Exhibit 10.32
LEGAL SERVICES FEE
AGREEMENT
This Legal Services Fee Agreement
(this “Agreement”) is made and entered into effective
as of the 26th day of October, 2005, by and among Forgent Networks,
Inc. and its wholly owned subsidiary Compression Labs, Inc.
(collectively, the “Client”), and Susman Godfrey, LLP
(the “Law Firm”). The Law Firm and the Client are
sometimes collectively hereinafter referred to as the
“Parties.” Any one of the Parties may be sometimes
hereinafter referred to as a “Party.”
This Agreement concerns litigation
and licensing activities with respect to U.S. Patent
No. 4,698,672 (the “‘672 Patent”), together
with any continuations, continuations-in-part, divisions and/or
foreign counterparts of the ‘672 Patent. The Client is
executing this Agreement for the purpose of retaining the Law Firm
to represent it in connection with investigating and asserting
claims, including the filing and prosecution of lawsuits, against
any other person who may be infringing the ‘672 Patent,
including the enforcement of the ‘672 Patent in the civil
actions identified in Exhibit A. Any such claim as to which
litigation is filed is referred to herein as a
“Lawsuit.” The Client is also executing this Agreement
for the purpose of retaining the Law Firm to represent it in
connection with negotiating with infringers who are not parties to
any lawsuit relating to the enforcement of the ‘672 Patent to
obtain and secure licensing or sublicensing agreements between the
Client and infringers. Any such licensing or sublicensing
agreements negotiated by the Law Firm will be referred to herein as
a “License Agreement,” and any negotiations for such
License Agreements will be referred to herein as the “License
Negotiations.” The Client is not engaging the Law Firm to
market or commercialize its technologies to non-infringers. The
Client understands and acknowledges that patent infringement
litigation often presents novel and difficult questions of both law
and fact, and the acceptance of the engagement by the Law Firm in
this matter may preclude engagements by the Law Firm on other
matters. However, notwithstanding anything else in this Agreement,
Client agrees that Law Firm is not required to represent Client or
anyone else in matters before the U.S. Patent and Trademark Office,
such as reexamination or reissue proceedings, or in matters
involving the Federal Trade Commission.
SPECIAL DISCLOSURE
. THE CLIENT ACKNOWLEDGES THAT IT
WAS ADVISED TO RETAIN INDEPENDENT LEGAL COUNSEL TO REPRESENT THE
CLIENT IN CONNECTION WITH THE NEGOTIATION AND EXECUTION OF THIS
AGREEMENT. THE CLIENT FURTHER ACKNOWLEDGES THAT IT WAS ADVISED THAT
THE LAW FIRM HAS A CONFLICT OF INTEREST THAT PREVENTS IT FROM
REPRESENTING THE CLIENT IN ANY WAY WITH RESPECT TO THE NEGOTIATION
AND EXECUTION OF THIS AGREEMENT AND THAT THE LAW FIRM HAS NOT DONE
SO.
NOW, THEREFORE, for and in
consideration of the mutual agreements set forth in this Agreement,
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed by each
Party, the Parties agree as follows:
1. Patents and Information
Provided by Client. The
Client agrees to aid and support the prosecution of the Lawsuits
and the Law Firm’s litigation and licensing efforts, and to
provide the Law Firm with all information and documents known to or
in the possession of the Client or any entities affiliated with the
Client relating to the ‘672 Patent, the Lawsuits, licensing
efforts, or reasonably required in connection with performing Law
Firm’s duties and obligations hereunder.
