LICENSE AGREEMENT
THIS AGREEMENT is entered into and effective as of February 26, 1997
("Effective Date"), by and between Taiwan Semiconductor Manufacturing Co.,
Ltd. ("TSMC"), a company duly incorporated under the laws of the Republic of
China, having its principal place of business at Xx. 000, Xxxx Xxxxxx 0,
Science Based Industrial Park, Hsinchu, Taiwan, ROC, and Silicon Storage
Technology, Inc. ("SST"), a company duly incorporated under the laws of
California, having its principal place of business at 0000 Xxxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxxxx 00000.
WHEREAS, SST has designed and developed SST Technology (as defined
hereinafter),
WHEREAS, SST is the owner of SST Intellectual Property Rights (as defined
hereinafter),
WHEREAS, TSMC desires to obtain from SST a non-exclusive, personal,
non-transferable, world-wide license to use, make, have made, sell, and
distribute the products containing SST Technology and to sublicense TSMC's
customers for the right to design such products; SST agrees to grant to TSMC
such non-exclusive, world-wide license to TSMC in accordance with the terms
and conditions set forth in this Agreement,
WHEREAS, SST's grant of right to TSMC to sublicense to TSMC's customers shall
be limited to offering of the Embedded Flash (as defined hereinafter)
manufactured by and for TSMC, and such right prohibit transfer of technology,
or any part of SST Intellectual Property Rights to any third party.
NOW THEREFORE, the parties hereto agree as follows:
I. DEFINITIONS
1.1 "SST Intellectual Property Rights" shall mean all patents, mask work
rights, copyright and trade secrets subsisting in or covering the SST
Technology for single bit per cell flash memory, which are owned by SST or
to which SST has the right to license as granted herein, now or hereafter
during the term of this Agreement. SST Intellectual Property Rights
include, but not limited to, patents covering flash cell and memory
circuits and memory array architecture, process, design rule and physical
layout therefore, masks work right in the layout of the flash cells and
memory circuits, copyright in the netlist, and confidential information in
cell design layout, design rule and process flow, and cell and memory array
architecture.
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1.2 "Embedded Flash" shall mean a product, other than a standalone
memory device, having a single bit per cell flash memory, manufactured
by or have-made for TSMC, in which portion of SST Intellectual Property
Right is used.
1.3 "Wafer Price" shall mean the price of the wafer charged by TSMC,
net of insurance fees, duties and taxes, masks charges, transportation
and handling charges. This price shall include back-lapping.
1.4 "SST Technology" shall mean [ * ]
II. SCOPE OF LICENSE
2.1 SST hereby grants to TSMC a world-wide, non-exclusive, personal
non-transferable license for the right to sublicense others to use the
SST Intellectual Property Rights to design Embedded Flash, and for TSMC
to make and have made such designed Embedded Flash, and to sell or
distribute such made Embedded Flash to TSMC customers
2.2 TSMC agrees to enter into a non-disclosure agreement with each
sublicensee, to maintain in confidence the SST Intellectual Property
Rights. The right to enforce the non-disclosure agreement is assigned to
SST.
2.3 SST shall deliver the material set for in Exhibit A to TSMC. SST
shall render assistance and training necessary for TSMC in
implementation and use of the material as set forth in Exhibit A and
shall provide relevant services and documents. Any customization,
modifications, availability schedule and other factors which have not
been jointly defined and specified in Exhibit A, shall be discussed in
good faith and planned with mutual agreement.
2.4 The "have-made" right granted herein shall be limited to wafer
manufacturing at TSMC affiliates of which TSMC owns or control at least
25% of interests. In the event the "have made" right is to be used, TSMC
shall inform SST of such intention in advance.
III. CONSIDERATION AND MUTUAL SUPPORT
3.1 In consideration of the License granted herein, TSMC shall pay to
SST:
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Royalties: [ * ]
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[ * ]
3.2 In consideration of the license granted in Section II, subject to the
royalties payments of Sub-Section 3.1, the relationship established with
TSMC in accordance with the spirit of this Agreement, although unique at
present, is viewed as most favorable. SST agrees to assure and uphold
TSMC as the most favorable licensee in respect of SST's grant of a
license having the same total consideration. SST shall keep TSMC
informed of any license or agreement which grants more favorable
condition than that of the license and adjust status of TSMC in
compliance of this Section. TSMC has the right to appoint an
internationally renown accounting firm to audit the license and license
agreements SST grants to third parties no more than once a year. Such
accounting firm can only report to TSMC if SST has treated TSMC as the
most favorable licensee.
