License Agrement [Addendum] - Artisan Components Inc. and Taiwan Semiconductor Manufacturing Co. Ltd.
ADDENDUM DATED SEPTEMBER 30, 1999
TO LICENSE AGREMENT
TO REVISE ROYALTY PAYMENT FORMULA
This Addendum Dated September 30, 1999 to License Agreement (this "Addendum")
serves to amend that certain License Agreement, Number PL2028, dated November
30, 1997, as amended (the "License Agreement"), by and between Artisan
Components, Inc., a Delaware corporation, with its principal place of business
at 1195 Bordeaux Drive, Sunnyvale, California 94089-1210 (hereinafter referred
to as "Artisan Components"), and Taiwan Semiconductor Manufacturing Company
Ltd., duly incorporated under the laws of the Republic of China and having its
registered office at N. 121, Park Ave. 3, Science-Based Industrial Park,
Hsin-Chu, Taiwan, R.O.C. (hereinafter referred to as "Licensee" and "TSMC").
This Addendum is made effective as of July 20, 1998 ("Addendum Effective
Date").
RECITALS
The parties desire to amend the License Agreement to provide for a different
royalty payment calculation and to add and/or clarify certain additional terms
and conditions.
The parties agree the below terms and conditions are added to and made a part
of the License Agreement:
ADDENDUM
1. NEW ROYALTY PAYMENT CALCULATION. Appendix C of the License Agreement sets
forth the royalty payment calculation that applies to all 0.25(micron) Licensed
Products and Appendix C-1 (from the Addendum Dated March 27, 1998) sets forth
the royalty payment calculation that applies to all 0.18(micron) Licensed
Products. Appendix C and Appendix C-1 of the License Agreement are amended to
read in their entirety as follows:
"a) Licensee shall pay to Artisan Components the following percentage, as
running royalties, of all Revenue received from any and all 0.25(micron)
LIC/Wafers (as defined below) manufactured by or for Licensee.
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Year* 1998 1999 2000 2001 2002 2003 2004 2005
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Royalty [**] [**] [**] [**] [**] [**] [**] [**]
Compensation
Percent**
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*Where Year is the calendar year in which Revenue is received for any and
all 0.25(micron) LIC/Wafers.
**The Royalty Compensation Percent is subject to a multiplier as set forth
in subsection (d) below depending upon what is used in the LIC/Wafer.
b) Licensee shall pay to Artisan Components the following percentage, as
running royalties, of all Revenue received from any and all 0.18(micron)
LIC/Wafers (as defined below) manufactured by or for Licensee:
** 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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CONFIDENTIAL 093099
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Year* 1999 2000 2001 2002 2003 2004 2005 2006
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Royalty [**] [**] [**] [**] [**] [**] [**] [**]
Compensation
Percent**
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*Where Year is the calendar year in which Revenue is received for any and
all 0.18(micron) LIC/Wafers.
**The Royalty Compensation Percent is subject to a multiplier as set forth
in subsection (d) below depending upon what is used in the LIC/Wafer.
c) Licensee shall pay to Artisan Components the following percentage, as running
royalties, of all Revenue received from any and all 0.15(micron) LIC/Wafers
(as defined below) manufactured by or for Licensee:
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Year* 2000 2001 2002 2003 2004 2005 2006 2007
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Royalty [**] [**] [**] [**] [**] [**] [**] [**]
Compensation
Percent**
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*Where Year is the calendar year in which Revenue is received for any and
all 0.15(micron) LIC/Wafers."
**The Royalty Compensation Percent is subject to a multiplier as set forth
in subsection (d) below depending upon what is used in the LIC/Wafer.
d) Each of the above Royalty Compensation Percentages in the above subsections
(a), (b) and (c) are subject to a multiplier, by LIC/Wafer, based on which
standard cell library, memories and/or I/Os are used in the LIC/Wafer (or the
LIC/Wafer's design) by multiplying the Royalty Compensation Percentage by a
fraction multiplier in accordance with the below chart(s). The below charts [**]
that a [**] would always have some [**] and [**] (but not necessarily [**]),
there would not be a [**] between [**] and [**] used on any one [**], there
would not be a [**] between [**] and [**] ([**] owned) [**] used on any one
[**], but that a [**] might not include [**], and if it did include [**], the
[**] could come from [**]. In the event any of these [**] in the [**] to be
[**], at the [**] of either [**], the [**] will in [**] an appropriate [**] to
the [**]:
** 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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CONFIDENTIAL 093099
Multiplier Chart
[**]
Below is a chart of Examples indicating how royalties will be calculated:
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EXAMPLE SCENARIO HOW ROYALTY IS CALCULATED
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[**]
------------------------------------------------------------------------
** 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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CONFIDENTIAL 093099
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Ex 2: [**] [**]
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e) Artisan and Licensee shall hold quarterly meetings to review the progress
of the actual royalty payments against forecasts.
2. LIC/WAFERS. The parties confirm and clarify that "LIC/Wafer" shall mean
any single integrated circuit die and/or piece of silicon wafer designed and/or
manufactured Using all or any portion of the (i) Licensed Products and/or any
[**], [**] or [**] of Licensed Products made by or for Licensee or [**] of the
foregoing, (ii) any of the [**] provided [**] distributed by and through Artisan
through its Free Library Program and Third Party Relationship Programs, and/or
(iii) any [**] and/or [**] (e.g., [**] etc.) that can be used to manufacture at
[**] for the TSMC 0.25(micron), 0.18(micron) and/or 0.15(micron) processes
and developed by Artisan for [**].
"0.25(micron) LIC/Wafers" means all LIC/Wafers that are manufactured for any
of the TSMC 0.25(micron) processes and TSMC 0.25(micron) derivative
processes, except [**] and [**].
"0.18(micron) LIC/Wafers" means those LIC/Wafers that are manufactured for any
of the TSMC 0.18(micron) processes and TSMC 0.18(micron) derivative
processes, except [**] and [**].
"0.15(micron) LIC/Wafers" means those LIC/Wafers that are manufactured for any
of the TSMC 0.15(micron) processes and TSMC 0.15(micron) derivative
processes, except [**] and [**].
"[**]" means an [**] set of wafers (not to exceed [**]) manufactured for [**]
the [**] and [**] of the [**] for a particular [**].
** 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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CONFIDENTIAL 093099
3. RESTRICTED CREDITS.
3.1 Artisan Components will accrue restricted credits ("Restricted Credits")
for Licensee based on royalty fees paid to Artisan Components when due
hereunder as follows. A percentage of a Restricted Credit will accrue for each
$1.00 of royalty fees paid to Artisan Components when due hereunder in
accordance with the following table.
Restricted Credit Percentages For Royalties Paid Against 0.25(micron)
LIC/Wafers
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Year 1998 1999 2000 2001 2002 2003 2004 2005
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Percentage [**] [**] [**] [**] [**] [**] [**] [**]
of Royalty
$$ =
Restricted
Credit
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For example, if [**] of royalties is paid to Artisan for calendar year 1998 for
0.25(micron) LIC/Wafers when due, Licensee will accrue [**] of Restricted
Credits.
Restricted Credit Percentages For Royalties Paid Against 0.18(micron)
LIC/Wafers
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Year 1999 2000 2001 2002 2003 2004 2005 2006
--------------------------------------------------------------------------------
Percentage [**] [**] [**] [**] [**] [**] [**] [**]
of Royalty
$$ =
Restricted
Credit
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Restricted Credit Percentages For Royalties Paid Against 0.15(micron)
LIC/Wafers
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Year 2000 2001 2002 2003 2004 2005 2006 2007
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Percentage [**] [**] [**] [**] [**] [**] [**] [**]
of Royalty
$$ =
Restricted
Credit
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3.2 One Restricted Credit will be applied by Artisan Components only towards
$1.00 of new license fees and/or development fees for such products and/or
services, and not royalty fees, for new/additional Licensed Products ("New
Orders") ordered by Licensee under the License Agreement; provided, however,
that (i) the maximum amount of Restricted Credits to accrue will be capped by
process, as set forth below), and (ii) the Restricted Credits may be applied
only against New Orders set forth in a firm order from Licensee within [**] of
the date the Restricted Credits were accrued (date of accrual shall be the date
Artisan Components receives the royalty fees that earned the Restricted
Credits). Restricted Credits will be utilized on [**] basis. Any Restricted
Credits which are not applied by Artisan Components towards New Orders as set
forth above, for any reason, shall be deemed void.
** 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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CONFIDENTIAL 093099
3.3 The total amount of Restricted Credits that can accrue for any process (and
process derivatives) may not exceed the total amount of Licensed Product
(development/service/license) orders placed by Licensee hereunder for such
process (and process derivatives). For example, if the total amount of orders
placed by Licensee for the 0.25(micron) process (including Enhanced
0.25(micron)) equals $3,000,000, then the maximum amount of Restricted Credits
to accrue hereunder from royalties paid on the 0.25(micron) LIC/Wafers is
$3,000,000. The foregoing does not prohibit Licensee from applying Restricted
Credits earned from one process to purchase of products for another process.
3.4 Restricted Credits have no cash value or refund value, and they may not be
used for any purpose except as specifically set forth above as a credit to be
applied by Artisan Components and authorized by Licensee towards New Orders in
accordance with all of the above.
3.5 The ability to accrue Restricted Credit does not mean that Licensee will
not have to pay out cash monies for New Orders. Whether or not Licensee has to
pay out cash monies for New Orders will depend upon the amount of Restricted
Credits accrued and available for Licensee, if any, to use at the time payment
is due for such New Orders.
For example, if Licensee has accrued $500,000 of Restricted Credits and $750,000
of payments is due and payable under a New Order, such $750,000 payment may be
satisfied in part by applying the $500,000 of Restricted Credits, in which case
Licensee must pay Artisan an additional $250,000 by way of cash monies to
satisfy the full $750,000 payment obligation.
3.6 Restricted Credits will be earned for all royalties paid hereunder from the
Addendum Effective Date. Notwithstanding the above requirement that Restricted
Credits may be applied against New Orders only, the parties confirm that any
Restricted Credits earned from the Addendum Effective Date under the following
Addendums, may be applied against the payments owed under such Addendums to the
License Agreement:
ADDENDUM DATED DECEMBER 23, 1998 TO LICENSE AGREEMENT (SAGE)
ADDENDUM NO. 6 TO LICENSE AGREEMENT DATED JUNE 30, 1999
ADDENDUM DATED AUGUST 4, 1999 TO LICENSE AGREEMENT
ADDENDUM DATED SEPTEMBER 22, 1999 TO LICENSE AGREEMENT SAGE LOW POWER.
ADDENDUM DATED SEPTEMBER 30, 1999 TO LICENSE AGREEMENT TO ADD O.15(micron)
PRODUCTS
4. TSMC/ARTISAN DATA EXCHANGE. In consideration of the relationship between
the parties, the parties agree to afford one another [**] as its library
vendor/foundry customer as follows.
(a) Artisan Data Exchange to TSMC. So long as TSMC continues with the "TSMC
Data Exchange to Artisan" relationship described in Section 4(b) below, Artisan
agrees that it will do all of the following:
** 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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CONFIDENTIAL 093099
- Artisan will keep TSMC apprised [**] of its standard (library product)
development plans. Such information shall be provided to TSMC [**] any such
information is made available to [**].
- Artisan will make itself available to meet on a [**] basis on an
executive and technical level for the purposes of providing library
product development plans.
- When Artisan has new standard library product development plans, Artisan
will offer to develop such proposed standard library products for TSMC
[**]. If the parties reach agreement on the terms and conditions for the
development of such products, when completed, Artisan will offer such
products as part of the Artisan Free Library Program. Notwithstanding
the foregoing, the above shall not prevent Artisan from offering to
develop and developing custom products (that which Artisan has no intent
of offering as an Artisan standard library product) for any entity at any
time, and Artisan shall be free to offer to develop and develop new
standard library products for other parties [**] to develop them for [**].
(b) TSMC Data Exchange to Artisan. So long as Artisan continues with the
"Artisan Data Exchange to TSMC" relationship described in Section 4(a)
above, TSMC agrees that it will do all of the following:
- TSMC will keep Artisan apprised [**] of its "process" development/changes
plans. Such information shall be provided to Artisan [**] any such
information is made available to [**].
- TSMC will make itself available to meet on a [**] basis on an executive
and technical level for the purposes of providing process
development/change information.
- When TSMC has new process information, and desires to have a commercial
library developed/optimized for such new process TSMC will make such
information available to Artisan [**]. If the parties reach agreement on
the terms and conditions for the development of such products, when
completed, Artisan will offer such products as part of the Artisan Free
Library Program. Notwithstanding the foregoing, the above shall not
prevent TSMC from providing such information to other library developers
to develop products [**] to provide such information [**].
5. TSMC 9000. Licensee has developed new library QA acceptance guidelines that
are referred to as TSMC 9000 ("TSMC 9000"). This guideline is for use by library
developers for documenting the QA flow and analysis of the libraries in TSMC
silicon. Artisan agrees to review such TSMC 9000 guidelines and develop and
distribute TSMC 9000 data or equivalent data (from silicon correlation of the
library) to Licensee and Licensee customers. The guidelines will be followed, or
equivalent guidelines used by Artisan when developing any new TSMC products.
6. FRONT END DISTRIBUTION. To enable wider distribution to promote better
market acceptance of the TSMC/Artisan products, the parties agree that,
effective upon the date Artisan changes its Front-End Views License Agreement
as described below, anticipated to occur by October 15, 1999 ("Agreement
Change Date"), the [**] on Artisan to [**] the Front-End Views of the Licensed
Products to [**] of [**] is [**] (with the sole exception of [**], which
Licensee shall [**] authorize [**] to -- the [**] following
** 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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[**]: [**], and that the [**] of Front-End Views no longer needs to be verified
as [**] being a [**] of [**] (per list of [**] provided by [**] to [**] and
updated from time to time). Effective on the Agreement Change Date, Artisan
[**] the Front-End Views without [**] the [**] (with the [**] of the [**] in
this paragraph). The [**] of this [**] however, requires Artisan to add to
their Front-End View License Agreement, the sentences substantially similar to
"Your receipt of the Front-End Views of the TSMC/Artisan library does not
guarantee a business relationship with TSMC. Signing a separate agreement with
TSMC is the mechanism to secure a business relationship with TSMC."
7. ROYALTY PAYMENT TERMS. Under the terms of the License Agreement, Licensee
is to report and pay the royalties on a calendar [**] basis with both the
report and payment due [**] after [**] end. The parties agree to amend this
such that the report required per Section 7.3 of the License Agreement will
continue to be due within [**] after each calendar [**], but that the payment
on the royalties shall be due the earlier (i) [**] from the date the report is
delivered to Artisan, or (ii) [**] from the calendar [**] end date.
8. GENERAL.
Except as set forth herein, all terms and conditions of the License Agreement
shall remain in full force and effect. Unless otherwise defined in this
Addendum, capitalized terms used in this Addendum shall have the same meaning
as set forth in the License Agreement.
Accepted and Agreed To:
ARTISAN COMPONENTS, INC. TAIWAN SEMICONDUCTOR
MANUFACTURING COMPANY
LTD. (Licensee)
By: /s/ LARRY S. FAGG By: /s/ [Illegible]
------------------------ ------------------------
Name: Larry S. Fagg Name: [**]
------------------------ ------------------------
Title: VP, Worldwide Sale Title: [**]
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Date: 9-30-99 Date: 9-30-99
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** 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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