AGREEMENT AMONG LICENSORS REGARDING THE 1394 STANDARD

Transcription

1 AGREEMENT AMONG LICENSORS REGARDING THE 1394 STANDARD This Agreement is made this 1st day of October, 1999, by and between: Apple Computer Inc., a corporation of California, having a principal place of business in Cupertino, California ( Apple ); Compaq Computer Corp., a corporation of Delaware, having a principal place of business in Houston, Texas ( Compaq ); Koninklijke Philips Electronics, N.V., a corporation of the Netherlands, having a principal place of business in Eindhoven, the Netherlands ( Philips ); Matsushita Electric Industrial Co., Ltd.; a corporation of Japan, having a principal place of business in Osaka, Japan ( MEI ); Sony Corporation, a corporation of Japan, having a principal place of business in Tokyo, Japan ( Sony ); and Toshiba Corporation, a corporation of Japan, having a principal place of business in Tokyo, Japan ( Toshiba ); WHEREAS, The Institute of Electrical and Electronics Engineers and the International Electrotechnical Commission have adopted and/or published an international standard relating to a high speed data transfer digital interface formally known as IEEE , IEEE P1394a, IEC and IEEE P1394b (as more fully defined below and hereinafter referred to as the 1394 Standard ); WHEREAS, Apple, Compaq, MEI, Philips, Sony and Toshiba (each a Licensor and, collectively, the Licensors ), each own and have the right to license or sublicense one or more patents, design patents and/or utility models which contain claims necessary for compliance with the 1394 Standard; WHEREAS, each Party believes that the 1394 Standard represents a significant advance in the field of high speed data transfer which will make available innovative new products and services to the public, and for this reason desires to encourage widespread adoption of the 1394 Standard by industries throughout the world and the use of the 1394 Standard by consumers throughout the world; WHEREAS, nothing in this Agreement precludes the respective Parties from licensing or sublicensing rights to make, use, offer to sell or sell products or processes under their individual 1394 Essential Patent(s) under terms and conditions each Party in its sole discretion deems advisable; WHEREAS, the Parties have discussed various matters necessary to implementing

2 a single licensing program for the benefit of licensees but have not entered into any discussions concerning the marketing, selling or other such matters involving licensed products, nor have the Parties had any discussions nor will the Parties have any discussions concerning each Party s individual licensing of its 1394 Essential Patent(s) or royalty rates in connection with such individual licensing; and WHEREAS, the Parties desire to make available license rights under their respective 1394 Essential Patent(s) in a single license (as more fully defined below and hereinafter referred to as the 1394 Patent Portfolio License ) for the convenience of any qualified individual, company or other entity desirous of acquiring such rights which can thereby avoid the need to obtain a separate license from each of the Parties under its 1394 Essential Patent(s). NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: 1. DEFINITIONS The definitions set forth in this Section shall apply to the following terms when used with initial capital letters in this Agreement, its attachments, and amendments hereto. 1.1 Affiliate(s) - shall mean a corporation, company, or other entity which now or hereinafter, directly or indirectly, controls, is controlled by or is under common control with a Party. The term control as used in this Section 1.1 shall mean ownership of more than 50% of the outstanding shares representing the right to vote for the election of directors or other managing officers of such corporation, company or other entity, or for a corporation, company or other entity which does not have outstanding shares, more than 50% of the ownership interest representing the right to make decisions for such corporation, company or other entity; provided, however, such corporation, company or other entity shall be deemed an Affiliate only so long as such control exists. 1.2 Agreement - shall mean this Agreement Among Licensors Regarding the 1394 Standard, including exhibits, attachments, amendments and modifications hereto. 1.3 Days - shall mean calendar days unless otherwise specifically stated in this Agreement

3 1.4 End User - shall mean any person or entity which purchases a 1394 Royalty Product for their or its personal or commercial use, whether alone or in combination with any other product, and not for re-sale. 1.5 Finished Product - shall mean any product of whatever nature which is fully compliant with all applicable portions of the 1394 Standard and which is offered for Sale in an unmodified and uncombined form to any End User. 1.6 Licensing Administrator - shall mean an individual, company or other entity selected by the Parties in accordance with the terms of this Agreement ( Licensing Administrator ), which has received a worldwide, nonexclusive license or sublicense from each Party under all 1394 Essential Patent(s) that the Party, presently or in the future, has the right to grant a license or sublicense (without the payment of royalties or other compensation by the Party to any person or entity which is not an Affiliated Party) with the right of the Licensing Administrator to grant sublicenses identical in form to the 1394 Patent Portfolio License to any individual, company or other entity desiring such a sublicense. 1.7 Manufacture (Manufactured) - shall mean fabrication, assembly, or otherwise making of substantially the entire Finished Product. 1.8 Original Party (Parties) - shall mean Apple, Compaq, MEI, Philips, Sony and Toshiba. 1.9 Parties (individually Party) - shall mean any person or entity which executes this Agreement Patent(s) - shall mean any issued patent, design patent and/or utility model Patent Consultant(s) - shall mean patent expert(s), who are employed by the Licensing Administrator with the consent of the Administrative Committee to independently identify 1394 Essential - 3 -

