LICENSING AND
MANUFACTURING AGREEMENT
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN DELETED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT
This Agreement is entered into this 27th day of April, 1990, by and
between National Semiconductor Corporation, a Delaware corporation with its
principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
(hereinafter referred to as "NSC") and Waferscale Integration, Inc., a
California corporation with its principal place of business at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (hereinafter referred to as "WSI"). NSC and/or WSI may be
referred to herein as a PARTY or the PARTIES as the case may require.
RECITALS
WHEREAS, NSC and WSI independently have designed, developed, manufactured
and marketed integrated circuits in the general field of high performance
programmable VLSI memory products;
WHEREAS, WSI has designed and developed a family of CMOS EPROM products
designed by WSI as "27CXXXLS";
WHEREAS, NSC desires access to WSI products and technology in order to
help complement NSC's memory products business;
WHEREAS, WSI does not now have its own wafer fabrication facility, and
desires to purchase for resale EPROM products manufactured by NSC, and NSC is
willing to manufacture and sell such products to WSI;
WHEREAS, WSI and NSC desire that NSC make an equity investment in WSI; and
WHEREAS, WSI and NSC desire to work jointly on the development of future
EPROM products;
NOW, THEREFORE, in furtherance of the foregoing premises and in
consideration of the mutual covenants and obligations set forth hereinbelow, the
Parties hereby agree as follows:
1.0 RECITALS AND APPENDICES
1.1 The PARTIES intend that the recitals and appendices to this
Agreement are to be an integral part thereof.
2.0 DEFINITIONS
2.1 "SUBSIDIARY": any company or other entity more than fifty (50%)
percent of whose outstanding stock entitled to vote for the election
of directors is owned or controlled, directly or indirectly, by a
PARTY hereto. A company or other entity continues to be a SUBSIDIARY
only so long as such control exists.
2.2 "CONFIDENTIAL INFORMATION": all proprietary information relating to
the subject matter of this Agreement disclosed by one of the PARTIES
to the other PARTY in written and/or graphic or computer data base
form originally designated in writing by the disclosing PARTY as
CONFIDENTIAL INFORMATION or by words of similar import, or, if
disclosed orally, summarized and confirmed in writing by the
disclosing PARTY within thirty (30) days after oral disclosure that
the orally disclosed information is CONFIDENTIAL INFORMATION. In
addition, information previously disclosed by one PARTY to the other
and covered by the terms of the Confidential Disclosure Agreement
dated August 28, 1989 (the "August Agreement") shall be CONFIDENTIAL
INFORMATION governed by this Agreement, which shall supersede the
August Agreement.
2.3 "LICENSED PRODUCTS": any of the following with respect to which
TECHNICAL INFORMATION has been transferred by one PARTY to the other
PARTY under the terms of this agreement:
(i) those products specified in Appendix A,
(ii) UPDATES to such products, and
(iii) NEW VERSIONS of such products.
2.4 "UPDATES": modifications (excluding NEW VERSIONS) made to LICENSED
PRODUCTS for the purpose of either: (i) making LICENSED PRODUCTS
conform to published specifications therefor, (ii) yield improvement
or increased industrial productivity, including reductions in
manufacturing or test time, or (iii) performance enhancements, and
which require changes to the TECHNICAL INFORMATION previously
transferred hereunder with respect to such products.
2.5 "NEW VERSIONS": EPROM products resulting from major modifications or
alterations by WSI to the cell architecture of the LICENSED
PRODUCTS.
2.6 "COOPERATIVE PRODUCTS": those EPROM products designed by NSC
resulting from the technical cooperation described in Section 9.0
hereof.
2.7 "TECHNICAL INFORMATION": the information with respect to a LICENSED
PRODUCT which one PARTY delivers to the other PARTY, as specified on
Appendix B or as otherwise specified herein, under the terms of this
Agreement.
2.8 "TECHNICAL ASSISTANCE": the engineering and design consultation, and
related assistance, to be provided by a PARTY delivering TECHNICAL
INFORMATION hereunder, with times, places and personnel as set forth
in this Agreement or otherwise agreed upon by the PARTIES.
2.9 "NET SALES": the total invoiced price of products sold or otherwise
disposed of by a PARTY in normal, arm's length, commercial
transactions between parties which are not in affiliation, less
shipping costs, taxes, and discounts actually paid or allowed, but
not fees or commissions to agents, representatives or others. If a
product is sold or otherwise disposed of otherwise than in normal,
arm's length, commercial transactions between parties which are not
in affiliation, "NET SALES" shall mean the amount that would have
been calculated according to the immediately preceding sentence for
the same quantities of similar or substantially similar products
sold in normal, arm's length, commercial transactions to the PARTY's
domestic OEM customers, or, if there be no similar or substantially
similar products so sold, then the fair market value thereof. A
product shall be deemed "sold" for purposes of this definition when
billed out, delivered, shipped or mailed to a customer, or when
first used or first set aside for future use by a PARTY or its
SUBSIDIARY, whichever shall first occur. A product disposed of as
scrap shall not be considered as product manufactured under this
Agreement. "NET SALES" shall not include any sales of products by
one PARTY to the other PARTY or such other PARTY SUBSIDIARIES.
2.10 "EPROM": a semiconductor memory device which is capable of being
programmed after manufacture by the application of specified
voltages and/or codes to the device pins, which is capable of
retaining the programmed information indefinitely, and which is
capable of being erased by ultraviolet radiation if assembled in a
package having a quartz window.
2.11 "EPROM PROCESS": the CMOS process to be used by NSC in production of
the LICENSED PRODUCTS, which process was developed at NSC's Salt
Lake City plant incorporating the overlapping gate, self-aligned
implant and tungsten silicide polysilicon wordlines required to
realize virtual ground EPROMS.
2.12 "ACCEPTANCE CRITERIA": has the meaning set forth in Appendix G.
2.13 "QUALIFICATION": has the meaning set forth in Appendix H.
2.14 "NSC": National Semiconductor Corporation and its SUBSIDIARIES.
2.15 "WSI": Waferscale Integration, Inc. and its SUBSIDIARIES.
3.0 LICENSE GRANTS
3.1 WSI hereby grants to NSC under WSI patents, copyrights, mask work
rights, necessary to manufacture the LICENSED PRODUCTS, and
TECHNICAL INFORMATION, a worldwide, non-exclusive license, without
the right to grant sublicenses, to: (i) make, have made and use
semiconductor processes, including the EPROM PROCESS, and (ii) make,
have made, use, sell, have sold, and otherwise dispose of
semiconductor products, including the LICENSED PRODUCTS; provided,
however that NSC shall not have the right to make, have made, use,
sell, have sold or otherwise dispose of any products designed or
developed by WSI other than LICENSED PRODUCTS, except for the
account of WSI in accordance with the terms of this Agreement; and,
provided further, that NSC shall not have the right to make, have
made, use, sell, have sold or otherwise dispose of LICENSED PRODUCTS
as die, wafers or packaged units for purposes of resale by any third
party as semiconductor products under any third party's own brand
label.
3.2 WSI hereby grants to NSC under WSI copyrights, a paid-up worldwide,
non-exclusive license, without the right to grant sublicenses, to
modify, reproduce and distribute all or part of the copyrighted
materials relating to the LICENSED PRODUCTS hereunder that are made
available to the general public.
3.3 WSI hereby grants to NSC licenses under all necessary rights to
WSI's proprietary packaging and tooling, including lead frames,
custom packaging and other items specifically required for
manufacturing LICENSED PRODUCTS.
3.4 NSC hereby grants to WSI under NSC TECHNICAL INFORMATION, a
worldwide, non-exclusive, license, without the right to grant
sublicenses, to make, have made, use, sell, have sold and otherwise
dispose of semiconductor products, including the LICENSED PRODUCTS;
provided, however, that in exercising the "have made" rights granted
hereunder, the following shall apply:
3.4.1 WSI shall be free to use any third-party foundry so long as
WSI provides to such foundry no process information beyond the
required electrical and physical targets.
3.4.2 If WSI desires to provide such foundry additional process
information, WSI shall advise NSC of the identity of the
proposed foundry prior to the transfer of any NSC TECHNICAL
INFORMATION, and NSC shall have the right to prohibit the
transfer of such information if NSC can demonstrate to the
reasonable satisfaction of WSI that the proposed foundry
presents a high risk of misuse of the information to be
provided.
3.4.3 Disclosure by WSI to any third-party of NSC TECHNICAL
INFORMATION shall be made only under terms and provisions
which protect the confidentiality of the disclosed information
upon the terms, and for a period which is not less than that,
contained in this Agreement.
3.4.4 It is understood and agreed that, except as provided in
Section 7.18, NSC shall have no obligation to provide
technical assistance or consultation to WSI in bringing up is
own manufacturing facility or qualifying a third-party
foundry.
4.0 TECHNICAL INFORMATION AND TECHNICAL ASSISTANCE
4.1 As soon as practicable after the signing of this Agreement (but in
no event later than the delivery due dates set forth beside each
LICENSED PRODUCT on Appendix A), WSI will deliver to NSC the
TECHNICAL INFORMATION specified in Appendix B with respect to the
LICENSED PRODUCTS listed on Appendix A.
4.2 On a continuing basis during the term of this Agreement, each PARTY
shall promptly, but in any event within 60 days from creation,
deliver to the other PARTY any revised or updated information
corresponding to previously transferred TECHNICAL INFORMATION, as
well as the TECHNICAL INFORMATION specified on Appendix B for all
UPDATES and NEW VERSIONS.
4.3 WSI agrees to provide to NSC, with respect to the LICENSED PRODUCTS
listed on Appendix A, the TECHNICAL ASSISTANCE specified in Appendix
C. Such TECHNICAL ASSISTANCE shall be provided at NSC facilities and
shall be limited to a maximum of twelve (12) months. The level of
such TECHNICAL ASSISTANCE shall be mutually agreed by the PARTIES to
promote the prompt QUALIFICATION of manufacturing at NSC's facility,
but WSI shall not be obligated to provide more than four WSI
engineers at NSC's site during the first six months of this
Agreement, or more than three WSI engineers thereafter.
4.4 During the period prior to QUALIFICATION of WSI shall have access to
such wafers, processed dice and packaged units as shall be required
for engineering work in support of the QUALIFICATION .
4.5 WSI will have the right, upon written request and subject to the
reasonable approval of NSC as to the specific periods of attendance,
to send WSI personnel, military compliance authorities and
representatives from WSI customers to NSC's facilities to inspect
such facilities and consult with appropriate NSC personnel regarding
NSC's manufacturing processes, equipment and process modules
applicable to the EPROM PROCESS. All such visitors shall be required
to observe such restrictions as are imposed by NSC on its own
customers during similar inspections.
4.6 With respect to changes made by NSC tot he EPROM PROCESS, NSC shall
provide to WSI information concerning the change at the time and on
the same basis that NSC provides such information to its
most-favored OEM customers.
5.0 CONSIDERATION
5.1 In consideration for the licenses granted by WSI to NSC under
Sections 3.1, 3.2 and 3.3, NSC shall pay to WSI the following:
(i) A license fee of [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION].
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION] of this fee has been
paid to WSI prior to the date of this Agreement, and
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION] is payable upon the
signature hereof.
(ii) A product transfer fee of [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] for each LICENSED PRODUCT, one half payable upon
transfer of the data base and one half payable upon
QUALIFICATION of the LICENSED PRODUCT by NSC.
(iii) A royalty of [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] of the
NET SALES BY NSC of LICENSED PRODUCTS until such NET SALES
have reached [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION], a
royalty of [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] of the
NET SALES by NSC of LICENSED PRODUCTS on the second
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION] of the NET SALES by
NSC of LICENSED PRODUCTS thereafter.
5.2 In consideration for the provision by WSI of TECHNICAL ASSISTANCE,
NSC shall pay a technical support fee of [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] per month for the period during which WSI is providing
TECHNICAL ASSISTANCE specified in Section 4.3, which payments are
not to exceed in total [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION].
5.3 In consideration for the license granted by NSC to WSI under Section
3.4, WSI shall devote reasonable technical resources during the term
of this Agreement to the development of a 16 Meg EPROM and related
process improvements. In the event WSI desires to cease its
development effort on a 16 Meg EPROM, it shall so notify
NSC and WSI shall thereafter, through the term of this Agreement and
any extension thereof, pay to NSC a royalty of [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION] of the NET SALES by WSI of products
manufactured by NSC on the EPROM PROCESS or manufactured for WSI by
a third-party foundry pursuant to the license granted to WSI under
Section 3.4 of this Agreement.
5.4 All royalty payments required hereunder shall be made quarterly in
arrears, within [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] of the end
of each of paying PARTY's fiscal quarters and shall be accompanied
by a report setting forth the NET SALES of LICENSED PRODUCTS and the
manner in which the amount of the royalty payment was calculated.
Each PARTY shall have the right, in confidence and upon reasonable
notice, to have a mutually acceptable third party accounting firm
inspect the other PARTY's books and records to determine compliance
with this Section 5.0.
5.5 Except as otherwise provided in this Agreement, each PARTY shall pay
all of its own expenses incurred in order to perform its obligations
under this Agreement.
6.0 STOCK PURCHASE AGREEMENT
6.1 In further consideration for the licenses granted by WSI to NSC
under Sections 3.1, and 3.2 and 3.3, for the transfer by WSI of
TECHNICAL INFORMATION, and for the provision by WSI of TECHNICAL
ASSISTANCE, NSC shall make a Nine Million Dollar ($9,000,000) equity
investment in WSI in substantially equal installments at three
closings under the terms and conditions set forth in the Stock
Purchase Agreement attached hereto as Appendix D, which is being
entered into by the PARTIES simultaneously with this Agreement.
Notwithstanding anything to the contrary contained herein, this
Agreement shall not be effective for any purpose unless and until
the First Closing under the Stock Purchase Agreement (as defined
therein) has occurred.
7.0 SUPPLY OF FINISHED PRODUCT AND WAFERS TO WSI
7.1 NSC agrees to supply to WSI LICENSED PRODUCTS in the form of
finished products or as dice in wafer form, and to supply other
products manufactured on the EPROM PROCESS in parametrically
tested-wafer form, subject to the terms and conditions set forth in
this Section 7.0, which shall control over any other terms and
conditions in conflict therewith set forth in any other document.
7.2 For LICENSED PRODUCTS, NSC agrees to supply finished products in
packaged and tested form to WSI beginning not more than thirteen
(13) weeks after
QUALIFICATION of the relevant LICENSED PRODUCT (subject to the
possible ramp-up constraints described in Section 7.4). Such
products shall be marked with the WSI logo and such other markings
as agreed by the PARTIES. Alternatively, upon the request of WSI,
NSC will supply LICENSED PRODUCT as dice in wafer form beginning not
more than nine (9) weeks after QUALIFICATION of the relevant
product. For LICENSED PRODUCTS, NSC shall provide and pay for (i)
development wafer processing needed for QUALIFICATION of such
products, with quantities determined by agreement of the PARTIES,
(ii) mask tooling for LICENSED PRODUCTS, (iii) scribeline test chip
tooling costs, and (iv) other production costs associated with the
QUALIFICATION of LICENSED PRODUCTS.
7.3 For WSI products which are not licensed to NSC, NSC shall supply
product to WSI in the form of parametrically tested wafers only, and
only on the condition that the products can be manufactured on the
EPROM PROCESS, and provided further that WSI pays the costs of all
masks and tooling for such products. NSC shall be liable for no
engineering costs on non-LICENSED PRODUCTS beyond those required to
meet the parametric acceptance criteria.
The quantity of such non-LICENSED PRODUCTS shall not exceed
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] percent of the total wafers
manufactured by NSC for WSI during any calendar quarter.
7.4 Pursuant to Sections 7.2 and 7.3, NSC shall supply such quantities
as are ordered by WSI up to the monthly volumes set forth in the
following schedule:
Quarter 1: [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
Quarter 2: [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
Quarter 3: [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
Quarter 4: [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
Quarter 5: [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
Quarter 6: [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
Quarter 7: [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
Thereafter: [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
The capacity defined for "Quarter 1" in this Section 7.4 will be
available for shipments to WSI starting [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] after NSC has completed QUALIFICATION of the 27C010LS.
However, as a result of "learning-curve" constraints in new assembly
and test flows, both PARTIES recognize that the finished goods
manufacturing cycle time for LICENSED PRODUCTS immediately after
QUALIFICATION of a LICENSED PRODUCT may be longer than the
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] contemplated by this Section
7.0. Both PARTIES agree to use their best efforts to assist
improvement of such longer cycle times as quickly as possible.
7.5 In consideration for NSC making available to WSI the wafer capacity
set forth in Section 7.4, WSI guarantees to purchase the following
minimum quantities:
Quarter 1: [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
Quarter 2: [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
Quarter 3: [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
Quarter 4: [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
Quarter 5: [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
Quarter 6: [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
Quarter 7: [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
Thereafter: [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
These minimum guarantees shall be subject to annual renegotiation
(but in no event to less than [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] per
month) provided, however, that the available capacity committed by
NSC in Section 7.4 shall be correspondingly adjusted to an amount
equal to [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION] the minimum guaranteed
amount. Notwithstanding these minimum guarantees, WSI shall have the
option to terminate the foundry provisions of this Section 7.0 in
accordance with the notice requirements of Section 7.16.
7.6 The prices to be paid by WSI for LICENSED PRODUCTS shall be
determined according to the schedules and formulae set forth in
Appendix E.
7.7 For non-LICENSED PRODUCTS, NSC shall initially be obligated to
deliver only parametrically tested wafers, processed to NSC
commercial production standards. Thereafter, the wafers shipped to
WSI for non-LICENSED PRODUCTS shall be subject to the ACCEPTANCE
CRITERIA set forth in Appendix G. The prices to be charged for such
wafers will be based on WSI's total equivalent wafer consumption,
with the price during any month determined by averaging the wafer
production value of LICENSED PRODUCTS and other products sold to
WSI, according to the following schedule:
(i) First [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE
COMMISSION] Wafers per month - [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION]
(ii) Wafers [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE
COMMISSION] per month - [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION]
(iii) Wafers [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE
COMMISSION] per month - [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION]
(iv) Wafers [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] per month
- [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
(v) Wafers [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION] and up per month -
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]
For non-LICENSED PRODUCTS, NSC shall not be obligated to start any
production lots containing fewer than [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] wafers. Further, NSC shall not be obliged to carry more
than [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] different non-LICENSED PRODUCTS
in work-in-process ("WIP") at any one time, provided, however, that
this limitation is based on the assumption that wafer fabrication
cycle time is between [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] weeks, and
if that cycle time is consistently exceeded the PARTIES shall
negotiate a modification of this eight product limit.
Since all non-LICENSED PRODUCTS are custom with respect to WSI, once
wafers have started, WSI will be obligated to accept and pay for
completed wafers or NSC stated WIP costs.
7.8 Special wafer fabrication charges:
(i) wafers produced to 883C standard shall be subject to a
surcharge of [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] per
wafer. 883C wafers will be limited to a maximum of
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION] percent of the total
wafers manufactured for WSI.
(ii) Quick turnaround lots, which are run in approximately 2.5
times theoretical cycle time, shall be limited to
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION] wafers. The
availability of quick turnaround lot starts is subject to
allocation among all users in the line, and they shall be
billed at [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] the
wafer price prevailing at the time the wafers are started.
7.9 NSC shall have the option of subcontracting to third parties the
wafers manufactured for WSI hereunder, provided that said
subcontracted wafers satisfy the WSI ACCEPTANCE CRITERIA specified
in Appendix G.
7.10 WSI shall utilize purchase orders as the mechanism for short term
forecasting. Each month, WSI shall place a purchase order for its
best estimate of its requirements, by product type, for the sixth
month hence. All purchase orders with delivery dates of less than
three months are firm, and may not be altered.
7.11 Purchase orders outside the three month window may be changed
according to the following schedule:
Delivery date Aggregate Change
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]
Because different product types may be included, the aggregate
changes shall be evaluated on the basis of wafer starts to serve WSI
needs within any given month.
7.12 WSI will assist NSC in all long term planning, providing long term
forecasts of expected requirements for finished goods, dice and
wafers. These forecasts will be required in March and September of
each year, supporting NSC's capacity forecasting cycles.
7.13 In the event of a shortfall in wafer capacity for the EPROM PROCESS,
NSC shall support the WSI guarantees according to Paragraph 7.5
above. Additional capacity shall be allocated in the following
manner:
(i) NSC shall use capacity up to the guarantees defined for WSI in
Paragraph 7.5.
(ii) Remaining capacity will be allocated in proportion to the hard
backlog (described in equivalent wafers) of the PARTIES.
Capacity allocations shall be defined in wafers, and each PARTY will
have the freedom, within the constraints of timing for wafer starts,
to define which products shall be manufactured with their available
capacity.
7.14 In the event of a shortfall in NSC's final test capacity for EPROMS,
NSC shall have the option of subcontracting final test or of
shipping packaged but untested units to WSI at a cost determined in
accordance with Appendix E. NSC shall advise WSI of
such untested shipments no less than [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] weeks prior to the date that product will be sealed by
NSC.
7.15 All shipments to WSI of finished products and wafers shall be
governed by NSC's standard terms and conditions of sale, except as
modified herein. A copy of such terms and conditions is attached
hereto as Appendix F, and in the event of any conflict between such
terms and this Agreement, this Agreement shall control. Payment
shall be made by WSI within thirty [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]of
the date of NSC's invoice. In the event of non-payment or delayed
payment by WSI, NSC shall have the right to suspend performance
hereunder, place WSI on "credit hold" or take other appropriate
actions immediately notwithstanding the 60-day cure period provided
in Section 12.2 for other breaches of this Agreement.
7.16 If WSI desires to stop purchasing wafers or finished product from
NSC, the following ramp-down schedule shall apply:
Percentage of Outs For
Months After Notice Month Notice is Given
------------------- ---------------------
Fourth [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSION]
Fifth [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSION]
Sixth [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSION]
Seventh [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSION]
Eighth [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSION]
7.17 NSC shall have the right to cease production of finished products or
wafers for WSI at any time prior to the termination of this
Agreement on the following conditions:
7.17.1 NSC must give WSI not less than [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
written notice of its intention to cease such production.
7.17.2 NSC shall not be entitled to issue such notice until [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION] after NSC first delivers finished product or
wafers to WSI pursuant to this Section 7.0.
7.17.3 Upon its receipt of notice from NSC under Section 7.17.1, WSI shall
be required to confirm, not later than [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] after receipt of notice, the total "lifetime buy"
quantity of wafers and finished products it intends to purchase
from NSC prior to NSC's cessation of production. WSI confirmation
of this "lifetime buy" quantity shall be accompanied by a firm
purchase order for the full amount. The "lifetime buy" quantity
ordered by WSI shall be limited to not more than [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION] the maximum quantity that could otherwise be
ordered by WSI during the notice period.
7.18 In the event WSI terminates this Agreement pursuant to Section 12.2
or NSC ceases production for WSI pursuant to Section 7.17, WSI shall
have the right to disclose NSC TECHNICAL INFORMATION delivered to
WSI hereunder to one or more third parties for the sole purpose of
having such third parties provide WSI with design, layout, foundry,
assembly and testing services relating to semiconductor products,
provided that such disclosures are made under terms and provisions
which protect the confidentiality of the disclosed information upon
the terms, and for a period which is not less that, contained in
this Agreement. WSI shall also have rights to the tooling used by
NSC in the manufacture of product of WSI, and NSC shall provide WSI
reasonable technical assistance and consultation to assist such
foundry in qualifying its process for WSI.
8. PROGRAM MANAGEMENT
8.1 Within fifteen (15) days after signature of this Agreement, the
PARTIES shall appoint a Program Management Committee of no more than
six persons, comprised of three representatives from each PARTY, at
least one of which shall be an engineer qualified in technical
matters related to the LICENSED PRODUCTS. Each PARTY shall designate
one of its representatives to this Committee as Program Manager,
whose primary responsibility shall be to act as a focal point for
technical and commercial discussions between the PARTIES related to
the subject mater of this Agreement.
8.2 The Program Management Committee shall meet not less than once a
month for the initial six months of this Agreement, and not less
than quarterly thereafter. Meetings shall be held alternately at
WSI's site in Fremont and NSC's site in Santa ▇▇▇▇▇, unless
otherwise agreed. The Program Managers of each PARTY shall establish
the agenda in advance of each meeting.
9.0 TECHNICAL COOPERATION
9.1 By mutual agreement, the parties may add to the number of LICENSED
PRODUCTS by adding additional products to Appendix A. In the event
such additional products are developed solely by WSI, NSC shall pay
to WSI the product transfer fee specified in Section 5.1(ii) and
such products shall be subject to the royalty obligations of Section
5.1(iii).
9.2 In the event WSI develops a NEW VERSION, it shall transfer to NSC
the TECHNICAL INFORMATION required under Section 4.2, and the
following additional terms shall apply:
9.2.1. If the NEW VERSION does not exceed the performance levels set
forth on Appendix I, NSC shall have the option to immediately
add the NEW VERSION to Appendix A, in which case the NEW
VERSION will be governed by Section 9.1.
9.2.2 If the NEW VERSION does exceed the performance levels set
forth on Appendix I, NSC shall have the right to add the NEW
VERSION as an Appendix A LICENSED PRODUCT [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION] after first silicon on the NEW
VERSION is shipped by NSC to WSI, provided that NSC shall have
the right to deliver customer samples only until [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION] after shipment of such first silicon
to WSI. Notwithstanding the foregoing time restrictions on
NSC's ability to ship samples or production units of the NEW
VERSION, should NSC demonstrate, to the reasonable
satisfaction of WSI, that an EPROM competitor of NSC's has
announced, sampled or shipped production units of an EPROM
that is competitive in performance to the NEW VERSION, then
NSC shall have the right to announce equivalent information
and ship equivalent samples or production units.
9.3 In order to continue expansion of the product family, the PARTIES
may agree that NSC shall design specified additional EPROMS, all of
which shall be
manufacturable on the EPROM PROCESS, with the technical assistance
and cooperation of WSI. These COOPERATIVE PRODUCTS shall be offered
for sale to WSI under the provisions and pricing methods of Section
7.0 applicable to LICENSED PRODUCTS at the time they are released to
production by NSC.
9.4 COOPERATIVE PRODUCTS shall not be subject to either a product
transfer fee or a royalty.
9.5 Notwithstanding assistance from any NSC engineer in designing the
WSI 27C020LS product, the PARTIES recognize that WSI will own the
27C020LS and that the 27C020LS will be a LICENSED PRODUCT and not a
COOPERATIVE PRODUCT.
10.0 FUTURE AGREEMENTS
10.1 WSI and NSC desire to work together on the joint development of the
next generation of EPROM products and processes. The PARTIES
therefore agree to negotiate in good faith with the goal of entering
into a mutually satisfactory CO-DEVELOPMENT AGREEMENT setting forth
the terms and conditions of such joint development work as promptly
as possible after the execution of this Agreement. However, failure
by the PARTIES to negotiate a CO-DEVELOPMENT AGREEMENT will not
constitute a material breach under this Agreement.
10.2 WSI has indicated to NSC its interest in acquiring license rights to
manufacture and sell certain NSC products on terms and conditions
similar to those set forth in this Agreement. The PARTIES therefore
agree to negotiate in good faith with the goal of entering into a
mutually satisfactory LICENSING AGREEMENT under which NSC would
license WSI to manufacture an and sell up to five mutually-agreed
NSC products on terms and conditions similar to those of this
Agreement. However, failure by the PARTIES to negotiate a LICENSING
AGREEMENT will not constitute a material breach under this
Agreement.
11.0 CONFIDENTIALITY
11.1 Each PARTY acknowledges that the other may, from time to time,
reveal certain confidential business or technical information which
will be CONFIDENTIAL INFORMATION. Each PARTY agrees that it will not
use in any way for its own account or the account of any third
party, not disclose to any third party, except pursuant to this
Agreement, any such CONFIDENTIAL INFORMATION revealed to it by the
other PARTY. Each PARTY shall take every reasonable precaution to
protect the confidentiality of the CONFIDENTIAL INFORMATION of the
other PARTY. Each PARTY shall use the same standard of care in
protecting the CONFIDENTIAL INFORMATION of the other PARTY as it
normally uses in
protecting its own trade secrets and proprietary information, or a
higher standard of care if reasonable under the circumstances.
11.2 Notwithstanding any other provisions of this Agreement, no
information received by a PARTY hereunder shall be CONFIDENTIAL
INFORMATION if said information is:
11.2.1 published or otherwise made available to the public other
than by a breach of this Agreement,
11.2.2 furnished to a PARTY by an independent third party without
restriction on its dissemination,
11.2.3 approved for release in writing by the PARTY designating said
information as CONFIDENTIAL INFORMATION,
11.2.4 known to or independently developed by the PARTY receiving
CONFIDENTIAL INFORMATION hereunder without reference to or
use of said CONFIDENTIAL INFORMATION, or
11.2.5 disclosed to a third party by the PARTY transferring said
information hereunder without restriction on its subsequent
disclosure and use by said third party.
11.3 Disclosure of any CONFIDENTIAL INFORMATION by a PARTY hereto shall
not be precluded if such disclosure is in response to a valid order
of a court or other government body, provided that the receiving
PARTY promptly notifies the other PARTY of such order and makes a
good faith effort to obtain a protective order requiring that the
CONFIDENTIAL INFORMATION so disclosed be kept in confidence and used
only for the purpose for which such order was issued.
11.4 Either PARTY may disclose CONFIDENTIAL INFORMATION of the other
PARTY for the sole purpose of exercising the "have made" rights
granted in Section 3.0 of this Agreement, provided that such
disclosures are made under terms and provisions which protect the
confidentiality of the disclosed information upon the terms, and for
a period which is not less than that, contained in this Agreement.
12.0 TERM AND TERMINATION
12.1 Unless otherwise terminated as herein provided, this Agreement shall
continue in full force and effect for a period of five (5) years
from the date hereof, and thereafter shall continue on a
year-to-year basis unless the PARTY wishing to terminate provides
the other PARTY not less than twelve (12) months written notice of
its intent not to renew this Agreement.
12.2 This Agreement may be terminated by either PARTY for material breach
of this Agreement if such breach has not been cured within sixty
(60) days after written notification of such breach; provided,
however, that this Agreement may not be terminated if the breaching
PARTY has provided within such sixty (60) day period evidence of
good-faith effort and progress toward curing the breach, in which
case this agreement may not be terminated unless the breach has not
been cured within ninety (90) days of written notification of the
breach.
12.3 This Agreement may be terminated by either PARTY with immediate
effect in the event the other PARTY files for liquidation under
Chapter 7 of the United States Bankruptcy Code, or a prior Chapter
11 proceeding in which the other PARTY is the debtor is converted to
a Chapter 7 proceeding.
12.4 In the event that a proceeding for corporate reorganization under
chapter 11 of the United States Bankruptcy Code is filed by or
against a PARTY, or a Receiver or Trustee is appointed for a PARTY,
or a PARTY makes an assignment for the benefit of creditors, the
other PARTY may immediately suspend performance of its obligations
hereunder (other than royalty obligations in excess of amounts owed
to such PARTY) until such time as it receives reasonable assurances
of such PARTY's ability and intent to fully perform such PARTY's
obligations hereunder. If a condition referred to in this Section
12.4 continues for more than one (1) year, the other PARTY may at
its option terminate this Agreement upon written notice to such
PARTY.
12.5 In the event of termination of this Agreement, other than
termination under Section 12.2, the licenses and rights to royalties
granted hereunder shall survive such termination and all other
rights granted hereunder shall cease (except for rights accruing to
one PARTY by reason of the other PARTY's performance hereunder prior
to the effective date of termination).
12.6 In the event of termination under Section 12.2, the licenses and
rights to royalties shall continue except as follows:
(i) the licenses granted by WSI to NSI shall terminate if the
Agreement is terminated by WSI for a material breach by NSC of
its obligations under Sections 5.0, 6.0 or 7.17 of this
Agreement, and
(ii) the obligations of NSC to pay royalties to WSI shall terminate
if the Agreement is terminated by NSC for a material breach by
WSI of its obligations under Section 4.0
12.7 Notwithstanding any other provisions of this Agreement, the
confidentiality provisions of Section 11.0 shall survive any
termination of this Agreement.
12.8 IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR INCIDENTAL
OR CONSEQUENTIAL DAMAGES UPON TERMINATION OF THIS AGREEMENT FOR ANY
REASON.
13.0 INVENTIONS
13.1 All discoveries, improvements and inventions conceived in the
performance of this Agreement by NSC personnel shall be the sole and
exclusive property of NSC and NSC shall retain any and all rights to
file at its sole discretion and patent applications thereon.
13.2 All discoveries, improvements and inventions conceived in the
performance of this Agreement by WSI personnel shall be the sole and
exclusive property of WSI and WSI shall retain any and all rights to
file at its sole discretion any patent applications thereon.
13.3 All discoveries, improvements and inventions conceived jointly by
NSC and WSI personnel in the performance of this Agreement shall be
jointly owned by NSC and WSI with each PARTY having the undivided
right to exploit and grant licenses in respect of such inventions
and any patents arising therefrom without accounting to the other
PARTY. In the event of a joint invention, the PARTIES shall have the
responsibility for preparing and filing a patent application on the
invention in the United States and foreign countries and the PARTIES
agree that each will bear one-half of the actual out-of-pocket
expenses associated with obtaining and maintaining such patents. In
the event one PARTY elects not to seek or maintain patent protection
for any joint invention in any particular country or not to share
equally in the expenses thereof with the other PARTY, that other
PARTY shall have the right to apply for or maintain such patent
protection at its own expense in such country and shall have full
control over the prosecution and maintenance thereof, even though
title to any patent resulting therefrom shall be jointly owned.
14.0 PATENT INDEMNITY
WSI agrees to defend any suit or proceeding brought against NSC if it is
based on a claim that a LICENSED PRODUCT or other WSI product manufactured
by NSC under this Agreement constitutes an infringement of any patent,
trademark, copyright, mask work right, trade secret or other proprietary
right of a third party, if notified promptly in writing and given full and
complete authority, information and assistance (at WSI's expense) for the
defense of same. WSI shall pay all damages and costs, including attorneys'
fees, therein awarded against NSC, but WSI shall not be responsible for
any compromise made without its written consent. Notwithstanding anything
herein to the contrary, however, WSI's total liability under this Section
14.0 shall not exceed the total amount of license fees and product
transfer fees paid by NSC to WSI pursuant to Section 5.1
15.0 NONSOLICITATION OF EMPLOYEES
During the term of this Agreement and for a period of one year thereafter,
neither PARTY will solicit or induce any employee of the other PARTY who
is or has been engaged in the transfer of TECHNICAL INFORMATION or in
rendering TECHNICAL ASSISTANCE to become an employee or consultant of such
PARTY.
16.0 PUBLICITY
The PARTIES will agree on the content of a press announcement related to
the relationship contemplated by this Agreement. Except as otherwise
provided in this Section 16.0, neither PARTY shall publicize or otherwise
disclose the terms of this Agreement without the prior approval of the
other PARTY, which approval shall not be unreasonably withheld. This
provision shall not affect the right of NSC or WSI to disclose under
confidentiality and use restrictions, such terms of this Agreement as are
reasonably necessary to disclose for purposes of providing information of
the type customarily requested by customers and prospective customers in
the ordinary course of doing business, and of seeking financing, bank
credit or the like. Both PARTIES shall remain free to disclose the
existence of the Agreement, that NSC is a foundry for WSI products, and
the origin and design authorship of products produced or licensed under
this Agreement.
17.0 ASSIGNMENT
This Agreement and the rights and obligations rising hereunder shall be
binding upon and inure to the benefits of the PARTIES and to their
respective successors and assigns, provided that one PARTY shall not
assign any of its rights or privileges hereunder without the prior written
consent of the other PARTY. Notwithstanding the above, this Agreement may
be assigned by either PARTY pursuant to a merger, consolidation or sale of
all or substantially all of the assets of a PARTY, provided that the
successor agrees to be bound by the terms of this Agreement; provided,
however, that the rights granted in Section 7.0 shall not be assignable to
or assumable by any third party which meets either of the following
criteria: (i) annual semiconductor sales of more than $1 Billion, or (ii)
any other company which NSC can demonstrate to the reasonable satisfaction
of WSI is unlikely to adequately protect CONFIDENTIAL INFORMATION or
observe the license restrictions set forth in this Agreement. In the event
NSC refuses to consent to assignment of the rights granted in Section 7.0
on the basis of (ii) above, then NSC shall nevertheless provide WSI the
"lifetime buy" opportunity on the same basis as provided in Section 7.17,
except that the notice period of Section 7.17.1 shall be reduced to twelve
(12) months and the "lifetime buy" quantity in Section 7.17.3 shall be
limited to not more than two (2) times the maximum quantity that could
otherwise be ordered during the notice period.
18.0 WAIVER
No failure or delay on the part of either PARTY in the exercise of any
power, right or privilege arising hereunder shall operate as a waiver
thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.
19.0 INTEGRATION
This Agreement and the Stock Purchase Agreement attached hereto as
Appendix D constitute the entire agreement and understanding between the
PARTIES with respect to the subject matter of this Agreement and integrate
all prior discussions and proposals (whether oral or written) between them
related to the subject matter hereof. No modification of any of the terms
of this Agreement shall be valid unless in writing and signed by a duly
authorized officer of each PARTY.
20.0 SEVERABILITY
If any provision of this Agreement is for any reason found to be
ineffective, unenforceable or illegal, such condition shall not affect the
validity of enforceability of any of the remaining portions hereof;
provided, further, the PARTIES shall negotiate in good faith to replace
any ineffective, unenforceable or illegal provision with an effective
replacement as soon as is practical.
21.0 FORCE MAJEURE
Neither PARTY shall be liable in damages or have the right to terminate
for any delay or default in performing hereunder where such delay or
default is caused by conditions beyond the control of the delaying or
defaulting PARTY, including but not limited to acts of God, government
restrictions, continuing domestic or international problems such as wars
or insurrections, strikes, fires, floods, work stoppages and embargoes;
provided, however, that either PARTY shall have the right to terminate
this Agreement upon thirty (30) days prior written notice if the delay or
default of the other PARTY due to any of the above-mentioned causes
continues for a period of six (6) months.
22.0 COUNTERPART ORIGINALS
This Agreement is being executed simultaneously in two (2) counterparts,
each of which shall be deemed an original but both of which together
constitute one and the same instrument.
23.0 NO PARTNERSHIP OR AGENCY CREATED
Nothing contained herein or done in pursuant of this Agreement shall
constitute the PARTIES as entering upon a joint venture or partnership, or
shall constitute either PARTY the agent for the other PARTY for any
purpose or in any sense whatsoever.
24.0 CHOICE OF LAW
This Agreement and the performance of the PARTIES hereunder shall be
construed in accordance with and governed by the laws of the State of
California.
25.0 EFFECT OF HEADINGS
The headings and sub-headings contained herein are for information
purposes only and shall have no effect upon the intended purpose or
interpretation of the provisions of this Agreement.
26.0 EXPORT CONTROL
Each PARTY hereby represents and warrants to the other PARTY that unless
prior authorization is obtained or a general license is available from the
United States Government, such PARTY shall not knowingly:
(i) Export or re-export, directly or indirectly, any technical data (as
defined in Part 379 of the Administration Regulations of the United
States Department of Commerce) received from the other PARTY
hereunder, or
(ii) Disclose such technical data for use in or export or re-export,
directly or indirectly, any direct product of such technical data,
to any destination or country to which the export or re-export or
release of such technical data or export or re-export of the direct
products of such technical data is prohibited by the laws or
regulations of the United States. These assurances are furnished by
each PARTY in compliance with Part 379 (Technical Data) of the
export Administration Regulations of the United States Department of
Commerce.
(iii) Each PARTY hereby further agrees to obtain any necessary export
license or other documentation prior to exportation of any products
or technical data acquired from the other PARTY under this
Agreement. Accordingly, such PARTY shall not sell, export,
re-export, transfer, divert or otherwise dispose of any such product
directly or indirectly to any person, firm or entity, or country of
countries, prohibited by the laws or regulations of the United
States. Further, each PARTY shall give notice of the need to comply
with such laws and regulations of the United States. Further, each
PARTY shall give notice of the need to comply with such laws and
regulations to any person, firm or entity which is has reason to
believe is obtaining any such products from such PARTY with the
intention of exportation. Each PARTY shall secure, at its own
expense, such licenses and export and import documents as are
necessary to resell any product contemplated by this Agreement.
27.0 NOTICES
All notices required or permitted to be given hereunder shall be in
writing and shall be valid and sufficient if dispatched by registered
airmail, postage prepaid, in any post office of the country where mailed,
address as follows.
If to WSI:
WAFERSCALE INTEGRATION, INC.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
If to NSC:
NATIONAL SEMICONDUCTOR CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Either PARTY may change its address by a notice given to the other PARTY
in the manner set forth above. Notices given as herein provided shall be
considered to have been given seven (7) days after the mailing thereof.
IN WITNESS WHEREOF, the PARTIES have had this Agreement executed by their
respective authorized officers on the date first written above.
NATIONAL SEMICONDUCTOR CORPORATION
By: /s/
-----------------------------
Date: April 27, 1990
WAFERSCALE INTEGRATION, INC.
By:
-----------------------------
Date:
-----------------------------
If to WSI:
WAFERSCALE INTEGRATION, INC.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
If to NSC:
NATIONAL SEMICONDUCTOR CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Either PARTY may change its address by a notice given to the other PARTY
in the manner set forth above. Notices given are herein provided shall be
considered to have been given seven (7) days after the mailing thereof.
IN WITNESS WHEREOF, the PARTIES have had this Agreement executed by their
respective authorized officers on the date first written above.
NATIONAL SEMICONDUCTOR CORPORATION
By:
-----------------------------
Date:
-----------------------------
WAFERSCALE INTEGRATION, INC.
By: /s/
-----------------------------
Date: April 27, 1990
-----------------------------
APPENDIX A
LICENSED PRODUCTS DELIVERY DEADLINE
----------------- -----------------
1. 27C256LS 120 days from Agreement date
2. 27C512LS 60 days for Agreement date
3. 27C010LS(1) Delivered prior to Agreement date
4. 27C020LS(2) 90 days from Agreement date
5. 27C040LS(3) 60 days from Agreement date
NOTES:
-----
(1) Prior to July 1, 1990, NSC shall not ship any devices (other than
engineering samples) marked and guaranteed for a speed grad faster than
120 nsec.
(2) Prior to October 1, 1990, NSC shall not ship any devices (other than
engineering samples) marked and guaranteed for a speed grade faster than
120 nsec.
(3) Prior to October 1, 1990, NSC shall not publicly announce the availability
of a 4 Meg devices and shall not ship any qualified 4 Meg devices for
revenue, with the exception of NSC's being permitted to deliver
engineering samples after July 1, 1990.
APPENDIX B
TECHNICAL INFORMATION
For each licensed product, the following technical information shall be
transferred:
1.0 General Product Information.
1.1 Information on the process required to manufacture licensed
products.
Starting Material Specifications
Process Flow Description
Final Critical Dimensions
Critical Dimensions in Database
Thickness of Conducting and Insulating Layers
Processing Temperatures for Critical Steps
Threshold and Breakdown Voltages Required for Licensed Products
Sheet and Bulk Resistivities of Conducting Layers
1.2 Parametric Test Structure Information
Test Structure Database
Test Device Descriptions and Dimensions
Process Target Values for Tested Parameters
2.0 General Product Design Information
2.1 Design Rule Information
Layout Design Rule Package
Description of relationship between drawn and final dimensions
Design rule checking algorithms
2.2 Electrical Design Information
Simulation models used for simulating active devices and parasitic
areas
Current density design rules
3.0 Specific Product Design Information
3.1 Schematic diagram of LICENSED PRODUCT including device sizes, and
explanation of all operating modes of device.
3.2 Simulation netlists.
3.3 Graphical database of LICENSED PRODUCT, in hierarchical form, in
mutually agreed, computer readable format. All information required
to interpret and utilize the database for mask making and circuit
debugging.
3.4 LVS netlist corresponding to graphical database.
3.5 Explanations of all special structures, and their operating modes.
3.6 Full explanation of test methods and test modes of the LICENSED
PRODUCTS.
3.7 Characterization data of LICENSED PRODUCTS.
APPENDIX C
TECHNICAL ASSISTANCE
1. Experiences engineering assistance achieving prompt QUALIFICATION of the
LICENSED PRODUCTS, according to the requirements stated in APPENDIX H.
2. Consultation to support NSC's understanding of TECHNICAL INFORMATION.
3. Test support of wafers processed to develop and refine the EPROM PROCESS.
4. Consultation in support of NSC's development of manufacturing tests.
5. Consultation in support of NSC's establishment of assembly capability.
6. Design support of defining the correct sizing for manufacturing mask sets.
7. Design support in achieving the basic performance requirements defined in
APPENDIX H.
8. Engineering support in the definition of a production scribe line test
structure.
9. Failure analysis in support of yield enhancement. WSI and NSC share the
objective of achieving the defect densities and systematic yields
necessary to realize yields of [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] wafer on the
27C010LS during the twelve months of TECHNICAL ASSISTANCE.
10. Design and product engineering support achieving the full performance
potential of the LICENSED PRODUCTS. WSI and NSC share the objective of
achieving a 90% yield to Bin 1 specifications within the timeframe of
TECHNICAL ASSISTANCE. Apart from other criteria, the simplest way to
characterize "Bin 1" is by the following list of address access times:
27C256LS 90 nsec
27C512LS 100 nsec
27C010LS 100 nsec
27C020LS 100 nsec
27C040LS 120 ▇▇▇▇
▇▇. Design and product engineering in support of achieving the following
standards, over and above the basic performance criteria in APPENDIX H.
Operating Current Mean I(subscript(CC)) + 4 sigma < 60 mA
Output Noise Sensitivity No T(subscript(AA)) pushout below
V(subscript(CC)) = 6.5 V at -55 (degree) C
Output Loading With 130 pf load, achieve
specified speed and avoid data
errors
VIL >= 1.1 V
Programming Margin >= 7.0 V
These criteria are not required for qualification, but they are requirements
imposed by the most critical customers.
12 Process Baseline
In the event that it becomes necessary to compare NSC processing to the
current foundry performance experienced by WSI, WSI will provide the data
and support necessary to prepare a set of masks for the VG product,
27C210L. Unless explicitly added to the list of licensed products, the use
of these masks shall be confined to process development and process
baseline comparisons. WSI shall support these activities by making
historical data available and by evaluating the NSC processed wafers.
APPENDIX D
STOCK PURCHASE AGREEMENT
WAFERSCALE INTEGRATION, INC.
-----------------------------
SERIES C AND SERIES D PREFERRED
STOCK PURCHASE AGREEMENT
WITH NATIONAL SEMICONDUCTOR CORPORATION
as of April 27, 1990
TABLE OF CONTENTS
Page
----
SECTION 1 AUTHORIZATION AND SALE OF THE SHARES.............................4
1.1 Authorization of the Shares......................................4
1.2 Sale of the Shares...............................................4
1.3 Lower Priced Securities..........................................4
1.4 Share Reserves...................................................5
SECTION 2 CLOSING DATES; DELIVERY..........................................5
2.1 Closing Dates....................................................5
2.2 Delivery.........................................................6
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................6
3.1 Organization and Standing; Restated Articles and By-Laws.........6
3.2 Corporate Power..................................................6
3.3 Capitalization...................................................6
3.4 Authorization....................................................7
3.5 Subsidiaries.....................................................8
3.6 Financial Statements; No Material Changes........................8
3.7 Material Liabilities.............................................8
3.8 Patents, Trademarks, etc.........................................8
3.9 Compliance with Other Instruments................................9
3.10 Registration Rights..............................................9
3.11 Governmental Consent, etc........................................9
3.12 Offering........................................................10
3.13 Disclosure......................................................10
3.14 Brokers or Finders..............................................10
3.15 Litigation......................................................10
SECTION 4 INVESTMENT REPRESENTATIONS......................................10
4.1 Investment......................................................10
4.2 Experience and Information......................................11
4.3 Rule 144........................................................11
4.4 Restrictions on Transferability.................................11
4.5 Restrictive Legend..............................................12
4.6 Notice of Proposed Transfers....................................12
SECTION 5 PURCHASER'S CONDITIONS TO CLOSING...............................13
5.1 Conditions to the Purchaser's Obligations at the First Closing..13
5.2 Conditions to the Purchaser's Obligations at the Second Closing.14
5.3 Conditions to the Purchaser's Obligations at the Third Closing..14
SECTION 6 COMPANY'S CONDITIONS TO CLOSING.................................15
6.1 Conditions to the Company's Obligations at the First Closing....15
6.2 Conditions to the Company's Obligations at the Second Closing...16
6.3 Conditions to the Company's Obligations at the Third Closing....16
- i -
SECTION 7 AFFIRMATIVE COVENANTS OF THE COMPANY............................17
7.1 Information Rights..............................................17
7.2 Amendment of Information Rights.................................17
7.3 Assignment of Rights to Information.............................18
7.4 Non-Disclosure..................................................18
7.5 Right of First Refusal..........................................18
7.6 Amendment and Waiver of Right of First Refusal..................18
7.7 Termination of Covenants........................................18
SECTION 8 AFFIRMATIVE COVENANTS OF THE PURCHASER..........................18
8.1 Standstill......................................................18
8.2 Definitions.....................................................19
8.3 Termination.....................................................19
SECTION 9 REGISTRATION RIGHTS.............................................19
9.1 Registration Rights.............................................19
9.2 Amendment of Registration Rights................................20
SECTION 10 MISCELLANEOUS...................................................20
10.1 Governing Law...................................................20
10.2 Survival........................................................20
10.3 Successors and Assigns..........................................20
10.4 Entire Agreement; Amendment.....................................20
10.5 Notices, etc....................................................20
10.6 Delays or Omissions.............................................21
10.7 Severability of Agreement.......................................21
10.8 Expenses........................................................21
10.9 Titles and Subtitles............................................21
10.10 Counterparts ...................................................21
10.11 Consent to Certain Repurchases .................................21
- ii -
SCHEDULE OF EXHIBITS
--------------------
Exhibit A-1 - Fourth Restated Articles of Incorporation, as amended
Exhibit A-2 - Amendment to Fourth Restated Articles of Incorporation
Exhibit B - Schedule of Exceptions to Representations and Warranties of
the Company
Exhibit C - Provisions of Opinion of ▇▇▇▇ & Freidenrich, A Professional
Corporation
Exhibit D - Voting Agreement and Irrevocable Proxy
Exhibit E - Current Provisions of Information Rights Referenced from
Series D Agreement
Exhibit F - Current Provisions of Right of First Refusal and Termination
of Covenants Referenced from Series D Agreement
Exhibit G - Current Provisions of Registration Rights Referenced from
Series D Agreement
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WAFERSCALE INTEGRATION, INC.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
SERIES C AND SERIES D PREFERRED
STOCK PURCHASE AGREEMENT
WITH NATIONAL SEMICONDUCTOR CORPORATION
This Agreement is made and dated as of April 27, 1990, among WaferScale
Integration, Inc., a California corporation with its principal office located at
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and National
Semiconductor Corporation, a Delaware corporation with its principal office
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Purchaser").
SECTION 1
Authorization and Sale of the Shares
[Comment1]
1.1 Authorization of the Shares. The Company has or, as of the First
Closing Date (as hereinafter defined) will have authorized the sale and issuance
of 391,781 shares of its Series C Convertible Preferred Stock (the "Series C
Preferred") and 2,291,585 shares of its Series D Convertible Preferred Stock
(the "Series D Preferred") having the rights, restrictions, privileges and
preferences as set forth in the Fourth Restated Articles of WaferScale
Integration, Inc., as amended, attached to this Agreement as Exhibit A-1 as
further amended by the Amendment to Fourth Restated Articles of Waferscale
Integration, Inc. in the form attached as Exhibit A-2 to this Agreement (the
"Amendment to Articles") (together, the "Articles"). Shares of the Company's
preferred stock of any series now existing or hereafter issued shall be
collectively referred to as "Preferred Stock".
1.2 Sale of the Shares. Subject to the terms and conditions hereof, the
Company will issue and sell to the Purchaser and the Purchaser will purchase
from the Company an aggregate of 391,781 shares of Series C Preferred and
2,291,585 shares of Series D Preferred (the "Shares") at a purchase price of two
dollars and fifty cents ($2.50) per share of Series C Preferred and three
dollars and fifty cents ($3.50) per share of Series D Preferred. The Shares
shall be purchased and sold in three substantially equal installments at three
closings as described below.
1.3 Lower Priced Securities. Notwithstanding anything to the contrary set
forth in this Agreement, if the Company issues any securities prior to the Third
Closing (other than securities excluded from the definition of "Additional
Shares of Common" under Section 5(d)(i)(4) of the Articles, and the Series C
Preferred contemplated by this Agreement) at a price per share
(determined in accordance with Section 5(d)(v)(1) of the Articles) of less than
$3.35 subject to adjustments for stock splits, reverse stock splits, stock
dividends, reclassifications and the like ("Lower Price"), the Purchaser shall
be entitled to purchase, at a price per share equal to the Lower Price, at any
Closing after such issuance, instead of the Shares to be purchased by the
Purchaser at such Closing, that number of the securities that may be purchased
for the remaining consideration contemplated by Section 2.1(b) and/or Section
2.1(c), as appropriate.
1.4 Share Reserves. In the event the Company issues securities triggering
the provisions of Section 1.3, the Company shall, prior to such issuance, take
all such actions as are necessary to ensure that the required number of shares
of such securities and Common Stock are properly reserved and available for
issuance to Purchaser under the provisions of Section 1.3.
SECTION 2
Closing Dates; Delivery
2.1 Closing Dates. Each of the closings of the purchase and sale of the
Shares hereunder (collectively the "Closings" and individually a "Closing")
shall be held at the offices of ▇▇▇▇ & Freidenrich, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on the dates as hereinafter provided (collectively the
"Closing Dates"):
(a) The first Closing for the purchase and sale of 130,594 shares of
Series C Preferred and 763,862 shares of Series D Preferred (the "First
Closing") shall be held on the first business day following the date on which
verbal confirmation is received that the Amendment to Articles has been filed by
the California Secretary of State, or on such other date as the Purchaser and
the Company may agree (the "First Closing Date").
(b) The second Closing for the purchase and sale of 130,594 shares
of Series C Preferred and 763,862 shares of Series D Preferred (the "Second
Closing") shall be held on a date (the "Second Closing Date") within five (5)
business days after the qualification of the 27COlOLS at the Purchaser's wafer
foundry in accordance with the Licensing and Manufacturing Agreement of even
date herewith between the Purchaser and the Company (the "Licensing Agreement").
(c) The third Closing for the purchase and sale of 130,593 shares of
Series C Preferred and 763,861 shares of Series D Preferred (the "Third
Closing") shall be held on a date (the "Third Closing Date") within five (5)
business days after the qualification of the 27CO40LS at the Purchaser's wafer
foundry in accordance with the Licensing Agreement.
2.2 Delivery. Subject to the terms of this Agreement, at each Closing the
Company will deliver to the Purchaser two stock certificates registered in the
Purchaser's name representing the number of shares of Series C Preferred and
Series D Preferred purchased by the Purchaser at
- 5 -
such Closing. At each Closing, the Purchaser will pay the appropriate per share
purchase price multiplied by the number of shares being purchased at such
Closing, by check or wire transfer.
SECTION 3
Representations and Warranties of the Company
Subject only to and except as disclosed by the Company in the Schedule of
Exceptions attached as Exhibit B to this Agreement, the Company hereby
represents and warrants to the Purchaser as follows:
3.1 Organization and Standing; Restated Articles and By-Laws. The Company
is a corporation duly organized and validly existing under the laws of the State
of California and is in good standing under such laws. The Company has requisite
corporate power to own and operate its properties and assets, and to carry on
its business as presently conducted. The Company is not qualified to do business
in any foreign jurisdiction, and the operation of the Company's business,
including the ownership or leasing of any property or the employment of any
person outside of California, does not presently require such qualification. The
Company has furnished counsel for the Purchaser with copies of its Articles of
Incorporation and Bylaws. Said copies are true, correct and complete and contain
all modifications and amendments through the date of this Agreement. Prior to
the First Closing, the Company shall have properly filed the Amendment to
Articles with the California Secretary of State.
3.2 Corporate Power. The Company has all requisite legal and corporate
power to enter into this Agreement and will have on the First Closing Date all
requisite legal and corporate power to sell the Shares and to carry out and
perform its obligations under the terms of this Agreement.
3.3 Capitalization. Immediately prior to the First Closing, the authorized
capital stock of the Company will be 50,000,000 shares of Common Stock (the
"Common Stock"), 5,376,876 shares of which are issued and outstanding as of the
date hereof; and 27,300,000 shares of Preferred Stock, 8,871,250 shares of which
are designated Series A Preferred Stock ("Series A Preferred"), 8,871,250 of
which are issued and outstanding as of the date hereof; 5,441,033 shares of
which are designated Series B Preferred Stock ("Series B Preferred"), 4,270,300
of which are issued and outstanding as of the date hereof; 6,000,000 of which
are designated Series C Preferred, 3,584,218 shares of which are issued and
outstanding as of the date hereof; and 5,300,000 of which are designated Series
D Preferred, 2,124,790 shares of which are issued and outstanding as of the date
hereof, The Series A Preferred, Series B Preferred, Series C Preferred and
Series D Preferred have the respective rights, preferences and privileges which
are set forth in the Articles and are enforceable against the Company. All such
issued and outstanding shares have been duly authorized and validly issued, and
are fully paid and nonassessable. The Company has reserved 391,781 shares of
Series C Preferred and 2,291,585 shares of Series D Preferred for issuance
hereunder; 8,871,250 shares of Common Stock for issuance upon conversion of the
- 6 -
Series A Preferred, 5,441,033 shares of Common Stock for issuance upon
conversion of the Series B Preferred, 6,000,000 shares of Common Stock for
issuance upon conversion of the Series C Preferred, and 5,300,000 shares of
Common Stock for issuance upon conversion of the Series D Preferred; 7,930,675
shares of Common Stock for issuance to employees under its 1984 Incentive Stock
Option Plan (the "Employee Plan") pursuant to which, as of the date hereof,
options to purchase 3,347,265 shares of Common Stock have been granted and are
outstanding and 1,941,653 shares of Common Stock have been issued upon exercise
of options. As of the date hereof, except for (i) options to purchase 3,347,265
shares of common stock under the Employee Plan, (ii) warrants-or agreements to
issue warrants to purchase 781,597 shares of the Company's Series B Preferred
and 119,283 shares of the Company's Series C Preferred, (iii) the conversion
rights and right of first refusal which attach to the outstanding Series A,
Series B, Series C, and Series D Preferred, and (iv) as otherwise set forth on
Exhibit B, there are no outstanding rights, options, warrants, preemptive
rights, conversion rights or agreements for the purchase or acquisition from the
Company of any shares of capital stock, or any other securities.
3.4 Authorization. All corporate and other action on the part of the
Company, its directors and shareholders necessary for the authorization,
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein, and for the authorization, issuance and
delivery of the Shares and of the Common Stock issuable upon conversion of the
Shares ("Conversion Stock") has been taken or will be taken prior to the First
Closing. This Agreement is a valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and except to the
extent that the enforceability of the indemnification provisions of Section 8.9
of the Series D Preferred Stock Purchase Agreement dated May 21, 1987 (the
"Series D Agreement"), as referenced in Section 9 hereof, may be limited by
applicable law. The Shares are not subject to any preemptive rights or similar
rights created by the Company or, to the best of the Company's knowledge, any
other person or entity; prior to or simultaneous with the First Closing, the
right of first refusal granted to the purchasers of the Company's Series A,
Series B, Series C and Series D Preferred will have been waived as to the
Shares. The Shares, when issued in compliance with the provisions of this
Agreement, will be validly issued, fully paid and nonassessable, and will be
free of any liens or encumbrances; provided, however that the Shares may be
subject to restrictions on transfer under state and/or federal securities laws
as set forth herein. The Conversion Stock has been duly and validly reserved and
is not subject to any preemptive rights, rights of first refusal or similar
rights, and, upon issuance, will be validly issued, fully paid and nonassessable
and free of any liens or encumbrances.
3.5 Subsidiaries. Except as set forth in Exhibit B, the Company does not
presently own or control, directly or indirectly, any equity interest in any
corporation, association or business entity. The Company is not, directly or
indirectly, a participant in any joint venture or partnership.
3.6 Financial Statements; No Material Changes.
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(a) The Company has delivered to the Purchaser audited financial
statements for the fiscal year ended December 31, 1989 and unaudited financial
statements for the fiscal quarter ended March 31, 1990 (the "Financial
Statements"). The Financial Statements were prepared in accordance with
generally accepted accounting principles consistently applied throughout the
period indicated (except for the absence of notes thereto for the unaudited
financial statements) and fairly present the financial position of the Company
at the dates thereof and the results of operations of the Company for the
periods covered thereby.
(b) Since December 31, 1989: (i) the Company has not entered into
any material transaction which was not in the ordinary course of its business;
(ii) there has been no change in the condition (financial or otherwise),
business, property, assets, or liabilities of the Company as shown on the
balance sheet at that date contained in the Financial Statements, other than
changes that both individually and in the aggregate are not materially adverse
to such condition, business, property, assets or liabilities; (iii) the Company
has not declared or paid any dividend or made any distribution on its capital
stock, redeemed, purchased or otherwise acquired any of its capital stock,
granted any options or warrants to purchase shares of its capital stock other
than pursuant to the Employee Plan, or issued any shares of its capital stock;
(iv) there has been no agreement or commitment by the Company to do or perform
any of the acts described in this Section 3.6(b); and (v) to the best knowledge
of the Company, there has been no other event or condition of any character
specifically relating to the Company pertaining to and materially adversely
affecting the condition (financial or otherwise), business, property, assets or
liabilities of the Company.
3.7 Material Liabilities. The Company has no material liability or
obligation, absolute or contingent, direct or indirect (individually or in the
aggregate), which is not disclosed in the Financial Statements, except
obligations and liabilities incurred after the date of the audited Financial
Statements in the ordinary course of business which are not individually or in
the aggregate material.
3.8 Patents, Trademarks, etc. The Company owns or controls, is licensed
under or, to the best of its knowledge, can become licensed on reasonable terms
under, all patents, patent applications, trademarks, service marks, trade names,
inventions, trade secrets, franchises, licenses, permits, computer software,
copyrights, processes and other proprietary rights necessary for the operation
of its business as now conducted, with no known infringement of or conflict with
the rights of others. The Company has not received any communication alleging
that the Company has violated or, by conducting its business as now conducted,
would violate or infringe upon any of the patents, licenses, trademarks, service
marks, trade names, copyrights, trade secrets, franchises, permits, computer
software, processes or other proprietary rights of any other person or entity.
To the best of the Company's knowledge, no third party is infringing or
violating any of its patents, licenses, trademarks, service marks, trade names,
copyrights, trade secrets or other proprietary rights.
- 8 -
3.9 Compliance with Other Instruments. The Company is not in violation of
any term of its Articles or its Bylaws, or, to the best knowledge of the
Company, of any mortgage, deed of trust, indenture, loan contract, agreement,
commitment instrument, judgment, decree, order, statute, obligation, rule or
regulation applicable to it, which violation would materially adversely affect
the condition (financial or otherwise), business, property, assets or
liabilities of the Company. The execution, delivery and performance of and
compliance with this Agreement, and the issuance of the Shares, will not result
in any such violation or be in conflict with or constitute a default under any
such term, or result in the creation of any mortgage, pledge, lien, encumbrance
or charge upon any of the properties or assets of the Company pursuant to any
such term or require any consent or waiver under any such provision (other than
any consents or waivers that have been obtained).
3.10 Registration Rights. Except as provided for in the Founders'
Registration Rights Agreement, the Series A Preferred Stock Purchase Agreement
dated February 28, 1984, the Series B Preferred Stock Purchase Agreement dated
October 22, 1984 (the "Series B Agreement"), the First Amendment to the Series B
Agreement, dated October 29, 1984, the Second Amendment to the Series B
Agreement dated July 12, 1985, the Series C Preferred Stock Purchase Agreement
dated January 28, 1986, the Written Consent and Waiver of Shareholders of the
Company dated June 30, 1986, the Series D Agreement and this Agreement, the
Company is not under any obligation to register (as defined in Section 8.2 of
the Series D Agreement, referenced in Section 9 below) or to grant registration
rights with respect to any of its presently outstanding securities or any of its
securities which may hereafter be issued.
3.11 Governmental Consent, etc. No consent, approval, order or
authorization of or registration, qualification, designation, declaration or
filing With any governmental authority on the part of the Company is required in
connection with the valid execution and delivery of this Agreement, or the
offer, sale or issuance of the Shares or the Conversion Stock, or the
consummation of any other transaction contemplated on the Closing hereof, except
(i) the filing of a notice under Section 25102(f) of the California Corporate
Securities Law, which filing will be made within 15 days of the First Closing
Date, (ii) the filing of the Amendment to Articles with the California Secretary
of State, which filing will have been made and be effective at or prior to the
First Closing Date and (iii) the filing with any federal or state securities
authorities any required notices or qualifications.
3.12 Offering. Subject to the accuracy of the Purchaser's representations
in Section 4 hereof and in response to the inquiries of the Company or its
counsel, the offer, sale and issuance of any Shares and the Conversion Stock in
conformity with the terms of this Agreement constitute transactions exempt from
the registration requirements of Section 5 of the Securities Act of 1933, as
amended, and from the qualification requirements of Section 25110 of the
California Securities Law.
3.13 Disclosure. No representation, warranty or statement by the Company
in this Agreement or in any statement or certificate furnished or to be
furnished to the Purchaser
- 9 -
pursuant to this Agreement, when taken together, contains, or will contain any
untrue statement of a material fact, or be misleading, or, when taken together,
omits or will omit to state a material fact necessary to make the statements
made herein or therein, in light of the circumstances under which they were
made, not misleading.
3.14 Brokers or Finders. The Company has not incurred and will not incur,
directly or indirectly, any liability for brokers' or finders' fees, agents'
commissions or other similar charges in connection with this Agreement or any of
the transactions contemplated hereby.
3.15 Litigation. There are no actions, proceedings or investigations
pending against the Company or its properties (or, to the best of the Company's
knowledge, any basis therefor or threat thereof), which, either in any case or
in the aggregate, might result in any material adverse change in the business of
the Company or any of its properties or assets or in any material impairment of
the right or ability of the Company to carry on its business as now conducted or
as proposed to be conducted, and none which questions the validity of this
Agreement, the right of Company to enter into it, or any action taken or to be
taken in connection herewith. The Company is not a party or subject to, and none
of its assets is bound by, the provisions of any settlement agreement, order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.
SECTION 4
Investment Representations
4.1 Investment. This Agreement is made with the Purchaser in reliance upon
the Purchaser's representation to the Company, which by its acceptance hereof
the Purchaser hereby confirms, that the Shares to be received by the Purchaser
will be acquired for investment for the Purchaser's own account, and not with a
view to the sale or distribution of any part thereof, and that the Purchaser has
no present intention of selling, granting participation in, or otherwise
distributing the same. By executing this Agreement, the Purchaser further
represents that the Purchaser does not have any contract, undertaking,
agreement, or arrangement with any person to sell, transfer, or grant
participations to such persons, or to any third person, with respect to any of
the Shares or any Conversion Stock. The Purchaser understands that the Shares
are not, and any Conversion Stock at the time of issuance may not be, registered
under the Securities Act of 1933 (the "Securities Act") because the sale
provided for in this Agreement and the issuance of securities hereunder is
exempt from registration under the Securities Act pursuant to section 4(2)
thereof, and that the Company's reliance on such exemption is predicated on the
Purchaser's representations set forth herein.
4.2 Experience and Information. The Purchaser represents that it is
experienced in evaluating high technology companies such as the Company, is able
to fend for itself in the transactions contemplated by this Agreement, has such
knowledge and experience in financial and
- 10 -
business matters as to be capable of evaluating the merits and risks of its
investment, and has the ability to bear the economic risks of its investment.
The Purchaser further represents that it has carefully reviewed the Financial
Statements and this Agreement, including all exhibits and appendices thereto and
hereto, and that it has had, during the course of the transaction and prior to
its purchase of its Shares, the opportunity to ask questions of ' and receive
answers from, the Company through its officers and key employees concerning the
terms and conditions of the offering and to obtain additional information (to
the extent the Company possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify the accuracy of any
information furnished to it or to which it had access. Notwithstanding the
foregoing, any such investigation by Purchaser shall not affect Purchaser's
right to rely on the representations and warranties made by the Company in
Section 3 of this Agreement.
4.3 Rule 144. The Purchaser understands that the Shares (and any
Conversion Stock) may not be sold, transferred, or otherwise disposed of without
registration under the Securities Act or an exemption therefrom, and that in the
absence of an effective registration statement covering the Shares (or the
Conversion Stock) or an available exemption from registration under the
Securities Act, the Shares (and any Conversion Stock) must be held indefinitely.
In particular, the Purchaser is aware that the Shares (and any Conversion Stock)
may not be sold pursuant to Rule 144 promulgated under the Securities Act unless
a.11 of the conditions of that Rule are met. Among the conditions for use of
Rule 144 is the availability of current information to the public about the
Company, unless the shares have been held for three years (Rule 144(k)). Such
information is not now available and the Company has no present plans to make
such information available. The Purchaser represents that, in the absence of an
effective registration statement covering the Shares (or any Conversion Stock),
the Purchaser will sell, transfer, or otherwise dispose of the Shares (or any
Conversion Stock) only in a manner consistent with the Purchaser's
representations set forth herein and then only in accordance with the provisions
of Section 4 hereof.
4.4 Restrictions on Transferability4.4 Restrictions on Transferability.
The Shares shall not be transferable except upon the conditions specified in
this Section 4, which conditions are intended to insure compliance with the
provisions of the Securities Act of 1933. The Purchaser will cause any proposed
transferee of the Shares held by the Purchaser to agree to take and hold such
securities subject to the provisions and upon the conditions specified in this
Section 4.
4.5 Restrictive Legend. Each certificate representing the Shares, (ii) the
Conversion Stock and (iii) any other securities issued in respect of the Shares
or the Conversion Stock upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event, shall (unless otherwise permitted by the
provisions of Section 4.6 below) be stamped or otherwise imprinted with a legend
in the following form (in addition to any legend required under applicable state
securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
- 11 -
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER THAT ACT COVERING THESE SECURITIES,
THE TRANSFER IS MADE IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER THAT
ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES WHICH IS REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT
SUCH REGISTRATION IS NOT REQUIRED.
Certificates representing securities that bear the legend above are referred to
below as "Restricted Securities".
4.6 Notice of Proposed Transfers.
(a) Prior to any proposed transfer of any Restricted Securities
(other than under circumstances described in Section 9 hereof), the Purchaser
shall give written notice to the Company of the Purchaser's intention to effect
such transfer, describing the manner and circumstances of the proposed transfer
in reasonable detail.
(b) The notice provided for in Section 4.6(a) above shall be
accompanied (except in transactions in compliance with Rule 144) by either (i) a
written opinion of legal counsel (who shall be reasonably satisfactory to the
Company) addressed to the Company and reasonably satisfactory in form and
substance to the Company's counsel, to the effect that the proposed transfer of
the Restricted Securities may be effected without registration under the
Securities Act, or (ii) a "no action" letter from the Commission to the effect
that the distribution of such securities without registration will not result in
a recommendation by the staff of the Commission that action be taken with
respect thereto, whereupon the Purchaser shall be entitled to transfer such
Restricted Securities in accordance with the terms of the notice delivered by
the Purchaser to the Company. Each certificate evidencing the Restricted
Securities transferred as above provided shall bear the appropriate restrictive
legend set forth in Section 4.5 above, except that such certificate shall not
bear such restrictive legend if the opinion of counsel referred to above is to
the further effect that such legend is not required in order to establish
compliance with any provisions of the Securities Act.
SECTION 5
Purchaser's Conditions to Closing
5.1 Conditions to the Purchaser's Obligations at the First Closing. The
Purchaser's obligation to purchase Shares at the First Closing is subject to the
fulfillment on or prior to the First Closing Date of the following conditions,
any of which may be waived by the Purchaser:
(a) The representations and warranties made by the Company in
Section 3 hereof, when read together with Exhibit B attached hereto (as revised,
if at all, prior to the
- 12 -
Closing) shall be true and correct in all material respects when made, and shall
be true and correct in all material respects on the Closing Date with the same
force and effect as if they had been made on and as of said date.
(b) All covenants, agreements and conditions contained in this
Agreement to be performed or complied with by the Company on or prior to the
First Closing Date shall have been performed or complied with in all material
respects.
(c) At the time of the First Closing, the purchase of the Shares by
the Purchaser hereunder shall be legally permitted by all laws and regulations
to which the Purchaser and the Company are subject.
(d) The Company shall have delivered to the Purchaser a certificate,
executed by the President of the Company, dated the First Closing Date,
certifying to the fulfillment of the conditions specified in Sections 5.1(a),
(b), (f), (g) and (h) of this Agreement.
(e) All corporate and other proceedings in connection with the
transactions contemplated hereby and all documents and instruments incident to
such transactions shall be satisfactory in substance and form to the Purchaser
and counsel for the Purchaser, and the Purchaser shall have received all such
counterpart originals or certified or other copies of such documents as it may
reasonably request.
(f) The Company shall have obtained any and all consents, permits
and waivers and made all filings necessary or appropriate for consummation of
the transactions contemplated by this Agreement.
(g) The right of first refusal held by each Series A Preferred
Shareholder, each Series B Preferred Shareholder, each Series C Preferred
Shareholder and each Series D Preferred Shareholder shall have been waived with
respect to the issuance and sale of the Shares.
(h) The Amendment to Articles shall have been filed with the
Secretary of State of the State of California.
(i) The Purchaser shall have received from ▇▇▇▇ & Freidenrich, A
Professional Corporation, counsel to the Company, an Opinion addressed to
Purchaser, dated the First Closing Date, containing the provisions set forth in
Exhibit C hereto.
5.2 Conditions to the Purchaser's Obligations at the Second Closing. The
Purchaser's obligation to purchase Shares at the Second Closing is subject to
the fulfillment on or prior to the Second Closing Date of the following
condition, which may be waived by the Purchaser:
(a) The Company's 27COlOLS product shall have been qualified at the
Purchaser's wafer foundry in accordance with the Licensing Agreement.
- 13 -
(b) At the time of the Second Closing, the purchase of the Shares by
the Purchaser hereunder shall be legally permitted by all laws and regulations
to which the Purchaser and the Company are subject.
(c) The Company shall have obtained any and all consents, permits
and waivers and made all filings necessary or appropriate for consummation of
the transactions contemplated by this Agreement.
(d) If required, the Company shall have complied with the provisions
of Section 1.4.
(e) The Company shall not have become the subject of a petition
filed in the Bankruptcy Court of the United States, whether voluntary or
involuntary (and, in the case of an involuntary petition, such petition shall
not have been withdrawn or discharged within 60 days after the date of filing),
a receiver or trustee shall not have been appointed for all or a substantial
portion of the Company's assets and the Company shall not have made an
assignment for the benefit of its creditors.
5.3 Conditions to the Purchaser's Obligations at the Third Closing. The
Purchaser's obligation to purchase Shares at the Third Closing is subject to the
fulfillment on or prior to the Third Closing Date of the following condition,
which may be waived by the Purchaser:
(a) The Company's 27CO40LS product shall have been qualified at the
Purchaser's wafer foundry in accordance with the Licensing Agreement.
(b) At the time of the Third Closing, the purchase of the Shares by
the Purchaser hereunder shall be legally permitted by all laws and regulations
to which the Purchaser and the Company are subject.
(c) The Company shall have obtained any and all consents, permits
and waivers and made all filings necessary or appropriate for consummation of
the transactions contemplated by this Agreement.
(d) If required, the Company shall have complied with the provisions
of Section 1.4.
(e) The Company shall not have become the subject of a petition
filed in the Bankruptcy Court of the United States, whether voluntary or
involuntary (and, in the case of an involuntary petition, such petition shall
not have been withdrawn or discharged within 60 days after the date of filing),
a receiver or trustee shall not have been appointed for all or a substantial
portion of the Company's assets and the Company shall not have made an
assignment for the benefit of its creditors.
- 14 -
SECTION 6
Company's Conditions to Closing
6.1 Conditions to the Company's Obligations at the First Closing. The
Company's obligation to sell and issue Shares at the First Closing is subject to
the fulfillment to the Company's satisfaction on or prior to the First Closing
Date of the following conditions, any of which may be waived by the Company:
(a) The representations made by the Purchaser in Section 4 hereof
shall be true and correct in all material respects when made, and shall be true
and correct in all material respects on the First Closing Date with the same
force and effect as if they had been made on and as of said date.
(b) All covenants, agreements and conditions contained in this
Agreement to be performed or complied with by the Purchaser on or prior to the
First Closing Date shall have been performed or complied with in all material
respects.
(c) At the time of the First Closing the sale of the Shares by the
Company hereunder shall be legally permitted by all laws and regulations to
which the Purchaser and the Company are subject.
(d) All corporate and other proceedings in connection with the
transactions contemplated hereby and all documents and instruments incident to
such transactions shall be satisfactory in substance and form to the Company and
counsel for the Company, and the Company shall have received all such
counterpart originals or certified or other copies of such documents as it may
reasonably request.
(e) The Company shall have obtained any and all consents, permits
and waivers and made all filings necessary or appropriate for consummation of
the transactions contemplated by this Agreement.
(f) The right of first refusal held by each Series A Preferred
Shareholder, each Series B Preferred Shareholder, each Series C Preferred
Shareholder and each Series D Preferred Shareholder shall have been waived with
respect to the issuance and sale of the Shares.
(g) The Amendment to Articles shall have been filed with the
Secretary of State of the State of California.
(h) The Company and the Purchaser shall have executed and delivered
a Voting Agreement and Irrevocable Proxy in the form of Exhibit D attached
hereto, and all actions contemplated by the Voting Agreement and Irrevocable
Proxy to have been taken by the Company and the Purchaser before or at the time
of the First Closing shall have been taken.
- 15 -
6.2 Conditions to the Company's Obligations at the Second Closing. The
Company's obligation to sell and issue Shares at the Second Closing is subject
to the fulfillment to the Company's satisfaction on or prior to the Second
Closing Date of the following condition, which may be waived by the Company:
(a) The Company's 27COlOLS product shall have been qualified at the
Purchaser's wafer foundry in accordance with the Licensing Agreement.
(b) At the time of the Second Closing, the purchase of the Shares by
the Purchaser hereunder shall be legally permitted by all laws and regulations
to which the Purchaser and the Company are subject.
(c) The Company shall have obtained any and all consents, permits
and waivers and made all filings necessary or appropriate for consummation of
the transactions contemplated by this Agreement.
6.3 Conditions to the Company's Obligations at the Third Closing. The
Company's obligation to sell and issue Shares at the Third Closing is subject to
the fulfillment to the Company's satisfaction on or prior to the Third Closing
Date of the following condition, which may be waived by the Company:
(a) The Company's 27CO40LS product shall have been qualified at the
Purchaser's wafer foundry in accordance with the Licensing Agreement.
(b) At the time of the Third Closing, the purchase of the Shares by
the Purchaser hereunder shall be legally permitted by all laws and regulations
to which the Purchaser and the Company are subject.
(c) The Company shall have obtained any and all consents, permits
and waivers and made all filings necessary or appropriate for consummation of
the transactions contemplated by this Agreement.
SECTION 7
Affirmative Covenants of the Company
The Company (and the Purchaser as to Sections 7.3 and 7.4) hereby
covenants and agrees as follows:
7.1 Information Rights.
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(a) Except as set forth in Section 7.1(b) below, the Purchaser shall
be accorded the rights and shall receive the information and access to
information provided to holders of Preferred Stock as set forth in Sections 7.1
and 7.2 of the Series D Agreement, as those Sections may be amended from time to
time in accordance with Section 8.16 of the Series D Agreement and Section 7.2
below. A complete copy of the present terms of Sections 7.1 and 7.2 of the
Series D Agreement is attached as Exhibit E to this Agreement.
(b) The Purchaser shall not have rights to receive (i) the written
reports regarding quarterly and monthly financial statements described in
Sections 7.1(b) and 7.2(a) of the Series D Agreement, or (ii) the annual
operational plan and other information described in Section 7.2(c) of the Series
D Agreement.
7.2 Amendment of Information Rights. Notwithstanding the provisions of
Section 10.4 of this Agreement, no term of Section 7.1 of this Agreement or of
Sections 7.1 or 7.2 of the Series D Agreement may be amended, waived, discharged
or terminated orally, except by a written instrument signed by the Company and
holders of not less than a majority of the Preferred Equivalents, taken together
as one group. As modified by the next sentence of this Section 7.2, for purposes
of this Agreement the term "Preferred Equivalents" shall have the meaning set
forth in Section 8.11 of the Series D Agreement, as that Section may be amended
from time to time. To the extent outstanding, the Shares and the Conversion
Stock shall be counted among the shares included in the definition of "Preferred
Equivalents". A complete copy of the present terms of Section 8.11 of the Series
D Agreement is included within Exhibit G attached to this Agreement.
7.3 Assignment of Rights to Information. The rights granted pursuant to
Section 7.1 may not be assigned or otherwise conveyed by the Purchaser without
the written consent of the Company.
7.4 Non-Disclosure. The Company may require the Purchaser to enter into a
non-disclosure agreement with the Company with respect to any proprietary
information contained in information disclosed pursuant to this Section 7.
7.5 Right of First Refusal. The Purchaser shall be accorded a right of
first refusal on the terms and conditions provided in Section 7.6 of the Series
D Agreement, as that Section may be amended from time to time in accordance with
Section 7.6 below. For all purposes of Section 7.6 of the Series D Agreement,
the terms "Purchaser" and "Shares" shall include the Purchaser and the Shares. A
complete copy of the present terms of Section 7.6 of the Series D Agreement is
attached as Exhibit F to this Agreement.
7.6 Amendment and Waiver of Right of First Refusal. Notwithstanding the
provisions of Section 10.4 of this Agreement, no term of Section 7.5 of this
Agreement or of Section 7.6 of the Series D Agreement may be amended, discharged
or terminated orally, except by a written instrument signed by the Company and
holders of not less than a majority of the Preferred
- 17 -
Equivalents, taken together as one group. To the extent outstanding, the Shares
shall be counted among the Series C Preferred and Series D Preferred for
purposes of Section 7.6(g) of the Series D Agreement.
7.7 Termination of Covenants. The covenants set forth in this Section 7
shall terminate and be of no further force and effect at the same time and in
the same manner as provided in Section 7.20 of the Series D Agreement, as that
section may be amended from time to time. A complete copy of the present terms
of Section 7.20 of the Series D Agreement is included in Exhibit F attached to
this Agreement.
SECTION 8
Affirmative Covenants of the Purchaser
8.1 Standstill. Except as provided in Section 1.3 hereof, the Purchaser
agrees that it will not, unless the prior written approval of the Company's
Board of Directors has been obtained:
(a) Acquisition. Directly or indirectly (i) acquire Beneficial
Ownership (as defined in Section 8.1(b) below) of any Voting Securities (as
defined in Section 8.1(b) below), except to the extent any such acquisition
results from a stock dividend, stock split, or other distribution by the Company
to its security holders, or (ii) make a tender, exchange or other offer for
Voting Securities if such acquisition or the acceptance of such offer would
cause the Purchaser's Beneficial Ownership of Voting Securities to represent
more than 10% of the combined voting power of all then outstanding Common Stock
and other securities of the Company having the power to vote generally upon the
election of directors of the Company.
(b) Participation. At such time and for so long as the Company is
subject to the reporting requirements under Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934, as amended,
(i) become a "participant" in a solicitation of proxies, as
those terms are defined in Rule 14a-11 and Rule 14a-1, respectively, of
Regulation 14A under the Exchange Act in respect of any Voting Securities that
may be outstanding at any time during such period;
(ii) form or join any group for the purpose of voting,
purchasing or disposing of the Company's securities; or
(iii) deposit any securities of the Company in a voting trust
or subject them to a voting agreement or other arrangement of similar effect.
8.2 Definitions. The Purchaser will be deemed to have "Beneficial
Ownership" of Voting Securities if the Purchaser or its affiliates, directly or
indirectly, through any contract, arrangement, understanding or relationship,
have or share the power to (i) vote or direct the
- 18 -
voting of such Voting Securities or (ii) dispose of or direct the disposition of
such Voting Securities. "Voting Securities" means Common Stock, any securities
convertible into or exchangeable for Common Stock, any other securities of the
Company having the power to vote generally upon the election of directors of the
Company, or any other rights to acquire the foregoing.
8.3 Termination. The Purchaser's obligations under this Section 8 shall
terminate on May 1, 2000.
SECTION 9
Registration Rights
9.1 Registration Rights. The Purchaser shall be accorded registration
rights on the terms and conditions provided in Sections 8.2, 8.5, 8.6, 8.7, 8.8,
8.9, 8.10, 8.11, 8.12, 8.13, 8.14, 8.15, and 8.16 of the Series D Agreement, as
those Sections may be amended from time to time in accordance with Section 8.16
of the Series D Agreement and Section 9.2 below. For all purposes of the
sections of the Series D Agreement listed in this Section 9.1, the Shares shall
be counted and included among the Series C Preferred and Series D Preferred. A
complete copy of the present terms of Sections 8.2, 8.5, 8.6, 8.7, 8.8, 8.9,
8.10, 8.11, 8.12, 8.13, 8.14, 8.15, and 8.16 of the Series D Agreement is
attached as Exhibit G to this Agreement.
9.2 Amendment of Registration Rights2. Notwithstanding the provisions of
Section 10.4 of this Agreement, no term of Section 9.1 of this Agreement or of
Sections 8.2, 8.5, 8.6, 8.7, 8.8, 8.9, 8.10, 8.11, 8.12, 8.13, 8.14, 8.15, and
8.16 of the Series D Agreement may be amended, waived, discharged or terminated
orally, except by a written instrument signed by the Company and holders of not
less than a majority of the Preferred Equivalents, taken together as one group.
SECTION 10
Miscellaneous
10.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of California, as applied to contracts entered into in
California between California residents and to be performed entirely within
California.
10.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Purchaser and the
closing of the transactions contemplated hereby.
10.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
- 19 -
10.4 Entire Agreement; Amendment. This Agreement and the other documents
attached or delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof. Subject to Sections 7.2, 7.6 and 9.2 above, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
orally, except by a written instrument signed by the Company and the Purchaser.
10.5 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first-class mail,
postage prepaid, or otherwise delivered by hand, by messenger or overnight air
freight service, addressed (a) if to the Purchaser, at its address set forth at
the beginning of this Agreement, or at such other address as the Purchaser shall
have furnished to the Company in writing, or (b) if to the Company, at its
address set forth at the beginning of this Agreement, or at such other address
as the Company shall have furnished to the Purchaser in writing.
10.6 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to the Purchaser upon any breach or default of the
Company under this Agreement, shall impair any such right, power or remedy of
the Purchaser nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character by
the Purchaser of any breach or default under this Agreement, or any waiver by
the Purchaser of any provisions or conditions of this Agreement, must be made in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies either under this Agreement, or by law or otherwise
afforded to any holder, shall be cumulative and not alternative.
10.7 Severability of Agreement. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, it shall, to the extent practicable,
be modified so as to make it valid, legal and enforceable and to retain, as
nearly as practicable, the intent of the parties, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not be in any
way affected or impaired thereby.
10.8 Expenses. The Company and the Purchaser shall bear their own expenses
and legal fees incurred with respect to this Agreement and the transactions
contemplated hereby.
10.9 Titles and Subtitles. The titles of the sections and subparagraphs of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
10.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
- 20 -
10.11 Consent to Certain Repurchases. As provided in Article IV, Section 8
of the Articles, the Purchaser hereby consents to repurchase by the Company of
Common Stock upon exercise of the Company's repurchase options contained in the
Company's stock purchase agreements with certain of the holders thereof, whether
or not such repurchases would be otherwise prohibited by Section 502, 503 or 506
of the California General Corporation Law.
IN WITNESS HEREOF, the parties have executed this Agreement through their
duly authorized representatives as of the date first above written.
