Technology License Agreement - U.S. Robotics Access Corp. and 8x8 Inc.
TECHNOLOGY LICENSE AGREEMENT
This Agreement is made between U.S. ROBOTICS ACCESS CORP., a Delaware
corporation, with principal offices at 8100 North McCormick Boulevard, Skokie,
IL 60076-2999, (herein called "USR"); and 8x8, INC., a Delaware corporation,
with principal offices at 2445 Mission College Blvd., Santa Clara, CA 94027
(herein called "8x8"), effective the 5th day of May, 1997 (the "Effective
Date"). The parties include any affiliate of a party; an "affiliate" is
defined as the parent company of a party and any company that is controlled
directly or indirectly by that party or its parent company through more than
fifty percent (50%) ownership, provided such affiliate agrees to be bound by
this agreement.
WHEREAS, 8x8, a developer and a supplier of videoconferencing
products, intends to license certain technology to USR according to these terms
and conditions; and
WHEREAS, USR, a developer and a supplier of modems, certain
information access products and other products, intends to license certain
technology to 8x8 according to these terms and conditions:
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained hereinafter, 8x8 and USR agree as follows:
1. LICENSES.
(a) Licensed Technology. The license from 8x8 to USR
covers:
. the technology that 8x8 has relating to
videoconferencing in a standalone format (i.e. in a
system that is not directly connected to a personal
computer), and thus includes what 8x8 calls its
"videocommunicators," i.e. ViaTV, LCD Phone and
variations on them (such as the Truedox design that
was also displayed during 8x8's presentation on
January 21, 1997), which are herein called the "VC";
VCP chip and current variations relevant to
videoconferencing like LVP, which are herein called
the "VCP";
. any source and object code related to
videoconferencing 8x8 has that will work in the VC,
including H.320, H.323, H.324, and MPEG (other than
on MPP or MPPex, as excluded below) and related
controls of the standalone system, such as the
controls from the telephone keypad, herein called the
"VC Code";
. any technology 8x8 has developed for direct
connection to the personal computer, such as DVC6 or
the Vidus CompressionCam and related technology
(demonstrated to USR by Sanyo, based on its
nonexclusive license of technology from 8x8's
subsidiary, Vidus, Inc.)
. all development tools applicable to the "Licensed
Technology" that 8x8 can provide to USR without
violating copyright or license agreements.
<PAGE> 2
All of the technology described above is herein collectively
called "Licensed Technology."
Excluded from the Licensed Technology is:
. the web browser technology developed by 8x8 with
PlanetWeb, Inc.
. the audio code 8x8 licensed from Signal Processing
Associates ("SPA")
. the modem technology licensed from ELSA GmbH [though
8x8 will use its best efforts to persuade each of
those parties (at the request of USR) to make
available such technology to USR on the same terms
and conditions as such technology is available to 8x8
(in which case thereafter USR will share enhancements
to technology with 8x8 as provided below for the
duration that the parties are sharing enhancements)].
Also excluded from the Licensed Technology is:
. the MPP and MPPex (licensed exclusively to ESS
Technology, Inc. for MPEG and CD Players), and
related MPEG code and software to the extent used on
MPP and MPPex; except that USR can use the MPEG on
the VCP.
The Licensed Technology is as it exists on the Effective Date
in written and electronic documents, including schematics, data base tapes,
software, source and object code for delivery to USR, and, except for the
foregoing, does not include delivery of any physical products; provided,
however, future modifications and enhancements to the Licensed Technology
pursuant to this Agreement shall become part of the "Licensed Technology."
(b) Grant: 8x8 will immediately deliver to USR the
Licensed Technology and hereby grants to USR a nonexclusive (except as set
forth in Section 4 hereof), nonassignable (except as allowed under Section 14
hereof) world-wide license to use the Licensed Technology and to make, have
made, use, market and sell products containing or embodying such Licensed
Technology, and enhancements as described below, including rights under any 8x8
patents or copyrights relevant thereto (including after-acquired rights).