4 Patent(s) of the Parties or of persons or entities seeking to become Parties Patent Family - shall mean all Patents, filed in any country, which (a) claim priority to an earlier national application in another country or to an earlier international application filed under an international treaty or convention or (b) issue from applications describing substantially the same subject matter concurrently filed on behalf of the same applicant in two or more countries Sale (Sold) - shall mean any sale, rental, lease, license or other form of distribution, transfer or import of a Licensed Product, either directly or through a chain of distribution. For purposes of Section of this Agreement, a Sale under this Section 1.13 shall be deemed to take place in the country where a Finished Product is delivered Essential Patent(s) - shall mean any and all claim(s), but only such claims, in a Patent which are necessarily and unavoidably and literally infringed by compliance with and/or implementation of any portion of the 1394 Standard ( Standard ) which the Standard mandates shall be implemented in order for a product, given its specific configuration, to be fully compliant with the Standard Patent Portfolio - shall mean the portfolio of 1394 Essential Patent(s) identified in Attachment 1 hereto, which portfolio may be supplemented or reduced from time to time in accordance with the provisions of this Agreement. The 1394 Patent Portfolio shall include only such Patent(s), under which a Licensor has the right to grant a license or sublicense to a third party (without the payment of royalties or other compensation by Licensor to any person or entity which is not an Affiliated Party) with a right of a third party to whom such license or sublicense is granted to grant sublicenses Patent Portfolio License(s) - shall mean a standard worldwide, nonexclusive sublicense under all 1394 Essential Patent(s) in the 1394 Patent Portfolio, which sublicense shall be identical in form to the sublicense in Attachment 2 hereto

5 Royalty Product(s) - shall mean a Finished Product, the Manufacture, Sale, offer for Sale or use of which, but for a license under the 1394 Patent Portfolio License, would infringe one or more 1394 Essential Patent(s) in the 1394 Patent Portfolio Standard - shall mean the standards adopted and/or published by the Institute of Electrical and Electronics Engineers and the International Electrotechnical Commission denominated as IEEE , IEEE P1394a (substantially in the form as published on June 30, 1999), IEC and IEEE P1394b (substantially in the form as published as version Draft 0.75, dated August 10, 1999). 2. OBLIGATIONS AND RIGHTS OF THE PARTIES 2.1 The Parties, through their respective representatives on the Administrative Committee as defined in Section 3.1 of this Agreement, shall select by at least 3/4 vote of its members a Licensing Administrator to perform at least the following: receiving, pursuant to Section 2.3 herein, a worldwide, nonexclusive license or sublicense from each Party under all present and future 1394 Essential Patent(s) licensable or sublicensable by the Party and its Affiliates (without the payment of royalties or other compensation by the Party to any person or entity which is not an Affiliated Party), with the right of the Licensing Administrator to grant sublicenses only in the form of the 1394 Patent Portfolio License in Attachment 2; granting a 1394 Patent Portfolio License to any qualified individual, company or other entity desiring such a sublicense; using its best efforts to solicit new sublicensees; collecting royalty statements and royalties due under each 1394 Patent Portfolio License granted by the Licensing Administrator; enforcing, when necessary, contract rights under an 1394 Patent Portfolio License; distributing to the Parties all revenues derived from all 1394 Patent Portfolio Licenses granted by the Licensing Administrator in accordance with Section 5.1 of this Agreement; using its best efforts to mitigate any taxes on royalties withheld by sublicensees under applicable law; reporting to the Parties the aggregate sales of

6 Royalty Product(s); and conducting, when it deems necessary, audits of sublicensees under 1394 Patent Portfolio Licenses. 2.2 The Parties shall enter into an agreement with the Licensing Administrator identical in form to the agreement in Attachment 3 hereto, hereinafter referred to as the 1394 Licensing Administrator Agreement. 2.3 Each Party shall grant to the Licensing Administrator a worldwide, nonexclusive, non-transferrable license or sublicense under all 1394 Essential Patent(s) which the Party and its Affiliate(s), if any, presently or in the future, have the right to license or sublicense (without payment of royalties or other compensation by the Party to any person or entity which is not an Affiliated Party), with a right of the Licensing Administrator to grant sublicenses which are identical in form to the sublicense in Attachment 2 hereto. The nonexclusive license or sublicense granted by each Party to the Licensing Administrator under this Section 2.3 shall be identical in form to the model license or sublicense in Attachment 4 hereto, which provides that the right of the Licensing Administrator to grant sublicenses under any patents in the 1394 Patent Portfolio licensed thereunder may be terminated by the Party at any time after September 30, 2000, under the terms specified therein; provided, however, in the event of such termination, all sublicenses granted by the Licensing Administrator under the Patents in the 1394 Patent Portfolio of the Party prior to the effective date of termination shall remain in full force and effect. One or more Patent Consultants which has been retained by the Licensing Administrator shall continue his or her work with the consent of the Administrative Committee to determine whether such Patent(s) are 1394 Essential Patents. Unless otherwise agreed by a unanimous vote of the Administrative Committee, no person shall be retained at anytime by the Licensing Administrator as a Patent Consultant if such person or his or her firm, at the time of or during the period of such retention (i) shall be employed by or affiliated with the party submitting any Patent for evaluation or (ii) has drafted the application which resulted in the issuance of any Patent submitted for evaluation. The 1394 Patent Portfolio License shall include on Attachment 1 thereto only those Patent(s) determined by such Patent Consultant(s) to be a 1394 Essential Patent(s). Patents to be deleted and added to - 6 -

