Document:

EXHIBIT 10.3

 

AVISTAR COMMUNICATIONS CORPORATION

 

2000 DIRECTOR OPTION PLAN

 

(As Amended Effective June 1, 2005)

 

1.                                       Purposes of the Plan. The purposes of this 2000 Director Option Plan
are to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive
to the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.

 

All
options granted hereunder shall be nonstatutory stock options.

 

2.                                       Definitions. As used herein, the following definitions shall apply:

 

(a)                                  “Annual
Meeting of Stockholders” shall mean the Company’s annual meeting of
stockholders.

 

(b)                                 “Board”
shall mean the Board of Directors of the Company.

 

(c)                                  “Code”
shall mean the Internal Revenue Code of 1986, as amended.

 

(d)                                 “Common
Stock” shall mean the common stock of the Company.

 

(e)                                  “Company”
shall mean Avistar Communications Corporation, a Delaware corporation.

 

(f)                                    “Consultant”
means any person who is engaged by the Company or any Parent or Subsidiary to
render consulting or advisory services to such entity.

 

(g)                                 “Director”
shall mean a member of the Board.

 

(h)                                 “Disability”
shall mean total and permanent disability as defined in section 22(e)(3) of
the Code.

 

 

(i)                                     “Employee”
shall mean any person, including officers and Directors, employed by the
Company or any Parent or Subsidiary of the Company. The payment of a Director’s
fee by the Company shall not be sufficient in and of itself to constitute “employment”
by the Company.

 

(j)                                     “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(k)                                  “Fair
Market Value” shall mean, as of any date, the value of Common Stock
determined as follows:

 

(i)             If the Common Stock
is listed on any established stock exchange or a national market system,
including without limitation the Nasdaq National Market or The Nasdaq SmallCap
Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or system for the last market trading day prior to the
time of determination as reported in The Wall Street Journal
or such other source as the Administrator deems reliable;

 

(ii)          If the Common Stock is
regularly quoted by a recognized securities dealer but selling prices are not
reported, the Fair Market Value of a Share of Common Stock shall be the mean
between the high bid and low asked prices for the Common Stock for the last
market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Board
deems reliable; or

 

(iii)       In the absence of an
established market for the Common Stock, the Fair Market Value thereof shall be
determined in good faith by the Board.

 

(l)                                     “Inside
Director” shall mean a Director who is an Employee.

 

(m)                               “Option”
shall mean a stock option granted pursuant to the Plan.

 

(n)                                 “Optioned Stock”
shall mean the Common Stock subject to an Option.

 

(o)                                 “Optionee”
shall mean a Director who holds an Option.

 

(p)                                 “Outside
Director” shall mean a Director who is not an Employee.

 

(q)                                 “Parent”
shall mean a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

 

(r)                                    “Plan”
shall mean this 2000 Director Option Plan.

 

(s)                                  “Service
Provider” means a Director or Consultant.

 

(t)                                    “Share”
shall mean a share of the Common Stock, as adjusted in accordance with Section 10
of the Plan.

 

(u)                                 “Subsidiary”
shall mean a “subsidiary corporation,” whether now or hereafter existing, as
defined in Section 424(f) of the Internal Revenue Code of 1986.

 

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3.                                       Stock Subject to the Plan. Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 814,000 Shares (the “Pool”) (the Shares may be
authorized, but unissued, or reacquired Common Stock), together with an annual
increase to the number of Shares reserved thereunder on the first day of the Company’s
fiscal year, beginning with January 1, 2004, equal to the lesser of (i) 175,000 Shares,
(ii) 1.0% of the outstanding Shares of Common Stock on the last day of
each prior fiscal year or (iii) such amount as determined by the Board.

 

If an
Option expires or becomes unexercisable without having been exercised in full,
the unpurchased Shares which were subject thereto shall become available for
future grant or sale under the Plan (unless the Plan has terminated). Shares
that have actually been issued under the Plan shall not be returned to the Plan
and shall not become available for future distribution under the Plan.

 

4.                                       Administration and Grants of Options under
the Plan.

 

(a)                                  Procedure
for Grants. All grants of Options to Outside Directors under this Plan
shall be automatic and nondiscretionary and shall be made strictly in
accordance with the following provisions:

 

(i)                       No person
shall have any discretion to select which Outside Directors shall be granted
Options or to determine the number of Shares to be covered by Options.

 

(ii)                    Each Outside
Director shall be automatically granted a one-time Option to purchase 50,000
Shares (the “First Option”) on the date on which such person first becomes an
Outside Director, whether through election by the stockholders of the Company
or appointment by the Board to fill a vacancy; provided, however, that an
Inside Director who ceases to be an Inside Director but who remains a Director
shall not receive a First Option. The First Option for an Outside Director who
has not previously received a stock option grant from the Company shall be for
50,000 Shares.

 

(iii)                 Each Outside
Director shall subsequently be automatically granted an Option to purchase
Shares (a “Subsequent Option”) on the date of the first meeting of the Board
following the 2005 Annual Meeting of Stockholders, and on January 1st
of each year thereafter, commencing with January 1, 2006, provided that (i) he
or she is then an Outside Director and (ii) as of such date, he or she
shall have served on the Board for at least the preceding six (6) months. The
Subsequent Option shall be for 25,000 Shares.

 

(iv)                Each Outside
Director who is a member of the Audit Committee of the Board of Directors shall
also be automatically granted an additional Option to purchase Shares (a “Subsequent
Audit Committee Option”) on the date of the first meeting of the Board
following the 2005 Annual Meeting of Stockholders, and on January 1st
of each year thereafter, commencing with January 1, 2006, provided that (i) he
or she is then a member of the Audit Committee of the Board of Directors. The
Subsequent Audit Committee Option shall be for 10,000 Shares for the Chairman
of the Audit Committee and 5,000 Shares for each other member of the Audit
Committee.

 

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(v)                   Each Outside
Director serving on the Board as of June 12, 2001 shall be automatically
granted an Option to purchase 60,000 Shares at an exercise price equal to 100%
of the fair market value on such date (a “One-Time Option”), as approved by the
stockholders at the Company’s 2001 Annual Meeting of Stockholders.

 

(vi)                Notwithstanding
the provisions of subsections (ii), (iii), (iv) and (v) hereof,
any exercise of an Option granted before the Company has obtained stockholder
approval of the Plan in accordance with Section 16 hereof shall be
conditioned upon obtaining such stockholder approval of the Plan in accordance
with Section 16 hereof.

 

(vii)             The terms of a First
Option granted hereunder shall be as follows:

 

(A)                              the
term of the First Option shall be ten (10) years.

 

(B)                                the
First Option shall be exercisable only while the Optionee remains a Service
Provider of the Company, except as set forth in Sections 8 and 10 hereof.

 

(C)                                the
exercise price per Share shall be 100% of the Fair Market Value per Share on
the date of grant of the First Option provided, however, that in the case of a
First Option granted on the effective date of the Company’s initial public
offering pursuant to a registration statement filed with the Securities and
Exchange Commission, the exercise price per share shall be the initial public
offering price per share.

 

(D)                               subject
to Section 10 hereof, the First Option shall become exercisable cumulatively
as to 1⁄4 of the Shares subject to the First Option on the first anniversary of
the grant date and 1/48th of the Shares subject to the First Option in each
month thereafter on the same day of each month as the grant date (if there is
no corresponding day in any month, then the last day of such month), so that
the First Option shall be fully exercisable four years after its date of grant,
provided that the Optionee continues to serve as a Service Provider on such
dates.

 

(viii)          The terms of a
Subsequent Option granted hereunder shall be as follows:

 

(A)                              the
term of the Subsequent Option shall be ten (10) years.