USR is free to use and market the Licensed Technology as
follows:
. Sell systems (what 8x8 calls its
"videocommunicators," i.e., ViaTV, LCD Phone and
variations on them) for itself (USR) or to Original
Equipment Manufacturers under their brand names
("OEMs"), including selling systems without casing
for incorporation into other manufacturers products
such as television sets.
. Sell direct computer products (such as DVC6 and
Compression Cam) for itself (USR) or to Original
Equipment Manufacturers under their brand names
-2-
<PAGE> 3
("OEMs"), including selling systems for incorporation
into other manufacturers products.
. Sell "daughter" cards or partial boards as subsystems
for another manufacturer's video solution.
USR is free to use the 8x8 H.323 stack and the H.245 and H.223
code for incorporation into its own products of all types.
(c) Consideration: In consideration therefor, USR will
pay 8x8 [*] immediately on execution of this Agreement.
(d) Royalty: On any system that USR sells that
incorporates any Licensed Technology (excluding USR products in which the only
use of the Licensed Technology is the incorporation of the 8x8 H.323 stack, the
H.245 code or the H.223 code), USR agrees to pay 8x8 the following royalties:
<TABLE>
<CAPTION>
CUMULATIVE NUMBER OF SYSTEMS SOLD BY USR UNDER THIS
AGREEMENT ROYALTY PER SYSTEM OWED 8x8 ON THOSE SYSTEMS
<S> <C>
1 - 20,000 [*]
20,001 - 40,000 [*]
40,001 - 60,000 [*]
60,001 - 80,000 [*]
80,001 - 100,000 [*]
100,001 - 120,000 [*]
120,001 - 140,000 [*]
140,001 - 160,000 [*]
160,001 - 180,000 [*]
180,001 - 200,000 [*]
200,001 - 220,000 [*]
>220,000 [*]
</TABLE>
If USR elects to manufacture the VCP, then for each such chip
incorporated into a system and sold (or sold on the open market as permitted
herein if the option is exercised), USR agrees to pay 8x8 the following
royalties:
____________________________________________________
[*] Confidential treatment requested.
-3-
<PAGE> 4
<TABLE>
<CAPTION>
CUMULATIVE NUMBER OF CHIPS SOLD BY USR UNDER THIS
AGREEMENT ROYALTY/CHIP OWED 8x8 ON THOSE CHIPS
<S> <C>
1 - 20,000 [*]
20,001 - 40,000 [*]
40,001 - 60,000 [*]
60,001 - 80,000 [*]
80,001 - 100,000 [*]
100,001 - 120,000 [*]
120,001 - 140,000 [*]
140,001 - 160,000 [*]
160,001 - 180,000 [*]
180,001 - 200,000 [*]
200,001 - 220,000 [*]
>220,000 [*]
</TABLE>
Provided, however that the chip royalty will be
proportionately reduced by the die area on the chip attributable exclusively to
enhancements by USR. Also, the [*] royalty on the chip is not due on any chip
purchased by USR from 8x8.
If USR uses the 8x8 H.323 stack, the H.245 code or the H.223
code on some system other than 8x8's chip USR agrees to pay 8x8 a royalty of
[*] per port (or end user customer); provided further, that USR does not owe
such [*] royalty if the H.323 stack, the H.245 code or the H.223 code is
developed independently of 8x8's technology in good faith ("clean room"
environment) and used on systems independent of 8x8's chip; and provided
further, that with this exception, the VC Code may only be used on the VCP
subject to royalty above.
Such royalty will be paid within 45 days of the end of each
USR fiscal quarter. Royalties shall not be due, and if already paid shall be
credited to USR, for systems and chips sold by USR but returned by the
purchaser. 8x8 is entitled to audit the records of USR through 8x8's auditor,
provided that (a) such audit shall occur no more than once per year, and (b)
such auditor (i) shall be acceptable to USR and (ii) shall have executed an
appropriate nondisclosure agreement. If such an audit discloses a deficiency
in the royalty paid of greater than five percent (5%), then USR will pay the
reasonable cost of such audit plus interest on the deficiency from the time due
until paid of twelve percent (12%) simple interest per annum.
USR will give 8x8 in the report each quarter a good faith
estimate of the number of systems that were for direct computer products (DVC6
or CompressionCam).
(e) Grant back from USR: USR will provide 8x8 theUSR
technical and other confidential and proprietary information that USR
determines is necessary or useful for 8x8 to improve
____________________________________________________
[*] Confidential treatment requested.
-4-
<PAGE> 5
the modem and speakerphone functionality for the video communicator
(hereinafter "USR Information") and USR hereby grants to 8x8 a paid up,
royalty-free, nonexclusive, nonassignable world-wide license to use the USR
Information to make, have made, use or sell products incorporating the USR
Information; provided, however, (i) such products shall include 8x8's
videophone technology only, and not direct computer products such as DVC6 or
CompressionCam; (ii) 8x8 shall use the USR information only for its own branded
system products, and shall not sublicense or otherwise disclose the USR
information to third parties for use in their products or for any other reason;
and (iii) such improvements shall be included in the Licensed Technology and
thereby licensed to USR for incorporation into USR's products. Notwithstanding
the foregoing, in the event USR sells one or more of its products to OEMs, then
8x8 shall thereafter have the right to sell its own similar products to OEMs.
Upon determining that it will sell its product(s) to OEMs, USR shall give 8x8
notice of that decision.
(f) Source Code: All source code licensed hereunder,
whether from 8x8 to USR or from USR to 8x8, shall, in addition to the terms and
conditions of this Agreement, be subject to the terms of the Source Code
License in the form of Exhibit A attached hereto.
2. LICENSING OF ENHANCEMENTS.
Each party agrees [*] to license to the other party any enhancements
it makes to the Licensed Technology. (Such enhancements created by 8x8 shall
then become Licensed Technology.) Such enhancements shall be delivered
promptly upon their development, until USR discontinues the licensing of such
enhancements by both parties by providing notice to 8x8 (but enhancements
delivered by either party up to the date of such notice shall continue to be
licensed); provided, however, that (a) 8x8 will in any event deliver the first
taped out version of the VCPex, and (b) USR will in any event deliver to 8x8
the initial enhancements it makes to the VCP, VCPex, or VC relating to modem
and speakerphone technology, including porting V.34 to 8x8's chip. (All such
enhancements by USR are hereinafter called "USR Enhancements.") Such
deliveries by 8x8 and USR, along with related development tools (to the extent
delivery can be done without paying a fee to third parties or violating other
agreements) will be in the same form and completeness as similar prior
deliveries by 8x8 of Licensed Technology, and with engineering support as
provided below. Nothing herein entitles USR to receive enhancements developed
by other licensees of 8x8, and nothing herein entitles 8x8 to sublicense,
distribute or otherwise disclose USR's enhancements to other licensees of 8x8;
provided further that 8x8 will limit production of chips with USR Enhancements
to incorporation on finished systems produced (made or have made) and sold or
leased by 8x8, and in no event will 8x8 sell or otherwise make available on the
open market such components in component form or on printed circuit boards for
incorporation into the systems of others; and thus, the chip that 8x8 sells on
the open market to its other chip customers will have deleted from it any USR
Enhancements. After June 30, 2000, either party may elect to terminate sharing
of enhancements developed after date of such termination.
____________________________________________________
[*] Confidential treatment requested.
