Strategic Collaboration Agreement - SGS-Thomson Microelectronics Inc. and NVIDIA Corp.
STRATEGIC COLLABORATION AGREEMENT
This Strategic Collaboration Agreement between SGS-THOMSON Microelectronics,
Inc., a Delaware corporation ("SGS-THOMSON"), and NVidia Corporation, a
California corporation ("NVidia"), is entered into this 10th day of November
1993.
OVERVIEW
The parties are entering into this Agreement with the purpose of establishing a
leadership position for graphics and multimedia controller products in the
personal computer market. The collaboration is intended to exploit the
potential of the NV multimedia architecture and to implement products being
developed by NVidia by combining NVidia's strengths in semiconductor design,
with SGS-THOMSON's strengths in semiconductor manufacturing, marketing and
sales. Initially, NVidia will take lead responsibility for finalizing
architecture and initial product designs, and SGS-THOMSON will take lead
responsibility in product manufacturability. The parties will then join in
introducing and marketing graphics and multimedia controller products into the
personal computer market. SGS-THOMSON will market the NV1-D64 graphics
controller with DRAM interface for high volume, medium performance applications
in the personal computer market and NVidia will market the NV1-V32 graphics
controller with VRAM interface for high performance graphics applications in the
personal computer market.
Subsequently, future generations of products will be designed by NVidia, with
SGS-THOMSON addressing the high volume, medium performance demands of the
personal computer market and NVidia concentrating on the smaller, high
performance range of the personal computer market.
The following definitions shall apply for purposes of this Agreement:
PC Graphics Controller Market. PC graphics controller market means unit
shipments for desktop and laptop applications.
Volume Product. A NVidia product is a Volume Product if unit shipments of the
applicable NVidia product and products with similar memory interface
specifications have exceeded 20% of the PC graphics controller market for two
successive quarters, and if unit shipments of such product(s) are projected to
exceed 33% of the PC graphics controller market during the next two successive
quarters, as determined by the simple mathematical average of IDC, J Peddie and
Associates and Dataquest market forecasts, or by such other method as the
parties may agree upon from time to time.
Net Sales. Net sales means SGS-THOMSON gross sales less sales to NVidia, SGS-
THOMSON intercompany transactions and net of trade and quantity discounts or
rebates, returns and cash discounts or rebates allowed and taken.
In consideration of the mutual representations, warranties, and covenants set
forth below, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
1.
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I. DESIGN WORK
A. NVidia to Develop NV Architecture and NV1-D64 and NV1-V32 Products. NVidia
will use its reasonable best efforts to complete the design of the NV graphics
architecture and of the two initial products, NV1-D64 and NV1-V32, according to
the specifications described in Exhibit A.
B. NVidia to Develop Future NV Products. NVidia will use its reasonable best
efforts during the balance of the term of this Agreement to design future
products compliant with the NV architecture for SGS-THOMSON and for NVidia with
the objective of maintaining a product leadership position based upon NV
architecture, with SGS-THOMSON continuing to address the high volume, medium
performance sector of the market, and with NVidia continuing to address the
smaller segment of the market utilizing high performance graphics controllers.
C. Technology Transfer. NVidia will provide technical assistance reasonably
requested by SGS-THOMSON to transfer the NV architecture and product technology.
II. SGS-THOMSON ACQUISITION OF OPTION TO WORLDWIDE LICENSE
A. Option to Exclusive License of NV1-D64 and Nonexclusive License of NV
Architecture. Upon the signing of this Agreement and the concurrent payment of
$500,000 to NVidia by SGS-THOMSON, SGS-THOMSON shall have obtained an option
from NVidia to acquire (i) a worldwide, exclusive, perpetual license to make,
have made, use and sell the NV1-D64, and (ii) a worldwide, nonexclusive,
perpetual license to make, have made, design, have designed, use, and sell
semiconductor devices utilizing the NV architecture. The license to the NV
architecture described in (ii) in the preceding sentence is expressly
conditioned upon SGS-THOMSON not modifying, extending or enhancing the
architecture except (i) in accordance with the terms of Exhibit B, or (ii) upon
the prior written approval of NVidia.
B. Option to Exclusive License of Future NV Products. All NV products
developed by NVidia during the term of this Agreement shall be disclosed to SGS-
THOMSON by NVidia during product definition. If SGS-THOMSON shall have
exercised its option to acquire a license to the NV1-D64 pursuant to III.A,
NVidia shall offer SGS-THOMSON an option to acquire a license to such future NV
products, other than future NV products reserved by NVidia which are other than
a Volume Product (such as a product for high performance graphics applications
targeted at the high performance segment of the personal computer graphics
controller market), upon the same terms and conditions as the license granted to
SGS-THOMSON for the NV1-D64. Upon the payment of $500,000 to NVidia by SGS-
THOMSON within 60 days after delivery by NVidia to SGS-THOMSON of written
specifications for such future NV product, SGS-THOMSON shall have obtained an
option to acquire a license on the same terms and conditions as the license
granted to SGS-THOMSON for the NV1-D64.
2.
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III. EXERCISE OF OPTION AND ACQUISITION OF LICENSES
A. NV1-D64 and NV Architecture. SGS-THOMSON may exercise its option to obtain
the license to the NV architecture and NV1-D64 any time prior to 30 days after
delivery by SGS-THOMSON to NVidia of the ASIC prototype for the NV1-D64 (the
"Option Period"). NVidia shall promptly evaluate the ASIC prototype and
communicate the results of such evaluation to SGS-THOMSON within 10 days of
receipt of the ASIC prototype. If the parties agree in good faith that the
evaluation is inconclusive, the Option Period shall be extended until a new ASIC
has been evaluated. To exercise the option and acquire the NV1-D64 license,
SGS-THOMSON shall pay NVidia $2,000,000 as follows: $1,000,000 upon exercise of
the option, $500,000 on August 1, 1994 or exercise of the option if later, and
$500,000 on November 1, 1994 or exercise of the option if later.
B. Future NV Products. SGS-THOMSON may exercise its option to obtain the
license to a future NV product during the term of the Agreement any time prior
to 30 days after delivery of the ASIC prototype for such future NV product (the
"Future Option Period"). NVidia shall promptly evaluate the ASIC prototype and
communicate the results of such evaluation to SGS-THOMSON within 10 days of
receipt of the ASIC prototype. If the parties agree in good faith that the
evaluation is inconclusive, the Future Option Period shall be extended until a
new ASIC has been evaluated. To exercise the option and acquire a future NV
product license, SGS-THOMSON shall pay NVidia $1,000,000 upon exercise of the
option.
IV. CONTINGENT CO-EXCLUSIVE LICENSE
A. Co-Exclusive License to NVidia Products. If SGS-THOMSON shall have
exercised its option to acquire a license to the NV1-D64 pursuant to III.A., and
the NV1-V32 or a future NV product previously reserved by NVidia becomes a
Volume Product, then SGS-THOMSON shall have obtained an option to acquire a
worldwide, co-exclusive (with NVidia), perpetual license to make, have made,
sell and use such product(s) exercisable upon payment of a $1,500,000 license
fee ($0 license fee in the case of the first NV high performance product
expected to be called NV1-V32) by SGS-THOMSON to NVidia within 90 days after the
applicable NV product became a Volume Product.
V. ROYALTIES
A. NV1-D64. If SGS-THOMSON shall have exercised its option to acquire a
license to the NV1-D64 pursuant to III.A and further elects to sell the NV1-
D64, SGS-THOMSON shall pay the following royalties on its Net Sales of the NV1-
D64: 1st 1 million units - [*]; next 2 million units - [*]; next 5 million
units - [*]; next 10 million units - [*]; [*] royalties shall be payable on
sales in excess of 18 million units. Royalties shall be calculated on a
quarterly basis, shall be payable to NVidia 45 days following the close of a
quarter, shall be accompanied by written reports of sales during the prior
quarter and shall be subject to independent audit no more frequently than once
a year.
[*] 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.
3.
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B. Future NV Products. If SGS-THOMSON shall have exercised its option to
acquire a license to a future NV product pursuant to III.B. and further elects
to sell such future NV product, the same royalty schedule and procedure set
forth in V.A shall apply to all Net Sales of future NV products, except that the
royalty rate on the first 1 million units of Net Sales by SGS-THOMSON shall be
[*].
C. SGS-THOMSON Products Using NV Architecture. For products designed by SGS-
THOMSON which employ the NV architecture, the royalty schedule shall be a
percentage of the rates specified for future NV products determined by dividing
the intellectual property value contributed by NVidia by the total intellectual
property value of the product as agreed in good faith by the parties or, in the
absence of agreement, as determined by a reputable independent graphics
controller expert selected in good faith by the parties.
VI. RELATED PRODUCTS AND PREPARATION FOR MANUFACTURE
A. ASIC Development. SGS-THOMSON will use its reasonable best efforts at its
expense for ASIC development and fabrication for the NV1-D64 and NV1-V32
according to the specifications and schedule attached as Exhibit C. SGS-THOMSON
will use its reasonable best efforts at its expense for ASIC development and
Fabrication for future NV products which are intended as Volume Products. SGS-
THOMSON will also use its reasonable best efforts at its expense for ASIC
development and fabrication of up to two future NV products per year which are
not intended as Volume Products. Any other ASIC development funded by NVidia
will be provided to NVidia by SGS-THOMSON at most favored customer pricing
during the term of this Agreement.
B. Video DAC's. SGS-THOMSON will use its reasonable best efforts to develop
at its expense video DAC(s) for the NV1-D64 and the NV1-V32 according to the
specifications and schedule specified in Exhibit D.
VII. MANUFACTURE
A. NV Products and DAC Manufacture. SGS-THOMSON will use its reasonable best
efforts to manufacture and sell to NVidia all NV products and related DAC's in
response to orders delivered to SGS-THOMSON, provided such orders are consistent
with NVidia 12 month projections provided to SGS-THOMSON by July 31, 1994 and
updated in writing at least quarterly. Orders in excess of projections shall be
filled by SGS-THOMSON as soon as reasonably practicable. NVidia shall use SGS-
THOMSON standard purchase order forms. NVidia shall be given most favored
customer pricing for similar products provided on a similar basis to other SGS-
THOMSON customers irrespective of the volume of products ordered by NVidia
pursuant to the Agreement. Should SGS-THOMSON decline to exercise an option to
license a Volume Product under III, SGS-THOMSON's manufacturing and pricing
obligations under this section VII shall terminate one year thereafter. SGS-
THOMSON shall retain last-time buy options consistent with its standard policy.
[*] 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.
4.
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B. Line of Credit. SGS-THOMSON shall establish a $1 million revolving line
of credit for NVidia orders placed during the term of this Agreement, secured by
NVidia receivables arising from the resale of such products in amounts
consistent with SGS-THOMSON standard security requirements for such lines of
credit. The credit shall be repaid as funds are received with respect to such
receivables; however, in no event later than 120 days following the issuance of
such credit.
VIII. MARKETING SUPPORT
A. SGS-THOMSON. SGS-THOMSON shall use its reasonable best efforts to
commercialize products licensed to it by NVidia hereunder and shall be
responsible at its expense for developing marketing materials and for all
marketing preparation through product launch for the NV1-D64 and NV1-V32.
Attached hereto as Exhibit E is a marketing plan which is illustrative of the
type and scope of marketing plan to be implemented by SGS-THOMSON. If SGS-
THOMSON does not acquire the license to the NV1-D64 pursuant to III.A, SGS-
THOMSON shall have no obligations under this paragraph VIII.A.
B. Joint Marketing Support. The parties will establish a Joint Marketing
Committee no later than July 1, 1994 consisting of a least one senior marketing
executive from each company to coordinate the use of common marketing materials.
The Committee will have no legal authority or standing and will act solely in an
advisory capacity; however, the parties agree to cooperate in good faith with
the Committee.
IX. SOFTWARE LICENSE AND SUPPORT
A. Software License. SGS-THOMSON shall have access to, and a worldwide,
nonexclusive, perpetual license to, use and modify the source code for device
drivers and BIOS for any product licensed by NVidia to SGS-THOMSON pursuant to
this Agreement and for any SGS-THOMSON product using NV architecture in
accordance with V.C. The license to the source code for the device drivers and
BIOS includes the right to modify such software for use with any device driver
or BIOS without charge except for royalties due on the related semiconductor
device pursuant to V., provided NVidia shall have the right without charge to
use any such modification or improvement in other NV products.
B. Software Support. NVidia will provide continuing software support for each
product being sold by SGS-THOMSON as specified in Exhibit F. If for products
after NV1-D64, NVidia can objectively show that the royalties payable are not
sufficient to cover the costs of such software support and a reasonable return
(5% of SGS-THOMSON net sales) on the new products, then NVidia shall be
permitted an appropriate software maintenance charge which shall be applied to
subsequent sales of the product at issue if SGS-THOMSON approves, which approval
shall not be unreasonably withheld.
5.
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X. THIRD PARTY LICENSES
A. Third Party Licenses. The parties realize that a license to manufacture
one or more of the products covered by the Agreement to a large PC manufacturer
for internal use may be in the best interests of both parties. In such
instance, both parties agree to work cooperatively to develop mutually
acceptable license terms.
XI. TERM
A. Term. The term of the Agreement shall be 3 years, unless extended by
mutual written agreement of the parties, provided that the royalty,
confidentiality and software support obligations under this Agreement shall
continue during the terms of the licenses, and that the manufacturing and
pricing obligations shall continue in accordance with VIII. Once effective,
licenses shall continue during the life of the underlying NVidia patents,
copyrights or trademarks. The line of credit in VII.B shall not be applicable
to any extensions of this Agreement.
XII. MISCELLANEOUS.
A. Key Personnel. SGS-THOMSON shall assign the key personnel specified in
Exhibit G to this collaboration for the periods and purposes specified.
B. Governing Law. This Agreement shall be governed by Delaware law.
C. Injunctive Relief. The parties acknowledge that a breach of the Agreement
regarding architectural compliance cannot adequately be compensated for with
monetary damages and that should such a breach occur, injunctive relief would be
an appropriate remedy.
D. Confidentiality. Confidential information shared or learned by either
party in the performance of this Agreement shall be protected by the receiving
party according to the rules which such receiving party applies to its own
confidential information.
E. Assignment to Parent or Controlled Affiliates. SGS-THOMSON may assign its
rights hereunder to its (i) parent, (ii) affiliates in which SGS-THOMSON's
parent owns, either directly or indirectly, at least 67% of such affiliate,
and/or (iii) affiliates in which SGS-THOMSON's parent owns, either directly or
indirectly, at least 51% of such affiliate if such ownership structure is
necessary for a material domestic presence in a geographical market in which
SGS-THOMSON (or its parent or affiliates) does not currently have a material
domestic presence and such presence is required for the marketing and sale of
products licensed hereunder.
F. Technology Representation. To the best of its knowledge without having
conducted any special investigation or patent search, NVidia owns or possesses
sufficient legal rights to all patents, trademarks, copyrights, trade secrets,
license, information and proprietary rights and processes (the "Intellectual
Property") necessary to enter into and to perform its obligations under this
Agreement without any conflict with, or infringement of the rights of, others.
6.
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G. Technology Cooperation. During the term of this Agreement, NVidia and SGS-
THOMSON shall cooperate in conducting patent searches and the like to determine
whether any of the Intellectual Property potentially conflicts with, or
infringes, the rights of others. If any such search determines a potential
conflict or infringement, NVidia and SGS-THOMSON shall cooperate to eliminate
such potential conflict or infringement from the intellectual property.
H. Insolvency and Asset Sale. In the event NVidia becomes insolvent and
thereafter chooses to sell all or a portion of its assets other than in the
ordinary course of business, to the extent permitted by law, SGS-THOMSON shall
be given the opportunity to match any reasonable offer for any asset offered for
sale by NVidia. In the event NVidia receives no offers, or no reasonable
offers, SGS-THOMSON shall be given the opportunity to purchase any such asset
for its fair market value. If NVidia and SGS-THOMSON cannot agree on the fair
market value of a particular asset, an independent, reputable appraiser
knowledgeable in the graphics controller market shall determine the value of the
particular asset.
In witness whereof, the parties have executed this Agreement as of the date set
forth above.
NVidia Corporation SGS-THOMSON Microelectronics, Inc.
Microelectronics, Inc.
By /s/ Jen-Hsun Huang By /s/ Giancarlo Ronzi
-------------------- --------------------
Jen-Hsun Huang Giancarlo Ronzi
President and Chief Executive Officer Vice President
Semicustom Products
7.
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EXHIBIT A
I. NV1-V32 and NV1-D64 Functionality and Performance Targets
The design targets for NV1 (V32 and D64) are substantially outlined in the
following pages. These targets are the result of performance analysis of the NV
architecture and algorithms.
II. NVidia Deliverables
The following deliverables will be provided to SGS-THOMSON as they become
available.
1. NV Architectural Specification
The NV Architecture specifies the visible interface by which applications
communicate to chips which embody the NV Architecture. An application which
follows the protocol and semantics specified by the NV Architecture can
access the capabilities of the chip. Version 1 of the NV Architecture
Specification was published October 20, 1993. The NV Architecture and
Specification is still in the process of refinement and is expected to be
finalized by June 1, 1994.
2. NV1-D64 Deliverables
- Functionality and interface Specification
- Design source, including:
Verilog HDL source
Synopsys synthesis scripts
Design netlist
Functional verification suits
Timing analysis scripts
- Information for ASIC manufacturing, including:
Chip floorplan
Package bonding diagram
Test patterns
- Evaluation board (Schematics & BOM)
- BIOS
- device drivers for Windows 3.1
(Other device drivers will be delivered as available. The order of priority
will be driven by NVidia and ST marketing. The default order will be
Windows 4.0, Windows NT, then OS/2)
3. NV1-V32 Deliverables
- Information for ASIC manufacturing, including:
Design netlist
Chip floorplan
Package bonding diagram
Text patterns
Timing analysis script
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Exhibit B: Definitions of Architectural Compliant Extensions
SGS-Thomson will be granted rights to develop derivative products based on the
NV architecture so long as architectural compliance is adhered to. The process
for developing architectural extensions is as follows:
1. The design will comply with the NV Architectural Specification.
2. A new class (functionality) extension to the NV architecture must comply
with the rules of virtualization as specified by the architecture.
3. Each new class will be registered with NVidia and will be assigned a unique
class ID number.
<PAGE>
Exhibit C: ASIC Development Milestone
The NV1-V32 development milestone is attached. The V32 is architected and
designed in such a way as to enable the maximum amount of design reuse with
NV1-D64. The final product specification of D64 is still pending input from SGS-
THOMSON. A detailed schedule will be provided once the final architecture of D64
and DAC is completed. The goal is to deliver first prototype of D64
approximately 2 months after that of V32, FCS approximately 1 month after V32,
and product introduction at the same time.
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EXHIBIT D: DAC DEVELOPMENT AND SCHEDULE
The DAC architecture is tightly coupled to the architecture of NV1-D64 and NV1-
V32. Numerous tradeoffs between price, performance, and functionality need to
be jointly made between NVidia and SGS-THOMSON.
NVidia will work with SGS-THOMSON to fully define and specify the NV1 DAC and
accelerator architectures. SGS-THOMSON is committed to deploy the necessary
engineering and marketing resources to accommodate this schedule. Both
companies will make best efforts to ensure expeditious development and
fabrication of NV1 DAC(s).
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Exhibit E
Marketing Deliverables
The marketing plan attached is illustrative of the type and scope of marketing
plan to be implemented by SGS-THOMSON. Deliverables from SGS-THOMSON to NVidia
will include:
o Printing and Artwork for a reasonable no of NV1 product datasheets, NV
Architectural Backgrounders, S/W writers guide, Application Notes, NV1
Brochures.
o Organisation of NV1 Press Launch in US, Taiwan and Tokyo, including booking
venues, inviting journalists and preparing Press Packs.
o Organisation of ISV camp including booking venue and printing training
material.
o Any Demo Software that SGS-THOMSON produces internally or sub-contracts
(NVidia will supply to SGS-THOMSON any demo software that NVidia produces).
o Use of guest suite that SGS-THOMSON rents at trade shows (including COMDEX)
for the purpose of promoting NV products.
Printed material will be delivered to NVidia for NVidia to distribute to its
customers.
NV1 MARKETING PLAN
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OBJECTIVES
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MAJOR STRATEGIES
----------------
SGS-THOMSON SALES & MARKETING SUPPORT FOR NV
--------------------------------------------
KEY ACCOUNT TARGETING
---------------------
KEY PROMOTIONAL MESSAGES OF NV
------------------------------
MEDIA STRATEGIE
---------------
TECHNICAL/APPLICATIONS SUPPORT
------------------------------
ACTION ACTIVITY PLAN
--------------------
PRIOR TO LAUNCH DATE
FIRST 30 DAYS AFTER LAUNCH
FIRST 60 DAYS AFTER LAUNCH
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EXHIBIT F: SOFTWARE SUPPORT AND MAINTENANCE
NVidia will provide on-going software support and maintenance to SGS-THOMSON as
reasonably expected. It is expected that SGS-THOMSON will provide the necessary
support for its own customers. The software maintenance service is as follows.