 

(B)                                the
Subsequent Option shall be exercisable only while the Optionee remains a Service
Provider of the Company, except as set forth in Sections 8 and 10 hereof.

 

(C)                                the
exercise price per Share shall be 100% of the Fair Market Value per Share on
the date of grant of the Subsequent Option.

 

(D)                               subject
to Section 10 hereof, the Subsequent Option shall become exercisable
cumulatively as to 1⁄4 of the Shares subject to the Subsequent Option on the
first anniversary of the grant date and 1/48th of the Shares subject to the
Subsequent Option in each month thereafter on the same day of each month as the
grant date (if there is no corresponding day in any month, then the last day of
such month), so that the Subsequent Option shall be fully exercisable 

 

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four years after its date
of grant, provided that the Optionee continues to serve as a Service Provider
on such dates.

 

(ix)                  The terms of a
One-Time Option granted hereunder shall be as follows:

 

(A)                              the
term of the One-Time Option shall be ten (10) years.

 

(B)                                the
One-Time Option shall be exercisable only while the Outside Director remains a Director
of the Company, except as set forth in Sections 8 and 10 hereof.

 

(C)                                the
exercise price per Share shall be 100% of the Fair Market Value per Share on
the date of grant of the One-Time Option.

 

(D)                               subject
to Section 10 hereof, the One-Time Option shall become exercisable
cumulatively with respect to 1/4th of the One-Time Option at the end
of each year after the date of grant, so that the One-Time Option shall be
fully exercisable four years after its date of grant, provided that the
Optionee continues to serve as a Director on such dates.

 

(x)                     In the event
that any Option granted under the Plan would cause the number of Shares subject
to outstanding Options plus the number of Shares previously purchased under
Options to exceed the Pool, then the remaining Shares available for Option
grant shall be granted under Options to the Outside Directors on a pro rata
basis. No further grants shall be made until such time, if any, as additional
Shares become available for grant under the Plan through action of the Board or
the stockholders to increase the number of Shares which may be issued
under the Plan or through cancellation or expiration of Options previously
granted hereunder.

 

5.                                       Eligibility. Options may be granted only to Outside Directors. All Options shall
be automatically granted in accordance with the terms set forth in Section 4
hereof.

 

The
Plan shall not confer upon any Optionee any right with respect to continuation
of service as a Director or nomination to serve as a Director, nor shall it
interfere in any way with any rights which the Director or the Company may have
to terminate the Director’s relationship with the Company at any time.

 

6.                                       Term of Plan. The Plan shall become effective upon the earlier
to occur of its adoption by the Board or its approval by the stockholders of
the Company as described in Section 16 of the Plan; provided, however, the
Plan shall not become effective until the effective date of the Company’s
initial public offering pursuant to a registration statement filed with the
Securities and Exchange Commission. It shall continue in effect for a term of
ten (10) years unless sooner terminated under Section 11 of the Plan.

 

7.                                       Form of Consideration. The consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other shares which
(x) in the case of Shares acquired upon exercise of an option, have been
owned by the Optionee for more than six (6) months on the date of
surrender, and (y) have a Fair Market Value on the date of surrender equal
to the aggregate exercise price of the Shares as to which 

 

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said
Option shall be exercised, (iv) consideration received by the Company
under a cashless exercise program implemented by the Company in connection with
the Plan, or (v) any combination of the foregoing methods of payment.

 

8.                                       Exercise of Option.

 

(a)  Procedure for Exercise;
Rights as a Stockholder. Any Option granted hereunder shall be exercisable
at such times as are set forth in Section 4 hereof; provided, however,
that no Options shall be exercisable until stockholder approval of the Plan in
accordance with Section 16 hereof has been obtained.

 

An
Option may not be exercised for a fraction of a Share.

 

An
Option shall be deemed to be exercised when written notice of such exercise has
been given to the Company in accordance with the terms of the Option by the
person entitled to exercise the Option and full payment for the Shares with
respect to which the Option is exercised has been received by the Company. Full
payment may consist of any consideration and method of payment allowable
under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 10
of the Plan.

 

Exercise
of an Option in any manner shall result in a decrease in the number of Shares
which thereafter may be available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is exercised.

 

(b)  Termination
of Continuous Status as a Service Provider. Subject to Section 10
hereof, in the event an Optionee’s status as a Service Provider terminates
(other than upon the Optionee’s death or Disability), the Optionee may exercise
his or her vested Options in accordance with the following provisions:

 

(i)             An Optionee who
served as a Director on the Board less than twenty-four (24) months from the
time of his or her appointment to the Board shall have three (3) months to
exercise his or her Option(s) following his or her date of termination as a
Service Provider;

 

(ii)          An Optionee who served as
a Director on the Board for at least twenty-four (24) months but less than
thirty-six (36) months from the time of his or her first appointment to the Board
shall have one (1) year to exercise his or her Option(s) following his or
her date of termination as a Service Provider.

 

(iii)       An Optionee who served as a
Director on the Board for at least thirty-six (36) months from the time of his
or her first appointment to the Board shall have two (2) years to exercise
his or her Option(s) following his or her date of termination as a Service
Provider.

 

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The
Optionee shall exercise his or her Option to the extent that the Optionee was
entitled to exercise it on the date of such termination. To the extent that the
Optionee was not entitled to exercise an Option on the date of such
termination, and to the extent that the Optionee does not exercise such Option
(to the extent otherwise so entitled) within the time specified herein, the
Option shall terminate.

 

(c)  Disability
of Optionee. In the event Optionee’s status as a Service Provider
terminates as a result of Disability, the Optionee may exercise his or her
Option, but only within twelve (12) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration
of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of termination, or if he or she does
not exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.

 

(d)  Death of Optionee.
In the event of an Optionee’s death, the Optionee’s estate or a person who
acquired the right to exercise the Option by bequest or inheritance may exercise
the Option, but only within twelve (12) months following the date of death, and
only to the extent that the Optionee was entitled to exercise it on the date of
death (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option
on the date of death, and to the extent that the Optionee’s estate or a person
who acquired the right to exercise such Option does not exercise such Option
(to the extent otherwise so entitled) within the time specified herein, the
Option shall terminate.

 

9.                                       Non-Transferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.

 

10.                                 Adjustments upon Changes in Capitalization,
Dissolution, Merger or Asset Sale.

 

(a)  Changes
in Capitalization. Subject to any required action by the stockholders of
the Company, the number of Shares covered by each outstanding Option, the
number of Shares which have been authorized for issuance under the Plan but as
to which no Options have yet been granted or which have been returned to the
Plan upon cancellation or expiration of an Option, as well as the price per
Share covered by each such outstanding Option, and the number of Shares
issuable pursuant to the automatic grant provisions of Section 4 hereof
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.” 
Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to an Option.

 

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(b)  Dissolution
or Liquidation. In the event of the proposed dissolution or liquidation of
the Company, to the extent that an Option has not been previously exercised, it
shall terminate immediately prior to the consummation of such proposed action.

 

(c)  Merger
or Asset Sale. In the event of a merger of the Company with or into another
corporation or the sale of substantially all of the assets of the Company,
outstanding Options may be assumed or equivalent options may be
substituted by the successor corporation or a Parent or Subsidiary thereof (the
“Successor Corporation”). If an Option is assumed or substituted for, the
Option or equivalent option shall continue to be exercisable as provided in Section 4
hereof for so long as the Optionee serves as a Director or a director of the
Successor Corporation. Following such assumption or substitution, if the
Optionee’s status as a Director or director of the Successor Corporation, as
applicable, is terminated other than upon a voluntary resignation by the
Optionee, the Option or option shall become fully exercisable, including as to
Shares for which it would not otherwise be exercisable. Thereafter, the Option
or option shall remain exercisable in accordance with Sections 8(b) through
(d) above.

