AGREEMENT BETWEEN GEDANKEN
CORPORATION AND THE TRANSLATION GROUP, LTD.
This Agreement, entered into by and between Gedanken
Corporation, a Delaware corporation, whose address is c/o Xx. Xxxxxx Xxxxxx,
Four Xxxxxx Xxxx, Xxxxxx, Xxx Xxxx 00000, and The Translation Group, Ltd., a
Delaware Corporation having its principal place of business at 0000 Xxxxx
Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000, shall be effective as of the 1st day of
November 1996.
WITNESSETH:
WHEREAS, Gedanken Corporation is the owner by assignment duly
recorded in the United States Patent and Trademark Office of all right, title
and interest in and to United States Patent Application No. 08/733,808, titled
"METHODS AND APPARATUS FOR TRANSLATING BETWEEN LANGUAGES," filed October 18,
1996, naming Xxxxxx Xxxxxx as inventor;
WHEREAS, Gedanken Corporation's United States Patent
Application No. 08/733,808 describes and claims apparatus and methods for
translating words, phrases and sentences in oral or written form from a source
language to other target languages using advanced telecommunications and
computer technologies;
WHEREAS, Gedanken Corporation owns, possesses and is
continuing to develop trade secrets, knowhow and other confidential research,
development and commercial information and materials relating to apparatus and
methods for translating words, phrases and sentences in oral or written form
from a source language to other target languages using advanced
telecommunications and computer technologies;
WHEREAS, The Translation Group, Ltd., by and through its
wholly-owned subsidiary, Bureau of Translation Services, Inc., is in the
business of translating words, phrases and sentences from a source language to
other target languages;
WHEREAS, The Translation Group, Ltd., in consideration of the
terms and conditions set forth in this Agreement, wishes to obtain an exclusive
world-wide right and license in the field of language translation to make, have
made, use, offer for sale, sell and distribute apparatus and methods covered by
the LICENSED PATENT RIGHTS (as hereinafter defined), and GEDANKEN (as
hereinafter defined) is willing to grant such an exclusive, world-wide field of
use license to TTGL (as hereinafter defined), subject to the terms and
conditions set forth in this Agreement;
WHEREAS, The Translation Group, Ltd., in consideration of the
terms and conditions set forth in this Agreement, wishes to obtain an exclusive,
world-wide right and license to use Gedanken Corporation's trade secrets,
knowhow and other confidential research, development and commercial information
and materials in the field of language translation relating to apparatus and
methods for translating words, phrases and sentences in oral or written form
from a source language to other target languages using advanced
telecommunications and computer technologies, and GEDANKEN (as hereinafter
defined), is willing to grant such an exclusive, world-wide field of use license
and to disclose such trade secrets, knowhow and other confidential research,
development and commercial information and materials in the field of language
translation to TTGL (as hereinafter defined), subject to the terms and
conditions set forth in this Agreement; and
WHEREAS, Gedanken Corporation and The Translation Group, Ltd.
each represent and warrant that they have the unencumbered right and power to
enter into
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this Agreement on behalf of themselves and any and all parents, subsidiaries,
divisions, affiliates, predecessor companies or proprietorships, and that the
consent or joinder of any other person or entity is not necessary to bind either
party with respect to any provision of this Agreement;
NOW THEREFORE, in consideration of the premises, license
grants, disclosures, payments, funding, mutual covenants and agreements,
together with the other conditions, undertakings and commitments set forth in
this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, GEDANKEN (as hereinafter defined)
and TTGL (as hereinafter defined), intending to be legally bound, agree as
follows:
ARTICLE I -- DEFINITIONS
As used in this Agreement, the following defined terms shall
have the meanings set forth below:
1.1 "EFFECTIVE DATE" shall mean November 1, 1996.
1.2 "GEDANKEN" shall mean and include Gedanken Corporation,
together with any parent corporations, subsidiary corporations, corporate
divisions or predecessor corporations.
1.3 "TTGL" shall mean and include The Translation Group, Ltd.,
together with any parents, subsidiaries, divisions, affiliates, predecessor
companies or proprietorships, and any real persons or business entities directly
or indirectly owned by, controlling or controlled by The Translation Group, Ltd.
As used herein, the term "control" means possession of the power to direct, or
to cause the direction of the
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management and policies of a real person, corporation or other business entity,
whether through the ownership of voting securities, by contract or otherwise.
1.4 "LICENSED PATENT RIGHTS" shall mean and include Gedanken
Corporation's United States Patent Application No. 08/733,808 (titled "METHODS
AND APPARATUS FOR TRANSLATING BETWEEN LANGUAGES"), filed October 18, 1996,
naming Xxxxxx Xxxxxx as inventor, any divisions, continuations or
continuations-in-part thereof, any patent or patents that issue on any of the
foregoing, together with any reissues, reexaminations, renewals or extensions of
any such patent or patents, together with any foreign patents or applications
for foreign patents that correspond in whole or in part to any of the foregoing.
1.5 "LICENSED TRADE SECRETS AND KNOWHOW" shall mean and
include trade secrets, knowhow and other confidential research, development and
commercial information owned, possessed or developed by GEDANKEN in the field of
language translation relating to apparatus and methods for translating words,
phrases and sentences in oral or written form from a source language to other
target languages using advanced telecommunications and computer technologies,
including, without limitation, the apparatus and methods described and claimed
in GEDANKEN's United States Patent Application No. 08/733,808, which will remain
confidential trade secrets and knowhow until a patent issues and those trade
secrets and that knowhow are disclosed to the public.
1.6 "FIELD OF USE" shall mean and include the field of
translating words, phrases and sentences in oral or written form from a source
language to other target languages.
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1.7 "LICENSED PRODUCTS AND METHODS" shall mean and include any
apparatus, product, service, method or process made by, made for, used, offered,
sold or distributed by TTGL that falls within the scope of any VALID CLAIM (as
hereinafter defined) of the LICENSED PATENT RIGHTS and/or uses or is otherwise
based in whole or in part on any of the LICENSED TRADE SECRETS AND KNOWHOW.
1.8 "VALID CLAIM" shall mean and include any issued, unexpired
claim of the LICENSED PATENT RIGHTS that GEDANKEN has not expressly admitted in
writing to be invalid or unenforceable, or that has not been held invalid or
unenforceable by a court, tribunal or governmental agency of competent
jurisdiction, or that has not been held invalid or unenforceable as a result of
an opposition proceeding, reissue, reexamination, dedication, disclaimer or
otherwise, and, in the case of a holding or decision, cannot be appealed or has
not been appealed within the time allowed for appeal.
1.9 "NET SALES" shall mean and include TTGL's gross sales of
LICENSED PRODUCTS AND METHODS as invoiced to customers, exclusive of sales or
other taxes, duties and the like, and less any insurance, transportation,
shipping, handling and related charges. NET SALES shall include, without
limitation, all revenue generated on xxxxxxxx to customers for time spent by any
person providing services that use or are otherwise based in whole or in part on
any of the LICENSED PATENT RIGHTS or any of the LICENSED TRADE SECRETS AND
KNOWHOW. For purposes of this Agreement, a sale shall occur when TTGL receives
or collects payment for the manufacture, use, offer, sale, distribution,
delivery, provision or shipment of LICENSED PRODUCTS AND METHODS.
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ARTICLE II -- GRANTS OF LICENSES
2.1 In consideration of the terms and conditions set forth in
this Agreement, GEDANKEN hereby grants to TTGL an exclusive, world-wide right
and license in the FIELD OF USE to use the LICENSED TRADE SECRETS AND KNOWHOW
only in connection with TTGL's research, development, testing, marketing,
promotion, manufacture, use, offer, sale and distribution of LICENSED PRODUCTS
AND METHODS.
