INTELLECTUAL PROPERTY AND TECHNOLOGY
AGREEMENT
This INTELLECTUAL PROPERTY AND TECHNOLOGY AGREEMENT No. C56-12-02153 (this
“Agreement”), dated as of July 26, 2012 (“Effective Date”) is entered into by and between Apple Inc., a
California corporation (“Apple”), and AuthenTec, Inc., a Delaware corporation (“AuthenTec”).
WHEREAS, Apple and AuthenTec desire that Apple have the right to acquire certain licenses and rights
as set forth in this Agreement to commercialize certain Apple sensors and Apple products; and
WHEREAS, Apple and AuthenTec desire to enter into this Agreement to set forth the terms and
conditions with respect to such licenses and rights.
NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements
contained in this Agreement, and intending to be legally bound hereby, Apple and AuthenTec hereby agree as
follows:
1. DEFINITIONS.
1.1 Defined Terms. Capitalized terms used in this Agreement will have the respective meanings ascribed
to such terms in Exhibit A attached hereto.
2. ACQUISITION OF LICENSES AND RIGHTS.
2.1 Acquisition of Licenses and Rights. The Parties agree that, at any time during the Term, Apple will
have the right to acquire certain licenses and rights as described in this Agreement. AuthenTec hereby grants to
Apple the right to acquire the licenses and rights set forth below in Article 3 and Article 4 (each, an “Acquisition
Right”).
2.2 Acquisition Right Fee. In consideration of the grant of Acquisition Rights under this Agreement,
Apple agrees to pay AuthenTec a total fee of $20 million (the “Acquisition Right Fee”), to be paid by Apple
within 30 days after the Effective Date.
2.3 Exercise of Acquisition Rights. The Parties agree that Apple has the right to exercise any of the
Acquisition Rights at any time during the Term by providing AuthenTec with written notice on or before the
expiration of the Term that it is exercising such Acquisition Right. If there is a corresponding payment set forth
in Article 3 or Article 4 for such Acquisition Right exercised by Apple, Apple will pay such amount to
AuthenTec as set forth in Article 3 or Article 4, as applicable. Apple may, in its sole discretion, terminate any of
the Acquisition Rights at any time during the Term by providing AuthenTec with written notice that it will not
exercise such Acquisition Right.
3. HARDWARE TECHNOLOGY AND PATENT RIGHTS.
3.1 Hardware Technology and Patent Acquisition Right. AuthenTec hereby grants to Apple the right to
acquire the licenses, covenants, rights and benefits set forth in this Article 3 with respect to Hardware
Technology and AuthenTec Hardware Sensor Patents (“Hardware and Patent Acquisition Right”) for the fee set
forth in Section 3.11.
3.2 Hardware License Grant. Without limiting any implied rights or the application of the doctrine of
patent exhaustion under applicable Law, subject to Apple’s payment obligations as set forth in Section 3.11 and
subject to Article 12, AuthenTec, on behalf of itself, its Affiliates and the respective successors and assigns of
AuthenTec or any of its Affiliates, hereby grants to Apple, its Affiliates and the
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respective successors and assigns of Apple or any of its Affiliates a non-exclusive, perpetual, irrevocable,
worldwide license (which license will be fully paid-up and royalty-free upon Apple’s payment of the fee set
forth in Section 3.11), under all AuthenTec Intellectual Property Rights, to Commercialize any Hardware
Technology and/or Hardware Improvements in connection with the Commercialization of any Apple Sensors for
incorporation into or use with any Apple-Branded Apple Products. Neither Apple nor any of its Affiliates nor
any successors or assigns of Apple or any of its Affiliates may grant any sublicenses under the license granted in
this Section 3.2. For avoidance of doubt, this restriction on sublicensing does not affect or limit in any manner
any “have made” rights granted under this Agreement. Apple covenants that it will not exercise the foregoing
license granted in this Section 3.2 unless and until it exercises the Hardware and Patent Acquisition Right in
accordance with Section 2.3. If Apple does not exercise the Hardware and Patent Acquisition Right in
accordance with Section 2.3, the foregoing license granted in this Section 3.2 will automatically terminate and
be of no force or effect.
3.3 Patent License Grant. Without limiting any implied rights or the application of the doctrine of patent
exhaustion under applicable Law, subject to Apple’s payment obligations as set forth in Section 3.11 and subject
to Article 12, AuthenTec, on behalf of itself, its Affiliates and the respective successors and assigns of
AuthenTec or any of its Affiliates, hereby grants to Apple, its Affiliates and the respective successors and
assigns of Apple or any of its Affiliates a non-exclusive, perpetual, irrevocable, worldwide license (which
license will be fully paid-up and royalty-free upon Apple’s payment of the fee set forth in Section 3.11), under
all AuthenTec Hardware Sensor Patents, to Commercialize any Apple Sensors for incorporation into or use with
any Apple Products. Neither Apple nor any of its Affiliates nor any successors or assigns of Apple or any of its
Affiliates may grant any sublicenses under the license granted in this Section 3.3. For avoidance of doubt, this
restriction on sublicensing does not affect or limit in any manner any “have made” rights granted under this
Agreement. Apple covenants that it will not exercise the foregoing license granted in this Section 3.3 unless and
until it exercises the Hardware and Patent Acquisition Right in accordance with Section 2.3. If Apple does not
exercise the Hardware and Patent Acquisition Right in accordance with Section 2.3, the foregoing license
granted in this Section 3.3 will automatically terminate and be of no force or effect.
3.4 Covenant Not to Sue. In addition to the licenses granted in Section 3.2 and Section 3.3, subject to
Apple’s payment obligations as set forth in Section 3.11 and subject to Article 12, AuthenTec, on behalf of
itself, its Affiliates, and the respective successors and assigns of AuthenTec or any of its Affiliates, hereby
irrevocably covenants not to sue (or threaten to sue) Apple, any of its Affiliates or any successors or assigns of
Apple or any of its Affiliates, and hereby irrevocably covenants not to knowingly sue any Other Covenant
Beneficiary (or knowingly individually threaten to sue any Other Covenant Beneficiary) or knowingly maintain
any suit against any Other Covenant Beneficiary (or knowingly maintain any threat of suit against any
individual Other Covenant Beneficiary), in each of the foregoing cases, for infringement of any (a) AuthenTec
Intellectual Property Rights in or to any Hardware Technology or Hardware Improvements with respect to any
Commercialization of any Apple Sensors for incorporation into or, in the case of Apple, any of its Affiliates or
any successors or assigns of Apple or any of its Affiliates, use with any Apple-Branded Apple Products or
(b) any AuthenTec Hardware Sensor Patent with respect to any Commercialization of any Apple Sensors for
incorporation into or, in the case of Apple, any of its Affiliates or any successors or assigns of Apple or any of
its Affiliates, use with any Apple Products. No Apple Product (or any component of any Apple Product) will be
used to satisfy any claim or claim element asserted by AuthenTec or any of its Affiliates, or any successors or
assigns of AuthenTec or any of its Affiliates, against Apple, any of its Affiliates, or any successors or assigns of
Apple or any of its Affiliates, or any Other Covenant Beneficiary. The Parties agree that the foregoing covenants
in this Section 3.4 will not be of any force or effect unless and until Apple exercises the Hardware and Patent
Acquisition Right in accordance with Section 2.3. If Apple does not exercise the Hardware and Patent
Acquisition Right in accordance with Section 2.3, the foregoing covenants in this Section 3.4 will automatically
terminate and be of no force or effect.
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3.5 Duration and Irrevocability of Licenses and Covenants. If Apple exercises the Hardware and Patent
Acquisition Right, subject to Apple’s payment obligations with respect to the Hardware and Patent Acquisition
Right as set forth in Section 3.11 and subject to Article 12, the licenses granted in Section 3.2 and Section 3.3
and the covenants in Section 3.4 (a) will continue in perpetuity and (b) are irrevocable.
3.6 Future Assignments and Grants by AuthenTec. The licenses and covenants granted under this Article
3 with respect to any AuthenTec Intellectual Property Rights, Hardware Technology, Hardware Improvements
and AuthenTec Hardware Sensor Patents will run with such AuthenTec Intellectual Property Rights, Hardware
Technology, Hardware Improvements and AuthenTec Hardware Sensor Patents and will be binding on any
successors or assigns thereof. Neither AuthenTec nor any of its Affiliates will assign, or grant any right under,
any AuthenTec Intellectual Property Rights, Hardware Technology, Hardware Improvements or AuthenTec
Hardware Sensor Patents to any Person (other than Apple and its Affiliates) unless such assignment or grant is
made subject to the license and covenants granted under this Article 3. Any attempted assignment of, or grant of
any right under, any AuthenTec Intellectual Property Rights, Hardware Technology, Hardware Improvements or
AuthenTec Hardware Sensor Patents in contravention of this Section 3.6 will be null and void.