-5-
<PAGE> 6
3. ENGINEERING SUPPORT.
8x8 will provide engineering support to USR, for all Licensed
Technology, including all such technology initially delivered to USR and all
enhancements. Such engineering support shall be sufficient to enable USR
quickly to implement the Licensed Technology and enhancements for demonstration
purposes and to enable USR to achieve its objectives of volume shipments as
soon as possible. USR shall provide comparable engineering support to 8x8 for
the USR Enhancements. [*] If the receiving party asks the delivering party at
any time for engineers or others to travel to the receiving party's location to
support the technology delivery, and the other party agrees to do so, receiving
party will pay the reasonable costs associated therewith, including the
traveling party's labor costs for such personnel as well as travel (coach class
on the airplane), meals and lodging.
4. EXCLUSIVITY.
8x8 agrees that for a period of one year beginning on the Effective
Date hereof it will not grant to any third party any licenses to use the
Licensed Technology, or any portion thereof, or to make, have made, use, market
or sell products with such Licensed Technology, or any portion thereof,
provided 8x8 may still deliver to its customers object code with chips and
reference designs for boards; 8x8 may deliver to its customers example source
code needed by customers for integration of 8x8's chips into customer products,
including PC driver code and microprocessor controller code for controlling VCP
applications (including changing display size, logo, trademark, menu, options
and features); 8x8 can honor currently outstanding licenses; and 8x8 can sell
to OEMs its system level products (whether partial boards, complete boards or
partial or complete systems branded as the customer desires) for resale in that
form or incorporated in other systems (like TV) as the customer desires. None
of the delivery of source or object code to customers shall include USR
Information other than as allowed in section 1(c).
5. VCP PRICING.
8x8 agrees to sell VCP chips to USR (as enhanced with enhancements
that become part of the Licensed Technology as described above) at a price [*].
USR is entitled to audit the records of 8x8 through USR's auditor, solely to
verify 8x8 pricing, provided that (a) such audit shall occur no more than once
per year, and (b) such auditor (i) shall be acceptable to 8x8 and (ii) shall
have executed an appropriate nondisclosure agreement. If such an audit
discloses a pricing discrepancy unfavorable to USR of greater than five percent
(5%), then 8x8 will pay the reasonable costs of such audit plus interest on the
discrepancy of twelve percent (12%) simple interest per annum.
6. WARRANTIES
(a) 8x8 warrants that (i) all portions of the Licensed
Technology owned by third party licensors of 8x8, if any, are provided to USR
hereunder pursuant to appropriate authority of those third
____________________________________________________
[*] Confidential treatment requested.
-6-
<PAGE> 7
parties, and (ii) 8x8 owns all rights in and to all other portions of the
Licensed Technology, free of any liens, claims, encumbrances or other
restrictions that would impair USR's rights under this Agreement. The
foregoing warranties exclude any warranty that the Licensed Technology does not
infringe the intellectual property rights of any third party. However, 8x8
warrants that to the best of its knowledge the Licensed Technology does not
infringe the intellectual property rights of any third party.
(b) 8x8 warrants that the Licensed Technology shall be
free of material defects and shall function in conformance with its published
documentation and other specifications customarily provided to 8x8's licensors
for a period of thirty (30) days from the date of delivery of the Licensed
Technology. During such thirty-day period, USR may return the Licensed
Technology to 8x8 for a full refund of all moneys paid to 8x8 hereunder if USR
is not satisfied with the Licensed Technology.
(c) 8x8 represents and warrants that as of the effective
date of this agreement it has received no notice that the Licensed Technology
infringes any patent, copyright, trade secret or other intellectual property
right (collectively "Intellectual Property Rights") of any third party, though
8x8 has incorporated a patent license from DSP Group and is considering
negotiating licenses of patents possibly applicable to G.723 (and USR would
need to consider negotiating similar licenses for its benefit). 8x8 will
immediately advise USR of any such notice received by 8x8 in the future as it
applies to Licensed Technology, and whether the enhancement was done by 8x8 or
USR; likewise, USR will notify 8x8 of any notice USR receives where there is a
claim that applies to Licensed Technology, and whether the enhancement was done
by 8x8 or USR. Each party bears the risk that some party claims or sues it
with respect to alleged infringement of intellectual property rights of others;
provided that the other party will cooperate in such litigation to the extent
it can be helpful in defending against such claims of other third parties.
