[***]CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
DEVELOPMENT AND LICENSING AGREEMENT
This Development and License Agreement ("Agreement") is entered into and
effective as of 22 March 2002 ("Effective Date") by and between TOWER
SEMICONDUCTOR, LTD., a company duly incorporated under the laws of Israel,
having its principal place of business at Ramat Gavriel Industrial Area, X.X.
Xxx 000, Xxxxxx Xxxxxx, Xxxxxx 00000, by and on behalf of itself and its
wholly-owned subsidiaries ("Tower") and VIRAGE LOGIC CORPORATION, ("Virage
Logic") a company duly incorporated under the laws of Delaware, USA, having its
principal place of business at 00000 Xxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000
XXX.
WHEREAS, Virage Logic is a provider of embedded memory solutions for the
semiconductor industry; and
WHEREAS, Tower desires to have Virage Logic license to Tower and Tower's
customer's an existing and/or future development of sub-micron memory compilers,
including, but not limited to, the memory compilers set forth in Exhibit A and
B, which consists of: (i) object code versions of a set of executable software
programs, (ii) libraries containing design elements of memory cell arrays and
control logic, and (iii) all related documentation, used for generating memory
configurations as supplied to Tower by Virage Logic, based on Tower 0.18um
technology (the "Compilers") for Tower's manufacturing services, and to have
Virage Logic extend the Compilers to its customers;
NOW THEREFORE, the parties hereto agree as follows:
1. DEVELOPMENT AND DELIVERY OF THE COMPILERS
1.1 Development. Virage Logic agrees to develop for Tower the Compilers
according to specifications as provided in Exhibit C ("Specifications") of this
Agreement. Virage Logic agrees to provide to Tower the set of deliverables
outlined in Exhibit A ("Deliverables ") and Exhibit B ("0.18u Full Product
List"). The products listed in Exhibit B will be provided only in response for
customer demand for such products. For the purposes of this Agreement, "customer
demand" shall mean that the customer has issued a purchase order for such
products or generation of one or more instances from such products. The products
listed in Exhibit B will be provided to customers to promptly fulfill their
purchase order requirements and will be provided at the current Virage Logic
standard business practices that Virage Logic uses for Leading Foundries (as
that term is defined in Exhibit I). Subject to the provision of section 4.9 of
this Agreement, the scope of this Agreement shall include 0.l8um technology,
which may be extended to future technologies, by mutual agreement in writing.
1.2 Schedule. Virage Logic agrees to provide the set of Deliverables
according to the schedule and milestones as provided in the Exhibit D
("Statements of Work"). Both Tower and Virage Logic shall conduct engineering
reviews to track the progress on a weekly basis. For every milestone set forth
Exhibit D, Virage Logic commits to allocate resources to meet the Schedule.
1.3 Tower Deliverables. Tower agrees to provide Virage Logic early access
to the technical information listed in Exhibit E ("Tower Deliverables") for use
by Virage solely in connection with developing the Compilers as set forth in
this Agreement. Virage Logic understands that there may be potential changes to
the information provided, and Tower agrees to use good faith and reasonable
efforts to keep Virage Logic continuously updated on the most current version of
information. Provided, however, that both parties understand that the scope of
such changes may result in changes to the Schedule set forth in Exhibit D.
Exhibit D shall be updated as necessary to reflect these changes to the schedule
with no penalty imposed upon Virage Logic.
1
1.4 Compilers. The Compilers will be an integration of (but not limited to)
Tower-specific memory compilers, which contain bit cells developed by Virage
Logic. The Compilers shall pass the quality assurance procedures set forth in
Section 1.7 and shall also pass Tower's DRC procedure. Tower will consider
Virage Logic's suggestions with respect to design rule modifications and
interpretations.
1.5 Virage Logic and Tower shall hold joint periodic technical discussions
in order to improve the probability that Tower-specific Compilers versions are
industry-competitive. The objectives and schedules of such technical discussions
are set forth in Exhibit D.
1.6 Schedule Changes. The Schedule set forth in Exhibit D shall be
appropriately and equitably revised to reflect any delays resulting from changes
to the specification implemented by either party and agreed to by both parties.
The non-changing party shall have no liability as a result of Schedule change.
1.7 Quality Assurance. Within sixty (60) days of the Effective Date, Virage
Logic agrees to provide to Tower the quality control programs and process
utilized by Virage Logic in its normal course of business. Tower may suggest
reasonable changes to such programs and processes and the parties agree to
discuss in good faith implementing programs and processes that incorporate such
changes, as appropriate.
1.8 Silicon Characterization. As part of any final characterization, Virage
Logic will provide a silicon characterization report in accordance with its
standard practices. Tower may suggest reasonable changes to practices, and the
parties agree to discuss in good faith implementing practices that incorporate
such changes, as appropriate.
1.9 Test Chips. Tower agrees to allow Virage Logic to use Tower's silicon
shuttle program, as available, for the manufacture of 50 test chips per run, up
to two such shuttle runs at no charge to Virage Logic. Virage Logic agrees to
promptly provide Tower with a test characterization report based on such test
chips.
