Document:

Exhibit 10.8

 

[*]                                 Text redacted pursuant to application for
Confidential Treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended, and filed separately with the Securities and Exchange Commission.

 

PATENT LICENSE AGREEMENT

 

THIS PATENT LICENSE
AGREEMENT (“License Agreement”), dated for reference December 31, 2004 (the
“Execution Date”), is entered into by and between AudioFAX IP LLC, a Georgia
limited liability company (“AudioFAX”), and Interactive Intelligence Inc. an
Indiana corporation (“Interactive Intelligence”), as of the date on which this
License Agreement has been fully executed by all of the parties hereto (“Effective
Date”).

 

WHEREAS,
AudioFAX owns certain patents and desires to grant to Interactive Intelligence
a license under the claims of the Licensed Patents;

 

WHEREAS, Interactive
Intelligence desires to obtain a license from AudioFAX under the claims of the
Licensed Patents.

 

NOW,
THEREFORE, in consideration of the foregoing and the respective promises and
covenants contained in this License Agreement, AudioFAX and Interactive
Intelligence hereby agree as follows:

 

1.                                       Definitions.

 

The
following terms shall have the meanings set forth below:

 

1.1                                 Change of Control.  “Change of Control” means the acquisition,
directly or indirectly, by any person, entity or group of more than fifty
percent (50%) of voting power of the voting stock of Interactive
Intelligence.  “Change of Control” shall
also mean any transaction in which any person, entity or group acquires, 

 

 

directly
or indirectly, the power to elect a majority of the Board of Directors of
Interactive Intelligence.

 

1.2                                 Change Event.  “Change Event” means a Change of Control or
any transaction described in Paragraphs 10, 11.1, 11.2 or 11.3 below.

 

1.3                                 Excluded Market Products.  “Excluded Market Products” means any product
or service made for, used by or sold directly or indirectly to any Person who
owns or controls or operates one or more hotels, motels, or similar businesses
in the lodging industry identified by the same Standard Industrial
Classification (1987 ed.) for the sole purpose of providing in-room
guest-related services to guests who are lodging with that Person.  Such guest-related services are not intended
to include back office or administrative uses. 
For the purpose of this definition only, “Person” means an individual, a
corporation, a partnership, an association, a limited liability company, a
trust, any unincorporated organization or a government or a political
subdivision thereof.

 

1.4                                 Licensed Patents.  “Licensed Patents” means United States Patent
No. 4,994,926, No. 5,291,302, No. 5,459,584, No. 6,643,034, and No.
6,785,021; Canadian Patent No. 1329852 and No. 2101327; and any divisional,
continuation, continuation-in-part, reexamination, reissue or foreign
counterpart of any of these patents; and any patent owned by AudioFAX that
issues from a patent application pending before a patent office on the
effective date and any divisional, continuation, continuation-in-part,
reexamination, reissue or foreign counterpart of any such patent.

 

2

 

1.5                                 Interactive Intelligence’s Licensed Products.  “Interactive Intelligence’s Licensed Products”
means all products, including software and hardware, and services sold by
Interactive Intelligence and/or its Subsidiaries, which products and services
are covered by one or more claims of the Licensed Patents.

 

1.6                                 First [*] Date.  “First [*] Date” means the date on which Interactive Intelligence and/or
its Subsidiaries reports in its and/or their financial statements [*] in the aggregate during [*] consecutive fiscal quarters.

 

1.7                                 Second [*] Date.  “Second [*] Date” means the date on which Interactive Intelligence and/or
its Subsidiaries reports in its and/or their financial statements [*] in the aggregate during [*] consecutive fiscal quarters.

 

1.8                                 Third [*] Date.  “Third [*] Date” means the date on which Interactive Intelligence and or
its Subsidiaries reports in its and/or their financial statements [*] in the aggregate during [*] consecutive fiscal quarters.

 

1.9                                 Subsidiary. 
“Subsidiary” means a corporation, partnership, limited liability
company or other legal entity currently Controlled by Interactive Intelligence,
but only for so long as such Control exists.  

 

1.10                           Controlled/Control.  “Controlled” or “Control” means the
ownership of more than fifty percent (50%) of the voting stock of a Subsidiary
or other legal entity.

 

2.                                       License.

 

2.1                                 Grant.  AudioFAX grants to Interactive Intelligence a
worldwide, non-exclusive, non-divisible, fully paid-up license under the claims
of the Licensed Patents to import, make, use, offer to sell or sell Interactive
Intelligence’s Licensed Products, except as limited herein.  This license does not include any license or 

 

3

 

right
to import, make, use, offer to sell or sell any Excluded Market Products or any
products or services that are not Interactive Intelligence’s Licensed
Products.  This license does not include
any right to grant or issue sub-licenses except as set forth in
Paragraph 2.2 below.  Any other
attempt to grant or issue sub-licenses without the express written consent of
AudioFAX, which may be withheld by AudioFAX for any reason, shall be void.  This license shall become effective only upon
Interactive Intelligence’s full and timely compliance with the terms of
Paragraphs 4 and 5 below.