3.7 AuthenTec Supply Chain Vendors. For 24 months after the exercise by Apple of the Hardware and
Patent Acquisition Right, Apple will have the right to directly source from AuthenTec’s or any of its Affiliates’
respective supply chain vendors (including foundries, other suppliers and packaging houses) (“AuthenTec
Supply Chain Vendors”) any materials and products (excluding inventory of fabricated wafers, any work in
progress under AuthenTec orders or packaged component parts ordered by AuthenTec or any of its Affiliates)
owned by AuthenTec or any of its Affiliates necessary or useful to Commercialize any Apple Sensors for
incorporation into or use with any Apple Products, including the right to utilize (and have AuthenTec Supply
Chain Vendors utilize) any Hardware Technology or Hardware Improvements in the possession or control of (or
otherwise made available by AuthenTec to) AuthenTec Supply Chain Vendors (including mask sets owned by
AuthenTec or any of its Affiliates). AuthenTec, on behalf of itself, its Affiliates and the respective successors
and assigns of AuthenTec or any of its Affiliates, agrees: (a) not to take any action, or direct or cause any action
to be taken, to make any such Hardware Technology or Hardware Improvements or any Intellectual Property
Rights related to any of the foregoing unavailable for use in connection with any Apple Sensors for
incorporation into or use with any Apple Products; (b) to seek to obtain on behalf of Apple terms no less
favorable than the terms AuthenTec has with such AuthenTec Supply Chain Vendors; and (c) to provide Apple
with written authorizations by no later than 30 days after the Hardware and Patent Acquisition Right Exercise
Date that permit Apple to directly purchase from AuthenTec Supply Chain Vendors any materials and products
that are being produced for AuthenTec, at a price that would be agreed upon by Apple and such AuthenTec
Supply Chain Vendors.
3.8 Hardware Technology Transfer. Upon the exercise by Apple of the Hardware and Patent Acquisition
Right, AuthenTec will use its best efforts to immediately transfer and deliver to Apple all Hardware Technology
(in a format mutually agreed upon by Apple and AuthenTec) existing as of the Effective Date in the manner and
in accordance with the process, timelines and other requirements set forth in the Technology Transfer Statement
of Work attached hereto as Schedule A (“Technology Transfer Statement of Work”). Apple will promptly
acknowledge receipt of any Hardware Technology transferred to and received by Apple or notify AuthenTec of
any deficiencies with respect to any Hardware Technology transferred to and received by Apple. Until such
transfer and delivery is complete in accordance with the Technology Transfer Statement of Work, AuthenTec
will provide a written update to Apple each day indicating (a) the Hardware Technology transferred and
delivered by AuthenTec to Apple on such day and (b) the Hardware Technology that will be transferred and
delivered by AuthenTec to Apple on the next day. During the period of AuthenTec’s transfer and delivery of the
Hardware
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Technology as set forth in the Technology Transfer Statement of Work, AuthenTec will make available to
Apple, at no additional cost to Apple, all assistance, existing engineering resources (which engineering
resources have supported or are supporting any research, development, manufacturing, analysis or testing of any
Project IP (as defined in each of the Prior Interim Agreement and the Interim Agreement) or any Project Work
Product (as defined in the Development Agreement)), training and technical support to enable Apple to make
productive use of the Hardware Technology in connection with the design, development and/or
Commercialization of any Apple Sensors for incorporation into or use with any Apple Products. AuthenTec will
ensure that all engineering resources provided under this Section 3.8 have appropriate technical competency.
3.9 Hardware Improvements.
(a) Hardware Bug Fix Improvements. For 4 years after the Hardware and Patent Acquisition Right
Exercise Date, AuthenTec will transfer and deliver to Apple each Hardware Improvement that is Bug Fix
Improvement within 5 Business Days after the completion of the development of such Bug Fix Improvement.
(b) Hardware Non-Bug Fix Improvements. The Parties will hold an engineering meeting during
each of the first 4 periods of 3 months each after the Hardware and Patent Acquisition Right Exercise Date (on a
date and at a location mutually agreed upon by the Parties) (each, a “Hardware Engineering Meeting”).
AuthenTec will disclose to Apple at each Hardware Engineering Meeting all new Hardware Non-Bug Fix
Improvements during the applicable 3-month period (and, in the case of the first Hardware Engineering
Meeting, any Hardware Non-Bug Fix Improvements prior to such 3-month period). The Parties will discuss in
good faith which of the Hardware Non-Bug Fix Improvements will be provided to Apple, based on the principle
agreed upon by the Parties that any Improvements that are relevant to or useful for the Commercialization of
any Apple Sensors will be transferred and delivered to Apple within 10 Business Days after such Hardware
Engineering Meeting and deemed to be and included as Hardware Improvements for purposes of this
Agreement. If any Hardware Non-Bug Fix Improvement has been developed, created or conceived, but not
reduced to practice, during the 12 month period after the Effective Date, the Parties will discuss in good faith
whether such Hardware Non-Bug Fix Improvement will be transferred and delivered to Apple at such time that
such Hardware Non-Bug Fix Improvement is reduced to practice.
(c) Corrective Delivery or Disclosure of Improvements. In the event AuthenTec discovers, or Apple
discovers and provides written notice to AuthenTec of, any (i) Hardware Improvement that is a Bug Fix
Improvement that was not transferred and delivered to Apple in accordance with Section 3.9(a) or (ii) Hardware
Improvement that is a Non-Bug Fix Improvement that was not disclosed to Apple in accordance with
Section 3.9(b), then AuthenTec will promptly transfer and deliver such Hardware Improvement to Apple (in the
case of (i)) and promptly disclose such Hardware Improvement to Apple (in the case of (ii)). If AuthenTec
promptly transfers and delivers, or discloses, to Apple, as applicable, such Hardware Improvement in
accordance with the preceding sentence, AuthenTec will be deemed to not be in breach of this Section 3.9 with
respect to such failure to transfer and deliver, or disclose, as applicable, such Hardware Improvement in
accordance with this Section 3.9.
3.10 Technical Support and Assistance.
(a) If Apple exercises the Hardware and Patent Acquisition Right, for 1 year after the Hardware and
Patent Acquisition Right Exercise Date, AuthenTec will, at no additional cost to Apple (i) provide to Apple
telephonic and electronic technical support and assistance with respect to any Hardware Technology or
Hardware Improvements in response to requests from Apple, (ii) respond to such requests
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in accordance with the response times set forth in Schedule B attached hereto and (iii) reasonably cooperate with
Apple in connection with such requests.
(b) AuthenTec will ensure that all engineering resources provided under this Section 3.10 have
appropriate technical competency.
3.11 Hardware and Patent Acquisition Right Fee. If Apple exercises the Hardware and Patent Acquisition
Right, subject to Article 12, Apple agrees to pay AuthenTec a total fee of $90 million, to be paid as follows:
(a) $72 million (the “Initial Hardware and Patent Acquisition Right Fee Payment”) within 30 days
after the date of Apple’s written notice to AuthenTec that it is exercising the Hardware and Patent Acquisition
Right in accordance with Section 2.3; and
(b) $18 million in 4 installments of $4.5 million each as follows: (i) the first installment of $4.5
million will be paid on or before the first day of the third month of the first full calendar quarter after the
calendar quarter in which the payment set forth in Section 3.11(a) is due by Apple to AuthenTec; and (ii) the
remaining 3 installments of $4.5 million each will be due on or before the first day of the third month of each of
the 3 consecutive calendar quarters following such first full calendar quarter.
4. SOFTWARE TECHNOLOGY AND PATENT RIGHTS
4.1 Software Technology and Patent Acquisition Right. AuthenTec hereby grants to Apple the right
to acquire the licenses, covenants, rights and benefits set forth in this Article 4 with respect to Software
Technology and AuthenTec Software Sensor Patents (“Software and Patent Acquisition Right”) for the fee set
forth in Section 4.11.
4.2 Software License Grant. Without limiting any implied rights or the application of the doctrine of
patent exhaustion under applicable Law, subject to Apple’s payment obligations as set forth in Section 4.11 and
subject to Article 12, AuthenTec, on behalf of itself, its Affiliates and the respective successors and assigns of
AuthenTec or any of its Affiliates, hereby grants to Apple, its Affiliates and the respective successors and
assigns of Apple or any of its Affiliates a non-exclusive, perpetual, irrevocable, worldwide license (which
license will be fully paid-up and royalty-free upon Apple’s payment of the fee set forth in Section 4.11), under
all AuthenTec Intellectual Property Rights, to Commercialize any Software Technology and/or Software
Improvements in connection with the Commercialization of any Apple Sensors for incorporation into or use
with any Apple-Branded Apple Products. Neither Apple nor any of its Affiliates nor any successors or assigns
of Apple or any of its Affiliates may grant any sublicenses under the license granted in this Section 4.2. For
avoidance of doubt, this restriction on sublicensing does not affect or limit in any manner any “have made”
rights granted under this Agreement. Apple covenants that it will not exercise the foregoing license granted in
this Section 4.2 unless and until it exercises the Software and Patent Acquisition Right in accordance with
Section 2.3. If Apple does not exercise the Software and Patent Acquisition Right in accordance with
Section 2.3, the foregoing license granted in this Section 4.2 will automatically terminate and be of no force or
effect.
4.3 Patent License Grant. Without limiting any implied rights or the application of the doctrine of
patent exhaustion under applicable Law, subject to Apple’s payment obligations as set forth in Section 4.11 and
subject to Article 12, AuthenTec, on behalf of itself, its Affiliates and the respective successors and assigns of
AuthenTec or any of its Affiliates, hereby grants to Apple, its Affiliates and the respective successors and
assigns of Apple or any of its Affiliates a non-exclusive, perpetual, irrevocable, worldwide license (which
license will be fully paid-up and royalty-free upon Apple’s payment of the fee
5
set forth in Section 4.11), under all AuthenTec Software Sensor Patents, to Commercialize any Apple Sensors
for incorporation into or use with any Apple Products. Neither Apple nor any of its Affiliates nor any successors
or assigns of Apple or any of its Affiliates may grant any sublicenses under the license granted in this
Section 4.3. For avoidance of doubt, this restriction on sublicensing does not affect or limit in any manner any
“have made” rights granted under this Agreement. Apple covenants that it will not exercise the foregoing license
granted in this Section 4.3 unless and until it exercises the Software and Patent Acquisition Right in accordance
with Section 2.3. If Apple does not exercise the Software and Patent Acquisition Right in accordance with
Section 2.3, the foregoing license granted in this Section 4.3 will automatically terminate and be of no force or
effect.
