EXHBIT 10.4
EXCLUSIVE PATENT LICENSE AGREEMENT
by and between
WOLFGANG GRABHER
("Licensor")
and
ADMINISTRATION FOR INTERNATIONAL CREDIT & INVESTMENT, INC.
("Licensee")
Dated as of July 13, 2000
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TABLE OF CONTENTS
1.
Definitions...............................................................1
2. License Grants and
Restrictions...........................................3
3.
Compensation..............................................................4
4. Patent
Prosecution........................................................5
5.
Infringement..............................................................6
6. Representations and
Warranties............................................6
7.
Indemnification...........................................................7
8.
Confidentiality...........................................................8
9.
Liability.................................................................9
10. Term and
Termination......................................................9
11. General
Provisions.......................................................11
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EXCLUSIVE PATENT LICENSE AGREEMENT
THIS
EXCLUSIVE PATENT LICENSE AGREEMENT (this "AGREEMENT") is made as of
July13, 2000 (the "EFFECTIVE DATE"), between Wolfgang Grabher, a Austrian
national residing in Stuttgart with an address located at Zettachring 2a,
D-70567 Stuttgart ("LICENSOR"),
and Administration For
International Credit and
Investment, Inc., an Oregon corporation with an address located at 391 N.W.
179th Ave., Aloha, Oregon 97006 ("LICENSEE") (each a "PARTY" and together
the
"PARTIES").
RECITALS
WHEREAS,
Licensor is the owner
of certain Technology,
as defined herein;
and
WHEREAS,
Licensor is willing to license the Technology to Licensee for
the
development and Use of the Technology in the Voice-Over-Internet Protocol
("VOIP") market in those jurisdictions where the Technology
has been registered
upon the terms and subject to the
conditions set forth in this Agreement.
NOW,
THEREFORE,
in consideration of these premises and of the mutual
promises and conditions contained in this
Agreement, Licensor and Licensee agree
as follows:
1. DEFINITIONS
1.1
"AFFILIATE"
of a party shall mean
an entity directly or
indirectly
controlling, controlled by or under common
control with that party where control
means the ownership or control, directly or indirectly, of more than fifty
percent (50%) of all of the voting power
of the shares (or other securities or
rights) entitled to vote for the election of directors or other governing
authority; provided that such entity shall be
considered an Affiliate only for
the time during which such control
exists.
1.2
"CHANGE OF CONTROL"
shall mean the occurrence of any of the following
events:
(a) Any "person" or
"group of persons"
(as such terms are
used in
Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended)
is or becomes the
"beneficial
owner" (as defined in
Rule 13d-3
under said
Act), directly or
indirectly,
of securities of the Company
representing 50% or
more of the total
voting power
represented
by the
Company's
then-outstanding voting securities; or
(b) The shareholders of the Company approve a merger or
consolidation of the
Company with any other corporation, other than a
merger or
consolidation that
would result in the voting securities of the
Company
outstanding
immediately
prior thereto continuing to represent
(either
by remaining outstanding or by being converted into voting
securities
of the surviving entity) at least 50% of the total voting power
represented by the
voting securities
of the Company or such surviving
entity
outstanding immediately after such merger or consolidation,
or the
shareholders of the Company approve a plan of complete liquidation of the
Company or
an agreement for the sale or disposition by the Company of
all
or
substantially all of the Company's assets.
1.3
"CONTRACT QUARTER"
shall mean each calendar quarter period (March 31,
June 30, September 30 and December 31)
following the Effective Date during the
Term.
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1.4
"ENTITY" shall mean any general
partnership,
limited partnership,
limited liability company, corporation, joint venture, trust, business trust,
cooperative or association, or any foreign trust or foreign business
organization.
1.5
"EXCLUSIVE PERIOD"
shall mean the period of time set forth in Section
2.1.
1.6
"INTELLECTUAL PROPERTY RIGHT" and "INTELLECTUAL PROPERTY RIGHTS"
shall
mean all worldwide right, title and interest of a Person in,
to and under any
and all: (a) United States or foreign
patents and pending
patent applications
therefor, including the right to file new
and additional
patent applications
based thereon, including provisionals,
divisionals, continuations,
continuations-in-part, reissues and reexaminations; (b) copyrights; and (c)
trade secrets, know-how, processes, methods, engineering data and technical
information.