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2. Client’s Patent
Rights. The Client
represents and warrants that, to the best of its knowledge after
reasonable investigation, the following is true:
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(a)
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Client owns the
exclusive right to enforce all rights with respect to the
‘672 Patent, including, without limitation, the exclusive
right to bring actions against others for infringement of the
‘672 Patent, to license and sublicense the ‘672
Patent,
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(b)
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Client owns the
exclusive right to collect all royalties, license fees, profits or
other revenue or valuable consideration to be paid or exchanged by
anyone else for the right to use the ‘672 Patent,
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(c)
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The ‘672
Patent is valid and enforceable,
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(d)
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The adverse
parties in the Lawsuits identified in Exhibit “A”
infringe the ‘672 Patent, and
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(e)
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Client has
previously made reasonable efforts to disclose to Law Firm all
material known facts, allegations, opinions or analysis of counsel,
and potential prior art material to the validity, invalidity,
enforceability, unenforceability, infringement, or non-infringement
of the ‘672 Patent.
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In addition, the Client agrees to
continue to timely pay all maintenance fees due on the ‘672
Patent.
3. Contingent Fee Compensation to
Law Firm.
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(a)
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For services
rendered pursuant hereto, the Client hereby agrees to pay the Law
Firm a contingent fee equal to thirty-three percent
(33.00%) of all License Proceeds and Litigation Proceeds. For
purposes hereof, (i) “License Proceeds” shall mean
any revenues, including but not limited to, royalties or license
fees, money or other valuable consideration received by the Client
through, under or as a result of any License Agreement and/or any
License Negotiations, and (ii) “Litigation
Proceeds” shall mean any recovery realized out of or
collected from or in connection with any Lawsuit, either through
settlement, compromise, license or judgment, including, but not
limited to, compensatory damages, release of any right to recover
damages or enforce injunctive relief, exemplary damages,
attorneys’ fees, prejudgment interest, and post judgment
interest (whether through trial or settlement of any
Lawsuit).
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(b)
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The Law Firm
will receive its percentage interest in the License Proceeds and
Litigation Proceeds as they are paid to the Client or, at the
election of the Client, based upon the present value of the amount
of money that is to be paid to the Client over time. If the Client
chooses to waive any such future payments, it will pay the Law Firm
an amount equal to the Law Firm’s interest in those payments
as they otherwise would have been made to the Client. The Parties
agree that (i) the License Proceeds shall include the full
fair market value of any non-monetary proceeds and shall not be
reduced by any cross-license, cross-action, setoff or other payment
by Client, which shall be the sole responsibility of Client, and
(ii) the Litigation Proceeds shall include the full fair
market value of any non-monetary relief obtained or received
directly by the Client or any related entity as a proximate result
of any Lawsuit, such as injunctive relief. The Law Firm’s
contingent fees based on License Proceeds and Litigation Proceeds
shall collectively be referred to herein as the “Contingent
Attorneys’ Fees.”
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(c)
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The Client
shall pay the Contingent Attorneys’ Fees to the Law Firm
quarterly, on or before the 10 th day of each succeeding fiscal
quarter. With each such lump sum payment, the Client shall provide
the Law Firm with a (i) detailed accounting of all License
Proceeds and Litigation Proceeds received by the Client during the
immediately preceding fiscal quarter, and (ii) a calculation
of the quarterly lump sum amount being tendered to the Law Firm.
The Law Firm shall have 30 days following its receipt of each
quarterly payment and the accompanying detail within which to
verify and/or object to the Client’s calculation of the
quarterly payment amount. If the Law Firm fails to object to any
quarterly calculation within such 30 day period, the calculation
and the payment received shall, absent fraud by the Client, be
deemed to have been accepted by the Law Firm and shall be
final.
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(d)
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Anything herein
to the contrary notwithstanding, the Law Firm shall not be entitled
to receive, and the Client shall not be required to pay the Law
Firm, any Contingent Attorneys’ Fees under this Paragraph 3
or otherwise out of or with respect to the first $6 million of
“Gross Recoveries” received by the Client on or after
October 27, 2004, in recognition of Client’s existing
obligations under that certain Resolution Agreement, dated
December 22, 2004.