7 Attachment 1 as a result of the binding determination by such Patent Consultant(s) shall be added and deleted pursuant to the terms of this Agreement and the 1394 Patent Portfolio License Any Party or third party submitting any Patent(s) to the Patent Consultant(s) shall pay the costs and fees of any evaluation of such Patent(s) by the Patent Consultant(s). Such costs and fees are currently set at $7,000 per Patent payable to the Licensing Administrator which shall remit such costs and fees to the Patent Consultant, and are subject to change from time to time upon the approval of 3/4 vote of the Administrative Committee Any Party or third party submitting any Patent(s) for evaluation to the Patent Consultant(s) shall enter into any engagement letter and/or waiver of conflict letter as reasonably required by such Patent Consultant The worldwide, nonexclusive, non-transferrable license or sublicense granted by each Party to the Licensing Administrator pursuant to Section 2.3 of this Agreement shall not provide the Licensing Administrator with the right to bring a claim for infringement of any Patent(s) licensed or sublicensed thereunder in a lawsuit or other proceeding against any Party or third party in any country In the event that the Licensing Administrator resigns, is terminated by the Parties pursuant to Sections 10.1 or 10.2 of the Licensing Administrator Agreement, or ceases to exist, the 1394 Patent Portfolio Licenses granted by the former Licensing Administrator shall be deemed transferred to a successor Licensing Administrator selected in accordance with Section 3.4 of this Agreement. 2.4 If a Party comes to a good faith conclusion that a Patent(s) in the 1394 Patent Portfolio is not an 1394 Essential Patent(s), or if a third party notifies a Party or the Licensing Administrator that it believes that a Patent(s) in the 1394 Patent Portfolio is not an 1394 Essential - 7 -

8 Patent(s) and provides a reasonable basis for its belief, in each case the Party(ies) shall promptly evaluate such conclusion or belief as follows: If all Parties determine in good faith that the Patent(s) in question is not an 1394 Essential Patent(s) in the country (countries) which issued or published the Patent(s), then the Administrative Committee shall instruct the Licensing Administrator to delete such Patent(s) from the 1394 Patent Portfolio; provided, however, that the Licensing Administrator shall provide each existing sublicensee at the time that such deletion is to be made the option to retain its sublicense under the Patent(s) to be deleted for the term of the sublicense and for any renewal thereof If the Parties cannot unanimously agree that the Patent(s) is not 1394 Essential Patent(s), then a Patent Consultant(s) shall be retained by the Licensing Administrator with the consent of the Administrative Committee to provide an opinion as to whether or not the Patent(s) in question is a 1394 Essential Patent(s) If the Patent Consultant(s) provides an opinion that the Patent(s) in question is not an 1394 Essential Patent(s), then the Administrative Committee shall instruct the Licensing Administrator to delete such Patent(s) from the 1394 Patent Portfolio; provided, however, that the Licensing Administrator shall provide each existing sublicensee at the time that such deletion is to be made the option to retain its sublicense under the Patent(s) to be deleted for the term of the sublicense and for any renewal thereof. In the case of a determination under this Section , the costs and fees of the Patent Consultant(s) shall be paid to the Licensing Administrator by the Party which has sublicensed such Patent to the Licensing Administrator and the Licensing Administrator - 8 -

9 shall remit such payment to the Patent Consultant(s) If the Patent Consultant(s) provides an opinion that the Patent(s) in question is a 1394 Essential Patent(s), then such Patent(s) shall remain in the 1394 Patent Portfolio. In the case of a determination under this Section , the costs and fees of the Patent Consultant(s) shall be paid to the Licensing Administrator by the Party or Parties, if any, challenging the Patent(s) and the Licensing Administrator shall remit such payment to the Patent Consultant(s). 2.5 Upon final adjudication by a court of competent jurisdiction of invalidity or unenforceability of a Party s 1394 Patent Portfolio Patent(s), from which no appeal is taken or allowed, or upon expiration of a Party s Patent(s) in the 1394 Patent Portfolio, the Party that has licensed or sublicensed such Patent(s) to the Licensing Administrator pursuant to Section 2.3 of this Agreement shall promptly amend its license to the Licensing Administrator to delete such Patent(s) from the license or sublicense, and the Licensing Administrator promptly thereafter shall delete such Patent(s) from the 1394 Patent Portfolio. 2.6 As to any Patent(s) which is deleted from the 1394 Patent Portfolio pursuant to Sections 2.4.1, or 2.5 of this Agreement, where one or more sublicensees have elected to retain their sublicenses under the deleted Patent(s), such deleted Patent(s) shall not be considered a 1394 Essential Patent(s) for purposes of Section 5.1 of this Agreement (Apportionment of Revenues) with respect to the royalties paid by such sublicensees. 2.7 If a Party or its Affiliate(s) acquires the right to license or sublicense an additional Patent(s) to the Licensing Administrator (without the payment of royalties or other compensation by the Party or Affiliate(s) to any person or entity which is not an Affiliated Party) which the Party has concluded in good faith is a 1394 Essential Patent(s) not already in the 1394 Patent Portfolio, it shall promptly notify all other Parties of its conclusion and shall submit such Patent - 9 -