1. Support for x86 platforms.
2. Major operating system device drivers will be provided on a best effort and
prioritized basis. The OS drivers currently planned, in order of priority,
are Windows3.1, Windows4.0, NT, and OS/2 2.0.
3. BIOS support for desktop platforms.
4. Windows3.1 and BIOS will be available at prototype.
5. NVidia will release timely and regular software updates to SGS-THOMSON.
SGS-THOMSON will receive software updates no later than NVidia customers.
6. NVidia will keep available assistance to SGS-THOMSON between 8:00AM and
6:00PM, prevailing local time, Monday through Friday (excluding NVidia
recognized holidays).
7. NVidia will provide appropriate assistance to SGS-THOMSON within a
reasonable period after ST adequately describe and/or document the problem.
8. Enhancements requested by ST that are agreed upon by NVidia will be
provided at a reasonably negotiated price.
9. NVidia is planning to develop application-specific interfaces for strategic
applications such as Adobe Photoshop and AutoCAD. To the extent that
NVidia can legally do so, NVidia will make available to SGS-THOMSON these
DDA (Direct-Device Access) drivers under favorite customer terms.
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EXHIBIT G: KEY SGS-THOMSON PERSONNEL ASSIGNED TO COLLABORATION
SGS-THOMSON initially expects to assign people and locations to the
collaboration as follows. During the collaboration SGS-THOMSON will continue to
review the requirements of the program and assign people based on circumstances
at any given time.
<TABLE>
<CAPTION>
Position Period Location
<S> <C> <C>
Marketing Manager Full Time San Jose
Graphics Architect Full Time San Jose
Designer 1 DAC Full Time Bristol
Designer 2 DAC Full Time Bristol
Designer 3 DAC Full Time Bristol
Designer 1 Controller Full Time San Jose
Designer 2 Controller Full Time San Jose
Application Engineer 1 Full Time San Jose
Application Engineer 2 Full Time San Jose
Product Engineer Full Time San Jose (for three months
then Bristol)
ASIC Support Engineer Full Time Dallas/San Jose
</TABLE>
In addition to the personnel listed above, who will be allocated to the program
initially, further personnel from SGS-THOMSON, mainly based in Dallas and
Bristol, will be allocated to the program as it becomes appropriate.
<PAGE>
AMENDMENT AND EXTENSION
TO
STRATEGIC COLLABORATION AGREEMENT
This Amendment and Extension to Strategic Collaboration Agreement between SGS-
THOMSON Microelectronics, Inc., a Delaware corporation ("ST"), and NVIDIA
Corporation, a California corporation ("NVIDIA"), is entered into this 3rd day
of June 1996 (hereinafter the "Amendment").
WHEREAS, ST and NVIDIA entered into that certain Strategic Collaboration
Agreement dated November 10, 1993 (the "Original Agreement");
WHEREAS, the Original Agreement expires by its terms on November 10, 1996;
WHEREAS, ST and NVIDIA each wish to develop a next generation multimedia
accelerator product (hereinafter the "Next Generation Product") and desire to
work together in the design of such product, and
WHEREAS, ST and NVIDIA each wish to amend and extend the Original Agreement in
order to jointly develop such Next Generation Product.
NOW, THEREFORE, in consideration of the mutual representations, warranties and
covenants set forth below, and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties, intending to be legally
bound, hereby agree as follows.
1. PRODUCT DEVELOPMENT
ST and NVIDIA have each independently defined a Next Generation Product using
the NV architecture developed by NVIDIA and licensed to ST in the Original
Agreement. ST's defined product (hereinafter "STG3000") is an alternative
version of the product defined by NVIDIA as the NV3 (hereinafter the "NV3").
1.1. PRODUCT DESIGN. NVIDIA will be responsible for the development of the core
technology comprising the NV3 and the STG3000 (hereinafter the "Core
Technology"). NVIDIA will make reasonable best efforts to design the NV3 in such
a way as to permit the ST to use the Core Technology to easily modify the NV3 to
meet the definition of the STG3000. Although the STG3000 is defined as the NV3
without audio functionality, the audio technology included within the NV3 is
included within the Core Technology. NVIDIA will use its reasonable best effort
to (i) design the NV3 to emulate the STG3000 by using a bonding option, and (ii)
design the NV3 so that ST may recombine some or all of the Core Technology
within the NV3 in order to produce a cost optimized version of the STG3000. ST
will use its reasonable best efforts to design the STG3000 in such a way that it
can be emulated by the NV3. In addition, ST will direct its Graphics Business
Unit ("GBU") engineering resources to the development of the Core
1
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Technology (including the STG3000 emulated NV3) as a priority over ST's
development of the STG3001 or any other GBU project.
2. PRODUCT MARKETING
ST and NVIDIA will each use their reasonable best efforts to support each
other's product development and to get their respective products to market as
soon as reasonably practical. To that end, ST and NVIDIA will co-operate to
concurrently produce silicon samples of the NV3 and the NV3 emulated version of
the STG3000. Each company will independently market, promote, sample, price and
sell their respective products.
3. NVIDIA GRANT OF TECHNOLOGY LICENSES
3.1 ST TO OBTAIN LICENSE. The license fee for the Core Technology will be
$2,500,000 and will be payable as follows: (i) $1,000,000 upon final execution
of this Amendment, (ii) $500,000 at tapeout of the NV3 product acceptable to ST,
and (iii) $1,000,000 at the production of a prototype of the NV3 product
acceptable to ST. Only upon final payment shall ST have acquired the license.
All license payments shall be non-refundable. In the event ST finds the tapeout
or prototype of the NV3 unacceptable and therefore does not pay the
corresponding payment, ST shall nevertheless continue to be obligated to comply
with the other provisions of this Amendment regarding product development and
manufacturing specifically including, but not limited to, paragraphs 3.4 and
3.6.
3.2 ST EXERCISE OF LICENSE. Upon final payment of the licenses fee described in
paragraph 3.1, ST shall have obtained from NVIDIA, a worldwide, non-exclusive,
perpetual license to make, have made, use and sell (without the right to
sublicense) and to otherwise fully exploit the Core Technology or any portions
thereof as part of a product that ST may manufacture or have manufactured.
Notwithstanding the foregoing grant of license, ST shall be prohibited from (i)
using or selling the NV3 product in the form defined by NVIDIA, and (ii)
modifying, extending, or enhancing the NVIDIA architecture except with the prior
written consent of NVIDIA, which consent shall not be unreasonably withheld.
3.3 ST EXISTING LICENSES. Except as specifically provided in this Amendment,
nothing herein shall modify the product, technology, and software licenses
obtained by ST in the Original Agreement. As such, and for clarification
purposes, ST shall remain (i) the exclusive licensee to the NV1-D64 product
developed by NVIDIA, (ii) a non-exclusive licensee to the NV architecture
technology developed by NVIDIA, and (iii) a non-exclusive licensee to the
software developed and/or licensed by NVIDIA for device drivers and BIOS and all
NV architecture based products licensed by ST or developed by ST. The terms of
the Original Agreement shall continue to govern such licenses. In addition, for
clarification purposes, NVIDIA hereby acknowledges that such licenses are in no
way limited as to market/product segment and consequently ST has unlimited
rights to sell the NV1-D64 product, and any other NV
2
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architecture based products ST designs or has designed for it, in any market
segment without limitation.