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4. Additional Monthly Fixed Fee
Compensation to Law Firm. In addition to the Contingent Attorneys’
Fees referenced in paragraph 3 above, the Client shall also pay to
Law Firm a fixed fee of one hundred and sixteen thousand dollars
($116,000.00) per month (the “Fixed Fee”), each month
until this Agreement terminates. The first such payment shall be
due on November 1, 2005. If Client is unable to make payments
to the Law Firm pursuant to this paragraph, then at the election of
the Law Firm, the fixed fee may be reduced to $50,000 per month and
the Contingent Fee referenced in paragraph 3 above shall be
increased to 38.5%. If Client is unable to pay the reduced fixed
fee described in the preceding sentence, then at the election of
the Law Firm, the fixed fee may be reduced to $0 per month and the
Contingent Fee referenced in paragraph 3 above shall be increased
to 44%.
5. Client Payment of Enforcement
Expenses. For purposes
hereof, “Enforcement Expenses” shall mean those
third-party expenses reasonably incurred by Law Firm on the
Client’s behalf hereunder (but only if approved by the Client
in advance, either specifically or in periodic expense budgets),
including but not limited to, travel expenses, long distance calls,
investigation fees, consultant fees, expert and witness fees,
charts, photographs, deposition fees and costs, court costs,
photocopying and other document reproduction costs, postage
charges, fax charges, on-line computer research.
Once the Law Firm becomes entitled
to receive Contingent Attorneys’ Fees with regard to a
particular Lawsuit or Licensing Agreement, Enforcement Expenses
relating to that particular Lawsuit or Licensing Agreement shall be
reimbursed to the Client out of any License Proceeds or Litigation
Proceeds up to, but not to exceed, 20% of any such License Proceeds
or Litigation Proceeds recovered from any person(s) at any one time
relating to that particular Lawsuit or Licensing Agreement. For
example, if License Proceeds or Litigation Proceeds are recovered
from a Licensing Negotiation or any Lawsuit from any person, then
up to 20% of such total proceeds will be paid to the Client as
reimbursement for Enforcement Expenses incurred, and the remainder
of the License Proceeds or Litigation Proceeds will be distributed
to the Law Firm and the Client in accordance with the provisions of
Paragraph 3(a) above. In the event that the total amount of License
Proceeds or Litigation Proceeds recovered with respect to a
particular Licensing Negotiation or Lawsuit are insufficient to
reimburse the Client fully for Reimbursable Enforcement Expenses,
the Client agrees that the Client shall bear the unreimbursed
portion of the Enforcement Expenses and that the Law Firm shall not
be liable for any Enforcement Expenses not reimbursed.
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Client also agrees, on or before
November 1, 2005, to pay to Law Firm an initial cost deposit
of $25,000 to cover Enforcement Expenses. Law Firm will place those
funds in an interest-bearing trust account. The cost deposit will
be applied to Law Firm’s final statement for expenses, or, in
Law Firm’s discretion, to any past due monthly expense
statement or invoice for fees. Client is obligated to maintain the
cost deposit at its initial amount at all times. Upon the
termination of this Agreement, Law Firm will promptly refund the
balance, less payment of any fees or expenses unpaid as of the date
of Law Firm’s final bill. Law Firm’s agreement to
provide legal representation in this matter is conditioned upon
payment and maintenance of the requested cost deposit. In addition,
SG retains the discretion to request a supplemental cost deposit,
over and above the cost deposit required prior to our commencement
of the engagement, in the event of an increase in anticipated
monthly expenses during the course of litigation.
6. Quarterly Budget.
On or before the 5
th
day of the start of each
quarter during the term hereof, the Law Firm shall prepare and
provide to the Client a written budget for that quarter for the Law
Firm’s legal Enforcement Expenses under Paragraph 5. The Law
Firm shall also notify Client of any anticipated material increases
not reflected in the Quarterly Budget.
7. Court Award of Attorneys Fees
or Costs . Where
reasonably appropriate under the circumstances in any Lawsuit, the
Law Firm shall apply to the Court for such amount of compensation,
costs, and litigation expenses, if any, as may reasonably be
al