4.4 Covenant Not to Sue. In addition to the licenses granted in Section 4.2 and Section 4.3, subject to
Apple’s payment obligations as set forth in Section 4.11 and subject to Article 12, AuthenTec, on behalf of
itself, its Affiliates, and the respective successors and assigns of AuthenTec or any of its Affiliates, hereby
irrevocably covenants not to sue (or threaten to sue) Apple, any of its Affiliates or any successors or assigns of
Apple or any of its Affiliates, and hereby irrevocably covenants not to knowingly sue any Other Covenant
Beneficiary (or knowingly individually threaten to sue any Other Covenant Beneficiary) or knowingly maintain
any suit against any Other Covenant Beneficiary (or knowingly maintain any threat of suit against any
individual Other Covenant Beneficiary), in each of the foregoing cases, for infringement of any (a) AuthenTec
Intellectual Property Rights in or to any Software Technology or Software Improvements with respect to any
Commercialization of any Apple Sensors for incorporation into or, in the case of Apple, any of its Affiliates or
any successors or assigns of Apple or any of its Affiliates, use with any Apple-Branded Apple Products or
(b) any AuthenTec Software Sensor Patent with respect to any Commercialization of any Apple Sensors for
incorporation into or, in the case of Apple, any of its Affiliates or any successors or assigns of Apple or any of
its Affiliates, use with any Apple Products. No Apple Product (or any component of any Apple Product) will be
used to satisfy any claim or claim element asserted by AuthenTec or any of its Affiliates, or any successors or
assigns of AuthenTec or any of its Affiliates, against Apple, any of its Affiliates, or any successors or assigns of
Apple or any of its Affiliates, or any Other Covenant Beneficiary. The Parties agree that the foregoing covenants
in this Section 4.4 will not be of any force or effect unless and until Apple exercises the Software and Patent
Acquisition Right in accordance with Section 2.3. If Apple does not exercise the Software and Patent
Acquisition Right in accordance with Section 2.3, the foregoing covenants in this Section 4.4 will automatically
terminate and be of no force or effect.
4.5 Duration and Irrevocability of Licenses and Covenants. If Apple exercises the Software and Patent
Acquisition Right, subject to Apple’s payment obligations with respect to the Software and Patent Acquisition
Right as set forth in Section 4.11 and subject to Article 12, the licenses granted in Section 4.2 and Section 4.3
and the covenants in Section 4.4 (a) will continue in perpetuity and (b) are irrevocable.
4.6 Future Assignments and Grants by AuthenTec. The licenses and covenants granted under this Article
4 with respect to any AuthenTec Intellectual Property Rights, Software Technology, Software Improvements
and AuthenTec Software Sensor Patents will run with such AuthenTec Intellectual Property Rights, Software
Technology, Software Improvements and AuthenTec Software Sensor Patents and will be binding on any
successors or assigns thereof. Neither AuthenTec nor any of its Affiliates will assign, or grant any right under,
any AuthenTec Intellectual Property Rights, Software Technology, Software Improvements or AuthenTec
Software Sensor Patents to any Person (other than Apple and its Affiliates) unless such assignment or grant is
made subject to the license and covenants granted under this Article 4. Any attempted assignment of, or grant of
any right under, any AuthenTec Intellectual Property Rights, Software Technology, Software Improvements or
AuthenTec Software Sensor Patents in contravention of this Section 4.6 will be null and void.
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4.7 AuthenTec Supply Chain Vendors. For 24 months after the exercise by Apple of the Software and
Patent Acquisition Right, Apple will have the right to directly source from AuthenTec Supply Chain Vendors
any materials and products (excluding inventory of fabricated wafers, any work in progress under AuthenTec
orders or packaged component parts ordered by AuthenTec or any of its Affiliates) owned by AuthenTec or any
of its Affiliates necessary or useful to Commercialize any Apple Sensors for incorporation into or use with any
Apple Products, including the right to utilize (and have AuthenTec Supply Chain Vendors utilize) any Software
Technology or Software Improvements in the possession or control of (or otherwise made available by
AuthenTec to) AuthenTec Supply Chain Vendors. AuthenTec, on behalf of itself, its Affiliates and the
respective successors and assigns of AuthenTec or any of its Affiliates, agrees: (a) not to take any action, or
direct or cause any action to be taken, to make any such Software Technology or Software Improvements or any
Intellectual Property Rights related to any of the foregoing unavailable for use in connection with any Apple
Sensors for incorporation into or use with any Apple Products; (b) to seek to obtain on behalf of Apple terms no
less favorable than the terms AuthenTec has with such AuthenTec Supply Chain Vendors; and (c) to provide
Apple with written authorizations by no later than 30 days after the Software and Patent Acquisition Right
Exercise Date that permit Apple to directly purchase from AuthenTec Supply Chain Vendors any materials and
products that are being produced for AuthenTec, at a price that would be agreed upon by Apple and such
AuthenTec Supply Chain Vendors.
4.8 Software Technology Transfer. Upon the exercise by Apple of the Software and Patent Acquisition
Right, AuthenTec will use its best efforts to immediately transfer and deliver to Apple all Software Technology
(in a format mutually agreed upon by Apple and AuthenTec) existing as of the Effective Date in the manner and
in accordance with the process, timelines and other requirements set forth in the Technology Transfer Statement
of Work. Apple will promptly acknowledge receipt of any Software Technology transferred to and received by
Apple or notify AuthenTec of any deficiencies with respect to any Software Technology transferred to and
received by Apple. Until such transfer and delivery is complete in accordance with the Technology Transfer
Statement of Work, AuthenTec will provide a written update to Apple each day indicating (a) the Software
Technology transferred and delivered by AuthenTec to Apple on such day and (b) the Software Technology that
will be transferred and delivered by AuthenTec to Apple on the next day. During the period of AuthenTec’s
transfer and delivery of the Software Technology as set forth in the Technology Transfer Statement of Work,
AuthenTec will make available to Apple, at no additional cost to Apple, all assistance, existing engineering
resources (which engineering resources have supported or are supporting any research, development,
manufacturing, analysis or testing of any Project IP (as defined in each of the Prior Interim Agreement and the
Interim Agreement) or any Project Work Product (as defined in the Development Agreement)), training and
technical support to enable Apple to make productive use of the Software Technology in connection with the
design, development and/or Commercialization of any Apple Sensors for incorporation into or use with any
Apple Products. AuthenTec will ensure that all engineering resources provided under this Section 4.8 have
appropriate technical competency
4.9 Software Improvements.
(a) Software Bug Fix Improvements. For 4 years after the Software and Patent Acquisition Right
Exercise Date, AuthenTec will transfer and deliver to Apple each Software Improvement that is Bug Fix
Improvement within 5 Business Days after the completion of the development of such Bug Fix Improvement.
(b) Software Non-Bug Fix Improvements. The Parties will hold an engineering meeting during each
of the first 4 periods of 3 months each after the Software and Patent Acquisition Right Exercise Date (on a date
and at a location mutually agreed upon by the Parties) (each, a “Software Engineering Meeting”). AuthenTec
will disclose to Apple at each Software Engineering Meeting all new
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Software Non-Bug Fix Improvements during the applicable 3-month period (and, in the case of the first
Software Engineering Meeting, any Software Non-Bug Fix Improvements prior to such 3-month period). The
Parties will discuss in good faith which of the Software Non-Bug Fix Improvements will be provided to Apple,
based on the principle agreed upon by the Parties that any Improvements that are relevant to or useful for the
Commercialization of any Apple Sensors will be transferred and delivered to Apple within 10 Business Days
after such Software Engineering Meeting and deemed to be and included as Software Improvements for
purposes of this Agreement. If any Software Non-Bug Fix Improvement has been developed, created or
conceived, but not reduced to practice, during the 12 month period after the Effective Date, the Parties will
discuss in good faith whether such Software Non-Bug Fix Improvement will be transferred and delivered to
Apple at such time that such Software Non-Bug Fix Improvement is reduced to practice.
(c) Corrective Delivery or Disclosure of Improvements. In the event AuthenTec discovers, or Apple
discovers and provides written notice to AuthenTec of, any (i) Software Improvement that is a Bug Fix
Improvement that was not transferred and delivered to Apple in accordance with Section 4.9(a) or (ii) Software
Improvement that is a Non-Bug Fix Improvement that was not disclosed to Apple in accordance with
Section 4.9(b), then AuthenTec will promptly transfer and deliver such Software Improvement to Apple (in the
case of (i)) and promptly disclose such Software Improvement to Apple (in the case of (ii)). If AuthenTec
promptly transfers and delivers, or discloses, to Apple, as applicable, such Software Improvement in accordance
with the preceding sentence, AuthenTec will be deemed to not be in breach of this Section 4.9 with respect to
such failure to transfer and deliver, or disclose, as applicable, such Software Improvement in accordance with
this Section 4.9.
4.10 Technical Support and Assistance.
(a) If Apple exercises the Software and Patent Acquisition Right, for 1 year after the Software and
Patent Acquisition Right Exercise Date, AuthenTec will, at no additional cost to Apple (i) provide to Apple
telephonic and electronic technical support and assistance with respect to any Software Technology or Software
Improvements in response to requests from Apple, (ii) respond to such requests in accordance with the response
times set forth in Schedule B attached hereto and (iii) reasonably cooperate with Apple in connection with such
requests.