2. TIMING AND DESIGN TOOL REVISION
2.1 Virage Logic shall promptly revise the design kits in the Compilers at
its own expense in the event of design tool revisions and changes, that are
needed in order to keep the Compilers current with industry standards as set by
Leading Foundries. Virage Logic shall re-characterize the Compilers, at its
expense, for timing changes (e.g., due to changes in Tower's SPICE models). The
re-characterization will be done a maximum of two times. Additional
re-characterizations of the Compilers, that are requested by Tower will be paid
for by Tower at the rate of [***]. The amount paid by Tower will cover the
Compilers then currently available to Tower's customers. Compilers updated for
timing and/or tool revisions will be provided to Tower, existing
maintenance-paying customers, potential customers and for evaluation purposes.
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2
3. OWNERSHIP AND LICENSE
3.1 As between the parties, Virage Logic exclusively shall have all right,
title and interest including all patent rights, copyrights, trade secret rights,
mask work rights and other rights throughout the world (collectively
"Intellectual Property Rights") in any inventions, intellectual property,
trademarks, works-of-authorship, mask works, ideas or information made or
conceived or reduced to practice by Virage Logic or by Virage Logic jointly with
Tower and/or third parties in the course of development of the Compilers.
3.2 As between the parties, Tower exclusively shall have all Intellectual
Property Rights in (a) any Tower Deliverables that exist prior to the Effective
Date and (b) any inventions, intellectual property, trademarks,
works-of-authorship, mask works, ideas or information made or conceived or
reduced to practice by Tower or by Tower jointly with Virage Logic and/or third
parties in the course of development of the Tower Deliverables.
3.3 If, during the term of this Agreement, the parties anticipate that the
development of any future products that may involve joint ownership of such
future products, the parties agree to negotiate a separate agreement.
3.4 Tower acknowledges and agrees that the Compiler contains trade secrets
and other proprietary information of Virage Logic. In order to protect those
trade secrets and other proprietary information, Tower agrees that, except as
expressly permitted under applicable law, it will not reverse engineer,
disassemble, or otherwise attempt to derive the source code form of the
Compiler.
3.5 Tower acknowledges and agrees that all output generated for Tower by
Virage Logic as described in the Agreement, or generated by Tower through use of
the Compilers licensed hereunder contains information that complies with the
Virtual Component Identification Physical Tagging Standard (VCID) as maintained
by the Virtual Socket Interface Alliance (VSIA). Such information may be
expressed in the specific GDSII layer designated by the VSIA, hardware
definition languages, or other formats. Tower is not authorized to alter or
change any such information.
4. CONSIDERATION
4.1 In consideration of the 0.l8um Compilers developed herein, Tower shall
pay to Virage Logic [***]pursuant to the schedule set forth in Exhibit A.
4.2 Tower shall also pay to Virage Logic a royalty based compensation rate
as specified in Sections 4.3, 4.4 and 4.5 on net sales revenues of production
wafers (excluding test chips, engineering lots, embedded intellectual property
cores, samples and other similar product) manufactured by Tower and sold to
Tower Customers that contain die that include instance(s) generated by
Compiler(s) ("Royalty-Bearing Products"). The net sales revenues are to be
determined by Tower, in accordance with Tower's normal and customary business
records under Generally Accepted Accounting Practices ("Net Sales Revenue").
Royalty based compensation payments will be strictly limited based on the wafers
shipped and accepted through Tower that contain Compilers. Tower shall not pay
any royalty based compensation for either engineering lots or any test chip
wafers.
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3
4.3 Royalty Based Compensation Schedule for 0. l8um technology:
--------------------------- ---------------------
Total Cumulative Royalty Maximum Royalty Rate
Paid to Virage Logic
--------------------------- ---------------------
--------------------------- ---------------------
[***] [***]
--------------------------- ---------------------
--------------------------- ---------------------
[***] [***]
--------------------------- ---------------------
--------------------------- ---------------------
[***] [***]
--------------------------- ---------------------
4.4 Allocation.
4.4.1 By Library Class. Except as set forth herein, [***]% of the
above Maximum Royalty Rate shall be due for each library class integrated
into Royalty-Bearing Products that utilize a instance(s) generated by
Compiler(s). There are 2 library classes; standard cells (SCL) including
input/output cells (I/O) and memory.1
4.4.2 Within a Library Class. In the event a Royalty-Bearing Product
contains both a instance(s) generated by Compiler(s) and library components
licensed from a third party for which Tower is contractually obligated to
pay royalties in the same library class, the royalty due for instance(s)
generated by Compilers under the affected library class(es) shall be
reduced to [***]% of the applicable Maximum Royalty Rate.2
4.5 Royalty Obligation. Tower shall be obligated to pay royalties as stated
herein to Virage Logic for any Tower customer design that is: (a) properly
designated at time of production release to Tower by Tower's customer as
containing instance(s) generated by Compiler(s) that have been so licensed under
Tower's Library Program and (b) where such designs are manufactured by Tower. In
the event that a customer designates to Tower that multiple library vendors
contributed to the design, the royalties payable under this Agreement shall be
in accordance with Section 4.4.
4.6 Tower agrees to use good faith and reasonable efforts to require that
customers declare all designs as either "containing such instance(s) generated
by Compilers " or "NOT containing such instance(s) generated by Compilers."
Tower's sole liability shall be limited to recording its customers' assertions
regarding such Compilers. Notwithstanding the above, if any of Tower's customers
notifies Tower of errors or omissions discovered, Tower shall pay Virage Logic
the owed applicable royalties, or Virage Logic shall refund to Tower the
overpaid applicable royalties, in each case as stated under the terms of this
Agreement.