1.7 "NET
RECEIPTS" shall mean the gross amount
recognized
as income on
Licensee's books (pursuant to generally accepted accounting principles
consistently applied) in connection with the sale of a Product or
Processes,
less deductions for payment of sales, value added or any similar
taxes, and
shipping and insurance charges, with
respect to such Product or Process.
1.8
"PATENT" shall mean:
(a) United States and international applications listed on
Appendix
A and the
resulting patents;
(b) any
divisionals, continuations,
continuation-in-part
applications, and
continued prosecution
applications (and their relevant
international
equivalents) of the
patent applications
described in (a)
above to
the extent the claims are directed to subject matter
specifically
described
in such patent applications, and the resulting patents;
(c) any patents resulting from reissues, reexaminations, or
extensions
(and their relevant
international
equivalents) of the patents
described
in (a) and (b); and
(d) international
(non-United
States) patent
applications
filed
after the
Effective Date and the
relevant international
equivalents
to
divisionals,
continuations, continuation-in-part
applications
and
continued
prosecution
applications of such
patent applications
and any
patents
resulting from reissues, reexaminations, or extensions of the
patents
described in (c) to
the extent the claims are directed to subject
matter
specifically
described in the patents or patent applications
referred
to in (a), (b) and (c), above, and the resulting patents.
1.9
"PATENT RIGHTS" shall mean all rights related to the Use of the
Patents for the development, manufacture, use, sell, offer to sell, lease,
distribution and import of VoIP billing and customer care software and other
VoIP-related Products.
1.10
"PRODUCT" shall mean any product or service that cannot be
developed,
manufactured, Used, leased, sold or imported, in whole or in part, without
infringing on one or more claims under the
Patent Rights.
1.11
"PROCESS" shall mean any process or service that cannot be
performed,
in whole or in part, without using at least one process that
infringes one or
more claims under the Patent Rights.
1.12
"PATENT TERM" shall mean the period of time commencing on the
Effective Date and ending with the expiration or abandonment of all issued
patents and filed patent applications
within the Patent
Rights, unless
earlier
terminated in accordance with the
provisions of this Agreement.
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1.13
"TERRITORY" shall mean worldwide.
1.14
"THIRD PARTY" shall mean, with respect to a party, any Person that
is
not an Affiliate of such party.
1.15
"USE" shall mean operate, reproduce, distribute, transmit (by
electronic means or otherwise), make
available, perform and display.
2. LICENSE GRANTS AND RESTRICTIONS
2.1 Grant
Of License.
Subject to the terms
of this Agreement,
Licensor
hereby grants to Licensee an exclusive license under the Patent Rights to
develop, make, have made, Use, sell, offer to sell, lease, distributed and
import Products or to practice
Processes in the
Territory from the Effective
Date through the Patent Term (the
"EXCLUSIVE
PERIOD") (such licenses shall be
hereinafter referred to, collectively, as
the "License").
2.2
Restriction on
Sublicensing.
The License
granted hereby may not
be
transferred or sublicensed by Licensee, but shall extend to any
wholly-owned
subsidiaries and divisions or Affiliates of Licensee (collectively,
"Affiliates"). Licensee shall be responsible for the compliance by each
such
Affiliate with the terms and provisions of
this Agreement, and
agrees to report
and pay Royalties to Licensor in
accordance
with Section 3 hereof
with respect
to production of Products by each such
Affiliate. Any such Affiliate shall agree
in advance in writing to be bound by all the
terms of this
Agreement,
and
Licensee shall agree to guarantee the
obligations of such Affiliate hereunder.
2.3 U.S.
Production. Licensee agrees that any Products used or sold in
the
Untied States will be manufactured
substantially in the United States.
2.4 Audits
and Inspection Rights.