(b) AuthenTec will ensure that all engineering resources provided under this Section 4.10 have
appropriate technical competency.
4.11 Software and Patent Acquisition Right Fee. If Apple exercises the Software and Patent Acquisition
Right, subject to Article 12, Apple agrees to pay AuthenTec a total fee of $25 million, to be paid as follows:
(a) $20 million (the “Initial Software and Patent Acquisition Right Fee Payment”) within 30 days
after the date of Apple’s written notice to AuthenTec that it is exercising the Software and Patent Acquisition
Right in accordance with Section 2.3; and
(b) $5 million in 4 installments of $1.25 million each as follows: (i) the first installment of $1.25
million will be paid on or before the first day of the third month of the first full calendar quarter after the
calendar quarter in which the payment set forth in Section 3.11(a) is due by Apple to AuthenTec; and (ii) the
remaining 3 installments of $1.25 million each will be due on or before the first day of the third month of each
of the 3 consecutive calendar quarters following such first full calendar quarter.
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5. OWNERSHIP; NO GRANT OF RIGHTS; TERMINATION OF CERTAIN LICENSES.
5.1 Ownership by AuthenTec. As between the Parties, AuthenTec owns all rights (including AuthenTec
Intellectual Property Rights), title and interest in and to all Hardware Technology, Software Technology and
AuthenTec Improvements.
5.2 Ownership by Apple. As between the Parties, Apple owns all rights (including Intellectual Property
Rights), title and interest in and to all Apple Improvements, Apple Sensors and Apple Products (other than any
Hardware Technology, Software Technology or AuthenTec Improvements incorporated therein).
5.3 No Grant of Rights to AuthenTec. Nothing in this Agreement obligates Apple or any of its Affiliates
to provide or license to AuthenTec or any of its Affiliates, or grants (expressly or by implication) to AuthenTec
or any of its Affiliates any license under or any right to use or otherwise Commercialize, any Apple
Improvements, Apple Sensors, Apple Products or any Intellectual Property Rights or Technology of Apple or
any of its Affiliates.
5.4 No Grant of Rights to Apple for Certain Intellectual Property Rights of AuthenTec Acquiror. For
avoidance of doubt, the licenses in Section 3.2, Section 3.3, Section 4.2 and Section 4.3 do not grant any rights,
and the covenants in Section 3.4 and Section 4.4 do not apply, to the following:
(a) if AuthenTec is acquired by an AuthenTec Acquiror, any Intellectual Property Rights owned.
acquired, controlled or licensable by, or assigned to, such AuthenTec Acquiror or any AuthenTec Acquiror
Affiliate, provided that (i) AuthenTec survives the acquisition transaction and (ii) such Intellectual Property
Rights were not AuthenTec Intellectual Property Rights prior to such acquisition transaction; or
(b) subject to the following sentence in this Section 5.4(b), any Intellectual Property Rights owned
by a third party that is not an Affiliate of AuthenTec (i) developed, created, authored, discovered or conceived
by or for AuthenTec or any of its Affiliates pursuant to an agreement between such third party and AuthenTec
or any of its Affiliates (“Third Party Development Agreement”) and (ii) transferred or assigned by AuthenTec or
such Affiliate to such third party pursuant to such Third Party Development Agreement. If AuthenTec is
acquired by an AuthenTec Acquiror and AuthenTec survives such acquisition transaction, AuthenTec agrees
that neither AuthenTec nor any of its Affiliates will, on or after the closing of such acquisition transaction, enter
into any agreement with such AuthenTec Acquiror or any AuthenTec Acquiror Affiliate that would have the
effect, whether intentional or not, of circumventing AuthenTec’s obligations under this Agreement to provide
AuthenTec Improvements to Apple.
5.5 Termination of Licenses Granted by Apple. The Parties hereby terminate, as of the Effective Date, any
license related to any Hardware Technology, Software Technology or AuthenTec Improvements granted by
Apple to AuthenTec during the 120 days preceding the Effective Date, including the license in Section 2.4(b) of
the Interim Agreement. The Parties acknowledge and agree that such licenses will be of no force or effect after
the Effective Date.
6. PAYMENTS.
6.1 Payment Instructions. All payments by Apple to AuthenTec under this Agreement will be made by
electronic transfer of funds to:
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Bank Name:
SWIFT:
Routing:
Account:
Beneficiary: AuthenTec, Inc.
6.2 Taxes; Tax Documentation. AuthenTec will be responsible for any duties, taxes and levies to which it
is subject as a result of any payment to AuthenTec hereunder. No later than 10 business days after the Effective
Date, AuthenTec will provide Apple with a completed IRS Form W9. If AuthenTec fails to provide such tax
documentation or fails to provide tax documentation sufficient to allow a 0% tax rate, Apple may, at its
discretion, cause taxes to be deducted from the amount paid and cause such withholding taxes to be paid to the
appropriate tax authority. For avoidance of doubt, in such case the actual payment to AuthenTec will be net of
any taxes withheld.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS; WARRANTY DISCLAIMER.
7.1 Representations and Warranties by Each Party. Each Party represents and warrants to the other Party
that it is a validly existing business and in good standing under the laws of the respective jurisdictions in which
it has activities, and has the full power and authority to enter into this Agreement and to perform its obligations
hereunder and consummate the transactions contemplated herein.
7.2 Representations and Warranties by AuthenTec. AuthenTec represents and warrants to Apple that:
(a) it has all requisite legal right, power and authority to execute, deliver and perform this Agreement; (b) except
as set forth in Schedule C, it solely owns all AuthenTec Sensor Patents; (c) it owns all Hardware Technology
and Software Technology and all AuthenTec Intellectual Property Rights (other than AuthenTec Sensor Patents)
in or to any Hardware Technology or Software Technology or, except for any Intellectual Property Rights or
Technology owned by any third party and disclosed to Apple in accordance with Section 7.3, otherwise has the
right to grant to Apple and its Affiliates the licenses set forth in Section 3.2, Section 3.3, Section 4.2 and
Section 4.3; (d) no third party has any right to enforce any such AuthenTec Intellectual Property Rights or
AuthenTec Sensor Patents or, to the best of AuthenTec’s Knowledge, recover for infringement or violation of
any such AuthenTec Intellectual Property Rights or AuthenTec Sensor Patents by Apple or any of its Affiliates
at any time; (e) it has not entered into any agreement or granted, and will not enter into any agreement or grant,
any option, license or other right, under any Intellectual Property Rights or Technology, that (i) conflicts with or
prevents AuthenTec from granting or providing to Apple, or would conflict with or prevent AuthenTec from
granting or providing to Apple, any Acquisition Right, license, right or covenant granted or provided to Apple
and its Affiliates under this Agreement or (ii) conflicts with or prevents AuthenTec from performing, or would
conflict with or prevent AuthenTec from performing, any obligation of AuthenTec or any of its Affiliates under
this Agreement; (f) there are no liens, conveyances, mortgages, assignments, encumbrances, or other agreements
that prevent or would prevent or impair the full and complete exercise of the terms of this Agreement by Apple
and its Affiliates; and (g) to the best of AuthenTec’s Knowledge, Schedule D sets forth a true and correct list of
all bugs, defects and errors as of the Effective Date in the Hardware Technology or Software Technology;
provided, however, that, in the event AuthenTec discovers, during the Term, additional bugs, defects or errors
that are not listed on Schedule D, then so long as AuthenTec promptly notifies Apple in writing of such
additional bugs, defects or errors, the failure of AuthenTec to list such bugs, defects or errors on Schedule D
will not be a material breach of this Section 7.2(g). The foregoing in clause (b) and clause (c) of the immediately
foregoing sentence in this Section 7.2 will not be interpreted as a representation or warranty that the AuthenTec
Sensor Patents, Hardware Technology, Software Technology or AuthenTec Intellectual Property Rights in or to
any
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Hardware Technology or Software Technology, or their use or exploitation in any manner by Apple or its
Affiliates, does not or will not infringe any Intellectual Property Rights of any Person.
7.3 Third Party Intellectual Property Rights and Technology. Within 30 days after the Effective Date,
AuthenTec agrees to amend Schedule E (as necessary) to provide to Apple a true and correct list of all
Intellectual Property Rights or Technology (a) owned by any third party and licensed to AuthenTec or any of its
Affiliates that is necessary to Commercialize any Hardware Technology, Software Technology and/or
AuthenTec Improvements in connection with the Commercialization of any Apple Sensors or Apple Products
and (b) owned by any third party and licensed to AuthenTec or any of its Affiliates that is necessary to
Commercialize any Hardware Technology, Software Technology and/or AuthenTec Improvements in
connection with the Commercialization of any Apple Sensors or Apple Products and under or to which
AuthenTec does not have the right to grant Apple and its Affiliates a sublicense under this Agreement of the
scope of the licenses granted under Section 3.2, Section 3.3, Section 4.2 and Section 4.3 or the scope of the
covenants set forth in Section 3.4 and Section 4.4. If Apple exercises the Hardware and Patent Acquisition Right
or the Software and Patent Acquisition Right, AuthenTec will update such list promptly after such exercise by
Apple. Following the Effective Date, at Apple’s request, AuthenTec agrees to use its diligent efforts to obtain
from each such third party (excluding You Technology, Inc.) the right to sublicense Apple, its Affiliates and the
respective successors and assigns of Apple or any of its Affiliates or to assist Apple in obtaining from each such
third party a license or sublicense under or to such third party Intellectual Property Rights or Technology, as the
case may be, that is necessary to Commercialize, on terms and conditions no less favorable than the terms and
conditions of AuthenTec’s or its applicable Affiliate’s license to such third party Intellectual Property Rights
and Technology, any Hardware Technology, Software Technology and/or AuthenTec Improvements in
connection with the Commercialization of any Apple Sensors or Apple Products, in each case, within the scope
of the licenses granted in Section 3.2 and Section 3.3 (if Apple exercises the Hardware and Patent Acquisition
Right) and Section 4.2 and Section 4.3 (if Apple exercises the Software and Patent Acquisition Right).