 

If the Successor
Corporation does not assume an outstanding Option or substitute for it an
equivalent option, the Option shall become fully vested and exercisable,
including as to Shares for which it would not otherwise be exercisable. In such
event the Board shall notify the Optionee that the Option shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
upon the expiration of such period the Option shall terminate.

 

For
the purposes of this Section 10(c), an Option shall be considered assumed
if, following the merger or sale of assets, the Option confers the right to purchase
or receive, for each Share of Optioned Stock subject to the Option immediately
prior to the merger or sale of assets, the consideration (whether stock, cash,
or other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares). If
such consideration received in the merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation, provide for the consideration to
be received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation
or its Parent equal in fair market value to the per share consideration
received by holders of Common Stock in the merger or sale of assets.

 

11.                                 Amendment and Termination of the Plan.

 

(a)  Amendment
and Termination. The Board may at any time amend, alter, suspend, or
discontinue the Plan, but no amendment, alteration, suspension, or
discontinuation shall be made which would impair the rights of any Optionee under
any grant theretofore made, without his or her consent. In addition, to the
extent necessary and desirable to comply with any applicable law, regulation or
stock exchange rule, the Company shall obtain stockholder approval of any Plan
amendment in such a manner and to such a degree as required.

 

(b)  Effect of Amendment or Termination.
Unless the Board expressly provides otherwise, any amendment or termination of
the Plan shall not affect Options already granted and 

 

8

 

such Options shall remain
in full force and effect as if this Plan had not been amended or terminated. The
Board may expressly provide with respect to a particular amendment or series of
amendments of the Plan, that such amendment(s) shall be deemed to amend Options
granted on or after the date of the amendment(s) and Options granted prior to
the date of the amendment(s), provided however that no amendment shall be made
which would impair the rights of any Optionee under any grant made prior to the
date of the amendment without his or her consent. Amendments to the Plan
effective June     , 2005 shall not affect Options
already granted under the Plan prior to such date and such Options shall remain
in full force and effect as if this Plan had not been amended. Any termination
of the Plan shall not affect Options already granted and such Options shall
remain in full force and effect as if this Plan had not been terminated.

 

12.                                 Time of Granting Options. The date of grant of an Option shall, for all
purposes, be the date determined in accordance with Section 4 hereof.

 

13.                                 Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933,
as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to
the approval of counsel for the Company with respect to such compliance.

 

As a
condition to the exercise of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without
any present intention to sell or distribute such Shares, if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.

 

Inability
of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

 

14.                                 Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

 

15.                                 Option Agreement. Options shall be evidenced by written option agreements in such form as
the Board shall approve.

 

16.                                 Stockholder Approval. The Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan
is adopted. Such stockholder approval shall be obtained in the degree and
manner required under applicable state and federal law and any stock exchange
rules.

 

9EXHIBIT 10.14

 

PATENT CROSS-LICENSE AGREEMENT

 

This PATENT CROSS-LICENSE AGREEMENT (this “Agreement”) is made
and entered into as of November 12, 2004 (the “Effective Date”) by
and between, on the one hand, Polycom, Inc., a Delaware corporation,
having offices at 4750 Willow Road, Pleasanton, CA 94588 (“Polycom”),
and, on the other hand, Avistar Communications Corporation, a Delaware
corporation, (“Avistar Communications”) having offices at 555 Twin
Dolphin Drive, Suite 360, Redwood Shores, California 94065 together with
its wholly owned subsidiary Collaboration Properties, Inc., a Nevada
corporation, (“CPI”) having offices at 555 Twin Dolphin Drive, Suite 360, Redwood Shores, California 94065
(collectively, “Avistar “) (Polycom and Avistar are individually referred
to herein as a “party,” and collectively as the “parties”).

 

WITNESSETH

 

WHEREAS, Avistar has filed claims against Polycom for patent
infringement in an action styled Collaboration Properties, Inc. v. Polycom, Inc.,
Case # 02-CV-04591, pending in the United States District Court for the
Northern District of California, and Polycom has asserted counterclaims for, inter alia, patent infringement,
invalidity and unenforceability, against Avistar (the “Litigation”);

 

WHEREAS,
Polycom and Avistar are concurrently entering into a Settlement Agreement under
which the parties are settling and releasing all outstanding claims and
dismissing all litigation between them (“Settlement Agreement”); and

 

WHEREAS, each party desires to acquire licenses to patents of the other
party on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the above
and the mutual covenants and promises hereinafter contained, the parties agree
as follows:

 

ARTICLE I –
DEFINITIONS

 

As used in this Agreement, the following terms shall have the following
meanings:

 

1.1                                 “Avistar Patents”
means all Patents worldwide (i) that have a Priority Date on or before the
end of the Capture Period (including those that have a Priority Date prior to
the Effective Date); and (ii) for which Avistar or any of its Subsidiaries
has as of the Effective Date, or obtains at any time during the term of this
Agreement, ownership or other right to grant licenses to Polycom or any of its
Subsidiaries of or within the scope granted herein without requiring payment of
royalties or other incremental consideration by Avistar or any of its
Subsidiaries to a Third Party (except payments to Subsidiaries or to a Third
Party for inventions made by such Third Party while 

 

[***] 
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed pursuant to Rule 24b-2 promulgated under
the Securities Exchange Act of 1934, as amended, and the omitted portions
represented by [***] have been separately filed with the Securities and
Exchange Commission.

 

1

 

employed by Avistar or any of its Subsidiaries). The term “Avistar
Patents” includes all Patents asserted against Polycom in the Litigation.

 

1.2                                 “AvistarVOSTM
Products” means (i) Avistar’s networked architecture and video
operating system products, currently know as AvistarVOSTM, including
AvistarVOSTM Client and AvistarVOSTM Server; (ii) related
product offerings of Avistar and its Subsidiaries, including applications running
on AvistarVOSTM; and (iii) [***] to the [***].

 

1.3                                 “Capture Period”
means any time on or prior to the fifth (5th) anniversary of the
Effective Date.

 

1.4                                 “Change of Control”
means a transaction or series of related transactions (other than a
transaction or series of related transactions effected solely for the
purposes of changing the form or jurisdiction of organization of an
entity, or a pledge of assets pursuant to a credit agreement with an unrelated
bank, bank group or other financial institution) in which either (i) a
party consolidates or merges with or into another Person, or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets, or any Person consolidates with, or merges with or into, a party,
in each case unless the direct and indirect holders of aggregate Voting Power
of the party immediately prior to the transaction or series of related
transactions will hold, directly or indirectly, more than fifty percent (50%)
of the aggregate Voting Power of the surviving or transferee Person immediately
after the transaction or series of related transactions; or (ii) any
Person or “group” (as such term is used in Rule 13d-5 under the United
States Securities Exchange Act of 1934) is or becomes, or has the right to
become, the beneficial owner, directly or indirectly, of more than fifty
percent (50%) of the total aggregate Voting Power of a party. Notwithstanding
the foregoing, the purchase of stock of a party shall not constitute a Change
of Control to the extent that the purchase is by a financial investor who does
not conduct, and does not have any Subsidiary that conducts and is not a
Subsidiary of any Person that conducts, any manufacture, development,
distribution, support or marketing of any video, communications or networking
products; provided, however, that the licenses granted hereunder to or by the
acquired party shall not extend to or from either the financial investor (or
any Person owned by the financial investor that is used to acquire the acquired
party) or any of its Subsidiaries other than the acquired party and the
Subsidiaries of such acquired party.

