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TECHNOLOGY TRANSFER AGREEMENT
This Technology Transfer Agreement ("Agreement") is made and entered into as of
the last date as provided below by and between Voice Powered Technology
International, Inc., a California corporation, with its primary business located
at 00000 Xxxxxxx Xxxxxxxxx, Xxxxx #000, Xxxxxxx, Xxxxxxxxxx 00000 ("VPTI") and
Franklin Electronic Publishers, Inc., a Pennsylvania corporation, with its
primary offices located at Xxx Xxxxxxxx Xxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
("FEP").
BACKGROUND
1. As of the date of this Agreement, VPTI has acquired or designed low power
voice recognition technology, known as Voice Logic(TM) technology, for the
development and production of products ("Technology") including electronic
organizers that use voice recognition to eliminate the need for a
typewriter or numeric keypad ("Voice Organizers") such as the line that
includes its IQ Voice Model 5150 Voice Pocket Organizer ("5150"), IQ Voice
Model 5160 Voice Pocket Organizer ("5160"), and IQ Voice Model 6215 Voice
Organizer ("6215") ("VPTI Voice Organizers").
2. By Purchase and Loan Agreement between the parties hereto of even date
herewith ("the Purchase Agreement"), VPTI transfers and sells to FEP all
inventory, rights to work in process, manufacturing assets, marketing
assets, and software and hardware design assets for the 5150 and 5160.
3. Certain rights in Technology used in VPTI Voice Organizers including,
without limitation, computer programs, including those registered under U.
S. Copyright TXu 488 458 were obtained by VPTI by way of an Assignment
Agreement between Xxxxx Xxxxxxxxx ("Xxxxxxxxx"), an individual, and VPTI
dated February 20, 1996 ("the Xxxxxxxxx Assignment"). Such rights are
referred to herein as "the Xxxxxxxxx Rights."
4. Rights in Technology, other than the Xxxxxxxxx Rights, that (a) are
evidenced by the claims of U. S. Patent 5,602,963, assigned to VPTI ("the
Patent") and (b) are those used in or related to the development of the
5150 or 5160, such as, without limitation, trade secrets or know how in
voice compression and storage technology used in the 5150 or 5160,
copyright rights in the user interface software used in the 5150 or 5160,
other trade secrets or know how related to development and production of
the 5150 or 5160, or pending patent applications, relating to the 5150 or
5160 or the Technology used therein, are referred to herein as "the
Rights".
5. In accordance with the Terms of Agreement set forth below, VPTI wishes to
transfer or license to FEP certain rights in Technology, including, without
limitation, all right, title, and interest in the Xxxxxxxxx Assignment, and
the Rights in order that FEP develop and produce (a) the 5150 and 5160, (b)
other Voice Organizers and (c) electronic products other than Voice
Organizers (collectively "Franklin Products"), all for worldwide
distribution.
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6. In accordance with the Terms of Agreement set forth below, FEP wishes to
grant back to VPTI the Xxxxxxxxx Rights in order (a) that VPTI develop and
produce Voice Organizers, and (b) that VPTI sublicense, develop, or produce
electronic products other than Voice Organizers, all for worldwide
distribution.
7. The parties wish to cooperate to port certain Technology to a
microprocessor based platform in order that efficiencies in manufacturing
Voice Organizers and other products can be achieved for the benefit of both
parties.
TERMS OF AGREEMENT
1. Assignment of Xxxxxxxxx Technology. VPTI hereby assigns the Xxxxxxxxx
Assignment to FEP and FEP hereby accepts assignment of the Xxxxxxxxx
Assignment as modified by the Letter Agreement of even date herewith
between FEP and Xxxxxxxxx attached hereto and made a part hereof as Exhibit
A. VPTI agrees to execute such documents, instruments, applications,
agreements, assignments, and the like as requested by Franklin may be
necessary or desirable, in the opinion of FEP's counsel, to vest, evidence,
and/or perfect FEP's ownership of and title to all of the Xxxxxxxxx Rights.
2. VPTI's License to Franklin. VPTI grants to FEP on a non-exclusive basis the
Rights in order to make, have made, use, sell or otherwise distribute,
sublicense, perform, display, copy, and otherwise reproduce, or prepare
derivative works of Franklin Products.
3. Franklin's Grantback of Xxxxxxxxx Technology to VPTI. FEP grants to VPTI on
a non-exclusive basis a worldwide license in and to the Xxxxxxxxx Rights in
order to copy and otherwise reproduce, perform, display, sell and otherwise
distribute and prepare derivative works of (a) electronic products that are
not Voice Organizers, which license shall include the right to sublicense,
and (b) Voice Organizers that provide to the end user at least four (4)
minutes of recording time, such as the 6215. FEP further grants to VPTI a
worldwide license in and to the Xxxxxxxxx Rights in order to sell or
otherwise distribute its current inventory of finished goods of VPTI Voice
Organizers, that is model numbers 5200, 5050, 5060, 5300 and 5500 in the
quantities identified in Schedule 3.