10 for evaluation to a Patent Consultant(s) under the terms and conditions specified in Sections 2.3, and If the Patent Consultant(s) determines that such Patent is a 1394 Essential Patent(s) then such Patent shall be included in the 1394 Patent Portfolio. If the Patent Consultant(s) determines that such Patent is not a 1394 Essential Patent(s), then such Patent shall not be included in the 1394 Patent Portfolio. 2.8 Each Party retains the independent right to grant a nonexclusive license or sublicense under terms and conditions agreeable to the Party and its licensee to any individual, company or other entity desiring such a license or sublicense under 1394 Essential Patent(s) that the Party or any Affiliate(s) of the Party has the right to license or sublicense. The Parties recognize that each Party prior to the date hereof may have granted to third parties nonexclusive licenses under one or more of its 1394 Essential Patent(s). 2.9 Each Party shall have the right to instruct the Licensing Administrator to terminate a particular sublicense under any of its patents in the 1394 Patent Portfolio as to any sublicensee that has brought a lawsuit or other proceeding for infringement against such Party of a 1394 Essential Patent(s) and/or any other Patent(s) having one or more claim(s) which may be infringed by compliance with or implementation of the 1394 Standard, and the sublicensee has refused to grant such Party a license on fair and reasonable terms and conditions under the 1394 Essential Patent(s) and/or other Patent(s) upon which the lawsuit or other proceeding is based. For purposes of this Section 2.9 only, the Party s per patent share of royalties payable pursuant to Section 3.1 of the sublicensee s 1394 Patent Portfolio License shall be presumed to be a fair and reasonable royalty rate for the sublicensee s Patent(s) considering the nature of the sublicensee s Patent(s) Each Party shall have the right to instruct the Licensing Administrator to exclude any of its patents in the 1394 Patent Portfolio from an 1394 Patent Portfolio License to a prospective sublicensee that has brought a claim(s) for infringement of a 1394 Essential Patent(s) and/or any other Patent(s) having one or more claim(s) which may be infringed by compliance with or

11 implementation of the 1394 Standard in a lawsuit or other proceeding against the Party, where the Party has decided to bring a claim(s) for infringement of the 1394 Essential Patent(s) to be excluded in the same or another lawsuit or other proceeding against the prospective sublicensee Each Party shall have the right to instruct the Licensing Administrator to exclude any of its Patents in the 1394 Patent Portfolio from a 1394 Patent Portfolio License to a prospective sublicensee against whom the Party has brought a claim(s) for infringement of the Patent(s) to be excluded. 3. ADMINISTRATION 3.1 Each Party shall appoint one representative of the Party to serve as a member of an Administrative Committee and to act on behalf of the Party, and shall provide written notice to all other Parties of such appointment. The appointment by a Party of a representative to the Administrative Committee may be changed at any time upon written notice to all other Parties. As to matters that require the approval of the Parties pursuant to the terms of this Agreement, such approval shall be determined by vote of the members of the Administrative Committee, and each member of the Administrative Committee shall be entitled to one vote on behalf of the Party he or she represents. A quorum consisting of at least the majority of the members of the Administrative Committee shall be required in any vote taken by the Administrative Committee. Any vote of the Administrative Committee taken in the absence of such a quorum shall be null and void. Unless otherwise expressly provided, any action taken by the Administrative Committee shall require a majority vote. Notwithstanding anything to the contrary in this Agreement, no action shall be taken by the Administrative Committee without the approval of any Party which, at the time of the vote on such action, owns 25% or more of the patents in the 1394 Patent Portfolio. For purposes of the preceding sentence only, 1394 Essential Patent(s) which cover only IEC shall be deemed one-half a patent