 

1.5                                 “Economic Interest”
means rights of a party to receive, directly or indirectly, a share of the
profits of a Subsidiary associated with securities or other equity or ownership
interest in such Subsidiary (including, for example, rights to receive
dividends and other profit distributions), whether or not actually distributed.

 

1.6                                 “Existing Products”
means products that, as of a given date, either (i) have been made
commercially available by a given Person or its Subsidiary, (ii) are under
substantial development by a given Person or any of its Subsidiaries as of the
given date and are made commercially available within twelve (12) months after
the given date; or (iii) are bug fixes or error corrections to products
described in subsection (i) or (ii) above.

 

[***] 
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed pursuant to Rule 24b-2 promulgated under
the Securities Exchange Act of 1934, as amended, and the omitted portions
represented by [***] have been separately filed with the Securities and
Exchange Commission.

 

2

 

1.7                                 “[***]” means [***]
(regardless of [***] name) that are [***],[***], [***] or [***] of [***], or
are [***] with [***] or [***] or [***] as [***], in all cases [***] and in
substantial [***] on [***] and/or technologies [***] or [***] by such party or
its Subsidiaries other than [***] an [***] (as such term is defined in Section [***]
below) as a result of a [***] of [***].

 

1.8                                 “Licensed Products”
means all current and future products of a party or any of its Subsidiaries
(except as otherwise limited in Sections 2.5 and 2.6 below). Licensed Products
include all products of each party and its Subsidiaries accused of infringing
Avistar Patents or Polycom Patents, as applicable, in the Litigation.

 

1.9                                 “Patents” means
(i) all classes or types of utility patents, including utility models,
invention certificates, continuations, divisionals, continuations-in-part,
reexaminations, reissues, extensions and renewals, in all countries of the
world; and (ii) all applications, and rights to inventions for which
applications may be filed, for these classes or types of patents in all
countries of the world. For the avoidance of doubt, the term “Patents” does not
include any design patents, copyrights, trademarks, mask work rights, or trade
secret rights (even if such trade secrets may have been patentable during
the Capture Period).

 

1.10                           “Person” shall mean
an individual, trust, corporation, partnership, joint venture, limited
liability company, association, unincorporated organization or other legal or
governmental entity, worldwide.

 

1.11                           “Polycom Patents”
means all Patents worldwide (i) that have a Priority Date on or before the
end of the Capture Period (including those that have a Priority Date prior to
the Effective Date); and (ii) for which Polycom or any of its Subsidiaries
has as of the Effective Date, or obtains at any time during the term of this
Agreement, ownership or other right to grant licenses to Avistar or any of its
Subsidiaries of or within the scope granted herein without requiring payment of
royalties or other incremental consideration by Polycom or any of its
Subsidiaries to a Third Party (except payments to a Subsidiary or to a Third
Party for inventions made by such Third Party while employed by Polycom or any
of its Subsidiaries). The term “Polycom Patents” includes all Patents asserted
against Avistar in the Litigation.

 

1.12                           “Priority Date” means
the earliest effective filing date to which any Patent is entitled as a basis
for priority in a particular country. By way of example, it is understood that
the Priority Date for a United States patent is the earliest of (i) the
actual filing date of the United States patent application which issued into
such patent, (ii) the priority date under 35 U.S.C. § 119 for such
patent, or (iii) the priority date under 35 U.S.C. § 120 for such
patent.

 

1.13                           “Related Patents”
means, with respect to any Patent, any continuations, divisionals,
continuations-in-part, parents, counterparts, reexaminations, reissues,
extensions and renewals, in all countries of the world.

 

[***] 
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed pursuant to Rule 24b-2 promulgated under
the Securities Exchange Act of 1934, as amended, and the omitted portions
represented by [***] have been separately filed with the Securities and
Exchange Commission.

 

3

 

1.14                           “Subsidiary” means,
with respect to a given party or Person (the “Parent”), any other Person
where the Parent directly or indirectly owns or controls (i) more than
fifty percent (50%) of the aggregate Voting Power of such other Person, or (ii) in
countries where the percentage ownership by a foreign Parent is limited by law
to no more than fifty percent (50%), the maximum percentage of the aggregate
Voting Power permitted under applicable law, but in no event less than forty
five percent (45%). A Person shall be deemed to be a Subsidiary under this
Agreement only so long as such ownership or control exists. Notwithstanding the
foregoing, a Subsidiary of a party shall only be entitled to receive the
benefit of the licenses and covenants granted under this Agreement to its
Parent so long as such party also has (and has not contractually or otherwise
forfeited) a percentage Economic Interest in such Subsidiary at least equal to
the minimum percentage of Voting Power required under (i) or (ii) above,
as applicable (“Minimum Economic Interest”). It is understood that, with
respect to a Subsidiary, the Minimum Economic Interest is only required for
purposes of receiving the benefit of licenses and covenants granted under this
Agreement to its Parent and shall not be construed as restricting a Subsidiary’s
obligation to grant licenses and covenants under this Agreement.

 

1.15                           “Third Party” means a
Person other than a party to this Agreement or a Subsidiary of a party to this
Agreement.

 

1.16                           “Voting Power” means
the right to exercise voting power with respect to the election of directors or
similar managing authority of a Person (whether through direct or indirect
beneficial ownership of shares or securities of such Person or otherwise).

 

ARTICLE II–
LICENSE GRANTS

 

2.1                                 Avistar License to
Polycom. Subject to the limitations set forth in Sections 2.5 and 2.6,
Avistar and its Subsidiaries hereby grant to Polycom and its Subsidiaries a
non-exclusive, fully paid-up, worldwide license, under the Avistar Patents, to
make, have made, use, lease, sell (directly and indirectly through multiple
tiers of distribution), offer to sell and import Licensed Products and to
practice any process, method or procedure. Without limiting the foregoing, and
notwithstanding anything to the contrary, Avistar covenants, on its own behalf
and on behalf of its Subsidiaries, that it will not assert claims of
infringement of any of the Avistar Patents against Polycom, its Subsidiaries,
[***] of [***] ([***] or [***]),[***] ([***] or [***]),[***] ([***] or [***],
including [***]) or [***] ([***] and [***]) with respect to any [***] of [***]
or its [***] and/or [***] conferencing [***], including both [***] and [***],
with [***] (whether from [***], its Subsidiaries or [***]) where such [***] (or
its Subsidiaries’) [***] and/or [***] products are [***] for [***] in such [***].

 

2.2                                 Polycom License to
Avistar. Subject to the limitations set forth in Sections 2.5 and 2.6,
Polycom and its Subsidiaries hereby grant to Avistar Communications and its
Subsidiaries (including CPI) a non-exclusive, fully paid-up, worldwide license,
under the Polycom Patents to make, have made, use, lease, sell (directly and
indirectly through multiple tiers of distribution), 

 

[***] 
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed pursuant to Rule 24b-2 promulgated under
the Securities Exchange Act of 1934, as amended, and the omitted portions
represented by [***] have been separately filed with the Securities and
Exchange Commission.

 

4

 

offer to sell and import Licensed Products and to practice any process,
method or procedure. Without limiting the foregoing, and notwithstanding
anything to the contrary, Polycom covenants, on its own behalf and on behalf of
its Subsidiaries, that it will not assert claims of infringement of any of the
Polycom Patents against Avistar, its Subsidiaries (including CPI), [***] of [***]
([***] or [***]), [***] ([***] or [***]), [***] ([***] or [***], including
[***]) or [***] ([***] or [***]) with respect to any [***] of [***] or its [***]
and/or [***] conferencing [***], including both [***] and [***], with [***]
(whether from [***], its Subsidiaries or [***]) where such [***] (or Avistar’s
Subsidiaries’) [***] and/or [***] products are [***] for [***] in such [***].