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4. Payments:
4.1 Advance payment by FEP to VPTI. In connection with the license under
paragraph 2 herein, FEP shall pay to VPTI $700,000 on execution of
this Agreement as a non-refundable advance against royalties due under
paragraph 4.2 herein ("Advance").
4.2 Royalty payments by FEP to VPTI.
(a) FEP agrees to pay to VPTI $0.10 per unit for each Franklin
Product containing Technology licensed under paragraph 2 herein.
(b) Royalties due hereunder, in excess of the Advance, shall become
due and payable on the fifteenth day following the end of the
month for Franklin Products containing such Technology sold by
FEP during the preceding fiscal quarter. On or before the
fifteenth day of February, May, August, and November for such
royalty payments FEP shall provide VPTI with a written report
specifying the number of units by model number of each Franklin
Product containing such Technology sold by FEP during such
quarter.
4.3 Royalty payments by VPTI to FEP.
(a) VPTI agrees to pay to FEP $0.50 per unit for each product sold by
VPTI covered by the Xxxxxxxxx Rights.
(b) VPTI agrees to pay to FEP 15% of any payment actually received by
VPTI pursuant to any sublicense of the Xxxxxxxxx Rights granted
by VPTI to any third party.
(c) VPTI agrees to pay to FEP within five (5) business days of
receipt of written notice from FEP any "supplemental payment"
required to be made to Xxxxxxxxx under paragraph 4(c) of the
Xxxxxxxxx Assignment. VPTI agrees that Franklin shall be entitled
to hold back $15,000 otherwise payable under the Purchase
Agreement in connection with any such "supplement payment" for
the quarter ending June 30, 1997.
(d) Royalties hereunder shall become due and payable on the fifteenth
day following the end of the month for products covered by the
Xxxxxxxxx
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Rights sold by VPTI during the preceding fiscal quarter or for
payments to VPTI by any third party under any sublicense of the
Xxxxxxxxx Rights during the preceding fiscal quarter. On or
before the fifteenth day of February, May, August, and November
for such royalty payments VPTI shall provide FEP with a written
report specifying the number of units by model number of each
such product sold by VPTI during such quarter and the sublicense
payments by sublicensee.
4.4 Records: Each party shall keep accurate and complete books and records
of all sales or licenses to third parties in connection with this
Agreement and shall open such books and records for the inspection of
the other during regular business hours on reasonable request by the
other on one occasion during each year. The cost of such an inspection
will be borne by the requesting party unless additional royalties due
are discovered, in which case the cost of the inspection shall be
borne by the party undergoing the inspection.
5. Representations and Warranties.
5.1 Corporate Status. Each party represents and warrants that it is
properly organized, is validly registered to do business and is in
good standing in all jurisdictions in which it conducts business, and
has the requisite power and authority to enter into this Agreement.
5.2 Xxxxxxxxx Assignment. VPTI hereby represents and warrants to FEP that
the Xxxxxxxxx Assignment is in full force and effect, and all duties
and obligations of VPTI have been satisfactorily and timely performed,
and there are no present grounds for default, reversion or other
penalty or further obligation thereunder other than continuing
obligations under a normal course of operations. VPTI represents that
all current VPTI Voice Organizers are covered by the Xxxxxxxxx Rights.
5.3 Third Party Consents. VPTI hereby represents and warrants to FEP
that except as set forth in Schedule
5.3 attached hereto and made a part hereof, VPTI has obtained and provided
to FEP certification(s), authorization(s), approval(s) or release(s)
of any and all third parties necessary to consent to or approve this
Agreement, or release any claim, right, or security interest in
property assigned or licensed hereunder, including any patents,
copyrights, trade secrets, or any other intellectual property of VPTI.
5.4 Sufficiency of Technology Transfer. VPTI hereby represents and
warrants to FEP that VPTI has not retained any rights in the
Technology which are necessary or sufficient to produce and sell or
that would block or otherwise hinder FEP's production and sale of the
5150 and 5160, as well as any other Voice Organizers.
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5.5 No Claims. VPTI hereby represents and warrants to FEP that, except as
set forth in Schedule 5.5 attached hereto and made a part hereof, to
the best of VPTI's knowledge, there are no claims, actions, judgments,
or proceedings filed or threatened, including claims of infringement
sounding in patent, copyright, trademark or trade secret, in
connection with the Technology.
5.6 No Other Licenses or Assignments. VPTI hereby represents and warrants
to FEP that, except as set forth in Schedule 5.6 attached hereto and
made a part hereof, VPTI has not licensed, sublicensed, or otherwise
transferred to any third party or assigned, attempted to assign, or
promised to assign to any third party any Technology, or encumbered,
secured, or offered the Technology as collateral for commitments or
obligations which remain to be completed, except as same have been
affirmatively released and formally evidenced as so in Exhibit B
herein.
5.7 Binding Agreement. Each party hereby represents and warrants to the
other that this Agreement constitutes the legal, valid, and binding
obligation of the party and is enforceable in all respects as against
the party. Each party hereby further represents and warrants that
execution and delivery of this Agreement by certain officers of the
party has been approved by resolution of the Board of Directors of the
party on May 17, 1997 (for VPTI) and on May 7, 1997 (for FEP). A copy
of such resolutions, certified to be true and correct by the Secretary
of the respective party, is attached hereto as Exhibit B.
5.8 Technology. VPTI represents that to the best of its knowledge, the
Technology is merchantable, fit for the purpose intended, and without
defect.
5.9 Patent. VPTI represents that to the best of its knowledge, the Patent
is valid and has been properly assigned to VPTI, free of all rights of
third parties.
6. Releases of Security Interests. VPTI agrees to remove any and all third
party security interests in the Technology. Attached hereto and made a part
hereof as combined Exhibit C are letters from KBK Financial Inc. and
Flextronics (Malaysia) SDN BHD evidencing the release by each such party of
any rights or security interests that each such party has or may have in
the Technology.
7. Covenants. FEP agrees for a period of eighteen (18) months from the date of
this Agreement not to compete with VPTI in the sale of Voice Organizers
intended to be sold to end users at a retail price greater than $69.99 in
the United States. VPTI agrees for a period of eighteen (18) months from
the date of this Agreement not to compete with FEP in the sale of Voice
Organizers intended to be sold to end users at a retail price of less than
$69.99 in the United States.
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8. Porting Cooperation. Without additional payment, VPTI agrees to cooperate
with FEP to port 5150/5160 software to FEP's designated microprocessor
which cooperation shall be in the nature of support, advice, and providing
answers to questions, mainly via telephone, to FEP. On completion of such
porting, FEP agrees to sell such microprocessors to VPTI at $2.50/chip on
payment terms acceptable to FEP (i) solely for use in Voice Organizers as
specified in paragraph 3 that are produced for VPTI's resale pursuant to
the terms of this Agreement or (ii) solely for use in other electronic
products produced for VPTI's resale provided that such electronic products
are not electronic books or keypad-based or stylus-based electronic
organizers.
9. No Trademarks. Nothing contained herein shall be construed to grant any
license or permission from one party to the other with regard to rights in
trademarks, tradenames, business names, service names, or the like,
provided, however, that each party covenants not to xxx or make any claim
against the other party or in connection with any Franklin Products or
products of VPTI with respect to the phrase "voice organizer," whether or
not such claim sounds in trademark. Notwithstanding anything herein to the
contrary, FEP shall be entitled to use or sell any and all inventory or
manufacturing assets sold under the Purchase Agreement and FEP shall be
entitled to continue to use VPTI's trademarks, trade dress, or the like, in
connection with the sale of the 5150 or 5160 for eighteen months from the
date of this Agreement.
10. Indemnification.
10.1 Each party hereby indemnifies the other, and agrees to defend the
other and to hold the other harmless, from and against any and all
suits, actions, proceedings, liabilities, claims, losses, liabilities,
expenses, damages, and the like (including reasonable attorneys' fees,
costs, and expenses in connection therewith) arising in any way out of
such party's representations and warranties contained herein.
10.2 VPTI hereby further indemnifies FEP, and agrees to defend FEP and to
hold FEP harmless, from and against any and all suits, actions,
proceedings, liabilities, claims, losses, expenses, damages, and the
like (including reasonable attorneys' fees, costs, and expenses in
connection therewith arising from those claims identified in Schedule
5.5 subject to the following terms and conditions:
(a) The obligations will arise only if FEP give VPTI prompt notice of
any claim or assertion and grants VPTI, in writing if requested
by VPTI, exclusive control over its defense and settlement.
(b) The obligations shall not cover a claim or assertion which is not
based on the Technology as delivered to FEP by VPTI.
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(c) If a claim is asserted, or if VPTI believes one likely, VPTI will
have the right, but not the obligation, to procure a license from
the person claiming or likely to make such a claim.
11. Reasonable Support and Maintenance. Without additional payment, VPTI shall
provide, at FEP's request, support and advice via telephone to FEP for one
year following the delivery to FEP of all deliverables under the Purchase
Agreement in connection with FEP's development and production of Franklin
Products containing or using all or any part of the Technology. VPTI shall
maintain the Technology used in the 5150 and the 5160 and use its best
effort to fix any bugs in any software that is used in the 5150 for one
year following the date of this Agreement.
12. Remedies.
12.1 Should VPTI fail to make any payment under paragraph 4 or paragraph 7
hereunder when due, FEP shall be entitled to terminate the licenses
granted under paragraph 3 herein and to terminate its sale of chips to
VPTI under paragraph 7 herein on written notice to VPTI and VPTI's
failure to cure within fifteen (15) business days thereafter. Should
VPTI materially breach any provision of this Agreement, FEP shall be
entitled to terminate the licenses granted under paragraph 3 and to
terminate its sale of chips to VPTI under paragraph 7 herein on
written notice to VPTI and VPTI's failure to cure within fifteen (15)
business days thereafter. Any material breach of the Purchase
Agreement or any document ancillary thereto shall constitute a
material breach of the provisions of this Agreement.
12.2 FEP shall be entitled to enforce rights in the Patent. FEP agrees that
is shall use its best efforts to ensure that VPTI shall not be named
as a party in any suit or other proceeding in which FEP seeks to
enforce the Patent or to reimburse VPTI and, if such best efforts fail
and VPTI is named as a party, to indemnify VPTI and hold VPTI
harmless, from and against any and all liabilities, claims, losses,
expenses, damages, and the like (including reasonable attorneys' fees,
costs, and expenses in connection therewith) arising in any way out of
such suit or proceeding.
12.3 Each party agrees not to assert or contend that any provision of this
Agreement is invalid or unenforceable.
12.4 All remedies hereunder are cumulative to and not in substitution for
any remedies available under law.
13. Attribution. Where applicable, each party shall xxxx products produced
hereunder with appropriate property rights attribution, specifically, "U.S.
Patent 5,602,963"
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14. Notices. Notices hereunder may be given by fax or by overnight mail
addressed to the following:
TO FEP: Xxxxxxx X. Xxxxxx, Senior Vice President
Franklin Electronic Publishers, Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
FAX: 000-000-0000
TO VPTI: Xxxxxxxx Xxxxx, Chief Financial Officer
Voice Powered Technology International
00000 Xxxxxxx Xxxx. - Xxxxx 000
Xxxxxxx, Xxx. 00000
FAX: 000-000-0000
15. Business Relationship. Nothing herein contained shall constitute a
partnership, a joint venture between the parties. Neither party shall have
a right or authority to bind or obligate the other party in any manner
whatsoever, and shall not expressly incur any liability or obligation on
behalf of the other.
16. Confidentiality The terms of this Agreement shall remain held in confidence
by the parties. Should any disclosure in connection with this Agreement be
required by law, each of the parties hereto agree to use its best efforts
to keep confidential the terms of this Agreement. The parties agree that no
press release shall be issued in connection with this Agreement except as
in the form of the joint press release attached hereto as Exhibit D.
17. Severability. In the event that any provision of this Agreement shall be
held to be illegal, invalid or unenforceable for any reason, such
illegality, invalidity or unenforceability shall not affect in any respect
whatsoever the legality, validity or enforceability of any other provision
of this Agreement, each of which shall remain in full force and effect.
18. General. Without further consideration, each of the parties hereto shall,
at the request of the other, from time to time, make, execute and deliver
or cause to be made, executed and delivered, any and all such further
documents, instruments, agreements, and assurances, and take all such other
actions as may be reasonably necessary or proper to carry out the terms and
intend of this Agreement, and any amendments or addendums thereto. This
Agreement shall inure to the benefit of, and be binding upon, the parties
hereto and their respective heirs, successors, and permitted assigns. This
Agreement shall be governed by and interpreted in accordance with the laws
of the State of New Jersey without respect to its conflicts principles. The
parties agree that any dispute hereunder shall be subject to the
jurisdiction of courts sitting in New Jersey and each party agrees to
service of process by mail in such regard. FEP shall have the right to
assign or transfer FEP's rights, claims, interests, and the like under
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this Agreement without the prior consent or approval of VPTI. All headings
are provided for reference only and do not define or limit the scope of the
paragraph provided therein. All recitals contained in paragraphs under
section entitled Background are made part of this Agreement by this
reference as if repeated herein in their entirety. This Agreement contains
the entire Agreement concerning the subject matter hereof. All prior or
contemporaneous understandings, representations or agreements among the
parties with respect to the subject matter hereof are superseded hereby.
This Agreement may be amended only in writing, signed by the party against
whom enforcement is sought.
INTENDING TO BE LEGALLY BOUND HEREBY, the parties hereto have executed this
Assignment on the dates set forth below.
VOICE POWERED TECHNOLOGY INTERNATIONAL, INC.
By: /s/ Xxxxxxxx Xxxxx
Its: President
Date: May 21, 1997
FRANKLIN ELECTRONIC PUBLISHERS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Senior Vice President
Date: May 21, 1997