NATIONAL SEMICONDUCTOR CORPORATION
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
WAFERSCALE INTEGRATION, INC.
By:
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
President and CEO
- 21 -
APPENDIX E
PRICING FOR LICENSED PRODUCTS
The pricing for LICENSED PRODUCTS shall be determined by the following method:
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION]
- 22 -
APPENDIX E
Product Tables for Pricing Licensed Products
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION]
APPENDIX F
NATIONAL SEMICONDUCTOR STANDARD TERMS AND CONDITIONS
These terms and conditions may in some instances conflict with
some of the terms and conditions affixed to the purchase order
or the procurement document issued by the Buyer. In such case,
the terms and conditions contained herein shall govern and
acceptance of Buyer's order is conditioned upon Buyer's
acceptance of the terms and conditions contained herein
irrespective of whether the Buyer accepts these conditions by
a written acknowledgment, by implication, or acceptance and
payment of goods ordered hereunder. National's failure to
object to provisions contained in any communication from Buyer
shall not be deemed a waiver of the provision herein. Any
changes in the terms and conditions of sale contained herein
must specifically be agreed to in writing signed by a
corporate officer of national before becoming binding on
either party. All orders, offers, and contracts must be
approved and accepted by National at its home office in Santa
Clara, California.
1. TERMS OF PAYMENT
Where Buyer has established credit, terms of payment shall be
thirty (30) days from date of invoice. Where payment is by
letter of credit, all costs of collections shall be for
Buyer's account. Unless otherwise provided, all payments are
to be in United States dollars. In the event National is
required to bring legal action to collect delinquent accounts,
Buyer agrees to pay reasonable attorney's fees and cost of
suit.
2. TAXES
All prices are exclusive of any present of future sales,
revenue of excise tax, import duty (including brokerage fees)
or other tax applicable to the manufacture or sale of any
product. Such taxes when applicable shall be paid by Buyer
unless Buyer provides a proper tax exemption certificate.
3. TITLE AND DELIVERY
Sales are F.O.B. U.S. shipping point. national will use its
best efforts to ship in accordance with National's announced
shipment schedule by the method specified by Buyer.
4. ACCEPTANCE
Except for microcomputers and memory systems. Buyer shall
accept or reject products within thirty (30) days of receipt
of each shipment. Failure to notify National in writing of
nonconforming products within such period shall be deemed an
unqualified acceptance. Microcomputer and memory systems final
acceptance testing will be conducted suing National's
standard acceptance test procedures as specified in the
product test specification.
5. GENERAL WARRANTY
National warrants that the products covered hereby shall be
free from defects in workmanship and materials, and shall
conform to National's published specifications accepted in
writing by National for a period of one (1) year, except
Development Systems Products which are 90 days, from the date
of National's shipment, CIM board products which are warranted
as follows "within the CIM family, software and expendables
(such as batteries and fuses) are not warranted; cables are
warranted for thirty (30) days from the date of shipment; all
CIM boards are warranted for three (3) years from the date of
shipment; add-in products for the Apple Macintosh(TM) computer
are warranted for 5 years from date of shipment. The foregoing
warranty does not apply to any products which have been
subject to misuse (including static discharge), neglect,
accident, or modification or which have been soldered or
altered during assembly and are not capable of being tested by
National under its normal test conditions. National's sole
obligation to Buyer hereunder for products failing to meet the
aforesaid warranty shall be, at National's sole obligation to
Buyer hereunder for products failing to meet the aforesaid
warranty shall be, at National's discretion, to replace the
nonconforming product or issue Buyer credit for the purchase
price of the nonconforming product, where within the warranty
period: 1) National has received written notice of any
nonconformity, and 2) After National's written authorization
to do so Buyer has returned the nonconforming product to
National, freight prepaid, and 3) National has determined that
the product in nonconforming and that such nonconformity is
not a result of improper installation, repair or other misuse
by Buyer. Any replacement product shall carry only the
unexpired term of the warranty which was applicable to the
replaced product. The foregoing does not apply to software
except as provided in National's Software Licensing Agreement.
No National product may be used in a life support application.
THE FOREGOING WARRANTY AND REMEDIES ARE EXCLUSIVE AND ARE MADE
EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES EXPRESS OR IMPLIED,
EITHER IN FACT OR BY OPERATION OF LAW, STATUTORY OR OTHERWISE,
INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR USE.
NATIONAL NEITHER ASSUMES NOR AUTHORIZES ANY OTHER PERSON TO
ASSUME FOR IT ANY OTHER LIABILITY IN CONNECTION WITH THE SALE,
INSTALLATION FOR USE OF ITS
- 25 -
PRODUCTS AND NATIONAL MAKES NO WARRANTY WHATSOEVER FOR
PRODUCTS NOT MANUFACTURED BY NATIONAL. NATIONAL SHALL NO BE
LIABLE FOR DAMAGES DUE TO DELAYS IN DELIVERIES OR USE AND
SHALL IN NO EVENT BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL
DAMAGES OF ANY KIND, WHETHER ARISING FROM CONTRACT, TORT OR
NEGLIGENCE, INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS,
LOSS OF GOODWILL, OVERHEAD OR OTHER LIKE DAMAGES.
6. PATENT INDEMNIFICATION
Except as provided in the paragraph below, and subject to the
limitation set forth below, National will defend any suit or
proceeding brought against the Buyer if it is based on a claim
that any product, or any part hereof, made to National's
design by or for National and furnished hereunder constitutes
an infringement of any United States patents, in notified
promptly in writing and given full and complete authority,
information and assistance (at National's expense) for the
defense of same. National will pay damages and costs therein
awarded against the Buyer, but shall not be responsible for
any compromise made without its written consent. In providing
such defense, or in the event that such product, or part
thereof, is held to constitute infringement and the use of
such product, or part thereof is enjoined, National shall
retain the right at its sole discretion to either procure for
the Buyer the right to continue using such product or part
thereof, or modify it so that it becomes noninfringing, or
remove it, or part thereof, and grant the Buyer a credit for
the depreciated value thereof, national's indemnity is
expressly limited to United States patents only. In no event
shall National's total liability to Buyer under the foregoing
indemnity exceed the purchase price of the alleged infringing
product. National makes no expressed or implied warranty that
the products sold hereunder will not infringe any United
States or foreign patents, trademarks, or copyrights.
[illegible] infringement or contributory infringement of any
patents, trademarks or copyrights related to products sold
hereunder arising from (i) National's compliance with Buyer's
designs, specifications, or instructions, (ii) use of any
product in combination with products not supplied by National,
or (iii) use of any product in connection with a manufacturing
or other process.
7. TOOLING
Unless otherwise expressly provided in writing, Buyer shall
obtain no interest in any ???? or other tooling used in the
production of any National product. National shall not be
liable for fair wear and tear to Buyer's tooling.
- 26 -
8. CONFIDENTIAL INFORMATION
No information shall be deemed to be given or received in
confidence by either party unless and to the extent it is
covered by a separate agreement.
9. FORCE MAJEURE
National shall not be liable for any damage or penalty for
delay in delivery or for failure to give notice of delay when
such delay is due to the elements, acts of God, acts of Buyer,
acts of civil or military authority, war, riots, concerted
labor action, or any other causes beyond the reasonable
control of National. The anticipated delivery date shall be
deemed extended for a period of time equal to the time lost
due to any delay excusable under this provision. National
shall not be entitled to an extension of time for commercially
reasonable delays.
10. CANCELLATION FOR CONVENIENCE
BUYER MAY CANCEL ANY ORDER FOR CONVENIENCE ON THE FOLLOWING
TERMS: (A) FOR STANDARD PRODUCTS, ANY REQUEST FOR CANCELLATION
OR RESCHEDULE WILL BE ACCEPTED ONLY FOR ORDERS SCHEDULED FOR
DELIVERY MORE THAN 60 DAYS FROM RECEIPT OF THE REQUEST (90
DAYS WHERE THE PRODUCT HAS BEEN TESTED AND/OR MARKED TO
CUSTOMER SPECIFICATIONS) AND WITH THE SPECIFIC APPROVAL OF
NATIONAL'S CUSTOMER SERVICE DEPARTMENT, SPECIAL CHARGES MAY
APPLY. (B) FOR NON-STANDARD PRODUCTS, BUYER SHALL ACCEPT
DELIVERY OF ALL SUCH PRODUCTS COMPLETED AT THE TIME OF
CANCELLATION, NONSTANDARD PRODUCTS WHICH ARE RESCHEDULED BY
THE BUYER WILL BE DEEMED CANCELED AS TO THOSE PRODUCTS
SCHEDULED FOR DELIVERY IN SIXTEEN (16) WEEKS TIME PERIOD
FOLLOWING RESCHEDULING AND CANCELLATION CHARGES SHALL APPLY.
NONSTANDARD PRODUCTS WHICH ARE IN THE WORK-IN-PROCESS
INVENTORY SHALL BE PAID FOR BY BUYER AT A PRICE BASED ON THE
PERCENTAGE OF COMPLETION OF SUCH INVENTORY APPLIED TO THE
PRICE FOR THE FINISHED PRODUCT. BUYER SHALL ALSO PROMPTLY PAY
TO NATIONAL: (i) COST OF SETTLING AND PAYING CLAIMS ARISING
OUT OF THE TERMINATION OF WORK UNDER NATIONAL'S SUB-CONTRACTS
OR VENDORS, (ii) REASONABLE COSTS OF SETTLEMENT, INCLUDING
ENGINEERING DEVELOPMENT, ACCOUNTING, LEGAL AND CLERICAL COSTS,
AND (iii) TWENTY PERCENT (20%) OF THE PURCHASE PRICE OF THE
PORTION OF THE ORDER CANCELED; (C) STANDARD PRODUCTS WITH
MINIMUM USAGE MAY BE SUBJECT TO CANCELLATION CHARGES AS PER
NON-STANDARD PARTS.
- 27 -
11. CANCELLATION FOR DEFAULT
UPON NATIONAL'S FAILURE TO CORRECT ANY DEFAULT WITHIN
FORTY-FIVE (45) DAYS, BUYER AS ITS SOLE REMEDY, MAY RECOVER
FROM NATIONAL AS DAMAGES, THE DIFFERENCE BETWEEN THE COST OF
REPROCUREMENT (COVER) AND THE CONTRACT PRICE, LESS EXPENSES
SAVED IN CONSEQUENCE OF NATIONAL'S BREACH, BUT IN NO EVENT TO
EXCEED TEN PERCENT (10%) OF THE PRODUCT PRICE MULTIPLIED BY
THE NUMBER OF PRODUCTS UNCONDITIONALLY RELEASED BY BUYER, BUT
REMAINING UNSHIPPED, PROVIDED, HOWEVER, SUCH CLAIM BY BUYER
MUST BE ASSERTED WITHIN THE THIRTY (30) DAY PERIOD FOLLOWING
THE EFFECTIVE DATE OF CANCELLATION, NATIONAL SHALL NOT BE
LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING BUT
NOT LIMITED TO THE COST OF LABOR, REQUALIFICATION, DELAY, LOSS
OF PROFITS, OR GOODWILL.
12. CANCELLATION FOR INSOLVENCY
National shall have the right to cancel any unfilled order
without notice to Buyer in the event that Buyer becomes
insolvent; adjudicated bankrupt; petitions for or consents to
any relief under any bankruptcy reorganization statutes; or
becomes unable to meet its financial obligations in the normal
course of business.
13. APPLICABLE LAW
The terms and conditions contained herein shall be governed by
and construed under the laws of the State of California.
14. EQUAL OPPORTUNITY
Unless exempt, all products furnished hereunder were produced
under conditions in compliance with the Civil Rights Act of
1964; Title VII Equal Opportunity, and the regulations and
orders issued hereunder, including Executive Order 11246, the
provisions of which are deemed incorporated herein.
LIFE SUPPORT POLICY
NATIONAL'S PRODUCTS ARE NOT AUTHORIZED FOR USE AS CRITICAL COMPONENTS IN LIFE
SUPPORT DEVICES OR SYSTEMS WITHOUT THE EXPRESS WRITTEN APPROVAL OF THE PRESIDENT
OF NATIONAL SEMICONDUCTOR CORPORATION. As used herein:
(1) Life support devices or systems are devices or systems which a) are intended
for surgical implant into the body; or b) support or sustain life and whose
failure to perform when properly
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used in accordance with instructions for use provided in the labeling can be
reasonably expected to result in a significant injury to the user.
(2) A critical component in any component in a life support device or system
whose failure to perform can be reasonably expected to cause the failure of the
life support device or system or to affect the safety or effectiveness.
(TM)Macintosh is a trademark of Apple Computer, Inc.
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APPENDIX G
WAFER ACCEPTANCE CRITERIA
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION]
APPENDIX I
DEFINITION OF REVOLUTIONARY "NEW VERSION"
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION]
APPENDIX H
QUALIFICATION CRITERIA
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION].