-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KkDBThoorRpJDw8v6MfCmOROVYiGBoE61cBhLBZ50N1RKFwp7PdrNO0Cdd8h+nCG fkDu30aJ5Y0WbFCh2ZaiXw== 0001045969-03-000479.txt : 20030221 0001045969-03-000479.hdr.sgml : 20030221 20030221163859 ACCESSION NUMBER: 0001045969-03-000479 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20030221 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030221 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERDIGITAL COMMUNICATIONS CORP CENTRAL INDEX KEY: 0000354913 STANDARD INDUSTRIAL CLASSIFICATION: PATENT OWNERS & LESSORS [6794] IRS NUMBER: 231882087 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11152 FILM NUMBER: 03576317 BUSINESS ADDRESS: STREET 1: 781 THIRD AVE CITY: KING OF PRUSSIA STATE: PA ZIP: 19406-1409 BUSINESS PHONE: 6102787800 MAIL ADDRESS: STREET 1: 781 THIRD AVE STREET 2: 2200 RENAISANCE BLVD STE 105 CITY: KING OF PRUSSIA STATE: PA ZIP: 19406-1409 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL MOBILE MACHINES CORP DATE OF NAME CHANGE: 19920703 8-K 1 d8k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 -------------------------------- Form 8-K Current Report PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): February 21, 2003 INTERDIGITAL COMMUNICATIONS CORPORATION (Exact name of registrant as specified in charter) PENNSYLVANIA 1-11152 23-1882087 (State or Other Jurisdiction of (Commission (I.R.S. Employer Incorporation or Organization) file number) Identification Number) 781 Third Avenue, King of Prussia, Pennsylvania 19406-1409 (Address of principal executive offices) (610) 878-7800 (Registrant's telephone number, including area code) Item 5. Other Events. This 8-K is being filed in order to file as exhibits certain contracts which the Company and/or its subsidiary, InterDigital Technology Corporation ("ITC"), have entered into between May 8, 1995 and January 15, 2002. These contracts have previously been described in the Company's filings with the Securities and Exchange Commission. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (c) Exhibits Exhibit 10.51: Patent License Agreement dated May 8, 1995 between InterDigital Technology Corporation and NEC Corporation. The Appendices to the Patent License Agreement are not being filed as a part of this Exhibit 10.51. The Company agrees to furnish supplementally a copy of any such Appendices to the Securities and Exchange Commission upon request. Exhibit 10.52: Amendment to the Patent License Agreement of May 8, 1995 dated January 15, 2002 between InterDigital Technology Corporation and NEC Corporation. The Exhibit to the Amendment to the Patent License Agreement is not being filed as a part of this Exhibit 10.52. The Company agrees to furnish supplementally a copy of such Exhibit to the Securities and Exchange Commission upon request. Exhibit 10.53: Narrowband CDMA and Third Generation Patent License Agreement dated January 15, 2002 between InterDigital Technology Corporation and NEC Corporation. The Attachments and Exhibit to the Patent License Agreement are not being filed as a part of this Exhibit 10.53. The Company agrees to furnish supplementally a copy of any such Attachments and of such Exhibit to the Securities and Exchange Commission upon request. Exhibit 10.54: Settlement Agreement dated January 15, 2002 between InterDigital Technology Corporation and NEC Corporation. Exhibit 10.55: The TDD Development Agreement between and among InterDigital Communications Corporation, InterDigital Technology Corporation, and Nokia Corporation, dated as of January 22, 1999. Exhibit 10.56: Amendment No. 1 to the TDD Development Agreement dated September 30, 2001 between and among InterDigital Communications Corporation, InterDigital Technology Corporation, and Nokia Corporation. Exhibit 10.57: PHS and PDC Subscriber Unit Patent License Agreement dated March 19, 1998 between InterDigital Technology Corporation and Sharp Corporation. The Exhibits to the Patent License Agreement are not being filed as a part of this Exhibit 10.57. The Company agrees to furnish supplementally a copy of such Exhibits to the Securities and Exchange Commission upon request. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. INTERDIGITAL COMMUNICATIONS CORPORATION Date: February 21, 2003 By: /s/ R.J. Fagan ------------------------------------------ Richard J. Fagan Executive Vice President and Chief Financial Officer -3- EXHIBIT INDEX Exhibit No. Description ----------- ----------- 10.51 Patent License Agreement dated May 8, 1995 between InterDigital Technology Corporation and NEC Corporation 10.52 Amendment to the Patent License Agreement of May 8, 1995 dated January 15, 2002 between InterDigital Technology Corporation and NEC Corporation 10.53 Narrowband CDMA and Third Generation Patent License Agreement dated January 15, 2002 between InterDigital Technology Corporation and NEC Corporation 10.54 Settlement Agreement dated January 15, 2002 between InterDigital Technology Corporation and NEC Corporation 10.55 The TDD Development Agreement between and among InterDigital Communications Corporation, InterDigital Technology Corporation, and Nokia Corporation, dated as of January 22, 1999 10.56 Amendment No. 1 to the TDD Development Agreement dated September 30, 2001 between and among InterDigital Communications Corporation, InterDigital Technology Corporation, and Nokia Corporation 10.57 PHS and PDC Subscriber Unit Patent License Agreement dated March 19, 1998 between InterDigital Technology Corporation and Sharp Corporation -4- EX-10.51 3 dex1051.txt NEC 2G PATENT LICENSE AGREEMENT EXHIBIT 10.51 CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND SEPARATELY FILED WITH THE COMMISSION. INTERDIGITAL TECHNOLOGY CORPORATION PATENT LICENSE AGREEMENT THIS IS A PATENT LICENSE AGREEMENT (the "Agreement"), dated May 8, 1995, (the "Effective Date") between InterDigital Technology Corporation ("ITC"), a Delaware corporation with a mailing address of 913 Market Street, Suite 802, Wilmington, DE 19801, and NEC Corporation ("Licensee"), a Japanese corporation with a mailing address of [**]. BACKGROUND ITC owns and has the right to license the Licensed Patents (defined below) and is willing to grant worldwide, non-exclusive licenses thereunder on the terms set forth below. Licensee desires to obtain such a license. NOW, THEREFORE, in consideration of the mutual promises contained herein, and intending to be legally bound, the parties agree as follows: 1 Definitions. As used herein: (a) "Affiliate" means IDC, or a corporation or other legal entity fifty percent (50%) or more of the voting stock or control of which is owned, directly or indirectly, by Licensee, IDC, or ITC, as the case may be. (b) "Cellular Unit" means a Covered Subscriber Unit other than a PCS/PHS Unit or Wireless Local Loop Subscriber Unit. (c) "Covered Infrastructure Unit" means Infrastructure Equipment that is designed to operate in accordance with a Covered Standard. (d) "Covered Standards" mean IS-54, IS-136, GSM, DCS-1800/1900, PDC, PHS and additional standards for digital wireless communications products as added pursuant to Paragraph 4, below, and various derivations thereof that do not fundamentally alter the character thereof, where the use and operation of products in conformity with such standards is covered by one or more claims of the Licensed Patents. (e) "Covered Subscriber Units" means Subscriber Units that are built to operate in accordance with one or more Covered Standards. (f) "DCS 1800/1900" means the compatibility standard developed for personal communications systems based on GSM but intended for use in the 1.8Ghz and/or 1.9 Ghz frequency bands. ** Material omitted and filed separately with the Commission. (g) "GSM" means the compatibility standard developed for the 900 MHZ PanEuropean digital TDMA cellular mobile radio communication system, promulgated by the European Telecommunication Standards Institute, as amended from time to time. (h) "IDC" means InterDigital Communications Corporation. ITC is a wholly owned subsidiary of InterDigital Patents Corporation which is an Affiliate of IDC. (i) "Infrastructure Equipment" means mobile switching centers, base station controllers, base stations, digital transceivers, and similar telephony equipment, which are used to interconnect a Covered Subscriber Unit to the wired telephone network. Switching equipment may be included in the mobile switching center or the base station controller. (j) "IS-54" means Cellular Dual Mode Mobile Station - Base Station Compatibility Standards, promulgated by the Electronics Industry Association and the Telecommunications Industry Association, as amended from time to time. (k) "IS-136" means an improved version of 15-54 which includes, among other things, a digital control channel. (l) "Licensed Patents" means every issued patent derived from a patent application which bears a first effective filing date on or before February 28, 2002 and owned at any time by ITC or its Affiliates or for which ITC has the right to grant the licenses conveyed hereunder, (including utility models but excluding design patents and design registrations) in any country of the world, which covers the manufacture, use, sale or lease of Subscriber Units and/or Infrastructure Equipment for use in TDMA based digital wireless telecommunications systems. Licensed Patents shall also include published patent applications which, but only to the extent that ITC would have the right, under the laws of the nation in which said applications are published, to recover damages for infringement of said application during the period of publication. Licensed Patents shall not include patents of an entity that acquires IDC. Appendix B contains a complete listing of the existing patents and patent applications relating to TDMA based digital wireless telecommunications systems owned by ITC (including the expiration date of each such patent). ITC shall update such list annually or as otherwise requested by Licensee during the term of this Agreement to add newly filed or issued patent applications or patents. The identity and contents (if provided) of any patents applications shall be maintained in confidence by Licensee; provided that Licensee shall have no confidentiality obligation with respect to any information which: (i) is already publicly available, or becomes publicly available except by Licensee's breach of the confidentiality obligation herein, (ii) is already known to Licensee at the time of the disclosure, (iii) is legitimately obtained by Licensee from a third party without confidentiality obligation, or (iv) is independently developed by Licensee at any time. 2 (m) "Licensed PDC Infrastructure Equipment" means PDC Infrastructure Equipment licensed under this Agreement. (n) "Licensee" means the company identified as "Licensee" on page 1 of this Agreement, and its Affiliates. (o) "Manufacturer's Average Selling Price" means the average price at which a Covered Subscriber Unit is sold by the manufacturer in an arms' length transaction after deducting the following items to the extent actually paid: (i) usual trade discounts, (ii) packing costs, (iii) costs of insurance and transportation, and (iv) import, export, excise, sales and value added taxes and custom duties. The determination of the Manufacturer's Average Selling Price shall be made once each calendar year and shall be based on sales of the applicable model of Covered Subscriber Unit in the immediately preceding calendar quarter. (p) "Net Selling Price" means the amount actually invoiced to the customer for a Covered Infrastructure Unit less packing, insurance and shipping costs, applicable import, export and excise duties, returns, trade discounts given, insurance and installation costs, to the extent included in the Net Selling Price, [**]. If base stations or other Infrastructure Equipment contain integrated switching equipment, royalties shall be payable with respect to the entire cost of such base stations or other Infrastructure Equipment, provided, however, [**]. (q) "PCS Unit" means a Covered Subscriber Unit that (i) complies with DCS 1800/1900 and (ii) whose Manufacturer's Average Selling Price is fifty percent (50%) or less of the Manufacturer's Average Selling Price of a typical GSM Subscriber Unit in the country in which such Subscriber Unit is sold. Any DCS 1800/1900 Subscriber Unit that does not satisfy both of the foregoing conditions shall be treated as a Cellular Unit for purposes of this Agreement. (r) "PCS/PHS Unit" means a (i) Subscriber Unit that complies with PHS, or (ii) a PCS Unit. (s) "PDC" means the RCR STD 27 compatibility standard developed in Japan known as PDC or Personal Digital Cellular or PanAsian Digital Cellular for TDMA ______________ ** Material has been omitted and filed separately with the Commission. 3 digital wireless mobile radio communication systems, as amended from time to time. (t) "PHS" means the RCR STD 28 compatibility standard developed in Japan and known as the Personal Handyphone Standard, as amended from time to time. (u) "PDC Infrastructure Equipment" means Infrastructure Equipment designed for use in conjunction with PDC Subscriber Units. (v) "PDC Infrastructure Unit" means a PDC base station which is used as the method of tracking the royalties payable for PDC Infrastructure Equipment. (w) "Subscriber Unit" means a radiotelephone, whether fixed, mobile, transportable, vehicular, portable or hand-held, adapted for use by a single person. A Subscriber Unit may be a Wireless Local Loop Subscriber Unit. (x) [**] (y) TDMA" means time division multiple access. (z) "Unlicensed Subscriber Unit" means a Subscriber Unit built in accordance with a Covered Standard by a third party that is not licensed under the Licensed Patents for the manufacture, use and sale of such Subscriber Unit. (aa) "Wireless Local Loop Subscriber Unit" means a Subscriber Unit, other than a PHS Subscriber Unit, used in a digital wireless communication system that is specifically designed for the purpose of providing fixed wireless telephone service. 2 License Grant. ITC hereby grants to Licensee a non-exclusive, worldwide, royalty bearing license under the Licensed Patents to make, have made, import, use, sell, lease and/or otherwise distribute Covered Subscriber Units and Covered Infrastructure Units. 3 Limitations on License Grant. (a) Third party purchasers of Covered Subscriber Units or Covered Infrastructure Units purchased directly or indirectly from Licensee shall have the right to use and sell such purchased products for their normal or expected uses without obligation under patents to ITC or its Affiliates. (b) Notwithstanding the terms of subparagraph (a), no license is granted by estoppel or implication to any third party customer of Covered Subscriber Units to make, use or sell Infrastructure Equipment, and no license is granted by estoppel or implication to any third party customer of Covered Infrastructure Units to make, use or sell Subscriber Units, and any claims that ITC may have against a third party manufacturer of Unlicensed Subscriber Units that the use of such Unlicensed Subscriber Units with Infrastructure Equipment licensed hereunder ____________ ** Material has been omitted and filed separately with the Commission. 4 contributorily infringe or induce the infringement of any claims of any of the Licensed Patents are expressly reserved by ITC hereunder. (c) Notwithstanding the terms of subparagraph (b), in no event shall Licensee be held liable for contributory infringement or inducing infringement (or under any similar theory of liability), based on the uses made of Covered Subscriber Units or Covered Infrastructure Units by direct or indirect purchasers, regardless of the manner in which such Covered Subscriber Units or Covered Infrastructure Units are sold, marketed or promoted by Licensee. 4 Additional Covered Standards. (a) ITC and Licensee shall each have the right to designate additional standards (including, without limitation, Licensee product architectures, even if such architectures are not the subject of an industry standard) as candidates for adoption as Covered Standards, by giving written notice to the other. Any such designation shall include a full description of the standard, and a list of those patent claims which are deemed to cover the use and operation of Licensee's products in conformity with that standard. (b) If candidates for adoption as additional Covered Standards are designated by ITC, Licensee shall retain the right to object to such designation on the ground that such candidate is not a Covered Standard. If the parties are unable to reach agreement on this issue, this dispute will be resolved under the dispute resolution provisions of Paragraph 18. (c) If a candidate for adoption as an additional Covered Standard is adopted as such, either by agreement of the parties or through the Paragraph 18 dispute resolution process, the parties shall enter into good faith negotiations to determine an appropriate royalty applicable to Covered Subscriber Units or Covered Infrastructure Units which comply with such additional Covered Standard. Such negotiations shall take into consideration the Manufacturer's Average Selling Price of such product, the Licensed Patents covering such product and the royalty rates and terms contained herein. (d) In the event that an additional Covered Standard is adopted prior to the exhaustion of prepaid royalties, Licensee shall have the option to apply prepaid royalties towards products compliant with such additional Covered Standard. Such prepaid royalties will be applied at a rate consistent with the ratio between the royalty rate applicable to already covered products and the royalty rate applicable to newly covered products. For example, if a 1995 royalty rate of $[**] per unit were applied to a Subscriber Unit covered by an additional Covered Standard, sales of such Subscriber Unit would be applied against the prepaid royalty credit at a rate of two such Subscriber Units for every PCS/PHS unit which would otherwise be applicable against the royalty credit, reflecting the ratio between $[**] and $[**]. (e) In no event shall the adoption of additional Covered Standards increase the royalty payable on any Covered Infrastructure Unit or Covered Subscriber Unit ____________ ** Material has been omitted and filed separately with the Commission. 5 which is or would be already subject to payment of royalties hereunder, or affect the allocation of the prepaid royalties to such a product. Thus, if a particular Licensee product is already subject to royalty payments based on the compliance of that product with an existing Covered Standard, the royalty payable on current and future sales of such product will not be affected by the adoption of an additional Covered Standard with which that product is compliant. In addition, if Licensee introduces a product in the future, and if that product is compliant with a Covered Standard listed in the originally executed version of this Agreement, the adoption of an additional Covered Standard with which that product is compliant will not increase the royalties otherwise payable on that product. 5 Payment of License Fees. (a) Advance Payment. (i) Licensee shall pay ITC Twenty Three Million, Five Hundred and Thirty One Thousand, Two Hundred and Sixty Six U.S. Dollars ($23,531,266) as the unconditional irrevocable payment in full for the license granted under Paragraph 2 hereof on the sale of the first [**] Cellular Units, net of credits and returns. (ii) Licensee shall pay ITC Three Million, Four Hundred Eight Thousand Fourteen U.S. Dollars ($3,408,014) as the unconditional irrevocable payment in full for the license granted under Paragraph 2 hereof on the anticipated revenue associated with the sale of Covered Infrastructure Units listed in Appendix A, net of credits and returns. (iii) Five Million U.S. Dollars ($5,000,000) of the advance payment specified in subparagraphs (i) and (ii) has already been paid by Licensee. The remaining amount of the advance payment specified in subparagraphs (i) and (ii), less any Japanese withholding taxes required to be withheld, will be paid by wire transfer on or before May 25, 1995. (iv) At Licensee's option, advance payments may be applied to any product licensed hereunder.[**] Thus, Licensee shall have the right to apply payments made under subparagraph (i) to Covered Infrastructure Units, and the right to apply payments made under subparagraph (ii) to Cellular Units. (v) The amount of the prepayment made under this subparagraph 5(a) has been determined on the basis of the sales projections set forth on the spreadsheet attached hereto as Appendix A, using the royalty rates set forth in paragraph 5(b) with an interest rate of [**] percent [**]% used to compute present value and with a discount of [**] percent [**]% for economic uncertainty and as consideration for prepayment of royalties. Licensee represents that its sales projections are fair and reasonable, and represent its best current estimates of its sales of Covered Subscriber Units and Covered Infrastructure Units. In the event that the actual number of Covered Subscriber Units or Covered Infrastructure Units sold by Licensee in a given year are more than 25% greater or less than the estimate set out in the Appendix A hereto, the number of such units covered by such prepaid ____________ ** Material has been omitted and filed separately with the Commission. 6 royalties shall be recalculated to take into account the shorter or longer time for which the [**]% interest rate is being applied. Any dispute regarding any such adjustment shall be resolved under the terms of Paragraph 18. (b) Running Royalties. (i) Royalty rate. After exhaustion of the payment under subparagraph 5(a), Licensee shall pay royalties to ITC on each sale (exclusive of returns and credits) of a Covered Subscriber Unit or a Covered Infrastructure Unit as follows: Cellular Units: Sold Prior to December 31, 1995 - $[**] Sold Prior to December 31, 1996 - $[**] Sold thereafter - $[**] PCS/PHS Units: Sold Prior to December 31, 1995 - $[**] Sold Prior to December 31, 1996 - $[**] Sold thereafter - $[**] Covered Infrastructure Units: [**]% of the Net Selling Price of Covered Infrastructure Equipment (ii) Cap on royalties. (1) The royalty rates set forth in subparagraph (i) above for Cellular Units and PCS/PHS Units are not intended to exceed [**]% of the Manufacturer's Average Selling Price for the applicable type of Covered Subscriber Units. Accordingly, once the advance payment is exhausted, Licensee shall have the option of providing ITC with information sufficient to determine the Manufacturer's Average Selling Price for each model of Covered Subscriber Unit. If the royalty provided for hereunder exceeds [**]% of the Manufacturer's Average Selling Price for a model of Covered Subscriber Unit, the royalty associated with such model of Covered Subscriber Units shall thereafter be reduced to [**]% of the Manufacturer's Average Selling Price for such Covered Subscriber Units. In each succeeding year, Licensee shall provide ITC with sufficient information to determine the Manufacturer's Average Selling Price of any Covered Subscriber Units for which the royalty has been reduced as described in this subparagraph, and the royalty for such Covered Subscriber Units shall be adjusted to take into account any subsequent price changes, with such royalty always to be maintained at the lower of (1) the rate specified in subparagraph (i), above, or (2) [**]%. (2) If required for purposes of subparagraph (ii)(1), above, Licensee shall make sufficient information available to ITC to enable it to independently verify the Manufacturer's Average Selling Price. If such information is not available, the parties shall jointly determine ____________ ** Material has been omitted and filed separately with the Commission. 7 a temporary Manufacturer's Average Selling Price to be used for one calendar quarter until an actual average Manufacturer's Average Selling Price can be determined as provided for in this Paragraph. ITC shall hold in confidence all Manufacturer's Average Selling Price supporting information provided hereunder. (c) For purposes of this Agreement, the manufacture, sale, lease and/or use of a Covered Subscriber Unit or Covered Infrastructure Equipment shall apply against the applicable prepaid royalty credit of Paragraph 5(a) or the applicable running royalties of Paragraph 5(b), as the case may be, if manufactured, used, sold or leased in (i) the United States, (ii) any country where a valid foreign counterpart of U.S. Patent No. [**] has issued or been published for opposition at the time in question, but only if said counterpart contains claims which do not differ materially from those of the [**] Patent, or (iii) any country where a foreign counterpart application to U.S. Patent No. [**] has been published if, under the law of the applicable country, ITC is or shall be entitled to recover damages based on such publication, but only if said counterpart contains claims which do not differ materially from those of the [**] Patent. At the adjustment meetings provided for in Paragraph 7 hereof, if requested by Licensee, the parties shall consider whether and which Covered Subscriber Units or Covered Infrastructure Equipment of Licensee are within the scope of the issued claims of any non-U.S. patent of the type referred to in subparagraph 5(c)(ii) or (iii), above. Nothing herein shall be construed as affecting in any manner the territorial scope of the license set forth in Paragraph 2, above. (d) Neither ITC nor its Affiliates currently have any issued Japanese patents or published Japanese patent applications for opposition which relate to TDMA digital wireless communications systems. Nothing herein contained shall be deemed to require that royalties be paid on, or a portion of the prepayment be allocated to, Licensee products manufactured, used and sold in Japan which are compliant with PHS, PCS or PDC, until and unless ITC acquires one or more Licensed Patents in Japan covering these standards. (e) Only one royalty shall be payable by Licensee to ITC under this Agreement based on any Covered Subscriber Unit or Covered Infrastructure Unit. If Licensee incorporates into a Covered Subscriber Unit or a Covered Infrastructure Unit apparatus obtained from a third party, for which a license under the Licensed Patents already exist, the value of such apparatus shall be excluded from the royalty base for such product. In the event the relevant product is a Covered Subscriber Unit, such exclusion shall take the form of reducing the unit royalty payment required for such Covered Subscriber Unit. (f) Any royalties payable on a published application shall be paid, or amounts subtracted from the prepayment, upon the issuance of the patent corresponding to said application, subject to the provisions of Paragraphs 5(c)(iii) and 7(e)(iii). 