 

2.3                                 Distribution of
Software Products. It is understood that Licensed Products that are
software may be distributed by providing a copy to a customer or VAR, OEM
or other distributor and allowing the customer or VAR, OEM or other distributor
to reproduce the software. The patent licenses set forth in Sections 2.1 and
2.2 shall extend to such software products and may include modifications
where the software products are reproduced and distributed in substantially the
same form as provided by the licensed party or its Subsidiary to the
respective customer or VAR, OEM or other distributor, including modifications
for installation, interoperability or integration with other software, systems
or environments.

 

2.4                                 Indirect
Infringement. During the term of this Agreement, each party and its
Subsidiaries covenant not to sue the other party and its Subsidiaries on any
claim that the other party or any of its Subsidiaries contributorily infringes
or induces infringement of any Avistar Patent or Polycom Patent, as applicable.
Each party agrees that this Section 2.4 shall not be construed as
providing any rights or licenses to any Third Party.

 

2.5                                 No Right to Act as
a Foundry or Contract Manufacturer. The licenses set forth in Sections 2.1
and 2.2 shall not include the right, under any Avistar Patents or Polycom
Patents, to manufacture or have manufactured products as a foundry or contract
manufacturer for a Third Party based on designs provided by such Third Party.

 

2.6                                 Have Made Rights;
Covenant Regarding [***].

 

(a)                                  The “have made”
rights under the licenses set forth in Sections 2.1 and 2.2 only apply when the
designs, working drawings or specifications for the respective Licensed Product
are owned or licensed and provided by a party or its Subsidiary and do not
extend to “off the shelf” products of a Third Party supplier that are made
generally available by such supplier to other Third Parties.

 

(b)                                 If either party or any
of its Subsidiaries [***] a [***] of a [***] for [***] as a [***] in a [***], [***]
or [***] (the party’s or its Subsidiary’s [***] being a “[***]”) which [***] is
a [***] of such party or any of its Subsidiaries (except with respect to the [***]
as a [***] therein), then the other party and its Subsidiaries hereby agree not
to assert any claim of infringement of any Avistar Patents or Polycom Patents,
as applicable, against [***] such party or any of its Subsidiaries with respect
to the [***], [***], [***], [***] and/or [***] of the respective [***] as a [***]
in such [***];[***] any [***] ([***] or [***]), [***] ([***] or [***]) or [***]
([***] or [***], 

 

[***] 
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed pursuant to Rule 24b-2 promulgated under
the Securities Exchange Act of 1934, as amended, and the omitted portions
represented by [***] have been separately filed with the Securities and Exchange
Commission.

 

5

 

including [***]) or [***] ([***] and [***]) of such party or any of its
Subsidiaries with respect to the [***] for the [***], [***], [***] for [***]
and/or [***] of the respective [***] as a [***] in such [***]. It is expressly
acknowledged and agreed that each party reserves the right to bring a suit for
patent infringement against the [***], including with respect to the [***] as a
[***] of the [***], without restriction or limitation by this Section 2.6.

 

2.7                                 Subsidiaries. Each
party intends for this Agreement to extend to all of its Subsidiaries with
respect to the licenses granted by such party to the other party under this
Agreement. The parties agree that, to the extent they are not already bound,
each party shall use best efforts to ensure that all such Subsidiaries are
bound by the terms of this Agreement. If any Subsidiary of a party is not bound
to this Agreement for any reason and makes an assertion of infringement that
would be precluded by the releases, licenses and covenants hereunder if such
Subsidiary were bound, then such party shall indemnify and hold harmless the
other party and its Subsidiaries and their resellers (direct and indirect),
distributors (direct and indirect), customers (direct and indirect, including
OEM customers) and end users (direct and indirect) for any costs and expenses
(including reasonable fees of attorneys and other professionals), liabilities,
damages and losses resulting from such assertion of infringement.

 

2.8                                 Non-Circumvention.

 

(a)                                  Each party agrees to
take all steps that are reasonable and in good faith under the circumstances to
ensure that all Patents are licensed under this Agreement that are directed to
inventions that are made by its and its Subsidiaries’ employees and/or
individual contractors.

 

(b)                                 Both parties
understand and acknowledge that there are circumstances in which a party could
reasonably agree in good faith with an independent Third Party that the party
would forgo rights to license and/or enforce Patents directed to inventions
developed in conjunction with employees and/or contractors of or for such Third
Party. For example, both parties understand that it could be reasonable under
the circumstances for a party to agree in good faith to forgo rights to license
and/or enforce Patents directed to inventions that arise out of:  (i) bona fide joint development projects
based in substantial part on the pre-existing technology of an independent
Third Party; or (ii) bona fide joint development projects undertaken with
the significant assistance of the employees and/or contractors of an
independent Third Party.

 

(c)                                  If a party, in good
faith, does not obtain the right to grant licenses and covenants under a Patent
of the full scope set forth in this Agreement, then the releases, licenses and
covenants granted under such Patent shall be of the broadest scope that such
party or any of its Subsidiaries has the right to grant.

 

(d)                                 If a Patent is subject
to payment obligations to a Third Party (other than to a Third Party for
inventions made by such Third Party while employed by the respective party or
any of its Subsidiaries) and would otherwise qualify as an Avistar Patent or
Polycom Patent, as applicable, the other party shall have the right to include
such Patent under the licenses and 

 

[***] 
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed pursuant to Rule 24b-2 promulgated under
the Securities Exchange Act of 1934, as amended, and the omitted portions
represented by [***] have been separately filed with the Securities and
Exchange Commission.

 

6

 

covenants granted to such other party and its Subsidiaries under this
Agreement so long as such other party agrees in writing to, and actually does,
make all payments required to be made to the Third Party as a result of such
licenses and covenants and holds the granting party harmless with respect to
such payment obligations.

 

(e)                                  If a party or any of
its Subsidiaries owns or has the right to enforce, or can control or cause the
enforcement of, or has a financial interest in the enforcement of any Patent
that would qualify as a Avistar Patent or Polycom Patent, as applicable, if
owned by the respective party or any of its Subsidiaries, such party and its
Subsidiaries shall not take any action to enforce or permit or cause the
enforcement of such Patent against the other party or any of its Subsidiaries
within the scope of the licenses and covenants set forth in this Agreement.

 

(f)                                    If a party or any
of its Subsidiaries is entitled to receive any share of money damages and/or
royalties for a Patent owned solely or jointly by a Third Party and cannot
prevent the independent enforcement of such Patent by the Third Party
notwithstanding compliance with its obligations under subsection (a) and
(e) above, then such party and its Subsidiaries shall reimburse the other
party and its Subsidiaries for any such amounts which it is entitled to receive
and actually receives if such Patent is enforced against such other party or
its respective Subsidiary.

 

2.9                                 No Other Rights.
No rights or licenses are granted under any Patents except as expressly
provided herein, whether by implication, estoppel or otherwise. Without
limiting the foregoing sentence, (i) no right to grant sublicenses is
granted under the licenses set forth this Agreement; (ii) except as
expressly set forth in Section [***], no license is granted, either
directly or by implication, estoppel or otherwise, to any Third Party for the
combination of any Licensed Products purchased from a party or its Subsidiary
with any other items that are not Licensed Products; and (iii) no right or
license is granted under any design patent, copyrights, trademarks, mask work
rights, or trade secret rights of either party or any of its Subsidiaries.

