PORTFOLIO CROSS-LICENSE AGREEMENT
BETWEEN
TEXAS INSTRUMENTS INCORPORATED
AND
UNITED MICROELECTRONICS CORPORATION
TABLE OF CONTENTS
1. LICENSES, COVENANTS, EXCLUSIONS AND RELEASES ............................................3
1.1 License Grants To UMC ENTITIES/UMC SPINOFFS ........................................3
1.1.1 UMC BRANDED PRODUCTS/UMC SPINOFF BRANDED PRODUCTS .........................3
1.1.2 UMC FOUNDRY PRODUCTS.......................................................4
1.1.3 Option to License MEMORY PORTION of UMC FOUNDRY PRODUCTS ..................5
1.2 License Grants to TI ENTITIES ......................................................7
1.2.1 PRODUCTS ..................................................................7
1.3 Have Made Rights ...................................................................8
1.3.1 UMC ENTITY Subcontracting .................................................8
1.3.2 TI ENTITY Subcontracting ..................................................8
1.4 Third-Party Products ...............................................................9
1.5 TI Foundry Restriction ............................................................10
1.6 Third Party Designs ...............................................................10
1.7 ENTITY/UMC SPINOFF Authority ......................................................10
1.8 General Exclusions ................................................................11
1.9 Releases ..........................................................................11
1.10 Certain Acquisitions ..............................................................13
2. ROYALTIES and RECORDS ..................................................................14
2.1 Royalty Rates......................................................................14
2.1.1 BASE ROYALTY..............................................................14
2.1.2 BRANDED ROYALTY...........................................................14
2.1.3 MEMORY FRACTION ROYALTY ..................................................14
2.1.4 Due Dates For BASE ROYALTIES .............................................15
2.1.5 Due Dates For BRANDED ROYALTY and MEMORY FRACTION ROYALTY ................15
2.1.6 Consideration for Royalty Rates ..........................................15
2.1.7 Method and Place for Royalty Payments ....................................15
2.1.8 Royalty Triggering Events for UMC ENTITIES ...............................16
2.1.9 Survival .................................................................16
2.2 Accounting and Records ............................................................16
2.2.1 Computation ..............................................................16
2.2.2 Audit ....................................................................16
2.2.3 Currency Exchange.........................................................17
2.2.4 Royalty Report ...........................................................18
2.2.5 Taxation .................................................................19
3. TERM, TERMINATION, DISPUTE RESOLUTION ....................................................19
3.1 Term ..........................................................................19
3.2 Termination .......................................................................19
3.2.1 Events of Termination ....................................................19
3.2.2 Non-terminating Events ...................................................22
3.2.3 Effect of Termination ....................................................23
3.2.4 License Survival .........................................................23
4. WARRANTIES AND REPRESENTATIONS, LIMITATIONS OF LIABILITY AND INDEMNIFICATION............23
4.1 Express Warranties, Acknowledgements and Representations ..........................23
4.1.1 Power and Authority ......................................................23
4.1.2 Proper Payment ...........................................................23
4.1.3 Full Royalty .............................................................24
4.2 Term ..........................................................................24
4.3 Material Breach ...................................................................24
4.4 Disclaimer ........................................................................24
4.5 Indemnities .......................................................................25
5. MISCELLANEOUS PROVISIONS................................................................25
5.1 Implied Licenses and Releases .....................................................25
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5.2 Technical Assistance ..............................................................25
5.3 No License to Software ............................................................25
5.4 Governmental Contract Restrictions ................................................25
5.5 No Agency .........................................................................26
5.6 No Assignment .....................................................................26
5.7 Patent Filings ....................................................................26
5.8 Language ..........................................................................26
5.9 Notice ..........................................................................26
5.10 Parole Evidence/No Oral Modification ..............................................27
5.11 Choice of Law......................................................................27
5.12 Jurisdiction and Venue ............................................................28
5.13 Confidentiality ...................................................................28
5.14 Merger ..........................................................................29
5.15 Basis for Agreement................................................................29
5.16 No Waiver..........................................................................29
5.17 Convenience of the Parties ........................................................30
EXHIBIT A ...........................................................................31
Definitions ...........................................................................31
1. "ANNUAL MAXIMUM BASE ROYALTY"...........................................................31
2. "BASE ROYALTY"..........................................................................31
3. "BRANDED ROYALTY" ......................................................................31
4. "BUSINESS EQUIPMENT AND SYSTEMS"........................................................31
5. "CIRCUIT PATENT CLAIMS".................................................................31
6. "DEFORMABLE DEVICE".....................................................................31
7. "EFFECTIVE DATE"........................................................................32
8. "ENTITY"................................................................................32
9. "INTEGRATED CIRCUIT"....................................................................32
10. "LICENSED PARTY"........................................................................32
11. "MANUFACTURING EQUIPMENT AND SYSTEMS"...................................................32
12. "MEMORY FRACTION".......................................................................32
13. "MEMORY FRACTION ROYALTY" ..............................................................33
14. "MEMORY PORTION"........................................................................33
15. "NET SALES BILLED"......................................................................33
16. "PARTY" ................................................................................34
17. "PATENT(S)" ...........................................................................34
18. "PROCESS PATENT CLAIMS".................................................................35
19. "PRODUCTS" .............................................................................36
20. "ROYALTY BEARING PRODUCT(S)" ...........................................................37
21. "SEMICONDUCTOR PRODUCT".................................................................37
22. "SUBSIDIARY(IES)". .....................................................................37
23. "TI CIRCUIT PATENT CLAIMS" .............................................................38
24. "TI ENTITIES". .........................................................................38
25. "TI-PARTICIPATION CIRCUIT PATENT CLAIMS"................................................38
26. "TI-PARTICIPATION PATENT(S)"............................................................38
27. "TI-PARTICIPATION PROCESS PATENT CLAIMS"................................................38
28. "TI PATENT(S)"..........................................................................38
29. "TI PROCESS PATENT CLAIMS"..............................................................38
30. "UMC BRANDED PRODUCT(S).................................................................39
31. "UMC ENTITIES". ........................................................................39
32. "UMC FOUNDRY PRODUCT(S)"................................................................40
33. "UMC-PARTICIPATION PATENT(S)"...........................................................40
34. "UMC PATENT(S) .........................................................................40
35. "UMC SPINOFFS"..........................................................................40
36. "UMC SPINOFF BRANDED PRODUCT(S)"........................................................41
EXHIBIT B ...........................................................................42
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PORTFOLIO CROSS-LICENSE AGREEMENT
This Agreement is made by and between Texas Instruments Incorporated
("TI"), a Delaware corporation having a place of business at 0000 Xxxxxx
Xxxx, Xxxxxx, Xxxxx 00000, U.S.a., and United Microelectronics Corporation
("UMC"), a corporation organized under the laws of the Republic of China
having a place of business at Xx. 0 Xx Xxxx Xxxx 0, Science Based Industrial
Park, Xxxx Xxx City, Taiwan. Unless otherwise defined herein, defined terms
shall have the meanings assigned thereto in Exhibit a hereto.
WITNESSETH:
WHEREAS, the TI ENTITIES own or control and have or may have in the
future rights under various patents and utility models and applications in
various countries of the world as to which the UMC ENTITIES desire to acquire
licenses as hereinafter provided;
WHEREAS, the UMC ENTITIES own or control and have or may have in the
future rights under various patents and utility models and applications in
various countries of the world as to which the TI ENTITIES desire to acquire
licenses as hereinafter provided;
WHEREAS, the TI ENTITIES and the UMC ENTITIES recognize that the
patent portfolios of each can, and will change, virtually on a daily basis,
as new patents are added and existing ones expire, in various countries of
the world, during the term of this Agreement, and both desire to enter into a
cross-license that would include, as licensed under this Agreement,
substantially the entire patent portfolios each at any time existing during
the term of this Agreement (a "portfolio cross-license");
WHEREAS, the TI ENTITIES and the UMC ENTITIES acknowledge that it is
their mutual intent and desire to enter into this portfolio cross-license form
of agreement as a result of and taking into consideration, among other things:
(A) The continuous updating of products in the semiconductor
industry resulting from rapid technological advances;
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(B) The practice of the TI ENTITIES and the UMC ENTITIES, as
well as others in the semiconductor industry, of annually
filing hundreds of patent applications worldwide, with the
result that each of the TI ENTITIES and the UMC ENTITIES
will have new patents being issued and expiring virtually
on a daily basis;
(C) The global nature of the semiconductor market and the
virtual impossibility of tracing the ultimate migration of
semiconductor products; and
(D) The economic impracticability of a patent-specific approach
to licensing worldwide patent portfolios, and the
recognition of this fact implicit in the standard and
custom of the semiconductor industry to enter into, and
rely on, portfolio cross-license agreements;
WHEREAS, the TI ENTITIES and the UMC ENTITIES are engaged in
continuing research, development and engineering in regard to PRODUCTS and
contemplate the possibility of filing applications for the patenting of
inventions resulting therefrom and mutually desire that these future patents
be licensed as hereinafter provided;
WHEREAS, TI and UMC acknowledge that they are entering into a
portfolio cross-license, and not a license for specific patents;
WHEREAS, TI and UMC have settled on a means to govern the payment of
royalties during the term of this Agreement having taken into account the
patent portfolios of the TI ENTITIES and the UMC ENTITIES, good faith
negotiations involving selected patents and product lines of the TI ENTITIES
and the UMC ENTITIES, and the fact that UMC will pay royalties hereunder for,
among other things, making UMC FOUNDRY PRODUCTS for customers, some of whom
will not have licenses from a TI ENTITY, as well as some who may;
WHEREAS, TI and UMC acknowledge and contemplate, in view of the fact
that a significant goal of this portfolio cross-license Agreement is to
provide the TI ENTITIES and the UMC ENTITIES, except for certain excluded
patents, with worldwide freedom to manufacture, sell and ship certain
PRODUCTS without concern for infringement suits, and that certain PRODUCTS
which are sold, offered for sale, used, imported, or manufactured in any
country, anywhere in the world, will be licensed, pursuant to the terms of
this Agreement, without regard
2
as to whether such PRODUCTS infringe any particular patent of either of them
in any particular country;
WHEREAS, TI and UMC find it convenient to make an arrangement
whereby substantially all the patents of the TI ENTITIES and of the UMC
ENTITIES with respect to certain PRODUCTS, are made accessible to the other
under one license in lieu of multiple negotiations and licenses, and
therefore, they desire to enter into one patent license agreement on the
terms hereinafter set forth and to make the payments described herein; and
WHEREAS, as part of the licensing arrangement, the UMC ENTITIES
desire to obtain and the TI ENTITIES are willing to grant licenses on the
terms of this Agreement to permit the ENTITIES to conduct foundry activities
for customers of the UMC ENTITIES, including, without limitation, mask
making, wafer fabrication, wafer probe, and test, assembly, packaging and
final test.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, it is hereby agreed as
follows:
1. LICENSES, COVENANTS, EXCLUSIONS AND RELEASES
1.1 LICENSE GRANTS TO UMC ENTITIES/UMC SPINOFFS
1.1.1 UMC BRANDED PRODUCTS/UMC SPINOFF BRANDED PRODUCTS
1.1.1.1 Each TI ENTITY hereby grants and agrees to
grant to each UMC ENTITY non-exclusive licenses under any TI PATENTS to make
UMC BRANDED PRODUCTS. Each TI ENTITY further grants and agrees to grant to
each UMC ENTITY the right to use, sell, lease, import, offer for sale, or
otherwise dispose of UMC BRANDED PRODUCTS made by a UMC ENTITY. The grant to
make UMC BRANDED PRODUCTS shall include the right, under any TI PATENTS, for
any UMC ENTITY to use manufacturing and business processes and methods, and
shall further include the right under any TI PATENTS for any UMC ENTITY to
use MANUFACTURING EQUIPMENT AND SYSTEMS and BUSINESS EQUIPMENT AND SYSTEMS
made by any UMC ENTITY or any other party.
1.1.1.2 To the extent that each TI ENTITY has the
legal right to do so, each such TI ENTITY hereby grants and agrees to grant to
each UMC ENTITY non-exclusive
3
licenses or sub-licenses under any TI-PARTICIPATION PATENTS to make UMC
BRANDED PRODUCTS; and to use, sell, lease, import, offer for sale, or
otherwise dispose of UMC BRANDED PRODUCTS made by a UMC ENTITY. The grant
to make UMC BRANDED PRODUCTS shall include the right, under any
TI-PARTICIPATION PATENTS, for any UMC ENTITY to use manufacturing and
business processes and methods and shall further include the right under any
TI-PARTICIPATION PATENTS for any UMC ENTITY to use MANUFACTURING EQUIPMENT
AND SYSTEMS and BUSINESS EQUIPMENT AND SYSTEMS made by any UMC ENTITY OR any
OTHER PARTY.
1.1.1.3 Each TI ENTITY hereby grants and agrees to
grant to each UMC ENTITY non-exclusive licenses, under any TI PATENTS, to
make UMC SPINOFF BRANDED PRODUCTS for sale to a UMC SPINOFF for that UMC
SPINOFF to use, sell, lease, import, offer for sale, or otherwise dispose of
SUCH UMC SPINOFF BRANDED PRODUCTS. The grant to make UMC SPINOFF BRANDED
PRODUCTS shall include the right under any TI PATENTS for any UMC ENTITY to
use manufacturing and business processes and methods and shall further
include the right under any TI PATENTS for any UMC ENTITY to use
MANUFACTURING EQUIPMENT AND SYSTEMS and BUSINESS EQUIPMENT AND SYSTEMS made
by any UMC ENTITY or any other party.
1.1.1.4. To the extent that each TI ENTITY has
the legal right to do so, each such TI ENTITY hereby grants and agrees to
grant to each UMC ENTITY non-exclusive licenses or sub-licenses under any
TI-PARTICIPATION PATENTS, to make UMC SPINOFF BRANDED PRODUCTS for sale to a
UMC SPINOFF for that UMC SPINOFF to use, sell, lease, import, offer for sale,
or otherwise dispose of, such UMC SPINOFF BRANDED PRODUCTS. The grant to make
UMC SPINOFF BRANDED PRODUCTS shall include the right under any TI-PARTICIPATION
PATENTS for any UMC ENTITY to use manufacturing and business processes and
methods and shall further include the right under any TI-PARTICIPATION
PATENTS for any UMC ENTITY to use MANUFACTURING EQUIPMENT AND SYSTEMS and
BUSINESS EQUIPMENT AND SYSTEMS made by any UMC ENTITY or any other party.
1.1.2. UMC FOUNDRY PRODUCTS
1.1.2.1 Each TI ENTITY hereby grants and agrees to
grant to each UMC ENTITY non-exclusive licenses, under TI PROCESS PATENT
CLAIMS only, to make
4
UMC FOUNDRY PRODUCTS. Each TI ENTITY further grants and agrees to grant to
each UMC ENTITY the right to sell, import, offer for sale or otherwise
dispose of UMC FOUNDRY PRODUCTS made by any UMC ENTITY. The grant to make
FOUNDRY PRODUCTS shall include the right, under any TI PROCESS PATENT CLAIMS,
for any UMC ENTITY to use manufacturing processes and methods and shall
further include the right under any TI PATENTS to use business processes and
methods and MANUFACTURING EQUIPMENT AND SYSTEMS and BUSINESS EQUIPMENT AND
SYSTEMS made by any UMC ENTITY or any other party. Notwithstanding the
foregoing, unless licensed under Section 1.1.3 herein, UMC FOUNDRY PRODUCTS
are not licensed under TI CIRCUIT PATENT CLAIMS.
1.1.2.2 To the extent that each TI ENTITY has the
legal right to do so, each such TI ENTITY hereby grants and agrees to grant
to each UMC ENTITY non-exclusive licenses or sub-licenses, under any
TI-PARTICIPATION PROCESS PATENT CLAIMS only, to make UMC FOUNDRY PRODUCTS;
and to sell, import, offer for sale or otherwise dispose of UMC FOUNDRY
PRODUCTS made by any UMC ENTITY. The grant to make UMC FOUNDRY PRODUCTS shall
include the right, under any TI-PARTICIPATION PROCESS PATENT CLAIMS, for any
UMC ENTITY to use manufacturing processes and methods, and shall further
include the right under TI-PARTICIPATION PATENTS for any UMC ENTITY to use
business processes and methods and MANUFACTURING EQUIPMENT AND SYSTEMS and
BUSINESS EQUIPMENT AND SYSTEMS made by any UMC ENTITY or any other party.
Notwithstanding the foregoing, unless licensed under Section 1.1.3 herein,
UMC FOUNDRY PRODUCTS are not licensed under TI-PARTICIPATION CIRCUIT PATENT
CLAIMS.
1.1.3 OPTION TO LICENSE MEMORY PORTION OF UMC FOUNDRY
PRODUCTS
1.1.3.1 In addition to the licenses granted under
Section 1.1.2 above, at UMC's option, for any UMC FOUNDRY PRODUCT which is an
INTEGRATED CIRCUIT product, each TI ENTITY agrees to grant to each UMC
ENTITY, an additional, non-exclusive, product-specific (including product
revisions) license, to make such INTEGRATED CIRCUIT product solely for the
benefit of a foundry customer of such UMC ENTITY, for the MEMORY PORTION of
such INTEGRATED CIRCUIT product, under TI CIRCUIT PATENT CLAIMS, and, to the
extent any TI ENTITY has the legal right to do so, under any TI-PARTICIPATION
CIRCUIT PATENT CLAIMS, allowing such foundry customer to use, sell, lease,
import, offer
5
for sale, or otherwise dispose of such MEMORY PORTION of such product,
subject to the following conditions:
(a) UMC shall pay to TI, in addition
to the royalty specified in Section 2.1.1, the MEMORY FRACTION ROYALTY
specified in Section 2.1.3 for such product;
(b) The non-MEMORY PORTION of such
UMC FOUNDRY PRODUCTS shall not be licensed under any TI CIRCUIT PATENT CLAIMS
or TI-PARTICIPATION CIRCUIT PATENT CLAIMS; and
(c) Notwithstanding anything to the
contrary in this Section 1.1.3, TI, by written notice to UMC within twenty
(20) business days of receipt by TI of UMC's notification to TI as
contemplated in Section 1.1.3.1(d), may decline to grant, or permit the TI
ENTITIES to grant, any such license to a UMC ENTITY if TI certifies to UMC
that any of the following circumstances exist:
(i) The customer, or any of
its SUBSIDIARIES, and any TI ENTITY are engaged in patent litigation with
each other;
(ii) The customer, or any of
its SUBSIDIARIES, and any TI ENTITY are engaged in, or have requested, patent
license discussions with each other;
(iii) The customer, or any of
its SUBSIDIARIES, or any TI ENTITY has notified the other of any of its
PATENTS; or
(iv) The customer, or any of
its SUBSIDIARIES, has a license from any TI ENTITY which includes the MEMORY
PORTION of such product.
(d) Subject to the provisions of
Section 1.1.3.1(c), any license to such customer for any such product under
this Section 1.1.3 shall commence on or after the date of written
notification by UMC to TI of the exercise of such option for such product,
such commencement date to be specified by UMC in such notice, provided,
however, that in TI's sole discretion, TI may agree to an earlier effective
commencement date. The notification to TI shall include: the name of the
customer, the specific product to be licensed, the estimated MEMORY FRACTION,
the commencement and end dates of such license, and to the extent available,
the estimated amount of product to be licensed. Subject to the provisions of
Section 3, the minimum term of any such license shall be twenty-four (24)
months.
6
(e) Any such license to such customer
under this Section 1.1.3 shall be conditioned on UMC securing for each of the
TI ENTITIES fully paid-up, world-wide, royalty-free, non-exclusive licenses
under PATENTS owned or controlled by the particular customer of the UMC
ENTITY during the term of the license protection for the MEMORY PORTION of
such product pursuant to this Agreement. These licenses secured by UMC shall
grant each TI ENTITY the right to make, have made, use, sell, lease, offer
for sale, import, or otherwise dispose of the following:
(i) all PRODUCTS under any
claims of any PATENTS owned or controlled by such customer which relate to
the structure, design, or manufacture of any semiconductor memory product;
(ii) the MEMORY PORTION of all
PRODUCTS under any PATENTS owned or controlled by such customer;
(iii) without limiting the
foregoing, these licenses shall include the right, under any PATENTS owned or
controlled by such customer, for the TI ENTITIES, or third parties under the
"have made rights" of the TI ENTITIES granted above, to use manufacturing
and business processes and to use MANUFACTURING EQUIPMENT AND SYSTEMS and
BUSINESS EQUIPMENT AND SYSTEMS made by any TI ENTITY or any other party;
(iv) the licenses granted
under this Section 1.1.3 from a specific customer to the TI ENTITIES shall
not terminate unless and until the licenses granted under this Section 1.1.3
to such customer terminate, provided however that upon termination of all of
the licenses granted under this Section 1.1.3 to such customer, the licenses
granted to TI ENTITIES by such customer under this Section shall also
terminate.
1.2 LICENSE GRANTS TO TI ENTITIES
1.2.1 PRODUCTS
1.2.1.1 Each UMC ENTITY and each UMC SPINOFF
hereby grants and agrees to grant to each TI ENTITY non-exclusive, paid-up,
royalty free licenses under any UMC PATENTS, to make PRODUCTS. Each UMC
ENTITY and each UMC SPINOFF further grants and agrees to grant to each TI
ENTITY the right to use, sell, lease, import, offer for sale or otherwise
dispose of PRODUCTS made by any TI ENTITY. The grant to make PRODUCTS shall
include the right, under any UMC PATENTS, for any TI ENTITY to use
manufacturing
7
and business processes and methods, and shall further include the right under
any UMC PATENTS for any TI ENTITY to use MANUFACTURING EQUIPMENT AND SYSTEMS
and BUSINESS EQUIPMENT AND SYSTEMS made by any ENTITY or any other party.
1.2.1.2 To the extent that any UMC ENTITY or any
UMC SPINOFF has the legal right to do so, each UMC ENTITY and each UMC
SPINOFF hereby grants and agrees to grant to each TI ENTITY non-exclusive,
paid-up, royalty-free, licenses or sub-licenses, under UMC-PARTICIPATION
PATENTS, to make PRODUCTS; and to use, sell, lease, import, offer for sale,
or otherwise dispose of, PRODUCTS made by any TI ENTITY. The grant to make
PRODUCTS shall include the right, under any UMC-PARTICIPATION PATENTS, for
any TI ENTITY to use manufacturing and business processes and methods, and
shall further include the right under any UMC-PARTICIPATION PATENTS to use
MANUFACTURING EQUIPMENT AND SYSTEMS and BUSINESS EQUIPMENT AND SYSTEMS made
by any TI ENTITY or any other party.
1.3 HAVE MADE RIGHTS
1.3.1 UMC ENTITY SUBCONTRACTING
The licenses granted hereunder to UMC
ENTITIES do include the right of a UMC ENTITY to outsource or otherwise
subcontract to one or more third parties: (1) the assembly and testing of UMC
FOUNDRY PRODUCTS, UMC BRANDED PRODUCTS and UMC SPINOFF BRANDED PRODUCTS; and
(2) the manufacture of masks used in the manufacture of UMC FOUNDRY PRODUCTS,
UMC BRANDED PRODUCTS, and UMC SPINOFF BRANDED PRODUCTS; provided that, in the
instance of (1) and (2) above, such UMC FOUNDRY PRODUCTS, UMC BRANDED
PRODUCTS, AND UMC SPINOFF BRANDED PRODUCTS are manufactured using
semiconductor wafers processed at least through the wafer fabrication stage
by a UMC ENTITY. Except as set forth above, the licenses granted hereunder to
UMC ENTITIES shall not include have made rights.
1.3.2 TI ENTITY SUBCONTRACTING
The licenses granted hereunder to TI ENTITIES
include the right to have a third party make PRODUCTS either in finished or
semifinished form for the sole account of a TI ENTITY, but only if:
8
(a) said PRODUCTS are to be sold,
used, leased or otherwise disposed of, by a TI ENTITY, and under the
trademark, trade name, or other commercial indicia, of a TI ENTITY;
(b) the TI ENTITY provides its
standard patent indemnities and product warranties (that it would provide for
the same or similar products manufactured in its own facilities) for any of
said PRODUCTS sold, leased or otherwise disposed of, by the TI ENTITY; and
(c) said PRODUCTS are made by the
third party using manufacturing drawings, specifications, data base tapes, or
the like:
(1) originated by a TI
ENTITY,
(2) originated by any third
party specifically and exclusively for a TI ENTITY,
(3) licensed to a TI ENTITY
by an entity or person other than the manufacturing party, or
(4) which a TI ENTITY has
the legal or contractual right to so utilize except where such right derives
from the manufacturing party; provided however that such right shall not
extend to standard, off-the-shelf products of such third party nor to
products originally designed by such third party and to which only minor
revisions are made to conform to the specifications of a TI ENTITY. Except as
set forth above, the licenses granted hereunder to TI ENTITIES shall not
include have made rights.
1.4 THIRD-PARTY PRODUCTS
With respect to the licenses granted hereunder to
TI ENTITIES, and notwithstanding anything in Section 1.3 to the contrary, a
license to a TI ENTITY "to use, sell, lease, offer for sale, import, or
otherwise dispose of" PRODUCTS made by a TI ENTITY, does include the right of
the TI ENTITY to use, sell, lease, offer for sale, import, or otherwise
dispose of, standard, off-the-shelf PRODUCTS of, and purchased directly or
indirectly by such TI ENTITY from, any third party; provided that such
PRODUCTS are used, leased, sold, offered for sale, imported, or otherwise
disposed of under the trademark, trade name or other commercial indicia of
such TI ENTITY.
9
1.5 TI FOUNDRY RESTRICTION
With respect to the licenses granted hereunder to
the TI ENTITIES, no such license includes the right of any TI ENTITY to make
or have made PRODUCTS, either in finished or semifinished form (by way of
example, "semifinished form" includes (1) semiconductor wafers at any stage
of their manufacture, (2) foundry services and (3) assembly) for, or for sale
to, any third party to use, to lease, to sell, to offer for sale, to import,
or otherwise to dispose of such PRODUCTS under the trademark, trade name, or
other commercial indicia of such third party in any instance where the
manufacturing drawings, specifications, data base tapes, or the like, are in
whole or in part originated by, or on behalf of, such third party. In the
event of any such activity by a TI ENTITY, the exclusive remedy for any UMC
ENTITY for any claim of patent infringement shall be against any party other
than a TI ENTITY. The foregoing in this Section 1.5 notwithstanding, in any
instance in which such PRODUCTS are application-specific INTEGRATED CIRCUITS
(ASICs or CSICs), which are substantially comprised of a TI ENTITY's ASIC or
CSIC preconfigured cells, whether macro or primitive, characterized to a TI
ENTITY's process, the licenses granted hereunder to the TI ENTITY shall be
deemed to be extended to such PRODUCTS.
1.6 THIRD PARTY DESIGNS
With respect to the licenses granted hereunder,
and except as provided otherwise in Section 1.4, a license to a LICENSED
PARTY "to use, sell, lease, offer for sale, import, or otherwise dispose of"
PRODUCTS:
(a) does not include any right for
the LICENSED PARTY to act as a sales agent, commission agent, sales
representative, broker or factor of products made by third parties; and
(b) does not include any right for a
LICENSED PARTY to act as a distributor or reseller of products made by third
parties.
1.7 ENTITY/UMC SPINOFF AUTHORITY
1.7.1 Each PARTY shall ensure that each of its respective
ENTITIES grants to the other PARTY and its respective ENTITIES the licenses
required hereunder, without royalty payment, except as provided in this
Agreement. If a PARTY fails to so ensure, that PARTY shall indemnify and hold
harmless the other PARTY and its ENTITIES against any and all costs or
damages incurred as a result of a claim of, or in defending against, any
patent infringement
10
asserted by any such ENTITY, including, but not limited to, damages based on
a reasonable royalty or lost profits, consequential damages, attorney's fees
and expenses; and, if such a claim is asserted in litigation and is not
caused to be dismissed by the PARTY so ensuring within forty-five (45) days,
such failure to ensure shall be deemed to be a material breach hereunder.
1.7.2 By their execution of this Agreement, the PARTIES
agree and covenant that they are acting on their own behalf and on the behalf
of their respective ENTITIES and shall cause each of their respective
ENTITIES to comply with all of such ENTITY's obligations hereunder,
including, but not limited to, the grant of licenses hereunder by such ENTITY
and the granting of releases hereunder by such ENTITY.
1.7.3 For purposes of this Section 1.7 all direct and
indirect references to UMC's respective ENTITIES shall be deemed to include
the UMC SPINOFFS.
1.8 GENERAL EXCLUSIONS
1.8.1 Nothing in this Agreement shall be construed or
interpreted as an agreement to bring or prosecute actions or suits against
third parties for infringement or conferring any right to bring or prosecute
actions or suits against third parties for infringement.
1.8.2 Specifically excluded from the grants of licenses
pursuant to this Agreement, is any license, direct or implied, under the U.S.
Semiconductor Chip Protection Act of 1984, or under the Japanese Law Concerning
Semiconductor Integrated Circuit Layouts of 1985, or under any other
corresponding legislation of any other country.
1.8.3 Specifically excluded from the grants of licenses
pursuant to this Agreement, is any license, direct or implied, under any
copyrights, trademarks, service marks, trade names, trade dress, or trade
secrets.
1.8.4 Specifically excluded from the grants of licenses
pursuant to this Agreement is any license, direct or implied, under any
design PATENTS except for any design PATENTS for packaging, modules, or
housing, for PRODUCTS.
1.8.5 Specifically excluded from the grants of licenses
pursuant to this Agreement is any right to sublicense.
1.9 RELEASES
1.9.1 Each UMC ENTITY which is or is deemed to be a UMC
ENTITY on or as of the EFFECTIVE DATE and each UMC SPINOFF hereby release,
acquit and forever discharge each TI ENTITY which is a TI ENTITY on or as of
the EFFECTIVE DATE from any
11
and all claims or liability for infringement or alleged infringement of any
UMC PATENTS under which a license is herein granted by any such UMC ENTITY or
UMC SPINOFF, with respect to performance by any such TI ENTITY, prior to the
EFFECTIVE DATE, of acts which if performed on or after the EFFECTIVE DATE
would be acts licensed hereunder.
1.9.2 Each TI ENTITY which is a TI ENTITY on or as of the
EFFECTIVE DATE hereby releases, acquits and forever discharges each UMC
ENTITY which is or is deemed to be a UMC ENTITY on or as of the EFFECTIVE
DATE, and each UMC SPINOFF, from any and all claims or liability for
infringement or alleged infringement of any TI PATENTS under which a license
is herein granted by any such TI ENTITY, with respect to performance by any
such UMC ENTITY or any UMC SPINOFF, prior to the EFFECTIVE DATE, of acts
which if performed on or after the EFFECTIVE DATE would be acts licensed
hereunder or would be subject to protection under the covenant not to xxx
under Section 1.9.5 hereof.
1.9.3 Each UMC ENTITY which is or is deemed to be a UMC
ENTITY on or as of the EFFECTIVE DATE and each UMC SPINOFF hereby waive any
and all claims or liability for infringement or alleged infringement which
any such UMC ENTITY or any UMC SPINOFF itself may have against any TI ENTITY
which is a TI ENTITY on or as of the EFFECTIVE DATE, based on any
UMC-PARTICIPATION PATENT with respect to performance by any such TI ENTITY,
prior to the EFFECTIVE DATE, of acts which if performed on or after the
EFFECTIVE DATE would be acts licensed hereunder, and each UMC ENTITY and each
such UMC SPINOFF agree to release each such TI ENTITY from any and all such
claims or liability to the extent any such UMC ENTITY or UMC SPINOFF has or
later acquires the legal right to grant such a release.
1.9.4 Each TI ENTITY which is a TI ENTITY on or as of the
EFFECTIVE DATE hereby waives any and all claims or liability for infringement
or alleged infringement which any such TI ENTITY itself may have against any
UMC ENTITY which is or is deemed to be a UMC ENTITY on or as of the EFFECTIVE
DATE or any UMC SPINOFF based on any TI-PARTICIPATION PATENT, with respect to
performance by any such UMC ENTITY or any UMC SPINOFF, prior to the EFFECTIVE
DATE, of acts which if performed on or after the EFFECTIVE DATE would be acts
licensed hereunder or would be subject to protection under the covenant not
to xxx under Section 1.9.5 hereof, and each such TI ENTITY hereby agrees to
12
release each such UMC ENTITY and each UMC SPINOFF from any and all such
claims or liability to the extent any TI ENTITY has or later acquires the
legal right to grant such a release.
1.9.5 Subject to the provisions of Section 3.2.1.3 herein,
each TI ENTITY hereby covenants not to xxx any UMC ENTITY for infringement of
TI CIRCUIT PATENT CLAIMS and, to the extent any TI ENTITY has such authority,
TI-PARTICIPATION CIRCUIT PATENT CLAIMS, as a result of the manufacture,
import, sale or offer for sale of UMC FOUNDRY PRODUCTS for so long as each
UMC ENTITY complies with each and every term and obligation of this
Agreement, to the extent such acts occur on or after the EFFECTIVE DATE and
at a time when the respective UMC ENTITY and TI ENTITY are both then ENTITIES
hereunder. TI and UMC agree that no UMC ENTITY is licensed under this
Agreement to make, use, sell, lease, import, offer for sale, or otherwise
dispose of UMC FOUNDRY PRODUCTS under TI CIRCUIT PATENT CLAIMS or
TI-PARTICIPATION CIRCUIT PATENT CLAIMS other than as may be provided for
under Section 1.1.3 of this Agreement. At such time as any UMC ENTITY fails
to comply with any term or obligation of this Agreement. (which failure is
not cured within forty-five (45) days of written notice by TI to UMC
specifying the alleged failure in reasonable detail), the covenant not to xxx
UMC ENTITIES granted in this Section shall terminate upon further written
notice from TI to UMC. TI shall then be entitled to recover fully for any and
all infringements of the TI CIRCUIT PATENT CLAIMS occurring from and after
such termination.
1.10 CERTAIN ACQUISITIONS
Notwithstanding any other provision of this Agreement, if, after the
EFFECTIVE DATE, either PARTY should acquire (directly or indirectly, whether
by stock purchase, merger, asset acquisition or otherwise) another existing
company, its assets or business (an "Acquired Business", but Acquired
Business shall not mean any entity which is a SUBSIDIARY of a PARTY as of the
EFFECTIVE DATE or which is an Additional UMC Company or UTEK), which Acquired
Business was substantially engaged in the manufacture and sale of PRODUCTS
prior to the acquisition and which Acquired Business had gross sales of
PRODUCTS equal to twenty-five percent (25%) or more of the gross sales of
PRODUCTS of the acquiring PARTY and its SUBSIDIARIES on a consolidated basis
for the calendar year immediately preceding the acquisition, the acquiring
PARTY shall notify the other PARTY in writing prior to or after any such
acquisition. The other PARTY shall have the right to reasonably withhold its
consent to
13
extend the grant of licenses hereunder to or, in respect of, such Acquired
Business. Upon such an acquisition, the other PARTY shall have forty-five
(45) days following such notice to give or withhold such consent in writing
to extend the grant of licenses hereunder to the Acquired Business. Consent
shall be deemed to have been given if the other PARTY fails to reply in
writing within the forty-five (45) day period. If the other PARTY sends
timely written notice withholding its consent to extend the grant of any
licenses hereunder, the Acquired Business will not be licensed under this
Agreement and any patents or PATENTS held by the Acquired Business prior to
the acquisition shall not be licensed to the other PARTY, and in such event
no release or waiver to, from, or in respect of such Acquired Business under
Section 1.9 will arise and the covenant not to xxx under Section 1.9.5 shall
not apply with respect to such Acquired Business. Further, nothing in Section
1.10 herein shall constitute a release by the other PARTY or its respective
ENTITIES of any claim for infringement or alleged infringement in respect of
the Acquired Business arising prior to such acquisition of the Acquired
Business.
2. ROYALTIES AND RECORDS
2.1 ROYALTY RATES
2.1.1 BASE ROYALTY
In partial consideration for the licenses
granted hereunder to the UMC ENTITIES, UMC shall pay to TI the BASE ROYALTY
specified in Exhibit B.
2.1.2 BRANDED ROYALTY
In addition to the BASE ROYALTY payable
under Section 2.1.1 above, and in partial consideration for the licenses
granted hereunder to the UMC ENTITIES, UMC shall pay to TI the BRANDED
ROYALTY specified in Exhibit B. In no event shall a MEMORY FRACTION ROYALTY
under Section 2.1.3 be payable in respect of any PRODUCT for which the
BRANDED ROYALTY is payable under this Section 2.1.2.
2.1.3 MEMORY FRACTION ROYALTY
In addition to the BASE ROYALTY payable
under Section 2.1.1 above, and in partial consideration for the licenses
granted hereunder to the UMC ENTITIES, UMC shall pay to TI the MEMORY
FRACTION ROYALTY specified in Exhibit B. In no event shall a MEMORY FRACTION
ROYALTY under this Section 2.1.3 be payable in respect of any PRODUCT for
which the BRANDED ROYALTY is payable under Section 2.1.2 above.
14
2.1.4 DUE DATES FOR BASE ROYALTIES
The BASE ROYALTY for any given calendar
year during the term of this Agreement shall be paid on or before the
applicable Date for Payment shown in Exhibit B. For any calendar year during
which the term of this Agreement shall terminate pursuant to Section 3.2 of
this Agreement, UMC shall pay the pro-rata portion of the Base Royalty for
such calendar year, together with any unpaid Base Royalty in respect of any
prior period, within thirty (30) days following such termination date.
2.1.5 DUE DATES FOR BRANDED ROYALTY AND MEMORY FRACTION
ROYALTY
BRANDED ROYALTIES and MEMORY FRACTION
ROYALTIES shall be payable as follows:
(a) All royalties due to NET SALES
BILLED in respect of all UMC BRANDED PRODUCTS, all UMC SPINOFF BRANDED
PRODUCTS, and the MEMORY FRACTION of all UMC FOUNDRY PRODUCTS licensed under
Section 1.1.3 hereto during each calendar semi-annual period commencing on
January 1st and ending on June 30th, or commencing on July 1st and ending on
December 31st, as the case may be, shall be paid within sixty (60) days after
that June 30th or December 31st, as the case may be;
(b) In the event this Agreement
expires or terminates, during a calendar semi-annual period, other than on
June 30th or December 31st, all royalties payable for that calendar
semi-annual period shall be paid within sixty (60) days after such
termination or expiration of this agreement.
(c) BRANDED ROYALTY for products sold
or otherwise disposed of on or before June 30, 1999 shall be reported and
paid within sixty days of the EFFECTIVE DATE.
2.1.6 CONSIDERATION FOR ROYALTY RATES
The PARTIES acknowledge that the royalty
rates specified in Exhibit B take into consideration the value of the
licenses granted to the TI ENTITIES in this Agreement and the method for
calculating royalties.
2.1.7 METHOD AND PLACE FOR ROYALTY PAYMENTS
All royalty payments made pursuant to
this Agreement shall be made to TI in United States dollars by electronic
transfer to TI's Bank Account [*]
* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.
15
[*] or to such other financial institution and account number as TI may
designate in writing to UMC. If UMC fails to make such payments on or before
the required dates for reasons other than bona fide clerical error, UMC shall
pay a supplemental royalty equal to one percent (1.0%) of the amount due but
unpaid for each month, or partial month on a pro rata basis, that the payment
is late.
2.1.8 ROYALTY TRIGGERING EVENTS FOR UMC ENTITIES
For purposes of NET SALES BILLED and
determining royalties hereunder, ROYALTY BEARING PRODUCTS shall be deemed to
be put into use, or sold or leased or otherwise disposed of, when billed to a
third party or a UMC SPINOFF, or upon delivery to a third party or a UMC
SPINOFF, or upon use or incorporation into a product, by a UMC ENTITY,
whichever event occurs first. All sales or other dispositions of products or
services by UMC ENTITIES shall be included, in the calculation of royalty
payments owed to TI by UMC. UMC shall be directly responsible to TI for all
royalty payments associated with such transactions on the part of the UMC
ENTITIES.
2.1.9 SURVIVAL
The obligation to pay unpaid royalties
which accrued during the term of this Agreement shall survive any termination
or expiration of this Agreement.
2.2 ACCOUNTING AND RECORDS
2.2.1 COMPUTATION
All computations relating to
determination of the amounts of royalties due and payable pursuant to this
Agreement shall be made in accordance with internationally recognized and
generally accepted accounting principles as reflected in the practice of
independent certified public accountants of international reputation.
2.2.2 AUDIT
2.2.2.1 ACCESS TO RECORDS. Upon the reasonable
written request of TI, UMC and the other UMC ENTITIES shall permit access to
their books and records relating to ROYALTY BEARING PRODUCTS by an
independent accounting firm selected by TI and approved by UMC, which
approval shall not be unreasonably withheld, for the sole purpose of, and
solely to the extent reasonable for, verifying the calculation of royalties
due and payable pursuant to this Agreement.
* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.
16
2.2.2.2 FREQUENCY. TI shall seek permission for
an audit of the same UMC ENTITY no more than once each calendar year, and no
such request may be made at a time longer than four (4) years after the due
date for the payment(s) involved.
2.2.2.3 SCOPE. All information concerning the
manufacture, use, lease, sale or other disposition of ROYALTY BEARING
PRODUCTS, including without limitation, sales prices and customers and other
confidential business information shall be made available to the independent
accounting firm to the extent necessary to verify the calculation of
royalties; provided that such information shall not be made available to TI
by the independent accounting firm and provided further that such accounting
firm shall agree in writing to maintain such information as confidential, not
to disclose it to anyone other than as necessary to verify such calculation
(and then only upon such terms as ensure protection for confidentiality at
least as stringent as provided herein), and not to use it for any purpose
other than such verification.
2.2.2.4 RECORD KEEPING. UMC shall retain such
books and records as are reasonably necessary for verifying the calculation
of royalties due and payable under this Agreement, for a period of no less
than five (5) years after the date of payment of such royalties.
2.2.2.5 COSTS. UMC shall bear all costs and
expenses of the independent accounting firm for a particular audit if, upon
performance of the audit, the independent accounting firm determines that any
of the Base Royalty, Branded Royalty, or Memory Fraction Royalty paid during
the audited period was underpaid by an amount in excess of 5%. Otherwise, TI
shall bear the costs and expenses of the independent accounting firm that are
incurred in performing the audit. UMC shall also pay the amount of any
royalty shortfall determined by the audit within thirty (30) days of written
notice of the amount of such shortfall following the conclusion of such
audit, provided however that no such payment or acceptance thereof shall be
an admission that the audit determination was correct, and UMC and TI shall
remain free to contest such determination in the manner allowed under the law.
2.2.2.6 SURVIVAL. The rights and obligations
provided under this Section 2.2.2 shall survive for a period of five (5)
years after the termination or expiration of this Agreement, for any reason.
2.2.3 CURRENCY EXCHANGE
Royalties accounted for in any currency
other than United States dollars shall be converted to United States dollars
by using the prevailing rate of exchange of any
17
such currency for United States dollars first quoted in the New York Foreign
Exchange Market ("prevailing rate of exchange") on the date ten (10) business
days prior to the date of the written statement required under Section 2.2.4.
2.2.4 ROYALTY REPORT
On or before the date which is ten (10) days
before each royalty payment is due, UMC shall furnish to TI a written
statement in the English language, certified by an authorized representative
of UMC, concerning the computation of royalties due to or payable to TI, in
respect of the applicable calendar annual or semi-annual period, and TI shall
send to UMC an invoice therefore within ten (10) days of receipt of such
statement. Separate written statements shall be required for each payment if
more than one type of royalty payment is made for a single annual or
semi-annual period, provided however that UMC may discharge its obligations
under this paragraph by sending a single statement if that statement is
timely and clearly identifies the applicable amounts, if any, of BASE
ROYALTY, of MEMORY FRACTION ROYALTY and of UMC BRANDED ROYALTY, and further
includes the information listed below. Each such written statement shall
contain information in reasonably sufficient detail to permit the
determination of the overall accuracy of each royalty payment due or payable
under this Agreement and, in particular, shall set forth the following:
(a) The total NET SALES BILLED for
such annual or semi-annual reporting period, including a listing of the
aggregate NET SALES BILLED in the currency(ies) in which billed, the
prevailing rates of exchange used and the final United States dollar value,
in respect of all UMC BRANDED PRODUCTS, UMC SPINOFF BRANDED PRODUCTS, UMC
FOUNDRY PRODUCTS, and such products for which the MEMORY FRACTION ROYALTY is
due, showing for products for which a MEMORY FRACTION ROYALTY is due, the
amount(s) attributable to the MEMORY PORTION thereof; and
(b) Whatever additional information
TI may reasonably prescribe by written request from time to time to enable TI
to ascertain the computation of royalties under this Agreement, provided,
however, that TI is not entitled to specific information concerning
particular sales and/or transactions except as may be requested in connection
with an audit pursuant to the terms of this Agreement, and then only as
prescribed for such an audit.
18
The obligation to provide such a royalty report for any
royalties for which a royalty report has not already been provided shall
survive for five (5) years beyond the termination or expiration of this
Agreement, for any reason.
2.2.5 TAXATION
All taxes imposed as a result of the existence
of this Agreement or the performance hereunder shall be paid by the party
required to do so by applicable law, provided, however, that if so required
by applicable law, UMC shall withhold the amount of any national or federal
income taxes levied by foreign governments, including, but not limited to the
Republic of China, on the payment to be made by UMC to TI pursuant to this
Agreement, and UMC shall promptly effect payment thereof to the appropriate
tax authorities of such foreign government and shall transmit to TI official
tax receipts or other evidence issued by said appropriate tax authorities
sufficient, to the extent feasible, to enable TI to support a claim for the
United States income tax credit in respect of any such taxes so withheld and
paid to any such foreign governments, including the R.O.C.
3. TERM, TERMINATION, DISPUTE RESOLUTION
3.1 TERM
Except as otherwise provided in this Section 3,
this Agreement and the licenses granted pursuant hereto shall remain in
force until December 31, 2007. At any time subsequent to December 31, 2006,
either PARTY may request negotiations to consider the possible renewal or
extension of this Agreement. In the event of any such request, both PARTIES
agree to enter into good faith negotiations to determine whether a mutually
acceptable extension or renewal can be agreed upon prior to expiration of the
Agreement. No extension or renewal shall be effective until executed by both
PARTIES. Nothing in this Section will prohibit either party from requesting
good faith negotiations in the event of any acquisition of an Acquired
Business subsequent to the EFFECTIVE DATE.
3.2 TERMINATION
3.2.1 EVENTS OF TERMINATION
3.2.1.1 NATURAL TERMINATION. Unless renewed or extended under
Section 3.1 above, this Agreement (and all licenses granted under it) shall
expire by its terms on December 31, 2007, except that such expiration shall
not effect any royalty or
other obligation
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arising prior to such expiration and shall not affect any rights or
obligations which are specifically provided hereunder as surviving expiration
or termination of this Agreement.
3.2.1.2 MATERIAL BREACH. If UMC fails to make any payment fully
or timely as required by this Agreement, or in the event of any other
material breach of this Agreement by either PARTY or any of its respective
ENTITIES (a "defaulting PARTY"), and if such failure or other material breach
is not corrected within forty-five (45) days after written notice complaining
thereof is given to the defaulting PARTY, then this Agreement may be
terminated forthwith in its entirety by written notice to that effect from
the non-defaulting PARTY, provided that such termination shall not affect any
royalty or other obligation arising prior to such termination and shall not
affect any rights or obligations which are specifically provided hereunder as
surviving expiration or termination of this Agreement, and provided further
that as to UMC BRANDED PRODUCTS and UMC SPINOFF BRANDED PRODUCTS as to which
TI accepts payment of the BRANDED ROYALTY and as to UMC FOUNDRY PRODUCTS as
to which TI accepts payment of the BASE ROYALTY and/or MEMORY FRACTION
ROYALTY, the licenses, covenants and releases under this Agreement shall not
be terminated as to such products for which royalty payments have been made
by UMC and accepted by TI.
3.2.1.3 INFRINGEMENT ACTION BY UMC CUSTOMER.
Other than as specified in this Section 3.2.1.3, TI shall have the right to
terminate any license granted hereunder, and the covenant not to xxx under
Section 1.9.5. herein with respect to any particular UMC FOUNDRY PRODUCT, or
with respect to any particular PRODUCTS manufactured by a UMC ENTITY
according to data base tapes, manufacturing drawings, specifications, or the
like originated by, or on behalf of a third party, but in each case only as
to such products as are manufactured for such third party, where such
products are primarily for the sole account of such third party; such
termination to be effective upon the occurrence of the following conditions:
(a) such third party has brought a patent
infringement action or proceeding (other than to defend against an
infringement action or proceeding brought against such third party by TI)
against TI or its respective ENTITIES based upon an activity or product which
would be licensed hereunder if manufactured or done under this Agreement; and
(b) TI provides written notice of such
termination to UMC. In the event the license and covenant not to xxx are so
terminated:
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(i) UMC's obligation to pay the MEMORY[nb]FRACTION
ROYALTY, if any, associated with such customer shall be terminated for all
future products of and production for such customer;
(ii) all licenses granted to the UMC ENTITIES
under TI PATENTS and TI-PARTICIPATION PATENTS as to PRODUCTS manufactured for
such customer, shall be terminated as of the date of such termination notice
such that the TI ENTITIES shall be able at such time to xxx and secure
injunctive relief and/or to seek damages prospectively directly against such
customer of the UMC ENTITIES;
(iii) notwithstanding the foregoing, the
covenant not to xxx the UMC ENTITIES granted by the TI ENTITIES in Section
1.9.5 of this Agreement shall continue to be in effect as to all
semiconductor wafers and all UMC FOUNDRY PRODUCTS which any UMC ENTITY had
already begun processing prior to receiving the written termination notice
from TI with respect to such customer under this Section; and
(iv) any termination of a license under this
Section 3.2.1.3 shall not affect or diminish UMC's royalty obligation to pay
the BASE ROYALTY.
3.2.1.4 REORGANIZATION OR SALE OF ASSETS. This Agreement may
be terminated by written notice of a PARTY to the other PARTY (the
"Transferring PARTY") within thirty (30) days of receiving actual notice that
the Transferring PARTY has consolidated with or merged with or into, or
transferred, directly or indirectly, all or substantially all of its assets
to, another corporation, company or other entity; notwithstanding that such
Transferring PARTY may be the surviving entity, of such consolidation, merger
or transfer, unless, immediately after such consolidation, merger, or
transfer, the shareholders of the Transferring PARTY immediately prior to the
consolidation, merger or transfer and the shareholders of entities which
immediately prior to the consolidation, merger or transfer were SUBSIDIARIES
of the Transferring Party, collectively, continue to own, immediately after
such consolidation, merger or transfer, more than fifty percent (50%) of the
outstanding shares of stock entitled to vote for the election of directors of
such new or surviving entity or entity to which such assets were transferred.
No such termination shall affect any royalty or other obligation arising
prior to such termination.
3.2.1.5 GOVERNMENT INTERVENTION. If at any time during the
term of this Agreement, any government or agency thereof takes any action
against either or both
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PARTIES or their respective ENTITIES requiring, directly or indirectly,
formally or informally, alteration or modification of any material term or
condition of this Agreement or of the performance of the PARTIES or their
respective ENTITIES that materially adversely affects one PARTY (the
"Affected PARTY") substantially frustrating the purpose of the Affected PARTY
in entering into this Agreement, then if the Affected PARTY makes written
request to the other PARTY within sixty (60) days from Said action of such
government or agency thereof, the PARTIES shall enter into good faith
negotiations with the objective of restructuring the relationship between the
PARTIES in a manner such that the adverse effect of such required alteration
or modification of this Agreement will be minimized consistent with the
purposes of the PARTIES in entering this Agreement as expressed herein. If
the PARTIES cannot reach an acceptable restructuring arrangement within six
(6) months from the date of such written request, or within such longer
period of time as mutually agreed upon, either PARTY shall have the right to
terminate this Agreement forthwith in its entirety by giving written notice
to that effect to the other PARTY and such termination shall be effective
upon receipt of notice as provided in Section 5.9. All other provisions of
this Section 3.2 notwithstanding, in the event this Agreement is terminated
pursuant to this Section 3.2.1.5, then all rights and licenses under TI
PATENTS, TI-PARTICIPATION PATENTS, UMC PATENTS and UMC-PARTICIPATION PATENTS
shall cease and terminate upon receipt of such termination notice. No such
termination shall affect any royalty or other obligation arising prior to
such termination.
3.2.2 NON-TERMINATING EVENTS
For the convenience of the PARTIES hereto, this
Agreement is made in consideration of the exchange of patent licenses under a
group of PATENTS of each PARTY and its respective ENTITIES. a determination
or action by a court of competent jurisdiction, regulatory authority or
governmental agency: (1) finding that one or more of the PATENTS of one PARTY
or its respective ENTITIES are invalid or unenforceable; or (2) granting a
temporary or permanent injunction or restraining order under one or more of
the PATENTS; shall not give rise to a right of termination by either PARTY
nor shall such determination or action be regarded as justification (a) for a
retrospective or prospective change in this Agreement affecting the royalty
rates or amounts to be paid, or (b) for changing any other provision of this
Agreement.
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3.2.3 EFFECT OF TERMINATION
Except as otherwise provided specifically in
Section 3.2.4, all licenses granted pursuant to this Agreement shall cease
forthwith as of the date of expiration or termination for any reason of this
Agreement. Any PRODUCTS as to which an event specified in the first sentence
of Section 2.1.8 has not occurred prior to the date of such expiration or
termination shall not be considered to be licensed
under this Agreement.
3.2.4 LICENSE SURVIVAL
In the event of termination of this Agreement or
any of the licenses granted under this Agreement by one party ("the
Terminating PARTY") pursuant to Section 3.2.1.2, the licenses granted by the
defaulting PARTY and its respective ENTITIES to the Terminating PARTY and its
respective ENTITIES hereunder shall survive until December 31, 2007.
4. WARRANTIES AND REPRESENTATIONS, LIMITATIONS OF LIABILITY
AND INDEMNIFICATION
4.1 EXPRESS WARRANTIES, ACKNOWLEDGEMENTS AND REPRESENTATIONS
4.1.1 POWER AND AUTHORITY
Each PARTY represents and warrants that it
and each of its respective ENTITIES (including, in the case of UMC, each UMC
SPINOFF) has sufficient right and authority to grant to the other PARTY
(including, in the case of UMC, each UMC SPINOFF) all licenses, releases, and
other rights granted hereunder.
4.1.2 PROPER PAYMENT
UMC represents and warrants that, as set
out in Section 2 of this Agreement, subject to the provisions of Section
2.2.5 herein, any royalties or other monies payable under this Agreement will
be fully and timely paid directly to TI as specified in this Agreement, and,
except as provided with respect to withholding taxes under Section 2.2.5,
will not be paid to any other person, rum or entity, including, without
limitation, any court, court clerk, escrow fund or escrow agent, unless
ordered by any United States Court or United States administrative agency of
competent jurisdiction.
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4.1.3 FULL ROYALTY
The PARTIES represent and acknowledge that
they have bargained for the right to use all of the PATENTS licensed herein
but are free not to use any if they so choose. UMC acknowledges that it is
liable hereunder for the full royalty obligation detailed herein regardless
of the number of PATENTS used and such royalty obligation exists even if no
PATENTS are actually used.
4.2 TERM
The representations, acknowledgements, and warranties set
out herein survive the execution and EFFECTIVE DATE of this Agreement and are
binding on both PARTIES during the entire term of this Agreement.
4.3 MATERIAL BREACH
In addition to any other material breach of this Agreement,
the PARTIES acknowledge that breach of any of the representations,
acknowledgements or warranties in Section 4.1 constitutes a material breach
of this Agreement.
4.4 DISCLAIMER
The warranties in this Agreement are in lieu of all other
warranties, express or implied. This Agreement is a compromise of disputed
matters. Nothing contained in this Agreement shall be construed as:
(a) a warranty, representation and/or an
admission by any of the PARTIES or their respective ENTITIES as to the
infringement, enforceability, validity, or scope of any patents;
(b) a warranty or representation that any
manufacture, sale, offer for sale, lease, import, use or other disposition of
PRODUCTS hereunder will be free from infringement of any intellectual
property rights of third parties; or
(c) a warranty or representation by any TI
ENTITY, that any or all of the terms and conditions in this Agreement
(including the royalty rates or amounts to be paid) are any more favorable or
unfavorable than the terms and conditions (including the royalty rates or
amounts to be paid) in any other patent license agreement between any TI
ENTITY and any third party.
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4.5 INDEMNITIES
Other than as expressly set forth in this
Agreement, UMC and TI acknowledge that there are no other indemnities, either
express or implied, related to this Agreement.
5. MISCELLANEOUS PROVISIONS
5.1 IMPLIED LICENSES AND RELEASES
Nothing in this Agreement shall be construed or
interpreted as conferring by implication, estoppel or otherwise, upon any
LICENSED PARTY, any license or other right under any patent or utility model,
copyright, mask work right, trade secret, trademark, trade name or the like,
except the licenses and rights expressly granted hereunder.
5.2 TECHNICAL ASSISTANCE
Nothing in this Agreement shall be construed or
interpreted as an obligation to furnish any technical assistance or
information or know-how.
5.3 NO LICENSE TO SOFTWARE
Nothing in this Agreement shall be construed or
interpreted as conferring by implication, estoppel or otherwise upon any
LICENSED PARTY, any license or other right under copyrights or design PATENTS
covering any computer software that may be embodied in a PRODUCT.
5.4 GOVERNMENTAL CONTRACT RESTRICTIONS
It is recognized that the TI ENTITIES and the UMC
ENTITIES may have contracted, or may after the EFFECTIVE DATE, contract with
a governmental entity, such as a national or other sovereign government,
governmental agency or intergovemmental authority, to do work financed by
such entity and to assign to such entity its/their right to grant, or may now
or hereafter be restrained by such entity from granting, licenses (other than
between related ENTITIES) under PATENTS for inventions arising out of such
work. The inability, for such a reason, to grant the licenses herein agreed
to be granted shall not be considered a breach of this Agreement.
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5.5 NO AGENCY
Nothing in this agreement or anything done by any
ENTITY in the discharge of its obligations hereunder shall be deemed to make
any ENTITY the agent of another.
5.6 NO ASSIGNMENT
This Agreement and the licenses granted herein
shall inure to the benefit of the. PARTIES and their respective ENTITIES.
Neither PARTY nor any of its respective ENTITIES shall assign or transfer any
of its rights, privileges or obligations hereunder without the prior written
consent of a duly authorized representative of the other PARTY, provided that
no such consent shall be required for a transfer to the surviving ENTITY in a
transaction which does not result in termination under Section 3.2.1.4
herein. Any attempt to so assign this Agreement or the licenses without such
consent shall be null and void.
5.7 PATENT FILINGS
Neither PARTY nor any of its respective ENTITIES
(nor, in the case of UMC, the UMC SPINOFFS or any UMC customer) shall be
required by anything contained in this Agreement to file in any country an
application for patent on any invention, or to secure any patent, or once
having filed an application for patent or obtained a patent, to maintain the
patent application or patent in force.
5.8 LANGUAGE
This Agreement is in the English language only,
which language shall be controlling in all respects, and all versions hereof
in any other language shall be for accommodation only and shall not be
binding upon the PARTIES and their ENTITIES. All communications to be made or
given pursuant to this Agreement shall be in the English language.
5.9 NOTICE
All notices required or permitted to be given
hereunder shall be in writing and shall be valid and sufficient if dispatched
by registered airmail, postage prepaid, in any post office in the United
States or in the R.O.C., as the case may be, or by facsimile with receipt
confirmed, addressed as follows:
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Texas Instruments: UMC:
Texas Instruments Incorporated United MicroelectronicsCorp.
0000 Xxxxxx Xxxx Xx. 0 Xx Xxxx Xxxx 0
Post Office Box 660199 Science Based Industrial Xxxx
Xxxx Xxxxxxx 0000 Xxxx Xxx Xxxx, Xxxxxx, R.O.C.
Xxxxxx, Xxxxx 00000 Attn: President
USA
Attn: Manager, Patent Licensing
Fax: 0 (000) 000-0000 Fax: 000 (00) 000-0000
Copy to:
Xxxxx Xxxxxxxx
Fax: 0 (000) 000-0000
Either PARTY may change its address by a notice given to the other PARTY in
the manner set forth above. Notices given as herein provided shall be deemed
to be duly received seven (7) business days after mailing or upon actual
receipt, whichever is earlier.
5.10 PAROLE EVIDENCE/NO ORAL MODIFICATION
No oral explanation or oral information by either
PARTY hereto shall alter the meaning or interpretation of this Agreement. No
modification, alteration, addition or change in the terms hereof shall be
binding on either PARTY or its ENTITIES unless reduced to writing and
executed by a duly authorized representative of each PARTY.
5.11 CHOICE OF 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 State of New York, United
States of America, as applicable to agreements made and to be performed
entirely within that state and without regard to the choice of law
provisions, statutes, or regulations of this or any jurisdiction.
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5.12 JURISDICTION AND VENUE
Neither PARTY nor its respective ENTITIES (nor, in
the case of UMC, the UMC SPINOFFS) shall commence any action or proceeding
against the other arising out of this Agreement or the termination thereof,
except in a Federal Court located in the Southern District of the State of
New York. The TI ENTITIES, the UMC ENTITIES, and the UMC SPINOFFS each
consent to jurisdiction by such Federal Court and hereby waive any objection
they may have in any such action or proceeding, as to the appropriateness of
the above-identified venues.
5.13 CONFIDENTIALITY The PARTIES and their respective ENTITIES (and
in the case of UMC, the UMC SPINOFFS) shall keep the terms of this Agreement
confidential and shall not now or hereafter divulge the same or any part
thereof to third parties except:
(i) with the prior written consent of the other PARTY;
(ii) to any governmental body or judicial entity having
jurisdiction and calling therefor;
(iii) as otherwise may be required by law or a securities
exchange established under law, and the rules and regulations of or
pertaining to such law or exchange, including but not limited to those
promulgated under the U.S. Securities Act and Securities Exchange Act, and by
any securities exchange established thereunder;
(iv) to legal counsel representing either PARTY;
(v) to the independent outside auditors of either PARTY;
(vi) as may reasonably be appropriate to communicate to
customers and prospective customers, the license rights which affect the
PRODUCTS sold or to be sold to them (but any such disclosure under this
Section 5.13 shall not include the royalty or payment obligations of UMC or
copies of any portion of this Agreement);
(vii) as may reasonably be required for customary business
needs not covered in (vi) above (but any such disclosure under this Section
5.13 shall not include the royalty or payment terms or copies of any portion
of this Agreement);
(viii) as may be reasonably necessary in connection with
corporate financings and similar transactions but only under appropriate
confidentiality requirements; or
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(ix) to any potential UMC SPINOFF or ENTITY as may be
reasonable subject to appropriate confidentiality restrictions.
The disclosing party shall provide notification to the
non-disclosing party prior to any disclosure under a court or governmental
order, under clause (ii) above. All reasonable efforts to preserve the
confidentiality of the terms of this Agreement shall be expended by the
disclosing party in complying with such an order, including requesting and
obtaining a protective order to the extent possible.
5.14 MERGER
This Agreement sets forth the full and complete
agreement and understanding between the PARTIES as to the subject matter of
this Agreement and merges all prior discussions and writings (including, but
not limited to, the Memorandum of Understanding dated August 28, 1998)
between them as to the subject matter hereof. There are no representations,
understandings or agreements, oral or written, between TI and UMC as to the
subject matter of this Agreement which are not expressly included herein.
Neither of the PARTIES shall be bound by any modification of this Agreement,
other than as expressly provided in this Agreement or as duly set forth on or
subsequent to the date hereof in writing and signed by a duly authorized
representative of both PARTIES.
5.15 BASIS FOR AGREEMENT
The PARTIES acknowledge that they have entered into
this Agreement of their own free will, and have not relied on any inducement
by the other party to enter into this Agreement (even if such inducement
occurred), nor have they relied on any warranty or representation by the
other party not explicity set forth in this Agreement (even if such
warranties or representations were made).
5.16 NO WAIVER
The failure by a PARTY or its ENTITIES to exercise
any of its rights under this Agreement shall not be deemed to constitute a
waiver of any of such rights, or other rights or remedies available to such
PARTY. In particular, and subject to the terms of this Agreement, the
subsequent acceptance of royalty payment(s) by TI shall not be deemed a
waiver of any prior default by UMC regardless of TI's knowledge of such prior
default at the time of acceptance of such royalty.
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5.17 CONVENIENCE OF THE PARTIES
The PARTIES hereto understand and agree that the
royalty payments to be made by UMC hereunder are based on royalty rates
applied to all sales or use by UMC ENTITIES (whether to third parties or to
UMC SPINOFFS) of all ROYALTY BEARING PRODUCTS in any country in the world
regardless of whether or not a TI ENTITY has any patent in any particular
country and regardless of whether there is any use of any TI PATENTS in
certain countries. It is further understood that this is specifically done
for the convenience of the PARTIES and their respective ENTITIES, so that
separate accountings do not have to be made and separate license agreements
do not have to be negotiated for all PATENTS and for each country in which
the PARTIES or their respective ENTITIES hold or may hold PATENTS and do
business.
IN WITNESS WHEREOF, the PARTIES have caused their duly authorized
officers to execute this Agreement, on the dates below indicated.
TEXAS INSTRUMENTS INCORPORATED UNITED MICROELECTRONICS CORPORATION
BY: BY:
--------------------------- -------------------------------
XXXXXXX X. XXXXXX
SENIOR VICE PRESIDENT
DATE: DATE:
------------------------- --------------------------------
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EXHIBIT A
DEFINITIONS
1. "ANNUAL MAXIMUM BASE ROYALTY"
Shall have the meaning given in paragraph 1 of Exhibit B of this Agreement.
2. "BASE ROYALTY"
Shall have the meaning given in paragraph 1 of Exhibit B of this Agreement.
3. "BRANDED ROYALTY"
Shall have the meaning given in paragraph 2 of Exhibit B of this Agreement.
4. "BUSINESS EQUIPMENT AND SYSTEMS"
Means equipment, processes and methods useful for the operation of the
business of manufacturing and marketing PRODUCTS, including equipment,
processes and methods related to office operations, communications,
accounting, sales, purchasing and the like.
5. "CIRCUIT PATENT CLAIMS"
Means only those PATENT claims which cover the schematically
representable aspects or structure of an INTEGRATED CIRCUIT or the electrical
circuit characteristics or function of an INTEGRATED CIRCUIT ("Circuit
Claims"). In the case of a PATENT which contains one or more claims other
than Circuit Claims, CIRCUIT PATENT CLAIMS does not include such other claims.
6. "DEFORMABLE DEVICE"
Means a SEMICONDUCTOR PRODUCT wherein addressable and movable
electromagnetic radiation reflecting members comprise a substantial portion
of the product, including, by way of illustration and not limitation,
electrostatically controllable, deformable, or deflectable mirrors.
-31-
7. "EFFECTIVE DATE"
Means the date of the execution of this Agreement by both PARTIES.
8. "ENTITY"
Means a TI ENTITY or a UMC ENTITY, as the case may be.
9. "INTEGRATED CIRCUIT"
Means any integrated circuit (having two or more active circuit
elements) whether sold, leased, used, incorporated or otherwise disposed of
singly, or in wafer form, or as hybrid integrated circuits, or as XXXXX or
the like. INTEGRATED CIRCUIT includes any packaging provided as a part
thereof. The intent of this definition is to coincide with the manner in
which Dataquest (as of the EFFECTIVE DATE) uses the term "integrated circuit"
or "IC." INTEGRATED CIRCUIT shall not include display devices such as LCD
displays, field emission displays, or the like.
10. "LICENSED PARTY"
Means an entity licensed under this Agreement.
11. "MANUFACTURING EQUIPMENT AND SYSTEMS"
Means equipment, processes and methods useful for the operation of
facilities for the production of PRODUCTS, including equipment, processes and
methods related to the operation and control of machinery and processes used
to create PRODUCTS, and shall also include test equipment and systems
including any aggregate of instrumentalities primarily adapted for use in the
examination, analysis, measurement, detection, recording or indication of one
or more characteristics or properties of a PRODUCT or PRODUCTS.
12. "MEMORY FRACTION"
Means the fraction of the area of an INTEGRATED CIRCUIT occupied by the
array or arrays of memory storage cells (including their associated sense
amps), provided that in the event of a stand-alone or commodity memory
product the MEMORY FRACTION shall equal 1 (i.e., the entire INTEGRATED
CIRCUIT product).
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13. "MEMORY FRACTION ROYALTY"
Shall have the meaning given in paragraph 3 of Exhibit B of this
Agreement.
14. "MEMORY PORTION"
Means the array or arrays of memory storage cells together with any
circuitry necessary for storing and retrieving data from such array or arrays.
15. "NET SALES BILLED"
Means the following:
a. the total amount billed in any country of the world to any third
party, including a UMC SPINOFF, by any UMC ENTITY (excluding transactions
between UMC and any of its related ENTITIES) pursuant to a bona fide, arms
length transaction unaffected by reason of affiliation or any other cause, in
connection with the sale, lease, importation, or other disposition, anywhere
in the world, of ROYALTY BEARING PRODUCTS less (i) sales, excise taxes and
other taxes (other than taxes measured by a UMC ENTITY's income) levied in
respect to such worldwide sales, leases or other disposition, where such
amounts are included in the amount billed, (ii) returned sales, sales
allowances (adjustments for quality and/or yield) and/or retroactive price
adjustments or credits, (iii) trade, cash or quantity discounts but only if
they are expressly documented, (iv) transportation and insurance costs where
such amounts are included in the amount billed, and (v) import duties; or
b. the fair market value of such ROYALTY BEARING PRODUCTS not so sold,
leased or otherwise disposed of, but used by a UMC ENTITY or otherwise sold,
leased or disposed of by a UMC ENTITY to any person or entity other than as
described in clause a. of this definition anywhere in the world (provided,
however, that products described in clause a. of this definition and products
which are distributed without charge in the ordinary course of business and
in commercially insignificant volumes, such as samples, products consumed in
internal testing, benchmarking, research and/or development, or scrapped
products, shall not be included in NET SALES BILLED for purpose of this
clause b.). For purposes of this clause b., fair market value of a particular
ROYALTY BEARING PRODUCT shall be determined as follows:
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(1) Total worldwide sales revenue (less the deductions in (i)
through (v) of clause a. above) for the applicable calendar semiannual
reporting period for a product which is the same as or similar to said
particular ROYALTY BEARING PRODUCT, sold, leased or disposed of under
clause a. above divided by the total units of that product so sold,
leased or otherwise disposed of anywhere in the world during said
calendar semiannual reporting period to any person or entity other than
a UMC ENTITY, to determine the average sales price per unit for such
same or similar product. Such average sales price per unit shall be
multiplied by the total units of such particular ROYALTY BEARING
PRODUCT for which NET SALES BILLED are calculated under this clause b.
(2) For each such same or similar product that has no sales revenue
under clause a. above for the reporting period, fair market value
shall be the SAME value as the average sale price (calculated in the
manner provided in clause b.(1) above) as reported for such same or
similar product in the immediately preceding calendar semiannual
reporting period or, if there were no value established for the
immediately preceding reporting period, then the fair market value, as
determined above, shall be applied for the average sales price of the
nearest related standard part offered by any of the UMC ENTITIES, that
substantially performs the same functions as such same or similar
product.
(3) If a plurality of ROYALTY BEARING PRODUCTS are assembled onto a
printed circuit board or otherwise are similarly configured
(hereinafter called the "Assembled Products") and used or incorporated
in the manner for which NET SALES BILLED are required to be calculated
as set forth in this clause b., the fair market value of each ROYALTY
BEARING PRODUCT incorporated in Assembled Products shall be used for
the purpose of this Agreement.
c. NET SALES BILLED shall be accounted for in accordance with Section
2.1.8 of the Agreement.
16. "PARTY"
Means TI or UMC, as the case may be.
17. "PATENT(S)"
Means patents (including reissues and re-examination certificates),
utility models, and applications therefor of all countries of the world, which
convey legally enforceable rights, in any
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country, prior to the date of expiration or termination of this
Agreement. PATENTS includes applications for patents and utility models which
have been published for opposition. PATENTS does not include design patents,
except PATENTS does include design patents which cover packaging, modules, or
housing for SEMICONDUCTOR PRODUCTS. PATENTS does not include any rights for
which payments or other consideration to third parties is required for the
right to grant licenses of the scope granted herein, except for (i) payments
to a SUBSIDIARY of the party owning or controlling such PATENT, or (ii)
payments made to said third parties for inventions made while employed by
such party or its SUBSIDIARIES. PATENTS does not include any claims of any of
the foregoing which are applicable primarily to a DEFORMABLE DEVICE;
provided, however, that for purposes of the license grants hereunder, PATENTS
shall include any such claims to the extent they cover PRODUCTS licensed
other than DEFORMABLE DEVICES.
18. "PROCESS PATENT CLAIMS"
Means those PATENT claims which cover one or more process steps in the
fabrication of PRODUCTS ("Process Claims"). In the case of a PATENT which
contains one or more claims other than Process Claims, PROCESS PATENTS CLAIMS
does not include such other claims. Illustrative examples of process steps
include, but are not limited to, the following:
a. the deposition, sputtering, formation and/or creation of
semiconductor material or. thin films used in PRODUCT fabrication,
b. altering the conductivity of semiconductor material,
c. the formation of a semiconductive and/or insulating element or body,
d. the patterning or etching of elements or layers, including etch
chemistry, in an INTEGRATED CIRCUIT,
e. the formation of insulating, intermediate, sacrificial or
passivating layers,
f. the formation of conductive interconnects on an INTEGRATED CIRCUIT,
g. the assembling, encapsulation and/or packaging of an
INTEGRATED CIRCUIT,
h. the formation of photolithographic or other masks used in the
patterning of INTEGRATED CIRCUIT elements,
i. the probing and/or testing of individual elements or groups of
elements in an INTEGRATED CIRCUIT,including without limitation test
structures and/or features which are
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used by the foundry to monitor and/or evaluate processes, electrical
characteristics of process steps and/or process parameters,
j. the evaluation, burn-in and/or testing of packaged
INTEGRATED CIRCUITS,
k. place and route for circuitry provided by a customer, or
l. implementation of cell libraries, standard cells, or the like
into GDS II tapes from higher level specifications or softcores.
For purposes of this Agreement, PROCESS PATENT CLAIMS shall be interpreted to
include topographical structures and cross sections that result from process
steps, provided however, that notwithstanding any of the foregoing, PROCESS
PATENT CLAIMS shall not include any CIRCUIT PATENT CLAIMS.
For purposes of this Agreement, the following structures shall be
deemed to be processes so that any claim's covering such structures shall be
deemed to be PROCESS PATENT CLAIMS:
a. ESD Structures;
b. Twin-Well Structures and other three dimensional or topographical
structures not so related to the functioning or operation of a specific
electrical circuit as normally to be considered as part of circuit design; and
c. Pad Structures.
19. "PRODUCTS"
Means SEMICONDUCTOR PRODUCTS.
a. By way of example and not of limitation, PRODUCTS shall include
semiconductor material, wafers (both unprocessed and processed), discrete
devices (such as transistors), INTEGRATED CIRCUITS, unpackaged dies, packaged
INTEGRATED CIRCUITs (such as DRAMs, SRAMs, DSPs, and subject to clause b
below, microprocessors), memory chips, packaged chips (such as memory and
processor chips), hybrid integrated circuits, memory modules and stacked
memory chip packages, and similar devices. PRODUCTS shall not include any
electronic systems (other than as may be provided above with respect to
hybrid integrated circuits, memory modules and stacked memory chip packages,
and the like) created using more than one INTEGRATED CIRCUIT or an INTEGRATED
CIRCUIT combined with other peripheral systems such as personal, laptop, or
palmtop computers, computer cards or boards, audio visual components,
telecommunications equipment such as switches or handsets, or other electronic
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system comprising one or more packaged INTEGRATED CIRCUITS and other
systems or structures. The fact that a PRODUCT licensed hereunder is part of a
combination as stated above does not in and of itself mean that such combination
of such PRODUCT is licensed.
b. PRODUCTS shall not include any microprocessors (including without
limitation, digital signal processors), microcontrollers, or math coprocessors,
that are Object Code Compatible (defined below) with a Proprietary Product
(defined below) of a "Licensor" (meaning a TI ENTITY or UMC ENTITY, as the case
may be). "Proprietary Product" shall mean a microprocessor (including without
limitation, digital signal processors), microcontroller, or math coprocessor,
introduced or marketed by the Licensor, that has an instruction set originally
designed by the Licensor or originally and exclusively designed for the
Licensor. "Object Code Compatible" shall mean the condition in which a
microprocessor (including without limitation, digital signal processors),
microcontroller, or math coprocessor, is capable of executing the binary object
code of 75% or more of the instructions in the instruction set of a Licensor's
Proprietary Product.
20. "ROYALTY BEARING PRODUCT(S)"
Means any INTEGRATED CIRCUITS which are UMC FOUNDRY PRODUCTS (including
the MEMORY PORTION thereof in cases where licensed), UMC BRANDED PRODUCTS, or
UMC SPINOFF BRANDED PRODUCTS.
21. "SEMICONDUCTOR PRODUCT"
Means any product comprising at least in part semiconductive material,
such products, including, but not limited to, semiconductor devices,
semiconductor circuits, and INTEGRATED CIRCUITS.
22. "SUBSIDIARY(IES)"
Means any corporation, company or other entity more than fifty percent
(50%) of the outstanding shares or stock entitled to vote for the election of
directors of which is owned or controlled by a party (meaning a PARTY or a
third party, as the case may be), directly or indirectly, now or hereafter
during the term of this Agreement. Subsidiary also means any corporation,
company or other entity in which a party (meaning a PARTY or a third party as
appropriate): (i) owns or controls at least forty percent (40%) of such
shares or stock and (ii) controls and/or designates more than fifty percent
(50%) of the members of the board of directors
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during the term of this Agreement, Any corporation, company or other
entity which would at any time be a SUBSIDIARY of a party, by reason of the
foregoing shall be considered a SUBSIDIARY for the purposes of this Agreement
only so long as the ownership or control, directly or indirectly, by such party,
meets the conditions set forth above.
23. "TI CIRCUIT PATENT CLAIMS"
Means those claims under TI PATENTS which are CIRCUIT PATENT CLAIMS.
24. "TI ENTITIES"
Means TI and its SUBSIDIARIES.
25. "TI PARTICIPATION CIRCUIT PATENT CLAIMS"
Means those claims under TI-PARTICIPATION PATENTS which are CIRCUIT
PATENT CLAIMS.
26. "TI-PARTICIPATION PATENT(S)"
Means PATENTS arising out of and coveting inventions developed or made
by one or more employees, agents or independent contractors of a TI ENTITY
(including employees of a TI ENTITY temporarily dispatched, assigned or
otherwise participating in any project of, or placed on the payroll of, any
third party) singly, or jointly with a third party, and where approval or
consent by a party other than a TI ENTITY is required prior to granting a
license or sublicense thereunder.
27. "TI-PARTICIPATION PROCESS PATENT CLAIMS"
Means those claims under TI-PARTICIPATION PATENTS which are PROCESS
PATENT CLAIMS.
28. "TI PATENT(S)"
Means PATENTS which, at any time during the term of this Agreement, a
TI ENTITY owns or controls and under which a TI ENTITY has the right to grant
releases or licenses of the scope granted pursuant to this Agreement.
29. "TI PROCESS PATENT CLAIMS"
Means those claims under TI PATENTS which are PROCESS PATENT CLAIMS.
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30. "UMC BRANDED PRODUCT(S)"
Shall mean PRODUCTS that are made (including by third parties to the
extent permitted under Section 1.3.1 of this Agreement) and sold by a UMC
ENTITY under a brand name or designation associated with a UMC ENTITY. UMC
BRANDED PRODUCTS shall also mean PRODUCTS sold by a UMC ENTITY that are made
by a UMC ENTITY but designed in whole or in part by a third party if (i) such
products are sold under a trade xxxx or designation associated with the third
party designing such products and (ii) if and only if such products were
manufactured only by, and not manufactured for, a UMC ENTITY prior to the
EFFECTIVE DATE of this Agreement and (iii) if such products were not sold by
such UMC ENTITY pursuant to a foundry relationship with a third party.
Notwithstanding the foregoing, UMC BRANDED PRODUCTS does not include PRODUCTS
made pursuant to a foundry relationship with a third party.
31. "UMC ENTITIES"
Means UMC and (a) its SUBSIDIARIES, (b) United Semiconductor
Corporation("USC"), United Integrated Circuit Corporation ("UICC") and United
Silicon Incorporated ("USIC") (USC, UICC and USIC are each an "Additional UMC
Company") and (c) Utek Semiconductor Corporation ("UTEK"), provided, however,
that any such Additional UMC Company shall cease to be a UMC ENTITY from and
after the occurrence of any of the following events:
(i) Any person or entity or "group" within the
meaning of Section 13 of the U.S. Securities
Exchange Act of 1934(other than a UMC
ENTITY), acquires, directly or indirectly,
control over shares of stock of such
Additional UMC Company entitled to vote for
the election of Directors in excess of the
number of such shares then owned by UMC;
(ii) a majority of the board of directors of such
Additional UMC Company fails to consist of
individuals selected and nominated by UMC;
or
(iii) UMC otherwise ceases to control and direct
the management and operation of such
Additional UMC Company.
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In addition, UTEK shall not be considered a UMC ENTITY for any purpose
under this Agreement if (i) UTEK does not merge and/or combine with or into
UMC or become a SUBSIDIARY of UMC on or prior to March 1, 2000. In the event
UTEK does merge and/or combine with UMC or becomes a SUBSIDIARY of UMC on or
prior to March 1, 2000, then UTEK shall be deemed to have been a UMC ENTITY
from the EFFECTIVE DATE.
32. "UMC FOUNDRY PRODUCT(S)
Shall mean PRODUCTS (other than a UMC SPINOFF BRANDED PRODUCT) that are
manufactured by a UMC ENTITY pursuant to a foundry relationship with a third
party.
33. "UMC-PARTICIPATION PATENT(S)"
Means PATENTS arising out of and covering inventions developed or made
by one or more employees, agents or independent contractors of a UMC ENTITY
or UMC SPINOFF (including employees of a UMC ENTITY or UMC SPINOFF
temporarily dispatched, assigned, or otherwise participating in any project
of, or placed on the payroll of any third party) singly, or jointly with a
third party, and where approval or consent by a party other than a party
hereto is required prior to granting a license or sublicense thereunder.
34. "UMC PATENT(S)
Means PATENTS which, at any time during the term of this Agreement, a
UMC ENTITY or a UMC SPINOFF owns or controls and under which a UMC ENTITY or
a UMC SPINOFF has the right to grant releases or licenses of the scope
granted pursuant to this Agreement.
35. "UMC SPINOFFS"
Means those entities amongst AMIC Technology Inc. ("AMIC"), BroadMedia
Inc. ("BroadMedia"), Integrated Technology Express Inc. ("ITE"), Integrated
Telecom Express Inc. ("IteX"),MediaTek Incorporated ("MediaTek"), and Novatek
Microelectronics Corporation ("Novatek"), and their respective wholly owned
SUBSIDIARIES which are designated to be UMC SPINOFFs in a Written notice to
TI from UMC on or before January 1, 2000. Upon such written notice, each such
designated company and its wholly owned SUBSIDIARIES shall be deemed to be a
UMC SPINOFF from and after the EFFECTIVE DATE, and any such designation by
UMC o shall constitute a representation by UMC that such designated company
has agreed to be bound by
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any and all obligations applicable to it under this Agreement. UMC shall give
prompt written notice to TI if and when any person, entity, or "group" within
the meaning of Section 13 of the U.S. Securities Exchange Act of 1934 owns
more shares of stock of such UMC SPINOFF entitled to vote for the election of
directors than are owned, directly or indirectly, by UMC ("Shift in
Control"). At the option of TI by written notice to UMC given within
forty-five (45) days of receipt of UMC's notice, or within forty-five (45)
days of TI learning of such Shift in Control, such UMC SPINOFF shall cease to
be a UMC SPINOFF for purposes of this Agreement with respect to any wafer
starts from and after the date of such Shift in Control and all licenses and
covenants to any TI ENTITY from such UMC SPINOFF shall terminate as to wafer
starts on or after such date, provided however that if UMC and/or the UMC
SPINOFF sends written notice to TI of the Shift in Control within forty-five
(45) days of the effective date of such Shift in Control, no termination as
to that SPINOFF under this clause will take effect as to any wafers started
prior to the date that the UMC receives the applicable written notice from TI
terminating the licenses as to the UMC SPINOFF involved.
36. "UMC SPINOFF BRANDED PRODUCT(S)"
Means any PRODUCT
(i) Sold to a UMC SPINOFF by a UMC ENTITY; and
(ii) Sold by such UMC SPINOFF under a brand name or designation of
such UMC SPINOFF or whose electrical design includes
substantial, material or meaningful design contribution from
such UMC SPINOFF; and
(iii) Manufactured at least through the wafer fabrication stage by a
UMC ENTITY; and
(iv) Which is sold by such UMC SPINOFF with a patent
indemnity.
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EXHIBIT B
1. The "BASE ROYALTY" is equal to [*] of the NET SALES BILLED for all
ROYALTY BEARING PRODUCTS [*] by [*] UMC ENTITY, anywhere in the world, during
the term of this Agreement, [*] to the [*] BASE ROYALTY (defined in the table
below). The PARTIES agree that the [*] royalty level shall be given no
precedential value for purposes of renewal of the present Agreement, if any,
or in the negotiation of similar other agreements between the same PARTIES or
their respective ENTITIES (including in the case of UMC, the UMC SPINOFFS).
For [*] year, the [*] BASE ROYALTY shall be [*] to the following amounts for
the following years:
[*] OF [*] YEAR TO WHICH
[*] BASE ROYALTY [*] FOR PAYMENT [*] BASE ROYALTY
[*] [*] CORRESPONDS
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.
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2. The "BRANDED ROYALTY" is [*] to [*] of the NET SALES BILLED for [*] UMC
BRANDED PRODUCTS and [*] UMC SPINOFF BRANDED PRODUCTS [*] by [*] UMC ENTITY,
anywhere in the world, on or [*], provided however that UMC SPINOFF BRANDED
PRODUCTS manufactured [*] to the EFFECTIVE DATE shall not be subject to
payment of BRANDED ROYALTY, and UMC BRANDED PRODUCTS for which wafer start
was [*] shall not be subject to BRANDED ROYALTY.
3. The "MEMORY FRACTION ROYALTY" is [*] to [*] of the NET SALES BILLED for
[*] of the UMC FOUNDRY PRODUCTS licensed under Section 1.1.3, [*] by the
MEMORY FRACTION associated with such UMC FOUNDRY PRODUCT.
4. The PARTIES agree that the BASE ROYALTY for [*] year of the agreement is
in consideration for the license under TI PROCESS PATENTS to [*] UMC BRANDED
PRODUCTS and for the UMC ENTITIES to [*]. For the convenience of the PARTIES,
the BASE ROYALTY [*] takes into account that some of such customers, at
various times during the term of this Agreement, may have their own license
from TI permitting them to [*], that such customers may be paying TI
royalties for [*], that the INTEGRATED CIRCUITS made for such customers by [*]
UMC ENTITIES will not be licensed under this Agreement to the extent those
INTEGRATED CIRCUITS are licensed under an agreement between such customer and
[*] TI ENTITY. Further, for the convenience of the PARTIES, the PARTIES have
agreed to apply the BASE ROYALTY [*] to [*] irregardless of whether any such
customer may have at the [*] a license from [*] TI ENTITY to [*] to the
PARTIES of tracking on a customer by customer basis which customers may have
a license at any particular time during the terms of this Agreement.
* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.
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