LERNOUT & HAUSPIE SPEECH PRODUCTS N.V.
AMENDMENT I
LICENSE AGREEMENT
This Amendment I, effective the 31st day of December, 1998
("Effective Date"), is by and between Lernout & Hauspie Speech
Products N.V. (the "Licensor"), and VASCO Data Security
International, Inc. (the "Licensee"), and hereby amends the Agreement
dated March 25, 1998 between Licensor and Licensee (the "Agreement").
The parties hereto agree as follows:
1. Scope of Amendment
This Amendment I supplements the Agreement to i) add new Development
Software, ii) add additional Designated Application, iii) expand the
prepayment and the term, iv) modify the payment terms and v) initiate
a co-marketing and co-sales effort. In all other respects, the
Agreement as amended is ratified and confirmed, and the terms thereof
shall remain in effect.
2. Existing Development Software, as of the Effective Date
The Agreement is hereby amended to add new Development Software.
Accordingly, new Addenda A-I, attached hereto, shall be added to
Addendum A and become part of the Agreement.
3. Additional Designated Application
The Agreement is hereby amended to add additional Designated
Application. Accordingly, a new Addendum B-I, attached hereto, shall
be added to Addendum B and become part of the Agreement.
4. Additional prepayment/Extension of Term
The Agreement is hereby amended to extend the term with an additional
five (5) years.
The Agreement is hereby amended to expand the prepayment.
Accordingly, Section 1 b) of Addendum C shall be deleted and replaced
as follows:
1.b) LICENSEE hereby commits to a non-refundable pre-payment on
royalties in the amount of US $1,700,000 (One Million Seven Hundred
Thousand US Dollars).
5. Payment Terms
The Agreement is hereby amended to change the payment terms.
Accordingly, Section 3 of Addendum C shall be deleted and replaced as
follows:
3.a) LICENSEE will pay a first non-refundable pre-payment on
royalties to the amount of Six Hundred Thousand US Dollars ($600,000
USD) within Three (3) months after the Effective Date of this
Agreement. This non-refundable prepayment will be credited against
royalty payments as described in this Agreement.
LICENSEE will pay a second non-refundable pre-payment on royalties to
the amount of One Million One Hundred Thousand US Dollars
($1,100,000USD) as follows:
. $450.000 USD will be payable upon C.E.D of this Amendment I.
. $650.000 USD will be payable on or before March 20, 1999.
This non-refundable prepayment will be credited against royalty
payments as described in this Agreement, as amended.
After the minimum committed royalties, the amounts of royalties shall
be paid by LICENSEE to LICENSOR in quarterly basis and shall be
calculated according to section 1 of this Addendum.
b) Payment of Non-Refundable Engineering Fee will be defined when
applicable.
6. Co-marketing and co-sales
The Agreements is hereby amended to include a co-marketing and co-
sales effort for both parties. Accordingly, a new Section 14.11 and
14.12 shall be added and become part of the Agreement.
14.11. Parties agree to use commercially reasonable efforts, upon
mutually agreed terms and conditions, to market the products of
the other party; such co-marketing to be achieved through but
without limitation, joint press releases, promotion on trade
fairs, sharing of existing distribution resources.
14.12. In the course of the first quarter of 1999, both parties will
work out a co-sales plan, in which they will determine which
jointly developed products of one party may be sold by the other
party. Pricing and commercial conditions will also be worked out.
As a guideline similar royalties are provided in the License
Agreement, will be paid by one party to the other, unless
otherwise defined in common agreement between both parties,
depending on market conditions and functionality of these
products.
IN WITNESS WHEREOF, the parties execute this Amendment I by their
duly authorized representatives, effective as of the Effective Date
of this Amendment I.
LERNOUT & HAUSPIE
VASCO Data Security International, Inc. SPEECH PRODUCTS N.V.
By /s/ T. Kendall Hunt By /s/ Gaston Bastiens
Name:___T. Kendall Hunt _________ Name:__Gaston Bastiens___
Title:__Chairman/CEO Title:_President/CEO______
Addendum A-1
Software Functional Specification
1.1 LICENSEE agrees having received the Development Software, having
the following reference:
All existing L&H products, including the following, but not limited
to:
ASR1500/T, all languages commercially available at the Effective Date,
ASR1600/M, all languages commercially available at the Effective Date,
ASR 200 and 300, all languages commercially available at the Effective Date,
TTS 3000, all languages commercially available at the Effective Date,
Speech Coding, but rate 4.8 Kbps.
Voice Xpress and Voice Xpress Pro, all languages commercially
available at the Effective Date.
1.2 Reference is made to the Documentation as provided for the
Development Software.
1.3 Furthermore, by signing this Agreement, LICENSEE accepts that the
Development Software meets the functional specification(s).
1.4 Functional Specifications: as per existing technical
documentation provided by LICENSOR to LICENSEE
1.5 Other LICENSOR's products, or other language version of existing
products, can be added to this agreement, as they become
available. This will be done in common agreement between both
parties. Notwithstanding the above, LICENSEE shall be entitled to
updates of the Development Software delivered hereunder.
Addendum B-1
Designated Application
1. Following are some of the target applications which, incorporating
the run-time software will be developed in common agreement
between both parties:
1) Telephony applications for the banking and remote access sector
using the L&H ASR 1500/T, for command and control functions, in
combination with the VASCO Verification and authentication, using
the VASCO proprietary products, including but not limited to
Cryptech and Advanced Authentication Technologies.
2) PC desktop applications for the banking and remote sector using
the L&H ASR 1600/M, for command and control functions, in
combination with the VASCO Verification and authentication, using
the VASCO proprietary products, including but not limited to
Cryptech and Advanced Authentication Technologies.
3) PC desktop Data security applications based on L&H products for
Access to the application (as per existing License Agreement), in
combination with the VASCO proprietary products, for
authentication.
4) PC desktop Data security applications and banking and remote
access applications using the L&H products for `document
authentication and signature'.
Documents can either be created by keyboard input, or by Voice
input-via dictation.
The exact functionality and specifications of these applications will
be defined jointly by product manager of both parties.
Product managers from both sides will meet at least once per quarter
to identify and define these applications, estimating development
cost and cycle.
Additional applications, using one or more of LICENSEE's technologies
or products can be added to the above list, in common agreement
between both parties.
2. LIMITED EXCLUSIVITY
The following will clarify the limited exclusivity provisions as
mentioned in the License Agreement:
During an initial period of three (3) years, LICENSEE's rights as
defined in article 2 of the License Agreements shall be exclusive as
to the Speaker Verification software for use in PC and network
security applications with authentication and/or signature functions.
During an initial period of three (3) years, LICENSEE shall have the
exclusive distribution rights of the sdk-version of the Speaker
Verification software to customers using the PC and network security
applications with authentication and/or signature functions.
Both parties agree to work out the procedure under which such
distribution shall take place. A fee amounting to 30% of the
revenues/license fees generated hereunder by LICENSOR, will be paid
to LICENSEE.
This exclusivity shall commence on January 1, 1999, and shall remain
for a period of three (3) years, so long as LICENSEE:
a) does not enter into agreements with other speech software
companies
b) makes timely payments to LICENSOR under this Agreements and other
agreements;
The failure to achieve any of the above cumulative conditions shall
immediately revert the exclusivity into a non-exclusivity. This
clause shall remain valid during any extension of the exclusivity
term and shall not be derogated by anything hereunder mentioned.
After two (2) years of the initial three (3) year period, LICENSOR
and LICENSEE shall both agree on the performance criteria, based on
but not limited to market share, which LICENSEE has to meet at the
end of the third year.
At the end of the initial three (3) year period (and each extension
thereof), both parties shall evaluate the results and the commercial
forecasts with a view to extend the exclusivity with one year
periods.
If both parties agree not to extend the exclusivity after any period
hereabove mentioned, both parties agree that the agreement shall
continue on an non-exclusive basis for the term of the Agreement.
LICENSEE acknowledges that the above exclusivity shall not apply to
existing customer base of LICENSOR, as well as to chip and board
manufacturers.