7.4 Warranty Disclaimer.
(a) THE REPRESENTATIONS AND WARRANTIES OF EACH PARTY IN SECTION 7.1 AND
OF AUTHENTEC IN SECTION 7.2 ARE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND
WARRANTIES GIVEN BY SUCH PARTY UNDER THIS AGREEMENT. NEITHER PARTY NOR ANY
OF ITS AFFILIATES MAKES ANY OTHER REPRESENTATION OR WARRANTY UNDER THIS
AGREEMENT WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT, AND EACH
PARTY HEREBY EXPRESSLY DISCLAIMS ALL OTHER REPRESENTATIONS OR WARRANTIES OF
ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. WITHOUT LIMITING THE
SCOPE OF THIS SECTION 7.4(a), SUBJECT TO SECTION 7.2, AUTHENTEC MAKES NO WARRANTY
OF ANY KIND THAT THE HARDWARE TECHNOLOGY, THE SOFTWARE TECHNOLOGY OR THE
AUTHENTEC IMPROVEMENTS ARE FREE OF DEFECTS OR ARE FIT FOR THEIR INTENDED
PURPOSE OR ANY PARTICULAR PURPOSE AT ALL.
(b) THE HARDWARE TECHNOLOGY, SOFTWARE TECHNOLOGY AND AUTHENTEC
IMPROVEMENTS ARE NOT INTENDED OR SUITABLE FOR USE IN SITUATIONS OR
ENVIRONMENTS WHERE THE FAILURE OR TIME DELAYS OF, OR ERRORS OR INACCURACIES IN
THE CONTENT, DATA OR INFORMATION PROVIDED BY, THE HARDWARE TECHNOLOGY,
SOFTWARE TECHNOLOGY AND AUTHENTEC IMPROVEMENTS COULD LEAD TO DEATH,
PERSONAL INJURY, OR SEVERE PHYSICAL OR ENVIRONMENTAL DAMAGE, INCLUDING THE
OPERATION OF NUCLEAR FACILITIES,
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AIRCRAFT NAVIGATION OR COMMUNICATION SYSTEMS, AIR TRAFFIC CONTROL, LIFE
SUPPORT OR WEAPONS SYSTEMS.
7.5 Covenants by AuthenTec Related to Acquisition Rights. During the Term, AuthenTec agrees not to
(a) enter into any agreement with any third party that grants such third party any licenses under or rights with
respect to any Hardware Technology, Software Technology, AuthenTec Improvements or AuthenTec Sensor
Patents (other than non-exclusive licenses and rights of the same scope as those granted by AuthenTec in the
ordinary course of its business before the Effective Date (e.g., distribution and license of driver source materials
for its Products)) or (b) enter into any agreement with, or grant any options, rights or benefits to, any third party
that (i) conflicts with, or otherwise would prevent Apple from exercising and enjoying all of the rights of and
benefits under, any Acquisition Right or (ii) conflicts with, or prevents AuthenTec from granting or providing to
Apple, any licenses, covenants, rights or benefits that are the subject of any of the Acquisition Rights.
8. TERM AND TERMINATION.
8.1 Term. The term of this Agreement will commence as of the Effective Date and, unless earlier
terminated in accordance with Section 8.2, will continue until 270 days after the Effective Date (“Term”).
8.2 Termination by Either Party. Subject to Article 12, this Agreement may be terminated by either Party
if the other Party materially breaches any provision of this Agreement and fails to cure such breach within 30
days after receiving written notice from the non-breaching Party describing such breach.
8.3 Termination by Apple. If any additional third party Intellectual Property Rights or Technology
required to be listed by Section 7.3(b) are added to Schedule E after the Effective Date, Apple may, within 10
Business Days after the receipt by Apple from AuthenTec of an amendment to Schedule E, terminate this
Agreement upon written notice to AuthenTec. If Apple terminates this Agreement pursuant to this Section 8.3
after payment of the Acquisition Right Fee, AuthenTec will promptly (and in no event later than 10 Business
Days after the effective date of such termination) refund to Apple the Acquisition Right Fee. If Apple terminates
this Agreement pursuant to this Section 8.3 prior to payment of the Acquisition Right Fee, for avoidance of
doubt, Apple will not be obligated to pay to AuthenTec the Acquisition Right Fee (or any portion thereof).
8.4 Effect of Termination. Upon the expiration or any termination of this Agreement, the following
provisions of this Agreement will survive:
(a) if Apple exercises the Hardware and Patent Acquisition Right, Article 3; provided, however,
that, if, subject to Article 12, AuthenTec terminates this Agreement pursuant to Section 8.2 for a material breach
by Apple of its payment obligations as set forth in Section 3.11, the licenses granted in Section 3.2 and
Section 3.3 and the covenants in Section 3.4 will not survive (but, for avoidance of doubt, any activities
undertaken by or for Apple or any of its Affiliates or any successors or assigns of Apple or any of its Affiliates
prior to the date of termination that were licensed under or subject to the covenants in Article 3 cannot later be
the subject of any legal claims after the date of termination);
(b) if Apple exercises the Software and Patent Acquisition Right, Article 4; provided, however, that
(i) if, subject to Article 12, AuthenTec terminates this Agreement pursuant to Section 8.2 for a material breach
by Apple of its payment obligations as set forth in Section 4.11, the licenses granted in Section 4.2 and
Section 4.3 and the covenants in Section 4.4 will not survive (but, for avoidance of doubt, any activities
undertaken by or for Apple or any of its Affiliates or any successors or assigns of Apple or any of its Affiliates
prior to the date of termination that were licensed under or subject to the covenants in Article 4 cannot later be
the subject of any legal claims after the date of termination); and
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(c) Article 1, Article 5, Article 6, Article 7, Section 8.4, Article 9, Article 10, Article 11, Article 12,
Article 13 and Exhibit A.
9. CONFIDENTIALITY.
9.1 Confidentiality Obligations. The Parties agree that all Confidential Information (as defined in the
Nondisclosure Agreement) disclosed in connection with this Agreement is subject to the terms and conditions of
the Nondisclosure Agreement. All Hardware Technology, Software Technology (other than object code) and
AuthenTec Improvements will be deemed Confidential Information of AuthenTec subject to the terms and
conditions of the Nondisclosure Agreement. AuthenTec acknowledges and agrees that any suppliers,
manufacturers and vendors of Apple or any of its Affiliates that Apple or such Affiliate retains to “have made”
any Apple Sensors or Apple Products under any licenses granted by AuthenTec under this Agreement may
receive Confidential Information of AuthenTec from Apple or such Affiliate to the extent such Confidential
Information of AuthenTec is required or desirable for such Apple Sensors and Apple Products to be made for
Apple or such Affiliate. Apple agrees that all such suppliers, manufacturers and vendors will be subject to
confidentiality obligations with respect to such Confidential Information of AuthenTec that are at least as
protective of such Confidential Information of AuthenTec as the confidentiality obligations of Apple and its
Affiliates under the Nondisclosure Agreement.
9.2 Additional Confidentiality Obligations. AuthenTec agrees not to disclose (a) the existence or any
terms of this Agreement (except as required by federal securities Law in accordance with this Section 9.2)
without Apple’s prior written consent or (b) any information about (i) any Apple Sensors that contain or are
based on any Confidential Information disclosed under this Agreement or (ii) any Apple Products into which
any Apple Sensors are or will be incorporated. AuthenTec will not make any public statements or any filings
with the United States Securities and Exchange Commission (the “SEC”) or the Nasdaq Stock Market
disclosing or otherwise referencing the existence or any terms of this Agreement, except as required by federal
securities Law in accordance with this Section 9.2. If AuthenTec determines in its reasonable judgment that
applicable federal securities Law requires AuthenTec to make any public disclosures or filings with the SEC or
the Nasdaq Stock Market disclosing or otherwise referencing the existence or any terms of this Agreement,
AuthenTec will consult with Apple prior to making such disclosure or filing and provide Apple with a
reasonable opportunity to review and comment on such disclosure or filing prior to making such disclosure or
filing. AuthenTec will cooperate with Apple regarding any such disclosures or filings and use reasonable best
efforts to redact such disclosures or filings to the extent reasonably requested by Apple and make such
disclosure or filings subject to a Confidential Treatment Request.
10. INDEMNIFICATION
10.1 Indemnification by AuthenTec. AuthenTec agrees to indemnify, defend and hold harmless Apple and
its Affiliates and each of Apple’s and each of its Affiliates’ respective officers, directors, employees, agents,
representatives, suppliers, licensees, resellers, distributors, customers, successors and assigns (“Apple
Indemnified Parties”) from and against all claims, losses, liabilities, damages, settlements, costs and expenses
(including reasonable fees and expenses of attorneys incurred in connection with the investigation or defense of
any actions) arising out of or resulting from any third party claims brought or made against any of the Apple
Indemnified Parties alleging that the Commercialization of any Hardware Technology or Hardware
Improvements (in the case Apple exercises the Hardware and Patent Acquisition Right) and/or any Software
Technology or Software Improvements
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(in the case Apple exercises the Software and Patent Acquisition Right) (in each of the foregoing cases,
(a) either alone or in combination with any other Intellectual Property Rights or Technology and/or (b) as may
be altered or modified) infringes or constitutes or results from a misappropriation of any third party Intellectual
Property Rights or Technology (each, a “Claim”); provided, however, that such Commercialization of any
Hardware Technology, Hardware Improvements, Software Technology and Software Improvements is within
the scope of the licenses granted to Apple and its Affiliates under this Agreement.