6 Wireless Local Loop Subscriber Units. (a) If Licensee makes, uses or sells Covered Subscriber Units which are Wireless ____________ ** Material has been omitted and filed separately with the Commission. 8 Local Loop Subscriber Units, ITC shall have the option of (1) treating such Wireless Local Loop Subscriber Units the same as other Covered Subscriber Units for royalty purposes or (2) imposing a royalty on such Wireless Local Loop Subscriber Units of [**] of the Manufacturer's Average Selling Price for each model of Wireless Local Loop Subscriber Unit. (b) In the event that ITC elects to impose a royalty on Wireless Local Loop Subscriber Units which is greater than the royalty which would otherwise be payable on such units as Covered Subscriber Units, Licensee shall have the option of terminating the royalty-free license which is granted pursuant to Paragraph 13 hereof. In such an event, the parties shall negotiate a cross-license, with or without royalties, as appropriate, for Wireless Local Loop Subscriber Units and UltraPhone products. Such cross-license may include a modification of the royalty rate which would be otherwise payable by Licensee on Wireless Local Loop Subscriber Units, and may include the payment of royalties by IDC or its Affiliates on UltraPhone sales. In the event the parties are unable to agree on the terms of such a cross-license, the dispute will be submitted to the dispute resolution process of Paragraph 18. 7 Adjustments to Royalties. (a) If requested by either party, the parties shall meet not more than annually during the term of this Agreement to discuss possible downward adjustments to royalties payable hereunder or other adjustments which may be required hereunder. Such adjustments may take the form of credits for additional units under the prepayment, or an adjustment of the running royalty rate, or both. (b) Adjustment meetings shall take place during the first calendar quarter of each year and shall alternate between Wilmington, DE and Tokyo, Japan. In the event the parties are unable to agree on adjustments, the dispute shall be submitted to the dispute resolution procedures of Paragraph 18 hereof. (c) Any adjustment pursuant to this Paragraph shall be effective on the date of the event giving rise to the right to have such an adjustment. (d) If Licensee is entitled to an adjustment of royalties as a result of the operation of this Paragraph, and Licensee has at the time of such entitlement not utilized all of the prepayment, Licensee shall receive a credit of additional Cellular Units and/or Covered Infrastructure Units which shall be determined pursuant to good faith negotiations between the parties, or pursuant to Paragraph 18 if such good faith negotiations are not successful. A credit under the prepayment will not preclude an additional adjustment of the running royalty rate. A credit under the prepayment will take into account a reasonable interest rate under the circumstances used for purposes of computing present value. (e) [**] [**] ____________ ** Material has been omitted and filed separately with the Commission. 9 (ii) The expiration of any Licensed Patent. (iii) The failure of any published application which constitutes a Licensed Patent to issue within two (2) years of ITC's identification of such application as a Licensed Patent, or the issuance of a patent from such application with claims materially different from those present in the application as published. (iv) The entry of any agreement, judgment, litigation settlement, arbitration award or the like, pursuant to which a third party obtains the right to a prospectively lower royalty payment under Licensed Patents for the manufacture, use or sale of Covered Subscriber Units or Covered Infrastructure Equipment. In such an event, the royalty rates under this Agreement shall be reduced by[**]. In evaluating whether Licensee is entitled to any reduction in royalty fees under these provisions for most favored licensee treatment, the economic values of all relevant factors (including but not limited to acquisitions of products by or from IDC, joint development projects with IDC, joint venture relationships with IDC, royalty advances, and royalty guarantees) will be taken into account. For purposes of this subparagraph, Covered Subscriber Units shall be deemed to be equivalent to products manufactured by third parties which are designed to operate in accordance with the same Covered Standards as particular Covered Subscriber Units. This subparagraph shall not apply to license agreements executed prior to the Effective Date. Any adjustment under this subparagraph will take into account the royalty rates applicable to the third party, determined, if relevant,[**] and the rate of sale of Cellular Units and/or Covered Infrastructure Units compared to the applicable rate set forth in Appendix A. (f) ITC shall be required to promptly inform Licensee of any event which might give rise to an adjustment under this Paragraph. In the event of an agreement, judgment, litigation settlement, arbitration award or the like, ITC shall promptly provide Licensee (or its independent outside counsel, if disclosure of the applicable document to Licensee is prohibited) with a copy of the relevant sections of the applicable documents. (g) [**] [**] [**] [**] 8 Payments. All running royalties payable shall be paid to ITC in U.S. Dollars on a quarterly basis, within forty-five (45) days after the end of each calendar quarter on products sold by Licensee during such calendar quarter. All applicable taxes which are required by law to be deducted from amounts payable to ITC (including deductions for Japanese withholding tax) shall be deducted from the royalties payable hereunder and paid to the relevant government authority by ____________ ** Material has been omitted and filed separately with the Commission. 10 Licensee on ITC's behalf. If any such deduction is required by the elevant government, Licensee will furnish ITC with appropriate documentation evidencing the payment of such tax as issued by the appropriate authority of such government. 9 Japanese Withholding Tax Provision. (a) For purposes of the applicability of Japanese withholding tax on the royalty advance, at Licensee's option, Licensee may either (i) pay on behalf of ITC the withholding tax on up to [**] of the advance royalties paid pursuant to Paragraph 5(a) hereof, or (ii) declare that at least [**]% of the anticipated manufacturing and sales plans of Licensee shall be allocated to non-Japanese source income, with the balance being allocated to Japanese source income. (b) With respect to any additional royalties which may be payable in the future to ITC by Licensee, if, and to the extent, permitted by Japanese tax law, no withholding shall be made with respect to Covered Subscriber Units or Covered Infrastructure Units manufactured outside of Japan, or manufactured in Japan but intended for sale outside of Japan, provided, however that ITC shall indemnify Licensee against underpayment of withholding. 10 Reports. (a) Until the exhaustion of the prepayment made hereunder, Licensee will provide to ITC an annual written report, setting forth the quantity of sales of each type of Covered Subscriber Unit and the number of Covered Infrastructure Units sold during such year, to the extent reasonably necessary for calculation of the amount of the prepayment applied to royalties hereunder. (b) Following the exhaustion of the prepayment, Licensee shall accompany each payment with a written report setting forth the quantity of each type of Covered Subscriber Unit and Covered Infrastructure Unit sold during the prior calendar quarter, to the extent reasonably necessary for calculation of royalties payable hereunder, and, if applicable, additional information sufficient to determine the royalties payable for units which are subject to royalty percentages. (c) All reports required under this paragraph will be certified to be complete and accurate by an officer of Licensee. (d) All information contained in any reports furnished under this paragraph shall be held in confidence by ITC. 11 Audits. (a) Licensee shall keep books and records adequate to accurately determine the payments due under this Agreement. The books and records must be retained for five (5) years after the delivery of the royalty report to which they relate. ITC shall have the right, no more than once per calendar year, to have an independent certified public accountant, who shall enter into an appropriate ____________ ** Material has been omitted and filed separately with the Commission. 11 nondisclosure agreement with Licensee, inspect all relevant books and records of Licensee on seven (7) business days notice and during regular business hours to verify the reports and payments required to be made hereunder. The auditor shall disclose to ITC no more information than is reasonably necessary to determine any royalties owed hereunder. Should an underpayment in excess of [**] percent ([**]%) be discovered, Licensee shall pay the cost of the audit. In any event, Licensee shall promptly pay any underpayment together with interest at the annual rate of [**] percent ([**]%). All information obtained through such audit shall be held in confidence by ITC. (b) Licensee shall have the right, no more than once per calendar year, to have a mutually acceptable independent certified public account, who shall enter into an appropriate nondisclosure agreement with ITC, inspect all relevant agreements, books and records, agreements, judgements, litigation settlements, arbitration awards and the like, relating to the Licensed Patents on seven (7) business days notice and during regular-business hours to verify the most favored licensee status of Licensee, taking into account the economic value of all relevant factors. The auditor shall disclose to Licensee no more information than is reasonably necessary for Licensee to verify its most-favored licensee status, and except in those extraordinary circumstances where the identity of a third party to an agreement or adjudication with ITC is essential information for the purposes of evaluating such agreement or adjudication, the auditor shall not disclose the identity of any such third party to Licensee. All information obtained through such audit shall be held in confidence by Licensee. 12 No Set Off. Licensee agrees and acknowledges that it has no right to, and shall not, attempt to set off amounts claimed to be owed based on any claim that it has or may have in the future against IDC or its Affiliates other than ITC, against amounts owed hereunder. 13 License Grant to IDC. Licensee hereby grants to IDC a worldwide, royalty free, paid-up, perpetual license under patents owned by it and its Affiliates, such license authorizing ITC and IDC to manufacture, use or sell any digital wireless telecommunications products based on the existing UltraPhone product line (including improvements thereof) manufactured and designed by or for IDC which are first offered for sale prior to one year from the Effective Date. 14 Additional Patent Licenses. With respect to any patents relating to digital wireless telephone systems owned by either party, or either party's Affiliates, which patents are not otherwise licensed hereunder, the owning party agrees to negotiate a reasonable license to make, have made, use, sell, lease and/or otherwise distribute Subscriber Units and Infrastructure Equipment on reasonable terms and conditions, taking into consideration the nature of the patent and the overall importance of the patent to the product. If no agreement can be reached on the nature of such terms, any dispute will be resolved under the dispute resolution procedures of this Agreement. 15 License Term. The term of this Agreement shall commence on the Effective Date and terminate upon the last-to-expire of the Licensed Patents applicable to ____________ ** Material has been omitted and filed separately with the Commission. 12 any Covered Standard, unless sooner terminated as provided herein. 16 Patent Marking. All Licensee Covered Subscriber Units intended for sale within the United States shall include a statement that they are licensed under U.S. Patents, including up to five patent numbers to be provided by ITC; provided that ITC shall represent and warrant that such patents cover such products and that all of its other licensees in the United States are also required to mark their corresponding products with such patent numbers. 17 Termination. (a) This Agreement may be canceled by either party, upon forty-five (45) days' prior written notice, if the other party is in breach of any of its material obligations hereunder and the breach is not remedied within the notice period. In the event that the other party submits the underlying dispute to the dispute resolution procedures of this Agreement, the termination shall be held in abeyance until such procedures are completed, and shall only take effect if said procedures result in a determination that the other party is in material breach. In such event, the other party shall be given forty-five (45) days after such determination to remedy such breach, with the termination to take effect only if the breach has not been remedied during said period. (b) This Agreement may be terminated without cause by Licensee upon written notice to ITC on thirty (30) days prior written notice, or at any time after the expiration, unenforceability, or invalidation of all of the Licensed Patents; provided, however, upon such termination, ITC shall have the right to take any action that it deems appropriate to collect royalties on products manufactured by Licensee after the termination and/or manufactured by Licensee before termination, but for which royalties due hereunder were not paid, which it believes are covered by the Licensed Patents. 18 Dispute Resolution. (a) Negotiation of Disputes. In the event of any dispute arising under this Agreement (including, without limitation, failure of the parties to agree on royalty rates, number of Licensee's products covered by the prepaid royalties, royalty reductions for patent invalidity, non-coverage, unenforceability or expiration or most favored license provisions, or other matters concerning royalty rates), senior executives of the parties with decision making authority will meet in Wilmington, DE, Tokyo, Japan or such other city as may be agreeable to the parties as soon as reasonably possible (but no later than sixty (60) days after notice) and will enter into good faith negotiations aimed at resolving the dispute. If they are unable to resolve the dispute in a mutually satisfactory manner within an additional sixty (60) days, the matter may be submitted to mediation and arbitration as provided for below. (b) Mediation of Disputes. The parties agree to submit any unresolved dispute to a sole mediator selected by the parties as soon as reasonably possible but no later than sixty (60) days after notice). Any such mediation shall be non-binding. If not thus resolved, the parties will proceed as specified in subparagraph (c). (c) Arbitration. Any disputes arising under this Agreement which are not resolved as 13 provide for in subparagraphs 18(a) and (b) shall be submitted to an arbitration proceeding which shall take place in Washington, D.C. The proceeding shall be conducted under the then prevailing rules for commercial arbitration (or, if the matter involves issues of patent validity, infringement or enforceability, the patent arbitration rules) of the American Arbitration Association, by a panel of three (3) arbitrators reasonably acceptable to both of the parties, one of whom must have substantial experience in the field of telecommunications. The arbitrators shall have the authority to permit limited discovery to the extent required by a party in order to establish its position. The decision of the arbitrators shall be final and binding and may be entered and enforced in any court of competent jurisdiction. Any monetary award shall be payable in U.S. dollars, free of any tax, offset or other deduction. Any determination of the arbitration shall be confidential to the parties hereto and binding solely on the parties hereto. The parties, their counsel, and the arbitrators shall take all reasonable steps to conclude the arbitration within six (6) months after it is instituted. 19 Miscellaneous. (a) Notices. All notices or other communications required or permitted under this Agreement shall be in writing and shall be delivered by personal delivery, registered mail, return receipt requested, or a qualified "Next Day Air" delivery service addressed as follows: If to ITC: InterDigital Technology Corporation [**] Wilmington, Delaware 19801 Attention: President If to Licensee: NEC Corporation [**] Japan Attention: [**] (b) ITC warrants that it owns the patents and patent applications identified in Appendix B hereto and that such patent and applications include all those of ITC and its Affiliates concerning Covered Subscriber Units or Covered Infrastructure Units, that by Agreement with IDC, ITC will own all patents and patent application filed on or before February 28, 2002 for inventions made by IDC and its Affiliates and that it has the right to grant this license to the Licensed Patents. IDC shall confirm to Licensee in writing its agreement to assign all such patents and patent application to ITC. (c) Nothing in this Agreement shall be construed as: (i) Requiring the maintenance of the Licensed Patents; (ii) A warranty as to the validity or scope of the Licensed Patents; (iii) A warranty or representation that any product will be free from infringement of patents of third parties; ____________ ** Material has been omitted and filed separately with the Commission. 14 (iv) An agreement to bring or prosecute actions against third party infringers of the Licensed Patents; (v) Conferring any license or right under any patent other than the Licensed Patents; or (vi) Conferring any right to use the Licensed Patents outside the field of use defined by the license grant of Paragraph 2. (d) This Agreement is personal to Licensee and may not be assigned or transferred, nor may any license granted hereunder be assigned or transferred, whether by operation of law or otherwise, and any attempt to make any such assignment or transfer shall be null and void; provided, however, this Agreement may be transferred in connection with the sale of all or substantially all of the business or assets of Licensee to which this Agreement relates. The license granted hereunder to Licensee shall survive any transfer by operation of law or otherwise of the Licensed Patents or otherwise of the Licensed Patents or this Agreement by ITC. (e) Licensee and ITC agree to hold in confidence and not to disclose, except under a requirement of confidentiality or an appropriate protective order, any of the terms of this Agreement, except as required by law or government regulation, or except to the party's outside counsel. The press release attached as Appendix C shall be issued by ITC on or after the Effective Date, but not before the ratification of this Agreement by Licensee's Board of Directors; provided that ITC shall first provide to Licensee an opinion of counsel that disclosure of the amount of the prepaid royalty under Paragraph 5 is required by U.S. securities laws. The per-unit royalties pursuant to Paragraph 5 will not be disclosed. Such press release, when and if issued, and shall be the basis for any further disclosures concerning this Agreement by IDC. (f) The validity and interpretation of this Agreement shall be governed by Delaware law, without regard to conflict of laws principles and the parties submit to the jurisdiction of the state and federal courts of the State of Delaware solely for the purpose of enforcing the dispute resolution clause set forth in Paragraph 18. Process may be served on either party by U.S. Mail, postage prepaid, or by a recognized "Next Day Air" service. (g) This Agreement contains the complete and final agreement between the parties, and supersedes all previous understandings relating to the subject matter hereof whether oral or written. This Agreement may only be modified by a written agreement signed by duly authorized representatives of the parties. 15 IN WITNESS WHEREOF, the parties have executed this Agreement by their duly authorized representatives. INTERDIGITAL TECHNOLOGY NEC CORPORATION CORPORATION By: By: /s/[**] ------------------------------ General Manager Title: Title: Mobile Communications Division ------------------------------ Dated: 5/2/95 Dated: 5/8/95 ------------------------- ------------------------------ ATTEST: By: /s/ [**] ------------------------------ [**] Mobile Communications Title: Systems Division ------------------------------ Dated: 5/8/95 ------------------------------ ____________ ** Material has been omitted and filed separately with the Commission. 16 Index of Appendices Appendix A - NEC Corporate Sales Projections Appendix B - ITC Patents 17 EX-10.52 4 dex1052.txt NEC 2G AMENDMENT TO PATENT LICENSE AGREEMENT EXHIBIT 10.52 CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND SEPARATELY FILED WITH THE COMMISSION. AMENDMENT TO PATENT LICENSE AGREEMENT THIS AMENDMENT TO THE PATENT LICENSE AGREEMENT dated May 8, 1995, is entered into this 15th day of January 2002 ("Effective Date") between InterDigital Technology Corporation ("ITC"), a Delaware corporation with a mailing address of [**], Wilmington, DE 19801, and NEC Corporation ("Licensee"), a company organized and existing under the laws of Japan, with a mailing address [**], Japan. PREAMBLE WHEREAS, ITC and Licensee are parties to an existing Patent License Agreement, dated May 8, 1995, covering certain TDMA-based products manufactured and sold by Licensee (the "Prior Agreement"); WHEREAS, a substantial dispute (the "Dispute") has arisen between Licensee and ITC as to whether royalties are owed by Licensee for its sale in Japan of Covered Infrastructure Equipment/1/ and Covered Subscriber Units compliant with PHS and PDC Covered Standards; WHEREAS, the parties have engaged in both a mediation and an arbitration dispute resolution process pursuant to the Prior Agreement with respect to such dispute, and are desirous of settling the dispute amicably; WHEREAS, the parties have agreed upon a settlement of the dispute, wherein the settlement provides:(i) for certain amendments to the Prior Agreement, the principal amendment providing for certain payments to ITC in lump sum amounts in exchange for a paid-up license for Covered Subscriber Units and Covered Infrastructure Equipment compliant with PHS and PDC Covered Standards, and (ii) for a new license agreement _______________ ** Material has been omitted and filed separately with the commission. /1/ Capitalized terms undefined herein shall have the meaning ascribed to them in the Prior Agreement. involving Covered Subscriber Units and Covered Infrastructure Equipment compliant with Narrowband CDMA and Third Generation (as defined in such new agreement) ("3G Agreement"); and WHEREAS, the lump sum amounts provided for under the settlement referenced herein are based upon the existing rights and obligations of the parties under the Prior Agreement, including without limitation the [**] provision of Section 7(g) of the Prior Agreement. NOW, THEREFORE, in consideration of the mutual promises contained herein, and intending to be legally bound, the parties agree as follows: 1. Paid Up License for PHS and PDC. Licensee irrevocably and unconditionally agrees to pay to ITC the non-refundable lump sum amount of $53,000,000. Payment of such amount shall be made on the following installment basis by wire transfer to ITC's bank account to be designated by ITC in advance: . On or before April 10, 2002: $US 13,250,000 . On or before December 31, 2002 $US 13,250,000 . On or before April 10, 2003 $US 13,250,000 . On or before December 31, 2003 US$ 13,250,000 In consideration of such payment and in recognition of the fact that the $26,939,280 was previously paid under the Prior Agreement, the license granted under Section 2 of the Prior Agreement, with respect to Covered Subscriber Units and Covered Infrastructure Equipment compliant with PHS and/or PDC Covered Standards ("Covered PHS/PDC Products"), shall be considered fully paid up and irrevocable and shall survive any termination of the Prior Agreement; provided, however, that the royalty obligation as regards ____________ ** Material has been omitted and filed separately with the commission. 2 any Covered PHS/PDC Products also compliant with Third Generation or Narrowband CDMA (each as defined in the 3G Agreement) shall be determined in accordance with the terms of the 3G Agreement. In addition, with respect to any other Covered Subscriber Unit or Covered Infrastructure Equipment also compliant with Third Generation or Narrowband CDMA (e.g., GSM/FDD Covered Subscriber Unit), no royalty shall be payable under the Prior Agreement for such other product, so long as Licensee has paid, or is to pay, a royalty in accordance with the terms of the 3G Agreement with respect to such other Covered Subscriber Unit or Covered Infrastructure Equipment. Licensee may deduct applicable Japanese source withholding taxes from the payments hereunder, it being understood that both parties agree that the entire amount of US$53,000,000 is subject to the Japanese source withholding taxes. Licensee shall furnish ITC with the evidence that any such withholding tax has been paid. It is understood that if the Prior Agreement is substituted at Licensee's election by another patent license agreement as a result of the operation of the most favored licensee rights provisions of the Prior Agreement, any royalty obligation under such substitute agreement relating to Covered Subscriber Units and Covered Infrastructure Equipment compliant with only PHS and PDC shall not apply. 2. (Reserved). 