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EXHIBIT 10.36
CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. SECTIONS 200.80(b)(4), 200.83
and 230.406.
AMENDED
LICENSE AGREEMENT
THIS AMENDED LICENSE AGREEMENT ("Agreement") is made and entered
into as of the 31st day of March, 1999 (the "Effective Date"), by and between
GENERAL MAGIC, INC., a Delaware corporation, having a place of business at 000
X. Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 ("General Magic"), and
FONIX/ACUVOICE, INC. a Utah corporation, having a place of business at 0000
Xxxxx Xxxx Tower, 00 Xxxx Xxxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000 ("Fonix").
RECITALS
A. General Magic and AcuVoice, Inc., a California corporation
("AcuVoice"), entered into a License Agreement dated September 23, 1997 (the
"License Agreement"), whereby AcuVoice licensed text-to-speech software for use
by General Magic in connection with its voice accessible integrated network
service.
B. AcuVoice was merged into Fonix, and Fonix is the successor in
interest to AcuVoice.
C. The parties desire to amend the License Agreement in its
entirety and to supersede and replace the License Agreement as hereinafter
provided.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the License Agreement is
superseded and replaced by this Agreement and is amended in its entirety to read
as follows:
1. DELIVERABLES. In connection with the execution of the License
Agreement, AcuVoice delivered to General Magic the then-current version of, and
related documentation for, the AcuVoice Telephony/Multimedia API Model AV2001
software using a male voice with standard American English (which, together with
new releases, updates, and bug fixes heretofore delivered to General Magic under
the License Agreement, are referred to hereinafter as the "Licensed Software")
in object code format. General Magic agreed to pay Fonix (i) a license fee of
[**] (the "License Fee") as described in Section 3 of the License Agreement and
(ii) royalties, to be paid in accordance with the terms of Section 3 of the
License Agreement. General Magic acknowledges receipt of the Licensed Software,
and Fonix acknowledges receipt of the License Fee and certain royalties.
2. LICENSE GRANT. In consideration of the License Fee, Additional
Fee and royalties paid and to be paid under the License Agreement and this
Agreement, and subject to the terms of this Agreement, Fonix hereby grants
General Magic (i) a nonexclusive (except as otherwise specifically provided
herein), perpetual, irrevocable, worldwide license to use, reproduce, publicly
display, publicly perform, and distribute the Licensed Software in connection
with General Magic's voice accessed integrated network service offerings
("Network Service Offerings") and (ii) the further right to sublicense some or
all of the foregoing rights to third
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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parties through multiple tiers of distribution for purposes of providing General
Magic's Network Service Offerings but not for purposes of providing a
stand-alone text-to-speech engine. From and after the Effective Date, Fonix
shall have no duty to provide bug fixes, new releases, updates, upgrades, or new
versions of the Licensed Software.
3. SOURCE CODE TRANSFER AND LICENSE. Fonix agrees immediately
upon execution of this Amended License Agreement by both parties to transfer to
General Magic a complete and accurate copy of its present source code and
related documentation for the Licensed Software (the "Source Code"), and hereby
grants to General Magic a non-exclusive, perpetual, irrevocable, worldwide
license to use, reproduce, modify, and create derivative works from the Source
Code restricted to use with General Magic's Network Service Offerings. Fonix
shall also grant to General Magic a perpetual, irrevocable worldwide license to
use, reproduce, publicly display, publicly perform, and distribute in object
code form any derivative works General Magic creates from the Source Code.
General Magic shall have no duty to provide Fonix with any derivative works
created by General Magic from the Source Code. For purposes hereof, the Source
Code to be transferred to General Magic hereunder shall be all source code and
data files for the Licensed Software and all associated, documentation, sound
libraries, and tools required to recompile the sound libraries, including those
items listed on Exhibit A hereto. Fonix shall have no duty to provide bug fixes,
new releases, updates, upgrades, or new versions of the Source Code. General
Magic shall have the right to transfer the Source Code and its related license
to any entity which acquires General Magic or substantially all of the assets of
General Magic but shall not have any right to otherwise transfer or sublicense
the Source Code to any other party.
4. LICENSE FEE AND ROYALTIES.
(a) ADDITIONAL LICENSE FEE. General Magic shall pay to
Fonix an additional license fee (the "Additional Fee") of [**]. The Additional
Fee shall be paid in [**] monthly installments of [**], with the first such
payment to be made immediately upon the transfer of the Source Code in
accordance with Section 3, and a similar payment of [**] on each monthly
anniversary thereafter until paid in full.