 

2.2                                 Sub-licenses.  Interactive Intelligence may grant a
sub-licenses to any or all of its Subsidiaries and Interactive Intelligence’s
and such Subsidiaries’ respective customers, resellers, distributors and value
added resellers (“VARs”) of Interactive Intelligence’s Licensed Products;
provided, however, that each of the following conditions is
met:  (a) said sub-license shall be strictly limited to the
re-sale or use of Interactive Intelligence’s Licensed Products only;
(b) said sub-license is entirely derivative of and dependant on the
license and rights granted in this License Agreement to Interactive
Intelligence; and (c) said sub-license is subject to all of the terms,
conditions, restrictions and definitions set forth in this License
Agreement;  (d) said sub-license granted
to a Subsidiary shall terminate on the date such Subsidiary ceases to be a Subsidiary;
and (e) said sub-license shall terminate upon any termination of the
License Agreement or the license granted herein to Interactive Intelligence;
provided, however, said sub-license granted prior to such termination shall
survive with respect to those units of Interactive Intelligence’s Licensed
Products sold before termination.

 

4

 

3.                                       Records.

 

Interactive Intelligence, and any assignee,
transferee, successor and person or entity controlling Interactive
Intelligence, shall furnish to AudioFAX once per year appropriate and relevant
information that AudioFAX may reasonably request to enable AudioFAX to
determine which products and services are covered under this License Agreement
and whether the First [*] Date,
Second [*] Date and Third [*] Date has occurred.

 

4.                                       License Fee.

 

In consideration of the
license granted herein, Interactive Intelligence shall pay and deliver to
AudioFAX a License Fee as follows: 
Interactive Intelligence shall pay to AudioFAX a non-refundable license
fee in the total amount of One Million Dollars ($1,000,000.00) (“License Fee”),
to be paid by Interactive Intelligence and received by AudioFAX by wire
transfer in the following installments on or before the following dates:

 

	
  Payment Amount

  	
   

  	
  Due Date

  
	
   

  	
   

  	
   

  
	
  Payment 1: US $275,000.00

  	
   

  	
  January 24, 2005

  
	
   

  	
   

  	
   

  
	
  Payment 2: [*]

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  
	
  Payment 3: [*]

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  
	
  Payment
  4: [*]

  	
   

  	
  [*]

  

 

5.                                       Processing Fee.

 

Interactive Intelligence
shall pay to AudioFAX a one-time, non-refundable license processing fee of
Twenty-Five Thousand Dollars (US $25,000.00) (“Processing Fee”).  The Processing Fee shall be paid by
Interactive Intelligence and received by AudioFAX by wire transfer on or before
January 24, 2005.

 

5

 

6.                                       Late Payment Charge.

 

Payments
provided for in this License Agreement when overdue, shall be subject during
the delinquency period to a late payment charge calculated at a rate of
interest equal to one and one quarter percent (1.25%) per month; provided,
however, that if the amount of such late payment charge exceeds the maximum
permitted by law for any such charge, such charge shall be reduced to such
maximum amount.

 

7.                                       Taxes.

 

AudioFAX
is not responsible for any sales, use, value-added, personal property or other
taxes imposed on Interactive Intelligence’s manufacture, use, possession, offer
of sale or sale of Interactive Intelligence’s Licensed Products.  Each party shall be solely responsible for
any taxes based on its own net income.

 

8.                                       Term and Termination.

 

8.1                                 The
term of this License Agreement shall be from the Effective Date until the
expiration of the last to expire of the Licensed Patents.

 

8.2                                 AudioFAX
may terminate this License Agreement after written notice to Interactive
Intelligence that Interactive Intelligence has materially breached any of the
terms and conditions of this License Agreement, and Interactive Intelligence
fails to cure such breach within thirty (30) days after receipt of such notice.

 

8.3                                 This
License Agreement may be, without opportunity for cure, immediately and
automatically terminated at AudioFAX’s option if full and timely payment of the
License Fee has not been made to AudioFAX in accordance with Paragraphs 4 and 5
above.

 

8.4                                 In
the event of termination of this License Agreement, Interactive Intelligence
shall not be entitled to a refund of any payments made to AudioFAX.

 

6

 

8.5                                 This
License Agreement may be terminated by AudioFAX, in its sole discretion, if a
petition in Bankruptcy or for receivership or liquidation of Interactive
Intelligence is filed or an assignment is made for the benefit of creditors of
Interactive Intelligence.

 

9.                                       Limitations.

 

9.1                                 Nothing
contained in this License Agreement shall be construed as creating any form of
license or rights under any copyrights, mask works, trademarks, tradenames,
service marks, service names, trade secrets or confidential information owned
or controlled by AudioFAX.

 

9.2                                 Disclaimer.  ALL WARRANTIES EXPRESSLY SET FORTH HEREIN, IF
ANY, ARE IN LIEU OF ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED (INCLUDING
THE IMPLIED WARRANTIES OF FITNESS FOR PARTICULAR USE OR OF MERCHANTABILITY) OR
ASSERTED TO ARISE BY IMPLICATION UNDER ANY STATUTE, RULE OR REGULATION OF ANY
JURISDICTION.  ALL SUCH OTHER WARRANTIES
ARE HEREBY DISCLAIMED.

 

9.3                                 Marking.  Interactive Intelligence shall permanently
mark the user manuals and materials associated with Interactive Intelligence’s
Licensed Products, in the manner required by 35 U.S.C. § 287, with the
numbers of the United States and Canadian Licensed Patents.  Interactive Intelligence may advertise or
reference the fact that Interactive Intelligence’s Licensed Products are
licensed under the Licensed Patents and that such patents are owned by AudioFAX
but, except as expressly provided herein, shall not otherwise use the name or
any trademark or servicemark of AudioFAX to market, advertise or promote
Interactive Intelligence’s Licensed Products or any other products, or
services, without AudioFAX’s express written consent.

