Exhibit 10.16
**CERTAIN CONFIDENTIAL MATERIAL CONTAINED IN THIS DOCUMENT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO 17 C.F.R. SUBSECTIONS 200.80(B)(4), 200.83, 230.406 AND
240.24B-2.**
[*] INDICATES TEXT WHICH HAS BEEN REDACTED
LICENSE AGREEMENT
THIS LICENSE AGREEMENT ("Agreement") is made and entered into
effective as of March 31, 1997, between FAROUDJA LABORATORIES, INC., a
California corporation, having its principal place of business at 000 Xxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 ("Licensor"), and S3 INCORPORATED, a
Delaware corporation, having its principal place of business at 0000 Xxxxxxx
Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 ("Licensee" or "S3").
RECITALS
A. A glossary of certain of the initially capitalized terms used
in this Agreement and other terms defined for purposes of this Agreement is
set forth on Exhibit A attached to this Agreement.
B. Licensor and Licensee wish to cooperate to establish high
quality brand Video Display and Enhancement Integrated Circuits for use in
PC, Non-MS and Consumer Electronics systems.
C. Licensor holds rights to the Licensed Technology.
D. Licensee desires to secure the right and license to use the
Licensed Technology in connection with the design, manufacture,
advertisement, promotion, distribution and sale of Licensee Products.
E. Licensor is willing to grant Licensee a license on the terms
and conditions set forth in this Agreement.
F. Licensor and Licensee desire to enter into a long term
relationship for their mutual benefit.
NOW, THEREFORE, the parties agree as follows:
1
AGREEMENT
1. LICENSE
1.1 GRANT. For the term of this Agreement and subject to the
other terms and conditions of this Agreement, Licensor hereby grants to
Licensee a worldwide, royalty-bearing license under Licensor's Intellectual
Property Rights to use the Licensed Technology solely on or in connection
with the design, manufacture, advertisement, promotion, distribution and sale
of Licensee Products. The Licensed Technology may not be used in connection
with the design, manufacture, advertisement, promotion, distribution or sale
of any product or service other than Licensee Products for [*] as more fully
set forth on Schedule 1.1-A. The license granted under this Section 1.1
shall be exclusive as to the Category I Technology with respect to certain
uses, non-exclusive as to the Category I Technology with respect to certain
uses, semi-exclusive as to the Category II Technology with respect to certain
uses, and non-exclusive as to the Category II Technology with respect to
certain uses, all as set forth in Schedule 1.1-A. The license granted
hereunder extends to such subsidiaries of S3 as to which, and only so long
as, S3 owns a majority of the capital stock entitled to elect the board of
directors thereof and as to which S3 has the ability to control the
management and the conduct of business of such subsidiaries ("Majority Owned
Subsidiary"), which subsidiaries are set forth on Schedule 1.1-B. In any
event, any such subsidiaries and S3 shall be deemed parties hereto, in
privity of contract with Licensor hereunder, intended third party
beneficiaries of this Agreement, and S3 and such subsidiaries shall be
jointly and severally liable for all obligations of S3 and such subsidiaries
hereunder. In the event of any claim against any such subsidiary under this
Agreement, Licensor agrees to make such claim first against S3 or the
specific subsidiary alleged to be in violation of the Agreement or both
before making any claims against other subsidiaries of S3. S3 agrees to
promptly cause each such subsidiary to sign a counterpart signature page to
this Agreement reconfirming that it is bound by the terms and conditions of
this Agreement. S3 may request from time to time that Licensor consent to
the addition of majority-owned subsidiaries to Schedule 1.1-B, and Licensor
shall consider the addition of such subsidiaries as licensees hereunder in
its reasonable commercial judgment. For purposes of this Agreement,
"Licensee" shall be deemed to include subsidiaries listed in Schedule 1.1-B
pursuant to this Section. S3 shall immediately notify Licensor if any such
subsidiary no longer is a Majority Owned Subsidiary and Licensor shall have
the right to review the status of such subsidiary and terminate the grant of
license under this Section 1.1 to such subsidiary. Upon any such
termination, all rights of such subsidiary in and to technology under Section
7.2 shall revert to S3.
1.2 NO SUBLICENSING RIGHTS; LIMITED DISCLOSURE RIGHTS. Licensee
shall not have the right to sublicense any of the rights or licenses granted to
Licensee under this Agreement. Licensee may disclose the Licensed Technology
in connection with the design, manufacture or provision of any products or
service in connection with the: (a) manufacturing of Licensee Products for
Licensee performed by subcontractors of
2
Licensee; and (b) design by subcontractors of Licensee of Licensee Products
that include all or a part of the Licensed Technology; provided that any such
disclosure shall be of only such of the Licensed Technology as is necessary
to the manufacturing or design services to be performed and shall be pursuant
to confidentiality agreements between Licensee and such subcontractors which
contain provisions regarding the limited and secure use and storage of the
Licensed Technology at least as restrictive and stringent as those in this
Agreement and shall be in a form reasonably satisfactory to Licensor, which
form may be submitted to Licensor for pre-approval.
1.3 RELATIONSHIP OF PARTIES. The relationship between Licensor
and Licensee is that of licensor and licensee of intellectual property
rights. In its capacity as licensee, Licensee shall be acting only as an
independent contractor, and not as a partner, co-venturer, agent, employee or
representative of Licensor.
1.4 OTHER PRODUCTS AND TECHNOLOGY. Licensee acknowledges that
under this Agreement it has no right or license to any technology or
intellectual property of Licensor other than the Licensed Technology, and the
Licensed Technology expressly excludes Licensor's [*] technologies. In
addition to Licensee rights under Section 7, Licensor and Licensee agree to
conduct discussions from time to time for the purpose of considering on a
technology-by-technology or product-by-product basis additional products or
technology which may be included hereunder or otherwise employ the Licensed
Technology on terms which Licensor and Licensee determine to be mutually
acceptable.
2. TERM
2.1 TERM. The term of this Agreement shall commence on the date
of this Agreement and shall continue until the Expiration Date, unless sooner
terminated in accordance with this Agreement or unless extended by the mutual
written agreement of the parties (the "Term").
2.2 EFFECT OF TERMINATION OR EXPIRATION. Prior to the Expiration
Date and so long as this Agreement has not been sooner terminated in
accordance with its terms, Licensor and Licensee shall enter into discussions
for the purpose of extending or renewing the Term upon mutually acceptable
terms and conditions which are within the same general framework of this
Agreement. In the event no agreement is reached by Licensor and Licensee as
to such extension or renewal, then Licensor and Licensee shall enter into a
new license agreement for the license of the Licensed Technology to Licensee
on a non-exclusive and most-favored customer basis. Subject to the foregoing
sentence and in addition to the provisions of Section 10.3, upon the
termination or expiration of this Agreement, all license rights of Licensee
shall terminate other than the right to retain and use the Licensed
Technology and Marks solely for the purpose of: (a) supporting the installed
base of Licensee Products; (b) filling any accepted purchase orders which are
not subject to cancellation for Licensee Products; (c) selling Licensee
3
Products developed as of such date until such time as Licensee discontinues
such products, but in any event not longer than two (2) years following the
date of termination; and (d) producing and selling such additional inventory,
if any, as may be required for Licensee to recoup any and all pre-paid
License Fees. Licensee shall otherwise cease manufacture and distribution of
Licensee Products and, at Licensor's direction, Licensee shall return or
destroy all copies of the Licensed Technology other than as permitted to be
retained pursuant to this Section 2.2.
2.3 RENEWAL OF TERM. The Term shall be renewed for successive
periods of one (1) year unless voluntarily terminated by either Licensor or
Licensee at the end of the initial Term or any renewal Term by providing to
the other party written notice of non-renewal of the Term at least 90 days
prior to the expiration of the initial or any renewal Term.
3. MANUFACTURING
3.1 ACKNOWLEDGMENT OF STANDARDS AND GOODWILL. Licensee
acknowledges that Licensor has made a substantial investment in developing
and fostering an image and reputation of high quality, design, prestige and
integrity and that the Licensed Technology is associated with products of
consistently high quality and design.
3.2 MANUFACTURING SPECIFICATIONS. Licensee shall manufacture all
of the Licensee Products that include the Licensed Technology consistent with
standards of high quality and design, and Licensee shall exercise its
commercially reasonable efforts to consult and cooperate with Licensor at all
times in connection with the manufacture of such Licensee Products. In that
regard, as early as possible, and in any event prior to the commencement of
distribution of each Licensee Product, Licensee shall provide to Licensor
pre-distribution versions of each Licensee Product. Licensee agrees that
Licensor shall have the right to test and evaluate all Licensee Products
which use Licensed Technology to confirm that such Licensee Products conform
to the specifications to be developed by Licensee and Licensor pursuant to
Section 5.2 hereof. In the event that Licensor determines that any such
Licensee Products do not meet such specifications, Licensor shall immediately
notify Licensee thereof and Licensee shall use all commercially reasonable
efforts to modify such Licensee Products to meet such specifications.