12 For purposes of this Section 3.1 only, all Patents in a Patent Family shall be treated as a single Patent. 3.2 The Administrative Committee shall be convened to meet when called by the Chairperson from time to time as necessary, but not less frequently than twice each calendar year, to discuss and resolve certain outstanding matters related to this Agreement. 3.3 The Administrative Committee shall elect by majority vote one of its members to serve as a Chairperson to call and preside over meetings of the Committee. The Chairperson shall serve for a period of two (2) years, subject to reelection. The Chairperson shall have no authority to make decisions on behalf of any Party other than the Party he or she represents. No action taken at a meeting of the Administrative Committee pursuant to Section 3.1 of this Agreement shall be valid unless each of its members receives written notice of the Administrative Committee meeting at least fourteen (14) Days in advance of the date of the meeting. Each member of the Administrative Committee shall have the right to participate in a meeting of the Administrative Committee by telephone or teleconferencing; provided that each member who elects to participate in a meeting by telephone or by teleconferencing notifies the Chairperson of the Administrative Committee in writing at least five (5) Days in advance of the date of such meeting. 3.4 The Administrative Committee, on behalf of the respective Parties represented thereby, may terminate the Licensing Administrator Agreement as to all Parties pursuant to Sections 10.2 or 11.3 of the Licensing Administrator Agreement, in which event the Administrative Committee, on behalf of the respective Parties represented thereby, shall promptly select by at least 3/4 vote of its members a successor Licensing Administrator, and the Parties shall enter into a new Licensing Administrator Agreement with the successor Licensing Administrator which shall be effective upon the date of termination of the predecessor Licensing Administrator. Each party shall grant a license to the successor Licensing Administrator in accordance with Section 2.3 and terminate the right of former Licensing Administrator to grant any further 1394 Patent Portfolio License(s). The 1394 Patent Portfolio License(s) granted by the Licensing Administrator pursuant to Section 2.3 of this

13 Agreement shall provide that upon the termination or resignation of the Licensing Administrator and the appointment of a new Licensing Administrator, the license or sublicense granted by the Party to the Licensing Administrator, and all sublicenses granted by the Licensing Administrator pursuant to such license or sublicense, shall be deemed transferred to the successor Licensing Administrator. 3.5 The Chairperson of the Administrative Committee shall serve as a liaison between the Licensing Administrator and the Parties on matters related to the responsibilities of the Administrative Committee, except that the Chairperson of the Administrative Committee shall have no authority to make substantive decisions on behalf of the Parties in any dealings with the Licensing Administrator The Administrative Committee shall select the Licensing Administrator on behalf of the Parties by at least 3/4 vote of its members In the event that an existing Licensing Administrator resigns, the Administrative Committee shall select a successor Licensing Administrator on behalf of the Parties by at least 3/4 vote of its members The Administrative Committee, on behalf of the respective Parties represented thereby, shall be responsible for monitoring certain activities of the Licensing Administrator throughout the world. The Administrative Committee, on behalf of the respective Parties represented thereby, shall also be responsible for retaining an independent auditor to audit the Licensing Administrator upon majority vote of its members

14 3.5.4 The Licensing Administrator shall have sole authority in respect of identification and solicitation of prospective qualified sublicensees, entering into 1394 Patent Portfolio License(s) with sublicensees, auditing of sublicensees when appropriate, determining back royalties owed by prospective sublicensees, terminating 1394 Patent Portfolio License(s) in accordance with the terms therein, bringing actions to enforce 1394 Patent Portfolio License(s), requesting sublicensees to provide greater financial security, all as in accordance with the Licensing Administrator Agreement. 3.6 In the event that the Licensing Administrator decides to bring an action to enforce a 1394 Patent Portfolio License(s) against a sublicensee, it shall notify each Party of such decision at least fifteen (15) Days prior to commencing the action If the Parties are asked to fund the cost in whole or in part of an enforcement action against a sublicensee, members of the Administrative Committee shall vote on (a) the commercial viability of the Licensing Administrator s decision to bring such an action and (b) the Licensing Administrator s selection of legal counsel for such action. If at least 2/3 of the members of the Administrative Committee determine that such action is not commercially viable, then the Chairperson of the Administrative Committee shall advise the Licensing Administrator that the Administrative Committee has disapproved the Licensing Administrator s decision. In such event, the Licensing Administrator may in its sole discretion pursue such enforcement action at its own cost In the event that the Administrative Committee does not disapprove the Licensing Administrator s decision, the Parties shall reimburse the Licensing Administrator pursuant to Section for reasonable expenses in bringing such an enforcement action. 4. REPRESENTATIONS AND WARRANTIES

15 4.1 Each Party represents and warrants that it has the requisite power, authority, and right to enter into this Agreement and to consummate transactions contemplated herein. Each Party further represents and warrants that it has not made and shall not make any outstanding agreements, assignments or encumbrances inconsistent with the provisions of this Agreement. 4.2 Each Party represents and warrants that it will comply with all applicable laws, regulations or ordinances pertaining to its performance hereunder. 4.3 Each Party represents and warrants that in executing this Agreement, it does not rely on any promises, inducements, or representations made by any other Party or third party with respect to this Agreement or any other business dealings with any Party or third party, now or in the future, with the exception of the terms of this Agreement and its attachments. 4.4 Other than the express warranties of this Article, there are NO OTHER WARRANTIES, EXPRESS OR IMPLIED. 5. LIABILITY, REVENUES AND EXPENSES 5.1 Apportionment of Revenues Royalties collected by the Licensing Administrator from each sublicensee shall be apportioned among the Parties as follows: For the royalty collected on each 1394 Royalty Product, 50% of the royalty shall be considered as royalty paid on patents in the 1394 Patent Portfolio in the country of Manufacture of such Product and 50% as royalty paid on patents in the 1394 Patent Portfolio in the country of Sale of such Product, unless the 1394 Patent Portfolio includes no 1394 Essential Patent(s) in the country of Manufacture of such Product, in which case