 

7

 

10.                                 Transfer.

 

AudioFAX
may freely assign and transfer any or all of its rights and obligations under
this License Agreement and any or all of its rights and obligations in one or
more of the Licensed Patents without Interactive Intelligence’s approval.  The license, rights and obligations of
Interactive Intelligence arising under this License Agreement are personal to
Interactive Intelligence.  Interactive
Intelligence may not assign or transfer (collectively, “Transfer”) any of its
license, rights or obligations granted under this License Agreement, except as
set forth below in this Paragraph 10. 
Any attempted Transfer not specifically permitted by this Paragraph 10,
whether by operation of law or otherwise, shall be void.  Interactive Intelligence may Transfer on one
occasion not less than all of Interactive Intelligence’s license, rights and
obligations arising under this License Agreement to the third party purchaser
of Interactive Intelligence, which purchaser acquires all or substantially all
of the assets of Interactive Intelligence or is the party into which
Interactive Intelligence merges (“Third Party Successor”).  The license and rights that may be
Transferred to said Third Party Successor shall only cover and apply to
Interactive Intelligence’s Licensed Products as provided by Interactive
Intelligence and, in any event, shall not cover and apply to the products,
services, technology, assets or business operations traceable to the Third
Party Successor or its subsidiaries or affiliates.  Once such a permitted Transfer has occurred,
no further Transfer by the Third Party Successor, by operation of law or
otherwise, shall be permitted and the Third Party Successor shall be bound by
all terms, conditions, restrictions and definitions set forth in this License
Agreement.  For purposes of this
Paragraph 10, the term “Transfer” specifically (a) excludes any Change in
Control and any transaction described in Paragraph 11.2 or Paragraph 11.3
below; and (b) includes Transfers through mergers in which Interactive
Intelligence is not the surviving entity.

 

8

 

11.                                 Certain Transactions.

 

11.1                           Change in Control.  In the event there is a Change in Control,
then the license and rights granted to Interactive Intelligence under this
License Agreement shall only cover and apply to Interactive Intelligence’s
Licensed Products [*] as
provided by Interactive Intelligence and, in any event, shall not cover or
apply to the products, services, technology, assets or business operations
traceable to the new owner or controlling company or the subsidiaries or
affiliates thereof, unless AudioFAX, in its sole discretion, elects otherwise
in writing.  Any Transfer to Interactive
Intelligence by the new owner or controlling company or the subsidiaries or
affiliates thereof of products, services, technology, assets or business
operations shall be treated as an acquisition by Interactive Intelligence under
Paragraph 11.3 below.  After any Change
of Control, Interactive Intelligence shall continue to be subject to all terms,
conditions, restrictions and definitions set forth in this License
Agreement.  Except as provided in this
Paragraph 11.1, nothing in this Paragraph 11.1 shall limit, expand or otherwise
modify the terms and conditions of Paragraph 10 above.

 

11.2                           Spin-offs.  In the event an Interactive Intelligence
business unit, division or operation or its products, services, technology or
assets, which is rightfully operating under the license and rights granted in
this License Agreement (“Enterprise”), is [*] stock distribution in which the Controlling shareholders of
such Enterprise are the same both immediately before and immediately after such
distribution (“Distributed Enterprise”), and [*] is licensing to users is the same as the technology developed
by Interactive Intelligence, said [*]
which shall be [*].

 

9

 

[*] shall be, on a continuing basis, [*] used to determine whether the [*]. 
In the event [*] is
otherwise sold, transferred or assigned to, or merged with a party other than
the Third Party Successor (“Divested Enterprise”), and the underlying
technology that said Divested Enterprise is licensing to users is the same as
the technology developed by Interactive Intelligence, then said Divested
Enterprise [*] upon the written
consent of AudioFAX [*].  [*]
shall be, on a continuing basis [*]
used to determine whether [*].

 

11.3                           Acquisitions By Interactive Intelligence.  In the event Interactive Intelligence
acquires, or remains as the surviving entity in a merger with, another company
or business, or acquires products, services, technology, assets or business
operations of said company or business (“Acquired Enterprise”), then the license
and rights granted to Interactive Intelligence under this License Agreement
shall not apply to or cover any of said Acquired Enterprise, or the products,
services, technology, assets or business operations traceable to same, without
the express written consent of AudioFAX [*] provided that in the event [*] Interactive Intelligence shall be [*] following an acquisition for the elimination of the Acquired
Enterprise’s products that include technology covered by the Licensed
Patents.  During such [*] as the case may be [*] such products [*] requirement of [*].

 

11.4                           Notice of Change Event.  Interactive Intelligence shall give notice to
AudioFAX of any Change Event within at least thirty (30) days prior to the
effective date of any Change Event.

 

11.5                           Future Negotiations.  Upon the request of Interactive Intelligence,
AudioFAX will negotiate in good faith with Interactive Intelligence, the Third
Party 

 

10

 

Successor
or the third parties described in Paragraph 11.2 or 11.3 above, regarding
the terms and conditions of a patent license agreement to cover products,
services, technology, assets or business operations, excluded from coverage
under Paragraphs 10 of this License Agreement.

 

12.                                 General Provisions.

 

12.1                           Choice of Law.  This License Agreement will be governed by,
and construed and interpreted according to, the substantive laws of the State
of Georgia.

 

12.2                           Choice of Forum and Attorneys’ Fees.  Any claim or action arising in any way out of
this License Agreement or the Licensed Patents must be brought in the United
States District Court, Northern District of Georgia, Atlanta Division or, if
subject matter jurisdiction cannot be obtained in that court, in any court of
competent jurisdiction sitting in Cobb County, Georgia.  AudioFAX and Interactive Intelligence hereby
submit to the jurisdiction and venue of said courts for these purposes and
waive all defenses relating to said jurisdiction and venue.  In the event of any litigation or claim
relating to this License Agreement or the Licensed Patents, the prevailing
party shall be entitled to an award of reasonable attorneys’ fees and expenses.

 

12.3                           Entire
Agreement.  This License
Agreement and the contemporaneous written agreement of Interactive Intelligence
regarding disclosure of this License Agreement, is the final and entire
agreement between the parties relating to their subject matter and supersedes
any and all prior or contemporaneous discussions, statements, representations,
warranties, correspondence, conditions, negotiations, understandings, promises
and agreements, oral and written, with respect to such subject matter.

 

11

 

12.4                           No Reliance.  The parties each acknowledge that, in
entering into this License Agreement, they have not relied upon any statements,
representations, warranties, correspondence, negotiations, conditions,
understandings, promises and agreements, oral and written, not specifically set
forth in this License Agreement.  All of
the parties represent that they are represented by legal counsel and have been
fully advised as to the meaning and consequence of all of the terms and
provisions of this License Agreement.

 

12.5                           Waiver; Modifications.  No provision of this License Agreement shall
be waived unless in writing signed by the party effecting such waiver.  No waiver of the breach of any of the terms
or provisions of this License Agreement shall be a waiver of any preceding or
succeeding breach of this License Agreement or any other provisions of it.  No waiver of any default, express or implied,
made by any party hereto shall be binding upon the party making such waiver in
the event of a subsequent default.  This
License Agreement may only be modified or amended by a written agreement executed
by each of the parties.

 

12.6                           Notices.
Any notices permitted or required under the provisions of this License
Agreement shall be in writing and shall be personally delivered or mailed by
certified mail, postage prepaid or shall be sent by overnight courier service
addressed as follows:

 

If to
AudioFAX:

 

AudioFAX
IP LLC

2995
Paces Lake Drive,

Atlanta,
GA 30339

Attn:                    Mark
Bloomfield, Managing Director

 

With a
Copy to:

 

Intellectual
Property Asset Corporation

Atlantic
Center Plaza, Suite 2400

1180
W. Peachtree Street, N.E.

 

Atlanta,
Georgia 30309

Attn:                    David A. Kennedy

Michael W. McLaughlin

 

12

 

Hunton & Williams LLP

Bank
of America Plaza

Suite
4100

600 Peachtree Street, NE

Atlanta,
Georgia 30308-2216

Attn:                  William M. Ragland, Jr., Esq.

 

If to
Interactive Intelligence:

 

Interactive Intelligence, Inc.

7601 Interactive Way

Indianapolis, IN 46278

Attn:                    Dr. Donald E. Brown, M.D.,
President and Chief Executive Officer

Stephen R. Head, Chief Financial Officer

 

Such
notice shall be effective upon receipt. 
A party may change the address for notices by giving a notice of such
change to the other party in the manner herein provided.

 

12.7                           Severability.  In the event that any one or more of the
provisions contained in this License Agreement shall, for any reason, be held
to be invalid, void, illegal or unenforceable in any respect, such invalidity,
voidness, illegality or unenforceability shall not affect any other provision
of this License Agreement, and the remaining portions shall remain in full
force.

 

12.8                           Cooperation.  Each of the parties hereto shall execute and
deliver any and all additional papers, documents and other assurances, and
shall do any and all acts and things reasonably necessary in connection with
the performance of their obligations hereunder and to carry out the intent of
the parties hereto.

 

12.9                           Titles.  Some Paragraphs of this License Agreement
have titles and some do not.  The fact
that some Paragraphs hereof do not have titles shall have no significance.  The 

 

13

 

titles
are included for ease of reference only, and shall not be used to construe the
meaning of this License Agreement.

 

12.10                     Authority.  All parties and authorized representatives
signing this License Agreement represent and warrant that they have authority
to execute and enter into this License Agreement.

 

12.11                     Counterparts.  This License Agreement may be executed in
multiple counterparts.

 

13.                                 Confidentiality and Press Release.

 

The terms and conditions
of this License Agreement are confidential to AudioFAX.  Interactive Intelligence shall not disclose
any such terms and conditions during the term of the License Agreement and for
a period of one (1) year after termination for any reason or expiration of the
License Agreement, except as required by law and as set forth below.  Each Party may disclose the terms of this
License Agreement: (a) as required by a court or other governmental authority
or as otherwise required by law; (b) in confidence to a party’s professional
advisors (e.g., legal counsel, accountants, auditors, financial institutions);
(c) in confidence in connection with negotiations regarding a merger, or sale
of all or substantially all of the assets or stock of a party; or (d) in
confidence in connection with negotiations regarding the sale of the Licensed
Patents to a third party.  The parties
agree that each may use in any press release all or any portion of the
statement attached hereto as Exhibit A, and may quote and republish any portion
of said statement.  The parties agree
that in the event of media or other inquiries, each will confirm the accuracy
of the statements in Exhibit A regarding this License Agreement.