 

2.10                           Negation
of Avistar Patent Warranties. With respect to the licenses granted by
Avistar to Polycom and its Subsidiaries pursuant to this Article II,
nothing in this Agreement shall be construed (i) as a warranty or
representation by Avistar as to the validity or scope of the Avistar Patents; (ii) as
a warranty or representation that anything made, used, sold, imported or
otherwise disposed of under the license granted by Avistar is or will be free
from infringement of the Patents, copyrights, trade secrets, trademarks or
other rights of any Third Parties; (iii) as granting by implication,
estoppel or otherwise any licenses or rights under Patents or other
intellectual property rights of Avistar other than as express granted in this Article II,
regardless of whether such Patents are dominant or subordinate to the Avistar
Patents; or (iv) (a) to require Avistar to file any Patent
application, (b) a warranty that Avistar will be successful in securing
the grant of any Patent or reissue or extensions thereof, or (c) to
require Avistar to pay any maintenance fees or take any other stapes to
maintain the Avistar Patents. Avistar does not assume any responsibility for
the manufacture or use of any product manufactured or sold under the license
granted in Section 2.1. All warranties in connection with such products
shall be made exclusively by Polycom or its Subsidiaries as the manufacturers
or sellers of such products.

 

[***]  Portions
of this exhibit have been omitted pursuant to a request for confidential
treatment filed pursuant to Rule 24b-2 promulgated under the Securities
Exchange Act of 1934, as amended, and the omitted portions represented by [***]
have been separately filed with the Securities and Exchange Commission.

 

7

 

2.11                           Negation
of Polycom Patent Warranties. With respect to the licenses granted by
Polycom and its Subsidiaries to Avistar pursuant to this Article II, nothing
in this Agreement shall be construed (i) as a warranty or representation
by Polycom or its Subsidiaries as to the validity or scope of the Polycom
Patents; (ii) as a warranty or representation that anything made, used,
sold, imported or otherwise disposed of under the license granted by Polycom or
its Subsidiaries is or will be free from infringement of the Patents,
copyrights, trade secrets, trademarks or other rights of any Third Parties; (iii) as
granting by implication, estoppel or otherwise any licenses or rights under
patents or other intellectual property rights of Polycom or its Subsidiaries
other than as express granted in this Article II, regardless of whether
such Patents are dominant or subordinate to the Polycom Patents; or (iv) (a) to
require Polycom or its Subsidiaries to file any Patent application, (b) a
warranty that Polycom or its Subsidiaries will be successful in securing the
grant of any Patent or reissue or extensions thereof, or (c) to require
Polycom or its Subsidiaries to pay any maintenance fees or take any other
stapes to maintain the Polycom Patents. Polycom and its Subsidiaries do not
assume any responsibility for the manufacture or use of any product
manufactured or sold under the license granted in Section 2.2. All warranties
in connection with such products shall be made exclusively by Avistar as the
manufacturer or seller of such products.

 

ARTICLE III
– TERM AND TERMINATION

 

3.1                                 Term. The term
of this Agreement shall commence upon the Effective Date and shall continue until
the expiration of the last to expire of the Polycom Patents and Avistar Patents.
All licenses and covenants granted under this Agreement are irrevocable and
non-terminable (except to the extent such licenses may be limited as
expressly set forth in Article IV or Section 6.7).

 

ARTICLE IV–
CHANGE OF CONTROL AND SUBSIDIARIES

 

4.1                                 Change of Control.
In the event of a Change of Control of either Polycom or Avistar:

 

(a)                                  The Licensed Products
of the party subject to the Change of Control (“Acquired Party”) shall
be limited to Existing Products of the Acquired Party and its Subsidiaries at
the time of the Change of Control and [***] thereto. The licenses granted under
this Agreement shall not apply to Existing Products of (i) any Third Party
involved in such Change of Control or any of its Subsidiaries (collectively,
the “Acquirer”) at the time of the Change of Control or any [***]
thereto, or (ii) any Person that is acquired by the Acquirer or any of its
Subsidiaries subsequent to the Change of Control, including any Person acquired
by the Acquired Party subsequent to the Change of Control. The Licensed
Products of the non-Acquired Party shall not be limited as a result of the
Change of Control.

 

(b)                                 The licenses and
covenants granted by each of the parties under this Agreement shall be limited
solely to those Patents owned or licensable by each party and its 

 

[***] 
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed pursuant to Rule 24b-2 promulgated under
the Securities Exchange Act of 1934, as amended, and the omitted portions
represented by [***] have been separately filed with the Securities and
Exchange Commission.

 

8

 

Subsidiaries prior to the date of the Change of Control and shall not
extend to any Patents of the Acquirer. If the Capture Period has not already
ended, the Capture Period (as applicable to both parties) shall be shortened to
terminate as of the effective date of the Change of Control.

 

(c)                                  A subsequent Change
of Control of the Acquired Party shall not be construed as further limiting or
expanding the licenses granted to the Acquired Party. In such event, the
Licensed Products of the Acquired Party shall remain limited to the Existing
Products of the Acquired Party and its Subsidiaries at the time of the initial
Change of Control and [***] thereto as described in Section 4.1(a) above.

 

4.2                                 Subsidiaries.

 

(a)                                  New Subsidiaries.
If a Person becomes a Subsidiary of a party after the Effective Date, then: (x)
such Subsidiary shall be granted the licenses and covenants set forth in this
Agreement; and (y) the Patents of such Subsidiary shall be subject to the
licenses and covenants granted to the other party and its Subsidiaries under
this Agreement. In addition, if the other party is not Actively Engaged (as
defined below) with such Person regarding infringement of Avistar Patents or
Polycom Patents, as the case may be, at the time such Person enters into a
definitive agreement to become a Subsidiary of a party, then: (a) such
Subsidiary shall be released from any liability for past infringement of
Avistar Patents or Polycom Patents, as applicable, within the scope of the
licenses and covenants granted in this Agreement ; and (b) the other party
and its Subsidiaries shall be released from any liability for past infringement
of the Patents of such Subsidiary within the scope of the licenses and
covenants granted in this Agreement. As used above, “Actively Engaged” means
that the other party (i) has sued and served a complaint upon the
respective Person for infringement of Avistar Patents or Polycom Patents, as
applicable, and such suit remains pending; or (ii) has provided written
notice of patent infringement of Avistar Patents or Polycom Patents, as applicable,
to the respective Person and is actively engaged in negotiations to grant a
royalty-bearing license to the respective Person for such Avistar Patents or
Polycom Patents, as applicable, including the exchange, by both sides, of definitive
terms for the respective agreement.

 

(b)                                 Former Subsidiaries.
Except as otherwise expressly set forth in Section 4.4 below, if a Person
(including CPI if it ceases to qualify as a Subsidiary of Avistar
Communications) ceases to qualify as a Subsidiary of a party (“Former
Subsidiary”), then:

 

(i)             the licenses and covenants granted to the
Former Subsidiary shall terminate on the date the Former Subsidiary ceases to
be a Subsidiary under this Agreement; and

 

(ii)          The licenses and covenants granted hereunder
to the other party and its Subsidiaries with respect to Patents of the Former
Subsidiary shall continue until the expiration of each such Patents, including
Patents based on applications filed prior to the date it ceased to be a
Subsidiary under this Agreement and Related Patents; provided, however, that
such licenses and covenants shall not extend to Patents of the Former
Subsidiary where the Former Subsidiary first acquires rights to such Patents
after the date it ceases to be a Subsidiary under this Agreement.

 

[***] 
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed pursuant to Rule 24b-2 promulgated under
the Securities Exchange Act of 1934, as amended, and the omitted portions
represented by [***] have been separately filed with the Securities and
Exchange Commission.

 

9

 

4.3                                 Divestiture of
Business or Assets. Except as otherwise expressly set forth in Section 4.4
below:

 

(a)                                  If a party or any of
its Subsidiaries spins out or transfers a portion of its business or assets
such that the spun-out or transferred business or assets are no longer part of
a party or any of its Subsidiaries under this Agreement, then the licenses and
covenants granted to such party under this Agreement shall not extend to such
business (or with respect to the products manufactured, distributed, imported,
marketed, leased, sold or used by such business) or assets after the spin out
or transfer.