4. DUTIES OF LICENSEE
4.1 MARKETING AND PROMOTION. In addition to the advertising and
public relations requirements set forth in Section 9, Licensee shall exercise
its commercially reasonable efforts to market, promote and sell the Licensee
Products that include the Licensed Technology and to meet the demand for the
Licensee Products which include Licensed Technology. All such Licensee
Products, packaging, literature,
4
advertising and promotional materials shall include the appropriate Xxxx and
other intellectual property rights notice as may designated by Licensor;
provided that unless Licensee otherwise agrees, such Xxxx shall be the same
Xxxx that Licensor uses or authorizes others to use to identify products that
perform similar functions or that include technology similar to the Licensed
Technology. [*].
4.2 COMPETING PRODUCTS. During such portion of the Term as
Licensee holds an exclusive license to any portion of the Licensed
Technology, Licensee shall not, nor shall it permit any of its principals,
subsidiaries, or affiliates to engage in the marketing, promotion, sale,
distribution, design, development or sourcing or manufacturing of any Video
Display and Enhancement Integrated Circuit for use in the PC market other
than in cooperation with Licensor and, with respect to use in markets other
than the PC market, Licensee shall first request Licensor to license
Licensor's technology to Licensee on mutually agreeable terms and cooperate
with Licensee and if Licensor declines then Licensee may work with third
parties with respect to such markets; provided that the foregoing shall not
prohibit Licensee from developing in-house its own Video Display and
Enhancement Integrated Circuits or from meeting with other holders of video
technology for the purpose of confirming that Licensee's leadership in its
industry is maintained. In addition, during the Term [*]
4.3 RECORDS AND INSPECTIONS. Licensee shall maintain and retain
complete, clear and accurate records regarding the distribution of all
Licensee Products that include Licensed Technology, and shall retain such
records for a period of at least one (1) year after payment of License Fees
with respect to such Licensee Product. Licensor shall have the right to an
inspection and audit of all accounting and sales books and records of
Licensee relevant to the calculation of License Fees under Section 6 below
conducted by an independent audit professional selected and paid by Licensor
no more than once every twelve (12) months during regular business hours at
Licensee's offices, on at least ten (10) days notice and in such a manner
which will not interfere with the conduct of Licensee's business. Licensee
shall cooperate fully with Licensor's representatives during such audits by
rendering such assistance as may be reasonably requested. If any such audit
discloses underpayment of ten percent (10%) or more of amounts due hereunder,
Licensee shall bear all of the reasonable costs of the audit. Licensee's
obligations and Licensor's audit rights under this Section shall survive the
expiration or termination of this Agreement and shall terminate on the date
which is one (1) year after the date of termination or expiration of this
Agreement or any renewal or extension hereof.
4.4 COMPLIANCE WITH LAW. Licensee shall comply with all
applicable laws and regulations respecting the design, development,
manufacture, advertising, promotion and distribution of the Licensee Products
that included Licensed Technology and the use of the Licensed Technology.
5
5. DUTIES OF LICENSOR
5.1 PRODUCT DEVELOPMENT. Licensor shall continue its Development
Work with respect to the Licensed Technology to effect the delivery of the
Licensed Technology and the integration of the Licensed Technology into the
Licensee Products in accordance with Section 5.2. Any and all reasonable
costs and expenses incurred by Licensor in connection with such Development
Work that are unique to Licensee shall be reimbursed by Licensee to Licensor
on a quarterly basis, payable with the License Fee payments, provided that
the same shall have been pre-approved by Licensee. In addition, Licensor
shall continue to meet with such PC industry companies as it deems
appropriate to ensure that product leadership is maintained with respect to
the Licensed Technology in the PC market, and Licensor may develop,
manufacture and sell its own Video Display and Enhancement Integrated
Circuits. If Licensor becomes aware of an opportunity for the sale of Video
Display and Enhancement Circuits [*] not otherwise addressed by this
Agreement, Licensor will inform Licensee of such opportunity and Licensor and
Licensee will discuss in good faith the terms and conditions of cooperation
for the mutual exploitation of such opportunity. Licensor agrees that during
that portion of the Term during which Licensee holds an exclusive license
hereunder, Licensor will not distribute products containing Licensed
Technology combined with 3D Graphics Technology in a single integrated
circuit for sale [*]. Subject to the foregoing terms of this Section 5.1,
nothing contained in this Agreement shall restrict Licensor's right to
develop and sell its own Video Display and Enhancement Integrated Circuits.
5.2 PRODUCT SUPPORT. Licensor shall use commercially reasonable
efforts to assist Licensee in the integration of the Licensed Technology into
Licensee Products, including generation of C++ models and macro block
synthesis, and Licensor shall use commercially reasonable efforts to
cooperate and work jointly with Licensee in defining specifications of the
video processing functions of the Licensed Technology to be integrated in the
Licensee Products.
5.3 APPLICATION SUPPORT. Licensor shall provide Licensee up to
eight (8) man hours per week of technical applications support during the
Term for the purpose of solving potential applications problems via telephone
calls, facsimile transmission and electronic mail at numbers and addresses
established by Licensor and at on-site meetings at Licensee premises, as
necessary. Licensee shall notify Licensor of any restrictions or limitation
as to the number and identity of employees of Licensee as are authorized by
Licensee to use such support services. Licensor agrees that it will evaluate
all Licensee Products that include Licensed Technology at Licensor's lab and
provide a summary report to Licensee of the result of such evaluation.
6. LICENSE FEES AND OTHER PAYMENTS
6.1 [*]
6
6.2 LICENSE FEES. Licensee shall pay Licensor, in arrears on or
before forty-five (45) days after the end of each calendar quarter of the
Term, a License Fee calculated as provided in Annex II, to the extent that on
a quarterly basis, such License Fees exceed the then current balance of the
Minimum License Fees paid in accordance with Section 6.1 above.
6.3 EXCEPTIONS. No License Fees shall be payable by Licensee for
the following Licensee Products: (a) a reasonable number of units used for
promotional, demonstration, other marketing or internal purposes by Licensee;
(b) damaged or returned and which Licensee nets against Licensee Products
shipped; or (c) provided at no or nominal charge as replacement products for
damaged or returned Licensee Product which Licensee has not netted against
units shipped.
6.4 [*]
6.5 PAYMENTS.
6.5.1 The License Fee and Minimum License Fees shall be
due and payable to Licensor by Licensee on the dates and in the amounts as
set forth in this Section 6 above.
6.5.2 Concurrent with each such payment, Licensee shall
provide to Licensor a written statement of the License Fee amount that is
certified by Licensee's Chief Financial Officer to be correct together with a
good faith, non-binding projection of the License Fee amount which Licensee
forecasts will be payable with respect to the next quarter. Licensee will
make available to Licensor, for review by an independent certified public
accountant at Licensee's offices only no more than once per quarter and upon
reasonable notice and at a mutually reasonably acceptable time, a detailed
accounting of the calculation of the License Fee[*]. Because of the highly
confidential nature of the statement available for review at Licensee's
offices, the reviewer may not copy or remove such statement from Licensee's
offices. In the event that the certified statement issued for the end of a
fiscal year shall amend, modify, correct or otherwise restate any prior
quarter's License Fee calculation, then the License Fee payable with respect
to the fiscal year end shall be adjusted, and, if necessary, subsequent
License Fee payment amounts shall be credited to adjust for such restatement.
6.5.3 All payments required under this Agreement shall be
in U.S. dollars, and made payable to the order of "FAROUDJA LABORATORIES,
INC.", or in such other currency, time, Licensor location or manner as
Licensor shall specify; provided that Licensee shall have no obligation with
respect to withholding or other taxes under Section 6.6 hereof in the event
that Licensor specifies that payments shall be made from or to any
jurisdiction other than the United States.
6.5.4 If Licensee fails to pay (by direct deposit for
Licensor's account, duly delivered check or confirmed wire delivery of funds)
any payment due
7
under this Agreement on or before the due date thereof, then the delinquent
amount shall be subject to a late charge equal one and one-half percent
(1.5%) per month from the due date until paid. If this late charge exceeds
the maximum rate allowable by law, then the late charge shall accrue at the
maximum rate allowable by law.
6.5.5 Acceptance by Licensor of any payments under this
Agreement shall not prevent Licensor at any later date from disputing the
amount owed or from demanding more information from Licensee regarding
payments finally due, and such acceptance of any payment by Licensor shall
not constitute a waiver of any breach of any term or provision of this
Agreement by Licensee if any such breach shall have occurred.
6.6 TAXES. In addition to any other payments due under this
Agreement, Licensee shall pay, and hereby agrees to indemnify and hold
Licensor harmless from, any sales, use, excise, import or export, value-added
or similar tax or duty not based on Licensor's net income, including any
penalties and interest, as well as any costs associated with the collection
or withholding thereof, and all government permit fees, license fees and
customs and similar fees levied on the delivery of any services or the
Licensed Technology to Licensee (collectively, "Taxes"). All payments due
under this Agreement shall be made without any deduction or withholding for
any Taxes, unless such deduction or withholding is required by any applicable
law of any relevant government revenue authority then in effect. If Licensee
is required to deduct or withhold any Taxes other than in connection with any
failure by Licensor to make payment of any Taxes, Licensee will promptly
notify Licensor of the requirement, pay the required amount to the relevant
governmental authority, provide Licensor with an official receipt or
certified copy or other documentation acceptable to Licensor evidencing the
payment, and gross-up the payments subject to any such deduction or
withholding and pay to Licensor, in addition to the payment to which Licensor
is otherwise entitled under this Agreement, such additional amount as is
necessary to insure that the net amount actually received by Licensor after
any such deduction or withholding equals the full amount Licensor would have
received had no such deduction or withholding been imposed. In the event
that Licensor receives any allowable or actual financial benefit from any
Taxes so paid by Licensee such that, together with the grossed-up payment
amount paid by Licensee, Licensor receives, or is entitled to receive, more
than the full amount Licensor would have received had no such deduction or
withholding been imposed, then Licensor shall promptly refund to Licensee any
such excess, or at Licensee's option, apply such excess to future license
fees. In the event that Licensor notifies Licensee that Licensor will not
receive any allowable or actual financial benefit from the deduction or
withholding of any Taxes, Licensor will make available to Licensee, for
review, at Licensee expense, by an independent certified public accountant at
Licensor's office, no more than once per year and upon reasonable notice at a
mutually reasonably acceptable time, the relevant Licensor tax returns (if
any) and the related documents so as to establish the propriety on the
non-receipt of the benefit. As a result of such audit, should a benefit be
discovered that was not taken by
8
Licensor, to the extent agreed by Licensor or its tax accountants, Licensor
shall promptly refund to Licensee any such excess or, at Licensee's option,
apply such excess to future license fees. If Licensor does not agree with
the findings of Licensee's auditor, then Licensee may refer such matter to
arbitration in accordance with Section 13.7 below. Any information disclosed
to such independent certified public accountants in the course of any such
audit shall be treated as confidential and may be disclosed to Licensee only
to the extent necessary to explain the benefit discovered by the audit.
6.7 FAVORED CUSTOMER PRICING.
6.7.1 WHILE LICENSEE HOLDS EXCLUSIVE RIGHTS. During such
of the Term as Licensee holds an exclusive license to Category I Technology,
Licensor agrees that it will not offer to license to any third party, with a
right to sell into or otherwise supply [*], the Category II Technology on
Economic Terms more favorable than those then in effect between Licensor and
Licensee with respect to substantially the same Category II Technology and
volumes.
6.7.2 WHILE LICENSEE DOES NOT HOLD EXCLUSIVE RIGHTS.
During such of the Term as Licensee does not hold an exclusive license as to
Category I Technology, Licensor shall offer to enter into with Licensee a
license agreement on the same Economic Terms with respect to any Licensed
Technology as entered into by Licensor with any similarly situated
third-party licensee within ten (10) days after the date that Licensor enters
into such agreement with such third party. Licensee may, within thirty (30)
days after receipt of such an offer from Licensor, notify Licensor that
Licensee desires to substitute each and every Economic Term granted to such
licensee for all (but not less than all) of the Economic Terms of this
Agreement. If Licensee elects to substitute the Economic Terms of any such
agreement for the Economic Terms of this Agreement, the substituted Economic
Terms shall become effective on the first day of the subsequent calendar
quarter as to the applicable Licensed Technology subject to Licensor and
Licensee entering into an amendment to this Agreement evidencing the new
Economic Terms.
7. OWNERSHIP OF THE INTELLECTUAL PROPERTY RIGHTS; CONFIDENTIAL INFORMATION
7.1 LICENSOR OWNERSHIP. Licensee acknowledges that (i) nothing
contained in this Agreement shall give to Licensee any right, title or
interest in the Intellectual Property Rights, other than the express license
granted in Section 1.1 of this Agreement and the rights (which are subject to
such license) granted under Sections 7.2 and 7.3, and (ii) Licensee's use of
the Intellectual Property Rights shall inure only to the benefit of Licensee
and sublicensees permitted hereunder, if any.
7.2 OWNERSHIP BY LICENSEE. Licensee owns all intellectual
property rights in and to Licensee's design and implementation of the
Licensed Technology in
9
Licensee Products, including but not limited to all VHDL code that embodies
such design; provided that Licensee's right to use and transfer such rights
are subject to the Licensor's rights in the Licensed Technology and this
Agreement and Licensee's rights in the Licensed Technology as provided in
this Agreement.
7.3 INVENTIONS AND ENHANCEMENTS.
7.3.1 OWNERSHIP. Any Enhancement or Invention jointly
conceived or developed during the Term by the employees, representatives or
agents of both Licensor and Licensee shall be jointly owned by Licensor and
Licensee with each holding an undivided fifty percent (50%) ownership
interest. Any Invention or Enhancement made during the Term independently by
or for Licensor or Licensee shall be owned solely by Licensor or Licensee,
respectively. With respect to jointly owned Inventions and jointly owned
Enhancements: (a) the parties shall agree on a case-by-case basis which
party will file United States and foreign patent applications and other
filings, recordation or registrations, if any; (b) the parties shall share
equally the reasonable cost of all mutually agreed upon patent applications
and other filings, recordation or registrations; (c) each party shall provide
to the other party, at no charge, copies of all designs, specifications,
samples and prototypes constituting such jointly owned Inventions or jointly
owned Enhancements, and of all licenses thereof or infringement claims,
actions or proceeding relating thereto as soon as possible and no later than
thirty (30) days after the development or occurrence thereof; and (d) each
party shall bear all cost of enforcement and defense of its rights and
interests in and to the jointly owned rights.
7.3.2 UTILIZATION OF INVENTIONS AND ENHANCEMENTS.
(a) With respect to jointly owned Inventions, the
parties shall negotiate in good faith the terms and conditions under which
each shall be entitled to license and otherwise exploit its interest during
the Term and thereafter.
(b) With respect to jointly owned Enhancements:
(i) during the Term and only during the Term, Licensee shall have the right,
for no additional fees or royalties, to utilize such Enhancements pursuant
and subject to the terms of this Agreement (e.g., Licensee shall have the
right to utilize Enhancements to Category I Technology in the same manner as
Licensee is entitled to utilize Category I Technology under this Agreement);
and (ii) Licensor shall have a perpetual, worldwide, royalty free license to
exploit and use the jointly owned Enhancements during the Term, subject to
the terms of this Agreement and to Licensee's rights and licenses with
respect to the applicable Category of Technology (including as set forth in
Section 1.1 and 5.1 above), and at all times thereafter.
10
(c) With respect to Enhancements developed during
the Term and owned by Licensor, Licensee shall have the rights described in
clause (i) of subsection (b) above.
(d) With respect to Enhancements developed during
the Term and owned by Licensee: (i) during the Term and only during the Term,
Licensee shall have the right to utilize such Enhancements pursuant and
subject to the terms of this Agreement (e.g., Licensee shall have the right
to utilize Enhancements to Category I Technology in the same manner as
Licensee is entitled to utilize Category I Technology under this Agreement);
and (ii) Licensor shall have a perpetual, worldwide, royalty free license to
exploit and use such Enhancements during the Term, subject to the terms of
this Agreement and to Licensee's rights and licenses with respect to the
applicable Category of Technology (including as set forth in Section 1.1 and
5.1 above), and at all times thereafter.
(e) With respect to Inventions arising during the
Term and owned by Licensor, if Licensor at its discretion and election
determines to offer to any party such Inventions for use [*], then Licensee
shall be entitled to a right of first refusal to license and utilize such
technology [*] on mutually acceptable terms (which may include exclusive or
non-exclusive license rights).
(f) With respect to Inventions arising during the
Term and owned by Licensee, if Licensee at its discretion and election
determines to offer to any party such Inventions in [*], then Licensor shall
be entitled to a right of first refusal to license and utilize such
technology in such market(s) on mutually acceptable terms (which may include
exclusive or non-exclusive license rights).
7.4 NO USE OF NAME. Licensee shall not use any of the
Intellectual Property Rights as a trade name, service xxxx, business name,
trade style, or fictitious business name. Any unauthorized use shall inure
solely to the benefit of Licensor, and such unauthorized use by Licensee
shall not confer on Licensee any right, title or interest in the Intellectual
Property Rights.
7.5 REGISTRATION. Licensee shall not seek or obtain any
registration of any of the Intellectual Property Rights or Licensed
Technology in any name other than that of Licensor or participate directly or
indirectly in such registration anywhere in the world without Licensor's
prior written consent. Nothing in this Section 7.5 shall restrict Licensee's
right to register intellectual property rights in Inventions or Enhancements
which Licensee owns in accordance with Section 7 above. If Licensee has
obtained or obtains in the future, in any country, any registered filed,
recorded or other right, title or interest in any of the Intellectual
Property Rights or the Licensed Technology, or in any other trademark or
service xxxx owned by Licensor, Licensee has so acted or will act as an agent
and for the benefit of Licensor for the limited purpose of obtaining such
registrations and assigning the same to Licensor. Licensee shall execute any
and all
11
instruments deemed by Licensor, or its respective attorneys or
representatives, to be necessary to transfer such right, title or interest to
Licensor.
7.6 [*]
7.7 INFRINGEMENT SUITS.
7.7.1 SUITS BY LICENSOR. In connection with the use and
exercise of Licensee's license rights hereunder, Licensee shall use its best
efforts to detect any possible infringements, claims or actions in derogation
of any Intellectual Property Rights by any third parties and shall inform
Licensor promptly of any such infringement, claim or action; provided,
however, that Licensor shall have the sole right to determine whether any
action shall be taken on account of such infringement, claim or action and
Licensee shall not take any action on account of such infringement, claim or
action without the prior written consent of Licensor. If Licensor initiates
any legal proceedings on account of any such infringement, claim or action,
Licensee shall cooperate with and assist Licensor to the extent reasonably
necessary to protect the Intellectual Property Rights, including without
limitation, being joined as a necessary or desirable party to such
proceedings. Licensor shall be entitled to retain all proceeds received upon
settlement or from judgment awarded in any such suits.
7.7.2 SUITS BY LICENSEE. If Licensee has provided written
notice to Licensor, pursuant to Section 7.7.1 above, of a material actual
infringement by a third party of one or more of the Patents [*] If Licensor
elects not to pursue any action against the alleged infringer, then Licensee
may maintain, at Licensee's expense and, in the case of any proposed action
against any third-party licensee of Licensor, [*] any appropriate suit,
action or proceeding involving the infringement or misappropriation [*]
Licensee shall be entitled to retain all proceeds received upon settlement or
from judgment awarded in any such suits as prosecuted by Licensee and not by
Licensor.
7.8 INTELLECTUAL PROPERTY RIGHTS. Licensor represents and
warrants that: (i) to Licensor's knowledge (without duty of inquiry), the
Licensed Technology does not and will not infringe any valid and subsisting
Patents or other intellectual property rights owned by any person other than
Licensee or an affiliate of Licensee; (ii) Licensor has not received and is
aware of no notice or allegation that any of the Licensed Technology
infringes any third-party intellectual property rights; (iii) to Licensor's
knowledge, Licensor owns or controls all rights in and to the Licensed
Technology; and (iv) to Licensor's knowledge, Licensor has the right to grant
the licenses granted in this Agreement. If it is determined that Licensor
does not have the right to use the Licensed Technology, or any portion
thereof, upon receipt of written notice from Licensor, Licensee shall
immediately refrain from selling the Licensee Products and, provided that
Licensor has not breached its representations and warranties made under
clauses (i), (ii), (iii) and (iv) of this Section 7.8, Licensee shall have no
claims against Licensor for
12
damages caused by such cessation or termination or otherwise caused except as
provided in Section 12.
7.9 COPYRIGHTS. If Licensee, alone or with others, develops any
written material pertaining to Licensee Products which include Licensed
Technology or to the Licensed Technology, prior to its publication and
dissemination, Licensor shall be provided a reasonable opportunity to review
and approve such material, which approval shall not be unreasonably withheld.
7.10 POWER OF ATTORNEY. During and for a period of two (2) years
after the Term, each party agrees to execute such documents, render such
assistance and take such other actions as the other party may reasonably
request, to assist the requesting party to apply for, register, perfect,
confirm and protect the requesting party's rights in the Licensed Technology,
Inventions and Enhancements as set forth in this Agreement. Each party will
assist the other in obtaining and enforcing Patents and other protection with
respect to the Licensed Technology, Inventions and Enhancements in accordance
with the ownership rights set forth in this Agreement in any and all
countries during and after the Term. Neither party shall incur any expense
with respect to any such assistance provided to the other party. If a
requesting party is unable to secure the other party's signature to any
lawful and necessary document that accurately reflects the ownership rights
established under this Agreement, where such document is required to apply
for, execute, perfect, enforce or protect any Patent or other rights with
respect to any Licensed Technology, Invention or Enhancement, then the
non-requesting party hereby designates and appoints the requesting party as
its agent and attorney in fact to act for and on behalf of and instead of the
non-requesting party to execute any such document and to take any such action
in the name of the non-requesting party.
7.11 CONFIDENTIAL INFORMATION. During and after the Term, Licensor
and Licensee shall maintain in strict confidence and shall not disclose any
Confidential Information. Licensor and Licensee shall take every reasonable
precaution to protect the confidentiality of the Confidential Information of
the other, consistent with the higher of: (a) the standard of care which that
party exercises with respect to its own Confidential Information; or (b) the
standard of care that an ordinarily prudent business would exercise to
protect its own Confidential Information. In any event, each party shall (i)
disclose Confidential Information to (x) only those authorized employees of
such party whose duties justify their need to know such information and who
have been clearly informed of their obligation, and who have agreed in
writing, to maintain the confidential and/or proprietary status of such
Confidential Information; or (y) only those third parties required for the
performance of a party's rights and obligations under this Agreement pursuant
to a written confidentiality agreement at least as extensive as the
confidentiality provisions of this Agreement; and (ii) use such Confidential
Information only for the purposes set forth in this Agreement. The
obligations set forth in this Section 7.11 shall not apply to any
Confidential Information which must be disclosed pursuant to applicable
federal, state or local law, regulation, court order, or other legal
13
process. In addition, neither party shall disclose the terms of this
Agreement to any third party without the express prior written consent of the
other party other than to its attorneys and accountants or as may be required
by law. If either party is required to disclose Confidential Information
pursuant to applicable federal, state or local law, regulation, court order
or other legal process or law, then prior to such disclosure, such party
shall give notice to the other party so that the other party may take
reasonable steps to oppose or limit such disclosure. The parties shall take
reasonable steps to agree as quickly as possible in light of Licensor's
requirements to determine what Licensor will disclose in any filings with
the Securities and Exchange Commission, and in any event a party shall
respond within 48 hours of such a proposed disclosure, with any failure to so
respond to be deemed consent.
8. NOTICE OF OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS
8.1 PROPRIETARY NOTICES. Licensee shall include Licensor's logo
on Licensee Products that include Licensed Technology, in accordance with
logo usage guidelines provided by Licensor. Licensee will determine the size
and placement of Licensor's logo on such Licensee Products given the overall
size and design of other markings on such Licensee Products. Licensee also
will include with documentation that accompanies Licensee Products that
include Licensed Technology all trademarks, trade names, logos, patent or
copyright notices, confidential or proprietary legends or other notices or
markings on or in the Licensed Technology.
8.2 TRADEMARK LICENSE. Subject to the terms hereof, Licensor
grants to Licensee a world-wide, limited license to use the Marks on Licensee
Products that include Licensed Technology and in Licensee's advertising and
printed materials for such Licensee Products. Licensee's license under this
Section 8.2 is [*] as to the use of the Marks [*] to identify Category I
Technology for so long as Licensee holds an exclusive license to such
Licensed Technology, [*] as to the use of the Marks [*] to identify Category
II Technology for so long as the Licensee holds a [*] license, and
non-exclusive as to the use of the Marks to identify Licensed Technology as
to which Licensee does not hold exclusive rights. Licensee shall provide a
notice of trademark status adjacent to and with the first or most prominent
use of the Xxxx in such printed materials and include the respective legends
adjacent to or as a footnote to the Xxxx as follows:
--[*] is a trademark of Faroudja Laboratories, Inc., which may be
registered in certain jurisdictions; and
--such other symbols and notices as may be prescribed by Licensor
from time to time
14
9. ADVERTISING AND PUBLIC RELATIONS
9.1 LICENSOR ADVERTISING AND PROMOTION. Licensor may as it deems
appropriate advertise and promote the Licensed Technology but shall have no
obligation to undertake any such advertising and promotion. Notwithstanding
the foregoing, at Licensee's reasonable request, Licensor will make
reasonable efforts to participate with Licensee in presentations by Licensee
to the public and to potential customers of Licensee Products that include
Licensed Technology.
9.2 LICENSEE ADVERTISING AND PROMOTION; [*]
9.3 PRIOR REVIEW. Licensee shall submit to Licensor for
Licensor's review samples of all advertising and other promotional plans and
materials that Licensee desires to use or is using to promote the Licensee
Products to the extent the same includes any references to or descriptions of
the Licensed Technology or Licensor prior to the publication or distribution
of such materials.
9.4 PUBLIC RELATIONS AND PRESS RELEASES. Licensee shall publicize
the Licensee Products as a part of Licensee's general public relations
efforts, including the participation by Licensor in new products "road show"
presentations, as reasonably requested by Licensee or Licensor. Licensor
agrees that Licensee shall have the right to make the first general
announcement of this Agreement and the transactions contemplated hereby. In
any event, neither party shall advertise, issue any press release or
otherwise publish the fact that the parties have entered into this Agreement
without the prior written consent of the other party, except as may be
required by law. The parties shall use their best efforts to draft and issue
a press release announcing the signing of this Agreement and each party may
include the information included in such press release in subsequent
advertisements, press releases or other publications without the other
party's prior written consent, provided that such party includes proper
attribution of the other party's name. Following the issuance of such press
release, Licensor may refer to Licensee as Licensor's customer in Licensor's
sales and marketing materials and presentations.
10. TERMINATION
10.1 TERMINATION FOR CAUSE. In the event of a material breach by
Licensor or Licensee (including any subsidiary set forth on Schedule 1.1-B)
of this Agreement, the non-breaching party may give written notice of the
breach to the breaching party and specify a reasonable period of time of not
less than thirty (30) days and not more than sixty (60) days within which the
breaching party is to cure the breach. As used in this Section 10.1, a
"reasonable period of time" for curing a breach shall be determined based
upon commercial circumstances existing at the time of the breach and the
commercially reasonable time necessary to cure such breach, but in any event
shall not be more than thirty (30) days with respect to the cure of any
payment default. If the
15
breach is not cured within the specified period, the non-breaching party may
terminate this Agreement effective upon written notice to the breaching
party.
10.2 TERMINATION UPON BANKRUPTCY INSOLVENCY OR DISSOLUTION. Upon
the insolvency, bankruptcy, or dissolution of Licensee (other than a
subsidiary), or the assignment or sale or other disposition of a substantial
portion of its assets for the benefit of creditors, this Agreement shall
immediately and automatically terminate. Upon the insolvency, bankruptcy, or
dissolution of any subsidiary listed on Schedule 1.1-B, or the assignment or
sale or other disposition of a substantial portion of its assets for the
benefit of creditors, the license granted to that subsidiary under Section
1.1 shall immediately and automatically terminate.
10.3 EFFECTS OF TERMINATION. Upon any termination of this
Agreement in accordance with its terms:
10.3.1 Any indebtedness of Licensee to Licensor shall
become immediately due and payable and Licensor may retain as security or
apply as payment against any such indebtedness any Licensee Products of
Licensee in the possession of Licensor.
10.3.2 Licensor shall not be liable to Licensee, either for
compensation or for damages of any kind, whether on account of loss by
Licensee or any other person, of present or prospective profits on present or
prospective sales, investments or goodwill resulting from Licensor's
termination of this Agreement in accordance with its terms.
10.3.3 Except as otherwise permitted under Section 2.2,
Licensee immediately shall discontinue to manufacture, promote, distribute or
sell in any manner the Licensee Products and shall discontinue the use of the
Licensed Technology, and any signs, equipment, certificates, advertising or
promotional materials, stationery, forms and any other articles or materials,
that display or refer to Licensed Technology.
10.3.4 Each party shall continue to maintain in confidence
any and all Confidential Information, and, within five (5) days after such
termination, except as otherwise permitted under Section 2.2, will return to
the other party, at the returning party's expense, all packaging, promotional
or advertising materials or other materials and documents relating to the
Licensee Products, Licensed Technology or any Confidential Information and
certify to the other party that the certifying party has complied with all of
its obligations with respect to Confidential Information under this Agreement.
10.4 SURVIVAL. Sections 7.1-7.3, 7.5, 7.6, 7.7.2, 7.10, 7.11,
10.3, 10.4, 11, 12 (provided that the indemnification obligations of Licensor
under Section 12
16
shall not survive termination based upon Licensee's breach) and 13 shall
survive the expiration or earlier termination of this Agreement.
11. DISCLAIMER OF WARRANTY
11.1 LIMITED WARRANTY. Except as set forth in Section 7.8 above,
the Licensed Technology is delivered to Licensee on an "as is" basis.
LICENSOR MAKES NO WARRANTIES, EXPRESS OR IMPLIED, CONCERNING THE LICENSED
TECHNOLOGY OR ANY OTHER MATERIALS OR SERVICES PROVIDED TO LICENSEE UNDER THIS
AGREEMENT, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.
LICENSOR SPECIFICALLY DOES NOT WARRANT THAT THE LICENSED TECHNOLOGY IS
COMPLETE, ERROR-FREE OR SUFFICIENT FOR THE MANUFACTURING AND SALE OF LICENSED
PRODUCTS.
11.2 NO LICENSOR WARRANTIES TO CUSTOMERS; LIABILITY DISCLAIMER. To
the extent that Licensee makes any warranty to its customers with respect to
the Licensee Products, such warranty shall be made solely for Licensee's
account and shall not bind Licensor.
12. INDEMNIFICATION AND LIMITATION ON LIABILITY
12.1 LICENSOR INDEMNITY FOR LICENSED TECHNOLOGY. Subject to the
limits of liability in this Section 12 and so long as Licensee is not in
material breach of its obligations hereunder, Licensor shall indemnify and
defend Licensee, and hold Licensee harmless against direct (but not
consequential or incidental) damages awarded in favor of any third party,
against any claim, suit or proceeding (collectively, "Claim") brought against
Licensee to the extent that such Claim is based on a breach of one or more of
Licensor's warranties under Section 7.8 above or any claim that any Licensed
Technology constitute a direct infringement of any patent or any mask work,
copyright or trade secret issued or protected under the laws of the United
States or under the laws of a country similar to those of the United States,
and Licensor shall pay all damage and costs (including attorney's fees)
awarded by final judgment (from which no appeal may be taken) or settlement
against Licensee, subject to the conditions set forth in Section 12.3 below.
During the pendency of any Claim, Licensee shall have no right of offset or
deduction against its obligations to make payment of License Fees and Minimum
Annual License Fees under this Agreement.
12.2 EXCEPTIONS AND CROSS-INDEMNITY. Licensor shall have no
liability to or for any Claim alleging infringement or misappropriation based
upon (a) Licensor's compliance with Licensee's instructions, drawings,
designs or functional specifications; (b) any use of the Licensed Technology
in a manner other than as specified by Licensor; (c) any use of the Licensed
Technology in combination with other products equipment,
17
devices, software, systems, data or services not supplied by Licensor to the
extent that such Claim is directed against such combination, (d) any
representation or warranty by Licensee to its customers with respect to the
Licensee Products except to the extent that such representation or warranty
was made by Licensee consistent with its rights and licenses under this
Agreement, or (e) any alteration or modification of the Licensed Technology
by anyone other than Licensor. In the event of an infringement or
misappropriation action or claim against Licensor which is based on any of
the circumstances or conduct described in the preceding sentence, Licensee
shall at its own expense defend such Claim, and Licensee shall pay any and
all damages and costs finally awarded against Licensor in favor of a third
party in connection with such Claim, or those damages and costs agreed in any
monetary settlement or compromise of such action, subject to the conditions
set forth in Section 12.3 below.
12.3 INDEMNIFICATION PROCEDURES. If either party receives any
Claim or is subject to any Claim as to which it is entitled to be indemnified
by the other party under Section 12.1 or 12.2 above, such indemnified party
shall promptly notify the indemnifying party in writing of such Claim. The
indemnifying party shall defend or settle such Claim and satisfy any final
judgments rendered against the indemnified party, provided that the
indemnifying party shall have sole control of the defense or settlement of
the Claim, and the indemnified party shall provide all reasonable assistance
requested by the indemnifying party, at the indemnifying party's expense.
If, in the reasonable judgment of the indemnified party, its interests
diverge from the interests of the indemnifying party, the indemnified party
may assume control of and conduct such defense at its own expense; provided,
however that the indemnifying party shall have no liability for damages or
losses attributable to such defense. The indemnified party may, at any time,
participate at its own expense, in the defense of the claim through counsel
of its choice. Neither party shall settle any such action without first
obtaining the other party's written consent thereto, which consent shall not
be unreasonably withheld.
12.4 REMEDIES. If any Licensed Technology supplied by Licensor to
Licensee shall be held to directly infringe any third party patent issued or
protected as of the date hereof or any mask work, copyright, trade secret or
other proprietary right, issued under the laws of the United States or the
laws of a country similar to those of the United States, and the use of same
is enjoined, or if Licensor believes such a holding is likely. Licensor
shall either: (i) procure for Licensee the right to use such Licensed
Technology free of liability for infringement; or (ii) replace (or modify)
the Licensed Technology with a non-infringing substitute otherwise complying
substantially with all the requirements of this Agreement; or (iii) if
neither of the foregoing alternatives is commercially feasible, to terminate
the Agreement and, in such event, Licensor's sole obligation and liability,
in addition to the obligations set forth in this Section 12, shall be to
refund to Licensee any unrecouped License Fees paid by Licensee with respect
to Licensee Products containing or based on the infringing Licensed
Technology.
18
12.5 DISCLAIMER. THE FOREGOING SECTIONS 12.1 - 12.4 AND SECTION
12.6 BELOW STATE THE SOLE AND EXCLUSIVE LIABILITY OF THE PARTIES FOR
INFRINGEMENT CLAIMS AND ACTIONS, WHETHER DIRECT OR CONTRIBUTORY.
12.6 LIMITATION OF LIABILITY. EXCEPT FOR LICENSEE'S LIABILITY FOR
PAYMENTS OF LICENSE FEES DUE AND OWING UNDER THIS AGREEMENT, EACH PARTY'S
AGGREGATE LIABILITY IN CONNECTION WITH THIS AGREEMENT, REGARDLESS OF THE FORM
OF ACTION GIVING RISE TO SUCH LIABILITY (WHETHER IN CONTRACT, TORT OR
OTHERWISE), AND INCLUDING ANY LIABILITY UNDER SECTION 12, SHALL NOT EXCEED
THE AGGREGATE AMOUNTS PAID, AS OF THE DATE OF FINAL DISPOSITION OR RESOLUTION
OF THE CLAIM, BY LICENSEE TO LICENSOR UNDER THIS AGREEMENT. NEITHER PARTY
SHALL BE LIABLE FOR ANY INDIRECT, EXEMPLARY, SPECIAL, CONSEQUENTIAL OR
INCIDENTAL DAMAGES OF ANY KIND (INCLUDING WITHOUT LIMITATION LOST PROFITS),
EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, EXCEPT FOR A
BREACH OF EITHER PARTY'S OBLIGATIONS WITH RESPECT TO SECTION 7.11. THE
LIMITATIONS OF LIABILITY CONTAINED IN THIS AGREEMENT ARE A FUNDAMENTAL PART
OF THE BASIS OF EACH PARTY'S BARGAIN HEREUNDER, AND NEITHER PARTY WOULD ENTER
INTO THIS AGREEMENT ABSENT SUCH LIMITATIONS.
13. GENERAL
13.1 EQUITABLE RELIEF. Licensor and Licensee acknowledge that
there may be no adequate remedy at law for its failure to comply with terms
of this Agreement relating to the obligations under Section 4.2, Licensee's
obligation to cease the manufacture, sale, advertisement, promotion or
distribution of the Licensee Products upon termination of this Agreement,
Licensor's and Licensee's obligations with respect to the limited use and the
rights to future use of Licensed Technology, Inventions and Enhancements, and
the obligation to maintain the confidentiality of Confidential Information.
Accordingly, if either party fails to comply with such terms of this
Agreement or other terms the breach of which may not have an adequate remedy
at law, the other party shall have the right to have any such breach remedied
by equitable relief by way of a temporary restraining order, preliminary
injunction, permanent injunction, and such other alternative relief as may be
appropriate.
13.2 ASSIGNMENTS; SUCCESSORS AND ASSIGNS; SUBSIDIARIES. No right
or obligation of either party under this Agreement may be assigned, delegated
or otherwise transferred, whether by agreement, operation of law or otherwise
without the express prior written consent of the other party, except pursuant
to a merger, sale of all or substantially all assets, disposition of all or
substantially all of the assigning party's business with respect to the
Licensed Technology or other corporate reorganization,
19
other than any of the foregoing effected in connection with an insolvency,
bankruptcy or like proceeding, and any attempt to otherwise assign, delegate
or otherwise transfer any rights or obligations hereunder, without such
consent, shall be void. Subject to the preceding sentence, this Agreement
shall bind each party and its permitted successors and assigns and all
representations, warranties, covenants and agreements of the parties shall
inure to the benefit of and bind their respective successors and permitted
assigns. To the extent any subsidiary of Licensee is a licensee hereunder,
it shall have all the rights, benefits and obligations of the Licensee
hereunder, and, subject to Section 1.1: (a) each such subsidiary, together
with Licensee, shall be jointly and severally liable for all of the
obligations of the Licensee hereunder, and (b) Licensor may enforce its
rights and remedies hereunder against any one or more of Licensee or such
subsidiaries as Licensor may, in its sole discretion, deem appropriate,
irrespective of which of Licensee or such subsidiaries has breached the terms.
13.3 NOTICES. Any notice, request, demand, or other communication
required or permitted under this Agreement, shall be deemed to be properly
given by the sender and received by the addressee (i) if personally
delivered; (ii) three (3) days after deposit in the mails if mailed by
certified or registered air mail, postage prepaid; (iii) twenty-four (24)
hours after being sent by facsimile with confirmation sent as provided in
(ii) above; or (iv) twenty-four (24) hours after being sent by commercial
overnight mail, addressed as follows, and in the case of facsimile
transmission, to the appropriate facsimile number shown below:
To Licensor: FAROUDJA LABORATORIES, INC.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile No: 408.735.8571
With a copy to: BUCHALTER, NEMER, FIELDS & YOUNGER
000 X. Xxxxxxxx Xx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
Facsimile No: 213.896.0400
To Licensee: S3 INCORPORATED
0000 Xxxxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000-0000
(or if by overnight courier, 95054)
Attention: Director of Legal Affairs
Facsimile No: 408.980.5444
20
With a copy to: PILLSBURY MADISON & SUTRO LLP
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Park
Facsimile No: 415.223.4545
or to such other address or facsimile number as from time to time may be
given in the manner permitted above.
13.4 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Licensor or Licensee,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
fairly accomplish the purposes and intentions of all parties hereto.
13.5 SEVERABILITY. If any provision of this Agreement is found by
any court of competent jurisdiction to be invalid or unenforceable, such
provision shall be deemed to be modified to the minimum extent necessary to
cause it to be valid and enforceable and the invalidity or unenforceability
of such provision prior to such modification shall not affect the other
provisions of this Agreement and all provisions not affected by the
invalidity or unenforceability shall remain in full force and effect.
13.6 AMENDMENT AND MODIFICATION. This Agreement may not be amended
or modified orally. This Agreement may be amended or modified only by a
writing executed by all parties.
13.7 GOVERNING LAW AND ARBITRATION. The parties agree that this
Agreement is executed and delivered in the State of California. This
Agreement shall be construed and governed in accordance with the internal
laws of the State of California, without regard to conflict of law
principles. Any dispute arising out of or relating to this Agreement shall
be resolved by binding arbitration in Santa Clara, California in accordance
with the rules of the American Arbitration Association and the procedures set
forth in Schedule 13.7; PROVIDED that the foregoing shall not prevent either
party from seeking provisional relief, including equitable relief under
Section 13.1.
13.8 ENTIRE AGREEMENT. This Agreement, together with the
Non-Disclosure Agreement between Licensor and Licensee (erroneously referred
to as S3 Corporation) dated as of October 10, 1996, constitutes the entire
agreement between the parties relating to the subject matter hereof and
supersedes any and all previous agreements relating to the subject matter
hereof.
13.9 GOVERNMENT APPROVALS AND REGISTRATIONS. In the event that any
approvals with respect to this Agreement or any registration hereof is
required, initially
21
or at any time during the term of this Agreement, Licensee shall obtain such
approvals and make such registrations; and any costs, expenses, fees or
charges associated therewith shall be borne by Licensee.
13.10 AUTHORITY TO MAKE AGREEMENT. Each party warrants and
represents that it has the power to enter into this Agreement and perform in
accordance with the provisions hereof and that the execution and performance
of the Agreement has been duly and validly authorized in accordance with all
applicable laws and governing instruments.
13.11 NO WAIVER. No waiver of any breach of any of the
provisions of this Agreement shall be construed to be a waiver of any other
breach of the same or any other provision.
13.12 REMEDIES NOT EXCLUSIVE. No remedy conferred by any of
the specific provisions of this Agreement is intended to be exclusive of any
other remedy, except as expressly provided in this Agreement or any Exhibit,
Annex or Schedule hereto, and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or
hereafter existing in law or in equity or by statute or otherwise. The
election of any one or more remedies shall not constitute a waiver of the
right to pursue other available remedies.
22
13.13 EXHIBITS, ANNEXES AND SCHEDULES. The definitions and
provisions set forth on Exhibit A and the Annexes and Schedules attached
hereto are incorporated herein and made a part of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
"Licensor"
FAROUDJA LABORATORIES, INC.,
a California corporation
By /s/ Xxxxxxx Xxxxx
-------------------------------------
Title: President, CEO
"Licensee"
S3 INCORPORATED,
a Delaware corporation
By /s/ Xxxx Xxxxxxx
-------------------------------------
Title: President and CEO
23
EXHIBIT A
GLOSSARY OF TERMS
As used in the foregoing Agreement, the following terms shall have
the meanings as defined below:
[*]
"Average Selling Price" means the weighted average selling price,
based on the invoice price less discounts, of Licensee Products that include
Licensed Technology, sold by Licensee during the applicable calendar quarter.
"Category I Technology" is the technology [*] as set forth in
Section B of ANNEX I.
"Category II Technology" is the technology [*] as set forth in
Section A of ANNEX I.
"Confidential Information" means all of the terms and provisions of
the Agreement, this Exhibit and the Annexes and Schedules to the Agreement,
and any data or information disclosed under the Agreement (whether written,
oral or graphical) that relates to the disclosing party's products,
technology, research, development customers or business activities, and which
is confidential or proprietary or a trade secret of the disclosing party if
any such other information is disclosed in a tangible form it is labeled as
confidential or proprietary, or if provided orally, is identified as
confidential or proprietary at the time of disclosure with a written summary
of the confidential information that identifies such information as
"confidential or proprietary" provided to the recipient within ten (10) days
of the oral disclosure. Confidential Information shall not include any
information, data or material which: (a) the disclosing party expressly
agrees in writing is free of any non-disclosure obligations; (b) at the time
of disclosure to the receiving party was known to the receiving party (as
evidenced by documentation in the receiving party's possession) free of any
non-disclosure obligations; (c) is independently developed by the receiving
party (as evidenced by documentation in the receiving party's possession);
(d) is lawfully received by the receiving party, free of any non-disclosure
obligations, from a third party having the right to so furnish such
Confidential Information; or (e) is or becomes generally available to the
public without any breach of this Agreement or unauthorized disclosure of
such Confidential Information by the receiving party.
"Consumer Electronics" means [*] (commonly referred to as [*]) which
are capable of utilizing an integrated circuit which employs both Licensed
Technology and Licensee's 3D Graphics Technology (other than Licensed
Technology), including,
A-1
without limitation, [*] systems, [*] With respect to sales into the Consumer
Electronics market, in the aggregate, Licensee Products must include enough
3D Graphics Technology and additional features as appropriate such that the
overall product consists of more of Licensee's technology, circuits and die
area than those which represent the Licensed Technology.
"Cost of Goods Sold" means Licensee's direct costs for the Licensee
Products, as applicable and as are consistent with generally accepted
accounting principles. Direct costs consist of Licensee's costs for wafer,
packaging and testing, together with manufacturing overhead. The
manufacturing overhead allocated to the direct cost of Licensee Products
shall be calculated as a pro rata percentage of Licensee's total
manufacturing overhead for the applicable calendar quarter, based on the
total dollar volume of the particular Licensee Product(s) divided by the
total dollar volume of all Licensee Products that are subject to
manufacturing overhead.
"Decoders" means [*].
"Development Work" means work done by Licensor specifically for
Licensee's applications.
"Economic Terms" means all terms and conditions with respect to
license fees, advances on license fees, volume commitments, payment of
development fees, marketing and advertising expenditure commitments, and
support obligations and term of agreement.
"Encoders" means [*].
"Enhancement" means: (i) new technology or know-how covered by a
claim or claims of a Patent which is a part of the Licensed Technology; (ii)
any continuation-in-part of a Patent which is a part of the Licensed
Technology; or (iii) an improvement in know-how which is directly related to
the Licensed Technology.
"Exclusive-Licensed Technology" means the Licensed Technology
subject to an exclusive license in favor of Licensee pursuant to Schedule 1.1
"Expiration Date" means December 31, 2001 or the earlier
termination of the Agreement.
"Gross Profit Margin" means the Average Selling Price of Licensee
Products that include Licensed Technology sold by License during the
applicable calendar quarter less the Cost of Goods Sold for such products
together with other cost-of-goods-sold deductions taken consistent with
generally accepted accounting principles.
A-2
"Intellectual Property Rights" means all of Licensor's copyrights,
trade secrets, patents, mask works and other intellectual property rights
which are owned by or licensed to Licensor at any time during the Term which
are necessary for the manufacture, use, sale or support of the Licensed
Technology in the uses licensed under the Agreement, but excluding
trademarks, service marks, trade names and other product, service or company
identifiers.
"Invention" means: (i) any Patent which is related to line doubling
for video display and video enhancement which is not a part of the Licensed
Technology; or (ii) any technology which is deemed to be patentable by both
Licensor and Licensee and is not a part of the Licensed Technology and which
is related to line doubling for video display and video enhancement.
"License Fee" means the quarterly license fees payable by Licensee
to Licensor as set forth on ANNEX II.
"Licensee Products" means any Licensee integrated circuit products.
"Licensed Rights" means collectively the Licensed Technology and
Marks.
"Licensed Technology" means the Patents set forth on ANNEX III and
technology and know-how which Licensor owns or to which Licensor hold
licenses and is directly related to the application of such Patents to the
licensed uses of Licensee under the Agreement, but which in any event
excludes technology and know-how related [*]
"Marks" means those trademarks and/or service marks set forth on
ANNEX IV attached hereto and incorporated herein by this reference; PROVIDED,
HOWEVER, that the appearance and/or style of the Marks may vary from time to
time as specified by Licensor in its sole discretion without affecting this
Agreement.
"Minimum Advertising and Promotion Expenditures" means the minimum
annual advertising and promotion expenditures required to be made by Licensee
with respect to Licensee Products which include Licensed Technology, as set
forth on ANNEX V. Such expenditures must be of a nature intended to directly
publicize and promote the Licensee Products that include Licensed Technology,
the Marks or the Licensed Technology and shall not include any expenditures
for advertising and promotion of Licensee generally or for other Licensee
Products unless the Marks or the name of Licensor is also referenced therein.
"Minimum Annual License Fee Payments" means the minimum annual
license fee payments as set forth on ANNEX VI.
A-3
"Non-MS" means computer systems integrating a microprocessor
running third-party application software with an operating system sold or
licensed by an entity other than Microsoft Corporation, including but not
limited to current and future versions of Apple Corporation's Macintosh
operating system, the Sun Microsystems' Unix or Solaris operating systems, or
IBM's OS/2 operating system, which are capable of utilizing an integrated
circuit which employs both Licensed Technology and Licensee's 3D Graphics
Technology (other than Licensed Technology), but does not include PC systems;
[*] Licensee Products must include enough 3D Graphics Technology and
additional features as appropriate such that the overall product consists of
more of Licensee's technology, circuits and die area than those which
represent the Licensed Technology.
"Patents" means any and all issued United States patents and filed
United States patent applications, including any divisions, substitutions,
continuations, continuations-in-part, reissues, reexaminations, or extensions
thereof, and all corresponding foreign patents and patent applications filed
or issued in any country prior to the termination of this Agreement.