 

14

 

14.                                 Release.

 

AudioFAX agrees to
release Interactive Intelligence, its alliance partners (such as resellers,
distributors, VARs and other marketing partners) and customers, in their
capacities as such, from any and all claims and causes of action for infringement
of the Licensed Patents by the import, manufacture, use, offer for sale or sale
of Interactive Intelligence’s Licensed Products, arising from the beginning of
time to the Effective Date.  Nothing in
this release shall apply or extend to any claims or causes of action relating
to Excluded Market Products.  AudioFAX
may terminate this release upon the material breach by Interactive Intelligence
of the terms and conditions of this License Agreement.

 

[The rest of this page
intentionally left blank]

 

15

 

IN WITNESS WHEREOF, the parties have executed this License Agreement
through their duly authorized representatives on the respective dates set forth
below.

 

	
  AUDIOFAX IP LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Michael W. McLaughlin

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Michael W.
  McLaughlin

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  Authorized Agent for AudioFAX IP LLC

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  January 14, 2005

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  INTERACTIVE INTELLIGENCE
  INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Stephen R. Head

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Stephen R. Head

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  Chief Financial
  Officer

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  January 14, 2005

  	
   

  

 

16

 

EXHIBIT A

 

January XX, 2005

 

AUDIOFAX AND INTERACTIVE INTELLIGENCE ANNOUNCE PATENT LICENSE
AGREEMENT

 

ATLANTA, GA – AudioFAX IP
LLC and Interactive Intelligence, Inc. (Nasdaq: ININ) today announced that they
have entered into a patent license agreement. 
Under the license agreement, Interactive Intelligence has obtained a
non-exclusive, perpetual license to use AudioFAX’s technology.  Specific terms of the license and settlement
agreements are confidential.

 

The AudioFAX patents
cover a broad range of inventions that incorporate fax store-and-forward
technologies.  Many of these technologies
are used daily by millions and include products and services such as fax mail,
fax broadcasting, fax-on-demand and “real-time” fax over the Internet.

 

“AudioFAX is proud to
announce our newest licensee, Interactive Intelligence,” stated Mark
Bloomfield, Managing Director of Atlanta-based AudioFAX.  “Each new licensee further validates our
licensing program.”

 

AudioFAX IP LLC was
established to license and administrate its telecommunications patents.  The company was created as a spin-off from
AudioFAX, Inc., an Atlanta-based company founded in 1987, which is credited
with pioneering many of the technologies now used in the enhanced fax
industry.  AudioFAX initiated a patent
licensing program in early 1997 with the help of intellectual property experts
from the IP investment and asset management company IPAC, LLC and the law firms
of Hunton & Williams (AudioFAX’s licensing and litigation counsel) and
Womble, Carlyle, Sandridge & Rice (AudioFAX’s patent counsel).

 

“The AudioFAX Patent
Licensing Team is pleased to have licensed the AudioFAX patents to Interactive
Intelligence and looks forward to continued success in licensing these patents
throughout the industry,” said William M. Ragland, Jr., Partner at Hunton &
Williams.

 

Since its inception, the
AudioFAX Patent Licensing Program has entered into license agreements with over
30 companies.  AudioFAX’s list of
licensees includes AT&T, MCI Telecommunications, Cisco Systems, Sprint,
WorldCom, NEC, Cable & Wireless, 3Com, j2 Global, Mitel, Captaris,
Intervoice, LogicaCMG, Siemens, Premiere Technologies (PTEK Holdings), Boston
Technology (now part of Comverse Technology), FaxSav (formerly known as
NetMoves and now part of EasyLink Services), and Xpedite (now part of PTEK
Holdings), among others.

 

Companies interested in a
license to the AudioFAX patents may contact David Kennedy or Michael McLaughlin
of IPAC at (404) 874-0026 or dkennedy@ipassetcorp.com and
mmclaughlin@ipassetcorp.com.

 

17Exhibit 10.16(iii)

 

SUBLEASE

 

This Sublease is entered into as of this 29th day of
December, 2004 (the “Execution Date”), by and between Interactive
Intelligence, Inc., an Indiana corporation (“Sublandlord”) and CyberLearning
Labs, Inc., an Indiana corporation (“Subtenant”).

 

W
I  T  N  E  S  S  E  T  H

 

WHEREAS, the following facts are true:

 

A.                                   By
Lease Agreement dated April 1, 2001, as amended by instruments dated September 19,
2001 and December 13, 2002, (collectively, the “Master Lease”),
Sublandlord leased approximately 120,000 rentable  square feet of space located at 7601 Interactive Way,
Indianapolis, Indiana (“Leased Premises”) from Duke Realty Limited Partnership,
an Indiana limited partnership (f/k/a Duke-Weeks Realty Limited Partnership) (“Landlord”).  A copy of the Master Lease is attached hereto
as Exhibit A.

 

B.                                     Sublandlord
and Subtenant now desire to enter into a sublease whereby Subtenant will lease
a portion of the Leased Premises, as defined in the Master Lease, from
Sublandlord, upon and subject to the terms, covenants and conditions herein
contained.  The portion of the Leased
Premises to be sublet hereunder consists of approximately 8,980 rentable square
feet, is located on the first floor of the Leased Premises, is depicted on the
attached Exhibit B and is referred to herein as the “Premises.”

 

NOW, THEREFORE, in consideration of the premises, the mutual covenants
and terms contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

 

1.                                       Sublease
of Premises.  Sublandlord hereby
subleases to Subtenant, and Subtenant hereby takes from Sublandlord the
Premises and agrees to be bound by all rights and obligations of Sublandlord as
Tenant under the Master Lease and acknowledges that all provisions of the
Master Lease remain in full force and effect.