10.2 Exceptions to Indemnification by AuthenTec. AuthenTec will not have an indemnification obligation
pursuant to Section 10.1 with respect to a Claim to the extent such Claim is directly attributable to: (a) an
alteration or modification of any Hardware Technology, Software Technology or AuthenTec Improvement
developed, created, authored, discovered or conceived independently by any Apple Indemnified Party, unless
such Hardware Technology, Software Technology or AuthenTec Improvement as provided by AuthenTec to
Apple substantially embodies the essential elements of an invention claimed in any patent asserted in such
Claim; or (b) the combination by any Apple Indemnified Party of any Hardware Technology, Software
Technology or AuthenTec Improvement with any Product not provided by AuthenTec or any of its Affiliates
unless such Hardware Technology, Software Technology or AuthenTec Improvement substantially embodies
the essential elements of an invention claimed in any patent asserted in such Claim. For avoidance of doubt, if
the accused structure at issue in a patent infringement Claim is a third party software application (e.g., airline
security application), that uses only the output of the Software Technology and is not otherwise based on the
Software Technology or Hardware Technology, then such Claim would not be subject to indemnification.
AuthenTec will not have an indemnification obligation pursuant to Section 10.1 for any infringement claims
arising out of or resulting from patents identified in the Patent License Agreement, effective as of September 10,
2010, between AuthenTec and You Technology, Inc. (f.k.a. YT Acquisition Corporation).
10.3 Indemnification by Apple. Apple agrees to indemnify, defend and hold harmless AuthenTec and its
Affiliates and each of AuthenTec’s and each of its Affiliates’ respective officers, directors, employees, agents,
representatives, suppliers, licensees, resellers, distributors, customers, successors and assigns (“AuthenTec
Indemnified Parties”) from and against all claims, losses, liabilities, damages, settlements, costs and expenses
(including reasonable fees and expenses of attorneys incurred in connection with the investigation or defense of
any actions) arising out of or resulting from any (a) third party claims brought or made against any of the
AuthenTec Indemnified Parties alleging that any Apple Product that incorporates any Hardware Technology,
Software Technology or AuthenTec Improvement has directly caused personal injury or property damage or
(b) claims brought by a class of shareholders of Apple against AuthenTec claiming a diminution in Apple
shareholder value arising from any security breach or any payment system breach to which any Hardware
Technology, Software Technology or AuthenTec Improvement is a contributing factor.
10.4 Indemnification Procedure. In connection with any claim for which any Apple Indemnified Party
seeks indemnification pursuant to Section 10.1 or any AuthenTec Indemnified Party seeks indemnification
pursuant to Section 10.2, the applicable Party seeking indemnification (the “Indemnified Party”) will (a) notify
the other Party (the “Indemnifying Party”) reasonably promptly in writing of such claim, provided that any
delay in notification will not relieve the Indemnifying Party of its obligations under this Article 10 except to the
extent such delay materially impairs the Indemnifying Party’s ability to defend such claim, (b) permit the
Indemnifying Party to answer and, subject to the following in this Section 10.4, defend such claim using counsel
of the Indemnifying Party’s choice (which counsel is reasonably acceptable to the Indemnified Party), provided
that the Indemnified Party (at its cost) may participate in the defense of such claim with counsel of the
Indemnified Party’s choice, and (c) provide information and assistance reasonably necessary to enable the
Indemnifying Party to defend such claim (at the Indemnifying Party’s written request and expense). The
Indemnifying Party may not
14
settle any such action without the Indemnified Party’s prior written consent. The Indemnified Party will not
settle any such claim without the Indemnifying Party’s prior written consent, which consent will not be
unreasonably withheld. The Indemnifying Party will not publicize or permit any third party to publicize any
settlement of any such claim without the Indemnified Party’s prior written consent. If the Indemnifying Party
does not agree that any claim is fully covered by this Article 10, then the Parties agree to negotiate in good faith
an equitable arrangement regarding the defense of such claim and any settlement thereof consistent with the
Indemnifying Party’s obligations hereunder.
11. LIMITATION OF LIABILITY
EXCEPT WITH RESPECT TO ANY BREACHES BY EITHER PARTY OF ARTICLE 9, IN NO
EVENT WILL THE AGGREGATE LIABILITY OF EITHER PARTY, OR ANY OF ITS AFFILIATES,
UNDER THIS AGREEMENT EXCEED THE LESSER OF (a) ALL AMOUNTS PAID TO DATE, AT THE
TIME OF THE CLAIM, BY APPLE UNDER BOTH THE DEVELOPMENT AGREEMENT AND THIS
AGREEMENT OR (b) $90 MILLION.
12. DISPUTE RESOLUTION
12.1 Dispute Resolution Procedure. Any dispute between the Parties arising under or in connection with
this Agreement (“Dispute”) will be resolved in accordance with the procedure described in this Section 12.1. In
the event of any Dispute, either Party (“Notifying Party”) may provide written notice to the other Party
(“Receiving Party”) describing such Dispute (including, if applicable, any alleged breach of this Agreement by
the Receiving Party). Within 20 days after the Receiving Party receives such notice, senior management of each
Party will discuss in good faith such Dispute and attempt to resolve such Dispute. If, after such 20-day period,
such Dispute is not resolved, either Party may provide written notice to the other Party initiating expedited
arbitration with respect to such Dispute (“Arbitration Notice”). Such arbitration will be conducted in the State of
California in accordance with the rules and procedures of the International Chamber of Commerce as modified
by the remainder of this Section 12.1. Each Party will appoint 1 arbitrator. The arbitrators selected by the Parties
will mutually select 1 additional arbitrator, who will act as the presiding arbitrator. Within 60 days after such
Arbitration Notice, the arbitrators will determine the resolution of such Dispute in accordance with this
Agreement. If any Dispute involves any claim by Apple of any material breach by AuthenTec or any of its
Affiliates of any provision of this Agreement, then: (a) Apple may withhold any payments due under this
Agreement (except for the Initial Hardware and Patent Acquisition Right Fee Payment and the Initial Software
and Patent Acquisition Right Fee Payment) and any payments due under any Statement of Work under the
Development Agreement; (b) if the arbitrators determine that AuthenTec or any of its Affiliates is in material
breach of this Agreement and awards damages to Apple in connection with such breach, (i) Apple may retain
such withheld payments in an amount equal to such damages (which shall be considered AuthenTec’s payment
of such damages to the extent of such withheld payment amount), (ii) if there is any remaining balance of such
withheld payments, Apple shall only be obligated to pay such remaining balance to AuthenTec in full
satisfaction of the withheld payments and (iii) Apple may continue to withhold any such remaining balance until
10 Business Days after AuthenTec or such Affiliate cures such breach in accordance with the arbitrators’ award;
and (c) if the arbitrators determine that AuthenTec and its Affiliates are not in material breach of this
Agreement, Apple will pay any withheld amounts then due under this Agreement and any withheld amounts
then due under any Statement of Work under the Development Agreement within 10 Business Days after such
determination. The determination rendered by the arbitrators will include the steps to be taken by each Party (if
any) in connection with the resolution of such Dispute and may include the payment of damages or injunctive
relief as necessary. Judgment on such determination may be entered in any court having jurisdiction. All terms
and conditions of this Agreement (including, for avoidance of doubt, Section 3.2, Section 3.3, Section 3.4,
Section 4.2, Section 4.3 and Section 4.4) will continue in full force and effect during the pendency of the
resolution of such Dispute.
15
13. MISCELLANEOUS.
13.1 Compliance by AuthenTec Affiliates. AuthenTec will cause each of its Affiliates to comply with the
terms and conditions of this Agreement and will be responsible and liable for any breach of any provision of this
Agreement by any of its Affiliates.
13.2 Amendment or Supplement. This Agreement may be amended or supplemented in any and all
respects by written agreement of the Parties hereto.
13.3 Waiver. No failure or delay by Apple or AuthenTec in exercising any right hereunder shall operate as
a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right hereunder. Any agreement on the part of a Party hereto to any waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such Party.
13.4 Assignment; Binding Effect. Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned, in whole or in part, by operation of Law or otherwise, by any of the Parties without
the prior written consent of the other Parties, except that (a) Apple may assign, in its sole discretion, any of or
all its rights, interests and obligations under this Agreement to one or more of its Affiliates, but no such
assignment shall relieve Apple of any of its obligations hereunder and (b) AuthenTec may assign all of its rights,
interests and obligations under this Agreement to an AuthenTec Acquiror in connection with a Change of
Control of AuthenTec without Apple’s prior written consent, provided that (i) such AuthenTec Acquiror
executes a “Written Declaration of Commitment to Perform Obligations” in the form attached hereto as
Schedule F and (ii) AuthenTec provides written notice to Apple of such assignment and Change of Control
within five (5) Business Days after such Change of Control. For purposes of this Agreement, a Change of
Control of AuthenTec will be deemed to be an assignment of this Agreement by AuthenTec. Subject to the
foregoing in this Section 13.4, this Agreement shall be binding upon, inure to the benefit of, and be enforceable
by, the Parties hereto and their respective successors and permitted assigns (which shall be deemed to include
any successor of AuthenTec or any acquiror of AuthenTec’s securities or assets pursuant to a Change of Control
as though such successor or acquiror were a party hereto). Any purported assignment not permitted under this
Section 13.4 shall be null and void.