(b) ROYALTIES. From the Effective Date until March 31,
2003 (the "Term") General Magic shall pay to Fonix a royalty equal to [**] of
General Magic's [**] (as defined below) for any Network Service Offering which
includes or uses the Licensed Software or any derivative works created from the
Source. For purposes hereof, "[**]" shall mean with respect to any General Magic
Network Service Offering, [**] by General Magic from [**].
(c) ALTERNATE LICENSE FEE. In the event that General Magic
sells any product using the Licensed Software or any derivative works created
from the Source Code, or a sublicensee sells any such product, rather than
offering it in connection with a Network Service Offering, such sales shall be
treated as a general resale, and General Magic shall pay Fonix for each such
transaction during the Term, in place and instead of the royalty provided for in
the
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
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preceding paragraph, an amount equal to [**] per [**].
(d) REPORTS, PAYMENT OF ROYALTIES, AUDITS. Within thirty
(30) days following the date hereof, General Magic shall provide Fonix with a
written report in reasonable detail and in a form reasonably acceptable to
Fonix, which sets forth all royalties due and payable under the License
Agreement through the Effective Date. Payment for any royalties due under the
License Agreement, which are unpaid at the date of such report, shall accompany
such report. Within thirty (30) days following the end of each calendar quarter
during the Term, General Magic shall provide Fonix with a written report in
reasonable detail and in a form reasonably acceptable to Fonix which sets forth
the gross revenues and gross margin of all Network Service Offerings provided by
General Magic that are subject to the provisions of Section 4(b) during such
quarter and the aggregate amount of, and basis for, all payments due to Fonix
for such quarter. Payment for the royalties required by subsection (b), above,
shall accompany such report. Within thirty (30) days following the end of each
calendar quarter during the Term, General Magic shall provide Fonix with a
written report in reasonable detail and in a form reasonably acceptable to Fonix
which sets forth the number of run-time licenses distributed during such
quarter. Payment for the run-time licenses shall accompany said report. Any
payments due under this Agreement which are not paid when due shall bear
interest, to the extent permitted by applicable law, at the prime rate as
reported in The Wall Street Journal on the date such payment is due, plus an
additional one and one-half percent (1 1/2%), calculated on the number of days
such payment is delinquent Fonix shall have the right, at its own expense,
through independent auditors selected by Fonix and reasonably acceptable to
General Magic to inspect, no more than once per year, upon reasonable notice and
during regular business hours, the books and records of General Magic necessary
to calculate the royalty to which Fonix is entitled. General Magic agrees to
make and maintain until three (3) years after the transactions to which they
pertain, adequate records, books, and accounts regarding its sales,
distribution, and other activities in order to calculate and confirm its payment
obligations and compliance with other terms and conditions hereunder. If an
audit by Fonix, at Fonix's sole expense, discloses that the royalty or license
fees paid by General Magic were less than that amount to which Fonix is
entitled, then General Magic, within thirty (30) days after being furnished with
a copy of Fonix's audit, shall pay to Fonix the amount of any shortfall,
together with interest thereon at three percentage points (3%) above the prime
interest rate then reported in The Wall Street Journal, and if the shortfall is
greater than five percent (5%) of the royalties set forth in the most recent
royalty report, General Magic shall also pay to Fonix the cost of any such
audit; provided that General Magic shall be entitled to reasonably object to and
protest the results of any such audit and shall not be obligated to make any
payment to Fonix in accordance with the terms and conditions of this section
until such objection and protest have been resolved. Any sublicense granted by
General Magic shall contain a provision allowing Fonix's independent auditors to
audit the books of the sublicensee and providing for terms substantially the
same as those contained in this section. Fonix shall require the independent
auditors to sign a confidentiality agreement reasonably acceptable to the party
being audited before any audit contemplated by this section takes place. All
reports, information, and other materials furnished by General Magic or its
sublicensees to Fonix or its independent auditors under this Section shall be
subject to the confidentiality provisions of this Agreement and the
confidentiality agreement signed by the independent auditors, as applicable.
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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5. RESTRICTIONS OF FONIX' RIGHT TO LICENSE. Fonix agrees that
prior to September 1, 2000, Fonix shall not license the Licensed Software for
use by the following companies or their successors in interest: [**] and [**].
6. SUPPORT. Fonix agrees to provide to General Magic reasonable
technical support related to the architecture and programming logic of the
Source Code, and the process of successfully compiling the Source Code into a
working text-to-speech system functionally identical to the Licensed Software as
currently commercially deployed by General Magic, for a fee of [**] per hour.
7. OWNERSHIP. General Magic acknowledges that the copyrights,
patent rights, trade secrets, trademarks, and other intellectual property in or
to the Licensed Software, the Source Code, and/or any documentation are the
exclusive property of Fonix. Notwithstanding anything in this Agreement to the
contrary, Fonix retains title to the Licensed Software, the Source Code, and all
documentation related to the Licensed Software and the Source Code (the
"Documentation") and all copies of the Licensed Software, Source Code, and
Documentation.
8. WARRANTIES.
(a) YEAR 2000 COMPLIANCE. Fonix represents and warrants
that the Licensed Software and Source Code are Year 2000 Compliant as such term
is commonly used in the software industry. Fonix's sole liability pursuant to
this provision shall be to promptly correct or replace the Licensed Software and
Source Code with compliant software.
(b) SOURCE CODE WARRANTY. Fonix hereby represents and
warrants that the Source Code to be delivered pursuant to Section 3 constitutes
a complete and accurate copy of the Source Code for the Licensed Software, and
that it is sufficient to build the Source Code into a working text-to-speech
system functionally identical to the Licensed Software as currently commercially
deployed by General Magic. In the event that the initial delivery pursuant to
Section 3 fails to comply with this representation and warranty, General Magic
may, as its sole remedy, require Fonix to immediately deliver a complete and
accurate copy of the Source Code for the Licensed Software. In the event that
any subsequent delivery fails to comply with this provision, General Magic shall
be entitled to pursue any and all remedies it may have in equity or at law.
9. LIMITATION ON LIABILITY. EXCEPT FOR BREACH OF SECTIONS 3, 5
AND 8(b), THE AGGREGATE LIABILITY OF EITHER PARTY ARISING FROM OR RELATING TO
THIS AGREEMENT OR THE LICENSED SOFTWARE, SOURCE CODE, OR DOCUMENTATION
(REGARDLESS OF THE FORM OF ACTION OR CLAIM - E.G. CONTRACT, WARRANTY, TORT,
MALPRACTICE, FRAUD, AND/OR OTHERWISE) IS LIMITED TO [**] UNDER THIS AGREEMENT.
NEITHER PARTY SHALL IN ANY CASE BE LIABLE TO THE OTHER FOR ANY SPECIAL,
INCIDENTAL,
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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CONSEQUENTIAL, INDIRECT, OR PUNITIVE DAMAGES EVEN IF FONIX HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. FONIX IS NOT RESPONSIBLE FOR LOST
PROFITS OR REVENUE, LOSS OF USE OF LICENSED SOFTWARE, LOSS OF USE OF THE SOURCE
CODE, LOSS OF DATA, COSTS OF RE-CREATING LOST DATA, THE COST OF ANY SUBSTITUTE
EQUIPMENT OR PROGRAM, OR CLAIMS BY ANY PARTY OTHER THAN GENERAL MAGIC.
10. SOLE REMEDY AND ALLOCATION OF RISK. FONIX'S SOLE AND
EXCLUSIVE LIABILITIES ARE SET FORTH IN THIS AGREEMENT. THIS AGREEMENT DEFINES A
MUTUALLY AGREED-UPON ALLOCATION OF RISK AND THE AMOUNT PAYABLE TO FONIX REFLECTS
SUCH ALLOCATION OF RISK.
11. CONFIDENTIALITY.
(a) DEFINITION OF CONFIDENTIAL INFORMATION. For purposes
of this Agreement, "Confidential Information" of a party means the Source Code
and the other information and documents identified in this Agreement as
confidential information of such party, as well as any and all other information
that (i) such party considers to be confidential or proprietary to its business
(including trade secrets, technical information relating to ongoing research and
development, business strategies, marketing plans, customer lists, and financial
data) and (ii) either (A) is clearly labeled or identified as confidential or
proprietary when disclosed to the other party or (B) the other party knew, or
under the circumstances should have known, was considered confidential or
proprietary by the other party.
(b) GENERAL CONFIDENTIALITY OBLIGATIONS. Each party agrees
that it will (i) not disclose the other party's Confidential Information to any
third party (other than independent contractors as provided below); (ii) use the
other party's Confidential Information only to the extent necessary to perform
its obligations or exercise its rights under this Agreement; (iii) disclose the
other party's Confidential Information only to those of its employees and
independent contractors who need to know such information for purposes of this
Agreement and who are bound by confidentiality agreements containing terms no
less restrictive than those in this Section 11(b); and (iv) protect all
Confidential Information of the other party from unauthorized use, access, or
disclosure in the same manner as it protects its own confidential information of
a similar nature, and in no event with less than reasonable care.
(c) EXCEPTIONS. Each party's obligations with respect to
any portion of the other party's Confidential Information will terminate when
the receiving party can document that (i) such Confidential Information was in
the public domain at the time it was communicated to the receiving party by the
disclosing party; (ii) such Confidential Information entered the public domain
after it was communicated to the receiving party by the disclosing party through
no fault of the receiving party; (iii) such Confidential Information was in the
receiving party's possession free of any obligation of confidence at the time it
was communicated to the receiving party by the disclosing party; or (iv) such
Confidential Information was developed by employees or agents of the receiving
party independently of and without reference to any information communicated to
the receiving party by the disclosing party. In addition, Section 11(b) will not
be construed to prohibit any disclosure that is (A) necessary to establish the
rights of either party under this Agreement or (B) required by a valid court
order or subpoena, provided in the latter
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THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
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case that the party required to make such disclosure notifies the other party
(whose Confidential Information is to be disclosed) thereof promptly and in
writing and cooperates with the other party if the other party seeks to contest
or limit the scope of such disclosure.
(d) TERMS OF AGREEMENT. Neither party will disclose any
terms of this Agreement to anyone other than its attorneys, accountants, and
other professional advisors, except (i) pursuant to a mutually acceptable press
release made by the parties, or a press release or other announcement approved
by the other party in writing; or (ii) in connection with a contemplated change
of control of such party or sale of such party's business or financing
arrangements of a party (provided that any third party to whom the terms of this
Agreement are to be disclosed signs a confidentiality agreement reasonably
satisfactory to the other party hereto before such disclosure is made); or (iii)
as may be required by law, government regulation, or court order.
12. TERMINATION. This Agreement shall continue in full force and
effect unless terminated as set forth below.
If either party breaches a material obligation or warranty under
this Agreement and fails to cure such breach within thirty (30) days of written
notice of such breach, then the other party may terminate this Agreement upon
written notice. This right to terminate shall be in addition to, and shall in no
way limit, the other remedies, damages, and relief to which the other party may
be entitled.
13. EXPORT CONTROL. General Magic understands and acknowledges
that Fonix is subject to regulation by agencies of the United States government,
including, but not limited to, the U.S. Department of Commerce, which prohibit
export or diversion of certain software and technology to certain countries. Any
and all obligations of Fonix to provide the Licensed Software, the Source Code,
as well as any other technical information or assistance shall be subject in all
respects to such United States laws and regulations as shall from time to time
govern the license and delivery of technology and software abroad by persons
subject to the jurisdiction of the United States, including the Export
Administration Act of 1979, as amended, any successor legislation, and the
Export Administration Regulations issued by the Department of Commerce, Bureau
of Export Administration. General Magic warrants that it will comply with the
Export Administration Regulations and other United States laws and regulations
governing exports in effect from time to time.
14. SURVIVAL. Upon termination or expiration of this Agreement,
the provisions of Sections 2, 3, 8, 9, 10, and 11, and all payment obligations
incurred prior to the effective date of such termination or expiration shall
survive. The provisions of Section 5 shall survive if General Magic terminates
the Agreement because Fonix has breached a material obligation or warranty under
the Agreement and fails to cure such breach within thirty (30) days of written
notice by General Magic, but shall not survive if Fonix terminates the Agreement
because General Magic has breached a material obligation or warranty under the
Agreement and fails to cure such breach within thirty (30) days of written
notice by Fonix.
15. NOTICES. All demands, notices, and other communications to be
given hereunder, if any, shall be in writing and shall be sufficient for all
purposes if personally
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delivered, sent by facsimile, sent by nationally-recognized courier service, or
if sent by registered or certified United States mail, return receipt requested,
postage prepaid, and addressed to the respective party at the postal address set
forth herein or to such other address or addresses as such party may hereafter
designate in writing to the other party as herein provided. The present
addresses of the parties hereto are as set forth above. If personally delivered,
notice under this Agreement shall be deemed to have been given and received and
shall be effective when personally delivered. Notice by facsimile and
nationally-recognized courier service shall be deemed to have been given when
received. Notice by mail shall be deemed effective and complete two (2) days
after deposit in the United States mail.
16. NO PARTNERSHIP. Nothing in this Agreement shall be construed
to constitute a partnership between the parties hereto, and the parties
expressly agree that no such partnership is intended. No person or entity other
than the parties hereto shall have, be deemed to have or claim any third party,
direct or indirect rights or claims to this Agreement or the matters described
herein.
17. BINDING AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the respective parties hereto, their heirs, legal
representatives, successors, and assigns.
18. ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties and supersedes and replaces the License Agreement
in its entirety. No promise, representation, warranty, or covenant not included
in this Agreement has been or is relied upon by either party. Any prior
negotiations, correspondence, or understandings related to the subject matter of
this Agreement shall be deemed to be merged in this Agreement and shall be of no
further force or effect. No modification or amendment of this Agreement shall be
of any force or effect unless in writing executed by all of the parties.
19. INTERPRETATION. Unless otherwise provided, all terms shall
have the meaning given them in the ordinary English usage and as customarily
used. Words in any gender shall include both other genders. Whenever the context
requires, the singular shall include the plural, the plural shall include the
singular, and the whole shall include any part thereof.
20. INVALIDITY. In the event that any of the provisions of this
Agreement is held to be illegal, unenforceable or invalid by any court of
competent jurisdiction, then such provision shall be construed and deemed
modified to reflect and achieve the intent of the parties to the maximum extent
allowed under applicable law, and in any such case, the remaining provisions of
this Agreement will continue in full force and effect.
21. HEADINGS. The paragraph and other headings contained in this
Agreement are for purposes of reference only and shall not limit, expand, or
otherwise affect the construction of any of the provisions of this Agreement.
22. NO WAIVER. Acceptance by either party of any performance less
than required hereby shall not be deemed to be a waiver of such party to enforce
all of the terms and conditions hereof. No waiver of any such right hereunder
shall be binding unless reduced to writing and signed by the party to be charged
therewith.
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23. DEFAULT. If any party shall breach any of the provisions of
this Agreement, the nonbreaching party shall be entitled to recover from the
other party all costs and expenses incurred by the nonbreaching party in
connection with the breach, including reasonable attorneys' fees.
24. GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of California without regard to its conflicts
of law principles.
25. ASSIGNMENT. General Magic may assign this Agreement in a case
of a merger, acquisition or sale of assets, but not otherwise without the prior
written consent of Fonix.
26. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all of which shall together constitute one and the same
instrument.
27. AUTHORIZED EXECUTION. The individuals signing below each
represent and warrant (i) that they are authorized to execute this Agreement for
and on behalf of the party for whom they are signing, (ii) that such party shall
be bound in all respects hereby, and (iii) that such execution presents no
conflict with any other agreement of such party.
28. FACSIMILE SIGNATURES. The parties hereto agree that
transmission to the other party of this Agreement with its facsimile signatures
shall bind the party transmitting this Agreement by facsimile in the same manner
as if such party's original signature had been delivered. Without limiting the
foregoing, each party who transmits this Agreement with its facsimile signature
covenants to deliver the original thereof to the other party as soon as
practicable thereafter.
IN WITNESS WHEREOF, the authorized representatives of General
Magic and Fonix have executed this Agreement as of the day and year first above
written.
GENERAL MAGIC, INC., a FONIX/ACUVOICE, INC., a Utah
Delaware corporation: corporation:
By: /s/ XXXXXX XXXXXXX By: /s/ XXXXX X. XXXXXX
------------------------------ ------------------------------
Its: Chief Executive Officer Its: Vice President
----------------------------- -----------------------------
Xxxxxx Xxxxxxx Xxxxx X. Xxxxxx
---------------------------------- ----------------------------------
Print Name Print Name
Date: May 17, 1999 Date: 17 May 1999
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EXHIBIT A
I. [**]
A. [**]
1. [**]
2. [**]
3. [**]
B. [**]
1. [**]
2. [**]
3. [**]
4. [**]
5. [**]
C. [**]
D. [**]
1. [**]
2. [**]
E. [**]
F. [**]
1. [**]
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G. [**]
1. [**]
H. [**]
I. [**]
J. [**]
1. [**]
2. [**]
3. [**]
K. [**]
L. [**]
Appendix 1. [**]
Appendix 2. [**]
Appendix 3. [**]
Appendix 4. [**]
II. [**]
A. [**]
B. [**]
C. [**]
D. [**]
E. [**]
F. [**]
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III. [**]
A. [**]
B. [**]
C. [**]
D. [**]
E. [**]
F. [**]
G. [**]
IV. [**]
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.