3.3 In consideration of the license granted herein, TSMC shall provide SST's
forecast wafer requirement as agreed to by the parties, in the annual
plan. [ * ]
3.4 The wafer price used for calculation of the Royalties shall be [ * ]
3.5 Royalties payment shall be made quarterly within thirty (30) days at net
thirty (30) days term after the close of every calendar quarter. The
calculation of the Royalties payment shall be based on the actual
payment received by TSMC, payment by SST on products containing the
Embedded Flash excluded, during the particular calendar quarter. SST has
the right to appoint an internationally renown accounting firm to audit
the sales record of TSMC and the "have made" facilities of TSMC
generated from manufacturing of the Embedded Flash no more than once a
year. Such accounting firm can only report to SST if TSMC or its "have
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made" licenses has made sufficient Royalties payment. The Royalties
payment shall be subject to withholding tax and custom duty, and TSMC has
the right to withhold taxes as required by the laws of Republic of China.
In the event refund of the withholding tax can be claimed, TSMC will
conduct application for refund with the assistance of SST. [ * ] In the
event a TSMC customer is an existing licensee of SST, TSMC agrees to
[ * ], in addition to the Royalties payment and report.
3.6 SST shall provide support and consultation, including support in
developing test method and tools needed for use by TSMC, and technical
support in implementation thereof. SST shall provide TSMC with
consultation support in the back end production of Embedded Flash,
including but not limited to, characterization, yield/performance
improvement, production, testing and application. Technical assistance
provided by SST shall be reasonably sufficient to demonstrate and
explain practical use and operation of the License granted herewith, and
to reasonably permit TSMC to make full use thereof. Such assistance
shall be performed by qualified SST technical staff, knowledgeable in
SST Technology. TSMC's use of consultation support, training and other
technical assistance shall be reasonable. TSMC may generate material and
discussion for internal training to carry the know-how in relation to
the License forward, such material shall be subject to proprietary
treatment of Article (V).
IV. MODIFICATION AND IMPROVEMENT
4.1 Title to all intellectual property rights relating to invention(s)
or improvement(s) to SST Technology arising from the joint efforts of
TSMC or TSMC customers or TSMC "have made" affiliates and SST under this
Agreement shall be jointly owned by TSMC and SST, and all expenses
incurred in obtaining and maintaining such rights shall be equally
shared by both parties hereto. Subject to the limitation on TSMC's
sublicense under the Agreement, either party has the right to license
such joint work to third parties. In case either party elects not to
seek or maintain legal protection for any such invention or improvement
in any particular country or territory, the other party shall have the
right to seek protection at its sole expenses and for its sole benefit
and shall have full control over the prosecution and maintenance
thereof, provided that such other party shall grant to the other party a
royalty free license to use such invention(s) or improvement(s). Any
modification and improvement to the joint work as set forth herein made
by sole efforts of a party after the termination or expiration of this
Agreement shall be solely owned by such party.
4.2 TSMC and TSMC's customers shall have the right to modify or improve
the License. Title to any intellectual property right relating to such
modifications or
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improvements made by sole efforts of TSMC or TSMC customers shall be
solely owned by TSMC. TSMC will notify SST of any modifications and
improvements promptly upon use thereof and SST shall have the right to
royalty free, personal, unrestricted use of such intellectual property
right, improvements and modifications without the right to transfer to
third parties the modification or improvement owned by TSMC.
V. PROPRIETARY INFORMATION
5.1 The term "Proprietary Information" shall mean any information controlled
by a party hereto identified as proprietary and/or confidential and
disclosed to the other party according to this Agreement. Written
Proprietary Information shall be clearly marked "CONFIDENTIAL" or
"PROPRIETARY". All oral disclosures of Proprietary Information shall be
identified as such prior to disclosure and confirmed in writing, or
email, by the disclosing party within thirty (30) days of the oral
disclosure. In case of disagreement, the receiving party must make a
written objection thereto within thirty (30) days after receipt of the
information. The Proprietary Information shall not include information
that: (1) is now or subsequently in the public domain or otherwise
becomes available to the public other than by breach of this Agreement
by the receiving party; (2) has been rightfully in the receiving party's
possession prior to receipt from the disclosing party; (3) is rightfully
received by the receiving party from a third party; and (4) is
independently developed by the receiving party without use of any
proprietary information or trade secrets of disclosure, and is authorized
by the disclosing party to be disclosed or released.
5.2 Except that TSMC exercises its license and rights hereunder, both
parties agree to maintain Proprietary Information in confidence, not to
make use thereof other than for the performance of this Agreement, to
release it only to employees or TSMC customers who have a reasonable
need to know the same, and not to release or disclose it to any third
party, without the prior written consent of the disclosing party.
5.3 All Proprietary Information and any copies thereof shall remain the
property of the disclosing party. Upon expiration or termination of this
Agreement, the receiving party shall return the original and all copies
of tangible Proprietary Information at the request of the disclosing
party.
5.4 This Section shall survive the termination or expiration of this
Agreement for a period of five (5) years.
5.5 The terms and conditions of the Non-disclosure Agreement dated February
1, 1996 between the parties shall remain effective. In the event the
terms and conditions conflicts with this Agreement, this Agreement shall
prevail.
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VI. WARRANTY
6.1 SST warrants and represents that the it has the right and authority
to convey and grant the License as set forth herein.
6.2 SST agrees to indemnify, hold harmless and defend TSMC from and
against any and all equitable actions, damages, costs and expenses
incurred by TSMC in connection with a claim which, if true, would
constitute a breach of SST's warranty set forth under Sub-Section 6.1
hereof, provided SST has been given prompt notification and reasonable
assistance from TSMC, and SST has sole control over legal action.
6.3 Neither party shall be liable to the other for any incidental,
indirect or consequential damages arising out of or in connection with
this Agreement. In no event shall either party be liable to the other
for damages, in the aggregate, greater than [ * ]. Furthermore,
TSMC agrees to hold SST harmless from any cause of action arising
out of, as a result of, or in connection with, any dispute between
TSMC and its customers, except to the extent such dispute arises
from a breach by SST of its contractual obligation to TSMC under this
Agreement, including a breach by SST of its warranty under Sub-Section
6.1, and provided that SST fulfills its obligation under Sub-Section 6.2.
6.4 TSMC shall have the sole liability and responsibility for the
exploitation of the modifications and improvements it or its customer
made pursuant to Sub-Section 4.2. TSMC shall defend SST, and indemnify
it and hold it harmless from any breach of this obligation.
VII. TERM AND TERMINATION
7.1 This Agreement shall remain in full force and effect for five (5)
years. Thereafter, so long as neither party is in breach of this
Agreement, this Agreement will continue year to year unless either party
notifies the other, in writing, of a request for non-renewal at least
one year prior to the expiration of the original or renewed term of the
Agreement. Upon termination, all tangible Proprietary Information shall
be returned or destroyed according to the instruction of the disclosing
party.
7.2 This Agreement may be terminated by either party if the other party
(1) breaches any material provision of this Agreement and does not cure
or remedy such breach within thirty (30) days after receipt of the
notice of breach from the other party; (2) becomes the subject of a
voluntary or involuntary petition in bankruptcy or any proceeding
relating to insolvency, receivership, liquidation, or composition
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for the benefit of creditors if such petition or proceeding is not
dismissed with prejudice within sixty (60) days after filing.
Termination of this Agreement shall be effective 30 days after issuance
of a written notice of termination to the other party by the
non-defaulting party. In the event SST becomes bankrupt, or a trustee
is otherwise appointed for SST, TSMC shall have the right to maintain
the rights and licenses provided for in this Agreement, provided it
continues to make the royalty payments provided for herein.
7.3 After effective termination of this Agreement by either party in
accordance with Section VII hereof, TSMC shall cease and desist all use
of the License except for the performance of its obligations to
customers which are incurred before termination of this Agreement. The
obligation and duties of both parties under this Agreement for
existing products at the time of termination shall survive the
termination of this Agreement.
7.4 The termination of the license granted under this Agreement, by
expiration or otherwise, shall not release TSMC from any of its
obligations or liabilities therefore incurred, or rescind or give any
rights to rescind, anything done or any payment made or other
consideration given therefore to SST under this Agreement, provided
that TSMC will have such rights, under such license, after any such
termination or expiration, as are necessary for TSMC to (a) supply
replacement products for any defective Embedded Flash units sold by
TSMC on or prior to the date of such termination or expiration, and (b)
supply Embedded Flash products under, and pursuant to the terms of,
commitments of TSMC to third parties, for a period of one year
thereafter, and (c) to dispose of inventory of Embedded Flash products
under TSMC's control as of the date of such supply Embedded Flash
products to new product design. TSMC will provide SST a statement of
inventory at this point in time, as well as an estimate of time
required to dispose of said inventory. TSMC shall cause to be issued an
irrevocable letter of credit issued by a commercial bank equal to the
amount of royalty based upon the inventory. TSMC will fulfill all
royalty obligations for material described in (a), (b) and (c). No
failure or delay on the part of SST in exercising its right to
terminate for any one or more default shall be construed to prejudice
its rights of termination for such or for any other or subsequent
default.
VIII. MISCELLANEOUS
8.1 Neither party shall be responsible for any failure to perform under
this Agreement if such failure is caused by unforseen circumstances or
due to causes beyond its control, including but not limited to acts of
God, riot, labor stoppages, acts of civil and military authorities,
fire, floods or accidents.
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8.2 This Agreement shall be governed by and construed in accordance with the
laws of the state of California. In the event of any dispute arising out
of or in connection with this Agreement which cannot be amicably settled
by the parties hereto, the parties agree to submit any such dispute to
binding arbitration to be conducted in San Francisco, California in
accordance with the then prevailing rules for the commercial arbitration
of American Arbitration Association and the decision of the arbitration
panel shall be final and binding and may be entered as a judgment by a
court of competent jurisdiction. All information relating to or
disclosed by any party in connection with the arbitration shall be
treated by the parties and the arbitration panel as confidential
information and no disclosure of such information shall be made by
either party or the arbitration panel without the prior written consent
of the disclosing party.
8.3 No modification, alteration or amendment of this Agreement shall be
effective unless in writing and duly signed by both parties. The terms
and conditions of this Agreement constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof,
and supersede all previous communication, agreement, understanding,
whether oral or written, between the parties regarding the same.
8.4 No waiver of any breach or failure by either party to enforce any
provision of this Agreement shall be deemed a waiver of any other or
subsequent breach or a waiver of future enforcement of that or any other
provision.
8.5 TSMC and SST shall schedule management review meetings a minimum of twice
a year to access the progress of the relationship, deal with any
unresolved problems, and develop strategic plans for continued joint
effort. Specific areas of discussion are to include:
1) [ * ] 2) process changes and improvements; 3) flash and embedded
flash technology roadmap planning; 4) other topics as required and
proposed by either party toward the continued achievement of the
business objectives represented by this Agreement.
8.6 Neither party can assign this Agreement without the prior written
consent of the other party.
8.7 Any notice between the parties shall be made, by fax or mail, to the
correspondent as follows:
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To TSMC:
Xx. Xxx Xxx
000 Xxxx Xxx. III
Science-Based Industrial Park Tel: 886/0-000-0000 x.0000
Hsinchu, Taiwan, ROC Fax: 886/0-000-0000
To SST:
Xx. Xxxxxx Xxxxxxx/Xx. Xxx-Xxx Xx
0000 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000 Tel: 408/000-0000
USA Fax: 408/000-0000
8.8 In the event TSMC finds a design provided by third parties for production
by TSMC which contains SST Technology without a license from SST nor
TSMC, TSMC shall promptly notify SST.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed in duplicate on their behalf by their duly authorized officers
and representatives on the date given above.
Taiwan Semiconductor Silicon Storage Technology, Inc.
Manufacturing Co., Ltd
/s/ Xxx Xxxxxx /s/ Bing Yeh
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Signature Signature
Mr. Xxx Xxxxxx, President Xx. Xxxx Xxx, President
---------------------------------- ----------------------------------
Name & Title Name & Title
2/26/97 2/26/97
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Date Date
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Exhibit A
1) The engineering deliverables from SST to TSMC
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1.1) The macrocell block according to the configuration defined in
paragraph (2)
1.2) Documentation and training material as outlined in paragraph (3)
2) Macrocell blocks
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[ * ]
3) Documentation and material for training
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Following documentation shall be compiled during the training period relevant
to the macrocell block defined in Paragraph (2), and they shall be delivered
at conclusion of the training period.
[ * ]
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[ * ]
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