13.5 Counterparts. This Agreement may be executed in counterparts (each of which shall be deemed to be
an original but all of which taken together shall constitute one and the same agreement) and shall become
effective when one or more counterparts have been signed by each of the Parties and delivered to the other
Party.
13.6 Entire Agreement; No Third-Party Beneficiaries. This Agreement (a) constitutes the entire
agreement, and supersedes all other prior agreements and understandings, both written and oral, among the
Parties, or any of them, with respect to the subject matter hereof and thereof and (b) except as expressly
provided herein, is not intended to and shall not confer upon any Person other than the Parties hereto any rights
or remedies hereunder.
13.7 Governing Law. This Agreement shall be governed by, and construed in accordance with, the Laws
of the State of California, applicable to contracts executed in and to be performed entirely within that State.
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13.8 Specific Enforcement. The Parties agree that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that, notwithstanding Section 12.1, the Parties shall be entitled to seek an
injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any state court of the State of California or any federal court sitting in the State
of California, without bond or other security being required, this being in addition to any other remedy to which
they are entitled at Law or in equity.
13.9 Notices. All notices, requests and other communications to any Party hereunder shall be in writing
and shall be deemed given (a) when delivered or sent if delivered in person or sent by facsimile transmission
(provided confirmation of facsimile transmission is obtained), (b) on the 3rd Business Day after dispatch by
registered certified mail, (c) on the next Business Day if transmitted by national overnight courier or (d) on the
date delivered if sent by email (provided confirmation of email receipt is obtained), in each case as follows:
If to Apple, to:
Apple Inc.
Office of the Chief Financial Officer
1 Infinite Loop, MS 301-CFO
Cupertino, California 95014
Attention: Chief Financial Officer
Facsimile: (408) 974-2023
and
Apple Inc.
Office of the General Counsel
1 Infinite Loop, MS 301-4GC
Cupertino, California 95014
Attention: General Counsel
Facsimile: (408) 974-8530
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
201 Redwood Shores Parkway
Redwood Shores, California 94065
Attention: Karen N. Ballack
Facsimile: (650) 802-3100
Email: karen.ballack@weil.com
If to AuthenTec, to:
AuthenTec, Inc.
100 Rialto Place
Suite 100
Melbourne, Florida 32901
Attention: Lawrence J. Ciaccia
Frederick R. Jorgenson
Facsimile: (321) 308-1410
Email: Larry.ciaccia@authentec.com
Fred.jorgenson@authentec.com
17
with a copy (which shall not constitute notice) to:
Alston + Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: W. Scott Ortwein
Justin Howard
Facsimile: (404) 881-7777
Email: scott.ortwein@alston.com
justin.howard@alston.com
13.10 Severability. If any term or other provision of this Agreement is determined by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other
terms, provisions and conditions of this Agreement shall nevertheless remain in full force and effect and shall in
no way be affected, impaired or invalidated so long as the economic and legal substance of the transactions
contemplated by this Agreement is not affected in any manner adverse to any Party hereto. Upon such
determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties
hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as
closely as possible to the fullest extent permitted by applicable Law in an acceptable manner to the end that the
transactions contemplated by this Agreement are fulfilled to the extent possible.
13.11 Interpretation. Unless otherwise expressly provided, for purposes of this Agreement, the following
rules of interpretation shall apply:
(a) Calculation of Time Period. When calculating the period of time before which, within which or
following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference
date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period
in question shall end on the next succeeding Business Day.
(b) Dollars. Any reference in this Agreement to $ shall mean U.S. dollars.
(c) Headings. When a reference is made in this Agreement to an Article, a Section, an Exhibit or a
Schedule, such reference shall be to an Article of, a Section of, or an Exhibit or Schedule to, this Agreement
unless otherwise indicated. The provisions of a Table of Contents, the division of this Agreement into Articles,
Sections and other subdivisions and the insertion of headings are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
(d) Including. Whenever the words “include,” “includes” or “including” are used in this Agreement,
they shall be deemed to be followed by the words “without limitation.”
(e) Herein. The words “hereof,” “herein” and “hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
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(f) Definitions; Gender and Number. All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter genders of such term.
(g) Updates. Any statute defined or referred to herein or in any agreement or instrument that is
referred to herein means such statute as from time to time amended, modified or supplemented, including by
succession of comparable successor statutes and references to all attachments thereto and instruments
incorporated therein. References to a Person are also to its permitted successors and assigns.
(h) Negotiation and Drafting. The Parties hereto have participated jointly in the negotiation and
drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as jointly drafted by the Parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.
13.12 Bankruptcy. It is the intent of the Parties and the Parties hereby agree that in the event of any
proceeding by or against AuthenTec under any Law relating to bankruptcy, insolvency, reorganization or relief
of any debtors, all rights, licenses, covenants, privileges, releases and immunities granted under or pursuant to
this Agreement will continue without termination, rejection or avoidance by virtue of or in the context of such
proceeding. All rights, licenses, covenants, privileges, releases and immunities granted under or pursuant to this
Agreement by AuthenTec are, and will otherwise be deemed to be, for the purposes of Section 365(n) of 11
U.S.C. § 101 (et seq.) (the “U.S. Bankruptcy Code”), licenses of rights to “intellectual property” as defined
under Section 101(35A) of the U.S. Bankruptcy Code. The Parties further agree that in the event that any
proceeding is instituted by or against AuthenTec under any Law relating to bankruptcy, insolvency,
reorganization or relief of any debtors, the provisions of Section 365(n) of the U.S. Bankruptcy Code will apply,
and that Apple will retain and may fully exercise all of its respective rights and elections under the U.S.
Bankruptcy Code. Upon written notice from Apple to AuthenTec or the bankruptcy trustee of AuthenTec of
Apple’s election to proceed under Section 365(n) of the U.S. Bankruptcy Code, AuthenTec and such bankruptcy
trustee will comply in all respects with Section 365(n) of the U.S. Bankruptcy Code, including by not interfering
with the rights of Apple, any of its Affiliates or any successors or assigns of Apple or any of its Affiliates as
provided by this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed and
delivered as of the Effective Date.
APPLE INC.
By:
/s/ Peter Oppenheimer
Name: Peter Oppenheimer
Title: SVP and CFO
AUTHENTEC, INC.
By:
/s/ Lawrence J. Ciaccia
Name: Lawrence J. Ciaccia
Title: Chief Executive Officer
[SIGNATURE PAGE TO INTELLECTUAL PROPERTY AND TECHNOLOGY AGREEMENT]
Exhibit A
Defined Terms
1.1 “2D Fingerprint Sensor” means a silicon fingerprint sensor, including (as applicable) its packaging,
flex and all other Hardware Technology elements, that operates primarily by virtue of detection of a user’s
fingerprint on the surface of a device and does not require the user to move or slide his or her finger across the
surface of the device.
1.2 “Affiliate” means, as to any Person, any other Person that, directly or indirectly, is controlled by such
Person. For this purpose, “control” (including, with its correlative meaning, “controlled by”) means the
possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a
Person, whether through the ownership of securities or partnership or other ownership interests, by contract or
otherwise.
1.3 “Apple-Branded Apple Product” means any Apple Product Commercialized under a trademark or
brand name owned by Apple or any of its Subsidiaries.
1.4 “Apple Improvement” means any Improvement of or to any Hardware Technology, Software
Technology or AuthenTec Improvement, in each case, that is developed, created, authored, discovered or
conceived by or for Apple or any of its Affiliates (whether alone or with any other Person (including AuthenTec
or any of its Affiliates)).
1.5 “Apple Product” means any Product that is Commercialized by or for Apple or any of its Affiliates.
1.6 “Apple Sensor” means a 2D Fingerprint Sensor that is suitable for use in an Apple Product.
1.7 “AuthenTec Acquiror” means a third party that acquires control of AuthenTec pursuant to a Change of
Control.
1.8 “AuthenTec Acquiror Affiliate” means, as to an AuthenTec Acquiror, any other Person (other than
AuthenTec or any of its Affiliates) that, directly or indirectly, is controlled by, or is under common control with,
such AuthenTec Acquiror. For this purpose, “control” (including, with its correlative meanings, “controlled by”
and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause
the direction of management or policies of a Person, whether through the ownership of securities or partnership
or other ownership interests, by contract or otherwise.
1.9 “AuthenTec Hardware Sensor Patents” means any (a) AuthenTec Sensor Patents that would be
infringed, directly or indirectly, in whole or in part, by any Commercialization of any hardware-related
Technology, materials, tools and documents that are necessary or useful to Commercialize any fingerprint
sensors and (b) AuthenTec Sensor Patents other than any AuthenTec Sensor Patents that would be infringed,
directly or indirectly, in whole or in part, by any Commercialization of any software -related Technology,
materials, tools and documents that are necessary or useful to Commercialize any fingerprint sensors.