3. Infrastructure. With regard to Infrastructure Equipment compliant with GSM and IS-54/136, Licensee agrees to pay ITC a royalty of [**]% of the Net Selling Price of each such sale, if any, of said Infrastructure Equipment from May 8, 1995 through December 31, 2006. Such royalty payments shall be made on each such sale, if any, by Licensee or its Affiliates anywhere in the ______________ ** Material has been omitted and filed separately with the commission. 3 world, without regard to the provisions of Section 5(c) or Section 7 (other than Section 7(e)(iv)) of the Prior Agreement. Thereafter, any royalty obligations with regard to such Infrastructure Equipment shall be governed by the terms of the Prior Agreement. 4. Meaning of Paragraphs 5(c)(ii) and (iii) of Prior Agreement. The parties agree that, as used in Paragraphs 5(c) (ii) and (iii) of the Prior Agreement, the clause "but only if said counterpart contains claims which do not differ materially from those of the [**] Patent" shall in each occurrence, for the purpose of settlement, be hereafter deemed to refer to substantial differences between the issued non-U.S. patent claim(s), which issue from non-U.S. [**] patent applications that share a common specification with the U.S. patent, and Licensee's products compliant with a Covered Standard, such that infringement of such non-U.S. claims cannot be found. The parties further agree that, based on the audit conducted as part of the Dispute, Licensee has correctly accounted for use of the pre-paid units, including the application of credits under the [**] clause of the Prior Agreement, and that such credits shall continue to be available to Licensee with regard to its royalty obligations under the Prior Agreement. 5. Adjustment. (1) If, after the Effective Date of this Amendment Agreement, Licensee or its Affiliates acquires any entity which, prior to such acquisition, sold PDC or PHS Covered Subscriber Units or Covered Infrastructure Equipment without a license from ITC for the Licensed Patents, then Licensee shall pay ITC royalties of (i) $[**] for each PDC Covered Subscriber Unit and PHS Covered Subscriber Unit, and (ii) [**]% of the Net Selling Price of PDC or PHS Covered Infrastructure Equipment sold by such entity prior to such acquisition by Licensee; provided, however, that if such _____________ ** Material has been omitted and filed separately with the commission. 4 acquisition occurs later than twelve (12) months after the Effective Date of this Amendment, Licensee shall have the option, to be exercised via written notice to ITC within sixty (60) days of the completion date of such acquisition, to have such sales be construed as unlicensed. In such situation, ITC shall have recourse to seek damages and/or royalties from any entity, including Licensee or its Affiliates, against whom legal action may be brought. In addition, provided such entity, at the time of being acquired by Licensee, had annual sales of PDC and/or PHS Covered Subscriber Units in excess of [**] units, in the aggregate, or had annual sales of PDC or PHS Covered Infrastructure Equipment of [**] U.S Dollars ($US [**]), the parties shall negotiate in good faith an equitable adjustment to the lump sum amount provided in Article 1 herein for sales after the date of the acquisition, provided that in lieu of adjustment to the lump sum amount provided in Article 1 herein, Licensee shall have the option to pay royalties to ITC at the royalty rates provided for in (i) and (ii) above with respect to PDC or PHS Covered Subscriber Units or Covered Infrastructure Equipment sold by, or ascribed to, the acquired entity after the date of the acquisition. Such negotiated adjustment amount will be based upon the ratio of Licensee and its Affiliates' total sales of the PDC and PHS Covered Subscriber Units and Covered Infrastructure Equipment from the period January 1, 1995 through December 31, 2001 and the acquired entities sales of the PDC and PHS Covered Subscriber Units and Covered Infrastructure Equipment over the same period, less any royalties, if any, paid by Licensee for sales by the acquired entity prior to the date of acquisition pursuant to the first sentence of this Article 5. Any dispute as to the adjustment amount owed shall be made subject to resolution under the Dispute Resolution Procedures of the Prior Agreement. The parties shall also negotiate such an adjustment amount if Licensee acquires, over time, a number of ________________ ** Material has been omitted and filed separately with the commission. 5 entities, such that, in the aggregate, there existed annual sales of at least [**] Covered Subscriber Units or [**] U.S Dollars ($[**] US) of Covered Infrastructure revenue at the time of being acquired by Licensee. Sales by the acquired entities of non-PDC and non-PHS Covered Subscriber Units and Covered Infrastructure Equipment after the time of being acquired by Licensee, shall be controlled by the Prior Agreement. For sales by the acquired entities of non-PDC and non-PHS Covered Subscriber Units and Covered Infrastructure Equipment prior to the time of being acquired by Licensee, then Licensee shall pay ITC royalties of (i) $[**]US for each non-PDC Covered Subscriber Unit and non-PHS Covered Subscriber Unit, and (ii) [**]% of the Net Selling Price of non-PDC or non-PHS Covered Infrastructure Equipment; provided, however, that if such acquisition occurs later than twelve (12) months after the Effective Date of this Amendment, Licensee shall have the option, to be exercised via written notice sent to ITC within sixty (60) days of the conclusion date of such acquisition, to have such sales be construed as unlicensed. (2) To the extent Licensee or its Affiliates acquires an entity already licensed by ITC to the Licensed Patents, for the first twelve (12) months after the acquisition, the royalty obligation of such entity for royalty obligated sales volumes related to such entity shall be defined in such other license agreement with ITC. After the 12 month period, royalty obligations for all PDC and PHS Covered Subscriber Units and Covered Infrastructure Equipment sales made by, or ascribed to, the previously licensed acquired entity shall be determined as set forth in paragraph (1) above (as for unlicensed entities, either as an adjustment to the lump sum or running royalties, at Licensee's option); and royalty obligations for all non-PDC and non-PHS Covered Subscriber Units and Covered Infrastructure Equipment sales made by, or ascribed to, the previously licensed acquired ____________ ** Material has been omitted and filed separately with the commission. 6 entity after such acquisition shall be controlled by the terms of the Prior Agreement. (3) The above paragraphs (1) and (2) shall not apply in cases Licensee or its Affiliates acquires Licensee or any entity which is already Licensee's Affiliates at the time immediately prior to the acquisition. 6. Confidentiality/Press Release. Unless otherwise required by law, government regulations, stock exchange listing rules or court order, the parties shall maintain as strictly confidential the royalty terms of this Amendment Agreement and any proprietary information disclosed under, or as a result of the negotiation of, this Amendment Agreement, provided that each party may disclose in confidence the royalty terms to (i) its outside counsel or accountant, or (ii) its financial advisors or prospective acquiring or acquired entity in connection with its prospective M&A transactions. Further, ITC and/or IDC may issue a press release having the content shown in Exhibit 1, attached hereto. Licensee may also issue a press release regarding the fact of the execution of this Amendment Agreement and the settlement of the arbitration. To the extent ITC and/or IDC desires to modify an agreed upon press release, or Licensee desires to issue a press release, such desiring party shall provide the other party with an advance copy of its respective proposed press release for review, consent and comment; whereby consent by the other party shall not be unreasonably withheld or delayed. 7. Prior Agreement. Except as provided herein, all other terms and conditions of the Prior Agreement remain unaltered and in full force and effect. Signatures on following page. 7 IN WITNESS WHEREOF, the parties have executed this Agreement by their duly authorized representatives. INTERDIGITAL TECHNOLOGY CORPORATION By: /s/ William J. Merritt ------------------------------------ Dated: January 14, 2002 --------------------------------- NEC CORPORATION By: /s/ [**] ------------------------------------ Dated: January 15, 2002 --------------------------------- ____________ ** Material has been omitted and filed separately with the commission. 8 Index of Exhibits EXHIBIT 1: PRESS RELEASE 1 EX-10.53 5 dex1053.txt NEC 3G PATENT LICENSE AGREEMENT EXHIBIT 10.53 CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND SEPARATELY FILED WITH THE COMMISSION. NARROWBAND CDMA AND THIRD GENERATION PATENT LICENSE AGREEMENT BETWEEN INTERDIGITAL TECHNOLOGY CORPORATION and NEC CORPORATION Dated and Effective January 15, 2002 ("Effective Date") PATENT LICENSE AGREEMENT THIS NARROWBAND CDMA and THIRD GENERATION PATENT LICENSE AGREEMENT ("3G Agreement") dated as of January 15, 2002, (the "Effective Date") is between InterDigital Technology Corporation ("ITC"), a Delaware corporation with a mailing address of 300 Delaware Avenue, Suite 527, Wilmington, DE 19801, and NEC Corporation ("Licensee"), a company organized and existing under the laws of Japan, with a mailing address of [**] Japan. PREAMBLE WHEREAS, ITC and Licensee are parties to an existing Patent License Agreement, dated May 8, 1995, covering certain TDMA-based products manufactured and sold by Licensee (the "Prior Agreement"); WHEREAS, a substantial dispute has arisen between Licensee and ITC as to whether royalties are owed by Licensee for its sale in Japan of Covered Infrastructure Units and Covered Subscriber Units compliant with the PHS and PDC Covered Standards; WHEREAS, the parties have engaged in both a mediation and an arbitration dispute resolution process pursuant to the Prior Agreement with respect to such dispute, and are desirous of settling the dispute amicably; WHEREAS, ITC holds a large and valuable patent portfolio with regard to Narrowband CDMA and Third Generation and NEC is desirous of obtaining a license thereunder and ITC is willing to grant such license on the term and conditions set forth herein; WHEREAS, NEC holds a large and valuable patent portfolio with regard to Narrowband CDMA and Third Generation and ITC is desirous of obtaining a non-assert thereunder and NEC is willing to grant such non-assert on the term and conditions set forth herein; ** Material has been omitted and filed seperately with the Commission. WHEREAS, the parties have agreed upon a settlement of the dispute, wherein the settlement provides:(i) for certain amendments to the Prior Agreement, the principal amendment providing for certain payments to ITC in lump sum amounts in exchange for a paid-up license for Covered Subscriber Units and Covered Infrastructure Units compliant with PHS and PDC Covered Standards, and (ii) for a new license agreement (this 3G Agreement) involving Covered Subscriber Units and Covered Infrastructure Units compliant with Narrowband CDMA and Third Generation (as defined herein); and NOW, THEREFORE, in consideration of the mutual promises contained herein, and intending to be legally bound, the parties agree as follows: ARTICLE 1. DEFINITIONS 1.1. "Affiliate" means (i) IDC with respect to ITC or (ii) a corporation or other legal entity of which more than fifty percent (50%) of the voting stock or control is owned, directly or indirectly, by Licensee, IDC, or ITC, as the case may be. Such corporation or other entity in item (ii) shall be considered as Affiliate of Licensee, IDC, or ITC, as the case may be, only so long as the requisite ownership of the voting stock or control exists. 1.2. "Combi-Unit" means any Subscriber Unit which has substantial functionality unrelated to basic voice or wireless data transmission, such as video phones, personal digital assistant, computers, and the like, but which performs modulation and demodulation. 1.3. "Communication Card" means a Subscriber Unit in card or similar format (e.g. PCMCIA card) which contains at a minimum all of the circuitry necessary for modulation and demodulation in accordance with one or more Covered Standards and may be readily attachable to, and detachable from, the body of an 3 end-user terminal device, whether fixed, mobile, transportable, vehicular, portable or hand-held, with RF transmit and/or RF receive capabilities by end-user. A Communication Card shall include all attachments necessary to enable the information and/or communication unit to transmit and receive wireless communications. 1.4. "Covered Infrastructure Unit" means Infrastructure Units designed to operate in accordance with one or more of the Covered Standards. 1.5. "Covered Standards" mean standards for Narrowband CDMA and Third Generation. 1.6. "Covered Subscriber Units" means Subscriber Units designed to operate in accordance with one or more Covered Standards. 1.7. "IDC" means InterDigital Communications Corporation, having an office at 781 Third Avenue, King of Prussia, PA 19406. 1.8. "Infrastructure Unit" means mobile switching centers, radio network controllers, service nodes, Node B's, base stations, radio resource management devices and software, base station controllers, digital transceivers, digital channel cards, and software necessary to operate the aforementioned devices (including software maintenance agreements to the extent that free upgrades are provided in exchange for the maintenance fee, or to the extent that the software maintenance provides an upgrade or enhancement as to functionality), whether sold as individual items or bundled as an integrated product, which is used to interconnect a Covered Subscriber Unit to a public or private data or voice network (whether wired or unwired), including the internet. Subject to the 4 foregoing, absent some substantial difference in design and/or function of Infrastructure Units, the parties agree, generally, the interpretation of Infrastructure Equipment and Net Selling Price (as defined in the Prior Agreement), and used in the arbitration, including for audit purposes, shall generally be considered acceptable guidelines in determining the royalty base hereunder. 1.9. "Licensed Patents" means any issued patent relating to TDMA or CDMA-based digital wireless communications and similar patent applications on file as of the Effective Date or filed within five (5) years of the Effective Date, which patents and patent applications are owned by ITC or its Affiliates and/or for which ITC or its Affiliates has the right to grant the licenses conveyed hereunder, without such grant or the exercise of rights thereunder resulting in the payment of royalties or other consideration by ITC or its Affiliates to third parties (except for payments between ITC and Affiliates of ITC, payments between Affiliates of ITC and payments to third parties for inventions made by said third parties while employed by ITC or any of its Affiliates), including utility models but excluding design patents and design registrations, in every country of the world and any continuation, continuation-in-part and divisional application based on such patents, and any foreign counterparts of any such patents, continuations, continuations-in-part or divisional applications. A listing (which is not intended to be exhaustive) of Licensed Patents as of the Effective Date is included as Attachment A. 1.10. "Licensee" means NEC Corporation. 1.11. "Module" means a Subscriber Unit which is an integrated modem/base band/RF device containing the complete functionality of an applicable Covered Standard 5 (excluding display, keypad and antenna) and which is sold for physical integration into a Covered Subscriber Unit. 1.12. "Narrowband CDMA" means standards for direct sequence code division multiple access digital cellular radiotelephone service adopted as a standard by either a standards development organization - such as ETSI, TIA/EIA or ARIB- or a major operator of public subscription systems for in-country requirements (e.g. frequency spectrum availability, interconnection with preexisting telephony networks, etc.) which limit the spread of the signal over a bandwidth not greater than 1.25 MHz, including, but not limited to, IS-95 Rev.A, IS-95 Rev. B and various derivations thereof that do not fundamentally alter the character thereof. 1.13. "NEC Patents" means any issued patent relating to TDMA or CDMA-based digital wireless communications and similar patent applications on file as of the Effective Date or filed within five (5) years of the Effective Date, for which Licensee or its Affiliates has the right to grant the non-assertion and the licenses described in Article 2.3 below without such grant or the exercise of rights thereunder resulting in the payment of royalties or other consideration by Licensee or its Affiliates to third parties (except for payments between Licensee and Affiliates of Licensee, payments between Affiliates of Licensee and payments to third parties for inventions made by said third parties while employed by Licensee or any of its Affiliates), (including utility models but excluding design patents and design registrations) in every country of the world and any continuation, continuation-in-part and divisional application based on such patents, and any foreign counterparts of any such patents, continuations, continuations-in-part or divisional applications. 6 1.14. "Net Selling Price" means the amount actually invoiced to the customer for a Covered Infrastructure Unit or Covered Subscriber Unit, less packing, insurance and shipping costs, applicable import, export and excise duties, returns, trade discounts given, insurance and installation costs, to the extent included in the Net Selling Price, [**]. If base stations or other Covered Infrastructure Units contain integrated switching equipment, royalties shall be payable with respect to the entire cost of such base stations or other Covered Infrastructure Units; [**]. 1.15. "Subscriber Unit" means an end-user terminal device, whether fixed, mobile, transportable, vehicular, portable or hand-held, with RF transmit and/or RF receive capabilities (or a Module therefor), which device is designed for wireless voice and/or wireless data communications but which may have other functionality such as, without limitation, appointment functions, MP3 player, etc. 1.16. "TDD" means time division duplex technology, including all chip rates and modes thereof. 1.17. "Third Generation" means those TDMA or CDMA-based digital cellular mobile radio telecommunication standards generally considered by the industry to be the third generation, whether adopted by any recognized standardizing body or promoted by major telecommunications operators as de facto standards. Examples of current Third Generation Standards under development, or related standardization efforts, are the International Telecommunications Union - _____________ ** Material has been omitted and filed separately with the Commission. 7 Radio efforts under the label IMT-2000, the specifications being developed under the Third Generation Partnership Projects (3GPP and 3GPP2), and comparable or related standards adopted by ARIB, ETSI, TTA, TIA, T1P1, CWTS, as well as other recognized standards development organizations. ARTICLE 2. LICENSE GRANT 2.1. Grant. ITC, for itself and its Affiliates, hereby grants to Licensee and its Affiliates a non-exclusive, non-transferable, worldwide, royalty-bearing license under the Licensed Patents to make, have made, use, import, sell and otherwise dispose of Covered Subscriber Units and Covered Infrastructure Units, including the right to make, have made, use, import, and otherwise dispose of components therefor, or the supply of replacement parts therefor. 2.2. Limitations on License Grant. The license granted hereunder excludes the right to grant sublicenses. In addition, the above license shall not include, by implication or otherwise, any license for components except when used solely as a part of and within Covered Subscriber Units and Covered Infrastructure Units sold or otherwise transferred by Licensee or its Affiliates. Further, as regards Covered Infrastructure Unit, the license as to the sale of Covered Infrastructure Unit such as base station transceiver system and the like which may be installed into a larger infrastructure shall extend only as to the Covered Infrastructure Unit sold or otherwise transferred by Licensee or its Affiliates and shall not extend, by implication or otherwise, to the portion of such larger infrastructure other than the Covered Infrastructure Unit not otherwise licensed hereunder. 2.3. Non-Assertion/TDD License/Optional License. Licensee hereby agrees, and 8 shall cause its Affiliates to agree, not to bring any claim against ITC, IDC or its Affiliates, for infringement of any claim or claims of the NEC Patents with respect to Covered Subscriber Units, Covered Infrastructure Units or components therefor made, used, sold or otherwise transferred by IDC or its Affiliates, it being understood that the foregoing shall not be construed to prevent Licensee or its Affiliates to bring such claim against any other party (including but not limited to direct or indirect customers of IDC or its Affiliates) with respect to such Covered Subscriber Units, Covered Infrastructure Units or components therefor. Further, Licensee grants, and shall cause its Affiliates to grant, to IDC and its Affiliates, a non-exclusive, royalty free, world wide, non-transferable license under the NEC Patents for ITC, IDC or its Affiliates to make, have made, sell, distribute, import or use Covered Subscriber Units and Covered Infrastructure Units, including components therefor, compliant with TDD ("TDD License"); provided, however, that such TDD License shall not extend to other non-TDD Third Generation functionality or Narrowband CDMA functionality included in such product. NEC also agrees, to the extent requested by IDC, to grant IDC or its Affiliates a non-transferable, non-exclusive, royalty bearing license under the NEC Patents for IDC or its Affiliates to make, have made, sell, distribute, import or use Covered Subscriber Units and Covered Infrastructure Units to the extent not covered by the TDD License. Such additional license shall be on the same terms and conditions as applied to NEC and its Affiliates hereunder, with IDC making a pre-payment of two-years worth of expected royalty payments as agreed in amount by IDC and Licensee. ARTICLE 3. ROYALTY RATES/PAYMENTS 3.1. Royalty Payments. 9 3.1.1. Convenience Based Royalties on Products Compliant with Third Generation and Narrowband CDMA. In consideration of the licenses granted herein, Licensee shall pay ITC the following non-refundable (except as the consequence of the royalty audit under Article 7.7 or except in the case of computation error by Licensee) royalties on each sale of the below listed products by Licensee and/or its Affiliates, anywhere in the world: i. For Covered Subscriber Units compliant with Narrowband CDMA and Third Generation, [**]% of the Net Selling Price of each such product sold by Licensee or its Affiliates provided, however, that the above royalty shall not exceed $[**] on a per unit basis. ii. For Covered Infrastructure Units compliant with Narrowband CDMA and Third Generation, [**]% of the Net Selling Price of each such product sold by Licensee and/or its Affiliates; provided, however, that for sales of Covered Infrastructure Units in Japan only, for sales occurring on or before December 31, 2003, the royalty rate shall be [**]%. For sales of Covered Infrastructure Units occurring on or after January 1, 2004, Licensee shall have the option to pre-pay ___________ ** Material has been omitted and filed separately with the Commission. 10 additional royalties for Covered Infrastructure Units for use in Japan only, at any time, based on Licensee's good faith projection of its sales of such products over a one (1) to three (3) year period(s). Such pre-payment shall be paid to ITC prior to the start of the royalty period used in determining the pre-payment amount. Licensee's actual payment to ITC for such royalty projection shall be discounted at [**] % per annum, to reflect the time value of money over the selected period. In addition, the optional pre-payment shall be further discounted by the following single volume discount, applied to the present value amount, as follows: Years Pre-paid Volume Discount 1 [**]% 2 [**]% 3 or more [**]% The projected royalty shall serve as the royalty credit, against which Licensee can at any time offset its royalty obligations as to Covered Infrastructure Unit for use in Japan only, until that royalty credit is exhausted. A sample calculation of the pre-payment method is set forth in Attachment B hereto. _____________ ** Material has been omitted and filed separately with the Commission. 11 As used herein, "sale" means the first non-affiliated sale made on an arms-length basis. In determining the royalty on a Module, Licensee shall use the greater of (i) the Net Selling Price of the Module or (ii) the average Net Selling Price of Covered Subscriber Units for the period for which royalties are being reported. In determining the Net Selling Price of a Combi-Unit, Licensee shall use the lesser of (i) the Net Selling Price of the Combi-Unit or (ii) the average Net Selling Price for Covered Subscriber Units for the period for which royalties are being reported. The average Net Selling Price for Covered Subscriber Units shall be calculated using the total revenue (based upon the Net Selling Price definition herein) for Covered Subscriber Units (excluding Modules and Combi-Units) for the period covered by the royalty report, divided by the number of Covered Subscriber Units (excluding Modules and Combi-Units) sold in that same period. Notwithstanding the foregoing, in the case that no sales of Covered Subscriber Units (excluding Modules and Combi-Units) exist for the period for which royalties are being reported, Licensee shall use the average net selling price of cellular handsets, which has no substantial functionality unrelated to basic telephony or wireless data transmission, built to the same Covered Standards for that period, as reported by Dataquest or some other internationally recognized data collection and reported firm agreeable to both parties. 