 

2.                                       Term.  The term of this Sublease is for three (3)
years commencing March 1, 2005 (“Commencement Date”) and expiring on February 29,
2008 (“Original Term”).  The Original
Term and the Extension Term, as hereinafter defined, are sometimes referred to
collectively as the “Sublease Term.”

 

3.             Rent.  During the Original Term, Subtenant shall pay
to Sublandlord as rent for the Premises Rent in the amounts set forth below:

 

 

	
  Sublease Term

  	
   

  	
  Minimum Annual Rent

  	
   

  	
  Monthly Rental Installments

  	
   

  
	
  Year 1

  	
   

  	
  $

  	
  140,088.00

  	
   

  	
  $

  	
  11,674.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Year 2

  	
   

  	
  $

  	
  144,578.04

  	
   

  	
  $

  	
  12,048.17

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Year 3

  	
   

  	
  $

  	
  149,067.96

  	
   

  	
  $

  	
  12,422.33

  	
   

  

 

All Operating Expenses charged to Sublandlord under the Master Lease
shall be paid by Sublandlord.  In the
event Sublandlord files a petition for bankruptcy, insolvency or for
reorganization and upon Landlord providing written notice to Subtenant,
Subtenant hereby agrees to pay rent for the Premises directly to Landlord.

 

4.                                       Surrender
and Holding Over.  Upon the
expiration or earlier termination of this Sublease, Subtenant shall remove all
furniture, furnishings, equipment, and all other personal property belonging to
Subtenant and shall surrender the Premises in substantially the same condition
the same were in as of the Commencement Date, subject only to reasonable wear
and tear, casualty, condemnation and matters which are the responsibility of
Sublandlord hereunder.  If Subtenant
holds over or remains in possession or occupancy of the Premises after the
expiration or earlier termination of the Sublease Term, without any written
sublease of the Premises being actually made and duly entered into by
Sublandlord and Subtenant, such holding over or continued possession or
occupancy shall create only a tenancy from month to month upon the terms (other
than the length of term) herein specified and at the a rental rate equal to one
hundred twenty-five percent (125%) of the monthly rent payable by Subtenant to Sublandlord.  In addition, if such holdover is without the
consent of Sublandlord, Subtenant shall be liable to Sublandlord for any
damages and costs incurred by Sublandlord as a result of Subtenant’s failure to
surrender the Premises as required, including, without limitation, all costs
incurred by Sublandlord in connection with retaking possession of the Premises.

 

5.                                       Alterations
and Repairs.  Landlord shall, at
Subtenant’s sole cost and expense, make all alterations necessary to separate
the Premises from the Leased Premises occupied by Sublandlord under the Master
Lease, including, without limitation, construction of any demising wall and any
new doorways and hallways, and all other alterations necessary or desirable for
Subtenant’s occupancy of the Premises (collectively, “Tenant Finish
Improvements”), and all such alterations shall be subject to the approval of
Landlord and Sublandlord, and all other conditions with regard to alterations,
under the Master Lease.  Subtenant
accepts the Premises in “as-is”
condition, with no warranties of any kind from Sublandlord, all of which are
disclaimed, including, without limitation any warranty with respect to the
condition of the Premises or its fitness for a particular purpose.

 

6.                                       Tenant
Finish Improvements.  Sublandlord
shall provide an allowance for the costs of the Tenant Finish Improvements in
an amount not to exceed One Hundred Forty-nine Thousand Six Hundred Sixty
Dollars ($149,660.00) (the “Tenant Finish Allowance”), which shall include the
costs of

 

2

 

initial
space planning and construction drawing services, to be completed by Subtenant’s
selected space planner.  The Tenant
Finish Allowance shall be paid by Sublandlord directly to Landlord and after
completion of all Tenant Finish Improvements and payment of all costs relating
thereto, the remaining balance shall be made available to Subtenant for payment
of wiring, cabling, relocation and other associated expenses of Subtenant,
which expenses shall be reimbursed to Subtenant by Sublandlord within thirty
(30) days of Sublandlord’s receipt of invoices for such other expenses from
Subtenant.  Subtenant shall pay for any
cost or expense attributable to the Tenant Finish Improvements which exceeds
the Tenant Finish Allowance no later than the Commencement Date.

 

7.                                       Early
Occupancy.  Subtenant will be
provided access to the Subleased Premises for the purposes of fixturing thirty
(30) days prior to Commencement Date; provided, however, that Subtenant’s schedule for
such work shall be communicated to Landlord and Sublandlord in advance.

 

8.                                       Notices.  All notices and demands hereunder shall be in
writing and shall be deemed to be delivered only when (i) actually
received or (ii) deposited in the United States mail (certified or
registered mail, postage prepaid, return receipt requested) and addressed to
Landlord, Sublandlord or Subtenant as follows:

 

	
  Landlord:

  	
  Duke Realty Limited
  Partnership

  
	
   

  	
  Attn: Property Manager

  
	
   

  	
  600 East 96th
  Street, Suite 100

  
	
   

  	
  Indianapolis, Indiana
  46240

  
	
   

  	
   

  
	
  Sublandlord:

  	
  Interactive Intelligence,
  Inc.

  
	
   

  	
  7601 Interactive Way

  
	
   

  	
  Indianapolis, Indiana
  46278

  
	
   

  	
   

  
	
  Subtenant:

  	
  CyberLearning Labs, Inc.

