**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 200.809(B), 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 the PC, Consumer
Electronics and Non-MS markets 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)
2
manufacturing of Licensee Products for Licensee performed by subcontractors
of 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 [*], [*] and [*] 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
3
orders which are not subject to cancellation for Licensee Products; (c)
selling Licensee 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
4
which include Licensed Technology. All such Licensee Products, packaging,
literature, 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. Licensee shall use its commercially
reasonable efforts to assist Licensor in the joint marketing and promotion to
[*] of the Licensed Technology consisting of Category I 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 Licensee shall use commercially
best efforts to: (a) prevent its distributors purchasing Licensee Products
that contain Licensed Technology directly from Licensee from selling or
distributing such Licensee Products into market segments reserved to Licensor
under this Agreement; and (b) avoid promotion, marketing or advertising of
any Licensee Product or other product as a substitute for, or as competitive
with, any product of Licensor for distribution or sale into any market or for
any use not permitted Licensee hereunder.
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
5
(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. 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 [*] industry companies as it deems
appropriate to ensure that product leadership is maintained with respect to
the Licensed Technology in the [*] 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 in the [*] market 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 in the [*] market. 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
6
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 MINIMUM LICENSE FEE PAYMENTS. As a pre-paid, non-refundable
License Fee payment, on the date of execution hereof and, so long as Licensee
holds an exclusive license hereunder as to any of the Licensed Technology,
within [*] of the end of each succeeding calendar quarter during the Term and
on the Expiration Date (if any amount of Minimum License Fee shall then be
unpaid for the quarter during which the Expiration Date occurs), Licensee
shall pay to Licensor [*] of the Minimum Annual License Fee payment as set
forth in Annex VI and as further described in such annex, including the
illustrative examples set forth in such annex.
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 INTERCOMPANY TRANSACTIONS. The License Fee, Gross Profit Margin,
Cost of Goods Sold and other financial calculations relating to amounts
payable to Licensor under this Agreement shall be determined for Licensee and
the subsidiaries listed on Schedule 1.1-B on a consolidated basis without
taking into account any intercompany transactions (e.g., Average Selling
Price will be calculated on the basis of sales in non-intercompany
transactions and the Cost of Goods Sold will not be affected by intercompany
transactions), it being the intent of the parties that Licensee and such
subsidiaries not intentionally or inadvertently understate amounts that would
otherwise be payable to Licensor under this Agreement because of intercompany
or related party transactions.
7
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, including, without
limitation, the aggregate number of sales of all Licensee Products that
included Licensed Technology during the quarter, broken down by category.
This statement shall also provide an accounting of the [*] and [*] for all
sales of Licensee Products that included Licensed Technology, all advertising
and promotional expenditures by Licensee, and all Licensee Products described
in Section 6.3. 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 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
8
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 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.
9
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 [*] industry, 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 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.
10
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.
(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
11
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 in the [*] market, then Licensee
shall be entitled to a right of first refusal to license and utilize such
technology in the [*] market 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 the [*] market or the [*] market, 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 instruments deemed by
Licensor, or its respective attorneys or representatives, to be necessary to
transfer such right, title or interest to Licensor.
7.6 [*]. During the Term and during the period occurring after the
termination of this Agreement or the expiration of the Term under Section 2.2
hereof during which Licensee is permitted to continue selling Licensee
Products that contain [*]
12
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 [*] to this
Agreement (the "Licensee Enforceable Patents") in the [*] field of use, then,
within [*] of Licensor's receipt of such notice from Licensee, Licensor will
notify Licensee as to whether Licensor will elect to pursue any action
against the alleged infringer. 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, upon receipt of Licensor's prior written approval
(which shall not be unreasonably withheld in light of the interests of
Licensor and Licensee and, in the event Licensee believes any such approval
has been withheld unreasonably, the reasonableness of Licensor's decision to
withhold approval shall be determined by arbitration following the procedures
set forth in Schedule 13.7 hereto; provided that such arbitration shall be
conducted on an expedited basis such that the proceeding before the
arbitrator shall occur, and the arbitrator's written decision shall be
issued, no later than [*] days after Licensee's request for arbitration), any
appropriate suit, action or proceeding involving the infringement or
misappropriation of such Licensee Enforceable Patents, in the [*] field of
use, subject to the following restrictions: (a) Licensor must approve, in
writing, the attorneys who will handle such suit, action or proceeding on
behalf of Licensee, which approval shall not be unreasonably delayed or
withheld; (b) Licensor may, at its option and expense, participate, through
counsel of its choice, in any such suit, action or proceeding, and will
receive full and complete disclosure from Licensee and its counsel of all
materials and information that Licensee obtains or develops in connection
with such suit, action or proceeding; and (c) any settlement of such suit,
action or proceeding shall be subject to Licensor's prior written consent.
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.
13
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 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:
14
(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 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 in the [*] market 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 in the [*] market 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
15
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:
--Xxxx 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
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; MINIMUM ADVERTISING AND
PROMOTION EXPENDITURES. Licensee shall work with Licensor to establish the
Licensee Products that include the Licensed Technology as a premium brand and
products. So long as Licensee holds an exclusive license hereunder to any of
the Licensed Technology, Licensee shall make the Minimum Advertising and
Promotion Expenditures with respect to Licensee Products that include the
Licensed Technology as set forth on Exhibit A. For purposes of this
provision, costs associated with product packaging are not advertising or
promotion expenditures. Not later than [*] after the end of each calendar
quarter, Licensee shall provide to Licensor a report, certified by Licensee's
Chief Financial Officer setting forth Licensee's actual advertising and
promotion expenditures during the preceding calendar quarter, until such time
as such expenditures reach the Minimum Advertising and Promotion Expenditures
amount for the applicable year.
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
16
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 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.
17
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 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.
18
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, 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
19
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.
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.
20
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, 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:
21
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
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.
22
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 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.
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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
24
EXHIBIT A
GLOSSARY OF TERMS
As used in the foregoing Agreement, the following terms shall have the
meanings as defined below:
[*] means a video processing integrated circuit or portion thereof
which processes and enhances a non-interlaced computer image for display on an
interlaced television using an [*]
"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 described as the [*] as set
forth in Section B of ANNEX I.
"Category II Technology" is the technology described as the [*] 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.
A-1
"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, 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
A-2
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.
"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.
A-3
"Minimum Annual License Fee Payments" means the minimum annual license
fee payments as set forth on ANNEX VI.
"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 the graphics acceleration and system
interface functions 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
A. CATEGORY II TECHNOLOGY: [*] - [*] uses an [*]. The scan
conversion is performed free of motion artifacts and provides better diagonal
transition performance than comparable line doublers. [*] improves the clarity
of the picture by restoring the Chroma and Luminance levels to their full
bandwidth. This gives the effect of a three dimensional like picture since the
enhanced background details improve the depth of picture, further described in
ANNEX III. The foregoing product includes the Licensed Technology listed in
Section A of ANNEX III to the Agreement.
B. CATEGORY I TECHNOLOGY: [*] - Includes all of the functions of
[*] with the addition of [*], additional [*] and [*] and a [*]. This is
equivalent to the scan conversion performed in the LD 200 combined with the
digital filter, further described in ANNEX III. The foregoing product includes
the Licensed Technology listed in Section B of ANNEX III to the Agreement.
Annex I
1
ANNEX II
LICENSE FEES
Licensee's [*] on [*] of Percentage of [*] of Licensee Products
include Licensed Technology that include Licensed Technology
--------------------------- ---------------------------------
Less than 30% [*]
Greater than or equal to 30%
but less than 35% [*]
Greater than or equal to 35%
but less than 40% [*]
Greater than or equal to 40%
but less than 45% [*]
Greater than or equal to 45%
but less than 50% [*]
Greater than or equal to 50%
but less than 55% [*]
Greater than or equal to 55% [*]
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
Faroudja to provide
Annex IV
1
ANNEX V
MINIMUM ADVERTISING AND PROMOTION EXPENDITURES
Calendar Year Minimum Advertising and Promotion Expenditures
------------- ----------------------------------------------
[*]
Annex V
1
ANNEX VI
[*] LICENSE FEES
Calendar Year Minimum License Fee
------------- -------------------
[*]
__________________
[*]
In consideration of Licensee's purchase of Site License and video
processing development system, Licensee will receive a credit of [*] to
Licensee's cumulative account for pre-paid license fees, but such credit does
not reduce Licensee's obligation to make payments of Minimum License Fees for
1997 and thereafter.
If, at any time, Licensee elects to convert its exclusive license to a
non-exclusive license or if Licensee's license otherwise converts to a
non-exclusive license pursuant to the terms of this Agreement, then Licensee
will have no further obligation to pay Minimum License Fee Payments,
including any additional amounts that would otherwise be due for the year in
which such conversion occurs. All payments of Minimum License Fees shall be
cumulative, and amounts due as License Fees shall first be offset against the
cumulative total of Minimum License Fee Payments previously made.
For example, if during 1996 Licensee paid [*] in Minimum License Fee
Payments and after the first quarter of 1997 Licensee paid [*] in Minimum
License Fee Payments, then if during the second quarter of 1997 Licensee sold
200,000 units of Licensee Products with Licensed Technology [*] of [*] and an
[*], then Licensor would be entitled to receive from Licensee the License Fees
calculated as follows:
[*]
Licensee would then be required to pay the next quarterly installment of [*],
but also would be entitled to offset the [*] License Fee payment obligation
against the previously prepaid Minimum License Fees such that the cumulative
Minimum License Fees would be reduced from [*] to [*]
If the License Fee for the second quarter of 1997 were [*] (instead of
[*] as in the example above), then Licensee would be required to pay the next
quarterly installment of [*], but also would be entitled to offset the [*]
License Fee against the entire prepaid Minimum License Fees (which after payment
of the [*] installment for the second quarter of 1997 would total [*]) and the
result of such offset would be that
Annex VI
1
Licensee would not owe any additional License Fees with respect to the second
quarter of 1997.
Annex VI
2
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: (a) commencing as of December 31, 1997,
and measured as of each December 31 thereafter, Licensee shall have achieved and
maintained [*], as determined on December 31, 1997, 1998, and 1999, and [*] as
determined December 31, 2000 and 2001, market share by dollar amount of the [*]
as determined using Mercury Research data (or if not available, comparable
data); (b) Licensee shall have paid when due the Minimum License Fee payment
applicable to each quarter during the 12 month period then ended; and [*]. In
addition, so long as the foregoing three conditions are satisfied, [*]. In the
event that any of such conditions are not satisfied, the foregoing [*] and
delivery by the electing party to the other of written notice, [*]
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.
Schedule 13.7
1
(2) The Arbitrator shall apply the rules of evidence to the same
extent as they would be applied in a court of law.
(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.
Schedule 13.7
2
(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.
(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