3.2. Purchase of Licensed Products. If Licensee or any of its Affiliates purchases Licensed Covered Subscriber Units (including Modules) or Covered Infrastructure Units for incorporation into Licensee's or its Affiliates' Covered 12 Subscriber Units or Covered Infrastructure Units, ("Licensed Products"), either in modified or unmodified form, Licensee shall receive a royalty credit equal to the amount of the per unit royalty (whether calculated as a $US per unit royalty or as a percentage of selling price) paid to ITC by the manufacturer of such Licensed Product, such credit not to exceed the amount of the per unit royalty due by Licensee hereunder for the ultimate Covered Subscriber Unit or Covered Infrastructure Unit sold by Licensee or its Affiliates, in which such Licensed Product, in the same or modified form, is incorporated. As used herein, Licensed Product shall mean a Covered Subscriber Unit (including Module) or Covered Infrastructure Unit compliant with one or more Covered Standards manufactured by a third party under a license from ITC under the Licensed Patents and not known by Licensee at the time of purchase of the Licensed Product to be other than in good standing (i.e., not in default), and for which the third party licensee has paid ITC the per unit royalty for the Licensed Product. For the purposes of determining the credit, Licensee shall, in its royalty report, specify the number of Licensed Products purchased, the date purchased, and from whom such Licensed Products were purchased. ITC will then notify Licensee of the applicable credit, which Licensee may apply in its subsequent royalty reports to ITC until exhausted. ITC may also notify Licensee if the third party licensee is in default of its obligations under the third party license with ITC and that the credit as to future sales by Licensee shall not be given unless and until such third party licensee cures such default. Licensee shall have the right to audit ITC's books and records in accordance with Article 7.7 below. If the license granted by ITC to such third party is on other than a per unit or % of net selling price running royalty basis, then for the purpose of the royalty credit, the parties, subject to the dispute resolution provisions, shall determine the per unit royalty deemed to have been paid by such third party to ITC for such Licensed Product, based on lump sums or other cash payments paid under the 13 applicable patent license agreement and the volume of products licensed thereunder. 3.3. Resale. If Licensee or its Affiliates (i) purchases Covered Subscriber Units or Covered Infrastructure Units from a third party that, under a license agreement executed subsequent to the Effective Date, is licensed under the Licensed Patents by ITC to manufacture, have made, sell and distribute such Covered Subscriber Units or Covered Infrastructure, and (ii) resells without modification, addition or enhancement, such purchased Covered Subscriber Units or Covered Infrastructure Units as such, no royalty shall be payable by Licensee so long as said third party license agreement includes express provisions under which purchasers which are original equipment manufacturers receive pass through rights under the Licensed Patents, including resale rights. If Licensee or its Affiliates purchase products from an entity meeting the above requirements except that (i) the applicable license was entered into prior to the Effective Date or (ii) the applicable license agreement (whether entered before or after the Effective Date) does not have the aforementioned resale rights, Licensee shall be given a credit for the per unit royalty paid by such entity, if any, using the same procedure, terms and conditions set forth in Article 3.2. Such credit shall not exceed the amount of royalty owed by Licensee. Licensee shall, in its quarterly royalty reports, specify (i) the number of such Covered Subscriber Units or Covered Infrastructure Units resold by Licensee and its Affiliates during the quarter, (ii) the date of purchase of such resold Covered Subscriber Units or Covered Infrastructure Units, and (iii) from whom such resold Covered Subscriber Units or Covered Infrastructure Units were purchased. 3.4. Pre-Payment Credit. On or prior to April 10, 2002, Licensee shall make a 14 non-refundable cash payment to ITC of US$19,500,000 which payment shall be a credit of US$19,500,000 toward Licensee's royalty obligations hereunder. Such payment obligation shall be unconditional and irrevocable. Such credit shall be applied, until exhausted, to: (i) 100% of Licensee's royalty obligations for sales made on or before December 31, 2003; and (ii) 50% of Licensee's royalty obligations as to sales on or after January 1, 2004 (with the other 50% to be paid in cash). 3.5. Reserved. 3.6. Repairs. It is understood and agreed by the parties that no royalty shall be payable by Licensee hereunder with respect to any parts, components or accessories sold or otherwise transferred by Licensee and its Affiliates for repair, maintenance or returns, but excluding upgrades and/or enhancements, of Covered Subscriber Units or Covered Infrastructure Units sold or otherwise transferred by Licensee and its Affiliates. ARTICLE 4. PASS-THROUGH LICENSE 4.1. Pass-Through License. Licensee's and its Affiliates' customers who are end users, operators or retail distributors will receive an irrevocable pass-through license for sale, including lease, or use of Covered Subscriber Units and/or Covered Infrastructure Units for which a royalty has been paid hereunder. Neither this 3G Agreement nor any payments made hereunder are intended or should they be construed as exhausting ITC's rights to royalties or damages or other compensation from unlicensed purchasers. 15 ARTICLE 5. TERM/TERMINATION 5.1. Term. The term of this 3G Agreement shall commence on the Effective Date and terminate upon expiration of the last-to-expire of the Licensed Patents, unless sooner terminated as provided herein. 5.2. Termination for Default. This 3G Agreement may be canceled by either party, upon thirty (30) days' prior written notice specifying the nature of the breach, if the other party is in material breach of any of its material obligations hereunder and the breach is not remedied within the notice period. Licensee's material obligations shall include, but shall not be limited to, its royalty reporting and payment obligations. 5.3. Adverse Actions. During the term of this 3G Agreement, neither party or its Affiliates shall institute or actively participate as an adverse party in, or otherwise provide material support to (except where such participation or support is required by court order or applicable law) any legal or administrative action anywhere in the world, the purpose of which is to invalidate or limit the validity or scope of the NEC Patents or the Licensed Patents and further if such party does not cease to institute, actively participate as an adverse party in, or otherwise provide material support to, such legal or administrative action within thirty (30) days after receipt of written notice from the other party, specifying such legal or administrative action and such party's involvement therein, such other party shall have the right to terminate this 3G Agreement by a written notice of termination. 16 ARTICLE 6. DISPUTE RESOLUTION 6.1 Negotiation of Dispute. In the event of any dispute arising under this 3G Agreement, senior level executives of the parties will meet in Wilmington, Delaware, unless some other city may be agreeable to the parties, as soon as reasonably possible (but no later than sixty (60) days after notice asking for the above meeting from either party to the other party) and will enter into good faith negotiations aimed at resolving the dispute. If they are unable to resolve the dispute in a mutually satisfactory manner within an additional sixty (60) days, the matter may be submitted to mediation/arbitration as provided for in Articles 6.2 and 6.3 hereto. 6.2 Mediation of Disputes. The parties agree to submit any unresolved dispute to a sole mediator selected by the parties as soon as reasonably possible (but no later than sixty (60) days after written notice asking for the mediation from either party to the other party). The first such mediation session shall occur in Tokyo and thereafter will alternate between Washington, D.C. and Tokyo. Any such mediation shall be non-binding. If not thus resolved, either party may proceed as specified in Article 6.3. 6.3 Arbitration of Disputes. Any unresolved disputes arising under this 3G Agreement shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce, with the venue and place of hearing being designated as London, England. The dispute shall be resolved by panel of three (3) arbitrators selected in accordance with said rules, one of such arbitrators having substantial experience in the field of telecommunications. The arbitrators shall have the authority to permit limited confidential discovery to 17 the extent required by a party in order to establish its case. The arbitrators' award shall be written and be final and binding and may be entered and enforced in any court of competent jurisdiction. Any monetary award shall be payable in U.S. dollars, free of any tax, offset or other deduction. Any determination of the arbitration shall be confidential to the parties hereto and binding solely on the parties hereto, and their Affiliates. The arbitration proceedings shall be conducted in English. The parties, their counsel, and the arbitrators shall use all reasonable efforts to conclude the arbitration with one (1) year of its being instituted. ARTICLE 7. MISCELLANEOUS 7.1. Payments/Reports. All payments required under this 3G Agreement shall be made by wire transfer to the following bank account of ITC in U.S. dollars on a quarterly basis within forty-five (45) days after the end of each calendar quarter. PNC Bank, Delaware 222 Delaware Avenue Wilmington, DE 19801 ABA # [**] Credit: Trust Uninvested Funds Account # [**] Further Credit: InterDigital. Technology Corp. ____________ ** Material has been omitted and filed separately with the Commission. 18 Account # [**] Attention: [**] Phone: [**] Such payment, less any available credit, shall be for all sales of Covered Subscriber Units and Covered Infrastructure Units made by Licensee or its Affiliates during such quarter. The first such report shall include sales of any Covered Subscriber Units and Covered Infrastructure Units made by Licensee and/or its Affiliates both during the calendar quarter ending March 31, 2002 as well as the sales of any such products made prior thereto (including prior to the Effective Date), except that any royalties for Covered Subscriber Units and Covered Infrastructure Units compliant with the Narrowband CDMA sold or otherwise transferred by Licensee and its Affiliates prior to the Effective Date, if any, are hereby irrevocably waived by ITC. Each payment made within the required 45 days, described above, shall be accompanied by a written report and associated certification by the responsible personnel of Licensee, setting forth the amount of the royalties payable and calculation thereof for the reported period. To assist ITC in preparing necessary earnings reports, Licensee shall also develop some form of advance royalty projection mechanism whereby Licensee, on a non-binding basis, shall advise ITC, by no later than thirty (30) days after the end of each calendar quarter, of the aggregate (i.e., not on a product category basis) royalty amount Licensee anticipates reporting for the subject calendar quarter. All such reports shall be held in confidence by ITC. 7.2. Currency Conversion. United States Dollar ($US) denominated sales shall be ______________ ** Material has been omitted and filed separately with the Commission. 19 reported as transacted. Other currency denominated sales shall be reported based on the mathematical average foreign currency/$US conversion rate applicable during the period over which sales are being reported, using the currency exchange rates given in the Wall Street Journal "Currency Trading Exchange Rates" section. Within fifteen (15) days after the end of each calendar quarter period, ITC shall inform Licensee in writing such applicable mathematical average foreign currency/$US conversion rate together with the substantiating material therefor. Licensee's timely performance of its royalty reporting and payment obligations under Article 7.1 is contingent upon the timely receipt by Licensee from ITC of such applicable conversion rate. 7.3. Taxes. All royalties payable hereunder are net of, and free and clear from, any applicable taxes (excluding those based on income), which taxes shall be paid by Licensee on a grossed-up basis, it being understood Japanese source income withholding tax shall be deducted by Licensee from the amounts payable to ITC hereunder. Licensee will furnish ITC with appropriate documentation evidencing the payment of such tax. 7.4. Most Favored Licensee Rights. Provided Licensee is not in material default of its obligations hereunder, Licensee shall be treated as a most favored licensee ("MFL") under the Licensed Patents with regard to Covered Subscriber Units and Covered Infrastructure Units. If subsequent to the Effective Date, ITC enters into an agreement, including a settlement agreement, with a third party pursuant to which ITC licenses said third party to sell products that operate under Covered Standards, ITC will notify Licensee of such agreement and will provide a copy of such agreement, in confidence, to Licensee. Licensee shall have the right to substitute for this 3G Agreement, on a forward going basis, the more favorable license agreement in its entirety and such substitution shall 20 constitute a novation of those portions of this 3G Agreement addressed in such substitute agreement; provided, however, that any royalty obligation under such substitute agreement relating to Covered Subscriber Units and Covered Infrastructure Units compliant with only PHS and PDC shall not apply as to Licensee and/or its Affiliates. Such election shall be made by Licensee in writing within thirty (30) days of receiving said license agreement from ITC, with any failure to elect to take such new agreement within such period shall serve as waiver as to any rights under such agreement. If Licensee elects to take such substitute agreement, Licensee shall pay royalties based on the rates set forth in its then existing agreement up to the date of such substitute agreement. Any remaining pre-payments under Licensee's then existing agreement shall apply as to the substitute agreement. 7.5 Confidentiality/Press Release. Unless otherwise required by law, government regulations, stock exchange listing rules or court order, the parties shall maintain as strictly confidential the royalty terms of the 3G Agreement and any proprietary information disclosed under, or as a result of the negotiation of, the 3G Agreement, provided that each party may disclose in confidence the royalty terms to (i) its outside counsel or accountant, or (ii) its financial advisors or prospective acquiring or acquired entity in connection with its prospective M&A transactions. Further, ITC or IDC may provide the royalty terms of this 3G Agreement in confidence to other licensees to the extent required by MFL clauses. ITC and IDC may issue a press release regarding this 3G Agreement having the content shown in Exhibit 1, attached hereto. Licensee may also issue a press release regarding the fact of the execution of this 3G Agreement. To the extent ITC and IDC desire to amend the press release contained in said Exhibit 1, or Licensee desires to make a press release, said desiring party shall provide the other party with an advance copy of its respective proposed press release for review, consent 21 and comment; whereby consent by the other party shall not be unreasonably withheld or delayed. Licensee may disclose the royalty terms of this 3G Agreement in confidence (i) to its suppliers and customers to the extent reasonably necessary for the purpose of discussion of the burden of royalty between Licensee and its suppliers or between Licensee and its customers and (ii) to Licensee's Affiliates. Licensee's Affiliates may disclose the royalty terms of this 3G Agreement in confidence to their suppliers and customers to the extent reasonably necessary for the purpose of discussion of the burden of royalty between Licensee's Affiliates and their suppliers or between Licensee's Affiliates and their customers. 7.6 Licensee Identification on Covered Subscriber Units. All Licensee Covered Subscriber Units and Covered Infrastructure Units intended for sale within the United States shall include a statement that they are licensed under U.S. patents, including up to five patent numbers to be provided by ITC; provided that such marking requirement shall not apply to the extent that ITC fails to require other licensees manufacturing Covered Infrastructure Units and Covered Subscriber Units to mark their corresponding products with such patent numbers. ITC may designate certain Licensed Patents for inclusion on such label. Additionally, if the laws of any other country require marking goods as a condition of any award of damages in a patent infringement action, ITC may notify Licensee in writing of the name of such other country together with a copy of the text of such law. In such case, the first sentence of this Article 7.6 shall similarly apply as to such country, provided that in no event shall the total number of patent numbers to be included in a statement pursuant to this Article 7.6 exceed five, unless required by the laws of such other country. 7.7 Audit. Licensee shall (and shall cause its Affiliates to) keep books and records 22 adequate to accurately determine the payments due under this 3G Agreement. The books and records must be retained for at least five (5) years after the delivery of the royalty report to which they relate. ITC shall have the right, no more than once per calendar year, to have an independent certified public accountant, who shall enter into an appropriate nondisclosure agreement with Licensee, inspect all relevant books and records of Licensee and its Affiliates on not less than forty-five (45) calendar days prior notice and during regular business hours to verify the reports and payments required to be made hereunder. The nondisclosure agreement with the auditor may include an obligation that the auditor shall not disclose to ITC more information than is reasonably necessary to determine the royalties owed hereunder. Should an underpayment in excess of [**] percent [**](%) be discovered, Licensee shall pay the cost of the audit. In any event, Licensee shall promptly pay any underpayment together with interest at the annual rate of [**] percent [**](%). ITC shall, at Licensee's election, either promptly reimburse any overpayment, or credit Licensee with any overpayment to Licensee against any royalties owed ITC in the subsequent calendar quarters until exhausted. All information obtained through such audit shall be held in confidence by ITC. Licensee shall have the right, not more than once per calendar year, to have an independent certified public accountant, who shall enter into an appropriate nondisclosure agreement with ITC, inspect all relevant agreements, books and records and the like relating to the Licensed Patents on not less than forty-five (45) calendar days prior notice and during regular business hours to verify the credit provided for pursuant to Articles 3.2 and 3.3 hereunder and the MFL ______________ ** Material has been omitted and filed separately with the Commission. 23 status of the Licensee. The nondisclosure agreement with the auditor may include an obligation that the auditor shall not disclose to NEC more information than is reasonably necessary to determine the credits owed hereunder. All information obtained through such audit shall be held in confidence by Licensee. 7.8 Governing Law/Venue. The validity and interpretation of this 3G Agreement shall be governed by Delaware law, without regard to conflict of laws principles. Process shall be deemed sufficient if served on either party by courier service or recognized mail delivery service (e.g. U.S. Mail), postage prepaid, certified or registered, return receipt requested, and addressed as indicated on page 1 of this 3G Agreement. The parties hereby waive any objection as to the sufficiency of the method of service provided such service is made as set forth herein. 7.9 Limited Warranty. Each party represents and warrants that it has the right to license the patents described herein. Neither party makes any other representation or warranty with regard to the validity of such patents or the licensed party's ability to use, manufacture, have manufactured or sell Covered Subscriber Units free of infringement of third party intellectual property rights. Neither party shall have any obligation to maintain or prosecute patents described hereunder. 7.10 Affiliate Performance. Each party shall be responsible for all actions required of its Affiliates hereunder and shall be liable to the other party for any adverse action or failure to perform by such party's Affiliates hereunder. 7.11 Waivers. The failure of any party to insist upon the performance of any of the terms or conditions of this 3G Agreement or to exercise any right hereunder, shall 24 not be construed as a waiver or relinquishment of the future performance of any such term or condition. 7.12 Severability. The provisions of this 3G Agreement shall be severable, and if any of them are held invalid or unenforceable, then that provision shall be construed to the maximum extent permitted by law. The invalidity or unenforceability of one provision shall not necessarily affect any other. 7.13 No Set Off. Licensee agrees and acknowledges that it has no right to, and shall not, attempt to set off amounts claimed to be owed based on any claim that it has or may have in the future against IDC or its Affiliates other than ITC, against amounts owed hereunder. 7.14 Notices. All notices or other communications required or permitted under this 3G Agreement shall be in writing and shall be delivered by personal delivery, registered mail, return receipt requested, or a qualified "Next Day Air" delivery service addressed as indicated on page 1 of this 3G Agreement (provided that in case of notice to Licensee such notice shall be to the attention of General Manager of Intellectual Property Division) or as subsequently amended for itself by notice of a party. 7.15 Limitation. Nothing in this 3G Agreement shall be construed as: (a) an agreement to bring or prosecute actions against third party infringers of the Licensed Patents; (b) conferring any license or right under any patent other than the Licensed Patents; or (c) conferring any right to use the Licensed Patents outside the field of use defined by the license grant of this 3G Agreement. 7.16 Personal Agreement. This 3G Agreement is personal to Licensee and may not be 25 assigned or transferred, nor may any license granted hereunder be assigned or transferred, whether by operation of law or otherwise, and any attempt to make any such assignment or transfer shall be null and void; provided, however, this 3G Agreement may be transferred in connection with the sale of all or substantially all of the business or assets of Licensee to which this 3G Agreement relates. ITC may, in its sole discretion, limit application of this license to the permitted transferee to the transferred business. If Licensee remains a separate entity after such sale, then the acquiring entity shall continue to pay royalties[**]. If Licensee does not remain a separate corporate entity, or Licensee's production facilities are merged into the acquiring company or one of its subsidiaries, then the acquiring company shall pay royalties [**]. In addition, to the extent that, after the Effective Date, Licensee acquires a new Affiliate during the term of this 3G Agreement, and such new Affiliate was not licensed under ITC's patents but sold Covered Subscriber Units and/or Covered Infrastructure Unit, Licensee shall pay ITC, within thirty (30) days of the completion of such acquisition, [**]. The licenses granted hereunder to Licensee shall survive any transfer by operation of law or otherwise of the Licensed Patents or this 3G Agreement by ITC. Notwithstanding the foregoing, the non-assertion granted by Licensee hereunder to the other parties hereunder shall be personal to such entities and shall not be assigned or transferred in any manner. 7.17 Entire Agreement/Amendment. This 3G Agreement contains the complete and final agreement between the parties, and supersedes all previous understandings relating to the subject matter hereof whether oral or written. This 3G Agreement may only be modified by a written agreement signed by duly authorized _____________ ** Material has been omitted and filed separately with the Commission. 26 representatives of the parties. To the extent that, prior to the Effective Date, the parties hereto were parties to a prior written agreement covering the subject matter hereof, and Licensee has elected pursuant to an MFL clause to take the terms of this 3G Agreement, Licensee shall pay any royalties required under such prior agreement up to the date of election to take this Agreement. 7.18 Survival. The following provisions of this 3G Agreement shall survive expiration or termination of this 3G Agreement: Article 2.1 (for products manufactured, sold or otherwise transferred prior to such expiration or termination and for which a royalty has been or will be paid, and subject to all other limitations herein which shall survive to the extent necessary as regards such license grant); Article 6; Article 7.2, 7.3, 7.5, 7.7, 7.8, 7.10, 7.11, 7.13, and 7.17. [Signature on Next Page] 27 IN WITNESS WHEREOF, the parties have executed this 3G Agreement by their duly authorized representatives. INTERDIGITAL TECHNOLOGY CORPORATION By: /s/ William J. Merritt --------------------------------- Dated: January 14, 2002 ----------------------------- NEC CORPORATION By: /s/[**] --------------------------------- Dated: January 15, 2002 ----------------------------- ____________ ** Material has been omitted and filed separately with the Commission. 28 Index of Attachments and Exhibits ATTACHMENT A: LICENSED PATENTS ATTACHMENT B: ROYALTY PREPAYMENT EXHIBIT 1: PRESS RELEASE EX-10.54 6 dex1054.txt SETTLEMENT AGREEMENT WITH NEC EXHIBIT 10.54 CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND SEPARATELY FILED WITH THE COMMISSION. SETTLEMENT AGREEMENT This Settlement Agreement is between InterDigital Technology Corporation ("ITC"), a Delaware corporation with a mailing address of 300 Delaware Avenue, Suite 527, Wilmington, DE 19801, and NEC Corporation ("NEC"), a company organized and existing under the laws of Japan, with a mailing address of [**], Japan (collectively, "Parties"). PREAMBLE WHEREAS, the Parties are the parties to an existing Patent License Agreement ("License Agreement"), dated May 8, 1995, covering the payment of royalties for certain TDMA-based products manufactured and sold by NEC; WHEREAS, the Parties have had disputes under the License Agreement, some of which have been arbitrated ("Arbitration") before an AAA Commercial Arbitration Panel ("Panel") in accordance with the License Agreement, and the arbitrators are now deliberating; WHEREAS, the Parties desire to resolve the issues pending before the Panel, as well as all other outstanding disputed issues under the License Agreement, amicably and move forward with a business relationship; and WHEREAS, in order to resolve all disputed issues, including those pending before the Panel, the Parties have agreed to contemporaneously enter into this Settlement Agreement, an amendment to the License Agreement ("Amendment to Patent License Agreement") and a Narrowband CDMA and Third Generation Patent License Agreement ("3G Agreement"). NOW, THEREFORE, in consideration of the mutual promises contained herein, and intending to be legally bound, the parties agree as follows: 1) This Settlement Agreement shall not be effective unless and until the Amendment to Patent License Agreement and the 3G Agreement have been executed and delivered by the Parties, it being understood and agreed that exchange by fax shall constitute delivery hereunder. (The date all three agreements have been executed and delivered is referred to herein as the "Effective Date".) 2) In consideration for NEC's execution and delivery of the Amendment to Patent License Agreement and the 3G Agreement and for the payment by NEC of a certain lump sum amount specified in the first sentence of Article 1 of the Amendment to the Patent License Agreement pursuant to said Amendment to the Patent License Agreement, ITC agrees not to assert against NEC any claim asserted by ITC in the Arbitration regarding the non-payment of royalties owed under the License Agreement up to and including the Effective Date. Further, NEC and ITC hereby remise, release and forever discharge each other as to any other claims, demands and liabilities arising under the License Agreement up to and including the Effective Date. 3) Once this Settlement Agreement, the Amendment to Patent License Agreement and the 3G Agreement have been executed and delivered by the parties, ITC and NEC will promptly advise the Arbitrators and the AAA that the disputes between the Parties have been settled, the Arbitration should be immediately terminated, no award or opinion should issue, all documents evidencing any Opinion or Award (including without limitation spreadsheets, drafts and notes) in the possession or under the control of the Arbitrators should be destroyed, and the amount of the award and the opinion shall not be disclosed to either Party or any third party. ** Material has been omitted and filed separately with the Commission 1 4) Terms, when used with initial capital letters in this Settlement Agreement, shall have the meanings described under the License Agreement. 5) The validity and interpretation of this Settlement Agreement shall be governed by Delaware law, without regard to conflict of laws principles. The parties further irrevocably consent to exclusive jurisdiction of the federal courts in the State of Delaware for the purpose of enforcing this Settlement Agreement only. Process shall be deemed sufficient if served on either party by courier service or recognized mail delivery service (e.g. U.S. Mail), postage prepaid, certified or registered, return receipt requested, and addressed as indicated on page 1 of this Settlement Agreement. The parties hereby waive any objection as to the sufficiency of the method of service provided such service is made as set forth herein. 6) This Settlement Agreement, the License Agreement, the Amendment to Patent License Agreement and the 3G Agreement constitute the entire agreement and understanding between the Parties concerning the subjects addressed before the AAA Commercial Arbitration Panel and otherwise, and supersede any all prior or written agreements or understanding between them concerning the same. No representations, promises or agreements on the subject matters contained in this Settlement Agreement have been made other than those specifically set forth herein. 7) This Settlement Agreement can only be amended or modified by a written document executed by duly authorized officers of each of the Parties. 8) No waiver of any right under this Settlement Agreement shall be deemed effective unless in writing and signed by the party charged with such waiver, and no waiver shall operate as a waiver of any future such right or any other right arising under this Settlement Agreement. 9) This Settlement Agreement is binding upon and shall inure to the benefit of the parties hereto and their respective successors and/or assigns. IN WITNESS WHEREOF, the Parties have executed this Settlement Agreement by their duly authorized representatives. INTERDIGITAL TECHNOLOGY NEC CORPORATION CORPORATION By: /s/ William J. Merritt By: /s/ [**] ---------------------------- ---------------------------------- Senior Executive Vice President Title: President Title: and Member of the Board ------------------------- ------------------------------- Dated: January 14, 2002 Dated: January 15, 2002 ------------------------- ------------------------------- ** Material has been omitted and filed separately with the Commission 2 EX-10.55 7 dex1055.txt NOKIA TDD DEVELOPMENT AGREEMENT CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND SEPARATELY FILED WITH THE COMMISSION EXHIBIT 10.55 TDD DEVELOPMENT AGREEMENT Between InterDigital Communications Corporation InterDigital Technology Corporation and Nokia Corporation Table of Contents ARTICLE 1 - DEFINITIONS....................................................... 2 1.1 Definition ............................................................ 2 ---------- ARTICLE 2 - TDD PROJECT....................................................... 2 2.1 Overall Program/Goal................................................... 2 -------------------- 2.2 Scope of Work.......................................................... 2 ------------- 2.3 Pre-Requisites......................................................... 2 -------------- 2.4 Technology Transfer.................................................... 3 ------------------- 2.5 Location of Services .................................................. 3 -------------------- 2.6 Program Control/Management ............................................ 3 -------------------------- 2.7 Reports/Penalty........................................................ 8 --------------- 2.8 No Solicitation ....................................................... 11i -------------------- ARTICLE 3 - STANDARDIZATION ASSITANCE......................................... 11 3.1 Standardization Commitment ............................................ 11i -------------------------- 3.2 Standardizattion Efforts .............................................. 12 ------------------------ 3.3 Submittals............................................................. 13 ---------- 3.4 Notification........................................................... 13 ------------ ARTICLE 4 - INTELLECTUAL PROPERTY RIGHTS ..................................... 13 4.1 Ownership ............................................................. 13 --------- 4.2 ITC and IDC License Grants ............................................ 14 -------------------------- 4.3 Nokia License Grants .................................................. 15 -------------------- 4.4 Jointly Developed Patent Rights........................................ 17 ------------------------------- 4.5 Patent Filing Coordination ............................................ 19 -------------------------- 4.6 Certain Ackowledgements and Representations............................ 19 ------------------------------------------- 4.7 Additional Limitations and Conditions of the License Grant............. 19 ---------------------------------------------------------- 4.8 Cooperation in Patent Infringement Assessment/Litigation .............. 21 -------------------------------------------------------- 4.9 InterDigital TDD Technology Licensing ................................. 22 ------------------------------------- ARTICLE 5 - COMPENSATION...................................................... 23 ARTICLE 6 - TDD PRODUCT PURCHASES............................................. 23 ARTICLE 7 - TDD ASIC SALES.................................................... 24 ARTICLE 8 - WARRANTIES; LIMITATION OF LIABILITIES ............................ 24 8.1 Title Warranty ........................................................ 25 -------------- 8.2 Limitation of Liability ............................................... 25 ----------------------- 8.3 Limitation of Warranties............................................... 25 ------------------------ ARTICLE 9 - EFFECTIVE DATE; TERM; TERMINATION................................. 26 9.1 Effective Date ........................................................ 26 -------------- 9.2 Term .................................................................. 26 ---- 9.3 Termination for Cause ................................................. 26 --------------------- 9.4 Termination for Convenience ........................................... 26 --------------------------- 9.5 Rights Upon Termination................................................ 27 ----------------------- ARTICLE 10 - MISCELLANEOUS ................................................... 28 10.1 Incorporation by Reference ........................................... 28 -------------------------- 10.2 Exhibits.............................................................. 28 -------- 10.3 Entire Agreement...................................................... 28 ----------------
PROPRIETARY INFORMATION 10.4 Counterparts/Faxed Signatures ........................................ 28 ----------------------------- ii PROPRIETARY INFORMATION TDD DEVELOPMENT AGREEMENT THIS AGREEMENT is entered into as of the Effective Date between and among InterDigital Communications Corporation, a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, with offices at 781 Third Avenue, King of Prussia, Pennsylvania 19406 ("IDC"), InterDigital Technology Corporation, a Delaware corporation with offices at 300 Delaware Avenue, Suite 527, Wilmington, Delaware 19801 ("ITC" and, together with IDC, "InterDigital"), and Nokia Corporation, a corporation existing under the laws of the Country of Finland, with offices at [**] ("Nokia"). Background Nokia is a global leader in the design, manufacture, and supply of advanced wireless telecommunications equipment, including Infrastructure and Subscriber Units utilizing time division multiple access technology (TDMA). Nokia is also a leading developer and participant in the standards setting process associated with Third Generation applications. IDC has developed extensive digital communications technology experience involving both TDMA and code division multiple access (CDMA) technologies. Nokia desires to engage IDC to develop time division duplex ("TDD") technology, which technology is currently being proposed as part of the technological solution for Third Generation applications. Nokia and InterDigital further desire to enter into an agreement providing for the mutually beneficial cross-licensing of the TDD Technology. NOW THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto, intending to be legally bound, agree as follows: ** Material has been omitted and filed separately with the Commission. 1 PROPRIETARY INFORMATION ARTICLE 1 - DEFINITIONS 1.1 Definitions. As used herein, the terms set forth in the Master Agreement, Exhibit 1 thereto, when used with initial capital letters in this Agreement, including any Exhibits, attachments or amendments, shall have the meanings described in such Exhibit 1. ARTICLE 2 - TDD PROJECT 2.1 Overall Program/Goal. Pursuant to the terms and conditions of this Agreement, IDC will undertake to develop TDD Technology for Nokia. As contemplated by the Work Plans and Specifications as of the Effective Date, IDC will develop the technology and intellectual property blocks for the TDD Technology for use in Third Generation. That development effort may include software development, ASIC development, modem development, and other aspects of TDD Technology. IDC's development effort will be undertaken principally at IDC's R&D facilities. IDC will provide the TDD Technology to Nokia for its use in productizing the TDD Technology. Nokia will be permitted to employ the TDD Technology without further royalty obligation to InterDigital, as set forth herein. IDC will be permitted to use TDD Technology for its TDD Products, and license others under the TDD Technology, as set forth herein. 2.2 Scope of Work. IDC will use reasonable efforts to accomplish the TDD Project and deliver to Nokia the deliverables pursuant to the Work Plans and Specifications. The initial Work Plans and Specifications are contained in Exhibit 1. The Work Plans and Specifications may be amended from time to time in accordance with the provisions of Section 2.6. 2.3 Prerequisites. IDC shall provide adequate, experienced and trained resources to execute TDD Project according to the Work Plans and Specifications. IDC shall provide basic facilities like office and laboratory space with standard furnishing and equipment. These arrangement are done so that necessary security and confidentiality 2 PROPRIETARY INFORMATION requirements have been taken care. Nokia will provide experienced and trained resources for leading standardization activities, project supervision and technology transfer. IDC will provide for limited number of Nokia personnel (4-8) a possibility to work at the IDC R&D facilities premises on the TDD Project, with such working environment to be comparable with IDC's own project personnel. Such personnel will comply with IDC's policies and procedures on security. 2.4 Technology Transfer. InterDigital will provide Nokia with access to TDD Technical Information in accordance with the Work Plans and Specifications in real time. Generally, documentation will be made when closed and final, unless the Work Plans and Specifications provide for earlier release. For the quality control purposes, IDC shall not be required to provide working drafts of documentation absent a requirement to do so under the Work Plans and Specifications; provided, however, that Nokia may request such draft information, which request will IDC shall be considered promptly and in good faith by IDC. The documentation will be made available to Nokia by placement in electronic and paper format in repositories in at IDC's R&D facilities. Computer access will be provided to authorized Nokia employees having a valid password, and agreeing to comply with all IDC's policies and procedures on security. 2.5 Location of Services. The services to be rendered by IDC related to this Agreement shall be performed by IDC's employees primarily at the IDC facilities in Melville, New York, and King of Prussia, Pennsylvania, USA. 2.6 Program Control/Management. The TDD Project shall be directed and coordinated in the following manner: 2.6.1 Schedule/Budget. The initial Work Plans and Specifications, TDD Project Budget and TDD Project Schedule are contained in Exhibit 1. The Work Plans and Specifications may be revised by the parties jointly, or by Nokia, as set forth below. Any amendments to the TDD Project Budget and/or TDD Project Schedule must be by agreement of the parties (generally the Program 3 PROPRIETARY INFORMATION Managers), as set forth below. IDC shall use its reasonable efforts to accomplish the TDD Project in a minimum budget and schedule. 2.6.2 InterDigital Management. InterDigital shall have the management responsibility for the implementation of the Work Plans and Specifications, such management responsibility to include but not be limited to: (a) Employ appropriate and skilled engineers and technicians for the performance of the Work Plans and Specifications, it being understood that IDC will use reasonable efforts to minimize any changes in its personnel engaged in the TDD Project and keep Nokia informed of any significant changes in staffing among the first two tiers of management assigned to the project; (b) Engage and monitor contractors using standards customary in the industry; (c) Maintain appropriate security measures regarding the development, disclosure and dissemination of TDD Technology; (d) Provide suitable training opportunities for employed personnel to maintain and enhance competence; and (e) Establish suitable project procedures and guidelines regarding document and revision control, cost reporting, quality assurance, program review, etc. 2.6.3 Technical Steering Committee. A technical steering committee (TSC), comprised of technical representatives from Nokia and IDC, shall provide overall technical direction for the TDD Project. The TSC will meet on an asneeded basis to review technical matters and, with due consideration to the 4 PROPRIETARY INFORMATION cost, schedule, and intellectual property issues, make recommendations as to the technical direction of the TDD Project. Recommendations of the TSC shall be made by agreement of IDC and Nokia. TSC recommendations shall be approved in writing in program management meetings (described in Section 2.6.4) prior to implementation. 2.6.4 Program Management Meeting. The Nokia and IDC Program Managers for the TDD Project shall meet on a regular basis. The Program Managers' Meeting (PMM) will be used to track program status, review deliveries and milestones, coordinate project activities, review TSC recommendations (or the inability of the TSC to reach a consensus), approve revised TDD Project Budgets and TDD Project Schedules prepared by IDC (as directed by the Contract Review Committee - see below), assign and review program level action items, make recommendations as to the how to best address Major Deviations (described in Section 2.7.3) and generally address any other program issues. In addition, at any PMM, the Program Managers shall have the authority to approve changes to the Work Plans and Specifications provided such changes do not result in (i) upward deviations of more than five percent (5%) in the projected Total TDD Project Cost, as compared to the then-existing TDD Budget, or (ii) upward deviation of more than 10% in the projected Total TDD Project Cost, as compared to the then-existing TDD Budget, when such change is combined with previously approved changes to the Work Plans and Specifications underlying the then-current TDD Budget, or (iii) delays in the completion of project milestones or deliverables of more than two months as compared to the then-existing TDD Schedule, or (iv) delays of more than four (4) months in the TDD Projection Completion, as compared to such TDD Schedule, when such change is combined with previously approved changes in the Work Plans and Specifications. PMM decisions shall be made by agreement of IDC and Nokia and recorded in the written minutes signed by the Program Managers of both IDC and Nokia. Regardless of the number of individuals attending for each company, IDC and Nokia shall each have one vote. Any such changes to the 5 PROPRIETARY INFORMATION Work Plans and Specifications not authorized to be made at the PMM as set forth above must be approved in a Contract Review Meeting (described in Section 2.6.5) prior to implementation. In addition, any deviations or changes to the TDD Project Budget and TDD Project Schedule for which the PMM cannot reach a consensus shall be referred to the Contract Review Committee. All approvals and recommendations of the PMM shall be documented in writing. 2.6.5 Contract Review Meetings. Contract review meetings ("CRM") will be held at major program milestones, as set forth in the Work Plans and Specifications, or as otherwise needed but in no event less than once every six months. The Contract Review Meetings will be used to approve project results, define the Confidential Information available for disclosure to third parties (unless already exempted under Master Agreement or this Agreement), review the scope and the focus of the project, review the actions taken at, or recommendations arising out of, the PMM, approve the TDD Project Schedule or TDD Project Budget (to the extent such approval was not attained by the Project Managers), track external circumstances which will have an impact to the project and give approval of plans and funding of the project for the following six months' period. These meetings will be attended by four Nokia and four IDC senior corporate representatives; provided, however, that Nokia and IDC shall each have one vote per company, regardless of the number of representatives attending the Contract Review Committee. Nokia will nominate one of its representatives to act as a chairman of the Contract Review Committee. The Chairman will have the responsibility to call the meetings; provided, however, that IDC may call a meeting if required to have TDD Technology deliverables approved. In addition to other matters, any changes to the Work Plans and Specifications recommended by the Program Managers but for which the PMM did not have the authority to implement, shall be reviewed and voted on in the Contract Review Meeting. Such changes to the Work Plans and Specifications, as well as any PMM proposed changes to the Work Plans and Specifications, TDD Project Schedule and/or TDD Project Budget to address Major Deviations 6 PROPRIETARY INFORMATION (described in Section 2.7.3 below), shall be agreed to in writing by IDC's and Nokia's senior corporate representatives on the Contract Review Committee, such agreement not to be unreasonably withheld or delayed; provided, however, that the Contract Review Committee Chairman may, in good faith and after consultation with IDC, unilaterally reduce the scope of the work effort for the TDD Project, provided such change does not materially impair the objective of IDC to have the development of useable and licensable TDD Technology funded by Nokia in exchange for other considerations in this Agreement and the Patent License Agreement. By way of examples only, "material impairment" (i) includes reduction in the Work Scope and Specifications that would significantly reduce the Total Project Cost below the $40,000,000 amount contemplated by the initial Work Plans and Specifications and materially reduce any development of TDD Technology necessary for Third Generation, and (ii) excludes a significant reduction to the Work Plans and Specifications (a) necessary to achieve TDD Project Completion by the year 2002 or (b) that would significantly reduce a future TDD Project Budget (which provided for higher than $40,000,000 spending) back to $40,000,000. To the extent that such changes are approved or directed, the Work Plans and Specifications, TDD Project Budget and TDD Project Schedule, as applicable, shall be revised by IDC, and approved at the next PMM. In addition, the Contract Review Committee shall direct IDC to revise the TDD Project Budget and TDD Project Schedule to reflect the changes to the Work Plans and Specifications previously approved by the PMM and within the PMM's authority. The Chairman shall provide written directives to IDC to perform all such actions set forth above. Such directive shall be a prerequiste for IDC to commence work according to the revised Work Plans and Specifications for changes not previously approved at a PMM, and within the PMM's authority. 7 PROPRIETARY INFORMATION 2.7 Progress Review/Penalty. 2.7.1 Monthly Reports. At the end of each month IDC will provide Nokia a Monthly Report, which contains (i) expended hours for each person in the project, (ii) actual labor cost, (iii) list of other expenses with appropriate backup documentation for expenses, (iv) status of the Deliverables having scheduled date in previous month and the status of all delayed deliverables and (v) a short description of the plan of next month activities. IDC monthly invoice to Nokia is based on this report (See Compensation Schedule, Exhibit 2). 2.7.2 Quarterly Reports. At the first PMM after the end of each calendar quarter, IDC shall make a report to Nokia describing the status of the TDD Project. Such report shall provide information to Nokia as to (i) actual TDD Project costs to date versus the budget cost, (ii) the projected year-end cost versus the budgeted year-end costs, (iii) the projected project-end costs versus budgeted project-end costs, (iv) estimated delivery dates for key deliverables (as set forth in the Work Plans and Specifications) as compared to the TDD Project Schedule, and (v) the estimated date of TDD Project Completion as compared to the TDD Project Schedule. The report will provide suitable explanations for (i) any deviations of 5% or greater between the actual costs or estimated costs, by appropriate cost category (labor, travel, equipment, etc.) for the applicable period (month-end, year-end, project-end) and the budget, and (ii) any delays of greater than two months or more in the expected completion of deliverables as compared to the TDD Schedule. 2.7.3 Major Deviations. If, at the PMM (as set forth in Section 2.6.2), IDC identifies that either (i) the projected Total TDD Project Cost will exceed the then-current TDD Project Budget by ten percent (10%), or (ii) the projected TDD Project Completion date shall exceed the TDD Project Schedule by more than four months ("Major Deviation"), the Program Managers will devise a course of action to properly deal address the causes for such Major Deviation, and a 8 meeting of the Contract Review Committee will be promptly convened. The Contract Review Committee will review the proposal made by the Program Managers for appropriate adjustments to the Work Plans and Specifications and/or the TDD Project Budget or TDD Project Schedule as set forth in Section 2.6.3. 