 

(b)                                 If a party or any of
its Subsidiaries assigns or transfers any Avistar Patents or Polycom Patents,
as applicable, the licenses and covenants granted to the other party and its
Subsidiaries with respect to those Patents shall remain in effect, and the
transferring party or Subsidiary shall enter into a written agreement with the
transferee making any such assignment or transfer expressly subject to the
licenses and covenants set forth in this Agreement.

 

4.4                                 [***] of Material [***].

 

(a)                                  If a party or any of
its Subsidiaries [***][***] or [***] of the [***] or [***] of a [***] (as
defined below) to a [***] (“[***]”) for a [***] of at [***][***] [***] ([***])
(whether [***],[***] or other [***] of [***]), then the [***] under [***] shall
[***] to apply to the [***] of the [***] as of that date of [***] of such [***]
that are [***] to the [***] notwithstanding such [***].

 

(b)                                 As used in this Section 4.4,
a “[***]” means a material and substantial [***] of a [***] that has, among
other things, all of the following: (i) all of the [***] for one or more [***],
including at least [***] of [***]; (ii) [***] who [***] such [***]; (iii) [***]
or other [***] relating to such [***]; and (iii) [***] related to such [***].
As used herein, a [***] involving a “[***]” as described herein may be an [***]
or may be by [***] of a [***], in which event the provisions of this Section 4.4
shall apply, rather than the provisions of Section [***] and [***] above.

 

ARTICLE V–AvistarVOSTM PRODUCTS

 

5.1                                 Most Favored Rights.
Polycom shall have the right, but not the obligation, to purchase AvistarVOSTM
Products at a price, and on terms and conditions, that are no less favorable
than those that Avistar or any of its Subsidiaries makes available to any other
customer of the AvistarVOSTM Products purchasing the AvistarVOSTM
products.

 

5.2                                 Audit. Avistar
and its Subsidiaries agree to keep full, clear and accurate records to document
and confirm compliance with its obligations under Section 5.1. Upon its
purchase of AvistarVOSTM Products or request for a quote under which
it may purchase AvistarVOSTM Products, Polycom shall have the
right to have an independent auditor inspect and audit such records during
regular business hours to confirm Avistar’s and its Subsidiaries’ compliance
with Section 5.1. In no event shall such audit be held more than one time
in a calendar year during, 

 

[***] 
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed pursuant to Rule 24b-2 promulgated under
the Securities Exchange Act of 1934, as amended, and the omitted portions
represented by [***] have been separately filed with the Securities and
Exchange Commission.

 

10

 

unless an audit uncovers a material non-compliance. Polycom shall bear
its own costs for such audit, unless the audit uncovers a material
non-compliance, in which case Avistar shall reimburse Polycom for the costs of
such audit.

 

ARTICLE VI–
MISCELLANEOUS PROVISIONS

 

6.1                                 Representations and
Warranties.

 

(a)                                  Each of the parties
hereto represents and warrants that it has the right to grant the licenses and
covenants granted by such party under this Agreement.

 

(b)                                 Polycom represents and
warrants that (i) Polycom owns the Patents asserted against Avistar in the
Litigation, and any Related Patents thereto, and has the right to grant
licenses and covenants with respect to such Patents of the full scope set forth
herein; (ii) no payment of consideration to any Third Party is required
for the licenses granted with respect to Patents owned by Polycom or any of its
Subsidiaries as of the Effective Date; (iii) neither Polycom nor any of
its Subsidiaries has any parent, affiliate or joint venture (other than Polycom
or its Subsidiaries under this Agreement) who owns or controls any Patents as
of the Effective Date); and (iv) neither Polycom nor any of its
Subsidiaries has assigned or otherwise transferred its rights to any Patents in
the one (1) year period prior to the Effective Date which would otherwise
qualify as Polycom Patents in the absence of such assignment or transfer.

 

(c)                                  Avistar represents
and warrants that (i) Avistar owns the Patents asserted against Polycom in
the Litigation, and any Related Patents thereto, and has the right to grant
licenses and covenants with respect to such Patents of the full scope set forth
herein; (ii) no payment of consideration to any Third Party is required
for the licenses granted with respect to Patents owned by Avistar or any of its
Subsidiaries as of the Effective Date; (iii) neither Avistar nor any of
its Subsidiaries has any parent, affiliate or joint venture (other than Avistar
or its Subsidiaries under this Agreement) who owns or controls any Patents as
of the Effective Date); and (iv) neither Avistar nor its Subsidiaries has
assigned or otherwise transferred its rights to any Patents in the one (1) year
period prior to the Effective Date which would otherwise qualify as Avistar
Patents in the absence of such assignment or transfer.

 

6.2                                 Confidentiality of
Terms. Neither party shall disclose the terms of this Agreement without the
prior written consent of the other party except:

 

(a)                                        to Subsidiaries
of the parties in confidence;

 

(b)                                       to any
governmental body having jurisdiction and specifically requiring such
disclosure (in confidence to the extent allowed);

 

(c)                                        in response to
a valid subpoena or as otherwise may be required by law (in confidence to
the extent allowed);

 

[***] 
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed pursuant to Rule 24b-2 promulgated under
the Securities Exchange Act of 1934, as amended, and the omitted portions
represented by [***] have been separately filed with the Securities and
Exchange Commission.

 

11

 

(d)                                       to the extent
required, for the purposes of disclosure in connection with the Securities
Exchange Act of 1934, as amended, the Securities Act of 1933, as amended, and
any other reports filed with the Securities and Exchange Commission, or any
other filings, reports or disclosures that may be required under
applicable laws or regulations, provided however, that in the event either
party determines it is necessary to disclose any terms beyond those included in
the press releases attached as Exhibit B to the Settlement Agreement or
that it is required to publicly file this Agreement or the Settlement
Agreement, the disclosing party agrees to use commercially reasonable efforts
to receive confidential treatment for information deemed sensitive and shall
give the other party reasonable prior notice of its intention to disclose such
information;

 

(e)                                        to a party’s
accountants, legal counsel and other financial and legal advisors, subject to
obligations of confidentiality;

 

(f)                                          as required
during the course of litigation, subject to protective orders or other similar
protections as applicable; or

 

(g)                                       to a [***] in connection
with a [***] or [***], of or with [***] provided that such disclosure shall be (i) on
a strictly limited, need-to-know basis, (ii) when such [***] is [***] to
[***], and (iii) on terms applicable to the most confidential information
disclosed by such party in connection with such [***] provided such terms are
at least as restrictive as set forth herein;

 

provided, however, that prior to any such
disclosure pursuant to paragraphs (c) and/or (f) hereof, the party
seeking to make such disclosure shall notify the other party and take
reasonable actions in an effort to minimize the nature and extent of such
disclosure.

 

6.3                                 Notices. All
notices required or permitted to be given hereunder shall be in writing and
shall be delivered by hand, or if dispatched by prepaid air courier or by
registered or certified airmail, postage prepaid, addressed as follows:

 

	
  If to Avistar:

  	
   

  	
  Avistar Communications Corporation

  
	
   

  	
   

  	
  Attn: Chief Financial Officer

  
	
   

  	
   

  	
  555 Twin Dolphin Drive

  
	
   

  	
   

  	
  Suite 360

  
	
   

  	
   

  	
  Redwood Shores, California 94065

  
	
   

  	
   

  	
   

  
	
  If to Polycom:

  	
   

  	
  Polycom, Inc.

  
	
   

  	
   

  	
  General Counsel

  
	
   

  	
   

  	
  4750 Willow Road

  
	
   

  	
   

  	
  Pleasanton, CA 94588

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Polycom, Inc.