  
	
   

  	
  7601 Interactive Way,
  Suite 100

  
	
   

  	
  Indianapolis, Indiana
  46278

  

 

9.                                       Authority.  The undersigned persons executing this
Sublease on behalf of Sublandlord or Subtenant, respectively, represent and
certify that the execution, delivery and performance of this Sublease have been
duly authorized by all necessary corporate action of Subtenant or Sublandlord
(as applicable) and that this Sublease is the legal, valid and binding
obligation of Subtenant or Sublandlord (as applicable).

 

10.                                 Option
to Extend.  Provided
(i) Subtenant is not in default hereunder at the time it exercises this
option or at the commencement of the Extended Term (as hereafter defined),
(ii) the creditworthiness of Subtenant is no less than on the date hereof,
and (iii) Subtenant originally named herein remains in possession of all
of the Premises, Subtenant shall have a one time option to

 

3

 

extend
the Original Term for a period of no less than one (1) year and no more than
two (2) years (the “Extension Term”). 
The Extension Term shall be upon the same terms and conditions contained
in this Sublease during the Original Term except (i) this provision shall
be deleted and (ii) the annual rent shall be increased by $4,206.50 per
year.  Subtenant shall exercise such
option by delivering to Sublandlord, no later than twelve (12) months prior to
the expiration of the Original Term, written notice of Subtenant’s desire to
extend the Original Term and specifying the length of the Extension Term.  If Subtenant properly exercises its option to
extend, Sublandlord and Subtenant shall execute an amendment to this Sublease
reflecting the terms and conditions of the Extension Term.

 

11.                                 Option
to Expand.  Provided that
(i) Subtenant is not in default hereunder at the time of exercise or
commencement of this option, (ii)  the creditworthiness of Subtenant is no
less than on the date hereof, and (iii) Subtenant originally named herein
remains in possession of all of the Premises, Subtenant shall have the option
during the first twenty-four (24) months of the Original Term (“Expansion
Option”) to expand the Premises by up to 3,000 rentable square feet of space
(the “Expansion Space”).  In the event
Subtenant elects to exercise its Expansion Option, Sublandlord and Subtenant
hereby agree that  Subtenant shall concurrently
exercise the Option to Extend provided in paragraph 10 above.  In addition, Sublandlord hereby agrees to
provide Subtenant with a tenant finish allowance for the Expansion Space in an
amount equal to Seventeen and 50/100 Dollars ($17.50) per rentable square foot,
adjusted as set forth below (“Expansion Space Allowance”).  If less than thirty-six (36) months remain in
the Sublease Term after the exercise of the Option to Extend following the
commencement of Subtenant’s occupancy of the Expansion Space, the Expansion
Space Allowance shall be decreased to an amount determined by multiplying the
Expansion Space Allowance by a fraction, the numerator of which is equal to the
number of months of the Sublease Term remaining after Subtenant’s occupancy of
the Expansion Space and the denominator of which is equal to thirty-six (36).

 

12.                                 Liability
of Sublandlord.  Sublandlord hereby
acknowledges that this Sublease does not relieve it from its liability for the
payment of rent and the performance and observance of all of the terms,
conditions, covenants and obligations under the Master Lease.  Sublandlord further acknowledges that this
Sublease shall not be construed to modify, waive, impair, or affect any of the
terms, provisions or conditions of the Master Lease.

 

13.                                 Incorporation
of Terms of Master Lease.

 

(a)                                  Subtenant
acknowledges and agrees that all of the terms, conditions and covenants set
forth in the Master Lease, except for those specific provisions set forth in
Sections 1-11 herein, shall be incorporated into and made a part of this
Sublease, and Subtenant shall be and hereby agrees to be subject to and bound
by and to comply with all of such terms, conditions

 

4

 

and
covenants with respect to the Premises and to satisfy all applicable terms and
conditions of the Master Lease for the benefit of both Sublandlord and
Landlord.  The provisions of this
Sublease shall be interpreted wherever possible so as to be consistent with the
provisions of the Master Lease; in the event, however, of an irreconcilable
inconsistency, the provisions of this Sublease shall control.  Wherever in the Master Lease the word “Tenant”
appears, for the purposes of this Sublease, the word “Subtenant” shall be
substituted, and references to the “Landlord” shall be deemed to include the “Sublandlord.”

 

(b)                                 Upon
the breach of any of the terms, conditions or covenants of the Master Lease or
upon the failure of the Subtenant to pay rent or to comply with any of the
provisions of this Sublease, Sublandlord may exercise any and all rights and remedies
granted to Landlord by the Master Lease. 
Whenever the provisions of the Master Lease require the written consent
of the Landlord, such provisions shall be construed to require the written
consent of both the Landlord and the Sublandlord.  Subtenant hereby acknowledges that it has
read and is familiar with the terms of the Master Lease and agrees that this
Sublease is subordinate and subject to the Master Lease and that any
termination thereof shall likewise terminate this Sublease.

 

14.                                 Brokerage.  Subtenant warrants that it has had no
dealings with any broker or agent in connection with the negotiation or
execution of this Sublease other than Carmen Commercial Real Estate Services,
Inc., who will be compensated through a commission sharing arrangement with
Sublandlord’s broker, Meridian Real Estate Services.  Subtenant agrees to indemnify Sublandlord and
Landlord against all costs, expenses, attorneys’ fees or other liability for
commissions or other compensation or charges asserted by any broker or agent
claiming by, through or under Subtenant.

 

15.                                 Security
Deposit.

 

(a)                                  On
or before the execution and delivery of this Sublease, Tenant shall deliver to
Sublandlord a cash deposit (“Security Deposit”) of $11,674.00 to be held by
Sublandlord throughout the Sublease Term as security for the full and punctual
performance by Subtenant of all the terms of this Sublease.  In the event Subtenant defaults in the
performance of any of the terms of this Sublease, Sublandlord may draw upon the
Security Deposit to the extent required for the payment of (i) any amount
of Rent, or (ii) any sum which Sublandlord may expend or may be required
to expend by reason of Subtenant’s default including, without limitation, any
damages or deficiency in the re-letting of the Premises, whether accruing
before or after summary proceedings or other re-entry by Sublandlord.

 

(b)                                 In
the event Sublandlord applies the Security Deposit in whole or in part against
a default by Subtenant, Subtenant shall, upon demand by Sublandlord, deposit
sufficient funds to restore the Security Deposit to the

 

5

 

initial
amount thereof.  Failure of Subtenant to
restore shall constitute a default hereunder and shall entitle Sublandlord to
avail itself of the remedies provided for in this Sublease for non-payment of
Rent.

 

(c)                                  If
Subtenant shall fully and punctually comply with all of the terms of this
Sublease, any Security Deposit then in existence shall be returned to Subtenant
within thirty (30) calendar days after termination of this Sublease.

 

16.                                 Miscellaneous.

 

(a)                                  So
long as Sublandlord is the sole occupant thereof, Subtenant shall have the
right to use the northeast quadrant of the first floor for occasional, pre-approved
meeting use.  Subtenant’s use will be
subject to availability.  Subtenant shall
bear all costs relating to such use, including clean-up.

 

(b)                                 As
long as Sublandlord has a receptionist on the first floor of the building in
which the Premises are located, the receptionist will direct, when needed,
guests of Subtenant to the Premises.

 

(c)                                  Signage
– Sublandlord, at Subtenant’s sole cost and expense, shall provide Subtenant
with Building standard signage on park/directional signage, building monument
(outdoor) and glass entry door to suite.

 

(d)                                 Security
– Subtenant’s employees will be provided, at Subtenant’s sole cost and expense,
with fobs, cards, and any additional card readers to access the Building and
keys to access the Premises.

 

6

 

IN WITNESS WHEREOF, the parties hereto have executed this Sublease as
of the date and year first above written.

 

	
   

  	
  “Sublandlord”

  
	
   

  	
   

  
	
   

  	
  INTERACTIVE INTELLIGENCE, INC., an Indiana

  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen R. Head

  	
   

  
	
   

  	
   

  
	
   

  	
  Printed:

  	
  Stephen R.
  Head

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
  “Subtenant”

  
	
   

  	
   

  
	
   

  	
  CYBERLEARNING LABS, Inc., an Indiana

  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher D. Clapp

  	
   

  
	
   

  	
   

  
	
   

  	
  Printed:

  	
  Christopher
  D. Clapp

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  STATE OF INDIANA

  	
  )

  	
   

  
	
   

  	
  )SS:

  	
   

  
	
  COUNTY OF 

  	
  )

  	
   

  
									

 

Before me, a Notary Public in and for said County and State, personally
appeared Stephen R. Head, the Chief Financial Officer of Interactive
Intelligence, Inc., an Indiana corporation, who
acknowledged the execution of the foregoing “Sublease” on behalf of said
corporation.

 

Witness my hand and Notarial Seal this 30th day of December,
2004.

 

	
   

  	
  /s/ Traci L. Shaw

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
  Traci L. Shaw

  	
   

  
	
   

  	
  (Printed Signature)

  

 

My Commission Expires: March 14, 2007

 

My County of Residence: Marion, Indiana.

 

7

 

	
  STATE OF INDIANA

  	
  )

  	
   

  
	
   

  	
  )SS:

  	
   

  
	
  COUNTY OF 

  	
  )

  	
   

  

 

Before me, a Notary Public in and for said County and State, personally
appeared Christopher D. Clapp, the President and Chief Executive Officer of
CyberLearning Labs, Inc., an Indiana corporation, who acknowledged the
execution of the foregoing “Sublease” on behalf of said corporation.

 

Witness my hand and Notarial Seal this 30th day of December,
2004.

 

	
   

  	
  /s/ Traci L. Shaw

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
  Traci L. Shaw

  	
   

  
	
   

  	
  (Printed Signature)

  

 

My Commission Expires: March 14, 2007

 

My County of Residence: Marion, Indiana.

 

8

 

CONSENT
AND ACCEPTANCE

 

Duke Realty Limited Partnership, an Indiana limited partnership, as
Landlord under the Master Lease, hereby consents to the Sublease of the Master
Lease as set forth above; provided, however, that such Sublease does not affect
or release any liability of Sublandlord under the terms and obligations of the
Master Lease.

 

This Consent and Acceptance of the foregoing Sublease shall not
constitute a consent by Landlord to any further
subletting or assignments of the entire or any portion of the Leased Premises.

 

	
   

  	
  “Landlord”

  
	
   

  	
   

  
	
   

  	
  DUKE REALTY LIMITED

  PARTNERSHIP, an Indiana limited partnership

  
	
   

  	
   

  
	
   

  	
  By:  Duke Realty Corporation, its
  general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jennifer K. Burk

  	
   

  
	
   

  	
   

  	
  Jennifer K. Burk

  
	
   

  	
   

  	
  Senior Vice President

  
	
   

  	
   

  	
  Indiana Office Group

  

 

9

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