2.7.4. IDC Penalty. The TDD Project is a research and development project, with the attendant risks and uncertainties as regards, among other things, schedule, cost and final results. As a result, the parties understand that, IDC may not be able to complete the TDD Project in accordance with the TDD Project Budget or TDD Project Schedule adopted by the parties, and that IDC will require flexibility in timing and cost estimates for the TDD Project. Notwithstanding the foregoing, but subject to 2.7.5, if a Major Deviation occurs that (i) was not caused by Nokia, (ii) was not the result of changes to the Work Plans and Specifications approved at the PMM or by the Contract Review Committee, (iii) cannot be attributed to the inherent risks of R&D projects, or (iv) cannot be attributed to situations or influences beyond the reasonable control of IDC, such situations beyond IDC's control including without limitation changes in Third Generation, shortage of qualified engineering resources arising from changed conditions (as compared to those in effect as of the Effective Date), failure of contractors selected by Nokia, or failure of contractors selected by IDC (excluding contractors being used to supplement IDC's internal work force) unless such failure is solely attributable to IDC's failure to use commercially accepted practices in managing such contractor, ("IDC-Caused Major Deviation"), the parties agree that, subject to Nokia's rights to terminate or reduce the TDD Project work scope, the Work Plans and Specifications, TDD Project Budget, and/or TDD Project Schedule shall be revised by mutual agreement of the parties, such approval not to be unreasonably withheld or delayed, to properly address the causes or causes for the Major Deviation. Nokia shall have the burden of proving that a delay was an IDC-Caused Major Deviation. Thereafter, if another IDC-Caused Major Deviation occurs without PROPRIETARY INFORMATION there having been an intervening approved modification to the Work Plans and Specifications, TDD Project Schedule or TDD Project Budget for other than IDC-Caused Major Deviations ("Intervening Change"), [**]. The Contract Review Committee will also make appropriate changes to the Work Plans and Specifications, TDD Project Budget, and/or TDD Project Schedule to properly address the IDC-Caused Major Deviation. In the event of (i) a subsequent IDC-Caused Deviation as regards such revised TDD Project Budget or TDD Project Schedule, without Intervening Change, or (ii) two consecutive IDC-Caused Deviations as regards a future adopted TDD Project Budget or TDD Schedule, [**] 2.7.5 No Cumulative Remedies.[**], as set forth in Section 2.7.4, Nokia may alternatively pursue the termination of the agreement pursuant to the provisions of Section 9.3. Nokia shall not be permitted to avail itself to both [**] and the remedies available under contract and law for termination for breach with regard to the same IDC-Caused Major Deviation. 2.8 No Solicitation. During the term of the TDD Project and for one year thereafter or for one year after the termination of this Agreement, the parties' employees engaged in the TDD Project shall not actively seek to employ, or make offers of employment to, either directly or indirectly, the engineering, technical, or project-related supervisory personnel of the other party engaged in the TDD Project without the prior written consent of such other party; and further, irrespective of how such employment is sought, neither party shall directly or indirectly actively seek to employ, or make offers of employment to the engineering personnel occupying top two organizational tiers on the TDD Project. IDC shall inform its employees of such restrictions. The parties ** Material has been omitted and filed separately with the Commission. 10 PROPRIETARY INFORMATION acknowledge that, in the event of a breach of this agreement, the affected party will not have an adequate remedy at law. Therefore, in such event, the affected party shall have the right, in addition to other rights and remedies in law or in equity, to have the provision of this section specifically enforced and to obtain a temporary or permanent injunction or order prohibiting any of the breaching party from employing any individual of the affected party in violation of this Section. ARTICLE 3 - STANDARDIZATION ASSISTANCE 3.1 Standardization Commitment. Nokia will take an active role, with the assistance of IDC, in promoting the adoption by the European Technical Standards Institute ("ETSI"), the Telecommunications Industry Association ("TIA") and International Telecommunication Union ("ITU") as well as other standard setting groups where Nokia has influence, of wireless communications standards for Third Generation applications embodying key components of TDD. 3.2 Standardization Efforts. Nokia and IDC will undertake the standardization activities in accordance with the Work Plan and Specifications, such efforts to include as minimum: 3.2.1 Nokia acting as the lead promoter of the TDD for inclusion of technically and commercially desirable features in appropriate telecommunications standards within its regular standardization activities; 3.2.2 Nokia and IDC attending appropriate meetings and workshops, preparing submittals and presentations, either jointly or independently, regarding TDD; 3.2.3 IDC performing patent clearance reviews with regard to submittals and presentations regarding TDD; and 11 PROPRIETARY INFORMATION 3.2.4 IDC and Nokia keeping each other informed as to standardization strategies, efforts and the like regarding TDD. 3.3 Submittals. Prior to making a submission regarding specifically TDD Technology to any standard setting body during the term of the TDD Project, the submitting party shall first provide a copy of the proposed submission to the other parties for review and comment in respect of the technical quality and commercial feasibility of the proposed submission. All comments shall be considered by the submitting party in good faith, and the parties will use all reasonable efforts to resolve any disagreements as regards the content of the submission including, if necessary, submitting the matter to a Contract Review Meeting for discussion. Notwithstanding the foregoing, a party, after complying with the foregoing provisions, may make the submission without the consent of the other party provided that the submission does not include the name of the dissenting party and that, in any event, the submitting party has complied with the Proprietary Information provisions of the Master Agreement, including but not limited to patent bar review. 3.4 Notification. Notwithstanding the provisions of Section 3.1 and 3.2, Nokia and/or IDC may find it desirable to support other or multiple technologies for inclusion in Third Generation. Nokia and IDC will use reasonable efforts to keep each other informed on a regular basis as to each party's standardization strategy. 3.5 Complience with IPR Rules of Relevant Standardization Bodies. Both parties undertake to comply with the IPR Rules of the relevant standardization bodies in respect of the submissions made to the TDD standardization and undertake to license under the rules of such bodies. 12 PROPRIETARY INFORMATION ARTICLE 4 - INTELLECTUAL PROPERTY RIGHTS 4.1 Ownership 4.1.1 Existing Patents, Copyrights and Know-How. InterDigital shall continue to own its Existing TDD Technology and Existing Patents. Nokia shall continue to own its Existing TDD Technology and Existing Patents. 4.1.2 Developed Technology. Except as provided in Section 4.1.3, InterDigital will own the Developed TDD Technology and Developed Patents created by InterDigital, and Nokia will own any Developed TDD Technology and Developed Patents created by Nokia. Except as provided in Section 4.1.3, Developed TDD Technology jointly developed by the parties shall be jointly owned by the parties with the respective rights and responsibilities of the parties as to jointly held Developed Patents being as set forth in Section 4.4. 4.1.3 Lab-Created Technology. Notwithstanding any provision herein to the contrary, InterDigital will be the exclusive owner of all Developed TDD Technology and Developed Patents created or invented solely by a Laboratory Person(s). For the purpose of this Section, Laboratory Person(s) shall mean (i) those InterDigital personnel (including contractors, subcontractors, or consultants hired by InterDigital) working principally at the IDC research and development laboratories, and (ii) any Nokia personnel (including contractors, subcontractors, or consultants hired by Nokia) assigned principally to work at the IDC research and development laboratories, including any such person for ninety days after the completion of such assignment. Nokia will promptly execute, or cause its employees, consultants and/or subcontractors, to execute, at Nokia's sole expense, all appropriate assignments and other documents necessary to accomplish or acknowledge IDC and/or ITC's ownership of intellectual property consistent with this Section 4.1.3. 13 PROPRIETARY INFORMATION 4.2 ITC and IDC License Grants. 4.2.1 InterDigital Copyright and Know-How License Grant. InterDigital hereby grants to the Nokia Group a non-exclusive, non-transferable, personal, worldwide, royalty-free license under InterDigital Licensed TDD Technology (including all related TDD Technical Information as a result of the TDD Proejct) and Developed Patents, to design, develop, manufacture and have manufactured (if substantially designed by Nokia), market, sell, distribute and use Subscriber Units and Infrastructure. The licenses granted pursuant to this Section shall exclude any rights to sublicense, or any rights to design, develop, manufacture and have manufactured, market, sell and distribute BCDMA Products. 4.2.2 Technically Necessary TDD Patents. To the extent not covered by Section above, IDC and ITC shall grant, and they shall cause any of their Affiliates to grant, to the Nokia Group a non-exclusive, non-transferable, personal, worldwide, royalty-free license to design, develop, manufacture and have manufactured (if substantially designed by Nokia), market, sell, distribute and use TDD Products under (i) the InterDigital TDD Patents, and (ii) those InterDigital Patents which would otherwise necessarily be infringed when complying with any TDD standard for Third Generation; provided, however, that such license shall only be with respect to that portion of the TDD Product performing TDD functionality and shall not apply to any non-TDD portion (e.g., FDD, GSM, etc) of a TDD Product. 4.2.3 Components. The grant above shall not include, by implication or otherwise, any license for components, except when used solely as a part and within the licensed products defined above. 4.2.4 IDC Trademark License Grant. At the request of Nokia, IDC shall grant Nokia and its affiliates a non-exclusive, non-transferable, personal, world- 14 PROPRIETARY INFORMATION wide, royalty-free license to use the TDD Trademarks in conjunction with Subscriber Units and Infrastructure employing TDD, such license to be in accordance with standard trademark license terms as to maintenance of quality, and recognition of InterDigital trademark ownership. 4.3 Nokia License Grants. 4.3.1 Nokia Grant of License. Nokia hereby grants to IDC and its Affiliates a nonexclusive, personal, world-wide, royalty-free license under the Developed Patents and Nokia Licensed TDD Technology (including all related TDD Technical Information as a result of the TDD Project) to design, develop, manufacture and have manufactured (if substantially designed by InterDigital), market, sell and distribute Subscriber Units and Infrastructure. The above license shall include the right to grant sublicenses under the Nokia Licensed TDD Technology but not under the Developed Patents owned solely by Nokia. 4.3.2 Technically Necessary TDD Patents. To the extent not covered by Section 4.3.1 above, Nokia shall grant, and it shall cause any of its Affiliates to grant, to IDC and its Affiliates a non-exclusive, non-transferable, personal, worldwide, royalty-free license to design, develop, manufacture and have manufactured (if substantially designed by InterDigital), market, sell, distribute and use TDD Products under (i) the Nokia TDD Patents, and (ii) those Nokia Group Patents which would otherwise necessarily be infringed when complying with any TDD standard for Third Generation; provided, however, that such license shall only be with respect to that portion of the TDD Product performing TDD functionality and shall not apply to any non-TDD portion (e.g., FDD, GSM, etc) of a TDD Product. 4.3.3 Components. [**] ** Material has been omitted and filed separately with the Commission. 15 PROPRIETARY INFORMATION 4.3.4 Nokia Non-Assertion. Nokia shall not assert (and shall ensure that its Affiliates do not assert) against IDC or its Affiliates any claims for infringement of the Nokia Group Patents regarding IDC's or its Affiliates' design, manufacture, have made, distribution, sale or use of TDD ASICs or modems. In addition, Nokia shall not assert (and shall ensure that its Affiliates do not assert) any claims of infringement of the Nokia TDD Patents against (i) any purchaser of TDD ASICs or modems from InterDigital regarding the use of such TDD ASICs or modems in the TDD Products by such purchaser, or (ii) any TDD Licensee with regard to the use of the TDD Technology in TDD Products by such TDD Licensee; provided, however, that, with regard to (i) and (ii) such non-assertion shall not apply as to any such purchaser or TDD Licensee that asserts its Patents against the Nokia Group. 4.4 Jointly Developed Patent Rights. 4.4.1 ITC shall have the primary responsibility for (a) preparing and filing applications in the United States and other countries for all jointly Developed Patents, (b) pursuing the issuance of such Patents, and (c) maintaining such patents after issuance. ITC, in performing such obligations, shall provide Nokia with copies of all material correspondence with the U.S. Patent Office and any foreign counterpart thereof concerning such Patents, and shall consult at regular intervals with Nokia concerning the same. If ITC elects not to file or prosecute a patent application, or maintain such a patent after issuance, then Nokia may undertake such actions at its cost ("Nokia Controlled Patent"). ITC will use reasonable efforts to provide Nokia with adequate notice so as not to materially prejudice Nokia's rights as regards such patent applications or patents. 16 PROPRIETARY INFORMATION 4.4.2 Nokia and its Affiliates shall have the unrestricted right to use or have used, for itself or its Affiliates, the inventions claimed under such jointly owned Developed Patents. In addition, to the extent that Nokia is sharing in the cost of patent filing, prosecution and maintenance, Nokia shall have the right under the jointly owned Developed Patents to grant sublicenses to any party, in any field, for any purpose. Nokia shall also have the right under Nokia Controlled Patents to use such Patents in any manner, and to grant sublicenses to any party, in any field, for any purpose. 4.4.3 IDC and its Affiliates shall have the unrestricted right to use or have used, for itself or its Affiliates, the inventions claimed under such jointly owned Developed Patents. In addition, to the extent that ITC is sharing in the cost of patent filing, prosecution and maintenance, ITC shall have the right under the jointly owned Developed Patents to grant sublicenses to any party, in any field, for any purpose. 4.4.4 The parties agree that all attorneys fees and other out-of-pocket expenses reasonably incurred by the parties in applying for, maintaining and defending (as regards patent opposition proceedings but not Declaratory Judgment actions) the jointly owned Developed Patents shall be shared equally by the parties. In addition, the parties will consult with each other prior to commencing any litigation over infringement of jointly owned Developed Patents. The parties will share in the recoveries of any such lawsuit in proportion to the costs borne by each party in such lawsuit. Without the prior written consent of the other party, a party that has not paid in a timely manner for the filing, prosecution and maintenance of a jointly owned Developed Patent shall not be permitted to commence litigation over such patent or to share in any recoveries regarding such patent. 4.4.5 Each party agrees, at its own expense, to provide reasonable cooperation to the other party in the application for and maintenance of the jointly 17 PROPRIETARY INFORMATION Developed Patents. Without limiting the foregoing, each party, at the other party's reasonable request, shall execute (or cause its employees to execute) all applications for jointly Developed patents and such other instruments as may be necessary to apply for and maintain the jointly Developed Patents. Each party hereto grants to the other party a limited power of attorney until the expiration of the last to expire of the jointly owned Developed Patent to execute such applications and other documents on the first party's behalf and to the extent the first party is unable or unwilling to execute the same upon second party's reasonable request. 4.5 Patent Filing Coordination. Within sixty (60) days after the end of each calendar quarter, each party shall submit to the other party a summary of the patent application flings made during such quarter for inventions related to TDD Project. Such summary shall provide an abstract of the invention, the inventor(s), and the independent claims. Each party shall have sixty (60) days to provide comments to the other party as regards inventorship. In the event of a dispute over inventorship or ownership, the parties shall engage an independent patent lawyer, acceptable to both parties, to resolve the dispute. Such resolution shall be final and binding absent material new facts that affect inventorship. 4.6 Certain Acknowledgments and Representations. Each party represents that it fully understands and willingly accepts the allocation of intellectual property rights as set forth herein. Each party further acknowledges that the patents covering the inventions licensed pursuant to this Agreement are not perpetual, and that various Patents may expire during the term of this Agreement. Each party represents and acknowledges that all allocations of intellectual property rights set forth in this Agreement, as well as the duration of the patents covering such intellectual property rights, have been taken into account in the negotiation of the economic terms set forth in this Agreement. 18 PROPRIETARY INFORMATION 4.7 Additional Limitations and Conditions of the License Grant. The license grants of this Article 4 are subject to the following conditions: 4.7.1 As used in Article 4, Infrastructure and Subscriber Units shall mean Subscriber Units and Infrastructure designed by, or for, the licensed party and which are sold by the licensed party or its Affiliates as fully completed units to its customers, including but not limited to end-users, operators or distributors (but not other telecommunications equipment manufacturers). The Nokia Group shall have no right to transfer licenses under the IDC Licensed TDD Technology or InterDigital Patents through the sale of ASICs, software or other parts to third parties; provided, however, the foregoing limitation will not limit the Nokia Group's right to provide spare parts and enhancements for licensed Subscriber Units and Infrastructure. In addition, neither IDC nor its Affiliates shall have no right to transfer licenses under the Nokia Group Patents through the sale of ASICs, software or other parts to third parties; provided, however, the foregoing limitation will not limit the right of IDC or its Affiliates to provide spare parts and enhancements for licensed Subscriber Units and Infrastructure. 4.7.2 Subject to the provisions of Section 4.2.2, 4.3.2, 4.3.4, and 4.7.1, third party purchasers of Subscriber Units and Infrastructure licensed hereunder and purchased directly or indirectly from, respectively, Nokia or its Affiliates on the one hand or, IDC or its Affiliates or Licensees on the other hand, shall have the right to use and sell such purchased products for their normal or expected uses without further obligation under InterDigital TDD Patents, InterDigital Licensed TDD Technology, Nokia TDD Patents and Nokia Licensed TDD Technology licensed hereunder. 4.7.3 Notwithstanding the terms of Section 4.7.2, no license is granted by estoppel or implication under the Existing or Developed Patents to any purchaser of Subscriber Units (which are licensed hereunder) to make, use or sell 19 PROPRIETARY INFORMATION Infrastructure not licensed hereunder; and no license is granted by estoppel or implication to any third party purchaser of Infrastructure Units (which are licensed hereunder) to make, use or sell Subscriber Units not licensed hereunder. Any claims that ITC or Nokia may have against a third party manufacturer that such units contributorily infringe or induce infringement of any claims of the Existing or Developed Patents are expressly reserved by ITC and Nokia hereunder; provided, however that in no event shall Nokia or IDC be held liable for contributory infringement or inducing infringement (or under any similar theory of liability) of Existing or Developed Patents licensed in this Agreement based on the uses made of Infrastructure and Subscriber Units licensed hereunder by direct or indirect purchasers, regardless of the manner in which such products are sold, marketed or promoted by Nokia or IDC. 4.8 Cooperation in Patent Infringement Assessment/Litigation. 4.8.1 Cooperation. As part of the TDD Project, InterDigital and Nokia will evaluate, on a regular basis, the applicability of third party Patents and patent applications to the TDD Technology, and take appropriate action to address any potential infringement issues. Notwithstanding the foregoing, neither InterDigital nor Nokia shall be required to undertake any TDD Project activity to the extent that, in the reasonable opinion of patent counsel for either party, the TDD Technology or may infringe, or otherwise create a potential for liability, under third party patent rights. 4.8.2 Notice. To the extent known, each party shall provide timely notice to the other party as to any theft or misappropriation of any Know-How licensed hereunder. 4.8.3 Non-Inclusion. Unless otherwise agreed or known by Nokia, and subject to the provisions of Section 4.8.1, IDC shall not knowingly and willingly, and 20 PROPRIETARY INFORMATION based on actual knowledge of relevant third party Patents or copyrights, nonetheless include as part of the Developed TDD Technology Know-How any know-how that, when used by Nokia in its intended manner would infringe such third party Patents or copyrights. This Section shall not apply to Patents or copyrights that are essential to the implementation of Third Generation. 4.8.4 Limited IPR Indemnity. To the extent, and only to the extent, that IDC (i) is grossly negligent in the performance of patent clearance reviews anticipated by the Work Plans and Specifications, or (ii) withholds from Nokia reasonable and considered conclusions by counsel that implementation of the TDD Technology would likely infringe Patents held by third parties, ((i) and (ii) excluding patents that are essential to Third Generation for which no indemnity shall apply). IDC shall defend, indemnify and hold Nokia and its Affiliates harmless against infringement of third party Patent rights by the TDD Technology as follows. Such indemnity shall be limited to 50% of the reasonable costs and damages associated with such claims, capped at $1 million for each claim asserted and in no event greater than $10 million in the aggregate. In addition, such indemnity shall only apply only if Nokia (i) completes the TDD Project with IDC, (ii) promptly informs IDC in writing of any threatened infringement action against Nokia regarding TDD Technology (iii) permits IDC to actively participate in the defense of such suit, claim or proceeding, (iv) informs IDC of any possible settlement, and (v) does not enter into any settlement without the written consent of IDC, which consent shall not be unreasonably withheld or delayed. IDC may, at its option, supply non-infringing modification to the TDD Technology sufficient to avoid the infringement. Notwithstanding anything in this Agreement to the contrary, this indemnification obligation shall apply only if the alleged infringement relates directly to the TDD Technology provided to Nokia by IDC, and not any unintended combination of such technology with technology provided by Nokia or others 21 PROPRIETARY INFORMATION 4.9 InterDigital TDD Technology Licensing. Notwithstanding any provision in this Agreement to the contrary, InterDigital's right to (i) market its services and enter into agreements and transfer TDD Technology to TDD Licensees, (ii) disclose Confidential Information developed in the TDD Project, and (iii) permit laboratory visits by third parties, shall be subject to the following restrictions: 4.9.1 Pre-Marketing. InterDigital may commence discussions with prospective TDD Technology Licensees concerning non-confidential TDD Technology commencing upon the earlier of July 1, 1999 or Nokia's disclosure of the TDD development effort with InterDigital. ("Pre-Marketing Date"). 