2.4.1 Licensor shall have the right, upon reasonable advance
notice,
to
inspect Licensee's records and facilities, and the records and
facilities
of Affiliates of Licensee, with respect to the manufacture or
distribution of
Products and Processes
hereunder and to receive samples
thereof in
order to verify that such manufacturing is within the scope
of
this
Agreement,
and that there are
appropriate
security procedures to
protect
Licensor's
Confidential
Information, as that
term is defined in
Section
8.1 hereof. Licensee
shall have similar rights as to any contract
manufacturer utilized by Licensee.
2.4.2 If the payment of Royalties is required as provided in
Section
3.2,
during the term of
this Agreement
and for a period of
one (1) year
thereafter, Licensor
shall have the right, at his expense, and upon
reasonable
notice to Licensee, to
have examined by an independent auditor
with a
national reputation,
reasonably acceptable to Licensee, Licensee's
books and
records in order to
determine or verify
the Net Receipts
and
sales of
Products. Licensor
shall not make any such examination more than
twice in
any calendar
year. If an error in the reported Net
Receipts or
the
reported number of Products sold by Licensee is discovered as a
result
of such an
examination
and the reported Net Receipts or the reported
Product
sold by Licensee
during the period(s)
examined were in excess of
5% less
than the actual Net Receipts or Product sold by Licensee, as the
case
may be, during such period(s), Licensee (i) shall pay all of
Licensor's
out-of-pocket
expenses related to
such examination, and
(ii)
shall pay
Licensor interest on the amount of such
underpayment,
at the
rate of 10% per annum, from the
date such amount was due and payable until
such
amount is actually paid.
2.4.3 Licensee shall keep adequate records to verify all reports
and
payments
made to Licensor
pursuant to this
Agreement for a period of two
(2) years
following the date of such reports and payments.
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2.5 No
Other Licenses.
The License granted under this Agreement is
specifically set forth herein, and no other licenses are granted
by Licensor to
Licensee by implication or estoppel,
including, but not limited to non-VoIP Uses
of the Patents.
2.6
Reservation Of Rights. All rights not specifically granted to
Licensee
hereunder are reserved by Licensor.
2.7
Restrictions on Export. Licensee acknowledges and agrees that it
shall
not import, export, or re-export Product to
any country in violation of the laws
and regulations of any applicable jurisdiction. Licensee further agrees to
defend, indemnify, and hold Licensor
harmless for any losses, costs, claims, or
other liabilities arising out of Licensee's
breach of this Section.
3. COMPENSATION
3.1
Royalties. Licensee shall pay to Licensor royalties equal to 3% on
its
Net Receipts ("Royalties") or an stock option acceptable by the Licensor in
exchange for the Royalties. Such Royalties shall be due and
payable to Licensor
regardless of whether Licensee collects
payments for Product from its consumers.
3.2 Patent
Costs. In
consideration of the
License granted in Section 2.1
above, Licensee agrees to pay all patent filing,
prosecution
and maintenance
costs related to the Patents as set
forth in Section 4.3
during the
Exclusive
Period, to the extent such costs relate to
the maintenance and
preservation of
the Patents as they relate to VoIP
services.
3.3 Taxes
and Assessments.
3.3.1 In addition to any other payments due under this Agreement,
Licensee
agrees to pay,
indemnify and hold Licensor harmless from any
sales,
Use, excise, import or export, value-added or similar tax or
duty,
and any
other tax not based upon Licensor's net income, including any
penalties
and interest, and all
government permit or license fees and all
customs
and similar fees,
levied upon the Use or
distribution of Product
which
Licensor may incur in respect of this Agreement, and any costs
associated
with the collection or withholding of any of the foregoing
items ("Taxes").
3.3.2 If Licensee fails to pay any Taxes as of the original due
date
for such
Taxes and Licensor receives any assessment or other notice
(collectively the
"ASSESSMENT")
from any governmental
taxing authority
providing
that such Taxes are due from Licensor, Licensor shall give
Licensee
written notice of the Assessment and Licensee shall pay to
Licensor
or the taxing authority the amount set forth as due in the
Assessment within thirty (30) days of receipt
of such written notice from
Licensor.
3.4
Payment Terms.
Royalties shall accrue upon delivery of
Product to a
customer by Licensee and shall be payable
within thirty (30)
days after the end
of each Contract Quarter. Each Royalty payment shall be accompanied by a
statement setting forth in sufficient
detail the basis upon which Royalties were
calculated. Payments and statements shall
be sent to Licensor at the address set
forth in Section 11.12 of this Agreement or such other address as
Licensor may
designate in writing. All payments due under this
Agreement shall be payable in
United States dollars. Conversion of foreign currency to U.S. dollars shall
be
made at the conversion rate existing in the United States (as
reported in the
Wall Street Journal) on the first working day of the month in which
payment is
due. Such payments shall be without
deduction of exchange,
collection or
other
charges, and, specifically, without
deduction of withholding or similar taxes or
other government imposed fees or taxes.
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3.5
Diligence
Requirements. Licensee
shall use its diligent efforts, or
shall cause its Affiliates to use diligent efforts, to develop Product or
Processes and to introduce such Product and Processes into the commercial
market; thereafter, Licensee or its Affiliates shall make such Product and
Processes reasonably available to the
public.
3.6
Record Keeping. Licensee shall maintain, and shall cause its
Affiliates to maintain, complete and
accurate records relating to the rights and
obligations under this Agreement, which records shall contain sufficient
information to permit Licensor to confirm
the accuracy of any reports delivered
to Licensor and compliance in other respects with
this Agreement.
Licensee or
its Affiliates shall retain such records for at
least five (5) years
following
the end of the calendar year to which they
pertain, during which time Licensor
or his appointed agents shall have the
right, at Licensor's
expense, to inspect
such records during normal business hours to verify any reports made or
compliance in other respects under this
Agreement.
Such inspections shall be
conducted at the Licensee's business office, with reasonable notice, and
shall
be conducted no more than twice every
twelve (12) months.
3.7
Purchase Option.
Licensor hereby grants
Licensee an exclusive option
to purchase all right and title in and to the Patent Rights on or after the
fourth anniversary of the Effective Date
through the end of the Exclusive Period
(the "OPTION PERIOD") for a purchase of
Four Million U.S.
Dollars
($4,000,000)
("PURCHASE Price") (the "OPTION"). The Option must be exercised by written
notice from Licensee to Licensor at least
thirty (30) days prior to the proposed
purchase date. Following receipt of such notice
by Licensor, the
parties shall
enter into a purchase agreement for the
Patent Rights on substantially the terms
set forth in this Section 3.7 (the "PURCHASE AGREEMENT") within thirty (30)
days. Pursuant to the Purchase Agreement
and upon delivery of the Purchase Price
to Licensor, Licensor shall file an assignment with respect to the Patent
Rights, and shall take all other actions
deemed reasonably necessary by Licensee
to separate the Patent Rights from the
Patents and to transfer ownership of such
Patent Rights to Licensee. Licensee may notify Licensor in writing at any
time
during the Option Period of its decision not to exercise the Option at which
point the Option will lapse and Licensor shall be free to offer the
Patent
Rights to a Third Party purchaser subject to the terms of this Agreement;
provided, however, that if Licensor should make an
offer to sell or solicit or
receive an offer to buy the Patent Rights
to or from any Third Party for a price
less than the Purchase Price, he shall first be required to offer the
Patent
Rights to Licensee on the same or similar
terms as those
offered to such
Third
Party and Licensee shall have the right to purchase
the Patent
Rights on the
terms presented within thirty (30) days of such notice.
For the avoidance
of
doubt, the parties' obligations under this Agreement shall continue in force
after any notice of exercise of they Option
has been given until
assignment of
the Purchase Price shall have been
effectuated.
The Option may not be
assigned
in whole or in part without the prior
written consent of Licensor.
4.
PATENT PROSECUTION
4.1
Responsibility
for Patent
Rights. Licensee shall prepare, file,
prosecute and maintain the Patents,
including patents, patent applications,
continuations, continuations-in-part and
divisionals having claims covering the
Patent