(d) EXCEPT AS SET FORTH IN SECTIONS 6(a), (b) AND (c)
ABOVE, NEITHER PARTY MAKES ANY WARRANTIES, EXPRESS OR IMPLIED, AS TO THE
QUALITY, PATENTS OR COPYRIGHTS OF ANYTHING DELIVERED HEREUNDER AND
ENHANCEMENTS, EXCEPT AS SPECIFIED IN THIS AGREEMENT. EACH PARTY MAKES NO
INDEMNITY IN THE EVENT THAT THE OTHER PARTY IS SUED FOR ANYTHING RELATED TO THE
LICENSED TECHNOLOGY OR ENHANCEMENTS HEREUNDER EXCEPT AS SPECIFIED IN THIS
AGREEMENT, BUT EACH PARTY WILL COOPERATE IN THE EVENT OF SUCH LITIGATION TO
ASSIST THE OTHER PARTY TO DEFEND SUCH LITIGATION. THE PARTIES SPECIFICALLY
DISCLAIM LIABILITY FOR CONSEQUENTIAL DAMAGES.
7. CONFIDENTIAL INFORMATION. The parties will keep confidential
any information provided to it by the other party that is proprietary to the
other party and marked confidential; provided such information shall not be
considered proprietary once it is in the public domain by no fault of the other
party. Such confidentiality will be maintained by the other party with the
same care that such party would use for its own confidential information, but
in any event with reasonable care.
-7-
<PAGE> 8
8. RECRUITING. Until such time as the parties cease to share
enhancements, each party agrees not to directly solicit the employment, either
temporary, full time or consultancy, of any person after the effective date who
was employed by the other party within one year of the date of such potential
hiring.
9. COMPLETE AGREEMENT. This is a complete agreement binding upon
the parties, their heirs, successors and assigns. It may only be modified in
writing signed by officers of both parties.
10. GOVERNING LAW. This Agreement shall be governed by the laws
of the State of Delaware, excluding its choice-of-law provisions.
11. PUBLIC STATEMENTS. The parties agree immediately to publish a
joint press release stating that Licensee has licensed 8x8's videoconferencing
technology, and 8x8 endorses USR's "x2" and related technologies. Further,
either party is free to file with the SEC any document required to be filed
there on advice of counsel (redacted in a form advised by counsel). Other
public statements and press releases related to this licensing agreement are
subject to approval in advance by both parties; neither party shall use the
name of the other party without advance approval.
12. INDEPENDENT CONTRACTORS. The parties are independent
contractors, and nothing herein shall be deemed to create any agency, joint
venture or partnership relationship between them. Neither party shall have the
right to bind the other to any obligation, nor have the right to incur any
liability on behalf of the other.
13. FORCE MAJEURE. Neither party shall be liable to the other for
delay or failure to perform if and to the extent such delay or failure to
perform is due to causes beyond the reasonable control of the party affected.
14. ASSIGNMENT. Neither party shall assign this Agreement or its
rights hereunder without the prior written consent of the other party, except
to an affiliate of that party; provided, however, in the event of a change in
control of one party through a merger, consolidation or other business
combination or acquisition by or with a person or entity a material portion of
whose business is the sale or licensing of products that are competitive with
products of the other party, the other party shall have the right to terminate
the licenses granted by both parties hereunder. Notwithstanding the foregoing,
8x8 agrees that USR's parent company's merger transaction with 3COM, as
previously announced to the public, does not give rise to any such termination
right of 8x8.
15. NON-WAIVER. No course of dealing or failure of either party
to enforce strictly any term, right, obligation or provision of this Agreement
shall be construed as a waiver of such provision.
16. SEVERABILITY. If any provision of this Agreement shall be
held invalid or unenforceable, such provision shall be deemed deleted from the
Agreement and replaced by a valid and enforceable provision that achieves, as
much as possible, the same purpose, and the remaining provisions of the
Agreement shall continue in full force and effect.