16 100% of the royalty shall be considered as royalty paid on patent in the 1394 Patent Portfolio in the country of Sale of such Product. Likewise, if the 1394 Patent Portfolio includes no 1394 Essential Patent(s) in the country of Sale of such Product, 100% of the royalty on such Product shall be considered as royalty paid on the Patent in the 1394 Patent Portfolio Patent(s) in the country of Manufacture of such Product. For the purposes of calculation of royalties under this Article only, a 1394 Essential Patent(s) which covers only IEC shall be deemed to have one half the value of any other 1394 Essential Patent Royalties collected and allocated to each country in accordance with Section of this Agreement shall be apportioned to each Party based on the following formula: (P/N) x M, where P is the number of the Party s Patent(s) in the 1394 Patent Portfolio weighted pursuant to Section in the country, N is the total number of 1394 Patent Portfolio Patent(s) weighted pursuant to Section in that country, and M is the total royalties considered paid on 1394 Patent Portfolio Patent(s) in that country weighted in accordance with Section herein Revenues shall be distributed to the Parties, net of any fees due the Licensing Administrator, by the Licensing Administrator quarterly concurrently with reports of the Licensing Administrator accounting for the share of revenues distributed to each Party. 5.2 Apportionment of Liability

17 5.2.1 Any and all payments arising from indemnification of the Licensing Administrator under the Licensing Administrator Agreement shall be apportioned among the Parties pro rata as to each of its Patent(s) in the 1394 Essential Patent Portfolio which is implicated by the claims The Administrative Committee shall determine, by at least 2/3 vote of its members, each Party s share of the indemnification payments payable pursuant to Section of this Agreement, and each Party shall pay the Licensing Administrator such calculated share of the indemnification payments. In the event that a Party does not pay its share of the indemnification payments pursuant to Section of this Agreement, the Administrative Committee, upon the approval of at least 2/3 of its members, may provide written instructions to the Licensing Administrator requiring the withholding of distributions to the non-paying Party until that Party s share of the indemnification payments are fully paid. 5.3 Apportionment of Expenses Unless otherwise provided herein, each Party shall bear its own expenses incurred in performance of this Agreement Each Party, pursuant to Section 3.6.2, shall contribute to any reimbursement of the reasonable expenses of the Licensing Administrator in bringing a lawsuit or other proceeding to enforce a 1394 Patent Portfolio License(s) ( Contract Enforcement Expenses ) which has not been disapproved pursuant to Section 3.6.1, pro rata based on the ratio of the portion of the expected monetary recovery from the enforcement action distributable to the Party to the total expected monetary recovery from the enforcement action. Reimbursement of Contract Enforcement Expenses by the Parties pursuant to this Section shall be from revenues

18 distributed to each Party pursuant to Section 5.1 of this Agreement, only to the extent that such revenues are accrued and distributed to the parties. To the extent that there are any unreimbursed Contract Enforcement Expenses at the time of a revenue distribution pursuant to Section 5.1 of this Agreement, such unreimbursed Contract Enforcement Expenses shall be apportioned to each Party in accordance with this Section 5.3.2, only up to the amount of the revenue distribution to the Party. The Licensing Administrator shall propose to the Administrative Committee each Party s share of any reimbursement of the Contract Enforcement Expenses calculated in accordance with the terms of this Section 5.3.2, which proposal shall become effective upon approval of at least 2/3 of the members of the Administrative Committee. In the event that the Administrative Committee does not approve the Licensing Administrator s proposal, the Licensing Administrator shall provide a revised proposal to the Administrative Committee for each Party s share of any reimbursement of Contract Enforcement Expenses calculated in accordance with the apportionment set forth in this Section Each Party shall contribute to the reimbursement of the reasonable costs of an audit of the Licensing Administrator, pro rata based on the ratio of the total revenues distributed or distributable to the Party pursuant to Section 5.1 of this Agreement at the time when expenses for such audit accrue, to the total revenues distributed or distributable to the Parties pursuant to Section 5.1 of this Agreement at such time. The Administrative Committee shall determine each Party s share of the reasonable cost of such an audit of the Licensing Administrator, which determination shall be approved by at least 2/3 of its members In the event that a Party does not pay its share of fees, or expenses pursuant to Sections or of this Agreement, the Administrative Committee, upon the approval of at least 2/3 of its members, shall provide written