  
	
   

  	
   

  	
  Attn: Chief Financial Officer

  
	
   

  	
   

  	
  4750 Willow Road

  
	
   

  	
   

  	
  Pleasanton, CA 94588

  

 

[***] 
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed pursuant to Rule 24b-2 promulgated under
the Securities Exchange Act of 1934, as amended, and the omitted portions
represented by [***] have been separately filed with the Securities and
Exchange Commission.

 

12

 

Such notices shall be deemed to have been served when received by
addressee or, if delivery is not accomplished by reason of some fault of the
addressee, when tendered for delivery. Either party may give written
notice of a change of address and, after notice of such change has been
received, any notice or request shall thereafter be given to such party as
above provided at such changed address.

 

6.4                                 Assignment. Neither
party may assign this Agreement or any right or obligation under this
Agreement without the prior written consent of the other party, except (i) as
part of a Change of Control transaction as defined in subsection 1.4(i) above,
in which event the licensed rights granted to such party hereunder shall be
limited by the provisions set forth in Section 4.1 above; or (ii) as part of
the transfer of all or substantially all of the business or assets of a party
(whether by sale, merger, operation of law or otherwise) in a transaction that
is not a Change of Control, solely because the direct and indirect holders of
aggregate Voting Power of the party immediately prior to the transaction or series of
related transactions will hold, directly or indirectly, more than fifty percent
(50%) of the aggregate Voting Power of the surviving or transferee Person
immediately after the transaction or series of related transactions. Any
assignment made in contravention of the foregoing sentence shall be void ab initio and of no force or effect. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the parties and their
permitted successors and assigns.

 

6.5                                 Governing Law. This
Agreement and matters connected with the performance thereof shall be
construed, interpreted, applied and governed in all respects in accordance with
the laws of the United States of America and the State of California, without
reference to conflict of laws principles.

 

6.6                                 Dispute Resolution.
If a dispute arises regarding this Agreement, or the interpretation, breach,
termination or validity thereof, the senior management of both parties shall
meet to attempt to resolve such disputes. If the senior management cannot
resolve the dispute, the parties agree to meet for one (1) day with an
impartial mediator to attempt to resolve such dispute. If the dispute is not
resolved by such mediation, then the parties agree that such dispute shall be
resolved by binding arbitration in San Francisco, California before three (3) arbitrators
in accordance with the rules of the International Chamber of Commerce (“ICC”)
in effect as of the Effective Date of this Agreement. The parties, their
representatives, other participants and arbitrators shall hold the existence,
content and result of arbitration in confidence, except as otherwise required
or advisable in connection with securities filings or otherwise required by law.
The award of the arbitrators may be entered in any court having jurisdiction
thereof. This
Section 6.6 shall not be construed as restricting or limiting either party’s
ability to immediately assert a license or other defense in any litigation or
other proceeding against such party, such party’s Subsidiaries, or its or their
products or the resellers, distributors or customers of such products,
regardless of jurisdiction or venue.

 

[***] 
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed pursuant to Rule 24b-2 promulgated under
the Securities Exchange Act of 1934, as amended, and the omitted portions
represented by [***] have been separately filed with the Securities and
Exchange Commission.

 

13

 

6.7                                 Bankruptcy. Each
party acknowledges that all rights and licenses granted by it under or pursuant
to this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n)
of the United States Bankruptcy Code (the “Bankruptcy Code”), licenses
of rights to “intellectual property” as defined under Section 101(56) of
the Bankruptcy Code. Each party acknowledges that if such party, as a debtor in
possession or a trustee-in-bankruptcy in a case under the Bankruptcy Code,
rejects this Agreement, the other party may elect to retain its rights
under this Agreement as provided in Section 365(n) of the Bankruptcy Code.
Each party irrevocably waives all arguments and defenses arising under 11
U.S.C. 365(c)(1) or successor provisions to the effect that applicable law
excuses the party, other than the debtor, from accepting performance from or
rendering performance to an entity other than the debtor or debtor in
possession as a basis for opposing assumption of the Agreements by the other
party in a case under Chapter 11 of the Bankruptcy Code to the extent that
such consent is required under 11 U.S.C. § 365(c)(1) or any successor
statute; provided, however, that the debtor in possession, or
trustee-in-bankruptcy agrees in writing that any Change of Control (whether
resulting from such bankruptcy proceeding or otherwise) shall remain subject to
Article IV above. In the event that a party liquidates, winds up or
otherwise ceases to conduct business in the ordinary course, then the licenses
granted to such party under this Agreement shall terminate and the licenses
granted to the other party shall remain in effect without limitation.

 

6.8                                 Severability. If
any provision of this Agreement is held to be illegal or unenforceable, such
provision shall be limited or eliminated to the minimum extent necessary so
that the remainder of this Agreement will continue in full force and effect and
be enforceable. The parties agree to negotiate in good faith an enforceable
substitute provision for any invalid or unenforceable provision that most
nearly achieves the intent of such provision.

 

6.9                                 Entire Agreement.
This Agreement, together with the Settlement Agreement, collectively embody the
entire understanding of the parties with respect to the subject matter hereof,
and merge all prior discussions between them, and neither of the parties shall
be bound by any conditions, definitions, warranties, understandings, or
representations with respect to the subject matter hereof other than as
expressly provided herein. No oral explanation or oral information by either party
hereto shall alter the meaning or interpretation of this Agreement.

 

6.10                           Modification; Waiver.
No modification or amendment to this Agreement, nor any waiver of any rights,
will be effective unless assented to in writing by the party to be charged, and
the waiver of any breach or default will not constitute a waiver of any other
right hereunder or any subsequent breach or default.

 

6.11                           Construction. Any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party will not be applied in the construction or interpretation of
this Agreement. As used in this Agreement, the words “include” and “including,”
and variations thereof, will not be deemed to be terms of limitation, but
rather will be deemed to be followed by the words “without limitation.”  The headings in this Agreement will not be
referred to in connection with the construction or interpretation of this
Agreement.

 

[***] 
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed pursuant to Rule 24b-2 promulgated under
the Securities Exchange Act of 1934, as amended, and the omitted portions
represented by [***] have been separately filed with the Securities and
Exchange Commission.

 

14

 

6.12                           Counterparts. This
Agreement may be executed in counterparts or duplicate originals, both of
which shall be regarded as one and the same instrument, and which shall be the
official and governing version in the interpretation of this Agreement. This
Agreement may be executed by facsimile signatures and such signatures
shall be deemed to bind each party as if they were original signatures.

 

[***] 
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed pursuant to Rule 24b-2 promulgated under
the Securities Exchange Act of 1934, as amended, and the omitted portions
represented by [***] have been separately filed with the Securities and
Exchange Commission.

 

15

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed below by their respective duly authorized officers.

 

 

	
  Avistar Communications Corporation

  	
   

  	
  Polycom, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ William L. Campbell

  	
   

  	
  By:

  	
  /s/ Michael R. Kourney

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  William L. Campbell

  	
   

  	
  Name: 

  	
  Michael R. Kourney

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice Chairman & Chief Admin
  Officer

  	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  November 12, 2004

  	
   

  	
  Date:

  	
  November 12, 2004

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Collaboration Properties, Inc.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ William L. Campbell

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  William L. Campbell

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  President and Chief Executive Officer

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  November 12, 2004

  	
   

  	
   

  	
   

  	
   

  

 

[***] 
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed pursuant to Rule 24b-2 promulgated under
the Securities Exchange Act of 1934, as amended, and the omitted portions
represented by [***] have been separately filed with the Securities and
Exchange Commission.

 

16

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