has already
accepted, the terms of a licence from the owner of any Third Party
Owned IP. Nothing in this Article 4.6.1 shall require the IATM Group to
procure a license or sub-license of the Third Party Owned IP for AV plc
on terms more favourable than the terms available to IATM Group;
4.6.2 In relation to items of Intellectual Property whose transfer requires
third party consent, the IATM Group and AV plc will each use their best
commercially reasonable efforts to obtain such consent in order to
permit transfer in accordance with Article 4.1. To the extent such
consent cannot be obtained the IATM Group will use its best
commercially reasonable efforts to procure a licence instead on similar
terms to those mentioned for Third Party Owned IP;
4.6.3 In the event that the efforts required from the IATM Group are not
successful in procuring for AV plc and its Affiliates any of the
aforementioned rights the IATM Group shall be under no further
obligation to assist in procuring such rights.
4.7 The provisions of Article 4.6 shall continue in effect for as long as it is
necessary to enable procurement of the relevant rights, including after the
Call Date.
5. PAYMENT OF THE CO-OWNERSHIP FEE
AV plc shall pay the Co-ownership Fee at the date of transfer referred to
in Article 4.1 by bank transfer to AG in Turgi, Switzerland.
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6. ADDITIONAL CONSIDERATION PAYMENTS AND ROYALTIES
6.1 AV AG Royalty. AV AG will pay a royalty (the "AV AG Royalty") on Net
Turnover at the rates set forth on the Schedule. The obligation of AV AG to
pay the AV AG Royalty shall cease on the date on which AV plc acquires sole
ownership of the Intellectual Property pursuant to Article 9. In the event
that AV plc does not acquire sole ownership of the Intellectual Property
pursuant to Article 9, AV plc shall continue paying AV AG Royalty on behalf
of AV AG until 16 March 2003.
6.2 Additional Consideration. For a period of two (2) years from the date on
which AV plc acquires sole ownership of the Intellectual Property pursuant
to Article 9, AV plc shall be liable to pay to AG additional consideration
calculated on Net Turnover at the rates set forth on the Schedule
("Additional Consideration"). After the expiry of such two year period the
obligation to pay Additional Consideration to AG shall cease.
6.3 During the AV AG Royalty and the Additional Consideration payment periods
set out in Article 6.1 and Article 6.2 AV plc shall remain liable to
account for AV AG Royalties and Additional Consideration on sales of
Products by its Affiliates and licensees.
7. ADDITIONAL CONSIDERATION PAYMENT AND ROYALTY PROVISIONS
7.1 AV AG Royalties and Additional Consideration shall be paid quarterly within
30 days of the end of each calendar quarter.
7.2 AG shall have the right to audit the AV AG Royalty and Additional
Consideration payments provided for in Article 6. Such right shall be
exercisable only through a person under a professional obligation of
confidentiality. In the event that such an audit reveals that AV AG Royalty
or Additional Consideration payments are deficient by more than five per
cent (5%), the costs of the audit shall be borne by AV plc.
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7.3 AV AG Royalties and Additional Consideration shall be paid in Swiss Francs
or in the currency in which payments for Products are made. The place of
payment shall be Turgi, Switzerland.
7.4 AV plc shall only have a right of set off of AV AG Royalties and Additional
Consideration in the event of written consent or a court judgment to that
effect.
8. IMPROVEMENTS MADE DURING CO-OWNERSHIP PERIOD
8.1 In the event that AV plc or any of its Affiliates shall make or acquire any
Improvement in the period before the Call Date, AV plc shall, or shall
procure that the relevant Affiliate shall, forthwith disclose and
communicate the same to AG and shall grant to AG and its Affiliates a
non-exclusive, royalty-free licence for the period up to the Call Date to
make, have made, use and sell Products incorporating such Improvement. With
the consent of AV plc (which AV plc may withhold in its absolute
discretion), AG shall have the right to grant licences and sublicences to
third parties regarding such Improvements.
8.2 In the event that any member of the IATM Group shall make or acquire any
Improvement in the period before the Call Date, IATM shall, or shall
procure that the relevant Affiliate shall, forthwith disclose and
communicate the same to AV plc and shall grant to AV plc and its Affiliates
a non-exclusive, worldwide, sub-licensable and assignable royalty-free
licence to make, have made, use and sell Products incorporating such
Improvement. The term of such licence shall be the period up to transfer of
the said Improvement to AV plc or one its Affiliates pursuant to Article 9.
9. TRANSFER FROM CO-OWNERSHIP INTO SOLE OWNERSHIP OF AV PLC
9.1 On the Call Date, conditional solely upon Admission, AV plc shall be
obligated to call upon the IATM Group, including AG, to transfer to AV plc,
either on the Call Date or as soon as possible thereafter based on IATM
Group's best efforts, its entire interest in the 50% co-ownership of the
Intellectual Property and in any Improvements made or
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acquired by the IATM Group during the co-ownership period, for a cash
consideration of US$2.5 million.
9.2 AV plc shall give at least two clear business days notice in writing to
IATM Group of the Call Date. Such written notice shall be sent by facsimile
to Finance Director, IAT AG, fax (00) 00 000 00 00.
9.3 AV plc shall be obliged to pay the US $2.5 million cash consideration for
AG's co-ownership interest in the Intellectual Property to a special
purpose account in the name of AG to be maintained by UBS AG, Zurich.
9.4 AV plc agrees that upon acquiring sole ownership of the co-owned
Intellectual Property it shall assume all the benefit and burden of any
licences of the same granted by the IATM Group before the date of such
acquisition.
10. CONFIDENTIALITY
10.1 Subject to the rights of sub-licensing set out herein, the parties agree to
keep each other's know-how confidential during the period of co-ownership.
The IATM Group will keep confidential the know-how of AV plc and its
Affiliates after the period of co-ownership, to the extent such know-how
does not legitimately enter the public domain.
10.2 The parties agree to keep confidential and not disclose to other parties
such of their business secrets as become known to them through this and
preceding agreements, including after termination.
11. WARRANTIES
11.1 AG and IATM warrant severally and on behalf of the IATM Group that, to the
best knowledge of AG and IATM respectively, in the case of the Intellectual
Property, both as at the Effective Date and as at the date of transfer into
the sole ownership of AV plc, and
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in the case of the Improvements by the IATM Group to be transferred
hereunder, as at the said date of transfer:
11.1.1 subject to AV plc's interest as a co-owner of the Intellectual Property
and except in respect of the Third Party Owned IP, one or more members
of the IATM Group is or are the unencumbered owners of the Intellectual
Property and the said Improvements;
11.1.2 the validity of the Intellectual Property or the said Improvements or
the title or right of the IATM Group thereto is not and has not been
under challenge;
11.1.3 the use of the Intellectual Property or the said Improvements does not
infringe any third party rights, and the Intellectual Property or
rights in the said Improvements are not being and have not been
infringed by any third party;
provided however and solely for the purpose of this Article 11.1, "to the
best knowledge of AG and IATM respectively" shall mean the knowledge of
Xxxxx Xxxxxxxxxx and Xxxxx Xxxx only.
11.2 AG and IATM warrant severally and on behalf of the IATM Group both as at
the Effective Date and as at the date of transfer into sole ownership of AV
plc (other than transfers in compliance with this Agreement) that none of
the Intellectual Property owned by the IATM Group, as the IATM Group was
constituted at the time of the Spin Off Agreement, has been transferred
either wholly or partly into the ownership of any third party, nor is any
additional consent required for transfer of ownership of the Intellectual
Property further to such consent as was required at the date of the Spin
Off Agreement, nor has any part of the Intellectual Property been charged
since the date of the Spin Off Agreement by any member of the IATM Group,
past or present.
11.3 If IATM is for any reason in breach of the warranty at 11.2, then without
limiting its other liability for such breach, it shall use its best
commercial efforts to rectify the
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situation leading to such breach in order to achieve the same objective as
if the said breach had not occurred.
12. TERMINATION
Once the condition referred to in Article 2.1 is fulfilled, this Agreement
may not be terminated (including in the event of insolvency or liquidation
or like event), and the parties' only remedy for breach shall be in the
form of damages or an order for specific performance. The parties
acknowledge that (except as provided below) it would be inappropriate for
either to have a right of termination given the nature of the co-ownership
arrangement set out above and the subsequent absolute transfer to AV plc of
all Intellectual Property as envisaged herein.
13. STATUS OF SPIN OFF AGREEMENT AND LICENCE AGREEMENT
In relation to all intellectual property matters this Agreement entirely
supersedes the Spin Off Agreement and the Licence Agreement, and the
Licence Agreement is hereby terminated and of no further force or effect
and none of the parties thereto have any remaining unfulfilled obligations
thereunder.
14. COVENANT OF FURTHER ASSURANCE
At the expense of AV plc, AV plc may call upon the IATM Group to give
reasonable assistance in the protection of the Intellectual Property and
Improvements transferred into the co-ownership or sole ownership of AV plc,
such as by provision of witness statements or records in proceedings for
defending the validity of such Intellectual Property and Improvements.
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15. AMENDMENTS
Amendments to this Agreement shall be in writing signed on behalf of an
authorised officer of each party.
16. GOVERNING LAW AND FORUM FOR DISPUTE RESOLUTION
This Agreement is governed by Swiss law. Disputes shall be settled by means
of arbitration in accordance with the Schiedsgerichtordnung (international
rules) of the Zurich Chamber of Commerce before three arbitrators, the
language of the proceedings and the award being in English. If there are
only two sides in the arbitration, each side shall appoint one arbitrator
with the third being appointed by agreement or, failing agreement, by the
President of the Zurich Chamber of Commerce. If there are more than two
sides, the parties shall attempt to agree the method of appointing
arbitration but to the extent agreement cannot be reached the panel shall
be appointed by the President of the Zurich Chamber of Commerce.
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IAT MULTIMEDIA INC
Place, Date
7/22/99
------------------------------------
Signature
/s/ Xxxxx Xxxx
-------------------------------------
Name (in capitals)
XXXXX XXXX
------------------------------------
IAT AG
Place, Date
7/22/99
------------------------------------
Signature
/s/ Xxxxx Xxxxxxxxxx
-------------------------------------
Name (in capitals)
XXXXX XXXXXXXXXX
------------------------------------
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ALGO VISION SCHWEIZ AG
Place, Date
7/22/99
------------------------------------
Signature
/s/ Xxxx Xxxxxxx /s/ Xxxxxx Xxxxxxx
-------------------------------------
Name (in capitals)
XXXX XXXXXXX XXXXXX XXXXXXX
-------------------------------------
ALGO VISION PLC
Place, Date
7/22/99
------------------------------------
Signature
/s/ Xxxxxx Xxxx
-------------------------------------
Name (in capitals)
XXXXXX XXXX
-------------------------------------
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SCHEDULE
Vision & Live 3.X 5% on sales price of the software price
in the systems or customer licence
Vision & Live light 5% Ditto
MSI 2.X 10% on sales price of the software or
customer licence
H.32X lib. 10% of sales price or customer licence
Wonderboard DM 25 per piece sold
A4 Codec DM 25 per piece sold
Wavelet 10% on software sales price or customer
licence
Wavelet new products on patent 5% on software sales price or customer
licence
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