-8-
<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Agreement.
U.S. ROBOTICS ACCESS CORP. 8x8, INC.
By: /s/ Michael S. Seedman By: /s/ Joe Parkinson
---------------------------------- ---------------------------------
Name: Seedman Name: Joe Parkinson
-------------------------------- -------------------------------
Title: SVP-GM Title: Chairman
------------------------------- ------------------------------
Date: May 12, 1997 Date: May 5, 1997
-------------------------------- -------------------------------
-9-
<PAGE> 10
EXHIBIT A
SOURCE CODE LICENSE
This Source Code License ("License") is effective this _____ day of
____________, 19__, by and between ___________________________ ("Licensor") and
___________________________ ("Licensee"). This License is an addendum to the
Technology License Agreement between the parties dated _______________
("Agreement"), and all Source Code licensed hereunder is subject to all terms
and conditions of that Agreement as well as those terms and conditions set
forth below. In the event of any conflict or inconsistency between the
Agreement and this License, this License shall take precedence.
1. License Grant. Licensor grants to Licensee, and Licensee
accepts, a license to use internally and copy the Source Code described in
Exhibit I attached hereto solely for the purpose of developing the products
described in the Agreement.
2. Restrictions.
2.1 Licensee may make a reasonable number of copies of
the Source Code solely for its own internal use under the terms of this
License, provided that all legal notices set forth on the Source Code are
reproduced on such copies.
2.2 Licensee shall limit access to the Source Code to
those of its employees who have a need to know for the purpose of enabling
Licensee to perform under this License and the Agreement. Licensee shall
ensure that all of its employees given access to the Source Code shall be bound
by Licensee's standard confidentiality agreement, copies of which may be
requested by Licensor upon demand, and which shall contain nondisclosure and
usage restrictions consistent with those set forth herein.
2.3 Except in furtherance of the license granted above,
Licensee shall not (i) modify, alter or prepare derivative works based on the
Source Code or (ii) engage in or cause the reverse engineering, disassembly or
decompilation or similar manipulation of the Source Code. Further, Licensee
acknowledges that it shall not lend, sell, assign, sublicense, lease,
hypothecate, disclose, disseminate or otherwise transfer the Source Code to any
third party in any media or permit any third party to use, execute, reverse
engineer, disassemble, decompile or engage in any similar manipulation of the
Source Code or any part thereof.
2.4 Notwithstanding the earlier termination of this
License, the obligations of this section shall remain in effect until such time
as the Source Code becomes publicly known, through no act or failure to act on
Licensee's part.
3. Ownership of Source Code. Source Code and all copies, in
whole or in part, and all additional materials provided therewith, as described
in Exhibit I, are and shall remain the property of Licensor. This Agreement
grants no rights other than those set forth herein.
<PAGE> 11
4. Export Control. Both parties recognize that an export license
must be obtained before the Source Code can be exported and will make all
reasonable efforts to obtain such license. Licensee will not transfer any
technical information that it receives from Licensor or products made using
such information to any country prohibited from obtaining such data by the U.S.
Department of Commerce Export Administration Regulations without first
obtaining a validated export license, and Licensee will otherwise comply with
all export control laws and regulations of the United States.
5. General. This Agreement shall be governed by the laws of the
State of Delaware. This License and the Agreement collectively comprise the
complete and exclusive agreement between the parties relating to this subject
matter and no amendments shall be effective unless in a writing signed by both
parties.
LICENSOR: LICENSEE:
By:__________________________________ By:_________________________________
Name:________________________________ Name:_______________________________
Title:_______________________________ Title:______________________________
Date:________________________________ Date:_______________________________
-2-
<PAGE> 12
EXHIBIT I
TO
SOURCE CODE LICENSE
Source Code to be provided by Licensor:
Additional materials to be provided by Licensor: