Re: LHSP & Microsoft. The following exerpted from LHSP's recently filed 10-K (starting on pg. 25) - the part that bothers me, even re-reading it a few times, is whether LHSP gave away the store to get the MSFT investment. I can't believe after QDEK that Gaston (who was on board then) would have done so, and any comments or clarifications would be appreciated: (sorry the text is so broken up)
Microsoft. In September 1997, we entered into a strategic alliance with Microsoft to accelerate development of speech products in multiple languages running on Microsoft Windows(R) platforms. As part of this strategic alliance, we entered into a Patent License Agreement with Microsoft, pursuant to which the parties have granted certain patent licenses to each other (the "License Agreement") and a Common Stock Purchase and Shareholders' Agreement (the "Microsoft Purchase Agreement") among us, certain of our affiliates and Microsoft, pursuant to which Microsoft purchased 5,800,840 shares of our common stock at $7.7575 per share for an aggregate of approximately $45.0 million. The purchase price per share paid by Microsoft was determined by multiplying 110% by the average of the closing bid prices of our common stock on the Nasdaq National Market for the 20 trading days preceding the date of purchase. In addition, in connection with this transaction, we issued warrants to Microsoft to purchase 1,714,284 shares of common stock at an exercise price equal to $8.75 per share, which Microsoft exercised in March 1999. The agreement further contemplates that we may further share technologies and cooperate on future development initiatives with Microsoft. In 1998, we continued our relationship with Microsoft and were named as an official partner of the Microsoft Office product line, our automatic speech recognition technology was demonstrated in connection with the launching of Windows(R) 98, and we announced our support for Windows(R)CE.
Under the License Agreement, we granted Microsoft a worldwide, exclusive, perpetual, irrevocable, fully-paid license (including the right to sublicense) under our "Speech" patents to exercise any and all rights with respect to Microsoft open speech platform products, including without limitation the right to manufacture, use, distribute, sell or otherwise transfer products. "Speech"
patents include all issued patents and patent applications that are entitled to an effective filing date within five years of the date of the License Agreement and that claim inventions relating to technology and methodology of speech
recognition, speech understanding, and/or speech synthesis, but excluding technology and methodology relating to natural language processing and machine translation. We also granted Microsoft a worldwide, perpetual, irrevocable,
fully-paid license, exclusive of all parties except us, under our natural language processing patents to make open platform products that use speech recognition, speech understanding, and/or speech synthesis.
Microsoft has granted us a world-wide, non-exclusive, perpetual, irrevocable, fully-paid license under some of its Speech patents to exercise any and all rights with respect to our embedded speech application products which
include speech for execution on special-purpose hardware devices without speech programming interfaces to support additional software applications, including without limitation the right to manufacture, use, distribute, sell or otherwise transfer such products. We may grant manufacturers and distributors the right under some of Microsoft's Speech patents to manufacture and distribute our
embedded speech application products through multiple tiers of manufacture and distribution. Our license under the License Agreement terminates upon transfer of all or substantially all of our assets. Microsoft may terminate our license upon a change of control of the Company.
In connection with Microsoft's investment, we granted Microsoft the right to nominate a candidate for election to our Board of Directors. Mr. Bernard Vergnes currently represents Microsoft on our Board of Directors. Following
Microsoft's exercise of its warrants in March 1999, it held an aggregate of 7,515,124 shares of our common stock, representing approximately 5.29% of our outstanding common stock as of June 8, 2000. |