2.2 The license granted in Paragraph 2.1 shall be effective as
of the EFFECTIVE DATE of this Agreement, and shall apply to LICENSED PRODUCTS
AND METHODS that TTGL researches, develops, tests, markets, promotes,
manufactures, uses, offers, sells or distributes on or after that date. The
license granted in Paragraph 2.1 shall extend for the full term of this
Agreement.
2.3 In consideration of the terms and conditions set forth in
this Agreement, GEDANKEN hereby grants to TTGL an exclusive, world-wide right
and license under the LICENSED PATENT RIGHTS in the FIELD OF USE to make, have
made, use, offer, sell and distribute LICENSED PRODUCTS AND METHODS. TTGL shall
have the right to sublicense others under the LICENSED PATENT RIGHTS in the
FIELD OF USE, subject to approval of any and all proposed sublicenses by
GEDANKEN, which approval shall not unreasonably be withheld. Fees, royalties and
other payments paid by sublicensees shall be accounted for separately. Seventy
percent (70%) of all such fees, royalties and other payments paid by
sublicensees shall be retained by TTGL, and thirty percent (30%) of all such
fees, royalties and other payments paid by sublicensees shall be paid to
GEDANKEN until such time as TTGL recoups by NET
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SALES of LICENSED PRODUCTS AND METHODS and\or fees, royalties or other payments
paid by sublicensees, the total amount of all payments TTGL actually makes to
GEDANKEN in accordance with Article IV of this Agreement in connection with
GEDANKEN's Phase 1, 2 and/or 3 research, development and testing of apparatus
and methods in the field of language translation for translating words, phrases
and sentences in oral or written form from a source language to other target
languages using advanced telecommunications and computer technologies. After
TTGL recoups the total amount of all payments TTGL actually makes to GEDANKEN in
accordance with Article IV of this Agreement in connection with GEDANKEN's Phase
1, 2 and/or 3 research, development and testing of apparatus and methods in the
field of language translation for translating words, phrases and sentences in
oral or written form from a source language to other target languages using
advanced telecommunications and computer technologies, all such fees, royalties
and other payments paid by sublicensee's shall be divided equally between
GEDANKEN and TTGL.
2.4 The license granted in Paragraph 2.3 shall be effective as
of the EFFECTIVE DATE of this Agreement, and shall apply to LICENSED PRODUCTS
AND METHODS that TTGL makes, has made, uses, offers, sells or distributes on or
after that date. The license granted in Paragraph 2.3 shall extend until the
earlier of: (a) the full term of this Agreement; or (b) the expiration of the
last-to-expire patent of the LICENSED PATENT RIGHTS.
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ARTICLE III -- ROYALTY PAYMENTS, REPORTS, RECORDS AND AUDITS
3.1 ROYALTY PAYMENTS.
(A) PHASES 1, 2 AND 3.
In consideration of the rights and licenses granted herein to
TTGL, and in consideration of the other terms and conditions of this Agreement,
TTGL shall pay to GEDANKEN during Phases 1, 2 and 3 of this Agreement (see
Paragraph 4.3 below) a royalty in the amount of four percent (4%) of the first
one million dollars ($1,000,000) of NET SALES of LICENSED PRODUCTS AND METHODS
sold, offered or distributed each calendar year, three percent (3%) of NET SALES
of LICENSED PRODUCTS AND METHODS above one million dollars ($1,000,000) to two
million dollars ($2,000,000) each calendar year, and two percent (2%) of NET
SALES of LICENSED PRODUCTS AND METHODS above two million dollars ($2,000,000)
each calendar year. These royalties shall be payable during Phases 1, 2 and 3 of
this Agreement (see Paragraph 4.3 below) from the EFFECTIVE DATE for the full
term of this Agreement.
During Phases 1, 2 and 3 of this Agreement (see Paragraph 4.3
below), TTGL shall pay to GEDANKEN an additional royalty of three percent (3%)
of NET SALES of LICENSED PRODUCTS AND METHODS sold, offered or distributed in
any country in which there is a VALID CLAIM of the LICENSED PATENT RIGHTS. This
additional royalty shall be payable during Phases 1, 2 and 3 of this Agreement
(see Paragraph 4.3 below) from the EFFECTIVE DATE for the full term of this
Agreement.
(B) AFTER SUBSTANTIAL COMPLETION
OF PHASES 1, 2 AND 3.
In consideration of the rights and licenses granted herein to
TTGL, and in consideration of the other terms and conditions of this Agreement,
TTGL shall pay to
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GEDANKEN after the substantial completion of Phases 1, 2 and 3 of this Agreement
(see Paragraph 4.3 below) a royalty in the amount of five percent (5%) of NET
SALES of LICENSED PRODUCTS AND METHODS. This royalty shall be payable after the
substantial completion of Phases 1, 2 and 3 of this Agreement (see Paragraph 4.3
below) for the full term of this Agreement.
After the substantial completion of Phases 1, 2 and 3 of this
Agreement (see Paragraph 4.3 below), TTGL shall pay to GEDANKEN an additional
royalty of three percent (3%) of NET SALES of LICENSED PRODUCTS AND METHODS
sold, offered or distributed in any country in which there is a VALID CLAIM of
the LICENSED PATENT RIGHTS. This additional royalty shall be payable after the
substantial completion of Phases 1, 2 and 3 of this Agreement (see Paragraph 4.3
below) for the full term of this Agreement.
If the royalties calculated and payable in accordance with the
preceding provisions of this Paragraph 3.1(B) amount to less than one hundred
thousand dollars ($100,000) for any partial or full calendar year after the
substantial completion of Phases 1, 2 and 3 of this Agreement (see Paragraph 4.3
below), TTGL shall nevertheless pay to GEDANKEN for each such partial or full
calendar year after the substantial completion of Phases 1, 2 and 3 of this
Agreement a minimum royalty of one hundred thousand dollars ($100,000).
(C) TIMING OF ROYALTY PAYMENTS.
The first royalty payment to be made hereunder, covering sales
and distribution of LICENSED PRODUCTS AND METHODS, shall be due within twenty
(20) days after the end of the first month in which TTGL sells, offers or
distributes any of
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the LICENSED PRODUCTS AND METHODS. Thereafter, royalty payments under this
Agreement shall be payable on a monthly basis within twenty (20) days after the
close of each month during the term of this Agreement. All royalty payments
shall be accompanied by the royalty report required under Paragraph 3.2 of this
Agreement. Royalty payments shall be made in the form of a check made payable to
Gedanken Corporation.
3.2 ROYALTY REPORTS.
Within twenty (20) days after the close of each month during
the term of this Agreement, beginning with the first month in which TTGL sells,
offers or distributes any of the LICENSED PRODUCTS AND METHODS, TTGL shall send
to GEDANKEN a written report reflecting TTGL's sales and distribution of
LICENSED PRODUCTS AND METHODS. Each written report shall include: (a) the total
number of LICENSED PRODUCTS AND METHODS sold, offered and distributed during the
period covered by the report, including a correlation identifying the country or
countries in which the LICENSED PRODUCTS AND METHODS were sold, offered or
distributed during that period; (b) the total dollar amount of TTGL's NET SALES
of LICENSED PRODUCTS AND METHODS sold, offered or distributed during the period
covered by the report, including a correlation identifying the country or
countries in which the LICENSED PRODUCTS AND METHODS were sold, offered or
distributed during that period; and (c) the royalty due in accordance with the
terms of this Agreement for the period covered by the report.
3.3 ROYALTY RECORDS.
TTGL shall keep or cause to be kept books and records in
detail sufficient to enable the royalties payable hereunder to be determined.
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3.4 AUDITS.
GEDANKEN shall have the right to conduct an audit no more than
twice each calendar year to confirm the accuracy of the information included in
royalty reports provided by TTGL in accordance with Paragraph 3.2 of this
Agreement. Such audits shall be conducted only upon reasonable notice, and in no
case less than five (5) days' notice, to TTGL in writing, and shall be performed
by any person or entity appointed by GEDANKEN and acceptable to TTGL, and shall
be conducted pursuant to a confidentiality agreement executed by the appointed
person or entity in a form acceptable to TTGL. TTGL shall make available to the
appointed person or entity for review books and records that may be reasonably
necessary for conducting such audits. The appointed person or entity may
disclose to GEDANKEN only whether TTGL has complied with the terms and
conditions of this Agreement, and shall keep all other information received from
TTGL in strict confidence (e.g., the names and identities of TTGL's customers),
and shall not disclose any of that other information to GEDANKEN or to any other
person or entity. The entire cost of these audits shall be borne solely by
GEDANKEN.
3.5 GEDANKEN'S OPTION TO CONVERT
ROYALTIES TO COMMON STOCK OF TTGL.
GEDANKEN shall have the right at any time during the term of
this Agreement to convert royalties due and payable into common stock of TTGL.
GEDANKEN may exercise this option within five (5) business days after GEDANKEN's
receipt from TTGL of a royalty payment, by providing TTGL with written notice of
GEDANKEN's election to convert all, or a stated portion, of such royalty payment
into common stock of TTGL. If GEDANKEN elects to convert all of any such royalty
payment into common stock of TTGL, GEDANKEN shall return TTGL's royalty
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payment check to TTGL with GEDANKEN's written notice of its election to convert
all of the royalty payment into common stock of TTGL. If GEDANKEN elects to
convert only a portion of any such royalty payment into common stock of TTGL,
GEDANKEN's written notice to TTGL of its election to do so shall be accompanied
by payment from GEDANKEN in the amount of the royalty payment to be converted
into common stock of TTGL. The rate for converting royalty payments or any
portion thereof into common stock of TTGL shall be determined by calculating the
average of the closing bid price of TTGL's common stock as reported by the
primary exchange or reporting bureau where the stock trades (except that if such
medium reports a last or closing sale price, that figure shall be used in place
of the closing bid price), for the ten (10) business days prior to the date
GEDANKEN receives the royalty report and payment. The average price determined
as above in this Paragraph 3.5 shall then be reduced by twenty percent (20%) to
account for the shares being unregistered. The number of shares of common stock
that TTGL shall deliver to GEDANKEN shall be the number of shares calculated by
dividing the dollar amount of the royalty payment to be converted by GEDANKEN by
the price per share determined in accordance with the calculus described above
in this Paragraph 3.5. TTGL shall, promptly upon GEDANKEN's election to convert
all or any portion of any royalty payment to common stock to TTGL, promptly
instruct its transfer agent to issue to GEDANKEN the number of shares calculated
in accordance with the provisions of this Paragraph 3.5. Notwithstanding the
foregoing provisions of this Paragraph 3.5, GEDANKEN shall at no time be
permitted to convert any royalty payment into common stock of TTGL in an amount
that would result in GEDANKEN having the beneficial
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ownership of an aggregate of more than twenty percent (20%) of the then
outstanding shares of the common stock of TTGL.
ARTICLE IV -- RESEARCH AND DEVELOPMENT, FUNDING OF
SAME AND DISCLOSURE OF TRADE SECRETS AND KNOWHOW
4.1 In consideration of the premises, payments, funding,
covenants and agreements, together with the other conditions, undertakings and
commitments set forth in this Agreement, and in accordance with the provisions
of this Article IV, GEDANKEN shall continue its research, development and
testing of apparatus and methods in the field of language translation for
translating words, phrases and sentences in oral or written form from a source
language to other target languages using advanced telecommunications and
computer technologies, and shall disclose to TTGL GEDANKEN's past, current and
future developments in the field of language translation relating to apparatus
and methods for translating words, phrases and sentences in oral or written form
from a source language to other target languages using advanced
telecommunications and computer technologies, including all of GEDANKEN'S past,
current and future trade secrets, knowhow and other confidential research,
development and commercial information and materials in the field of language
translation relating to such apparatus and methods.
4.2 In consideration of the premises, license grants,
disclosures, covenants and agreements, together with the other conditions,
undertakings and commitments set forth in this Agreement, and in accordance with
the provisions of this Article IV, TTGL agrees to fund GEDANKEN'S research,
development and testing of apparatus and methods in the field of language
translation for translating words, phrases and sentences in oral or written form
from a source language to other target languages using advanced
telecommunications and computer technologies.
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4.3 GEDANKEN'S continuing research, development and testing in
the field of language translation directed to apparatus and methods for
translating words, phrases and sentences in oral or written form from a source
language to other target languages using advanced telecommunications and
computer technologies shall be conducted in three phases:
(A) PHASE 1 -- SPECIFIC TOPIC BUILDER.
Phase 1 of GEDANKEN'S continuing research and development will
be directed to generating topic dictionaries, i.e., relationships between words
in different languages used in connection with the same topic. Among other
things, this work will involve the organization of many thousands of documents
already translated and amassed by TTGL, and the analysis of those documents
using appropriate neural network systems to generate or build specific
dictionaries for various topics. Phase 1 will begin at the EFFECTIVE DATE of
this Agreement and shall be substantially completed within twelve (12) months
after TTGL provides GEDANKEN with the initial twenty thousand dollar
($20,000.00) payment described in Paragraph 4.5 of this Agreement.
(B) PHASE 2 -- GENERAL TOPIC BUILDER.
Phase 2 of GEDANKEN'S continuing research and development will
be directed to generalizing the topic dictionary generator to make it capable of
generating dictionaries for various topics from written materials in different
languages relating to the same topic that have not previously been translated or
amassed. Phase 2 shall begin on the seventh month after TTGL provides GEDANKEN
with the initial twenty thousand dollar ($20,000.00) payment described in
Paragraph 4.5 of this Agreement and shall be substantially completed within six
(6) months after the substantial completion of Phase 1.
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(C) PHASE 3 -- REAL-TIME VOICE
TRANSLATION SYSTEM.
Phase 3 of GEDANKEN'S continuing research and development will
be directed to the development of a proprietary, real-time machine voice
translation system. The proposed system will operate via standard
telecommunications systems and ultimately will have the ability to
instantaneously translate language in oral form from one language to another. If
TTGL exercises its option to fund GEDANKEN'S Phase 3 research and development in
accordance with the provisions of Paragraph 4.4 of this Xxxxxxxxx, Xxxxx 0 shall
be substantially completed within twelve (12) months after the substantial
completion of Phase 2.
4.4 TTGL agrees to fund GEDANKEN'S research, development and
testing from the EFFECTIVE DATE of this Agreement through Phases 1 and 2 (see
Paragraph 4.3) as follows:
(a) Phase I -- Specific Topic Builder: $250,000.00; and
(b) Phase II -- General Topic Builder: $500,000.00.
GEDANKEN and TTGL agree that TTGL shall have an option to fund
GEDANKEN'S Phase 3 research, development and testing directed to a real-time
voice translation system (see Paragraph 4.3) by providing GEDANKEN with written
notice of TTGL's election to do so not less than three months prior to the
substantial completion of Phase 2. If TTGL exercises this option, TTGL shall
fund GEDANKEN'S Phase 3 research, development and testing (see Paragraph 4.3) in
the amount of four million dollars ($4,000,000.00).