4.7 Tower and Virage Logic shall work together to develop, within ninety
(90) days of the Effective Date, an auditing system (including report format) to
verify the royalty based compensation structure without violating the
confidentiality of Tower's and Virage Logic's customers. Virage Logic agrees to
provide reasonable assistance to Tower in developing the report format, and
Tower agrees to provide reports to Virage Logic, via email addressed to
XXXXXXX@XXXXXXXXXXX.XXX, no more frequently than quarterly.
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1 By way of example, if Compilers are integrated into a Royalty-Bearing Product
while the total applicable Royalty Rate is [***]%, only [***]royalty shall be
due on such products ([***]% for memory libraries).
2 By way of example, if memory libraries are integrated into a Royalty-Bearing
Product while the total applicable Royalty Rate is [***]%, but a third party
memory library is also integrated into such Royalty-Bearing Product, only [***]%
royalty shall be due to Virage on such products.
4
4.8 Taxes. The amounts payable to Virage Logic pursuant to this Agreement
are exclusive of any value added tax or sales or use tax that may be payable.
Tower will reimburse Virage Logic for its payment of any such value added taxes
or sales or use taxes based on the fees paid by Tower to Virage Logic hereunder.
Virage Logic acknowledges that amounts payable to Virage Logic hereunder may be
subject to withholding requirements and that Tower is authorized to withhold
such required amounts from amounts otherwise payable to Virage Logic. Virage
Logic will take full responsibility for obtaining any withholding tax
certificates from relevant tax authorities for reduced withholding tax rates,
and for processing any claims for tax credits, etc. associated with withholding
provided that Tower shall provide all such assistance as Virage Logic may
reasonably require in obtaining such withholding tax certificates.
4.9 0.13UM TECHNOLOGY. In the event Tower desires to license compilers for
its 0.13um process technology from Virage Logic, Virage Logic agrees to license
such compilers as set forth in Exhibit J to Tower at the same fees and under
similar terms and conditions as set forth in this Agreement. [***]
5. DISTRIBUTION OF THE COMPILER
5.1 Distribution of Compilers. During the term of this Agreement, upon
acceptance of the Compilers by Tower pursuant to Section 1.7 above, Virage Logic
shall have non-exclusive and non-transferable rights to reproduce and distribute
the Compilers to third party entities ("Compiler Licensees") without any payment
of royalties or other fees to Tower. Virage Logic agrees to sign "license
agreements" with the Compiler Licensees to authorize use of the Compilers.
5.2 Master License Agreement. Virage Logic's standard Master License
Agreement is attached as Exhibit E for information only and shall serve as a
basis for the license agreements Virage Logic will enter into with customers
under the Tower/Virage Logic Library Program. Virage Logic agrees to inform
Compiler Licensees (in the Master License Agreement or the Product Schedule
thereto) that the licensed Compilers may be used only for manufacturing at Tower
or Tower's designated facilities. Virage Logic shall have the right to make
changes from time to time to the License Agreements so long as any such changes
do not: (1) violate the terms of this Agreement, or (2) materially alter the
basic license restriction that the Compiler Licensees may use the Compilers only
for evaluation and for the design and tape-out of integrated circuits to be
manufactured solely at Tower or its designated manufacturing facilities. Virage
Logic agrees to offer to Tower's customers the same Master License Agreements it
offers to the customers of Leading Foundries.
5.3 Virage Logic agrees that it will offer its standard Master License
Agreement with its standard COT pricing on the current Virage Logic Price List
as offered to the customers of Leading Foundries (or more favorable pricing) to
all Tower Customers. The parties agree that Virage Logic may make changes that
are not permitted under Section 5.2 to the Master License Agreement on a
case-by-case basis for particular Compiler Licensees; provided that, Tower's
consent has been obtained in writing (email with appropriate acknowledgment and
facsimile will be acceptable forms of writing for such consents). Tower agrees
to not unreasonably withhold its consent to such changes.
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5
5.4 Customer Support. Virage Logic shall be responsible for providing
Compiler Licensees support for the Compiler distributed by Virage Logic. Virage
Logic shall be free to set all terms and conditions for support, maintenance,
engineering and customization services provided by Virage Logic to any Compiler
Licensees; provided that Tower customers in the aggregate will be provided the
same level of support at the same percentage of list price for support as
customers of Leading Foundries unless Tower customers require abnormal amounts
of support.
5.5 Distribution by Tower. Tower shall have the right to use and distribute
the Compilers for Tower or its designated subcontractors' internal designs,
including ASICs (at fees consistent with those for Leading Foundries) and
embedded intellectual property cores (with no fees due in connection with the
use by Tower of silicon intellectual property cores); provided that, Tower shall
execute a Virage Logic Master License Agreement as described in Exhibit G of
this Agreement. If required, support for Tower's internal use of the Compilers
as described above may be purchased at Virage Logic's standard fees.
5.6 Licenses Requested by Tower. Upon written request by Tower, Virage
Logic will, on reasonable terms and conditions, license and distribute the
Compilers to (a) other third party design service providers creating designs
that will be manufactured solely at Tower or Tower designated facilities; (b)
distribute as necessary to library developers; or (c), distribute to fulfill
Tower's current contractual obligations and to facilitate future contractual
obligations. The terms of these aforementioned licenses will be mutually
agreeable to Tower, Virage Logic, and the third party on a case by case basis.