3.4 NVIDIA RECEIPT OF LICENSE. Upon execution of this agreement NVIDIA shall
have obtained from ST a worldwide, royalty-free, non-exclusive, perpetual
license to make, have made, use and sell the Video and Graphics DAC technology
and otherwise fully exploit such Video and Graphics DAC technology, with right
to sublicense, provided such technology forms an integral part of a larger NV
architecture based product designed by NVIDIA.
3.5 NVIDIA DELIVERABLES. NVIDIA will transfer to ST all pertinent
specifications and know how generated by NVIDIA regarding the Core Technology in
the form reasonably requested by ST upon tape-out of the NV3. NVIDIA will
provide reasonable technical assistance necessary for ST to use the Core
Technology independent of NVIDIA, specifically including the information and
know how reasonably required by ST to design a cost optimized version of the
STG3000. In addition, in compliance with paragraph I.C. of the Original
Agreement, NVIDIA will transfer to ST (I) all specifications and know how
generated by NVIDIA regarding the NV1-D64 product, and (II) all specifications
and know how reasonably required by ST to design products using the NV
architecture. The information shall be transferred to ST in a form reasonably
requested by ST. NVIDIA shall be obligated to transfer any subsequent
specifications and know how developed by NVIDIA as they relate to the Core
Technology through December 31st, 1997.
3.6 ST DELIVERABLES. ST will transfer to NVIDIA all pertinent specifications
and know how generated by ST regarding the Video and Graphics DAC technology
and the NV3 physical design in the form reasonably requested by NVIDIA upon
tape-out of the NV3. ST will provide reasonable technical assistance necessary
for NVIDIA to use the Video and Graphics DAC technology independent of ST. The
information will be transferred to NVIDIA in a form reasonably requested by
NVIDIA. ST shall be obligated to transfer any subsequent specifications and know
how of the Video and Graphics DAC technology through December 31st, 1997.
3.7 THIRD PARTY MANUFACTURE CONFIDENTIALITY PROVISIONS. Notwithstanding each
party's foregoing grant of have made rights, in order to exercise such right,
the party intending to exercise such rights shall be required to (i) provide
written notice of the other party's ownership of the licensed technology, and
(ii) include the owner of such licensed technology as a third party beneficiary
to any confidentiality agreement between the party and such third party
manufacturer. The execution of such confidentiality agreement shall be condition
precedent to the exercise of the have made rights herein. ST shall have no
obligation to comply with such restriction when exercising its have made right
with a worldwide affiliate.
4. PRODUCT SUPPORT TO ST
4.1 SOFTWARE, QA, AND DEVELOPER MARKETING. In consideration of its payment
of $1,000,000 in 1996 and $750,000 in 1997. ST will be entitled to receive the
benefits of NVIDIA's efforts in developing the NV3 and STG3000 products using
the Core Technology
3
<PAGE>
during 1996 and the first half of 1997 as referenced in Exhibit A. ST shall pay
such amounts as follows: (i) $500,000 upon final execution of this agreement,
(ii) $250,000 on July 1st 1996, (iii) $250,000 on October 1st 1996, (iv)
$375,000 on January 2nd 1997, and (v) $375,000 on April 1st 1997. Throughout
1996 NVIDIA shall provide support in software engineering, product/quality
assurance engineering and developer marketing. From January 2nd 1997 to June
30th 1997, NVIDIA shall provide support for software engineering and developer
marketing. NVIDIA will provide ST such support on the same basis and in the same
time frame as it provides such benefits to itself. For example, ST shall receive
software releases for the STG3000 concurrent with that for the NV3, to the
extent that the two versions of the software are binary compatible. Any
additional product support other than as listed or described on Exhibit A shall
be upon the agreement of the parties; provided either ST or NVIDIA may take
additional actions independent from the other.
4.2 TRADE SHOWS / OTHER MARKETING EVENTS. ST and NVIDIA anticipate that
they will from time to time share the costs of trade shows and other specific
marketing efforts which are jointly developed or approved by both NVIDIA and ST.
5. DEVELOPMENT SUPPORT
5.1 NVIDIA CONTRIBUTION. NVIDIA will be responsible for the cost of
engineering, tools, and computers for the design, synthesis, and verification
phase of development of the NV3 product.
5.2 ST CONTRIBUTION. ST will be responsible for the cost of engineering,
tools, and computers for the layout and back-end phase of development and will
also be responsible for the cost of mask making and prototyping for up to two
full and one metal prototype runs for the NV3 and projected NVIDIA designed
mixed signal device, provided however that if the root cause of any prototype
failure is jointly agreed to be ST's fault, the mask making and prototyping to
correct such fault shall be ST's sole expense, and shall be in addition to the
two full and one metal prototype run described herein. ST shall obtain and
provide three Cadence design kits for use in NVIDIA's design and development of
its mixed signal device. ST shall be responsible for the cost of the Cadence
design kits through the earlier to occur of (i) NVIDIA 's completion of the
design of the mixed signal device, or (ii) December 31st, 1997.
5.3 EQUAL CONTRIBUTION. ST and NVIDIA shall share equally the cost of
third party FIB repair for the NV3.
6. MANUFACTURING CAPACITY AND PRICING
6.1 RESERVATION OF CAPACITY. ST reserves capacity of up to 1.5 million units
for NV3 for 1997 for the technologies, price and time matrix shown in paragraph
6.4, pursuant to ST's standard terms and conditions of sale, and additional
terms contained in this Agreement.
4
<PAGE>
6.2 USE OF RESERVED CAPACITY. In order to claim the reserved capacity at the
agreed upon pricing NVIDIA must provide ST with a monthly rolling 26 week
forecast of its expected product requirements. The initial 4 weeks of such
forecast shall be considered a firm order and consequently NVIDIA will be
required to issue purchase orders for such amount on a monthly basis. The next 8
weeks shall be considered a firm but modifiable order in which NVIDIA will be
entitled to increase or decrease the order by 50% (up to the time it falls
within the initial 4 week period of a forecast) and consequently NVIDIA shall be
required to issue purchase orders for such amount on a monthly basis. The
remaining 14 weeks of the forecast shall be for planning purposes only and shall
require no purchase order.
6.3 The only consequence of the failure by NVIDIA to place orders as described
above shall be that ST shall no longer be required to reserve capacity for such
unplaced orders.
6.4 PRICE MATRIX FOR NV3. ST agrees to manufacture and sell the reserved
capacity of NV3 product to NVIDIA at the following prices under the assumptions
contained in the following matrix. In the event the die size assumptions are
incorrect, ST and NVIDIA agree to change the prices proportionally.
Technology 1H97 2H97
HCMOS5S [*] [*]
4 Level Metal
9.5 x 9.5 mm die
256 PIN BGA
HCMOS6 [*] [*]
5 Level Metal
7.5 x 7.5 mm die
256 PIN BGA
ST prices offered to NVIDIA offered to NVIDIA shall at all times be as low as
those offered by ST to any other third party for comparable products under
similar business terms and conditions.
At approximately 6 monthly intervals, ST and NVIDIA agree to meet and review
the competitiveness of the current pricing, and negotiate in good faith pricing
for the subsequent 6 month period.
NVIDIA acknowledges that the HCMOS6 process technology referenced in the
preceding matrix is currently under development by ST and is included in the
price matrix based on ST's reasonable estimate of when the NV3 product may be
manufactured using the technology. In addition NVIDIA recognizes that the
development of the process technology may be delayed so that it is unavailable
for use in manufacturing the NV3 product during the terms of this Amendment. ST
shall promptly notify NVIDIA of any such delay and the expected delivery date.
[*] 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.
5
<PAGE>
6.5 PRICES ON NV1-V32 KIT. Upon final execution of this Amendment, ST will
manufacture and sell the NV1-V32 (revision C) kit, comprising the NV1-V32 and
the NVDAC, to NVIDIA at $22.00 per kit, subject to acceptance or orders by ST
under the then current terms and conditions of sale.
7. ROYALTIES
7.1 ROYALTIES ON STG2000. Upon final execution of this Amendment, paragraph
V.A. of the Original Agreement will be modified to provide for a [*] royalty
payable to NVIDIA on any and all future ST Net Sales (as defined in the Original
Agreement) of the NV1-D64 product in any volume (known to ST as the STG2000).
7.2 ROYALTIES ON STG3000. ST shall pay NVIDIA a royalty of [*] on its Net
Sales (as defined in the Original Agreement) of the STG3000. This rate will be
reduced to [*] under the prepaid credit mechanism described in paragraph 7.5.
In any event, ST's royalty obligation shall cease for any Net Sales of the
STG3000 made after December 31st 1998.
7.3 ROYALTIES ON FUTURE NV PRODUCTS BASED ON NV ARCHITECTURE. Starting January
1, 1998, the royalty for Net Sales of all future ST products on NVIDIA's NV
Architecture will be the ratio of the core area (total silicon area not
including bond pad area) wholly incorporation NV Technology and the total core
area, multiplied by the royalty rate shown in the table below.
<TABLE>
<CAPTION>
Total Volume Royalty Rate
------------ ------------
<S> <C>
First 5 MU [*]
Next 10 MU [*]
Beyond 11MU [*]
</TABLE>
To the extent such royalty payments are due and payable prior to the close of
business on December 31, 1998, 50% of such royalty payment will be paid in the
form of a reduction of the prepaid royalty described in paragraph 7.5.
7.4 PREPAYMENT OF ROYALTY. Upon final execution of this Amendment by both ST
and NVIDIA, ST agrees to prepay $2,500,000 of the royalty payment due NVIDIA
pursuant to the terms of paragraph 7.2. ST shall prepay the royalty as follows:
$1,000,000 upon final execution of this Amendment, $750,000 three months
following the final execution of this agreement, and $750,000 six months
following the final execution of this Amendment.
7.5 REDUCTION OF PREPAYMENT CREDIT/REPAYMENT OBLIGATION. Upon receiving the
prepaid royalty pursuant to paragraph 7.4, NVIDIA shall provide ST a credit
towards future royalty obligations. NVIDIA shall reduce such credit by an amount
equal to (i) [*] of ST's Net Sales (as defined in the Original Agreement) of the
STG3000, and (ii) [*] of any royalty due on ST's Net Sales of any future NV
based products pursuant to the terms of paragraph 7.3. Following reduction of
the prepayment amount to zero, royalties shall be payable to NVIDIA as provided
in paragraphs 7.2 and 7.3. In the event a portion of such credit remains as of
the close
[*] 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.
6
<PAGE>
of business of December 31st 1998, NVIDIA shall be obligated to remit such
balance to ST by the close of business on January 10th 1999. Thereafter, ST
shall be required to pay a cash royalty payment equal to the full royalty amount
on such future Net Sales pursuant to the terms of paragraphs 7.1 and 7.2.
7.6 SECURITY FOR PREPAID ROYALTY. In order to provide ST security for the
prepaid royalty, to the extent not already pledged as collateral as of the date
of this Amendment, NVIDIA shall grant ST a priority security interest on
specific assets identified by ST in an amount equal to the prepaid royalty. ST
shall release such security interest in the same amount as the prepaid royalty
credit described in paragraph 7.4 is reduced.
7.7 PAYMENT OF ROYALTIES. All royalties shall be calculated on a quarterly
basis, shall be payable to NVIDIA within 45 days of the close of a calendar
quarter unless offset as described in section 7.8, shall be accompanied by a
written report showing the calculation of such royalty payment during the prior
quarter, and shall be subject to independent audit no more frequently than once
a year. The audit shall be at NVIDIA's sole cost unless it reveals a discrepancy
of more than 10% in ST's favor in which case ST shall be obligated to pay for
such audit, and it shall take place during normal business hours upon reasonable
prior notice to ST.
7.8 OFFSET. ST may, at its sole discretion, elect to offset amounts receivable
form NVIDIA in lieu of making the payments in this section 7. Any such offset
will be reflected in the corresponding royalty report.
8. MODIFICATIONS OF THE ORIGINAL AGREEMENT.
The following provisions of the Original Agreement are modified as follows:
8.1 NVIDIA shall have no further obligation pursuant to paragraph 1.A. or 1.B.
to develop any future NV architecture based products or develop software to
support such products.
8.2 NVIDIA shall be obligated to transfer all licensed technology
(architecture, product, and software), and provide reasonable technical
assistance, pursuant to paragraph 1.C, through the termination of this
Amendment.
8.3 NVIDIA shall have no further obligations to disclose NV products or to
offer ST a license to any further NV products as required in paragraphs II.B.
or III.B. or V.B. and ST shall no longer have any rights under such paragraphs.
8.4 ST shall no longer have any royalty obligations pursuant to paragraph V.A.
except as contained in section 7 of this Amendment.
8.5 ST shall no longer have any obligation to develop any ASIC or DAC for the
NV1-DS4, the NV1-V32, or any other product pursuant to paragraphs VI.A. and
VI.B.
7
<PAGE>
8.6 ST shall have no further obligation to provide any marketing support
pursuant to paragraph VIII.A. and the parties shall have no further obligation
to maintain the Joint Marketing Committee pursuant to paragraph VIII.B.
8.7 ST shall extend the line of credit established for the benefit of NVIDIA
pursuant to paragraph VII.B. through the expiration of this Amendment unless
NVIDIA issues its first public stock offering prior thereto, in which case the
line of credit will expire concurrent with the stock offering. All credit issued
to such line of credit shall be repaid to ST pursuant to the terms of the
Original Agreement, to be replaced in part by ST's standard terms of credit.
8.8 The term of the Original Agreement and therefore this Amendment referenced
in paragraph XI.A. shall be extended through December 31, 1997.
9. ALL OTHER TERMS REMAIN UNCHANGED. Unless modified by the terms of this
Amendment, the terms of the Original Agreement shall remain unchanged and shall
be extended through December 31, 1997. In addition, any representation or
warranty made by either party in the Original Agreement shall be deemed made
again as of the date of this Amendment. To the extent any term of the Original
Agreement conflicts with a term contained in this Amendment, the parties agree
that the term contained in this Amendment shall be the controlling term.
10. SURVIVAL.
Notwithstanding any other provision of this Amendment or the Original
Agreement, ST and NVIDIA recognize that all licenses granted in the Original
Agreement and this Amendment are perpetual and this will survive termination of
this Agreement. In addition, NVIDIA's obligation to transfer the NV
architecture, product technology, and software, and ST's obligation to transfer
the Video and Graphics DAC technology, all in the form that it exists on
December 31, 1997, shall survive termination. The parties confidentiality and
royalty obligations shall also survive termination.
IN WITNESS THEREOF, the parties have executed this Amendment as of the date set
forth above.
NVIDIA Corporation SGS-THOMSON Microelectronics, Inc.
/s/ Jen-Hsun Huang /s/ A. McK. Malone
--------------------- ---------------------
Jen-Hsun Huang A. McK. Malone
--------------------- ---------------------
PRESIDENT & CEO Vice President - Finance & CEO
8
<PAGE>
EXHIBITS
Exhibit A: NVIDIA Deliverables NV3
NVidia will develop and share the following source with ST:
1. Design Data for the Core Technology which will include but not be
limited to:
NV3 PCI Bus Interface
NV3 SVGA and CRT Controller
NV3 Frame Buffer Interface for EDO and SGRAM memory
NV3 Media Port
NV3 Wavetable Synthesis and Soundblaster (DOS Audio) Engineer
NV3 2D and 3D Graphics Engine
All on-chip interfaces for the above
2. For each of the above, the following views will be supplied:
Production Chip level Verilog
Architectural Specification comprising:
Programmer's reference
Class Definitions
Architectural Developer guide
Register Specifications comprising:
Manuals
Compilation tools
Design Environment comprising:
Verification
Script Generation Tools
3. Software for the Core Technology, which will include but not be
limited to the following:
NV3 Resource Manager
Windows 95 Display Drivers
Windows 95 WDM Drivers
Windows NT Display Drivers
Windows NT WDM Drivers
All Windows 95 Direct-X drivers developed by NVidia for the NV3
Installation Utilities
Production Diagnostics
Debug Diagnostics
Software QA Automation Scripts
Software Release Build Utilities
NVLIB
SDK Utilities
Waretable Bank Files
<PAGE>
EXHIBIT B: ST Deliverables (DAC)
Design data and technology for the following:
Video Controller
Ramdac including
graphics fifo
Palette rams and pixel data path
DACs
Frequency synthesizers
Game ports
IO pads including ESD structures
Following information is necessary for each of these
Video controller
Production Chip Verilog
Test files
Test video clips
Manuals
All components of Ramdac and IO pads as listed above:
Production Chip Verilog
Schematics
Hierarchical GDS2 data base
Design rules
Spice models
Spice circuit files and simulation decks
Design review package
Simulation and characterization results
Production test vectors and test plan
Necessary inputs (scripts, constraints, etc.) for Synopsis Synthesis tools
Necessary inputs (scripts, constraints, etc.) for static timing analysis
Description of known critical timing paths and/or critical circuit elements
(behaviors)
<PAGE>
SECOND AMENDMENT TO STRATEGIC COLLABORATION AGREEMENT
This Second Amendment and Extension to the Collaboration Agreement (the "Second
Amendment") between SGS-THOMSON Microelectronics, Inc., a Delaware Corporation
("ST") and NVIDIA Corporation, a California Corporation ("NVIDIA"), is entered
into this 27th day of January 1998 (hereinafter the "Second Amendment").
Whereas, ST and NVIDIA entered into that certain Strategic Collaboration
Agreement on November 10, 1993 (the "Original Agreement");
Whereas, ST and NVIDIA modified the Original Agreement on June 3, 1996 (the
"First Amendment"); and
Whereas, ST and NVIDIA wish to further amend the Original Agreement as
previously modified by the First Amendment;
Now Therefore, intending to be legally bound, ST and NVIDIA hereby agree as
follows:
1. PRODUCT DEVELOPMENT
1.1 PRODUCT DESIGN. The product design of the Next Generation Product will be
that of the NV3 and will be identical for ST and NVIDIA. The product will be
marketed under a common trade name which has been agreed by the parties as the
"RIVA128". References in the First Amendment to the STG3000 and NV3 alternative
versions of the Next Generation Product and to their separate development, sales
and marketing and features are hereby deleted and references therein shall be
deemed reference to the single product design now known as RIVA128.
1.2 RELATED PRODUCT. NVIDIA will develop a product related to the RIVA128 to be
known as the RIVA128ZX. ST will synthesize the design of the RIVA128ZX into its
process technology and perform layout/LVS/DRC for the RIVA128ZX, NVIDIA will
design reference, and debug boards and driver software for the RIVA128ZX, ST and
NVIDIA will jointly develop emulation boards and perform system bring up and
validation of the RIVA128ZX. All references to the RIVA128 will include by
implied reference the RIVA128ZX product.
1.3 CORE TECHNOLOGY. Subject to the terms of the Original Agreement and the
First Amendment, each party will be able to independently develop, build and
market future products using the Core Technology.
1.4 ST CONTRIBUTION. Section 5.2 of the First Amendment shall be modified as
follows:
<PAGE>
ST shall obtain and provide three physical design CAD seats for use by
NVIDIA. The CAD seats would include tools necessary for NVIDIA to duplicate
the back-end methodology used by ST on the development of the RIVA128. ST
shall be responsible for the cost of the (3) CAD seats through June 30, 1998.
1.5 PRODUCT MANUFACTURING. ST will manufacture the RIVA 128 using its advanced
process technology.
2. SOFTWARE AND QA SUPPORT
In return for ST forgiving the $2.5 million of prepaid royalty provided to
NVIDIA pursuant to the terms of the First Amendment. NVIDIA shall provide
software engineering and QA support to ST for the RIVA128 and any derivarive
product developed by ST through December 31, 1998. The software support for
provided to ST shall specifically include but not be limited to support of MS
Windows NT 4.0 and 5.0, MS Windows 95, and MS Windows 98 (Memphis). During this
period NVIDIA shall provide ST support for its sales of RIVA 128 on the same
basis and in the same time frame as it provides such benefits for itself. In any
event, ST shall receive software releases concurrently with NVIDIA.
3. PRODUCT MARKETING
The parties will create a joint Sales and Marketing Committee with equal
voting authority for NVIDIA and ST. This Committee will review sales and
marketing decisions of both parties related to the RIVA128.
The parties will share equally the manufacturing cost of building boards
for the RIVA128 to be used as prototypes and for marketing purposes.
4. PRODUCT SALES
Each party will have the right to sell the RIVA128 at a price determined by
such party at its discretion. For its customers, NVIDIA will take orders and
place corresponding sales orders on ST (NVIDIA will act as a non-stocking
distributor). NVIDIA may at its discretion direct ST to ship directly to
NVIDIA's customers at NVIDIA's cost. The method of shipment shall be as directed
by NVIDIA.
ST will provide NVIDIA with regular updates on the status of its orders and
the work in process for the RIVA128.