Although there may be some overlap, and work on the various
phases may be interrelated, GEDANKEN shall report on a discrete basis the
research, development
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and testing conducted in accordance with this Agreement, separately identifying
the work performed in connection with each of the three phases. GEDANKEN shall
prepare monthly progress reports describing the research and development work
done during the monthly period covered by the report, the status of the research
and development work and a description of the current status of the research and
development work completed in relation to the pre-established goals for such
work set forth in Exhibit A to this Agreement. GEDANKEN shall prepare and submit
to TTGL within thirty (30) days after the execution of this Agreement by both
parties, an initial progress report describing research and development work
conducted by GEDANKEN from the EFFECTIVE DATE of this Agreement through the date
of the initial progress report. Thereafter, progress reports shall be submitted
on a monthly basis.
4.5 TTGL'S funding of GEDANKEN'S Phase 1, 2 and 3 research,
development and testing shall be made on a "fixed price" basis and shall not be
subject to any audit by TTGL or any accounting from GEDANKEN. Within thirty (30)
days after the execution of this Agreement by both parties, TTGL shall deliver
to GEDANKEN an initial payment of twenty thousand dollars ($20,000.00).
Thereafter, TTGL'S funding of GEDANKEN'S research, development and testing shall
be paid to GEDANKEN as follows:
(a) PHASE 1 -- SPECIFIC TOPIC BUILDER.
TTGL shall fund GEDANKEN'S Phase 1 research, development
and testing in the fixed amount of two hundred and fifty thousand dollars
($250,000.00), payable in twelve equal monthly payments, each monthly payment to
be delivered to
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GEDANKEN within five (5) days after TTGL'S receipt of each of the Phase 1
monthly progress reports required by Paragraph 4.4 of this Agreement.
(b) PHASE 2 -- GENERAL TOPIC BUILDER.
TTGL shall fund GEDANKEN'S Phase 2 research, development
and testing in the fixed amount of five hundred thousand dollars ($500,000.00),
payable in twelve equal monthly payments, each monthly payment to be delivered
to GEDANKEN within five (5) days after TTGL'S receipt of each of the Phase 2
monthly progress reports required by Paragraph 4.4 of this Agreement.
(c) PHASE 3 -- REAL-TIME VOICE TRANSLATION SYSTEM.
If TTGL exercises its option to fund GEDANKEN'S Phase 3
research, development and testing in accordance with the provisions of Paragraph
4.4 of this Agreement, TTGL shall fund GEDANKEN'S Phase 3 research, development
and testing in the fixed amount of four million dollars ($4,000,000.00). The
schedule for payment of this four million dollars ($4,000,000.00) shall be fixed
by mutual agreement of the parties if TTGL exercises its option to fund
GEDANKEN'S Phase 3 research, development and testing.
4.6 Notwithstanding the foregoing provisions of this Article
IV, TTGL shall have the right to discontinue funding GEDANKEN'S continuing
research, development and testing in the field of language translation directed
to apparatus and methods for translating words, phrases and sentences in oral or
written form from a source language to other target languages using advanced
telecommunications and computer technologies in accordance with the following
schedule:
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(a) Phase 1. TTGL may discontinue funding GEDANKEN's
research and development work during Phase 1: (i) at six months prior to the
substantial completion date of Phase 1 (see Paragraph 4.3(A)); or (ii) on the
substantial completion date of Phase 1 (see Paragraph 4.3(A)), by providing
GEDANKEN with notice of TTGL's intention to do so in writing not less than
thirty (30) days before either of those dates.
(b) Phase 2. TTGL may discontinue funding GEDANKEN's
research and development work during Phase 2: (i) at four months prior to the
substantial completion date of Phase 2 (see Paragraph 4.3(b)); (ii) at two
months prior to the substantial completion date of Phase 2; or (iii) on the
substantial completion date of Phase 2 (see Paragraph 4.3(B)), by providing
GEDANKEN with notice of TTGL's intention to do so in writing not less than
thirty (30) days before any of those dates.
(c) Phase 3. If TTGL exercises its option to fund
GEDANKEN'S Phase 3 research and development in accordance with the provisions of
Paragraph 4.4 of this Agreement, TTGL may discontinue funding GEDANKEN'S
research and development work at any time during Phase 3, by providing GEDANKEN
with notice of TTGL'S intention to do so in writing not less than sixty (60)
days prior to the date that funding will be discontinued.
4.7 If TTGL discontinues funding GEDANKEN's research and
development prior to substantial completion of Phase 1 in accordance with
Paragraph 4.6(a) of this Agreement, GEDANKEN shall have the right to immediately
terminate this Agreement and all rights and licenses granted hereunder by
providing TTGL with written notice of GEDANKEN's election to do so. Upon such
termination by GEDANKEN: (a)
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TTGL shall have no rights under the LICENSED PATENT RIGHTS and no right to use
the LICENSED TRADE SECRETS AND KNOWHOW; and (b) the total amount of all fees,
royalties and other payments payable by any sublicensees pursuant to any
sublicenses granted prior to such termination shall thereafter be paid solely to
GEDANKEN; and (c) TTGL shall return to GEDANKEN all copies (in whatever form
they may be recorded) of all trade secrets, knowhow and other confidential
research, development and commercial information and materials disclosed by
GEDANKEN in connection with this Agreement, and shall take all reasonable steps
necessary to preserve and maintain in strict confidence all of the trade
secrets, knowhow and other confidential research, development and commercial
information and materials that GEDANKEN disclosed to TTGL in connection with
this Agreement.