4.9.2 Technical Marketing. InterDigital may commence discussions with prospective IDC TDD Technology Licensees involving confidential TDD Technology (on a summary, non-use, confidential basis), including visits to the IDC research and development laboratories, commencing three months after the Pre-Marketing Date. 4.9.3 TDD Technology Transfer. Commencing April 1, 2000, InterDigital may provide TDD Licensees with access to Developed TDD Technology based on a marketing plan to be adopted by the Contract Review Committee at the first such meeting of such committee after the Effective Date. Such plan shall be consistent with the following guidelines (which the parties may change from time to time to address changed circumstances, approval to any proposed changes to the guidelines not to be unreasonably withheld or delayed): (i) The transfer of TDD Technology may not occur earlier than sixty (60) days after such technology has been delivered to Nokia in final form 22 PROPRIETARY INFORMATION as part of a complete deliverable contemplated by the Work Plans and Specifications; (ii) In the case of IP blocks, the grace period shall be three (3) months from testing and approval; (iii) For ASIC samples, no grace period after testing and approval; (iv) For ASIC volume delivers, the grace period shall be three (3) months provided that Nokia has executed an agreement with InterDigital for supply of ASICs in non di minimus quantities; and (v) IDC's arrangements with TDD Licensees may not interfere with the TDD Project or require changes to the content, schedule or cost of the TDD Project without Nokia's approval. ARTICLE 5 - COMPENSATION 5.1 Compensation. IDC will be paid for the TDD Development Project in accordance with the Compensation Schedule set out in Exhibit 2. Nokia's commitment hereunder shall only cover costs and fees which are incurred in accordance with this Agreement, the Work Plans and Specifications, and the Compensation Schedule, or future amendments or revisions thereto. ARTICLE 6 - TDD PRODUCT PURCHASES 6.1 IDC Purchase. IDC is hereby granted the option to buy from Nokia generally available standard single-mode TDD Products for sale in those markets for which Nokia opted to allow non-exclusive distribution by third parties, such sales to be on the nondiscriminatory terms and conditions as compared to those customarily given by Nokia to similarly situated wholesale customers; provided, however, that nothing in this Section shall obligate Nokia to develop such TDD Products. 23 PROPRIETARY INFORMATION ARTICLE 7 - TDD ASIC SALES 7.1 Joint ASIC Sales. As part of the TDD Project, IDC and Nokia shall explore the possibility of the joint development, manufacture and sale of single-mode TDD ASICs. If Nokia determines that such a cooperative manufacture and sales effort has commercial merit, Nokia shall first negotiate such a cooperative alliance with InterDigital, which negotiation shall be undertaken in good faith. ARTICLE 8 - WARRANTIES; LIMITATION OF LIABILITIES 8.1 Title Warranty. IDC and ITC, as applicable, represent and warrant that, to the best of their knowledge, they have sufficient right, title and interest in the InterDigital Licensed TDD Technology and TDD Trademarks to grant the licenses contemplated by this Agreement. Nokia represents and warrants that, to the best of its knowledge, it has sufficient right, title and interest in the Nokia Licensed TDD Technology to grant the licenses contemplated by this Agreement. 8.2 Limitation of Liability. Neither of the parties hereto shall be liable to the other party in tort, contract or otherwise for any consequential, incidental, exemplary, punitive, indirect or special damages of any kind, including, but not by way of limitation, damages for loss of profit by IDC, ITC or Nokia, even if the possibility of such damages was disclosed to, or could reasonably have been foreseen by, the injuring party. In addition, IDC's and Nokia's total limit of liability under this Agreement, regardless of claim or series of claims, shall not exceed fifty percent (50%) of the amount paid to IDC under Article 5 hereto; provided, however, that the fifty percent limitation shall not apply to Nokia's obligation to pay IDC for services as required under Article 5, or either party's obligation hereunder to reimburse the other for costs. 8.3 Limitation of Warranties. THE PARTIES MAKE NO WARRANTIES EXPRESSED OR IMPLIED, INCLUDING WITHOUT LIMITATION, IMPLIED WARRANTIES OF 24 PROPRIETARY INFORMATION MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WARRANTY AS TO PATENT NON-INFRINGEMENT, OTHER THAN THE WARRANTIES SET FORTH IN THIS ARTICLE. ARTICLE 9 - EFFECTIVE DATE; TERM; TERMINATION 9.1 Effective Date. The Effective Date of this Agreement shall be as set forth in the Master Agreement. 9.2 Term. The term of this Agreement shall be perpetual, unless terminated as provided herein. 9.3 Termination for Cause. A party may terminate this Agreement by written notice to take effect immediately if the other party is in material breach of this Agreement, and (i) the first Party previously notified the breaching party in writing of the default and such other party's intention to terminate the agreement, and (ii) the breaching party has failed to cure its breach within at least sixty (60) days after such notice or to make substantial progress towards curing such default or, in the case the breach consists of the breaching party's failure to make payments due hereunder, fails to cure such breach within at least thirty (30) days of such notice. 9.4 Termination for Convenience. Nokia may terminate this Agreement for convenience upon forty-five (45) days advance written notice to IDC. The date of termination shall be forty-five (45) days after the date of Nokia's notice to IDC. IDC shall be paid for all services rendered by IDC under and in accordance with this Agreement up to and including the termination date. In addition, to the extent that IDC does not continue the TDD Project without Nokia, IDC shall be reimbursed, as a full and complete compensation for the costs incurred by IDC as a consequence of the short termination period, for the following documented out-of-pocket costs, arising due to such project termination, such charges not to exceed [**] U.S. DOLLARS ($US [**]), and provided further that IDC shall undertake appropriate and ** Material has been omitted and filed separately with the Commission. 25 PROPRIETARY INFORMATION commercially reasonable actions, including commencing the orderly shutdown of the TDD Project promptly after receipt of the notice of termination from Nokia, to minimize the termination liability costs to be paid by Nokia hereunder,: (a) actual cancellation charges for equipment ordered prior to the notice of termination pursuant to the Work Plans and Specifications except that Nokia shall, at its option, be entitled to purchase any such equipment by paying the actual amount due after the termination date; (b) actual cancellation charges under consulting and engineering services agreements engaged pursuant to the Work Plans and Specifications and executed prior to the notice of termination; (c) actual cancellation charges on equipment leases necessary for the TDD Project and entered into prior to the notice of termination except that Nokia shall, at its opition, be entitled to assign any leases to it to the extent accepted by the leasor; (d) actual and documented severance benefits for IDC employees hired after the Effective Date and to be laid-off as a result of the termination of the TDD Project, such benefit not to exceed [**] [**] weeks of pay per employee, at [**] of the rates set forth in Exhibit 2; (e) one-hundred percent (100%) of the laboratory and dedicated office build-out, if such termination occurs in 1999, and [**] percent [**] if such termination occurs in 2000; (f) other actual and out-of pocket costs arising from such termination and approved by Nokia, such approval not to be unreasonably withheld or delayed. 9.5 Rights Upon Termination. Nokia shall be entitled to receive any TDD Technical Information developed up to the termination date. The licenses granted under Sections 4.2. and 4.3 shall survive termination of this Agreement as to the results conceived as part of the TDD Project. To the extent any of the Developed Patents are jointly owned, the provisions of Section 4.4 shall survive termination as regards such Developed ** Material has been omitted and filed separately with the Commission. 26 PROPRIETARY INFORMATION Patents. In addition, the following provisions will survive termination of this Agreement: Section 2.4(but only as to Technical Information developed prior to the date of termination), Section 2.8, Section 4.1.1, Section 4.1.2, Sections 4.1.3, 4.2.2 and 4.3.2 (but only as to those Patent claims necessary for the implementation of the TDD Technology developed prior to the date of termination), Section 8.2, Section 8.3, and Section 9.4. ARTICLE 10 - MISCELLANEOUS 10.1 Incorporation by Reference. All of the terms and conditions of the Master Agreement are hereby incorporated herein by reference. 10.2 Exhibits. All Exhibits and other attachments to this Agreement which are referred to herein or therein are hereby incorporated in and made a part of this Agreement. 10.3 Entire Agreement. This Agreement contains the complete and final agreement between the parties, and supersedes all previous understandings relating to the subject matter hereof and thereof whether oral or written. This Agreement may only be modified by a written agreement signed by duly authorized representatives of the parties. 10.4 Counterparts; Faxed Signatures. This Agreement may be executed by the parties in counterparts, each of which shall be deemed an original of the applicable document. Signatures provided by facsimile or other electronic means by any party shall be valid and enforceable upon delivery to the other parties hereto. 27 PROPRIETARY INFORMATION IN WITNESS WHEREOF, the parties have executed this Agreement by their duly authorized representatives. INTERDIGITAL COMMUNICATIONS CORPORATION BY: /s/ William A. Doyle ----------------------------------- Name: William A. Doyle Title: President Date: January 29, 1999 INTERDIGITAL TECHNOLOGY CORPORATION By: /s/ Howard E. Goldberg ----------------------------------- Name: Howard E. Goldberg Title: President Date: January 29, 1999 NOKIA CORPORATION By: /s/ [**] [**] ----------------------------------- ----------------------------------- Name: [**] Name: [**] Title: SVP, Product Creation Title: V.P. Licensing Date: January 28, 1999 Date: January 28, 1999 ** Material has been omitted and filed separately with the Commission. 28 Exhibit 1: Program Plan, UTRA -TDD Mode Interdigital - Nokia Strategic Initiative December 22, 1998 [**] ** Material has been omitted and filed separately with the Commission 29 PROPRIETARY INFORMATION Exhibit 2 COMPENSATION 30 DRAFT COMPENSATION SCHEDULE IDC will be paid by Nokia for IDC's Labor Cost and Expenses. The determination of those amounts is set forth below. 1. Labor Cost. IDC will be paid for the efforts of the Direct Labor involved in the TDD Project. Direct Labor will be those engineering, technical, software and other non-administrative or non-clerical personnel directly involved in the performance of the Work Plans and Specifications. Except to the extent of direct charges to the project by the individuals listed below, the indirect involvement of management of IDC shall not be separately recoverable. Direct Labor shall also include Patent Counsel assigned for patent clearance and related issues according to Work Plan. The reimbursement for Direct Labor will be determined based on the Hours Charged times the applicable Billing Rate, where the Billable Hours shall be the hours charged to the TDD Project for the Billing Period (see below). Unless separately agreed, compensation for travel time shall be at one-half of the actual time of travel, capped at four hours per one-way trip. The Billing Rate is the applicable per hour rate set forth below:
- ------------------------------------------------------------------------------------------------------------------ Direct Charge Category Per Hour Rate ------------------------------------------------------ 1999 2000 2001 2002 2003 - ------------------------------------------------------------------------------------------------------------------ Engineering Aides, Technicians, Technical Writers, [**] [**] [**] [**] [**] Documentation Supervisors - ------------------------------------------------------------------------------------------------------------------ Designers, Engineers, Project Administrators, Directors, [**] [**] [**] [**] [**] Documentation Managers - ------------------------------------------------------------------------------------------------------------------ Patent Counsel, Chief Technology Officer, General Manager [**] [**] [**] [**] [**] - ------------------------------------------------------------------------------------------------------------------
2. Expenses. IDC shall be reimbursed for its expenses (excluding Incidental Expenses) incurred related to the TDD Project, as set forth below. A. Reimbursable Expense. i. [**] IDC's Program Manager shall have authority to approve the purchase of materials and equipment necessary for the implementation of the Work Plans and Specifications such purchases not exceeding on an individual basis or, if a series of similar purchases is involved, in aggregate $10,000. Any purchase in excess of $10,000 shall be approved by Nokia in advance in writing. IDC will be reimbursed for actual, out-of-pocket expense for such materials and equipment. ii. Consultants. Nokia will reimburse IDC for expenses incurred for the services of consultants engaged by IDC for the implementation of the ** Material has been omitted and filed separately with the Commission Compensation Schedule Page 2 Work Plans and Specifications. The reimbursable expenses for consultants shall be the greater of (i) the hours charged times the Per Hour Rate for engineers, set forth above, or (ii) the actual Consultant charge for the same period. iii. Outside Services. Nokia will reimburse IDC for its costs related to outside engineering, technical and other service companies engaged for the performance of the Work Plans and Specifications. Prior to any engagement of an outside services company for which the estimated cost of services over the term of the engagement will exceed $10,000, IDC shall first notify Nokia in writing with the reasons for the engagement and the estimated cost, and Nokia shall provide written approval not to be unreasonably withheld or delayed. The reimbursable expense shall be the amount actually charged to IDC by such outside service company. iv. Travel. Nokia will reimburse IDC for its travel, hotel costs (including only the standard room rate, business center charges for TDD-Project related work provided that Nokia or IDC facilities are not readily available, plus tax but excluding any other room charges) while travelling and a fixed amount of USD [**] to cover living and related expenses incurred in the performance of the Work Plans and Specifications. Unless otherwise separately agreed, these expenses shall only be covered for travelling to Project Management Meetings and Contract Review Meetings and standardization meetings held outside the premises of IDC. No administrative surcharge shall be applied to such expenses. All IDC travel for the TDD Project shall comply with IDC's corporate policies on travel and hotel, as amended from time to time. v. Other Expense. Nokia shall reimburse IDC for other costs incurred in the implementation of the Work Plans and Specifications, such other costs to include without limitation shipping and related insurance costs, technical data costs (necessary reports, patent searches, etc.), personnel training costs necessary for the implementation of the Work Plans and Specification (and pre-approved by Nokia), and TDD Project related license, user or application fees. Nokia shall have prior approval rights over any expense greater than $10,000, which approval shall not be unreasonably withheld or delayed. B. Incidental Expense. IDC shall not be directly reimbursed for the incidental expense related to the implementation of the Work Plan and Specifications. Incidental expense shall include stationery supplies, internal xeroxing costs, utilities, telephone, basic internet access, etc. C. Title to Equipment. All equipment shall be purchased in the name of IDC and shall be the property of IDC; provided, however, that title to any equipment or ** Material has been omitted and filed separately with the Commission Compensation Schedule Page 3 components shipped to Nokia as required under the Work Plans and Specifications shall transfer to Nokia in accordance with the terms of the applicable shipping procedures (FOB, FCA, etc.). D. Billing/Reimbursement. On or before the last day of each month, IDC shall remit a monthly invoice to Nokia for services rendered for the previous month (the "Billing Period") along with a monthly report in accordance with Section 2.6.2 of the TDD Development Agreement, detailing with the break down of each of the items as to the level of day/persons involved/ Billable Hours in respect of the following categories: (i) the Billable Hours charged for the Billing Period, (ii) the total Direct Labor cost, (iii) a listing of the Expenses and the suitable backup documentation for expenses. Such invoice shall be paid by Nokia within 30 days of receipt. EX-10.56 8 dex1056.txt AMENDMENT NO. 1 TO NOKIA TDD DEVELOPMENT AGREEMENT EXHIBIT 10.56 CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND SEPARATELY FILED WITH THE COMMISSION PROPRIETARY INFORMATION AMENDMENT No. 1 to the TDD DEVELOPMENT AGREEMENT THIS AMENDMENT AGREEMENT No. 1 is entered into as of September 30, 2001 between and among InterDigital Communications Corporation, a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, with offices at 781 Third Avenue, King of Prussia, Pennsylvania 19406 ("IDC"), InterDigital Technology Corporation, a Delaware corporation with offices at 300 Delaware Avenue, Suite 527, Wilmington, Delaware ("ITC" and, together with IDC, "InterDigital"), and Nokia Corporation, a corporation existing under the laws of the Country of Finland, with offices at [**] Finland ("Nokia"). Background Nokia and IDC entered into a Master Agreement, Patent License Agreement, and a TDD Development Agreement, each effective as of January 29, 1999. The parties wish to amend the Master Agreement and TDD Development Agreement as provided herein. NOW, THEREFORE, in consideration of the covenants and promises made herein, the parties, intending to be legally bound, hereby agree as follows: Agreement 1. New Definitions. The following new definitions are added to the Master Agreement: "2a. "Base TDD Project" means the TDD Project described in Exhibit 1 to this Amendment Agreement." ** Material has been omitted and filed separately with the Commission. "28a. "Nokia Cap" means $US59,000,000." 2. New TDD Project Definition. The parties hereby adopt the Base TDD Project as the TDD Project to be undertaken by the parties pursuant to the terms of the Master Agreement and Related Agreements, as amended herein. Exhibit 1 hereto is hereby incorporated and made part of the Work Plans and Specifications. Any portions of the Work Plans and Specifications as of the Effective Date that are inconsistent with the provisions of Exhibit 1, either express or implied, are hereby superceded by Exhibit 1 hereto. Changes to the TDD Project shall be made in accordance with terms of the TDD Development Agreement, as amended herein. 3. Adoption of Cap and Payment Schedule For Reimbursement of Base TDD Project Costs Nokia and IDC hereby agree to modify the compensation terms of the TDD Development Agreement, from a time and materials basis without a cap, to payments schedule with a cap, as follows: A. Section 5.1 is hereby replaced in its entirety with the following: "Compensation. IDC will be paid for its reimbursable costs incurred in the Base TDD Project in accordance with Exhibit 2, such reimbursable costs to be (i) [**] Nokia shall reimburse IDC in accordance with the following payment schedule: (i) For services rendered by IDC during 2001, IDC will be paid [**]. (ii) For monthly services rendered by IDC commencing January 1, 2002, Nokia shall pay IDC [**]. (iii) Upon final delivery of all deliverables as set forth in the Work Plans and Specifications, Nokia shall pay IDC the lesser of [**] Nokia's commitment hereunder shall cover only costs and fees incurred in accordance with this Agreement, the Work Plans and Specifications, and the Compensation Schedule, or future amendments or revisions thereto. Notwithstanding the foregoing, Nokia shall continue to be _________________ ** Material has been omitted and filed separately with the Commission. 2 responsible to pay costs related to Jointly Developed Patent Rights in accordance with Section 4.4 of the Agreement, and for resolving patent ownership disputes in accordance with Section 4.5." 4. Changes to the Work Plans and Specifications. As regards the Base TDD Project, the review and approval of the associated TDD Project Budget shall be as set forth in the TDD Development Agreement except as modified under Section 5 hereto. Any changes to the Work Plans and Specifications shall be made in accordance with the TDD Development Agreement. Notwithstanding anything in this Agreement or in the TDD Development Agreement to the contrary, any change to the Work Plans and Specifications representing an increase in effort or expansion of the Base TDD Project shall be approved by the parties in writing prior to implementation. The Project Managers shall have the authority to jointly approve such changes to the Work Plans and Specifications provided the increased effort is not expected to exceed $500,000. 5. Changes to Budgeting, Invoicing and Penalty Provisions. If the Total TDD Project Cost for the Base TDD Project has exceeded the Nokia Cap, then, other than providing on a one time basis the details reasonably necessary to demonstrate that the Total TDD Project Cost has exceeded the Nokia Cap, IDC shall have no further obligation to report costs, budget changes or other financial related information to Nokia as otherwise required in the Agreement. In addition, Nokia shall no longer have approval rights as regards any expenditures made by IDC in the implementation of the Work Plans and Specifications. In addition, in consideration of IDC limiting Nokia's reimbursement responsibility to the Nokia Cap for the Base TDD Project as provided herein, the penalty related to cost overruns set forth in Section 2.7.3 of the TDD Development Agreement is hereby deleted. The above limitation shall not apply to any additional effort being provided by IDC under different economic terms and conditions, as set forth in Section 4 hereto. 6. Joint Cooperation on [**] Continued Support. Nokia and IDC shall cooperate with regard to [**]. Without otherwise limiting Nokia's obligations under the Work Plans and Specifications, Nokia also agrees to maintain _______________ ** Material has been omitted and filed separately with the Commission. 3 at least the same level of support as regards the project (including standards support) as has been provided by Nokia historically over the term of the project. 7. TDD Technology Transfer. Section 4.9.3 of the TDD Development Agreement is hereby amended to eliminate the grace periods under subparagraphs (i), (ii), and (iv). 8. Amendment to Termination Liability. Section 9.4 ("Termination for Convenience") is hereby deleted. 9. Additional Termination Right. The parties will meet on a regular basis to discuss the future market applications for TDD. In the event that due to the availability of other competing technologies or other factors, UTRA TDD technology is projected with a reasonable degree of certainty as having no relevant market application, IDC and Nokia shall meet to discuss termination of the project, an agreement to do such, in view of the above circumstances, will be made in good faith and not unreasonably withheld or delayed. 10. Intellectual Property Rights. Except as otherwise expressly stated by Nokia in writing in respect of particular parts ("Sensitive Cells") at the time of disclosure to IDC (such designation requirement to be strictly enforced), the license for IDC and its Affiliates under the Nokia Licensed TDD Technology (but not as to Developed Patents and any patent rights under any pending patent applications), as set forth in Section 4.3.1 of the TDD Development Agreement, shall include any product of IDC (including, without limitation semiconductors, integrated circuits, software, radio equipment, IP blocks, etc.) actually used or intended to be used in connection with the manufacture or installation of TDD Products ("IDC TDD Components"), including when such IDC TDD Components are not used as part and within licensed products, and test equipment. It is hereby understood and agreed that (i) Sensitive Cells shall exclude any Technical Information disclosed by Nokia to IDC as of the Effective Date of this Amendment, (ii) understanding that IDC needs to have licensable IP as a product of this Base TDD Project, Nokia shall limit designating Sensitive Cells to exceptional circumstances, and (iii) IDC may, after good faith discussion with Nokia, decline to accept and/or utilize 4 Sensitive Cells in the Base TDD Project to the extent such acceptance or use may materially adversely impact the licensability of the Developed Technology. Nokia's non-assert, as set forth in Section 4.3.4 of the TDD Development Agreement, shall also apply to IDC TDD Components in addition to TDD ASICs and modems but solely in respect of TDD portion of such products (and excluding, without limitation, any possible GSM or FDD portion in the same product). Moreover, as used in Sections 4.2 and 4.3 of the TDD Development Agreement, TDD Products shall be interpreted to include test equipment for TDD Products. In addition, IDC and Nokia will be permitted to provide spare parts for test equipment (Nokia's right being limited to spare parts for the test equipment supplied by Nokia), as set forth in Section 4.7.1 of the TDD Development Agreement. The licenses granted for Nokia and its Affiliates as set forth in Section 4.2.1 of the TDD Development Agreement shall also include the licenses to any Developed Patents of IDC under the TDD Program Plan Revision D with the exception of Patents relating to the software implementation of the protocol stack (not related to the-systems work) of L2/3 Release 2 features (e.g. handover, mobility procedures, temporary DCH RRM (escape mechanisms and load balancing), etc.). Contingent upon Nokia and InterDigital executing an agreement on a future TDD program, InterDigital shall grant Nokia a license under the terms of section 4.2.1 to the Patents developed under the TDD Program Plan Revision D that are excepted under the preceding sentence. Nothing contained in this provision shall obligate InterDigital to perform any work under the TDD Program Plan Revision D other than the work encompassing the Base TDD Project under this Amendment For the avoidance of doubt, and to avoid the need to disclose the contents of the Agreements and this Amendment to customers seeking to license TDD Technology or purchase TDD components from IDC, or to foundries producing TDD products for sale, Nokia and IDC will mutually agree on a holding statement that can be provided on a confidential basis to customer and other vendors, acknowledging (i) that IDC owns all of the TDD Technology it developed under the Agreements and this Amendment, (ii) that IDC has secured sufficient and appropriate rights as regards any Nokia TDD Technology included in the results of such projects for the purpose of licensing third parties to manufacture and sell TDD products, and (iii) that such rights as regards any Nokia Patents are conditional on such third parties not asserting their Patents against Nokia Group. 