NVIDIA will use its best efforts to provide reasonable technical
assistance, reasonable design-in assistance, and reasonable software support to
both parties customers.
<PAGE>
ST will use reasonable efforts to support reasonable manufacturing and
information needs of NVIDIA.
Each party will provide the Sales and Marketing Committee a rolling six
month sales forecast of the RIVA128 on a monthly basis.
The last 30 days prior to the Last Commit Date to the customer will be
considered firm demand. If an NVIDIA customer cancels or reschedules its order,
at NVIDIA's request, ST will use reasonable efforts to ship the product to one
of ST's customer. If ST does not have additional demand for the product, NVIDIA
will accept delivery of the product. This provision replaces Section 6.2 of the
First Amendment in its entirety.
Each party is responsible for the compensation of its own sales force and
other personnel.
ST will use reasonable efforts to maintain capacity for an adequate supply
of product to fill the orders of both parties and saturate ST's available
market. Any shortfall in capacity shall be allocated fairly by the Sales and
Marketing Committee. The Sales and Marketing Committee will approve the product
allocation policy which will govern the allocation of product to each of the
parties outside of the last 30 days prior to the Customer Shipment date. In the
event that the Committee cannot agree on a policy, the product available will be
allocated on a pro rata basis based on each party's backlog. ST will use
reasonable efforts to provide sufficient capacity to manufacture according to
NVIDIA's 1998 forecast. This is initially set at 500,000 per month, and will be
revised monthly as provided for herein.
5. PRODUCT PRICING
The pricing provision of Section 6.4 of the First Amendment are hereby
deleted. ST will provide the RIVA128 to NVIDIA based on a long term supply
relationship at a price (the"Adjusted Price") negotiated monthly by the Sales
and Marketing Committee. The Adjusted Price is equal to the amount displayed
in Exhibit B ("Base Cost") for the corresponding manufacturing plus on amount
("Mark-Up") determined by the Sales and Marketing Committee. In any event, the
Adjusted Price shall not exceed the maximum Price listed in Exhibit A. The
Mark-up is computed as [*]. In the event that the Committee can not agree on
the Mark-up, the Adjusted Price shall be equal to the Mark-up for the previous
quarter plus the then current Base Price.
NVIDIA shall have the right to have an independent audit of the
manufacturing yield no more frequently than once a year. The audit shall be at
NVIDIA's sole cost unless it reveals a discrepancy of more than 10% in ST's
favor in which case ST shall be obligated to pay for such audit. Any audit shall
take place during normal business hours upon reasonable prior notice to ST.
[*] 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.
<PAGE>
6. PRODUCT PAYMENT
Section VII(B) of the Original Agreement and Section 8.7 of the First
Amendment are hereby modified as follows:
ST will grant NVIDIA a revolving line of credit up to a maximum of the sum of
NVIDIA equity and ST's profit margin in sales of RIVA128 products to NVIDIA
over the preceding thirty (30) days. For purposes of this Section 6, NVIDIA's
equity shall equal the difference between NVIDIA's assets and liabilities
during the same thirty (30) day period for which ST will measure its profit on
the sale of RIVA128 products to NVIDIA. ST's profit shall be the Mark-Up
multiplied by the number of units sold to NVIDIA during such thirty (30) day
period. ST shall have no obligation to grant such line of credit until NVIDIA
enters into sufficient agreements documenting such arrangement and providing
ST sufficient security to issue such line of credit. NVIDIA shall pay the full
balance of such line of credit within ten (10) days of the initial public
offering of its securities. All other terms of such Sections shall remain
unchanged except as previously amended.
7. ROYALTIES
Section 7.2 and 7.3 of the First Amendment are hereby deleted and replaced
with: ST shall pay NVIDIA a per unit royalty equal to the Mark-Up set monthly by
the Sales and Marketing Committee on its Net Sales of the Next Generation
Product within 30 days of shipment. In any event, references made to paragraphs
7.2 and 7.3 of the First Amendment made in paragraph 7.5 of the First Amendment
are hereby replaced by reference to this paragraph 7. If the Committee cannot
agree on a new royalty, the per unit royalty shall remain the same as the prior
quarter.
8. CREDIT
NVIDIA will be solely responsible for the credit decisions relating to its
customers. NVIDIA will be solely responsible for invoicing and collections from
such customers. ST will be solely responsible for the credit decision,
invoicing, and collections relating to its customers.
9. SECOND SOURCE
NVIDIA retains the right to second source the RIVA128 using a third party
manufacturing facility and to market and sell the products to its customers.
NVIDIA second sourced product shall not be covered by this Second Amendment.
10. CONTROLLING TERMS
<PAGE>
Except as set forth herein, all terms of the Original Agreement, as
previously modified by the First Amendment, shall remain in full force and
effect. To the extent any term of the Original Agreement or the First Amendment
conflicts with a term in this Second Amendment, the parties agree that the term
contained in this Second Amendment shall be the controlling term.
11. NONINTERFERENCE
In light of the fact that ST and NVIDIA have been working closely together
in joint development projects and their mutual desire to each maintain a stable
work force necessary for continued business success, ST and NVIDIA each agree,
as a reciprocal agreement, that during the term of this Agreement, as now or
hereafter amended, and for two (2) years after the expiration of the term, as
the same may be extended, neither party will, directly or indirectly, (a) induce
or attempt to induce any employee to leave the employment of the other party or
any of its affiliated companies; (b) interfere with or disrupt the other party's
relationship with any of its employees; (c) solicit any employee of the other
party or its affiliated companies to come to work for it or one of its
affiliated companies; or (d) hire any employee, or former employee, of the other
party or its affiliated companies.
12. NO OTHER CHANGES
Unless modified by the terms of this Second Amendment, the terms of the
Original Agreement, as previously modified by the First Amendment, shall remain
unchanged. It is expressly understood that this Second Amendment in no way is
intended to extend the term of the Original Agreement, as previously amended by
the First Amendment, which shall terminate on December 31, 1997.
Capitalized terms used herein but not defined have the meaning set forth in
the Original Agreement or the Amendment.
IN THE WITNESS WHEREOF, the parties have executed this Second Amendment as
of the date set forth above.
SGS-THOMSON Microelectronics, Inc. NVIDIA Corporation
/s/ Tim Chambers /s/ Jen-Hsun Huang
---------------- ------------------
Tim Chambers Jen-Hsun Huang
Vice President President & CEO
Graphics Products Division
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Defect Density Base Cost
-----------------------------------------------------------------------------------------------
(def/cm2) (Dzero/l) Q1'98 Q2'98 Q3'98 Q4'98
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
[*] [*] $[*] $[*] [*] [*]
-----------------------------------------------------------------------------------------------
[*] [*] $[*] $[*] $[*] $[*]
-----------------------------------------------------------------------------------------------
[*] [*] $[*] $[*] $[*] $[*]
-----------------------------------------------------------------------------------------------
[*] [*] $[*] $[*] $[*] $[*]
-----------------------------------------------------------------------------------------------
[*] [*] $[*] $[*] $[*] $[*]
-----------------------------------------------------------------------------------------------
[*] [*] $[*] $[*] $[*] $[*]
-----------------------------------------------------------------------------------------------
</TABLE>
[*] 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.