1.10 “AuthenTec Improvement” means any of the following that is developed, created, authored,
discovered or conceived by or for AuthenTec or any of its Affiliates (whether alone or with any other Person
(excluding Apple or any of its Affiliates), where the resulting Improvement is owned, controlled or licensable to
Apple by AuthenTec or any of its Affiliates): (a) any Bug Fix Improvement
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developed, created, authored, discovered or conceived prior to the 4th anniversary of the Effective Date, (b) any
other Improvement of or to any Hardware Technology (in the case Apple exercises the Hardware and Patent
Acquisition Right) licensed to Apple and its Affiliates under this Agreement (“Hardware Non-Bug Fix
Improvement”), which Hardware Non-Bug Fix Improvement is developed, created, authored, discovered or
conceived after the Effective Date and prior to the 1st anniversary of the Hardware and Patent Acquisition Right
Exercise Date and is relevant to or useful for the Commercialization of any Apple Sensors as determined
pursuant to the process set forth in Section 3.9(b)and (c) any other Improvement of or to any Software
Technology (in the case Apple exercises the Software and Patent Acquisition Right) licensed to Apple and its
Affiliates under this Agreement (“Software Non-Bug Fix Improvement”), which Software Non-Bug Fix
Improvement is developed, created, authored, discovered or conceived after the Effective Date and prior to the
1st anniversary of the Software and Patent Acquisition Right Exercise Date and is relevant to or useful for the
Commercialization of any Apple Sensors as determined pursuant to the process set forth in Section 4.9(b). In no
event will AuthenTec Improvement include any Apple Improvement.
1.11 “AuthenTec Intellectual Property Rights” means all AuthenTec Patents and all other Intellectual
Property Rights owned, acquired, controlled or licensable by, or assigned to, AuthenTec or any of its Affiliates.
1.12 “AuthenTec Patents” means (a) all patents and patent applications (together with patents issuing
thereon) in all jurisdictions worldwide that are owned, acquired, controlled or licensable to others by, or
assigned to, AuthenTec or any of its Affiliates at any time on or after the Effective Date, or to which AuthenTec
or any of its Affiliates has, at any time on or after the Effective Date, a right to assert a claim of infringement,
(b) any divisional, continuation, continuation-in-part, reissue, reexamination, utility model, foreign counterpart,
parent or extension of any patent or patent application included in clause (a) of this Section 1.12 and (c) any
patent or patent application in any jurisdiction worldwide whose priority is based upon or in common with any
patent or patent application in clause (a) or (b) of this Section 1.12.
1.13 “AuthenTec Sensor Patents” means all AuthenTec Patents that may apply or relate to
Commercialization of any fingerprint sensors or any Products using or incorporating any fingerprint sensors. For
avoidance of doubt, if Apple exercises both the Hardware and Patent Acquisition Right and the Software and
Patent Acquisition Right, then the patent licenses granted in Section 3.3 and Section 4.3 will be under all
AuthenTec Sensor Patents.
1.14 “AuthenTec Software Sensor Patents” means any (a) AuthenTec Sensor Patents that would be
infringed, directly or indirectly, in whole or in part, by any Commercialization of any software -related
Technology, materials, tools and documents that are necessary or useful to Commercialize any fingerprint
sensors and (b) AuthenTec Sensor Patents other than any AuthenTec Sensor Patents that would be infringed ,
directly or indirectly, in whole or in part, by any Commercialization of any hardware-related Technology,
materials, tools and documents that are necessary or useful to Commercialize any fingerprint sensors.
1.15 “Bug Fix Improvement” means any Improvement of or to any Hardware Technology (in the case
Apple exercises the Hardware and Patent Acquisition Right) or Software Technology (in the case Apple
exercises the Software and Patent Acquisition Right) licensed to Apple and its Affiliates under this Agreement,
which Improvement constitutes a bug fix, error fix or workaround.
1.16 “Business Day” means a day except a Saturday, a Sunday or other day on which the United States
Securities and Exchange Commission or banks in the City of San Francisco, California, are authorized or
required by Law to be closed.
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1.17 “Change of Control” means: (a) any Person or “group” (as defined in Section 13(d) of the Securities
Exchange Act of 1934, as amended) is or becomes the beneficial owner, directly or indirectly in one transaction
or a series of related transactions of voting securities representing more than 50% of the AuthenTec’s
outstanding voting securities; or (b) any reorganization, recapitalization, consolidation, merger, business
combination or similar transaction of AuthenTec where the holders of outstanding voting securities of
AuthenTec immediately before the transaction represent or are converted into less than 50% of the beneficial
ownership of the outstanding voting power of the surviving entity (or its parent corporation) immediately after
the transaction; or (c) the consummation of any transaction or series of related transactions that results in the
sale of the majority of the assets of AuthenTec, other than where the entity acquiring shares or assets, or the
surviving entity with respect to clause (b) above, is a Subsidiary of AuthenTec.
1.18 “Commercialize” (including, with its correlative meanings, “Commercialization” and
“Commercialized”) means, with respect to any item, to make, use, import, export, market, purchase, sell, offer
to sell, license, lease, design, develop, practice any method or process in connection with, copy, reproduce,
distribute, modify, perform and display (publicly or otherwise), compile, execute, prepare derivative works of,
disclose (as necessary) and/or otherwise use, supply, distribute, provide, dispose of and/or exploit such item for
any purpose (and to have any third party exercise any of the foregoing rights on the applicable Party’s behalf,
e.g. “make” includes “have made”).
1.19 “Development Agreement” means the Development Agreement, dated as of the same date as the
Effective Date, between Apple and AuthenTec.
1.20 “Hardware and Patent Acquisition Right Exercise Date” means the date of Apple’s written notice to
AuthenTec that Apple is exercising the Hardware and Patent Acquisition Right.
1.21 “Hardware Improvement” means any AuthenTec Improvement to any Hardware Technology.
1.22 “Hardware Technology” means all hardware-related Technology, materials, tools and documents that
are necessary or useful to Commercialize any Apple Sensors, including all of the following in unencrypted
source formats where applicable, all related firmware and all documentation related to any of the following, in
each case, owned, acquired, controlled or licensable by, or assigned to, AuthenTec or any of its Affiliates as of
the Effective Date: RTL; schematics; test benches and supporting verification flow programs and scripts; formal
verification code; flow; high level and low level models; microcode controllers; behavioral models; performance
models; tools required to compile any source code; and all other tools and documentation necessary or useful to
develop, test, manufacture and/or use any Apple Sensors. Hardware Technology includes the Technology,
materials, tools, documents and other items listed in Schedule G attached hereto.
1.23 “Improvement” means any modification, enhancement, derivative work or improvement (including
bug fixes, error fixes and workarounds), whether patentable or not and whether reduced to practice or not.
1.24 “Intellectual Property Rights” means all current and future rights in patents, copyrights, trade secrets,
trademarks, mask works, design rights, database rights and any other intellectual property rights, and all rights
and forms of protection of a similar nature or having equivalent or similar effect to any of the foregoing that
may exist anywhere in the world, including, in the case of each of the foregoing, whether unregistered,
registered or comprising an application for registration.
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1.25 “Interim Agreement” means the Second Interim Agreement, dated May 16, 2012, between Apple and
AuthenTec.
1.26 “Knowledge” means (a) the actual knowledge of AuthenTec’s executive officers and employees or
(b) the knowledge that AuthenTec’s executive officers and employees with direct responsibility for the subject
matter would be expected to have after undertaking the due diligence that is typically conducted by AuthenTec
with respect to the applicable subject matter.
1.27 “Law” means any federal, state, local or other foreign law (including common law), statute,
ordinance, code, rule, regulation, decree or other legal requirement.
1.28 “Nondisclosure Agreement” means that certain Nondisclosure Agreement, effective January 26,
2012, by and between Apple and AuthenTec.
1.29 “Other Covenant Beneficiary” means any direct or indirect customer, user, licensee, service provider,
distributor, retailer, reseller, contractor, supplier or manufacturer of Apple, any of its Affiliates or any
successors or assigns of Apple or any of its Affiliates.
1.30 “Party” means either Apple or AuthenTec, and “Parties” means Apple and AuthenTec collectively.
1.31 “Person” means an individual, a corporation, a limited liability company, a partnership, an
association, a trust or any other entity, including a governmental authority.
1.32 “Prior Interim Agreement” means the Interim Agreement, dated March 9, 2012, as amended on
March 21, 2012 and March 30, 2012, between Apple and AuthenTec.
1.33 “Product” means any product (including any hardware product or software product), product line,
service, method, device, system, component, feature, any combination of any of the foregoing or any other
offering.
1.34 “Software and Patent Acquisition Right Exercise Date” means the date of Apple’s written notice to
AuthenTec that Apple is exercising the Software and Patent Acquisition Right.
1.35 “Software Improvement” means any AuthenTec Improvement to any Software Technology.
1.36 “Software Technology” means all software-related Technology, materials, tools and documents that
are necessary or useful to Commercialize any Apple Sensors, including all of the following in binary and source
code formats and all documentation related to any of the following, in each case, owned, acquired, controlled or
licensable by, or assigned to, AuthenTec or any of its Affiliates as of the Effective Date: matcher software;
firmware; and all other software necessary or useful to develop, test, manufacture and/or use any Apple Sensors.
Software Technology includes the Technology, materials, tools, documents and other items listed in Schedule H
attached hereto.
1.37 “Subsidiary” when used with respect to any Party, means any corporation, limited liability company,
partnership, association, trust or other entity the accounts of which would be consolidated with those of such
Party in such Party’s consolidated financial statements if such financial statements were prepared in accordance
with generally accepted accounting principles in the United States, as well as any other corporation, limited
liability company, partnership, association, trust or other entity of which securities or other ownership interests
representing more than 50% of the equity or more
24
than 50% of the ordinary voting power (or, in the case of a partnership, more than 50% of the general
partnership interests) are, as of such date, owned by such Party or one or more Subsidiaries of such Party or by
such Party and one or more Subsidiaries of such Party.
1.38 “Technology” means any (a) information, data, reports, findings, conclusions, results, work papers,
notebooks, electronic records, samples, prototypes, deliverables and any other information or materials in any
form or format and (b) inventions, discoveries, ideas, suggestions, processes, methodologies, formulas,
techniques, works of authorship, trade secrets and know-how, whether patentable or not.
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