If TTGL funds GEDANKEN'S Phase 1 research and development, but
does not fund or discontinues its funding of GEDANKEN's Phase 2 research and
development prior to substantial completion of Phase 2 in accordance with
Paragraph 4.6(b) of this Agreement: (a) the parties shall promptly amend this
Agreement in writing to convert the exclusive, world-wide right and license in
the FIELD OF USE to use the LICENSED TRADE SECRETS AND KNOWHOW granted to TTGL
in Paragraph 2.1 of this Agreement, to a nonexclusive, world-wide right and
license in the FIELD OF USE to use only the LICENSED TRADE SECRETS AND KNOWHOW
GEDANKEN discloses to TTGL in connection with Phase 1 directed to the
development of a specific topic builder, but otherwise on the same terms and
conditions set forth in this Agreement; (b) the parties shall promptly amend
this Agreement in writing to convert the exclusive, world-wide right and license
under the LICENSED PATENT RIGHTS in the FIELD OF
19
USE to make, have made, use, offer, sell and distribute LICENSED PRODUCTS AND
METHODS granted to TTGL in Paragraph 2.3 of this Agreement, to a nonexclusive,
world-wide right and license (with no right to sublicense others) to make, have
made, use, offer, sell and distribute LICENSED PRODUCTS AND METHODS for
translating words, phrases and sentences in written form only from a source
language to other target languages using only specific topic builders (said
amended license shall not grant TTGL any rights under the LICENSED PATENT RIGHTS
to make, have made, use, offer, sell or distribute any product or method for
translating words, phrases and sentences in oral form from a source language to
other target languages, and shall not grant TTGL any rights under the LICENSED
PATENT RIGHTS to make, have made, use, offer, sell or distribute any product or
method for translating words, phrases and sentences in written form from a
source language to other target languages using general topic builders), but
otherwise on the same terms and conditions set forth in this Agreement; (c) the
total amount of all fees, royalties and other payments payable by any
sublicensees pursuant to any sublicenses granted prior to the conversion of the
license grant contemplated by the provisions of (b) immediately above shall
thereafter be paid solely to GEDANKEN; (d) GEDANKEN shall have no obligation to
conduct any Phase 2 or Phase 3 research, development and testing work for the
benefit of TTGL and shall have no obligation to disclose to TTGL any of
GEDANKEN's past, current or future Phase 2 or Phase 3 developments in the field
of language translation relating to apparatus and methods for translating words,
phrases and sentences in oral or written form from a source language to other
target languages using advanced telecommunications and computer technologies,
including any of GEDANKEN'S past, current or future Phase 2 or Phase 3 trade
secrets,
20
knowhow or other confidential research, development and commercial information
and materials in the field of language translation relating to such apparatus
and methods; (e) TTGL shall have no right to use any of THE LICENSED TRADE
SECRETS AND KNOWHOW disclosed by GEDANKEN in connection with Xxxxx 0, XXXX shall
return to GEDANKEN all copies (in whatever form they may be recorded) of all
trade secrets, knowhow and other confidential research, development and
commercial information and materials disclosed by GEDANKEN in connection with
Phase 2, and shall take all reasonable steps necessary to preserve and maintain
in strict confidence all of the trade secrets, knowhow and other confidential
research, development and commercial information and materials that GEDANKEN
disclosed to TTGL in connection with Phase 2; and (f) GEDANKEN shall be free to
grant licenses to others in the FIELD OF USE under the LICENSED PATENT RIGHTS to
make, have made, use, offer, sell and distribute LICENSED PRODUCTS AND METHODS,
and shall be free to license others to use any and all of GEDANKEN's past,
current and future developments in the field of language translation relating to
apparatus and methods for translating words, phrases and sentences in oral or
written form from a source language to other target languages using advanced
telecommunications and computer technologies, including any and all of
GEDANKEN'S past, current or future trade secrets, knowhow or other confidential
research, development and commercial information and materials in the field of
language translation relating to such apparatus and methods.
If TTGL funds GEDANKEN'S Phase 1 and Phase 2 research and
development, but does not exercise its option to fund GEDANKEN'S Phase 3
research and development in accordance with the provisions of Paragraph 4.4 of
this Agreement:
21
(a) the parties shall promptly amend this Agreement in writing to convert the
exclusive, world-wide right and license in the FIELD OF USE to use the LICENSED
TRADE SECRETS AND KNOWHOW granted to TTGL in Paragraph 2.1 of this Agreement, to
a nonexclusive, world-wide right and license, but otherwise on the same terms
and conditions set forth in this Agreement; (b) the parties shall promptly amend
this Agreement in writing to convert the exclusive, world-wide right and license
under the LICENSED PATENT RIGHTS in the FIELD OF USE to make, have made, use,
offer, sell and distribute LICENSED PRODUCTS AND METHODS granted to TTGL in
Paragraph 2.3 of this Agreement, to an exclusive, world-wide right and license
(with no right to sublicense others) to make, have made, use, offer, sell and
distribute LICENSED PRODUCTS AND METHODS for translating words, phrases and
sentences in written form only from a source language to other target languages
(said amended license shall not grant TTGL any rights under the LICENSED PATENT
RIGHTS to make, have made, use, offer, sell or distribute any product or method
for translating words, phrases and sentences in oral form from a source language
to other target languages), but otherwise on the same terms and conditions set
forth in this Agreement; (c) the total amount of all fees, royalties and other
payments payable by any sublicensees pursuant to any sublicenses granted prior
to the conversion of the license grant contemplated by the provisions of (b)
immediately above shall thereafter be paid solely to GEDANKEN; (d) GEDANKEN
shall have no obligation to conduct any Phase 3 research, development and
testing work for the benefit of TTGL and shall have no obligation to disclose to
TTGL any of GEDANKEN's past, current or future Phase 3 developments in the field
of language translation relating to apparatus and methods for translating words,
phrases and
22
sentences in oral or written form from a source language to other target
languages using advanced telecommunications and computer technologies, including
any of GEDANKEN'S past, current or future Phase 3 trade secrets, knowhow or
other confidential research, development and commercial information and
materials in the field of language translation relating to such apparatus and
methods; and (e) GEDANKEN shall be free to grant licenses to others in the FIELD
OF USE under the LICENSED PATENT RIGHTS to make, have made, use, offer, sell and
distribute products and methods for translating words, phrases and sentences in
oral form from a source language to other target languages, including, without
limitation, real-time voice translation systems, and shall be free to license
others to use any and all of GEDANKEN's past, current and future developments in
the field of language translation relating to apparatus and methods for
translating words, phrases and sentences in oral or written form from a source
language to other target languages using advanced telecommunications and
computer technologies, including any and all of GEDANKEN'S past, current or
future trade secrets, knowhow or other confidential research, development and
commercial information and materials in the field of language translation
relating to such apparatus and methods.
If TTGL funds GEDANKEN'S Phase 1 and Phase 2 research and
development and exercises its option to fund GEDANKEN'S Phase 3 research and
development in accordance with the provisions of Paragraph 4.4 of this
Agreement, but thereafter discontinues funding GEDANKEN's research and
development work prior to substantial completion of Phase 3 in accordance with
Paragraph 4.6(c): (a) the parties shall promptly amend this Agreement in writing
to convert the exclusive, world-wide right and license in the FIELD OF USE to
use the LICENSED TRADE SECRETS AND
23
KNOWHOW granted to TTGL in Paragraph 2.1 of this Agreement, to a nonexclusive,
world-wide right and license, but otherwise on the same terms and conditions set
forth in this Agreement; (b) the parties shall promptly amend this Agreement in
writing to convert the exclusive, world-wide right and license under the
LICENSED PATENT RIGHTS in the FIELD OF USE to make, have made, use, offer, sell
and distribute LICENSED PRODUCTS AND METHODS granted to TTGL in Paragraph 2.3 of
this Agreement, to an exclusive, world-wide right and license (with no right to
sublicense others) to make, have made, use, offer, sell and distribute LICENSED
PRODUCTS AND METHODS for translating words, phrases and sentences in written
form only from a source language to other target languages (said amended license
shall not grant to TTGL any rights under the LICENSED PATENT RIGHTS to make,
have made, use, offer, sell or distribute any product or method for translating
words, phrases and sentences in oral form from a source language to other target
languages), but otherwise on the same terms and conditions set forth in this
Agreement; (c) the total amount of all fees, royalties and other payments
payable by any sublicensees pursuant to any sublicenses granted prior to the
conversion of the license grant contemplated by the provisions of (b)
immediately above shall thereafter be paid solely to GEDANKEN; (d) GEDANKEN
shall have no obligation to continue Phase 3 research, development and testing
work for the benefit of TTGL, and shall have no obligation to disclose to TTGL
any of GEDANKEN's past, current or future Phase 3 developments in the field of
language translation relating to apparatus and methods for translating words,
phrases and sentences in oral or written form from a source language to other
target languages using advanced telecommunications and computer technologies,
including any of GEDANKEN'S past, current or future Phase 3 trade secrets,
knowhow
24
or other confidential research, development and commercial information and
materials in the field of language translation relating to such apparatus and
methods; (e) TTGL shall have no right to use any of THE LICENSED TRADE SECRETS
AND KNOWHOW disclosed by GEDANKEN in connection with Xxxxx 0, XXXX shall return
to GEDANKEN all copies (in whatever form they may be recorded) of all trade
secrets, knowhow and other confidential research, development and commercial
information and materials disclosed by GEDANKEN in connection with Phase 3, and
shall take all reasonable steps necessary to preserve and maintain in strict
confidence all of the trade secrets, knowhow and other confidential research,
development and commercial information and materials that GEDANKEN disclosed to
TTGL in connection with Phase 3; and (f) GEDANKEN shall be free to grant
licenses to others in the FIELD OF USE under the LICENSED PATENT RIGHTS to make,
have made, use, offer, sell and distribute products and methods for translating
words, phrases and sentences in oral form from a source language to other target
languages, including, without limitation, real-time voice translation systems,
and shall be free to license others to use any and all of GEDANKEN's past,
current and future developments in the field of language translation relating to
apparatus and methods for translating words, phrases and sentences in oral or
written form from a source language to other target languages using advanced
telecommunications and computer technologies, including any and all of
GEDANKEN'S past, current or future trade secrets, knowhow or other confidential
research, development and commercial information and materials in the field of
language translation relating to such apparatus and methods.
25
ARTICLE V -- CONFIDENTIALITY
5.1 TTGL recognizes the proprietary and sensitive nature of
the trade secrets, knowhow and other confidential research, development and
commercial information and materials that GEDANKEN will disclose to TTGL in
connection with this Agreement. TTGL shall take all reasonable steps necessary
to preserve and maintain in strict confidence all of the trade secrets, knowhow
and other confidential research, development and commercial information and
materials that GEDANKEN discloses to TTGL in connection with this Agreement.
TTGL shall not deliver or in any way allow any such trade secrets, knowhow or
other confidential research, development and commercial information and
materials to be disclosed, delivered or used by any third party without the
express, specific written consent of GEDANKEN.
Upon termination of this Agreement, TTGL shall return to
GEDANKEN all copies of all documents and information ( in whatever form that
information may be recorded) containing or reflecting any of the trade secrets,
knowhow or other confidential research, development and commercial information
and materials disclosed by GEDANKEN in connection with this Agreement,
including, without limitation, any writings, designs, records, memoranda,
photographs, sound recordings, tapes and disks containing software, computer
source code listings, routines, file layouts, record layouts, system design
information, models, manuals, documentation and notes.
After termination of this Agreement, TTGL shall not directly
or indirectly (without GEDANKEN's express, specific written consent) use or
disclose to any third party any of the trade secrets, knowhow or other
confidential research, development and
26
commercial information and materials disclosed by GEDANKEN in connection with
this Agreement.
5.2 GEDANKEN recognizes the proprietary and sensitive nature
of the business information of TTGL that must be included in the royalty reports
required by the provisions of Paragraph 3.2 of this Agreement. GEDANKEN shall
take all reasonable steps necessary to preserve and maintain in strict
confidence the business information of TTGL that is included in any royalty
reports received from TTGL. GEDANKEN shall not deliver or in any way allow any
such business information to be disclosed, delivered or used by any third party
without the express, specific written consent of TTGL.
5.3 The obligations of confidentiality set forth in this
Article V shall survive the termination of this Agreement.
ARTICLE VI -- TTGL'S RIGHT OF FIRST REFUSAL IN
FIELDS OF USE OTHER THAN LANGUAGE TRANSLATION
6.1 TTGL shall have the right of first refusal with respect to
any license under the LICENSED PATENT RIGHTS offered by GEDANKEN in fields of
use other than the field of translating words, phrases and sentences in oral or
written form from a source language to other target languages. TTGL may exercise
this right of first refusal by matching the material terms (including royalties
and funding) of any bona fide offer received by GEDANKEN from a third party,
within sixty (60) days of written notice from GEDANKEN of the material terms of
bona fide offers from third parties. If TTGL exercises its right of first
refusal under this Article VI, TTGL shall be entitled to a twenty percent (20%)
royalty discount until such time as TTGL recoups, by NET SALES of LICENSED
PRODUCTS AND METHODS and\or fees, royalties or other payments paid by
sublicensees, the total amount of all payments TTGL actually makes to GEDANKEN
27
in accordance with Article IV of this Agreement in connection with GEDANKEN's
Phase 1, 2 and/or 3 research, development and testing of apparatus and methods
in the field of language translation for translating words, phrases and
sentences in oral or written form from a source language to other target
languages using advanced telecommunications and computer technologies.
ARTICLE VII -- REPRESENTATIONS AND WARRANTIES
7.1 REPRESENTATIONS AND WARRANTIES OF GEDANKEN.
GEDANKEN hereby represents and warrants the following:
(A) Gedanken Corporation is a corporation validly
existing and in good standing under the laws of the State of Delaware, and has
full corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
(B) The execution and delivery by Gedanken Corporation
of this Agreement and the performance by GEDANKEN of its obligations hereunder
have been duly and validly authorized by Gedanken Corporation, no corporate
action other than that already taken on the part of Gedanken Corporation's Board
of Directors or its stockholders being necessary. This Agreement has been duly
and validly executed and delivered by Gedanken Corporation and constitutes a
legal, valid and binding obligation of Gedanken Corporation enforceable against
GEDANKEN in accordance with its terms.
(C) Gedanken Corporation is the sole owner of the
entire right, title and interest in and to the LICENSED PATENT RIGHTS, and in
and to the LICENSED TRADE SECRETS AND KNOWHOW.
28
(D) Gedanken Corporation has the right to enter into
this Agreement and to grant the licenses under the LICENSED PATENT RIGHTS and
the LICENSED TRADE SECRETS AND KNOWHOW pursuant to this Agreement. GEDANKEN is
not a party to any agreement with or under any obligation to any third party
that would prevent Gedanken Corporation from entering into this Agreement.
(E) No other person or entity currently has any option
or license with respect to the LICENSED PATENT RIGHTS or with respect to the
LICENSED TRADE SECRETS AND KNOWHOW.
7.2 REPRESENTATIONS AND WARRANTIES OF TTGL.
TTGL hereby represents and warrants the following:
(A) The Translation Group, Ltd. is a corporation
validly existing and in good standing under the laws of the State of Delaware,
and has full corporate power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby.
(B) The execution and delivery by The Translation
Group, Ltd. of this Agreement and the performance by TTGL of its obligations
hereunder have been duly and validly authorized by The Translation Group, Ltd.,
no corporate action other than that already taken on the part of The Translation
Group, Ltd.'s Board of Directors or its stockholders being necessary. This
Agreement has been duly and validly executed and delivered by The Translation
Group, Ltd. and constitutes a legal, valid and binding obligation of The
Translation Group, Ltd. enforceable against TTGL in accordance with its terms.
29
7.3 EFFECT OF REPRESENTATIONS AND WARRANTIES.
It is understood that if the representations and warranties of
one party are not true and correct as of the date of execution of this
Agreement, and the other party, its parents, subsidiaries, affiliates, other
business entities directly or indirectly owned by, controlling or controlled by
that party, or its customers incur any damages, costs or other expenses as a
result of such falsity, the breaching party shall indemnify and hold harmless
the other party, its parents, subsidiaries, affiliates, other business entities
directly or indirectly owned by, controlling or controlled by that party, and
its customers for any such damages, costs or expenses incurred. This obligation
shall survive the termination of this Agreement.
ARTICLE VIII -- ARBITRATION
Any dispute, controversy or claim arising out of or relating
to this Agreement, or the breach thereof, shall be resolved by binding
arbitration in the City of New York, administered by the American Arbitration
Association in accordance with its then prevailing Commercial Arbitration Rules.