"PC" means personal computer systems integrating a microprocessor
running third-party applications software with x86, RISC or other
architecture, and executing a Microsoft (or Microsoft compatible) operating
system which are capable of utilizing an integrated circuit which employs
both Licensed Technology and Licensee's 3D Graphics Technology (other than
Licensed Technology); [*] With respect to sales into the PC market, in the
aggregate, Licensee Products must include enough 3D Graphics Technology and
additional features as appropriate such that the overall product consists of
more of Licensee's technology, circuits and die area than those which
represent the Licensed Technology.
"3D Graphics Technology" means [*] implemented by Licensee in
Licensee Products that include the Licensed Technology. Examples of such
functions which may be included are [*] In the aggregate, Licensee Products
will include enough of the above features and additional features as
appropriate such that the overall product consists of more of Licensee's
technology, circuits and die area than those which represent the Licensed
Technology.
"Video Display and Enhancement Integrated Circuits" means
integrated circuits which perform [*].
A-4
ANNEX I
CATEGORY I AND II TECHNOLOGY
[*]
[*]
Annex I
1
ANNEX II
LICENSE FEES
[*]
Annex II
1
ANNEX III
LICENSED PATENTS
A. FAROUDJA TECHNOLOGY (CATEGORY II TECHNOLOGY)
1. U.S. PATENTS
Description Patent No. Date
----------- ---------- ----
[*]
2. FOREIGN PATENTS
Description Patent No. US Patent Date
----------- ---------- --------- ----
[*]
3. FOREIGN PATENT APPLICATIONS
Application
Description Country Number
----------- ------- ------------
[*]
B. FAROUDJA PRO (CATEGORY I TECHNOLOGY)
1. U.S. PATENTS
Description Patent No. Date
----------- ---------- ----
[*]
2. U.S. PATENTS PENDING
PATENT
DESCRIPTION APPLICATION NO.
----------- ---------------
[*]
3. FOREIGN PATENTS
Description Patent No. US Patent Date
----------- ---------- --------- ----
[*]
Annex III
1
4. FOREIGN PATENT APPLICATIONS
PATENT
DESCRIPTION APPLICATION NO.
----------- ---------------
[*]
Annex III
2
ANNEX IV
MARKS
[*]
Annex IV
1
ANNEX V
[*]
Annex V
1
ANNEX VI
[*] LICENSE FEES
[*]
[*]
[*]
[*]
[*]
Annex VI
1
SCHEDULE 1.1-A
EXCLUSIVE AND SEMI-EXCLUSIVE LICENSE:
During the Term, Licensee shall have an exclusive license as to the
Licensed Technology employed with the Category I Technology [*] so long as
each and all of the following are satisfied: [*] (b) Licensee shall have
paid when due the Minimum License Fee payment applicable to each quarter
during the 12 month period then ended; and [*]
NON-EXCLUSIVE LICENSE:
During the Term, Licensee shall have a non-exclusive license as to the
Licensed Technology employed with the Category I Technology and Category II
Technology [*]. As provided above in this Schedule 1.1, in the event the
conditions for the exclusive and semi-exclusive licenses are not satisfied, upon
either of the Licensor's or Licensee's election such licenses shall become
non-exclusive.
Schedule 1.1-A
1
SCHEDULE 1.1-B
Majority-Owned Subsidiary Licensees
S3 Japan
S3 Germany
S3 India
Schedule 1.1-B
1
SCHEDULE 13.7
ARBITRATION PROCEDURES
(a) CLAIMS OR CONTROVERSIES SUBJECT TO ARBITRATION. Any claim or
controversy between or among the parties to this Agreement and any and all
ancillary and related documents, amendments, renewals and substitutions
thereto (collectively, the "Subject Documents"), (ii) any negotiations,
correspondence or communications relating to any of the Subject Documents,
whether or not incorporated into the Subject Documents or any indebtedness
evidenced thereby, (iii) the administration and management of the Subject
Documents and the transactions thereunder, and (iv) any alleged agreements,
promises, representations or transactions in connection therewith, including
but not limited to any claim or controversy which arises out of or is based
upon an alleged tort, shall, at the written request of any party, be
determined by binding arbitration. The arbitration shall be conducted in
accordance with Title 9 of the California Code of Civil Procedure sections
1280 ET. SEQ. (the "California Arbitration Act") and under the Commercial
Rules of the American Arbitration Association (the "AAA"). IN CONNECTION WITH
SUCH ARBITRATION, THE PARTIES HEREBY EXPRESSLY, INTENTIONALLY AND
DELIBERATELY WAIVE ANY RIGHT THEY MAY OTHERWISE HAVE TO TRIAL BY JURY OF SUCH
CLAIM OR CONTROVERSY.
(b) SELECTION OF ARBITRATOR. Within thirty (30) days after written
demand, or within thirty (30) days after commencement by any party of any
lawsuit subject to these arbitration provisions, a single neutral arbitrator
will be selected pursuant to the Commercial Rules of the AAA. However, the
arbitrator selected must be a retired state or federal court judge with at
least five years of judicial experience in civil and commercial transaction
matters. In the event that the selection pursuant to the Commercial Rules of
the AAA does not result in the appointment OF a single neutral arbitrator
within thirty (30) days, any such party may petition the court to appoint a
single neutral arbitrator who is a retired state or federal court judge with
at least five years of judicial experience in civil matters ("Arbitrator").
The parties shall equally bear the fees and expenses of the Arbitrator unless
the Arbitrator otherwise provides in the award.
(c) POWERS OF AND LIMITATIONS ON THE ARBITRATOR. The Arbitrator shall
have the powers provided by the California Arbitration Act and the Commercial
Rules of the AAA except as provided in these arbitration provisions,
including without limitation the following:
(1) The Arbitrator shall determine all challenges to the legality
and/or enforceability of the Agreement, including these
arbitration provisions.
(2) The Arbitrator shall apply the rules of evidence to the same
extent as they would be applied in a court of law.
Schedule 13.7
1
(3) The Arbitrator shall give effect to all legal and equitable
defenses in determining any claim or controversy, including
without limitation statutes of limitation, the statute of frauds,
waiver and estoppel.
(4) A party may not conduct discovery unless the Arbitrator grants
such party leave to do so upon a showing of good cause, provided
that limited discovery may be conducted as mutually agreed by the
parties or as otherwise ordered by the Arbitrator. All discovery
shall be completed within ninety (90) days after the appointment
of the Arbitrator. The Arbitrator shall limit discovery to
non-privileged material that is relevant to the issues to be
determined by the Arbitrator.
(5) The AAA shall determine the time of the hearing and shall
designate its location in the city of Santa Xxxxx, San Francisco,
or San Jose, California, based upon the convenience of the
Arbitrator, the parties and any witnesses. However, such hearing
shall be commenced within thirty (30) days after completion of
discovery, unless the Arbitrator grants a continuance upon a
showing of good cause by any party. At least seven (7) days
before the date set for such hearing, the parties shall exchange
copies of exhibits to be offered as evidence, and lists of the
witnesses who will testify, at such hearing. Once commenced, the
hearing shall proceed day to day until completed, unless the
Arbitrator grants a continuance upon a showing of good cause by
any party. Any party may cause to be prepared, at its expense, a
written transcription or electronic recording of such hearing.
(6) Any award by the Arbitrator shall be set forth in a written
decision supported by findings of fact and conclusions of law
which the Arbitrator shall deliver to the parties concurrently
with such award.
(7) The award of the Arbitrator may include equitable relief.
(8) The Arbitrator may not award punitive damages.
(9) The Arbitrator shall have the power to award reasonable
attorneys' fees (including a reasonable allocation for the costs
of in-house counsel) and costs to the prevailing party.
(10) The provisions of California Civil Code Sections 47 ET. SEQ.
shall apply to the arbitration to the same extent as they would
apply to a judicial proceeding subject to such provisions.
(11) The laws of the State of California shall govern the arbitration
pursuant to these arbitration provisions.
Schedule 13.7
2
(d) PROVISIONAL REMEDIES. No provision of these arbitration provisions
shall limit the right of any party to obtain or oppose injunctive,
provisional or ancillary remedies from a court of competent jurisdiction
before, after or during the pendency of the arbitration. The exercise of, or
opposition to, any such remedy does not waive the right of any party to
arbitration pursuant to the Agreement.
(e) MISCELLANEOUS. Judgment upon the award of the Arbitrator may be
entered in any court of competent jurisdiction. In the event that multiple
claims are asserted, some of which are found not subject to these arbitration
provisions, the parties agree to stay the proceedings of the claims not
subject to these arbitration provisions until all other claims are resolved
in accordance with these arbitration provisions. In the event that claims
are asserted against multiple parties, some of whom are not subject to these
arbitration provisions, the parties agree to sever the claims subject to the
arbitration provisions and resolve them in accordance with these provisions.
Schedule 13.7
3
