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EXHIBIT 10.18
TESSERA, INC.
TCC MASTER LICENSE AGREEMENT
TCC & MCM MANUFACTURING AND ASSEMBLY
This Agreement is entered into as of this 20th day of January, 1994,
between TESSERA, INC., a corporation of Delaware having a principal place of
business at San Jose, California ("Tessera"), and SHINKO ELECTRIC INDUSTRIES
CO., LTD., a corporation organized under the laws of Japan ("Licensee") with
reference to the following facts:
SCOPE:
WHEREAS, Tessera owns certain semiconductor integrated circuit ("IC")
packaging technology it calls TCC technology and certain other IC tape mounting
technology it calls TCMT technology and certain other related technology for
the manufacture of laminated substrates for IC interconnect it calls TLS
technology, where said technologies include manufacturing processes, device
designs and specifications, including design rules and certain other
proprietary information and technology required to manufacture TCCs and
multi-chip modules ("MCMs") made with TCCs, (collectively, the "Technology")
(each of the foregoing capitalized terms is more particularly described
herein): and
WHEREAS, Licensee wishes to use the Technology to: manufacture, or have
others manufacture, TCMT and TLS materials; assemble ICs owned by its Customers
onto said TCMT materials as TCCs; assemble TLS substrates for MCMs and other
packages for ICs using TLS materials; assemble MCMs using TCCs and TLS
substrates; and market and sell such MCMs, TCCs, TLS substrates and related
packages, materials and services including TCMT and TLS materials, all in
accordance with the terms hereof; and
WHEREAS, Tessera is in the business, among other things, of manufacturing
proprietary TCCs and MCMs along with quick-turn, prototype, and custom products
for certain customers, and of distributing (reselling) certain TCCs to MCM
assemblers; and
WHEREAS, Tessera and Licensee wish to jointly market, promote, and
promulgate TCMT, TCCs, and MCMs made with TCCs and TLS with industry wide
acceptance, and to ▇▇▇▇▇▇ the growth of an infrastructure of materials
suppliers and of assembly, burn-in, and test equipment manufacturers all
supporting TCMT, TCC, and TLS standards; and
WHEREAS, Tessera and Licensee wish to ensure and maintain TCMT, TCC, and
TLS materials Specifications and Standards along with uniform manufacturing
specifications and quality standards for same,
THE PARTIES HERETO AGREE:
DEFINITIONS: As used herein, the following terms shall have the following
meaning:
The term "Affiliate" means a company, the majority of whose voting shares
are directly owned or controlled by Licensee. A company shall be considered an
Affiliate only so long as such ownership or control exists.
The term "Customer" means any customer or Affiliate of Licensee and shall
include Licensee's parent company, Fujitsu Limited (Japan), a company
incorporated under the laws of Japan.
The term "Packaging-Related", as applied to any item (including any
information, idea, invention or know-how) means that such item is substantially
related to the physical structures and/or stages of
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assemblies, components and/or methods for packaging, mounting or connecting
semiconductor chips. Items which relate only to the electrical circuitry
embodied in semiconductor chips or assemblies, and which do not relate to said
physical structures or stages are not Packaging-Related.
The term "Technology" means the inventions claimed under US Patents and US
Patent applications set forth in Schedule A attached, including re-issues,
continuations, and all corresponding foreign patents, as they relate to the
manufacture, packaging and use of TCC, TLS, TCMT and MCMs, including all
Packaging-Related know-how owned or controlled by Tessera and used by it as of
the Effective Date (as defined below) for producing TCCs, TLS, TCMT and MCMs,
and all Improvements to each of the foregoing during the term of this Agreement.
The term "High Performance" refers to TCMT, TCCs, MCMs, MCM Components, or
other package or material made under or using the Technology, if permitted
hereunder, which incorporates, on an element other than a semiconductor chip,
an array of electrical contacts or bumps or having a contact pitch equal to or
less than 0.5 millimeter.
The term "Fine Pitch" refers to TCMT, TCCs, MCMs, MCM Components, or
other package or material made under or using the Technology, if permitted
hereunder, which (a) is not High Performance as defined above; and (b)
incorporates, on an element other than a semiconductor chip, an array of
electrical contacts or bumps on having a contact pitch less than 1.0 millimeter.
The term "Coarse Pitch" refers to TCMT, TCCs, MCMs, MCM Components, or
other package or material made under or using the Technology, if permitted
hereunder, which is neither Fine Pitch nor High Performance as defined above.
A "TCC" is an IC device which is made or packaged under or using the
Technology with an array of coplanar electrical contacts or bumps on a grid
spacing ("BGA"). The package for a TCC is a thin compliant multi-layer structure
mounted to the bonding pad side of an IC die, with permanent flexible electrical
connections between at least certain ones of said bumps and corresponding
bonding pad(s) on said IC die, where said pad(s) can be arranged on the
perimeter, or the interior, or in an area array on the surface of said IC die.
"TLS" means proprietary Tessera laminated substrates for MCMs and IC
interconnect and/or packaging made under or using the Technology comprised of
sub laminate signal layers and interconnecting interposer layers that may be
individually personalized and assembled by means of lamination into electrical
interconnecting substrates.
"TCMT" for ICs is a flexible film made under or using the Technology made
of one or more layers comprising a first layer of flexible film with electrical
contact bumps arranged in an array, at least certain ones of said bumps being
connected to one or more flexible conductors terminating in features disposed
and suitable for bonding to bonding pads of said IC.
An "MCM" is an IC sub assembly, made under or using the Technology
comprising at least one TCC, including the first wiring substrate it may be
attached to, whether permanently attached or not, and further including those
ICs, TCCs, components, heat spreaders, sealing caps, and sub assemblies that are
ultimately attached or connected to the same first wiring substrate (all of the
foregoing and nothing else), and where said IC Sub assembly is designed and
intended for permanent or detachable connection, by means of a socket or other
suitable method, to a greater electronic system for one or more of data I/O,
instructions, control signals, and access to system power and ground.
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An "MCM Component" is a partially completed MCM incorporating at least one
TCC, whether permanently attached or not, and which may be arranged to allow
for later removal of said TCC(s) and/or further incorporated of other TCCs,
chips, passives, heat spreaders, sealing caps, or other components.
"Improvements" means Packaging Related device designs, modifications,
derivatives, improvements, or enhanced device specifications, whether or not
patentable, that may be proposed for incorporation into the Tessera
Specifications.
"Tessera Specifications" means the specifications for TCMT, TCC, TLS,
MCMs, and related packages and materials, a copy of which is attached hereto in
its current form as Appendix A, as the same may be modified or amended from
time to time by Tessera.
"Standards" means the JEDEC Standards or similar standards for external
device properties and/or measurements.
LICENSEE RIGHTS: Subject to the terms and conditions hereinafter set
forth, fees paid to Tessera by Licensee herewith, Licensee's agreement to the
provisions hereof including all attachments hereto, and Licensee's payment of
the additional fees and royalties stated herein, Tessera hereby grants Licensee
a non-exclusive, non-transferable, non-sub licensable license during the term
of this Agreement, to use the Technology to manufacture, or have manufactured,
TCMT and TLS materials, and to package and assemble, or have packaged and
assembled ICs as TCCs for any Customer, to assemble, or have assembled TLS and
related packages, and to assemble, or have assembled TCCs into MCMs for any
Customer, all of the foregoing made or assembled strictly according to Tessera
Specifications, and to sell all of the foregoing as further provided herein on
a world wide basis;
PROVIDED THAT:
A. TCMT, TCMT MATERIALS AND TLS SUB LAMINATES AND MATERIALS: Licensee
may sell TCMT and TCMT materials only to third parties that hold a valid
license from Tessera to assemble TCCs, and Licensee may sell TLS sub laminates
and materials only to third parties that hold a valid license from Tessera to
assemble MCMs (other than second source MCM assemblers as provided in Paragraph
B below), and such restricted sales to Tessera licensees may be made without
royalty.
B. FINE PITCH AND HIGH PERFORMANCE: Licensee expressly agrees that it
shall not assemble, manufacture or deliver any Fine Pitch or High Performance
TCC or any MCM Component containing a Fine Pitch or High Performance TCC for any
Customer unless and until said Customer shall first execute and deliver to
Tessera a Limited Second Source MCM Assembly License (Substantially) of the form
attached hereto (a "Limited Second Source MCM Assembly License"). Licensee is
hereby authorized to offer any Customer of Licensee desiring to have Licensee
assemble Fine Pitch or High Performance TCCs or MCM Components, a
non-assessable, non-transferable, non-sub licensable Limited Second Source MCM
Assembly License which will become valid and binding on all parties when
countersigned by Tessera. Tessera hereby agrees that it will promptly execute
and deliver a confirming copy to Licensee and Customer, unless Tessera advises
Licensee of a valid and specific reason to believe that such Customer will not
perform its obligations under such Limited Second Source MCM Assembly License.
Licensee agrees that, immediately upon notice from Tessera that a Customer that
is a licensee of Tessera under a Limited Second Source MCM Assembly License is
in breach of such Limited Second Source MCM Assembly License and until Tessera
notifies Licensee to the contrary, Licensee shall withhold all shipments to such
Customer of any products made by or on behalf of Licensee under this Agreement.
Licensee may (but is not obligated to) advise such Customer that Licensee is
restricted by this Agreement from selling such products to any Customer in
breach of the Limited Second Source MCM Assembly License. Said Limited Second
Source MCM Assembly License provides: (a) That said Fine Pitch or High
Performance TCCs and MCM Components will be permanently incorporated into MCMs
before any further sale or transfer, and (b) That Tessera is granted a right to
purchase any IC (packaged as a TCC) that Customer may
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package or have packaged as a TCC, if Customer otherwise sells said IC in any
package. If said IC is not sold commercially except as part of a chipset in
Customer's MCM, then Licensee shall use its best efforts to obtain for Tessera
the aforesaid purchase right. Licensee expressly agrees that under no
circumstances shall Licensee make a market in, sell, or distribute Fine Pitch
or High Performance TCCs or MCM Components (except as provided above), and
Licensee further acknowledges and agrees that Fine Pitch and High Performance
TCC and MCM Component distribution is a business that Tessera desires to have
exclusively (except to the extent that Licensee is permitted to sell such
products pursuant to the terms of this Paragraph), and Licensee agrees to use
its best efforts to assist Tessera in this regard. Notwithstanding the
aforesaid, Tessera and Licensee agree to exercise their good faith efforts to
negotiate an agreement in which Licensee serves as Tessera's selling agent in
Japan for Fine Pitch and High Performance TCC's and MCM Components.
C. THIRD PARTY IMPROVEMENTS: The licenses granted to Licensee
hereunder shall not extend to any Improvements which are originated and/or
owned by any party other than Tessera, unless Tessera has an unrestricted right
to grant licenses for such Improvement without payment or other obligation of
Tessera to any other party. If Tessera has such unrestricted right without
obligation, the Improvement shall be incorporated in the Technology licensed
hereunder.
D. NO OTHER SALES: No licenses are granted or sales of any package,
system, material, item or component made under or using the Technology, are
permitted, except as expressly stated herein. Furthermore, any failure on the
part of Tessera to fully exercise any right or claim of any right express or
implied herein shall not be construed as any license granted hereunder, nor
shall same be construed as an abandonment of such right or the eventual full
exercise thereof by Tessera.
QUICK TURNS: Licensee agrees to cooperate and lend its support in
establishing a Tessera MCM Design Center and quick turn prototype production
facility located at Tessera's headquarters in San Jose, California, and will
assist Tessera in offering quick turn and prototype MCMs made using TCCs and TLS
substrates. Licensee agrees that Tessera shall have a first right of refusal to
manufacture any first article TCC or MCM, and Licensee shall exercise its best
efforts to direct and encourage any customers desiring first article, quick
turns and/or other prototype work to Tessera. Licensee shall not compete with
Tessera's quick turn and prototype business. Tessera hereby agrees to hold in
confidence any confidential information received from such Customer under the
same restrictions as set forth in "Non-Disclosure" set forth below. However,
Tessera recognizes that for certain Customers located in Japan, Licensee is the
appropriate source for prototypes and/or first articles of a volume production
order, and the parties agree that pursuant to the Joint Marketing provision
hereof, they will negotiate in good faith to enumerate such Customers. With
respect to any such Customer, Licensee may furnish prototypes and/or first
articles of a volume production order, provided that, Licensee shall provide
Tessera with an English language report summarizing the marketing, design and
engineering discussions.
FEE AND ROYALTY: In consideration for this Master License and the rights
and privileges hereof, Licensee shall pay to Tessera the sum of [*] US Dollars
(US $[*]) as a Technology transfer fee. The Technology Transfer fee shall be
paid in [*] US $[*] installments with the first installment due on [*] or the
date two weeks following the Effective Date, whichever is later,and the other
installments due [*] and [*], respectively. In addition, Licensee shall pay
regular, semi-annual cash royalties to Tessera on [*] derived by Licensee
pursuant to the rights and licenses granted hereunder including: [*]
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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Tessera and Licensee agree that the parties will meet at least every
three years for the purpose of reviewing the royalty rates set forth in
Schedule C above for High performance items in the context of evaluating
whether the market price of products made by Licensee under the Technology have
remained competitive.
Tessera and Licensee understand and hereby agree that the Fine Pitch and
High Performance MCM Component royalties stated above are sizable and necessary,
and are designed to favor sales and shipments of permanently assembled MCMs,
rather than sales of Fine Pitch and High Performance TCCs and MCM Components.
[*] Licensee shall furnish along with its royalty payments copies certified by
an officer of Licensee of such sales tax or [*] needed to evidence and support
any reduction in payments to Tessera of royalty due to the aforesaid sales tax
payments, or [*]. Licensee shall maintain full and accurate accounts and records
of all of its transactions under this Agreement, in such form that all amounts
owing hereunder to Tessera may be readily and accurately determined.
LICENSEE REPORTS AND PAYMENT: Royalties shall be paid twice annually for
the periods beginning January 1 and ending June 30, and the period beginning
July 1 and ending December 31 (each six month period hereinafter referred to as
a "Payment Period"). Licensee shall deliver to Tessera within thirty days after
the end of each Payment Period, beginning with the first Payment Period, a
written report describing in detail reasonably acceptable to Tessera, for the
applicable Payment Period: (a) the basis upon which royalties have been
calculated, and (b) with respect TCMT, TCMT materials, TLS sub laminates and
materials, the name of each Customer along with the quantity shipped to that
Customer. Each report for a Payment Period shall be accompanied by full payment
to Tessera of the royalties payable hereunder for such Payment Period. All
payments under this Paragraph shall be made by wire transfer in United States
Dollars to such bank or account as Tessera may from time to time designate in
writing. Payments shall be considered to be made as of the day on which they are
received in Tessera's designated bank or account. All royalties due and owing to
Tessera under this Paragraph but not paid by Licensee on the due date thereof
shall bear interest at the rate which is the lesser of (i) one percent (1%) per
annum above the then applicable prime interest rate announced by the main office
of the Bank of America N.T. & S.A. for one year loans to customers of varying
degrees of credit
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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worthiness; and (ii) the maximum lawful interest rate permitted under
applicable law. Such interest shall accrue on the balance of unpaid royalties
from time to time outstanding from the date on which portions of such royalties
become due and owing until payment thereof in full. No part of any amount
payable to Tessera hereunder may be reduced due to any counterclaim, set-off,
adjustment or other right which Licensee might have against Tessera, any other
party or otherwise. Royalties computed in a currency other than United States
Dollars shall be converted to United States Dollars at the New York Foreign
Exchange Selling Rate for such other currency on the date payment is due as
published in the Wall Street Journal.
TECHNOLOGY TRANSFER: In addition to granting of the aforesaid licenses
under the Technology, upon execution of this Agreement and the payment of the
first installment of $[*] of the Technology Transfer fee, Tessera will transfer
to Licensee: The Tessera Specifications (to the extent available in writing) to
the TCC, TCMT, and TLS, including materials specifications, current best methods
of manufacture and assembly, plating processes, tooling specifications, design
methods, techniques, and including necessary Tessera know-how, proprietary
software, and other such Tessera engineering data and test results which may be
needed by Licensee (all of the foregoing in Tessera's judgment) to exercise the
rights, licenses and privileges of this License. Furthermore, Tessera will make
available in a timely fashion, all changes, and modifications in Tessera
Specifications, methods and materials including Improvements in accordance with
the terms hereof. Notwithstanding the foregoing, Tessera is under no obligation
to transfer any information whether confidential, proprietary or otherwise that
it may be prohibited from transferring to Licensee by contract or applicable
law. Two copies of all documentation will be furnished to Licensee. For a period
of up to twelve months commencing with the date of this Agreement, and according
to a mutually agreeable time schedule and manpower assignment schedule, Tessera
will make certain of its engineering staff available at its San ▇▇▇▇ facilities
for transfer activities, including joint activities with Licensee's engineers,
in both San ▇▇▇▇ and Japan, as may be necessary in Tessera's judgment to
successfully complete the transfer. In no case shall Tessera be required to
provide engineering support exceeding eighty man-hours in any month. Additional
engineering support (not to exceed eighty man-hours in any month) beyond the
initial twelve month period for an additional 12 month period may be made
available, according to a mutually agreeable time schedule and manpower
assignment schedule, at a per diem rate of US $[*] per support engineer, plus
reasonable travel related expenses. Any support or other services required
thereafter may be provided upon terms mutually agreeable to the parties.
Notwithstanding anything herein to the contrary, Tessera will not furnish
Licensee with Technology, including, without limitation, any Improvements, after
January 1, 2004.
JOINT MARKETING: Licensee and Tessera agree to jointly, market and promote
the TCC, TCMT, TLS, and jointly design and market MCMs made using same.
Therefore, the parties hereby enter into a Joint Marketing Agreement between
themselves that shall include, without limitation, the following provisions:
Tessera and Licensee shall meet at least twice per year at a mutually convenient
times and locations to discuss and plan marketing and promotional activities and
to report to each other on activities involving the TCC and related sales
activities, including the progress of each in facilitating an industry
infrastructure to support the TCC as a "Known Good Die" ("KGD") solution. The
parties will make a record of these planning discussions in the form of a Joint
Marketing Plan updated twice annually covering both long term and short term (1
year and less) plans and objectives. Tessera and Licensee agree to establish MCM
Design Centers located initially in Tessera's facilities in San Jose, California
and one in Licensee's facilities. It is anticipated that marketing
representatives from Licensee and Tessera will jointly conduct visits to major
MCM Customers and jointly host meetings for Customers at the Design Center best
serving a particular Customer geographically. It is agreed by the parties that
as any customer's MCM volume requirements dictates, Licensee will propose terms
for volume manufacture of said Customer's MCMs. Said Joint Marketing Agreement
may include other such terms as both parties shall from time to time approve and
will merge and become a part of this Master TCC License Agreement. Each party
shall bear its own costs and expenses with respect to any all joint undertakings
under this provision.
RIGHT TO PURCHASE: If Licensee sells commercially or has a right to sell,
except for prohibitions stated herein, any IC or IC chipset in any package that
it may package or have packaged as a TCC, then Licensee agrees to sell to
Tessera such IC or IC chipset for a price (equitably adjusted to reflect
differences in
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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packaging costs) not to exceed the lowest price offered or paid commercially for
such IC or IC chipset within 90 days before or after a Tessera purchase request,
and Licensee will use its best efforts to provide reasonable volumes requested
by Tessera. In the event that Licensee packages an IC or IC chipset (or partial
chipset) as a Coarse Pitch TCC(s) for a Customer, then Licensee agrees to use
its best efforts to obtain for Tessera a written purchase right from said
Customer permitting Tessera to purchase reasonable volumes requested by Tessera
of said TCCs for a price (equitably adjusted to reflect differences in packaging
cost) not to exceed the lowest price offered or paid commercially for such TCC
chipset within 90 days before or after a Tessera purchase request. In addition,
Licensee agrees to enter a Subcontract Assembly Agreement with Tessera for any
TCCs or MCMs that Tessera may from time to time wish to have manufactured in the
course of its own business. Licensee agrees to provide Tessera with preferential
turn around times and allocations of capacity of up to 15 % of Licensee's
capacity with respect to any assembly of TCCs, TLS and MCMs commissioned by
Tessera pursuant to such agreement. Licensee further agrees to negotiate prices
and terms of such Subcontract Assembly Agreements in good faith, including price
and availability on a "best offered or paid" basis.
IMPROVEMENTS: Licensee hereby grants to Tessera a (a) fully-paid,
non-assessable, transferable, perpetual, sub licensable right and license to all
Improvements (including, without limitation, the right to practice any patents
covering any inventions contained in such Improvements) made or developed by or
on behalf of Licensee during the term of this Agreement, and (b) fully-paid,
non-sub licensable, non-transferable, perpetual right and license to use any and
all technology or know-how required to make said Improvements solely for
Tessera's own use in manufacturing and selling TCCs and MCMs. Licensee shall
promptly communicate the Improvements and know-how referred to in the preceding
sentence to Tessera. In no case, however, shall this provision operate to force
disclosure (except to Tessera), without compensation, of the technology or
know-how required to make the Improvements. Licensee and Licensee's Suppliers
may use only those Improvements to which Licensee has granted Tessera the rights
and licenses described in this Paragraph, and Licensee agrees that it shall not
use any Improvement that has not been licensed to Tessera in accordance with
this Paragraph. Any Improvement that is made through the joint efforts of
Tessera and Licensee shall be deemed a "Joint Improvement" hereunder and shall
be the joint property of both Tessera and Licensee, and both Tessera and
Licensee shall have a fully-paid, non-assessable, transferable, perpetual, sub
licensable right and license to use such Joint Improvements, but such right and
license shall not include any right or license by implication with respect to
any part of the Technology. Licensee and Tessera shall reasonably consult with
one another with respect to applying for and maintaining jointly owned patents
with respect to such Joint Improvements at shared expense. In the event that one
party hereto (the "Notifying Party") notifies the other party that the Notifying
Party wishes to apply for or maintain a patent in any country for any such Joint
Improvement and the other party hereto does not confirm to the Notifying Party,
within thirty (30) days thereafter, that such other party will join in such
patent application and share the cost thereof, the Notifying Party shall have a
right, at its own expense, to apply for or maintain such patent in its own name,
in which case such patent shall be the sole property of the Notifying Party, and
the Joint Invention in the country covered by such patent shall be treated as an
Improvement made solely by the Notifying Party, and shall be subject to the
provisions of this Agreement covering such Improvements. The parties hereto
shall execute such documents and render such assistance as may be appropriate to
enable the party properly having title to such Improvements to maintain or
obtain patents for the same.
STANDARDS COMMITTEE: Tessera agrees to establish a Standards Committee
of its Licensees and Customers, and Licensee agrees to participate therein. Said
Standards Committee is intended to establish and promulgate uniform TCMT, TCC,
and TLS Standards for use by all suppliers and licensees and customers
throughout the Industry.
SUPPLIERS: Licensee at its sole option may enter agreements with
subcontract suppliers ("Supplier") for the manufacture (but not for Supplier's
use or sale to anyone other than Licensee) of any TCC or TCMT or other Tessera
approved package, material or service, provided that prior to any disclosure of
Tessera confidential information or manufacture of any TCC or TCMT (and/or TLS)
or material, Licensee shall deliver a signed original copy of each such
subcontract agreement to Tessera. Licensee warrants that each such
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Supplier agreement shall (a) ensure that Supplier manufactures or supplies
strictly according to the Tessera Specifications, (b) ensure that Supplier
maintains TLS, TCC and TCMT Standards, (c) ensure that Supplier safeguards
Tessera Proprietary Information and Licensee's Proprietary Information, (d)
ensure that Supplier grants to Tessera the rights and licenses to Improvements
called for under "Improvements" herein, (e) ensure that Supplier affixes the
appropriate patent numbers and other designations to each product, material or
sub laminate made using the Technology according to the Tessera Specifications,
(f) ensure that Supplier shall indemnify and hold harmless Tessera and its
successors and assigns against any breach by Supplier of the foregoing
obligations, and (g) provide for a fair allocation of such TCMT, TLS, or other
TCC material or service among all Tessera licensees. In addition, Licensee shall
ensure that each Supplier shall perform its aforesaid duties and
responsibilities and indemnify and hold Tessera harmless from any damages,
costs, or expenses arising from or related to any breach thereof.
TERM: This Agreement shall become effective upon the date that the last of
the parties hereto have executed and delivered this Agreement (the "Effective
Date"), and, unless earlier terminated pursuant to its terms, shall remain in
effect until it automatically expires on the fifteenth anniversary of the
Effective Date, provided that Tessera's obligations to communicate or transfer
any Technology, including its Improvements, to Licensee and that Tessera's
obligations to license its Improvements to Licensee shall forever cease as of
January 1, 2004. For the period from January 1, 2004, to expiration of this
Agreement, Licensee may elect either (a) to continue to pay full royalties
hereunder and retain all of the rights and licenses granted hereunder; or (b) to
surrender its rights and licenses granted hereunder with respect to the Later
Improvements, as defined below, while retaining all of the other rights and
licenses granted hereunder, in which event the royalties due with respect to
sales made after January 1, 2004 shall be reduced to one-half of those otherwise
due hereunder. The election referred to in the preceding sentence shall be by
notice to Tessera, given before July 1, 2003. The term "Later Improvement" means
an Improvement which is neither (a) set forth in any patent application having a
priority date before January 1, 1999, nor (b) communicated to Licensee before
January 1, 1999. Upon expiration of this Agreement, Licensee shall have a fully
paid-up license to use the Technology on the terms set forth herein to the same
extent as Licensee was licensed to use the Technology immediately prior to
expiration. In the event this Agreement is terminated, the licenses granted
hereunder will terminate and Licensee shall immediately cease any use, practice
or other exploitation of the Technology and any production, use or sale of any
products incorporating any portion of the Technology. Licensee agrees that if
Tessera terminates this Agreement pursuant to the terms of this Agreement, then
Tessera shall not be liable for damages or injuries suffered by Licensee as a
result of such termination. Upon termination or expiration of this Agreement,
for any reason, nothing shall be construed to release Licensee from its
obligations to pay Tessera any and all royalties or other amounts accrued but
unpaid hereunder prior to the date of such termination or expiration.
BREACH: The parties agree that a failure on the part of either party to
perform its duties, obligations, or responsibilities herein will constitute a
breach of this Agreement, and that such breach will cause substantial damages to
the party not in breach; therefore, said breach will result in immediate
termination of this Agreement if such breach is not cured within sixty (60) days
of notice thereof, such termination being effective as of the date notice was
first given. Any and all costs that may result from this immediate revocation,
including legal costs, shall be born in full by the party in breach. The parties
further agree that notwithstanding anything in this Agreement to the contrary,
the non-breaching may seek any and all additional legal and equitable remedies
and damages that may be available.
REASONABLE AUDIT: The parties hereto agree to negotiate reasonable terms to
ensure that Tessera can obtain any necessary information concerning IC prices
and quantities to substantiate the royalties due hereunder, Tessera's exercise
of its Purchase Rights, and other factual matters including tax payments
requiring similar verification. Licensee agrees to maintain full and accurate
books and records in sufficient detail to enable royalties payable hereunder to
be determined. Notwithstanding the foregoing, Tessera shall have the right from
time to time upon five (5) days prior notice through an independent auditor
designated by Tessera to inspect and audit such accounts and records. In the
event that any audit properly indicates a deficiency in the
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amount paid by Licensee, Licensee shall promptly pay any such deficiency, with
interest thereon as provided above in this Agreement. If such deficiency
exceeds five percent (5%) of the amount properly due, then Licensee shall
additionally pay Tessera's audit costs, together with a surcharge equal to
fifty percent (50%) of the deficiency. In addition, Licensee shall procure for
Tessera the same right to inspect and audit the books and records of any
Affiliate to which any Fine Pitch and/or High Performance TCC or MCM Component
is transferred for incorporation into any other product by Licensee under the
License.
EQUITABLE LICENSE: Tessera, in good faith, intends that any agreement with
another similarly situated licensee whereby such licensee receives identical
rights, privileges, terms and conditions as contained in this Agreement, shall
be on financial terms (including running royalties and lump-sum payments) no
more favorable to such other licensee than the financial terms set forth in
this Agreement. Notwithstanding the foregoing, Licensee acknowledges and agrees
that is likely that all other license agreements will not contain the same
rights, privileges, terms or conditions as a result of different business
circumstances, and therefore will not be subject to this Paragraph. The
following shall not be deemed agreements subject to this Paragraph: (i)
agreements between Tessera and its Affiliates; (ii) cross-license or other
agreements under which a substantial portion of the consideration received by
Tessera consists of rights to patents and/or technology owned by the other
party to such agreement; (iii) agreements with governmental agencies; and (iv)
agreements in settlement of litigation. In the event that Tessera grants
another license subject to this Paragraph, then Tessera shall promptly notify
Licensee of the financial terms of such other license. Upon notice by Licensee,
given within 30 days after such notice by Tessera, this Agreement shall be
amended to substitute all of the financial terms of such other license for the
financial terms of this Agreement, provided that (a) Licensee must accept all
of the financial terms of such other license, and may not select particular
terms; and (b) such amendment shall not affect Tessera's rights with respect to
royalties or other moneys accrued and/or paid prior to such amendment.
NO WARRANTIES: Licensee acknowledges and agrees that the rights and
licenses, Technology and Specifications granted or otherwise provided hereunder
are provided to Licensee "AS IS", with no warranty of any kind. TESSERA MAKES NO
WARRANTY, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, CONCERNING THE SUBJECT
MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, WARRANTIES OF, FITNESS
FOR A PARTICULAR PURPOSE, QUALITY, USEFULNESS OR NONINFRINGEMENT. Tessera makes
no warranty that the Technology or Specifications will be sufficient or yield
any particular result.
LIMITATION ON DAMAGES: IN NO EVENT SHALL TESSERA BE LIABLE TO LICENSEE OR
ANY OTHER PERSON OR ENTITY UNDER ANY CONTRACT, OR NEGLIGENCE, STRICT LIABILITY
OR OTHER THEORY OR FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING
OUT OF OR RELATED TO THE SUBJECT MATTER OF THIS AGREEMENT, EVEN IF TESSERA HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR LOSSES, AND IN NO EVENT
SHALL TESSERA'S AGGREGATE LIABILITY EXCEED THE FEES AND ROYALTIES PAID BY
LICENSEE TO TESSERA HEREUNDER WITHIN TWELVE MONTHS PRIOR TO THE DATE LICENSEE
NOTIFIES TESSERA OF THE CLAIM GIVING RISE TO SUCH LIABILITY.
NON-DISCLOSURE: Licensee agrees (subject to the rights and licenses to
such information specifically granted hereunder) that information which Tessera
previously disclosed or currently or subsequently discloses to Licensee
hereunder, including information relating to TCCs, TLS, TCMT, MCMs and the
Improvements thereto licensed to Licensee by Tessera are the confidential
property of Tessera ("Proprietary Information"). Non-limiting examples of such
Proprietary Information are the properties, composition and structure of
TCCs, TLS, TCMT, MCMs, or the manufacture or processing thereof or machines
therefor and information relating to Tessera's business (including, without
limitation, computer programs, codes (object and source), algorithms, names and
expertise of employees and consultants, know-how, formulas, processes, ideas,
inventions (whether patentable or not), schematics and other technical,
business, financial, customer and product development plans, forecasts,
strategies and information)
9.
10
Licensee recognizes the importance of Tessera's Proprietary Information.
In particular, Licensee recognizes that Tessera's Proprietary Information (and
the confidential nature thereof) is critical to the business of Tessera and
that Tessera would not enter into this Agreement without assurance that its
Proprietary Information and the value thereof will be protected as provided in
this paragraph and elsewhere in this Agreement. Accordingly, Licensee agrees as
follows:
a. Licensee agrees during the Term of this Agreement and for five
(5) years thereafter (i) to hold Tessera's Proprietary Information in confidence
as a fiduciary and to take all reasonable precautions to protect such
Proprietary Information (including, without limitation, all precautions Licensee
employs with respect to its confidential materials), (ii) not to divulge any
such Proprietary Information or any information derived therefrom to any third
person (except as otherwise permitted under the licenses granted hereunder) and
(iii) not to make any use whatsoever at any time of such Proprietary Information
except as expressly authorized in this Agreement.
b. Immediately upon termination of this Agreement Licensee will
turn over to Tessera all Proprietary Information of Tessera and all documents
or media containing any such Proprietary Information and any and all copies or
extracts thereof.
c. Licensee acknowledges and agrees that due to the unique nature
of Tessera's Proprietary Information, there can be no adequate remedy at law
for any breach of its obligations hereunder, that any such breach may allow
Licensee or third parties to unfairly compete with Tessera resulting in
irreparable harm to Tessera and, therefore, that upon any such breach or any
threat thereof, Tessera shall be entitled to appropriate equitable relief in
addition to whatever remedies it might have at law and to be indemnified by
Licensee from any loss or harm, including, without limitation, lost profits and
attorneys' fees, in connection with any breach or enforcement of Licensee's
obligations hereunder or the unauthorized use or release of any such
Proprietary Information. Licensee will notify Tessera in writing immediately
upon the occurrence of any such unauthorized release or other breach. Any
breach of this paragraph constitutes a material breach of this Agreement.
In turn, Tessera agrees to keep as confidential (subject to the rights and
licenses to such information specifically granted hereunder) that information
of Licensee that Licensee may from time to time identify in writing as its
confidential and proprietary information.
The receiving party of any confidential information received hereunder
shall not be obligated under this paragraph (i) beyond five years after the
termination or expiration of this Agreement or (ii) with respect to information
the receiving party can document:
(1) is or has become readily publicly available through no fault of
the receiving party or its employees or agents; or
(2) is received from a third party lawfully in possession of such
information and lawfully empowered to disclose such information and provided
the receiving party abides by all restrictions imposed by such third party; or
(3) was rightfully in the possession of the receiving party prior to
its disclosure by the other party provided the receiving party abides by all
restrictions imposed on its possession of such information; or
(4) was independently developed by employees or consultants of the
receiving party without access to such confidential information.
10.
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INFRINGEMENTS: Licensee agrees to notify Tessera of any infringement
or other actual or unauthorized use of any part of the Patents of which it may
become aware and to promptly notify Tessera in writing of any actual or
suspected infringement or unauthorized use in such detail as may be reasonably
required by Tessera. Notwithstanding the foregoing, Tessera shall be under no
obligation to take any action to prosecute any suspected or actual infringement
or other unauthorized use of the Patents.
LICENSEE'S INDEMNITY: Licensee agrees to defend, indemnify and hold
Tessera harmless from and against any and all damages, liabilities, costs and
expenses (including reasonable attorney's fees and expenses) arising out of or
related to Licensee's exploitation of the Technology.
MISCELLANEOUS: The following additional terms shall apply to this
Agreement:
(a) Governing Law. This Agreement shall be governed, interpreted
and construed in accordance with the laws of the State of California without
regard to its provisions with respect to conflicts of law. Both parties shall
use their best efforts to resolve by mutual agreement any disputes,
controversies, claims or difference which may arise from, under, out of or in
connection with this Agreement. If such disputes, controversies, claims or
differences cannot be settled between the parties, such disputes, controversies,
claims or differences shall be finally settled by arbitration which shall take
place in the County of Santa Clara, California and shall be conducted in
accordance with the commercial arbitration rules of the American Arbitration
Association which shall administer the arbitration and act as the appointing
authority. The decision of the arbitrators shall be final and binding upon the
parties hereto and the expense of the arbitration (including attorney's fees)
shall be paid as the arbitrators determine. Provided, that disputes as to the
validity or scope of any patent shall not be subject to arbitration unless the
party owning such patent consents to the arbitration. If such a dispute cannot
be settled by agreement of the parties and the party owning the patent does not
consent to arbitration, then such dispute shall be settled by a court of
competent jurisdiction in the nation which issued the patent in question.
(b) Waiver. A waiver of any breach of any provision of this
Agreement shall not be construed as a continuing waiver of other breaches of the
same or other provisions of this Agreement.
(c) Notices. All notices, required documentation, and
correspondence in connection herewith shall be in the English language, shall be
provided in writing and shall be given by facsimile transmission or by
registered or certified letter to Tessera and Licensee at the addresses and
facsimile numbers set forth below:
Tessera: Tessera, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
Licensee: SHINKO Electric Industries Co., Ltd.
▇▇ ▇▇▇▇▇▇▇▇-▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇-▇▇ ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇▇
Attn: Managing Director,
Research & Development Division
Either party may change its address and/or facsimile number by
giving the other party notice of such new address and/or facsimile number. All
notice if given or made by registered or certified letter shall be deemed to
have been received on the earlier of the date actually received and the date
three days after the same was posted and if given or made by facsimile
transmission shall be deemed to have been received at the time of dispatch,
unless such date of deemed receipt is not a business day, in which case the date
of deemed receipt shall be the next succeeding business day.
-11-
12
(d) Patent notices. Licensee agrees to affix each system, component,
item, product, material or sub laminate made under this Agreement, with the
appropriate patent notice or other notices indicating that such system,
component, item, product, material or sub laminate is made under license from
Tessera and bearing the appropriate patent number(s) and such other information
or marks, including, in Tessera's discretion, trademarks owned by Tessera, as
Tessera may from time to time designate. Notwithstanding the foregoing, if it
is not physically possible or reasonably practical to affix such notices
directly on a system, component, item, product, material or sub laminate, the
Licensee agrees to indicate such appropriate notice on each package or container
enclosing the same.
(e) Entire Understanding. This Agreement embodies the entire
understanding between the parties relating to the subject matter hereof,
whether written or oral, and there are no prior representations, warranties or
agreements between the parties not contained in this Agreement. Any amendment
or modification of any provision of this Agreement must be in writing, dated
and signed by both parties hereto.
(f) Invalidity. If any provision of this Agreement is declared
invalid or unenforceable by a court having competent jurisdiction, it is
mutually agreed that this Agreement shall endure except for the part declared
invalid or unenforceable by order of such court. The parties shall consult and
use their best efforts to agree upon a valid and enforceable provision which
shall be a reasonable substitute for such invalid or unenforceable provision in
light of the intent of this Agreement.
(g) Responsibility for Taxes. Tessera shall be responsible for the
ten percent withholding tax currently imposed on royalties and transfer fee
payments under the United States - Japan Treaty for the Avoidance of Double
Taxation. Any other taxes (including any increase in the rate of withholding
under such treaty) now or hereafter imposed with respect to the transactions
contemplated hereunder (with the exception of income taxes or other taxes
imposed upon and collected directly from Tessera and measured by the net income
of Tessera) shall be the responsibility of Licensee, and if paid or required to
be paid by Tessera, the amount thereof shall be added to and become part of the
amounts payable by Licensee hereunder.
(h) Assignment. Neither party may assign this Agreement or any of
its rights or obligations hereunder without the prior written consent of the
other party, provided, that this Agreement and the rights and obligations
hereunder may be assigned and delegated by Tessera to any successor to
substantially all of Tessera's TCC business or assets.
(i) Attorneys' Fees. The prevailing party in any dispute shall be
entitled to costs and attorneys' fees.
(j) Survival. Notwithstanding anything herein to the contrary, the
following provisions shall survive the termination or expiration of this
Agreement: Fee and Royalty, Term, Non-Disclosure, No Warranties, Limitation on
Damages, Licensee's Indemnity, Reasonable Audit and Miscellaneous.
(k) Counterparts. This Agreement may be executed in any number of
counterparts and each such counterpart shall be deemed to be an original.
12.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
TESSERA, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇
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Title: President
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Date: January 20, 1994
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SHINKO ELECTRIC INDUSTRIES CO., LTD.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Title: President
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Date: January 20, 1994
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13.