Virage Logic may decline to license the following competitors of Virage Logic:
[***]. Virage Logic may unilaterally modify the above list of competitors at any
time (upon written notice to Tower to include any additional competitors that
sell, transfer, and/or license compilers and instances (designs of discrete
integrated circuit memory cell arrays and corresponding control logic) that
compete with Virage Logic products and Virage Logic shall, if requested by
Tower, remove from the list any entities that no longer compete with Virage
Logic.
5.7 Promotion of Compilers. Both Virage Logic and Tower shall actively
promote the Compilers to customers of both parties ("Customers") using Virage
Logic as the distributor of the Compilers. All licensees of Compilers will be
granted a license for use of the Compilers and Deliverables solely for tape-out
to Tower.
5.8 Reports. Virage Logic shall provide Tower a quarterly update of all
Compiler Licensees who receive front-end Views and/or Back-End Views. Virage
Logic shall not directly or knowingly indirectly make available the Compilers to
any company on the list provided in Exhibit I without first obtaining Tower's
consent in writing (email and facsimile will be acceptable forms of writing for
such consents). Tower agrees to not unreasonably withhold its consent to such
requests. Tower may unilaterally modify the above list of companies at any time
by providing a revised Exhibit I to Virage Logic, but may not add to the list of
Leading Foundries.
5.9 Quarterly Meetings. Both parties will jointly hold quarterly meetings
to review performance as a participant in the Tower/Virage Logic Library Program
beginning from the Effective Date. The Parties will assign liaison
representatives at both corporate and regional levels. The liaison
representatives are as follows:
[***][***][***][***][***][***][***][***][***][***]
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SEPARATELY WITH THE COMMISSION PURUSANT TO A REQUEST FOR CONFIDENTIALITY.
6
5.10 Tower agrees to use good faith and reasonable efforts to managing the
program for the useful life of the 0.18 process in the Compilers. If, due to
changes in the business environment or other reasons, Tower chooses to alter the
terms of this Agreement, then Tower agrees to give Virage Logic at least
one-year notice before any of the terms in Section 4 of this Agreement can be
altered so that Virage Logic can re-negotiate its agreements with customers.
Notwithstanding the above, the one-year notice period will be waived due to any
unforeseen circumstances to Tower.
6. TERM AND TERMINATION
6.1 Term. This Agreement shall have an initial term of five (5) years from
the Effective Date, and shall automatically be renewed for successive one (1)
year terms, unless either party gives sixty (60) days written notice of its
intention not to renew the Agreement prior to the expiration of the term
(including the initial term) then in effect.
6.2 Termination. This Agreement may be terminated early by either party if
the other party (1) breaches any material provision of this Agreement and does
not cure or remedy such breach within thirty (30) days after receipt of the
written notice of breach from the other party; (2) becomes the subject of a
voluntary or involuntary petition in bankruptcy or any proceeding relating to
insolvency, receivership, liquidation, or composition for the benefit of
creditors if such petition or proceeding is not dismissed with prejudice within
sixty (60) days after filing. Termination of this Agreement shall be effective
immediately upon issuance of a written notice of termination to the other party
by the non-defaulting party.
6.3 Termination of this Agreement for any reason shall not affect (1) the
obligations accruing prior to the effective date of termination and (2) any
obligations under Sections, 3, 4, 6, (including 6.6, if a Release Condition has
occurred), 7, 8, 9, 10, 11, 12, and current customer engagements hereof, all of
which shall survive termination or expiration of this Agreement.
6.4 Return of Proprietary Information. Upon the effective date of
termination, each receiving party shall cease to use and shall either destroy or
return to the disclosing party all of the disclosing party's Proprietary
Information in possession or under the receiving party's control during the term
of this Agreement. Any related documentation and copies thereof, in whole or in
part, in all forms of media, together with the receiving party's written
certification by a duly authorized officer that the receiving party's
Proprietary Information, and all related documentation and all copies thereof,
in whole or in part, are no longer in use and have been returned to the
disclosing party or destroyed; provided that Tower may retain Virage Logic
Proprietary Information in the event it receives source code under Section 6.6,
and such Proprietary Information is necessary or useful for exercising Tower's
rights grants under Section 6.6 below.
6.5 No Waiver. Termination of this Agreement under this Section shall be in
addition to, and not a waiver of, any remedy at law or in equity available to
either party arising from the other party's breach of this Agreement.
6.6 Source Code Escrow. Virage Logic agrees to put into escrow a copy of
the Compilers, excluding the GUI software, in human readable format ("Source
Code"), in detail that is in accordance with the industry standard for such
Source Code. Prior to Virage Logic putting the Source Code into escrow, the
parties shall execute a source code escrow agreement that contains the
provisions below:
7
6.6.1 Escrow Account. Within sixty (60) days of the signing of a
source code escrow agreement between Tower, Virage Logic and Data
Securities International ("Escrow Agent"), Virage Logic agrees to place in
an escrow account, a copy of the Source Code. The escrow agreement shall
contain, at a minimum, the terms and conditions set forth in this Section
6.6.1 and Section 6.6.2 below. Tower shall bear all effort, fees, expenses
and other charges incurred to open and maintain such escrow account,
including the arrangements for the escrow agreement itself. Virage Logic
shall update the escrow account as necessary to maintain the most recent
copy of the Source Code in the escrow account.
6.6.2 Release. Tower shall notify Virage Logic and Escrow Agent by
certified mail in the event Virage Logic or its successors is unable or
unwilling to provide support to Tower or Tower's maintenance-paying
customers for the Compilers, (the "Release Condition"). Unless within
fifteen (15) days thereafter Virage Logic files with the Escrow Agent its
affidavit executed by a responsible executive officer clearly refuting the
occurrence of Release Condition, the Escrow Agent shall upon the sixteenth
(16th) day release the Source Code to Tower. In the event Virage Logic
files such an affidavit, the parties agree to enter into binding mediation
to resolve the dispute. The mediation shall be completed within thirty (30)
days of either party's notification requesting a mediation. The mediator
shall require pre-hearing exchange of documentary evidence to be relied
upon by each of the respective parties in their respective cases in chief
and pre-hearing exchange of briefs. The mediator will make her/his decision
in writing; and his/her decision will be binding upon the Parties. In the
event the mediator decides in favor of Tower, the parties shall send a
joint notification to the Escrow Agent to immediately release the Source
Code to Tower.
6.6.3 License. Upon the release of the Source Code hereunder, Tower
shall have a license to modify, have modified and use the Source Code only
in the event that the need for such use and/or modification is necessary to
support current existing customer(s) of both Virage and Tower. Tower's
license to use and/or modify Source Code released hereunder is strictly
limited to only the Source Code associated with the process(es) for which
support is required or anticipated to be required. Tower shall own all
right title and interest in any modifications to the Source Code created by
or for Tower; subject to Virage Logic's rights in the underlying Source
Code. Tower agrees to grant Virage Logic a perpetual, royalty-free,
worldwide, non-exclusive, fully-paid license to use such Tower
modifications to create modified versions of the Source Code and to
reproduce and distribute such modified versions of the Source Code in
object code form.
7. DISCLAIMER OF WARRANTY
7.1 LIMITED COMPILER WARRANTY. Virage Logic warrants, for a period of [***]
from the date Virage Logic delivers each of the Compilers to Tower, that each of
such Compilers, as delivered, (a) will be free from defects in the media and
will conform, except for immaterial or insubstantial non-conformances, to the
Specifications of the Compilers provided to Tower by Virage Logic and (b) will,
up to the point of transmission to Tower, contain no computer viruses,
time-bombs or malicious code that could cause the Compilers to deviate
materially from the Specifications, including but not limited to any code that
would enable unauthorized access to, or damage, modify or disable a computer
system or programs or data stored on or transmitted by such computer system. For
purposes of this section 7.1, conformance of the NOVeA Compiler to its
Specifications may only be deemed to be attained once the Compiler qualifies the
mutually agreed upon Engineering Qual procedures and criteria specified in the
NOVeA SOW attached herein in Exhibit D. In the event of non-conformance of the
Compilers, Tower shall promptly notify Virage Logic and provide Virage Logic
with all available information in written or electronic form so that Virage
Logic can reproduce the non-conformance. Virage Logic's sole obligation is to
correct the non-conformance reported to Virage Logic during the warranty period.
The foregoing warranty does not apply to non-conformity caused by modification
of a Compiler, combination of a Compiler with other products, or improper use of
a Compiler.
8
7.2 SOLE AND EXCLUSIVE REMEDY. FOR ANY BREACH OF THE WARRANTY CONTAINED IN
SECTION 7.1, TOWER'S SOLE AND EXCLUSIVE REMEDY WILL BE THAT VIRAGE LOGIC WILL,
AT VIRAGE LOGIC'S OPTION, EITHER REPLACE OR CORRECT THE DEFECTIVE PORTION OF THE
COMPILER WITHIN THIRTY (30) DAYS OF BEING INFORMED OF THE BREACH OF WARRANTY.
[***]
7.3 TOWER WARRANTIES. Tower represents, warrants and covenants that: (a)
Tower has sufficient corporate power to enter into this Agreement; (b) Tower has
the rights and abilities to perform its obligations hereunder; and (c) the Tower
Semiconductor Deliverables will, up to the point of transmission to Virage
Logic, contain no computer viruses, time-bombs or malicious code that could
cause the Compilers to deviate materially from the Specifications, including but
not limited to any code that would enable unauthorized access to, or damage,
modify or disable a computer system or programs or data stored on or transmitted
by such computer system.
7.4 VIRAGE LOGIC WARRANTIES. Virage Logic represents, warrants and
covenants that: (a) Virage Logic has sufficient corporate power to enter into
this Agreement; and (b) Virage Logic has the rights and abilities to perform its
obligations hereunder.
7.5 DISCLAIMER OF OTHER WARRANTIES. EXCEPT FOR THE ABOVE EXPRESS LIMITED
WARRANTY, THE COMPILERS, KNOW-HOW, AND DOCUMENTATION, AND THE TOWER
DELIVERABLES, ARE LICENSED "AS IS," AND NEITHER PARTY MAKES ANY OTHER
WARRANTIES, EXPRESS AND IMPLIED REGARDING THE COMPILERS, DESIGN TECHNIQUES OR
DOCUMENTATION, OR THE TOWER DELIVERABLES, AS THE CASE MAY BE, INCLUDING BUT NOT
LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. AND NONINFRINGEMENT. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, VIRAGE LOGIC DOES NOT WARRANT THAT THE COMPILERS WILL MEET TOWER'S
REQUIREMENTS, THAT THE COMPILERS WILL OPERATE IN THE COMBINATIONS THAT TOWER MAY
SELECT OR USE, THAT THE OPERATION OF THE COMPILERS WILL BE UNINTERRUPTED OR
ERROR FREE, OR THAT ALL ERRORS IN THE COMPILERS WILL BE CORRECTED.
8. LIMITATION OF LIABILITY
8.1 DIRECT DAMAGES. VIRAGE LOGIC'S TOTAL LIABILITY FOR DIRECT DAMAGES UNDER
THIS AGREEMENT SHALL NOT EXCEED ALL PAYMENTS (INCLUDING LICENSE FEES AND ROYALTY
PAYMENTS) RECEIVED BY VIRAGE LOGIC FROM TOWER AND TOWER'S TOTAL LIABILITY FOR
DIRECT DAMAGES UNDER THIS AGREEMENT SHALL NOT EXCEED [***]; PROVIDED THAT EACH
PARTY'S LIABILITY FOR CLAIMS ARISING OUT OF SECTION 10 BELOW SHALL BE AS
FOLLOWS: (I) FOR CLAIMS COVERED BY SECTIONS 10.1(i), 10.1(ii), 10.5(i) or
10.5(ii) EACH PARTY'S TOTAL LIABILITY SHALL BE LIMITED TO [***]; and (II) FOR
CLAIMS COVERED BY SECTIONS 10.1(iii) or 10.5(iii), EACH PARTY'S LIABILITY SHALL
BE LIMITED TO THE AMOUNTS PAID BY TOWER TO VIRAGE LOGIC PURSUANT TO THIS
AGREEMENT AT THE TIME THE CLAIM IS SETTLED OR DAMAGES ARE AWARDED.
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8.2 CONSEQUENTIAL DAMAGES. UNDER NO CIRCUMSTANCES, SHALL EITHER PARTY BE
LIABLE FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING IN ANY WAY
OUT OF THIS AGREEMENT OR THE USE OF THE COMPILER, DESIGN TECHNIQUES AND
DOCUMENTATION, HOWEVER CAUSED, (WHETHER ARISING UNDER A THEORY OF CONTRACT, TORT
(INCLUDING NEGLIGENCE); OR OTHERWISE), INCLUDING, WITHOUT LIMITATION, DAMAGES
FOR LOST PROFITS, LOSS OF DATA, OR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS OR
SERVICES. THE LIMITATIONS ON EITHER PARTY'S LIABILITY SET FORTH IN THIS SECTION
8 SHALL APPLY NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY OF THE
LIMITED REMEDIES SET FORTH IN SECTIONS 7.1 AND 8.1 ABOVE.
9. PROPRIETARY INFORMATION
9.1 Both parties agree to maintain Proprietary Information in confidence,
not to make use thereof other than for the performance of this Agreement, to
release it only to employees who have a reasonable need to know the same and who
have signed written agreements requiring them to maintain its confidentiality,
and not to release or disclose it to any third parties, without prior written
consent of the disclosing party. Each party hereto shall provide proper and
secured storage for papers, drawings, and other items containing Proprietary
Information.
9.2 All Proprietary Information and any copies thereof remain the property
of the disclosing party, and no license or other rights is granted or implied
hereby. The receiving party shall, upon the disclosing party's request, return
the original and all copies of tangible Proprietary Information.
9.3 This Section 9 shall survive the termination or expiration of this
Agreement for a period of three (3) years.
10. PATENT AND COPYRIGHT INFRINGEMENT
10.1 TOWER INDEMNITY. Tower shall, at its own expense, subject to the
limitations set forth in Sections 8.1 and 8.2 above, indemnify, hold harmless,
and defend or at its option, settle any claim, suit, or proceeding brought by a
third party against Virage Logic for infringement of (i) any third party's
copyright or misappropriation of any third party trade secret, (ii) any patent
issued as of the Effective Date knowingly infringed by Tower that is issued in
the United States, Israel, Japan or the European Union, or (iii) any patent
issued in the United States, Taiwan, Japan or the European Union that is
unknowingly infringed by Tower, by virtue of Virage Logic's authorized use,
reproduction, distribution and sublicensing of any of the Tower Deliverables as
provided by Tower pursuant to the terms of this Agreement and shall pay any
settlement amounts or damages finally awarded in such claim, suit or proceeding;
provided that Virage Logic: (a) promptly notifies Tower in writing of such
claim, suit or proceeding, (b) gives Tower sole control over the defense and/or
settlement of such claim, suit or proceeding, subject to the provisions of
Section 10.10; and (c) fully cooperates and provides, at Tower's expense, all
available information, assistance and authority to defend or settle the claim,
suit or proceeding. Tower shall not be liable for any costs, expenses, damages
or fees incurred by Virage Logic in defending such action or claim unless
authorized in advance in writing by Tower. This Section 10.1 shall not apply to
infringement caused by of modifications to the Tower Deliverables as provided by
Tower or arising out of combination of the Tower Deliverables with other
technology, if such infringement would have been avoided but for such
modifications or combinations.
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10.2 TOWER CONTROL. Any action to be brought to prevent or enjoin any third
party from infringement of any patent, copyright or other proprietary rights of
Tower with respect to Tower Deliverables shall be brought exclusively by Tower
or Tower's designee, in Tower's sole discretion and as between Tower and Virage
Logic, at Tower's sole cost and expense.
10.3 POTENTIAL INFRINGEMENT. If the Tower Deliverables are, or in Tower's
opinion are likely to become, the subject of a claim, suit, or proceeding
alleging infringement, Tower will: (a) procure at no cost to Virage Logic, the
right to continue using, reproducing, distributing and sublicensing the Tower
Deliverables; (b) replace or modify the Tower Deliverables, at no cost to Virage
Logic, to make them non-infringing, provided that substantially the same
function is performed by the replacement or modified Tower Deliverables, or (c)
if the right to continue using, reproducing, distributing and sublicensing the
Tower Deliverables cannot be reasonably procured for Virage Logic or the Tower
Deliverables cannot be replaced or modified to make them non-infringing, Tower
may terminate the license of such Tower Deliverables hereunder; provided, that
Tower's indemnity obligations shall continue indefinitely as to all use,
reproduction, distribution and sublicensing of the Tower Deliverables prior to
such termination.
10.4 SOLE OBLIGATION. The foregoing states Tower's sole obligations and
entire liability with respect to any claim of infringement of the Tower
Deliverables of any intellectual property or other rights of any third party.
10.5 VIRAGE LOGIC INDEMNITY. Virage Logic shall, at its own expense,
subject to the limitations set forth in Sections 8.1 and 8.2 above, indemnify,
hold harmless, and defend or at its option, settle any claim, damages, suits, or
proceeding brought by a third party against Tower: (i) for infringement of any
third party's copyright or misappropriation of a third party trade secret, (ii)
for infringement of a third party patent issued as of the Effective Date in the
United States, Taiwan, Japan or the European Union where such patent was
knowingly infringed by Virage Logic; and (iii) for infringement of a third party
patent issued in the United States, Israel, Japan or the European Union where
such patent was unknowingly infringed by Virage Logic, by virtue of Tower's
authorized use, reproduction, distribution and sublicensing of any of the
Compilers pursuant to the terms of this Agreement, and shall pay any settlement
amounts or damages finally awarded in such claim, suit or proceeding; provided
that Tower: (a) promptly notifies Virage Logic in writing of such claim, suit or
proceeding, (b) gives Virage Logic sole control over the defense and/or
settlement of such claim, suit or proceeding, subject to the provisions of
Section 10.10; and (c) reasonably cooperates and provides, at Virage Logic's
expense, all available information, assistance and authority to defend or settle
the claim, suit or proceeding. Virage Logic shall not be liable for any costs,
expenses, damages or fees incurred by Tower in defending such action or claim
unless authorized in advance in writing by Virage Logic. This Section 10.5 shall
not apply to infringement caused by modifications to the Compilers as provided
by Virage Logic or arising out of combination of the Compilers with other
technology, if such infringement would have been avoided but for such
modifications or combinations.
10.6 VIRAGE LOGIC CONTROL. Any action to be brought to prevent or enjoin
any third party from infringement of any patent, copyright or other proprietary
right of Virage Logic with respect to the Compilers shall be brought exclusively
by Virage Logic or Virage Logic's designee, in Virage Logic's sole discretion
and as between Virage Logic and Tower, at Virage Logic's sole cost and expense.
10.7 POTENTIAL INFRINGEMENT. If the Compilers are, or in Virage Logic's
opinion are likely to become the subject of a claim, suit, or proceeding
alleging infringement, Virage Logic will: (a) procure at no cost to Tower, the
right to continue using, reproducing, distributing and sublicensing the
Compilers; or (b) replace or modify the Compilers, at no cost to Tower, to make
them non-infringing, provided that substantially the same function is performed
by the replacement or modified Compilers, or (c) if the right to continue using,
reproducing, distributing and sublicensing the Compilers cannot be reasonably
procured for Tower or the Compilers cannot be replaced or modified to make them
non-infringing, Virage Logic may terminate the license of such Compilers
hereunder; provided, that Virage Logic's indemnity obligations shall continue
indefinitely as to all use, reproduction, distribution and sublicensing of the
Compilers to such termination.
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10.8 SOLE OBLIGATION. The foregoing states Virage Logic's sole obligations
and entire liability with respect to any claim infringement of the Compilers of
any intellectual property or other rights of any third party.
10.9 DESIGNATION OF DAMAGES. The parties agree that any amounts that may be
payable by either party under this Section 10 shall designated as being Direct
Damages for purposes of Article 8 of this Agreement.
10.10 APPROVAL OF SETTLEMENT. In the event of a settlement or consent
decree that requires (a) payment in excess of the indemnifying party's
Limitation of Liability as set forth in Section 8.1(I), (b) an admission of
liability by the non-indemnifying party, or (c) entry of injunctive relief
against the non-indemnifying party, the indemnifying party must obtain the prior
written consent of the non-indemnifying party prior to any such settlement or
consent decree. Such written consent shall not be unreasonably withheld.
11. GENERAL TERMS
11.1 CHOICE OF LAW. This Agreement shall be governed by and construed in
accordance with the laws of State of California, excluding its conflict of laws
provisions. In the event of any dispute arising out of or in connection with
this Agreement, which cannot be amicably settled by the parties hereto, the
parties agree to submit any such dispute to binding arbitration in accordance
with the Rules of Arbitration of the International Chamber of Commerce by three
(3) arbitrators appointed in accordance with the said rules. The arbitral
proceedings shall be conducted in the English language and shall take place in
London , England. All information relating to or disclosed by either party in
connection with the arbitration shall be treated by the parties as confidential
information and no disclosure of such information shall be made by either party
without the prior written consent of the other party.
11.2 EXPORT CONTROLS. Both parties agree and certify that neither party
will export or re-export the materials (including the Compilers and any other
technical data received from Virage Logic), nor the direct product thereof, will
be outside the United States except as authorized and as permitted by the laws
and regulations of the United States.
11.3 ASSIGNMENT. This Agreement may not be assigned by either party without
the prior written consent from the other party, which consent shall not be
unreasonably withheld; provided that no such consent will be required in the
event of an assignment to any successor to all or substantially all of the
business assets of such Party so long as the buyer acknowledges the obligations
of such Party hereunder. Notwithstanding anything to the contrary in this
Section 11.3, neither party may assign this Agreement to any direct competitor
of the other, as those competitors are set forth in this Agreement, without
first obtaining the consent of the non-assigning party, which may be withheld in
the non-assigning party's sole discretion; and provided further that this
Agreement may be pledged by Tower for the benefit of Bank Hapoalim B.M. and Bank
Leumi Le-Israel B.M. (collectively, the "Banks") to secure debt financing made
available to Tower in connection with the construction of Tower's new wafer fab.
Any purported assignment in contravention of this Section 11.3 shall be null and
void.
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11.4 AUDIT. Tower shall keep full and accurate books and records pertaining
to Tower's performance under this Agreement for a period of at least one (1)
year after the date a given quarterly payment is made by Tower to Virage Logic.
Tower shall permit a mutually appointed third party, who has signed a Tower NDA,
on behalf of Virage Logic, to examine such books and records, at Virage Logic's
sole cost and expense, upon reasonable prior written notice during normal
working hours, but not later that one (1) year following the payment in
question, for the sole purpose of verifying the compensation payments and
reports and accountings related thereto. Prompt adjustment shall be made to
compensate for any errors or omissions disclosed by such examination. In the
event such examination shows underreporting and underpayment in excess of five
percent (5%) for any twelve (12) month period ending 3 months prior to the date
of such examination, then Tower shall pay Virage Logic the reasonable costs of
any such examination as well as the unpaid compensation payments.
11.5 NOTICES. Any notice, report, approval or consent required or permitted
hereunder shall be in writing and will be deemed to have been duly given if
delivered personally or transmitted via reputable international courier service
to the respective addresses of the parties as set forth in this Agreement. If to
Virage Logic, Attention: VP Finance, CFO. If to Tower, Attention: VP Marketing
and Sales. Notices shall be effective upon receipt.
11.6 NO WAIVER. Failure by either party to enforce any provision of this
Agreement will not be deemed a waiver of future enforcement of that or any other
provision.
11.7 INDEPENDENT CONTRACTORS. The relationship of Virage Logic and Tower
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed (i) to give either party the
power to direct or control the day-to-day activities of the other or (ii) to
constitute the parties as partners, joint ventures, co-owners or otherwise as
participants in a joint or common undertaking.
11.8 SEVERABILITY. If a court of competent jurisdiction finds any provision
of this Agreement, or portion thereof, to be invalid or unenforceable, that
provision of the Agreement will be enforced to the maximum extent permissible so
as to effect the intent of the parties, and the other provisions of this
Agreement will remain in force.
11.9 ATTORNEYS' FEES. The prevailing party in any action to enforce the
Agreement shall be entitled to recover the costs and expenses including, without
limitation, reasonable attorneys' fees.
11.10 INJUNCTIVE RELIEF. The parties agree that a material breach of this
Agreement adversely affecting both parties' Intellectual Property Rights which
would cause irreparable injury to non-breaching party for which monetary damages
would not be an adequate remedy. Therefore, the parties agree that the
non-breaching party shall be entitled to seek equitable relief in addition to
any remedies it may have hereunder or at law.
11.11 FORCE MAJEURE. Except for the obligation to make payments hereunder,
nonperformance of either party shall be excused to the extent that performance
is rendered impossible by strike, fire, flood, governmental action, failure of
suppliers, earthquake, or any other reason where failure to perform is beyond
the reasonable control of the non-performing party. If such nonperformance
extends beyond thirty (30) days, the other party shall be entitled to terminate
this Agreement.
11.12 ENTIRE AGREEMENT. This Agreement, including all exhibits, constitutes
the entire agreement between the parties with respect to the subject matter
hereof, and supersedes all prior agreements or representations, oral or written,
regarding such subject matter. This Agreement may not be modified or amended
except in writing, signed by duly authorized representatives of both parties.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed in duplicate on their behalf by their duly-authorized officers and
representatives on the date given above.
TOWER SEMICONDUCTOR LTD. VIRAGE LOGIC CORPORATION
By: ................................. By: ............................
Name: ............................... Name: ..........................
Title: .............................. Title: .........................
Address:RAMAT GAVRIEL INDUSTRIAL AREA Address:46501 LANDING PARKWAY
X.X. XXX 000 XXXXXXX, XXXXXXXXXX 00000
XXXXXX XXXXXX, XXXXXX 00000 XXX
Facsimile: 972-4-6547788 Facsimile: 000-000-0000
The following exhibits are hereby incorporated into this Agreement in their
entirety:
Exhibit A - Virage Logic Deliverables to Tower
Exhibit B - 0.18u Full Product List
Exhibit C -Virage Logic Compiler Specifications
Exhibit D -Statements of Work
Exhibit E - Tower Semiconductor Deliverables to Virage Logic
Exhibit F - Virage Logic Compiler Pricing
Exhibit G - Virage Logic Master License Agreement
Exhibit H - Virage Logic Program Schedule
Exhibit I - Tower List of Companies
Exhibit J - 0.13u Full Product List
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