5 11. Continued Cooperation. Without limiting either party's ability to pursue their own business interests, IDC and Nokia shall continue to cooperate and communicate on potential future activities on TDD so that, if desirable, the parties can promptly undertake such activities if and when market conditions and circumstances are appropriate. In this regard, IDC and Nokia shall maintain a regular, frequent dialog on each other's views on TDD. Further, in the event Nokia determines to pursue TDD activities beyond the Base TDD Project, it shall first meet with IDC with the view of providing IDC with the first opportunity to meet Nokia's development needs. 12. Future Cooperation. Contingent upon Nokia and InterDigital executing an agreement on a future TDD program, InterDigital shall provide to Nokia any TDD technology items which were deliverables under the TDD Program Plan Revision D, but are not part of the deliverables under this Amendment, provided: i InterDigital has the right to grant licenses to such deliverables, and ii Nokia compensates InterDigital for any mutually agreed upon, incremental expenses (e.g., equipment or labor associated with the test platform or license fees payable to third parties in connection with any license granted under section 12(i) above). Nothing contained in this provision shall obligate InterDigital to perform any work under the TDD Program Plan Revision D other than the work encompassing the Base TDD Project under this Amendment. 13. Miscellaneous. All of the terms and conditions of the Master Agreement are hereby incorporated herein by reference. Unless modified herein, all other terms and conditions of the Master Agreement and Related Agreements remain unaltered and in full force and effect. This Amendment Agreement shall be subject to the terms of the Master Agreement unless inconsistent with the terms in this Agreement. All Exhibits and other attachments to this Amendment Agreement which are referred to herein are hereby incorporated in and made a part of this Agreement. This Amendment Agreement contains the complete and final agreement between the parties, and supersedes all previous understandings relating to the subject matter hereof and thereof whether oral or written. This Amendment Agreement may only be modified by a written agreement signed by duly 6 authorized representatives of the parties. This Amendment Agreement may be executed by the parties in counterparts, each of which shall be deemed an original of the applicable document. Signatures provided by facsimile or other electronic means by any party shall be valid and enforceable upon delivery to the other parties hereto. IN WITNESS WHEREOF, the parties have executed this Amendment Agreement by their duly authorized representatives. INTERDIGITAL COMUNICATIONS CORPORATION BY: /s/ Howard Goldberg ------------------------------- Name: Howard Goldberg Title: President & CEO Date: INTERDIGITAL TECHNOLOGY CORPORATION By: /s/ William J. Merritt ------------------------------------ Name: William J. Merritt Title: President Date: NOKIA CORPORATION By: /s/ [**] /s/ [**] ------------------------------------ ------------------------------------ Name: [**] [**] Title: Executive VP, CTO Senior VP, Nokia Networks Date: ** Material has been omitted and filed separately with the Commission. 7 Exhibit 1: InterDigital/Nokia UTRA-TDD Program Plan [**] ** Material has been omitted and filed separately with the Commission 8 EX-10.57 9 dex1057.txt SHARP 2G PATENT LICENSE AGREEMENT EXHIBIT 10.57 CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND SEPARATELY FILED WITH THE COMMISSION PHS AND PDC SUBSCRIBER UNIT PATENT LICENSE AGREEMENT BETWEEN INTERDIGITAL TECHNOLOGY CORPORATION and SHARP CORPORATION Dated and Effective March 19, 1998 ("Effective Date") SUBSCRIBER UNIT PATENT LICENSE AGREEMENT THIS IS A PATENT LICENSE AGREEMENT (the "Agreement"), dated March 19, 1998, (the "Effective Date") between InterDigital Technology Corporation ("ITC"), a Delaware corporation with a mailing address of [**], Wilmington, DE 19801, and Sharp Corporation ("Licensee"), a corporation organized and existing under the laws of Japan, with a mailing address [**] JAPAN. PREAMBLE ITC owns and has the right to license the Licensed Patents (defined below) and is willing to grant world-wide, non-exclusive licenses thereunder on the terms set forth below. Licensee desires to obtain such a license. NOW, THEREFORE, in consideration of the mutual promises contained herein, and intending to be legally bound, the parties agree as follows: ARTICLE I - DEFINITIONS 1.1 "Affiliate" means IDC or a corporation or other legal entity of which more than fifty percent (50%) of the voting stock or control is owned, directly or indirectly, by Licensee, IDC, or ITC, as the case may be. An "Affiliate" may also include, subject to the mutual agreement of the parties, a company over whose senior management Sharp Corporation exercises substantial control. 1.2 "Covered Standards" mean PHS and PDC. 1.3 "Covered Subscriber Units" means Subscriber Units that are built to operate in accordance with one or more Covered Standards. 1.4 "Multi Mode Unit" means a Covered Subscriber Unit designed to operate in accordance with at least two Covered Standards. 1.5 "Essential Patents" means all patents (excluding Licensed Patents) that are essential to any practical implementation of a Covered Standard. ______________ ** Material has been omitted and filed separately with the Commission. 2 1.6 "IDC" means InterDigital Communications Corporation, having an office at 781 Third Avenue, King of Prussia, PA 19406. 1.7 "Infrastructure Equipment" means switching centers, base stations, base station controllers, digital transceivers, and like telephony equipment, which are used to interconnect a Subscriber Unit to the wired telephone network. 1.8 "Licensed Patents" means every issued TDMA-based digital wireless telephone related patent and patent application on file or filed within five (5) years of the Effective Date, which patents and patent applications are owned by ITC or for which ITC has the right to grant the licenses conveyed hereunder, (including utility models but excluding design patents and design registrations) in every country of the world. A listing of Licensed Patents as of the Effective Date is included as EXHIBIT A. 1.9 "Licensee" means the company identified as "Licensee" on page 2 of this Agreement, and its Affiliates. 1.10 "Net Selling Price" means (for royalty calculation purposes) the greater of (i) the amount actually invoiced to the customer for a Covered Subscriber Unit, less actual battery cost (as invoiced to Licensee by non-affiliated parties), packing, insurance and shipping costs, applicable import, export and excise duties (including VAT added by the Licensee to the completed Covered Subscriber Unit), returns, and trade discounts given, to the extent included in the amount invoiced to the customer, or (ii) 120% of the manufactured cost (consisting of direct product costs and factory overhead of Covered Subscriber Unit but excluding actual invoiced battery cost by non-affiliated third parties). As used in this Agreement, "factory overhead" may include standard cost components such as direct labor and supplies together with depreciation of manufacturing equipment but shall exclude, without limitation, sales and marketing, and general and administrative overhead and expenses. 1.11 "Patent Issuance Date" means the date on which the first patent issues to ITC based on Japanese patent application [**]. 1.12 "PDC" means the RCR STD27B compatibility standard developed in Japan known as PDC, or Personal Digital Cellular (also Japan Digital Cellular) for TDMA digital wireless mobile radio communication systems, as amended from time to time. ______________ ** Material has been omitted and filed separately with the Commission. 3 1.13 "Per Unit Royalty" has the meaning ascribed to that term in Article III. 1.14 "PHS" means the RCR STD28 compatibility standard developed in Japan known as PHS or Personal Handy Phone System, as amended from time to time. 1.15 "Subscriber Unit" means a radiotelephone or other end-user terminal devise, whether fixed, mobile, transportable, vehicular, portable or hand-held, adapted for use by a single person. A Subscriber Unit shall include a Wireless Local Loop Subscriber Unit. 1.16 "TDMA" means time division multiple access. 1.17 "Wireless Local Loop Applications" means a digital wireless communications system that is primarily directed to providing fixed wireless telephone service in place of wireline service 1.18 "Wireless Local Loop Subscriber Unit" means a radiotelephone, designed generally in accordance with a Covered Standard, used in a Wireless Local Loop Application. ARTICLE II - LICENSE GRANT 2.1 Grant. ITC hereby grants to Licensee a non-exclusive, non-transferrable (except as to pass-through rights as provided herein), worldwide, royalty-bearing license under the Licensed Patents to make, have made, use, sell and otherwise distribute Covered Subscriber Units. The license granted hereunder excludes the right to grant sublicenses. ITC hereby releases, acquits and forever discharges Licensee (and those Affiliates affiliated with Licensee on the Effective Date) from any and all claims or liability for infringement of any Licensed Patents by the making, selling or otherwise distributing of Covered Subscriber Units prior to the April 1, 1998. 2.2 Limitations on License Grant. No license is granted directly or by implication to any Infrastructure Equipment used in connection with Covered Subscriber Units. 2.3 Additional Covered Standards. If and when Licensee requires a license under ITC's patents to manufacture and sell products under other TDMA-based standards, ITC and Licensee shall negotiate such a license in good faith. Any 4 disputes between the parties as to such license shall be resolved pursuant to the dispute resolution procedures set forth in Article VII. 2.4 Cross-License. Licensee hereby grants to IDC and its Affiliates a royalty-free, worldwide, non-transferrable, irrevocable license under any and all patents in relation with Covered Subscriber Units and Infrastructure Equipment held or controlled by the Licensee as of the Effective Date or that issue from patent applications on file as of, or filed within five years of, the Effective Date to make, have made, use, sell or otherwise distribute Covered Subscriber Units and/or Covered Infrastructure. ARTICLE III - ROYALTY RATES/CREDITS 3.1 Royalty Payments. In consideration for the license granted herein, Licensee shall pay to ITC a Per Unit Royalty on each sale by Licensee of a Covered Subscriber Unit (exclusive of returns and credits, and exclusive of the Covered Subscriber Unit released, acquitted or discharged under Section 2.1). The Per Unit Royalty shall be as follows: (A) Covered Subscriber Units (Non-Wireless Local Loop Applications): (i) PDC: [**] (ii) PHS: [**] (B) Covered Subscriber Units (Wireless Local Loop Applications): (i) PHS and PDC: [**] 3.2 Timing of Payments. Licensee's obligation to make royalty payments to ITC hereunder shall commence: (A) Upon April 1, 1998, for all Covered Subscriber Units sold on or after April 1, 1998 for which the manufacture, sale or use of such equipment (or components thereof) takes place outside of the country of Japan, ______________ ** Material has been omitted and filed separately with the Commission. 5 (B) Upon the Patent Issuance Date, for all Covered Subscriber Units sold on or after April 1, 1998 for which the manufacture, sale and use of such equipment (or components thereof) shall occur within the country of Japan. In the event that the Patent Issuance has not occurred, ITC and Licensee shall negotiate in good faith the commencement of royalty payments hereunder based on other ITC Patents issued in Japan. Any disputes arising under this Section shall be subject to the Dispute Resolution procedures set forth in Article VII. ARTICLE IV - LUMP SUM PAYMENT 4.1 Lump Sum Payment. In consideration for the rights granted herein, Licensee shall pay an Up-Front Fee to ITC in the amount of $US4,444,000. Licensee shall also pay the amount of $US1,111,000 as a Royalty Prepayment for Covered Subscriber Units sold on and after April 1, 1998. The above payments shall be irrevocable and non-refundable. The above-mentioned aggregated $US5,555,000 shall be paid by Licensee to ITC within thirty (30) days after the execution of this Agreement ARTICLE V - PASS-THROUGH LICENSE 5.1 Pass-Through License. Provided Licensee is not in default of its obligations hereunder, Licensee's customers that are operators and end-users but who are not also suppliers (other than retail) will receive a pass-through license for sale (including lease) or use of Covered Subscriber Units. Neither this Agreement nor any payments made hereunder, are intended, nor should they be construed, as exhausting ITC's rights to royalties or damages from unlicensed purchasers. ARTICLE VI - TERM/TERMINATION 6.1 Term. The term of this Agreement shall commence on the Effective Date and terminate five (5) years thereafter, unless sooner terminated as provided herein. Any extensions to this Agreement shall be made by mutual agreement of the parties, subject to each party's discretion. 6.2 Termination for Default. This Agreement may be canceled by either party, upon thirty (30) days' prior written notice, if the other party is in breach of any of its material obligations hereunder and the breach is not remedied within the notice period. During the term of this Agreement, if Licensee institutes or actively participates as an adverse party in, or otherwise provides material support to, any legal action anywhere in the world, the purpose of which is to invalidate or limit the validity or scope of the Licensed Patents, ITC shall have the right to consider 6 such action as a material breach of this Agreement. Licensee's other material obligations shall include, but shall not be limited to, its royalty reporting and payment obligations. ARTICLE VII - DISPUTE RESOLUTION 7.1 Negotiation of Disputes. In the event of any dispute arising under this Agreement, senior executives of the parties with decision making authority will meet in Wilmington, Delaware, unless some other city as may be agreeable to the parties, as soon as reasonably possible (but no later than sixty (60) days after notice) and will enter into good faith negotiations aimed at resolving the dispute. If they are unable to resolve the dispute in a mutually satisfactory manner within an additional sixty (60) days, the matter may be submitted to mediation/arbitration as provided for in Sections 7.2 and 7.3 hereto 7.2 Mediation of Disputes. The parties agree to submit any unresolved dispute to a sole mediator selected by the parties as soon as reasonably possible (but no later than sixty (60) days after notice). Such mediation shall occur in Wilmington, DE. If not thus resolved, the parties will proceed as specified in Section 7.3 hereto. 7.3 Arbitration of Disputes. Any unresolved disputes arising under this Agreement shall be submitted to an arbitration proceeding which shall take place in Washington, D.C. The proceeding shall be conducted under the then prevailing rules for commercial arbitration of the American Arbitration Association, by a panel of three (3) arbitrators, one of whom must have substantial experience in the field of telecommunications. Each party shall select one arbitrator and the two arbitrators will select the third arbitrator. The arbitrators shall have the authority to permit limited discovery to the extent required by a party in order to establish its case. The decision of the arbitrators shall be final and binding and may be entered and enforced in any court of competent jurisdiction. Any monetary award shall be payable in U.S. dollars, free of any tax, offset or other deduction. Any determination of the arbitration shall be confidential to the parties hereto and binding solely on the parties hereto. ARTICLE VIII - MISCELLANEOUS 8.1 Payments. Payments made pursuant to Sections 4.1 shall be made by wire transfer in U.S. dollars at License Agreement execution. All other payments required under this Agreement shall be made by wire transfer in U.S. dollars on a semi-annual basis by February 28 for the preceding six-month period ending December 31 and August 31 for the preceding six-month period ending June 30. 7 Regardless of whether payment is made, Licensee shall provide ITC (at the same times as noted above) with a written report and associated certification setting forth the quantity of each type of Covered Subscriber Units sold, and additional information sufficient to determine the royalties payable for such Covered Subscriber Units. All such reports shall be held in confidence by ITC. 8.2 Taxes. All royalties payable hereunder are net of and free and clear from any applicable taxes (whether based on income or otherwise), which taxes shall be paid by Licensee on a grossed up basis, except any applicable Japanese source withholding taxes which shall be deducted by Licensee from amounts payable to ITC hereunder. On the basis of such deduction, Licensee agrees that it shall be responsible for and pay, on ITC's behalf, the withholding tax associated with the payments set forth under Section 3.1 and 4.1 hereto. Licensee will furnish ITC with appropriate documentation evidencing the payment of such tax as issued by the appropriate authority of such government. 8.3 Most Favored Licensee Rights. Provided Licensee is not in default of its obligations hereunder, the Licensee shall be treated as a most favored licensee ("MFL") under the Licensed Patents with regard to Covered Subscriber Units. If, subsequent to the Effective Date, ITC enters into an agreement with a third party comparable to the license granted in this Agreement but containing commercial terms which, in the aggregate (i.e., not on a clause by clause basis), are more favorable to the third party than the commercial terms in this Agreement, ITC will notify Licensee of such agreement. Licensee shall have the right to substitute for this Agreement the more favorable license agreement in its entirety (the "Substitute Agreement") and such substitution shall constitute a novation of this entire Agreement. MFL rights shall not extend to (i) TDMA License Agreements executed as part of broad-based strategic alliance partnerships, (ii) to any agreements executed prior to the Effective Date, or (iii) other Agreements amended subsequent to the Effective Date pursuant to executory amendment provisions entered into prior to the Effective Date. If Licensee elects a Substitute Agreement, Licensee shall, as a condition precedent to the effectiveness of the Substitute Agreement, pay all royalties owed (or credit prepayments) based on this Agreement for Covered Subscriber Unit sales made prior to the date Licensee executes the Substitute Agreement. To the extent that Licensee continues to have pre-payments available, the remaining pre-payment shall apply under the Substitute Agreement. 8.4 No Other Royalty Adjustment. The royalties set forth herein are based on a variety of factors, among them the breadth of ITC's patent portfolio, the avoidance of litigation costs related to challenges to the validity and scope of such patents, and the reasonable expectations of TDMA market growth. 8 Because (i) the parties have considered a variety of factors in developing the royalty rates, and (ii) those rates are already the subject of multiple discounts, credits and readjustment as provided herein, the parties irrevocably agree that neither will seek to alter, through negotiation, arbitration, litigation or otherwise, the royalty rates except as provided herein. Notwithstanding the foregoing, if there are drastic economic changes in the market for Covered Subscriber Units such that the royalty payments required hereunder present a substantial impediment for Licensee to successfully compete for sales, Licensee may request that ITC modify the royalty rates hereunder on a reasonable basis. 8.5 Confidentiality. Unless otherwise required by law or court order, the parties shall maintain as confidential the License Agreement and any proprietary information disclosed under, or as a result of the negotiation of, the License Agreement. 8.6 Audit. Licensee shall keep books and records adequate to accurately determine the payments due under this Agreement. The books and records must be retained for at least five (5) years after the delivery of the royalty report to which they relate. ITC shall have the right, no more than once per calendar year, to have an independent certified public accountant, who shall enter into an appropriate nondisclosure agreement with Licensee, inspect all relevant books and records of Licensee on seven (7) business days notice and during regular business hours to verify the reports and payments required to be made hereunder. The auditor shall disclose no more information than is reasonably necessary to determine the royalties owed hereunder and to assess the average Net Selling Price. Should an underpayment in excess of [**] percent ([**]) be discovered, Licensee shall pay the cost of the audit. In any event, Licensee shall promptly pay any underpayment together with interest at the compounded annual rate of [**] percent ([**]). All information obtained through such audit shall be held in confidence by Licensee. 8.7 Governing Law/Venue. The validity and interpretation of this Agreement shall be governed by Delaware law, without regard to conflict of laws principles. The parties further irrevocably consent to exclusive jurisdiction of the state and federal courts in the State of Delaware. Process shall be deemed sufficient if served on either party by courier service or recognized mail delivery service (e.g. U.S. Mail), postage prepaid, certified or registered, return receipt requested, and addressed as indicated on page 1 of this Agreement. The parties hereby waive any objection as to the sufficiency of the method of service provided such service is made as set forth herein. 8.8 Limited Warranty. ITC represents and warrants that it has the right to license the Licensed Patents. ITC makes no other representation or warranty with regard to _______________ ** Material has been omitted and filed separately with the Commission. 9 the validity of the Licensed Patents or the Licensee's ability to use, manufacture, have manufactured or sell Covered Subscriber Units free of infringement of third party intellectual property rights. ITC shall have no obligation to maintain or prosecute Licensed Patents. 8.9 Waivers. The failure of any party to insist upon the performance of any of the terms or conditions of this Agreement or to exercise any right hereunder, shall not be construed as a waiver or relinquishments of the future performance of any such term or condition. 8.10 Severability. The provisions of this Agreement shall be severable, and if any of them are held invalid or unenforceable, then that provision shall be construed to the maximum extent permitted by law. The invalidity or unenforceability of one provision shall not necessarily affect any other. 8.11 No Set Off. Licensee agrees and acknowledges that it has no right to, and shall not, attempt to set off amounts claimed to be owed based on any claim that it has or may have in the future against IDC or its Affiliates other than ITC, against amounts owed hereunder. 8.12 Notices. All notices or other communications required or permitted under this Agreement shall be in writing and shall be delivered by personal delivery, registered mail, return receipt requested, or a qualified "Next Day Air" delivery service addressed as indicated on page 2of this Agreement. 8.13 Limitation. Nothing in this Agreement shall be construed as: (a) an agreement to bring or prosecute actions against third party infringers of the Licensed Patents; (b) conferring any license or right under any patent other than the Licensed Patents; or (c) conferring any right to use the Licensed Patents outside the field of use defined by the license grant of this Agreement. 8.14 Personal Agreement. This Agreement is personal to Licensee and may not be assigned or transferred, nor may any license granted hereunder be assigned or transferred, whether by operation of law or otherwise, and any attempt to make any such assignment or transfer shall be null and void; provided, however, this Agreement may be transferred in connection with the sale of all or substantially all of the business or assets of Licensee to which this Agreement relates. ITC, may in its sole discretion, limit application of this license to the permitted transferee to the transferred business. The licenses granted hereunder to Licensee shall survive any transfer by operation of law or otherwise of the Licensed Patents or this Agreement by ITC. Licensee hereby guarantees the 10 performance of, and shall be liable to ITC for any failure to perform by, LicenseeAffiliates hereunder. 8.15 Entire Agreement/Amendment. This Agreement contains the complete and final agreement between the parties, and supersedes all previous understandings relating to the subject matter hereof whether oral or written. This Agreement may only be modified by a written agreement signed by duly authorized representatives of the parties. 8.16 Survival. The following provisions of this Agreement shall survive expiration or termination of this Agreement: Section 2.1 (only as to the release provision), 4.1, 7.1, 7.2, 7.3, 8.1, 8.2, 8.5, 8.7, and 8.13 IN WITNESS WHEREOF, the parties have executed this Agreement by their duly authorized representatives. INTERDIGITAL TECHNOLOGY CORPORATION SHARP CORPORATION By: /s/ Howard E. Goldberg By:[**] ------------------------------- ---------------------------- Dated: March 19, 1998________________________ Dated: March 10, 1998__ ** Material has been omitted and filed separately with the Commission. 11 Index Of Exhibits Exhibit A: LIST OF TDMA PATENTS Exhibit B: LIST OF SHARP AFFILIATES AS OF EFFECTIVE DATE 12 -----END PRIVACY-ENHANCED MESSAGE-----