19 6. AMENDMENTS instructions to the Licensing Administrator requiring the withholding of distributions pursuant to Section 5.1 of this Agreement to the non-paying Party until that Party s share of the fees and expenses are fully paid. 6.1 This Agreement shall be amended to add a new party that has the right to license or sublicense a 1394 Essential Patent(s) as determined by one or more Patent Consultant(s) and which has requested in writing to become a Party to this Agreement. Any Party(ies) receiving written notification from a prospective new party requesting to become a party to this Agreement and identifying the Patent(s) that the prospective Patent Consultant has determined to be a 1394 Essential Patent(s) shall advise all other Parties of such notification An Amendment to this Agreement to add the prospective new party as a Party to this Agreement shall be made if the Patent Consultant determines that the Patent(s) identified by the prospective new party is a 1394 Essential Patent(s) in the country which issued the Patent(s). 6.2 Reimbursement of Start-Up Expenses by New Party. In the event that this Agreement is amended to add a new party, within ten (10) Days of such amendment the new party shall partially reimburse each of the Original Parties for start-up expenses paid by the Original Parties. Such reimbursement shall be paid to the Licensing Administrator and shall be in the aggregate amount of Twenty-Five Thousand United States Dollars (U.S.$25,000), and shall be distributed to the Original Parties by the Licensing Administrator, without fee, and apportioned to each Original Party based on the percentage of Patent(s) each Party has in the 1394 Patent Portfolio. 6.3 Amendment of the 1394 Patent Portfolio License. In the event that the Licensing Administrator requests an amendment to the 1394 Patent Portfolio License which the Licensing Administrator believes would facilitate its licensing efforts or increase the number of 1394 Patent Portfolio Licenses granted, such amendment may be made only upon 3/4 vote of the members of the Administrative Committee,

20 except for amendments of the royalty rates, term, scope of the license grant or definition of 1394 Essential Patent(s) set forth in the 1394 Patent Portfolio License, which shall require unanimous vote of the Administrative Committee. Any Amendment to the 1394 Patent Portfolio License approved by the parties under this Section 6.3 shall be made to all future 1394 Patent Portfolio Licenses granted by the Licensing Administrator, and at the option of the sublicensee, may be made to existing 1394 Patent Portfolio Licenses if consistent with the terms and conditions of such License and applied prospectively. Where a Party opposes a substantive amendment to a material provision of the 1394 Patent Portfolio License, which amendment is made in accordance with this Section 6.3, such Party opposing the amendment has the right of termination in accordance with Section 7.2 of this Agreement. Such termination shall be effective immediately upon receipt by the Licensing Administrator of the Party s written election to terminate. 7. TERM AND TERMINATION 7.1 Term. For each Party, this Agreement expires upon the expiration of the Party s last to expire Patent(s) in the 1394 Patent Portfolio, upon the final determination that all of a party s patents in the 1394 Patent Portfolio are not Essential Patent(s) or upon final adjudication by a court of competent jurisdiction of invalidity or unenforceability of all of the Party s Patent(s) in the 1394 Patent Portfolio, from which adjudication no appeal is taken or allowed. 7.2 Voluntary Termination by a Party. Each Party shall have the right after September 30, 2000, and upon written notice to all other Parties and the Licensing Administrator, to terminate with respect to itself all but not less than all of the following: (1) this Agreement; (2) the right of the Licensing Administrator to grant additional sublicenses under its license or sublicense pursuant to Section 2.3 of this Agreement; and (3) the Licensing Administrator Agreement entered into pursuant to Section 2.2 of this Agreement. Upon such termination, the terminating Party shall have no further right to participate as a member of the Administrative Committee

21 7.2.1 All sublicenses granted by the Licensing Administrator under the terminating Party s Patent(s) in the 1394 Patent Portfolio prior to the effective date of termination of the Licensing Administrator s right to grant additional sublicenses thereunder, in accordance with Section 7.2, shall remain in full force and effect, and shall be subject to Section 2.8 of this Agreement and be entitled to renewal pursuant to Section 6.1 of the 1394 Patent Portfolio License. Any sublicensing of the terminating party s Patent(s) in the 1394 Patent Portfolio after notice of termination and before the effective date of termination shall be subject to Section 2.8 of this Agreement Termination under Section 7.2 of this Agreement shall be effective thirty (30) Days after giving of such notice, except as otherwise provided in Section A Party that terminates in accordance with Section 7.2 shall be entitled to continue to receive its apportioned share of revenues in accordance with Section 5.1 of this Agreement; provided, however, for each distribution of revenues made by the Licensing Administrator after termination, the terminating Party s apportioned share shall (i) be based solely on the total revenues derived under all 1394 Patent Portfolio Licenses (and all subsequent renewals thereof) that were granted by the Licensing Administrator before the effective date of such Party s termination; and (ii) not be less than its share of royalties computed as above and in accordance with Section 5.1 hereof using the royalty rate payable under Section 3.1 of the 1394 Patent Portfolio License in effect at the time the terminating Party gave written notice of its intent to terminate. 7.3 Survival. The following provisions of this Agreement shall survive expiration or termination of this Agreement: Payment of the fees of the Patent Consultant(s) pursuant to Section of this Agreement, to the extent that such expenses have accrued as of the date of expiration. With

22 respect to a Party that has terminated in accordance with Section 7.2 of this Agreement, the terminating Party s share of the payment under this Section shall be in proportion to royalties distributed to the Party pursuant to Section to the total royalties distributed to all Parties Payment of the Licensing Administrator s fee, payment of reasonable audit expenses pursuant to Section 5.3.3, and reimbursement of the Licensing Administrator s reasonable enforcement expenses pursuant to Section of this Agreement, to the extent that such expenses have accrued as of the date of expiration. With respect to a Party that has terminated in accordance with Section 7.2 of this Agreement, the terminating Party s share of the payment under this Section shall be in proportion to royalties distributed to the Party pursuant to Section to the total royalties distributed to all Parties The right to receive royalty distributions pursuant to Section 5.1 of this Agreement, to the extent that such right has accrued as of the date of expiration. With respect to a Party that has terminated in accordance with Section 7.2 of this Agreement, the terminating party shall continue to have the right to receive distributions pursuant to Section of this Agreement. 8. MISCELLANEOUS PROVISIONS 8.1 Notice All notices required or permitted under this Agreement shall be sent by either fax, Certified Mail with return receipt requested or by overnight delivery by commercial or other

23 service which can verify delivery. Such notices shall be effective as of the date the notice is mailed. 8.2 Assignment An assignment by a Party of a 1394 Patent Portfolio Patent(s) to a third party shall be subject to: (1) the terms and conditions of this Agreement, (2) the license or sublicense granted by the Party to the Licensing Administrator pursuant to Section 2.3 of this Agreement, (3) to all existing and, unless the Party or its assignee has terminated the Licensing Administrator s right to grant further sublicenses pursuant to Section 7.2 of this Agreement, any future sublicenses or additional sublicenses granted by the Licensing Administrator under the assigned Patent(s), and (4) the assignee executing this Agreement and becoming a Party thereto In the event that a Party assigns all of its Patents in the 1394 Patent Portfolio to a third party(ies), this Agreement shall be deemed terminated as to the assigning Party. Such termination shall be considered a voluntary termination pursuant to Section 7.2 herein An assignment by a Party of its license and/or sublicense granted to the Licensing Administrator pursuant to Section 2.3 herein to a third party shall be subject to: (1) the terms and conditions of this Agreement, (2) to all existing and, unless the Licensor or its assignee has terminated the Licensing Administrator s right to grant further sublicenses pursuant to Section 7.2 of this Agreement, any future sublicenses granted by the Licensing Administrator under the assigned license and/or sublicense, and (3) the assignee executing this Agreement and becoming a Party thereto. This Agreement shall be deemed terminated as to the assigning Party, and such termination shall be considered a voluntary termination pursuant to Section 7.2 herein

24 8.2.3 Each Party shall have the right to assign its right to receive royalty distributions hereunder to a third party. 8.3 Relationship. Nothing in this Agreement shall be construed to create a principal-agent relationship, partnership or joint venture between the Parties, or between any Party and the Licensing Administrator or give rise to any fiduciary duty from one Party to any other Party or the Licensing Administrator. 8.4 Binding on Successors. This Agreement shall be binding upon and inure to the benefit of the Parties and their successors and assigns. 8.5 Article and Section Headings. The Article and Section headings contained in this Agreement are for reference purposes only and shall not in any way control the meaning or interpretation of this Agreement. 8.6 Representation of Counsel; Mutual Negotiation. Each Party has been represented by counsel of its choice in negotiating this Agreement. This Agreement shall therefore be deemed to have been negotiated at arm s length, with the advice and participation of counsel, and prepared at the joint request, direction, and instruction of the Parties, and shall be interpreted in accordance with its terms without favor to any Party. 8.7 English Language. The Parties have required that this Agreement and all documents relating thereto be drawn up in the English language. 8.8 Choice of Law. The validity, construction and performance of this Agreement shall be governed by the substantive law of the State of New York, United States of America, without regard to the conflict of law rules in the jurisdiction where an action based on this Agreement is brought. 8.9 No Third Party Beneficiaries. Nothing in this Agreement shall be construed to give rise to any obligation on any Party hereto for the benefit of a third party or to confer any rights on any third party

25 8.10 Entire Agreement The provisions of this Agreement, including its attachments and any amendments, and other agreements referred to herein constitute the entire agreement among the Parties, and supersede any and all prior communications and understandings, oral or written, between the Parties relating to the subject matter hereof Except for supplementation of or deletion from the 1394 Patent Portfolio, no amendment to this Agreement shall be effective unless such amendment is in writing and specifically references this Agreement, and is signed by all Parties hereto Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable or contrary to law, the remaining provisions of the Agreement will remain in full force and effect provided that the rights and obligations of the Parties hereunder are not materially affected by any such court decision. 9. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which when taken together shall constitute one and the same instrument. Date: Apple Computer Inc. By: (authorized signature) (title) Date: Compaq Computer Corp

26 By: (authorized signature) (title) Date: Koninklijke Philips Electronics N.V. By: (authorized signature) (title) Date: Matsushita Electric Industrial Co, Ltd. By: (authorized signature) (title) Date: Sony Corporation By: (authorized signature) (title) Date: Toshiba Corporation By: (authorized signature) (title)