Within fifteen days after the commencement of arbitration, each party shall
select one person to act as arbitrator; the two arbitrators selected by the
parties shall select a third arbitrator within ten days of their appointment. If
the arbitrators selected by the parties are unable or fail to agree upon a third
arbitrator, the third arbitrator shall be selected by the American Arbitration
Association. Any interim or provisional remedy that would be available from a
court of law shall be available from the arbitral tribunal to the parties to
this Agreement pending arbitration. The panel of three arbitrators shall have
discretion to order a prehearing exchange of information by the parties,
including, without limitation, production of
30
requested documents, exchange of summaries of testimony of proposed witnesses
and examination by deposition of parties. Neither a party nor an arbitrator may
disclose the existence, content or results of any arbitration hereunder without
the prior written consent of both parties. The arbitration award shall be in
writing and shall specify the factual and legal bases for the award. In
rendering the award, the panel of three arbitrators shall determine the rights
and obligations of the parties according to the substantive and procedural laws
of the State of New York. Judgment on the award rendered by the panel of three
arbitrators may be entered in any federal or state court located in the City of
New York -- the parties hereby submit to the jurisdiction of the federal and
state courts located in the City of New York for this purpose. All fees and
expenses of the arbitration shall be borne by the parties equally. However, each
party shall bear the expense of its own counsel, experts, witnesses and
preparation and presentation of proofs.
ARTICLE IX -- INSURANCE
TTGL shall obtain and maintain standard liability and errors
and omissions insurance coverage at TTGL's sole cost and expense throughout the
term of this Agreement. Insurance coverage shall be obtained in a form
acceptable to GEDANKEN, from a qualified insurance company naming GEDANKEN as an
additional named insured. The insurance policy shall provide coverage against
any and all claims, demands or causes of action arising out of any injury,
error, omission, defect or failure to perform (alleged or otherwise) in
connection with the manufacture, use, offer, provision, sale or distribution of
any of the LICENSED PRODUCTS AND METHODS. Coverage shall be obtained and
maintained in a minimum amount of not less than one million ($1,000,000.00)
combined, single limit for each single occurrence. The insurance policy shall
provide for not less than
31
ten (10) days notice by the insurer to GEDANKEN by registered or certified mail,
return receipt requested, in the event that there is any modification,
cancellation or termination of said policy. TTGL shall provide GEDANKEN with a
certificate evidencing insurance coverage that conforms with the provisions of
this Article IX.
ARTICLE X -- PATENT PROSECUTION AND INFRINGEMENT
10.1 PROSECUTION. During the term of this Agreement, GEDANKEN
shall have discretion to prepare, file and prosecute all applications for
patents within the LICENSED PATENT RIGHTS and may do so at TTGL's sole cost and
expense. During the term of this Agreement, GEDANKEN shall have discretion to
maintain all such applications and patents at TTGL's sole cost and expense and
shall keep TTGL currently advised of all steps taken in the prosecution and
maintenance of any such applications and patents (including any reissues and
reexaminations). During the term of this Agreement, GEDANKEN shall furnish TTGL
with copies of all such patent applications and patents, together with copies of
all papers sent to or received from each patent office timely after filing or
receipt. TTGL shall have the right during the term of this Agreement to request
in writing that GEDANKEN prepare, file, prosecute and maintain applications for
patents and patents within the LICENSED PATENT RIGHTS in specified countries. In
the event that GEDANKEN during the term of this Agreement elects not to prepare
and file an application requested by TTGL, or elects not to continue to
prosecute or maintain any of the foregoing applications or patents (including
any application involved in an appeal or an opposition proceeding) or not to
maintain any patent or patent application within the LICENSED PATENT RIGHTS by
failure to pay any required annuity, renewal or working fee, GEDANKEN shall so
advise TTGL in writing in time to enable TTGL to
32
take appropriate action. TTGL shall be entitled during the term of this
Agreement to take such action at its expense and to own such resultant patents
without any obligation to pay any royalties under such patents under this
Agreement. In such event, GEDANKEN shall, at TTGL's request, but at no
additional cost to TTGL, execute whatever documents are necessary to transfer to
TTGL full ownership of such application or patent.
10.2 INFRINGEMENT.
(A) GEDANKEN and TTGL shall promptly notify each other in
writing of any infringement of the LICENSED PATENT RIGHTS that may come to their
attention during the term of this Agreement.
(B) During the term of this Agreement, GEDANKEN and TTGL
each may bring suit against any infringer of the LICENSED PATENT RIGHTS in their
own names as the sole plaintiff; joinder of the other as a party shall not be
necessary. GEDANKEN and TTGL, however, each shall have the right during the term
of this Agreement to join any such suit and to participate fully as a party.
If either GEDANKEN or TTGL brings suit against an infringer,
and the other elects not to join the suit as a party, it is understood and
agreed that the party bringing the suit shall bear solely all costs and expenses
associated therewith and shall be entitled to retain and keep any and all sums
received, obtained, collected or recovered whether by judgment, settlement or
otherwise, as a result of any such suit. The party electing not to join any such
suit shall, however, at no cost to the party bringing suit, render all
reasonable assistance (with the exception of providing legal counsel or
services) requested by the party involved in such litigation, including, without
limitation, executing all required documents, providing records, documents,
company witnesses, etc.
33
If either GEDANKEN or TTGL brings suit against an infringer,
and the other joins the suit as a party, it is understood and agreed that
GEDANKEN and TTGL shall share equally all costs and expenses associated with the
litigation, and shall share equally any and all sums received, obtained,
collected or recovered whether by judgment, settlement or otherwise, as a result
of any such suit.
ARTICLE XI -- INDEMNIFICATION
GEDANKEN and TTGL agree to indemnify and hold each other
harmless as follows:
(a) TTGL agrees during and after the term of this
Agreement to indemnify and to hold GEDANKEN and its officers, directors, agents,
employees and shareholders harmless from and against any and all loss, damage or
liability, including attorneys' fees, together with all other costs and expenses
incurred in connection with any demands, claims, suits or causes of action
arising out of any injury, error, omission, defect or failure to perform
(alleged or otherwise) relating to the manufacture, use, offer, provision, sale
or distribution of any of the LICENSED PRODUCTS AND METHODS.
(b) TTGL agrees during and after the term of this
Agreement to indemnify and hold GEDANKEN and its officers, directors, agents,
employees and shareholders harmless from and against any and all loss, damage or
liability, including attorneys' fees and other costs and expenses incurred by
GEDANKEN or its officers, directors, agents, employees and shareholders, as a
result of any violation of this Agreement by TTGL.
(c) GEDANKEN agrees during the term of this Agreement
to indemnify and hold TTGL harmless from and against any and all damages for
patent
34
infringement awarded against TTGL in a final judgment of a court or other
tribunal of competent jurisdiction in an action for patent infringement based on
TTGL'S manufacture, use, offer, provision, sale or distribution of any of the
LICENSED PRODUCTS AND METHODS, provided that: (1) TTGL promptly notifies
GEDANKEN in writing of any threat, claim, charge, suit or action for patent
infringement against TTGL based on TTGL's manufacture, use, offer, provision,
sale or distribution of any of the LICENSED PRODUCTS AND METHODS; (2) GEDANKEN
may select counsel to defend against any such threat, claim, charge, suit or
action and may control the conduct of the defense and any litigation and
appeals; and (3) TTGL cooperates fully in connection with the defense and any
litigation and appeals. In the event that TTGL prevails in any such action for
patent infringement, TTGL shall bear solely all costs and expenses incurred in
connection with the litigation, including, without limitation, all reasonable
attorney's fees. In the event that a judgment is entered against TTGL in any
such action for patent infringement, GEDANKEN shall indemnify and hold TTGL
harmless from and against any damages awarded for patent infringement, together
with all costs and expenses incurred in connection with the litigation,
including, without limitation, all attorney's fees, subject to the following
limitation: GEDANKEN'S indemnification shall be limited to the total amount of
all payments TTGL actually makes to GEDANKEN in accordance with Article IV of
this Agreement in connection with GEDANKEN's Phase 1, 2 and/or 3 research,
development and testing of apparatus and methods in the field of language
translation for translating words, phrases and sentences in oral or written form
from a source language to other target languages using advanced
telecommunications and computer technologies, less the total amount TTGL has
recouped as of the date of entry of the adverse judgment
35
for patent infringement by NET SALES of LICENSED PRODUCTS AND METHODS and\or
fees, royalties or other payments paid by sublicensees.
(d) GEDANKEN agrees during and after the term of this
Agreement to indemnify and hold TTGL harmless from and against any and all loss,
damage or liability, including attorneys' fees and other costs and expenses
incurred by TTGL, as a result of any violation of this Agreement by GEDANKEN.
ARTICLE XII -- MISCELLANEOUS PROVISIONS
12.1 GOVERNING LAW. This Agreement shall be governed by and
construed, interpreted and applied in accordance with the laws of the State of
New York, without regard to conflicts of law rules or principles.
12.2 ENTIRE AGREEMENT. This Agreement constitutes the only and
entire agreement between GEDANKEN and TTGL, and supersedes all previous
communications, representations, agreements or understandings, either oral or
written, between the parties with respect to the subject matter of this
Agreement. Any representation, promise, or condition in connection with such
subject matter that is not stated in this Agreement shall not be binding on
either party. This Agreement may be amended, supplemented or modified only by a
written instrument executed by a duly authorized officer of each of GEDANKEN and
TTGL by or on behalf of GEDANKEN and TTGL that specifically refers to this
Agreement. This Agreement shall be considered to have been jointly drafted by
both GEDANKEN and TTGL and shall not be construed in whole or in part against
either party as drafter.
12.3 FORCE MAJEURE. If for reasons of FORCE MAJEURE (as
hereinafter defined) either GEDANKEN or TTGL fails to comply with its
obligations
36
hereunder, such failure shall not constitute breach of this Agreement. For the
purpose of this Agreement, FORCE MAJEURE shall mean: acts of God; acts,
regulations or laws of any government; war; fire, earthquake or storm; civil
commotion; destruction of production facilities or materials; labor disturbance;
failure of public utilities or of common carriers or any other causes beyond the
reasonable control of any party.
12.4 NOTICES. All notices, requests, demands, payments or any
other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given and received: (a) when delivered by
hand; or (b) four (4) days after having been mailed by certified or registered
mail, return receipt requested, with postage prepaid, addressed as follows:
(a) If to Gedanken Corporation:
Xx. Xxxxxx Xxxxxx
0 Xxxxxx Xxxx
Xxxxxx, Xxx Xxxx 00000
cc: Xxxxx X. Xxxxxxxx, Esq.
Fish & Neave
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(b) If to The Translation Group, Ltd.:
The Translation Group, Ltd.
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
cc: Xxxxxx Xxxxxxxxx, Esq.
Xxxxxx, Xxxxxxxx & Xxxx, P.C.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
37
12.5 WAIVER. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by either party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or of any
other term or condition of this Agreement on any future occasion.
12.6 SEVERABILITY. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any applicable present or future
law, and if the rights or obligations of any party hereto under this Agreement
will not be materially and adversely affected thereby: (a) such provision shall
be fully severable; (b) this Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
hereof; (c) the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom; and (d) in lieu of such
illegal, invalid or unenforceable provision, GEDANKEN and TTGL shall negotiate
and add as part of this Agreement, a valid and enforceable provision as similar
in term to such illegal, invalid or unenforceable provision as may be possible.
12.7 HEADINGS. All headings in this Agreement are inserted for
convenience of reference only and shall not affect its meaning, construction or
interpretation.
12.8 ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of GEDANKEN and TTGL and their successors, heirs, assigns
or the
38
purchasers of substantially all of GEDANKEN's or TTGL's assets to which this
Agreement relates.
12.9 BANKRUPTCY. GEDANKEN shall have the right to terminate
this Agreement upon written notice to TTGL in the event of any bankruptcy of
TTGL that results in the liquidation of TTGL'S assets. Any assignment for the
benefit of creditors of TTGL shall be: (a) conditioned on an agreement by the
assignee to pay, with interest at the then prevailing rate, any unpaid royalties
or research and development funding owed to GEDANKEN; and (b) subject to
GEDANKEN'S approval, which shall not unreasonably be withheld.
12.10 PUBLIC ANNOUNCEMENTS. No news release or other public
announcement or disclosure relating in any way to the transactions contemplated
by this Agreement shall be made by either party without the prior written
consent of the other party (which consent shall not be unreasonably withheld),
unless in the opinion of counsel such release, announcement or disclosure is
required by law.
12.11 EXECUTION OF COUNTERPARTS. This Agreement may be
executed in one or more counterparts, all of which taken together shall be
deemed one original.
39
IN WITNESS WHEREOF, GEDANKEN and TTGL, intending to be legally
bound, have caused this Agreement to be executed and delivered by the duly
authorized officer of each party hereto.
Gedanken Corporation
/s/ Xxxxxx Xxxxxx
------------------------------------
Xxxxxx Xxxxxx, Ph.D.
Chairman
Dated: February 11, 1997
[Seal]
Attest:
/s/ Stella Buffalguo
----------------------------
The Translation Group, Ltd.
/s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
Dated: February 11, 1997
[Seal]
Attest:
/s/ Xxxxxxx Xxxxxxx
----------------------------
00
XXXXXXXXXXXXXXX
XXXXX XX XXX XXXX )
: ss.:
COUNTY OF NEW YORK )
On this 11th day of February 1997, before me personally came
Xxxxxx Xxxxxx, Ph.D., to me known, who being duly sworn, did depose and say that
he is Chairman of Gedanken Corporation, the corporation described in, and on
behalf of which he executed the above Agreement; that he knows the seal of said
corporation; and that the seal affixed to said Agreement is such corporate seal.
/s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Notary Public
[Notary Stamp and Seal]
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 11th day of February 1997, before me personally came
Xxxxxxx X. Xxxxxx, to me known, who being duly sworn, did depose and say that he
is President and Chief Executive Officer of The Translation Group, Ltd., the
corporation described in, and on behalf of which he executed the above
Agreement; that he knows the seal of said corporation; and that the seal affixed
to said Agreement is such corporate seal.
/s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Notary Public
[Notary Stamp and Seal]
41
EXHIBIT A
The following timetable of intra phase accomplishments is to be taken as a list
of estimated times needed to achieve the major components of each phase. The
overall time to complete each phase is specified in other sections of this
Agreement. As it is the case in any project of the sort undertaken herein,
experience may cause changes in the time needed to complete a given component or
the sequence in which intra phase components are worked on.
APPROXIMATE
PHASE I NUMBER OF DAYS
Purchase and installation of hardware and software 30
Completion of augmented dictionary 120
Coding of fuzzy set neural network similarity functions 180
Two language parsers 180
Two language parallel corpora deterministic comparator 180
Trial runs and debugging of deterministic parallel comparator 270
Completion of phase I 360
PHASE II
Two language similar corpora probabilistic word string comparator 540
Trial runs and debugging of probabilistic word string comparator 630
Completion of phase II 720
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