Agreement for Purchase and Sale of Custom Semiconductor Products - International Business Machinese Corp. and Transmeta Corp.
Agreement for Purchase and Sale of Custom Semiconductor Products
(Reserved Capacity)
AGREEMENT NUMBER: TM-MFG-121297
This Agreement is entered into by and between International Business Machines
Corporation ("IBM"), incorporated under the laws of the State of New York and
with an address for purposes of this Agreement of 1000 River Street, Essex
Junction, Vermont, 05452 and Transmeta Corporation ("Customer"), incorporated
under the laws of the State of California with an address for purposes of this
Agreement of 3940 Freedom Circle, Santa Clara, CA. 95054. IBM and Customer agree
as follows:
The parties acknowledge that work required by this Agreement has occurred prior
to the date of execution of this Agreement. Both parties agree that the terms
and conditions of this Agreement shall apply to all such work.
This Agreement is a master purchase agreement for the manufacture and sale of
custom integrated circuit foundry products ("Products(s)"). Unless the parties
agree otherwise in writing, this Agreement, and its work orders ("Task Orders")
issued under this Agreement, shall define Product deliveries by part number and
shall solely govern IBM's manufacture and sale of Products to Customer. A Task
Order is not binding unless and until it has been mutually agreed upon and shall
become subject to this Agreement when it has been signed by IBM and Customer.
Task Orders shall describe the respective responsibilities of the parties (e.g.,
deliverable materials and specifications, Product description(s), manufacture
and qualification of Product prototypes, as well as technical responsibilities)
with regard to specific Product(s), as well as specific purchasing information
(e.g., manufacturing lead times, Product pricing and ordering, as well as
billing locations). Task Orders shall be in the form as set forth in Exhibit A.
The term of a Task Order shall run from the effective date on the Task Order
until the earlier of: 1) the completion of the Task Order; 2) the expiration
date stated in the Task Order; or 3) termination of this Agreement or the Task
Order. In the event of an inconsistency between the terms and conditions of this
Agreement and those of a Task Order, the Task Order will prevail.
1. TERM OF AGREEMENT: This Agreement is effective on December 12, 1997 (the
"Commencement Date"). This Agreement will expire on the later of December 30,
2003 or upon completion of the last Task Order, subject to Section 15
(Termination Rights).
2. FORECASTS:
First Task Order Forecast. Each Task Order shall contain a forecast of
Customer's anticipated unit production demand requirements for Product(s) for at
least the twelve (12) month period immediately following execution of the Task
Order. Customer shall submit a purchase order with said forecast (placed in
accordance with Section 3), by which Customer orders the quantity of Products
forecast for the first [*], at a minimum, of the [*]. IBM agrees that it
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
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shall provide capacity to Customer such that if ordered, IBM would satisfy
Customer's forecasted requirements for the [*]of the [*].
Subsequent Forecasts. Customer shall provide an updated forecast to IBM, on a
monthly basis, in writing, and by no later than the fifth (5th) day of each
month during the term of the Task Order. Each such forecast will cover at least
a rolling twelve (12) month period (not to exceed the term of the Task Order),
and will be reviewed for acceptance by IBM, acceptance not to be unreasonably
withheld. IBM shall notify Transmeta of whether said forecast has been accepted
or rejected, within ten (10) business days after receipt by IBM. IBM shall have
the right to reject a forecast if Customer changes the quantity of Products
forecasted for [*] of a previously accepted forecast, thereby holding Customer
to the most recently accepted forecast. For example, assume Customer submits a
forecast in February and said forecast designates [*] and IBM accepts that
forecast. Further assume that Customer's next forecast designates only [*]. IBM
has the right to reject that forecast and hold Customer to the accepted
forecast.
Customer shall submit a purchase order (placed in accordance with Section 3)
with each updated forecast (if one has not already been submitted), by which
Customer orders the quantity of Products forecast for the [*] of the forecast
([*] having already been committed under purchase order(s) pursuant to previous
forecast(s)). IBM agrees that it shall provide capacity to Customer such that if
ordered, IBM would satisfy Customer's forecasted requirements for the [*] of
each forecast, subject to the following paragraph. In consideration for IBM
agreeing to grant that capacity, Customer agrees that if it does not order
against previously accepted forecasts, as discussed in Section 11 of the Task
Order, then Customer shall be subject to cancellation charges as discussed in
said section. IBM agrees to consider, but is not obligated to accept, purchase
orders seeking upside (meaning, for a quantity of units in excess of [*] of the
forecast) and forecasts greater than that of a previously accepted forecast.
IBM will accept purchase orders for units forecasted to be delivered in [*] of
any accepted forecast, provided the orders are placed in accordance with Section
3 and the quantities requested are within [*] of the most recently accepted
forecast for said months. Customer is not obligated to submit said orders until
the aforesaid [*] roll into the [*] of a forecast. For example, assume Customer
submits a forecast and said forecast designates [*]. Once that month rolls into
the [*] of a forecast, IBM will accept a purchase order from Customer as long as
Customer actually orders between [*] for delivery during that [*]. By way of a
final example, assume that on January 5 Customer forecasts [*] and that IBM
accepts the forecast. Further assume that Customer changes the forecast to [*].
IBM may reject the [*] forecast, and thereby hold Customer to the January
forecast, or accept the [*] forecast of [*]. If IBM accepts the new forecast,
Customer is obligated to submit a purchase order [*] that is between [*].
[*] (or greater, if Customer submits forecasts beyond [*]) of each forecast are
non-binding on Customer and IBM, and provided for convenience purposes only.
All forecasts shall be in the same format as set forth in the Task Order.
Forecasts shall be provided to IBM's Technical Coordinator identified in the
applicable Task Order. On a regular basis, as mutually agreed to in writing, the
parties will meet to review the historical Product unit volumes, manufacturing
cycle times, and foundry Product pricing.
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
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The parties agree that the [*] will be manufactured initially in IBM's [*]
process technology. In addition, the parties agree that Customer will be offered
access to IBM's [*] CMOS [*] foundry process for a shrink of the [*] (where
Customer will be responsible for performing the design-related shrink effort) in
a time frame generally consistent with that provided to IBM's other foundry
customers. Customer acknowledges that the prices quoted in the initial Task
Order are for manufacturing in [*] process technology and that IBM will requote
for manufacturing in such follow on process. The specific details on the timing
of a shrink into such follow on process technology are subject to a good faith
negotiation between the parties to occur by September 30, 1998.
Customer may purchase Product in the form of finished goods (which are fully
assembled, tested and marked), or in wafer form (either bumped or umbumped, and
probed or unprobed).
3. ORDERS: After the parties have executed a Task Order, Customer will request
delivery of Products by issuing written purchase orders to IBM's Technical
Coordinator by the fifth (5th) day of each calendar month. As set forth in
Section 2, Customer will maintain a minimum of four (4) months rolling purchase
orders on IBM and may place purchase order(s) for months five (5) and six (6) of
each forecast. Purchase orders are subject to, and IBM will accept and ship
against purchase orders that comply with, the terms and conditions of this
Agreement and the applicable Task Order, and are consistent with the most
recently accepted forecasts and the most recent Customer credit limit as granted
by IBM. Purchase orders shall only specify the following items on their face
unless otherwise mutually agreed to in writing by duly authorized
representatives of the parties:
a) PO number
b) Tax status - exempt or non-exempt
c) Ship to location - complete address
d) Bill to location - complete address
e) Order from location - complete address
f) Product part numbers and quantities being ordered;
g) The Product's applicable unit price;
h) Shipping instructions, including preferred carrier.
i) Requested shipment dates
j) The Agreement Number of this Agreement.
k) Name of Customer contact
In accordance with the above language in this Section 3, provided IBM accepts a
purchase order, IBM shall issue a written sales acknowledgment within a maximum
of ten (10) business days after IBM's receipt of Customer's purchase order,
which shall recite the Agreement Number, Product and Customer's shipping
instructions, as well as establish the quantities being sold, the Product's
applicable unit price and the estimated shipment dates.
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
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This Agreement shall take precedence over and govern in case of any additional,
different or conflicting terms and conditions in any purchase order(s) or any
other form of either party. Purchase orders and other forms of either party may
not vary the terms of this Agreement. Additional, different or conflicting terms
and conditions on a purchase order or other form shall be of no effect unless
specifically agreed to in writing by the parties. This Agreement does not
constitute a purchase order. No verbal communications shall result in a
financial obligation by Customer or IBM.
4. LEAD TIMES, SHIPMENT, TITLE AND RISK OF LOSS: The Product's manufacturing
lead times shall be as set forth in the applicable Task Order. IBM will use
reasonable efforts to set shipment dates in accordance with the lead time
specified for Product as stated in the Task Order. Customer will keep at least a
rolling four (4) months worth of purchase orders placed on IBM to support IBM's
efforts to schedule and supply Product to Customer's requirements. Customer may
request shipment dates with lead times less than those agreed to in the relevant
Task Order, and IBM, at its option, may use reasonable efforts to set a shipment
date that is coincident with the shipment date requested by Customer. Customer
acknowledges that it may be required to pay additional charges for expedited
shipment.
IBM agrees to set delivery lead times for the Product in a manner that is
generally consistent for other OEM customers using the same manufacturing and
technology process.
Products shall be shipped from the manufacturing location FOB for domestic U.S.
destinations and ExWorks (as defined in the 1990 INCO Terms) for international
shipments. Title and risk of loss for a Product passes to Customer when IBM
delivers the Product to the Customer-specified carrier for shipment (said
carrier to be identified in Customer's purchase order). [*]. IBM also agrees to
accommodate any reasonable specific packaging and/or shipping requirements as
may be required to meet the requirements of Customer's end customers. In cases
where IBM is more than five (5) days late to agreed upon Product delivery dates,
due to IBM's sole fault, IBM shall pay the difference between overnight
expedited shipping and the normal carrier rates, if so requested by Customer. In
all other instances Customer shall pay for shipping costs. Customer is
responsible for all packaging costs.
5. PRICES, INVOICING, PAYMENT TERMS AND TAXES: The engineering charges and the
price/quantity matrix in the applicable Task Order will apply to the Products.
IBM will invoice Customer for engineering charges associated with Products in
accordance with such Task Order. IBM will invoice Customer for Products upon
shipment. All payments owed by Customer to IBM under this Agreement, including,
without limitation, cancellation and engineering charges, as well as payment for
Products purchased, are payable in U.S. dollars and receipt of payment by IBM
will be due net thirty (30) days after the date of the invoice; provided,
however, that if Customer's account becomes in arrears or if Customer exceeds a
credit limit agreed to by IBM, in addition to any other right under this
Agreement, IBM reserves the right to cease manufacturing or stop shipment to
Customer or ship to Customer on a cash-in-advance basis until Customer's account
is again current. Customer will be liable for interest on any overdue payment
under this Agreement, up to the prime interest rate as reported by Citibank of
New York on the date the payment was due, plus three percent. Customer
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
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is responsible for all taxes actually charged related to Products. However, in
no event will Customer be liable for taxes based on IBM's net income. For the
situation where Customer grants any IBM business unit merchant market sales
rights to any Product under this Agreement, and IBM and Customer are selling the
said Product in the merchant market, [*].
6. ORDER CHANGES:
a) For a purchase order which is more than thirty (30) days, but less
than sixty (60) days, from its scheduled shipment date, Customer may request in
writing a onetime deferral of the scheduled shipment date not to exceed thirty
(30) days, with no cancellation charge imposed.
b) If Customer cancels an order or reduces an order or exceeds the
foregoing Product shipment rescheduling rights in this Section 6, Customer
agrees to pay the Product cancellation charges as described in the relevant Task
Order.
7. SUPPLY CONSTRAINTS: If IBM's ability to supply Product(s) to Customer is
constrained for any reason, including, without limitation, availability of
manufacturing materials or tools, and any IBM agreed-to Product shipment date
will be missed, IBM will reduce the quantities of Product(s) supplied to
Customer in proportion to the reduction in quantities of products of the same
technology or utilizing the same manufacturing process to be supplied to satisfy
others. [*]. Receipt of such allocated supply and later delivery of all
undelivered ordered quantities (unless canceled as set forth above) after the
constraint ends constitutes IBM's entire liability and Customer's exclusive
remedy in the event of such Product supply constraint.
8. ENGINEERING CHANGES: IBM may implement engineering changes required to
satisfy governmental standards, or for environmental, health or safety reasons
("Mandatory Engineering Changes").
For all previously shipped Product not incorporating Mandatory Engineering
Changes, IBM may provide replacement Products (including parts, materials and
documentation) at the expense of the party at fault. Customer must use
reasonable efforts to install Mandatory Engineering Changes on all Customer
installed Products and Products in its inventory. If IBM requests the return of
Products displaced by installation of replacement Products, Customer will
promptly return any displaced Products to IBM after installation of such
replacement Products, at IBM's expense. IBM will use reasonable efforts to
cooperate with Customer in cases where Customer's end customers require specific
information regarding changes under this Section 8.
In addition to Mandatory Engineering Changes, IBM may implement engineering
changes that result in cost reductions to the Product ("Elective Engineering
Changes") with prior approval from Customer. Such approval from Customer shall
not be unreasonably withheld. IBM shall give Customer prompt notice of proposed
Elective Engineering Changes.
IBM may make available other Engineering Changes ("Optional Engineering
Changes"). The cost of any Optional Engineering Changes that Customer desires to
implement will be borne by Customer and will be determined through a request for
quote process.
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
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9. CONFIDENTIAL INFORMATION EXCHANGES: Information containing the confidential
information of either party shall be identified as that party's confidential
information and shall be exchanged pursuant to the terms of the agreement for
exchange of confidential information (agreement number: V1290-01), between IBM
and Customer dated September 30, 1996 and any amendments thereto, until or
unless the Technology License Agreement is executed by both parties. If the
Technology License agreement is so executed, the terms and conditions of Section
5.0 of that Agreement shall control all of which are hereby incorporated by
reference. All other information exchanged by the parties shall be deemed
non-confidential, except that the parties agree that the specific terms and
conditions of this Agreement constitute mutual confidential information of the
parties.
10. CUSTOMER REPRESENTATIONS: Customer warrants it is the originator, rightful
owner or licensee of all designs, information, and materials supplied to IBM
hereunder, and that no part of such materials knowingly infringes the
intellectual property rights of any third party. All computer data provided to
IBM by Customer will have gone through Customer's best efforts to ensure that it
is free from any virus, worm or other routines that would permit unauthorized
access or otherwise harm software, hardware or data. Best efforts shall include,
but not be limited to, establishing and following a documented process to
prevent its computer data from being infected with such virus, worm or other
routine. Customer will provide IBM with the process upon request. Customer will
be responsible for any damages caused by any virus, worm or other routine.
Customer will not utilize Products in conjunction with any medical implantation
or other direct life support applications where malfunction may result in
injury, harm or death to persons, or used in conjunction with aviation, nuclear
materials, or other ultra-hazardous activities (collectively, "Ultra-hazardous
Uses"). Customer agrees to incorporate the foregoing restriction in all
contracts or sale documents under which Customer sells the Product or a device
incorporating the Product to Customer's customers.
Customer agrees to defend, indemnify and hold IBM harmless from and against all
claims, whether based in contract, tort or otherwise for any losses, expenses,
damages and liabilities which may arise out of Customer's use, distribution or
sale of Products, except those caused solely by Product defects in materials or
workmanship as warranted under Section 13 (Limited Warranty) or by the sole
negligence of IBM .
11. INTELLECTUAL PROPERTY RIGHTS: For the purposes of this Agreement,
"intellectual property rights" shall mean all legally cognizable rights with
regards to applicable patent laws, copyright laws and trade secret laws. IBM
shall own any physical masks made by IBM using data provided by Customer.
Notwithstanding the foregoing sentence, unless otherwise agreed to in writing,
IBM's sole use of such physical masks shall be to perform its obligations under
this Agreement. IBM will use tangible GDS II (or any other file format as agreed
to by the parties) data received from Customer or generated exclusively for
Customer hereunder, and any masks made from such data, only to manufacture
Products for sale to Customer. In addition, to the extent that Customer has
ownership rights and excluding any rights IBM has in its semiconductor
technology or any IBM technology licensed to Customer under the Technology
License Agreement, the Customer retains and reserves to itself all rights in,
and ownership of, all intellectual property in and to the P95 Processor and
other Products manufactured pursuant to Task Orders under this Agreement.
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The purchase, receipt or possession of Products from or through IBM carries no
license or immunity, express or implied, under any patent of IBM covering the
combination of such Products with other products purchased from others or the
use of any such combination, or under any patent or other intellectual property
right of any third party relating to such Products or their combinations with
any other products.
However, IBM intends that its sale of Products to Customer will, to the extent
under law, exhaust the patent rights of IBM as to such Products and the patent
rights of third party licensors to IBM.
Neither this Agreement, nor the sale of Products hereunder, shall be deemed to
give either party any right to use the other party's trademarks or any of the
other party's trade names without specific, prior written consent.
12. INTELLECTUAL PROPERTY INDEMNIFICATION: IBM shall indemnify Customer from and
against any damages finally settled or awarded by a court of competent
jurisdiction resulting from any direct infringement of any intellectual property
rights of a third party in any country in which IBM sells similar products,
arising as a result of any of IBM's manufacturing process, equipment or testing,
that is not specifically required by Customer's designs, specifications or
instructions. IBM shall defend at its own expense, including attorney's fees,
any suit brought against Customer alleging such infringement. In the event that
Customer becomes enjoined from using Product in its inventory or possession due
to such infringement, IBM at its option and expense, will secure for Customer
the right to continue to use and market the Product, or modify or replace the
Product with a non-infringing product. If IBM determines that neither of the
foregoing alternatives is reasonably available, Customer may return the Product
in Customer's inventory or possession to IBM for a credit equal to the price
paid for units of Product affected. IBM shall have no obligation regarding any
claim based upon modification of the Product by Customer or its customers, use
of the Product in other than its intended operating environment or the
combination, operation or use of the Product with non-IBM products or equipment.
Customer shall indemnify IBM from and against any damages finally settled or
awarded by a court of competent jurisdiction resulting from any direct
infringement of any intellectual property rights of a third party in any country
where Customer uses or distributes the Product, arising as a result of IBM's
compliance with any of Customer's design, specifications, instructions or
modifications of the Product by Customer and shall defend at its own expense,
including attorney's fees, any suit brought against IBM alleging any such
infringement.
The rights provided in this Section 12 are contingent upon the party seeking to
enforce indemnification giving prompt written notice to the indemnifying party
regarding any claim, demand or action for which the indemnified party seeks
indemnification. The indemnified party is required to fully cooperate with the
indemnifying party at the indemnifying party's expense and shall allow the
indemnifying party to control the defense or settlement of any such claim,
demand or action, including obtaining the written consent of the indemnifying
party prior to any settlement proposal or settlement. IBM shall have the right
to waive Customer's obligations under this Section 12 and provide for its own
defense, at IBM's sole discretion and expense.
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Except as expressly stated in this Agreement, this Section 12 states the entire
liability of the parties and their exclusive remedies with respect to
infringement of third party rights and all other warranties against infringement
of any intellectual property rights, statutory, express or implied are hereby
disclaimed.
13. LIMITED WARRANTY: [*]. IBM warrants Product(s) to be free from defects in
material and workmanship for one (1) year after the date of delivery to
Customer. Customer acknowledges that the functionality of Products is contingent
upon Customer's designs and, therefore, no warranty applies to the functionality
of Products manufactured for or sold to Customer. For warranty purposes only,
Products will be deemed delivered [*] after the date of shipment. This warranty
applies only to Customer, as the original purchaser from IBM, and Customer may
not transfer this warranty to any third party without first obtaining IBM's
written authorization, [*]. If Customer believes that a Product is not as
warranted, Customer will: 1) promptly notify IBM in writing; and 2) at IBM's
request, return the Product freight prepaid to IBM's designated location. If IBM
reasonably determines that the Product does not meet its warranty, IBM will, at
IBM's option, repair or replace the Product, or issue a credit or refund of the
purchase price. This warranty will not include credit, repair, or replacement of
a Product which has a defect due to Customer's or a third party's actions or
omissions.
PRODUCT PROTOTYPES PROVIDED TO CUSTOMER BY IBM ARE PROVIDED "AS IS" WITHOUT
WARRANTY OF ANY KIND, EXPRESS OR IMPLIED INCLUDING BUT NOT LIMITED TO ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS OR USE FOR A PARTICULAR PURPOSE.
THE FOREGOING PRODUCT WARRANTIES AS STATED IN THIS SECTION 13 (LIMITED WARRANTY)
ARE IN LIEU OF ALL OTHER PRODUCT WARRANTIES FROM IBM, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS OR USE FOR A PARTICULAR PURPOSE.
14. LIMITED LIABILITY: The following sets forth IBM's entire liability and
Customer's exclusive remedy:
a) In all situations involving claims for non-conforming or defective
Products furnished under this Agreement, Customer's exclusive remedy is the
replacement or repair of the Products or a credit or refund to Customer of the
purchase price paid for such units by Customer, at IBM's sole discretion; as
provided in Section 13.
b) IBM's liability for actual damages for any cause whatsoever (other
than as set forth in Section 14 a. above), shall be limited to the greater of
fifty thousand dollars ($50,000) or the applicable unit price for the specific
units of Product that caused the damages or that are the subject matter of, or
are directly related to, the cause of action. This limitation will apply, except
as otherwise stated in this Section, regardless of the form of action, whether
in contract or in tort, including negligence. This limitation will not apply to
the payment of costs, damages and attorney's fees referred to in Section 12
(Intellectual Property Indemnification). This limitation will also not apply to
claims by Customer for bodily injury or damage to real property or tangible
personal property caused by IBM's negligence.
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
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c) In no event will either party be liable to the other party for any
lost profits, lost savings, incidental damages or other consequential damages,
except as provided in Section 12. In addition, IBM will not be liable for any
claim based on any third-party claim, except as provided in Section 12. In no
event will a party be liable for any damages caused by the other party's failure
to perform its responsibilities hereunder.
d). In addition, IBM shall have no liability when the Products are used
in conjunction with any Ultra-hazardous Uses.
15. TERMINATION RIGHTS: If either party is in default of any material provision
of this Agreement, the party not in default may provide a termination notice to
the defaulting party. The termination notice shall specify:
a) the nature of the default;
b) the date, at least thirty (30) days from the date of such notice, by
which the defaulting party shall demonstrate a cure of the default; and
c) the date upon which the Agreement will terminate if the defaulting
party does not cure the default.
In addition, either party may terminate this Agreement immediately upon written
notice if the other party: becomes insolvent, files a petition in bankruptcy,
becomes dissolved or liquidated, files a petition for dissolution or
liquidation, makes an assignment for benefit of creditors, or has a receiver
appointed for its business; or is subject to property attachment or court
injunction or court order which has a substantial negative effect on its ability
to fulfill its obligations under this Agreement.
In addition, IBM may terminate this Agreement on nine (9) months prior written
notice if Customer transfers all or substantially all of its business or assets
to a third party, or undergoes any change of control as defined in the
Technology License Agreement between the two parties, to which this Foundry
Agreement is appended.
IBM may cease manufacturing Product and shall be under no further obligation
with respect to the relevant Task Order(s) if IBM receives a well founded and/or
substantiated charge or claim that any of Customer's deliverable items (which
include, without limitation, GDS II tape, specifications, instructions, test
data, as well as those items described under "Customer Deliverable Items" of the
applicable Task Order) infringes third party intellectual property rights. IBM
shall thereafter provide Customer's Technical Coordinator with a written
statement of the reasons why IBM has ceased production. If Customer fails to
reach a resolution satisfactory to IBM regarding such actual or potential
infringement after ninety (90) days, IBM may terminate the relevant Task
Order(s) upon written notice.
If this Agreement is terminated, all Task Orders still in effect shall be deemed
terminated on the effective date of the Agreement's termination. Any Products
ordered by Customer and which IBM commences to manufacture under this Agreement
are non-cancelable after wafer start and Customer agrees to pay the Production
Price (as stated in the applicable Task Order) for all such Product upon receipt
of IBM's invoice in the event that this Agreement or Task Order(s) are either
terminated or will be terminated.
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All amounts due for Prototypes or Product or NRE Services performed under this
Agreement prior to termination or expiration shall be paid in accordance with
the terms and conditions of this Agreement, notwithstanding any termination or
expiration of this Agreement.
If any event triggers a termination under both this Agreement and the
aforementioned Technology License Agreement, and a specific right or remedy for
such termination are inconsistent between the agreements, the terminating Party
has the right to choose which right or remedy will apply in that case.
16. ASSIGNMENT: Neither party to this Agreement may assign its rights or
delegate its duties in whole or in part without the prior written consent of the
other except that if the assets or stock of that portion of IBM to which this
Agreement pertains hereafter becomes owned or controlled, directly or
indirectly, by a third party, IBM may assign its entire right, title and
interest in this Agreement to such third party (so long as such third party
remains bound to the obligations of IBM herein), without Customers consent. Any
other assignments or delegations will be void.
17. RELATIONSHIP OF THE PARTIES: Each party hereto is an independent contractor
and is not an agent of the other party for any purpose whatsoever. Neither party
shall make any warranties or representations on the other party's behalf, nor
shall it assume or create any other obligations on the other party's behalf. For
the term of this Agreement, each party agrees not to solicit or recruit
engineers of the other party who have been or are assigned to perform work under
this Agreement. This does not restrict any employee of one party, on that
employee's own initiative or in response to general solicitations, to seek
employment from the other party.
18. COMPETITIVE PRODUCTS AND SERVICES: Neither this Agreement, nor any Task
Orders issued hereunder, will impair any right of IBM or Customer to design,
develop, manufacture, market, service, or otherwise deal in, directly or
indirectly, other products or services, including, without limitation, those
which are competitive with those offered by IBM or Customer; provided, however,
that nothing in this Agreement or any Task Order authorizes either party to use
any of the other party's intellectual property accept as expressly provided
herein.
19. PROMOTIONAL ACTIVITY: Press releases and other like publicity, advertising
or promotional material which mention the other party by name, this Agreement or
any term hereof shall not be released without the prior written consent of both
parties. Notwithstanding the immediately prior sentence, however, no permission
will be required by Customer pursuant to its disclosing under appropriately
protective confidentiality agreements to potential and actual customers,
financiers, acquirers or joint venture partners that IBM is manufacturing
Products for Customer.
20. NOTICES: All notices, requests, consents and other communications under this
Agreement shall be in writing and shall be sent by a traceable means of
delivery. Such communications shall be deemed delivered when received by the
party's designee referenced below. Each party may change its designee upon
written notice to the other party's designee.
IBM Transmeta Corporation
Dept. VLZV/862-1 Dept.
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1000 River Street 3940 Freedom Circle
Essex Junction, VT 05452 Santa Clara, CA. 95054
FAX: 802-769-3988 FAX: (408) 327-9840
Attn: Contract Administrator Attn: Chief Financial Officer
Day to day activities under Task Orders will be directed by technical
coordinators who will be responsible for maintaining technical liaison between
the parties ("Technical Coordinators"). Task Orders shall designate a Technical
Coordinator for each party. Either party may change its respective individual
designated for receipt of notices, and/or Technical Coordinator and their
addresses designated for notices by notifying the other party's Technical
Coordinator.
21. GENERAL: This Agreement may be executed in any number of identical
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument when each party has
signed one such counterpart.
The activities of each party and its employees, agents or representatives while
on the other party's premises (including any design center) shall comply with
the host company's policies and procedures for such facilities, including
security procedures and visitation guidelines.
IBM shall not change the place of manufacture of Products without prior written
notice to Customer.
If any provision of this Agreement is found to be invalid, illegal or
unenforceable under any applicable statute or rule of law, they are to that
extent to be deemed omitted from this Agreement . The validity, legality and
enforceability of such provision and the remainder of this Agreement shall
continue in effect in every other respect, so long as the remaining provisions
of this Agreement still expresses the intent of the parties. If the intent of
the parties cannot be preserved, this Agreement shall be either renegotiated or
terminated.
Except for Customer's obligation to pay amounts due under this Agreement,
neither party will be responsible for any failure or delay in its performance
under this Agreement due to causes, including, without limitation, acts of God,
natural disasters, fire, acts of civil or military authority, insurrections,
epidemics, riots, wars, sabotage, labor shortages and governmental actions,
which are beyond such party's reasonable control, provided that the affected
party: (a) gives the other party prompt written notice of such cause; and (b)
uses its reasonable efforts to correct such failure or delay in its performance.
If the effect of a condition as stated above should continue for more than
ninety (90) days, either party may terminate this Agreement upon written notice
to the other party.
This Agreement shall be construed, and the legal relations between the parties
hereto shall be determined, in accordance with the substantive laws of the State
of New York, without regard to the conflict of laws principles thereof. Any
proceedings to resolve disputes relating to this Agreement shall be commenced in
the State of New York. The parties hereto expressly waive any right they may
have to a jury trial and agree that any proceeding under this Agreement shall be
tried by a judge without a jury.
[*].
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
11
<PAGE> 12
No actions arising out of this Agreement may be brought by either party more
than two (2) years after the cause of action has arisen, except those seeking to
enforce indemnification rights, or, in the case of nonpayment, more than two (2)
years from the date the last payment was due.
Each party will comply with all applicable federal, state and local laws,
regulations and ordinances including, without limitation, the regulations of the
U.S. Government relating to the export of commodities and technical data insofar
as they relate to the activities under this Agreement. Customer agrees that
Products, and technical data provided under this Agreement are subject to
restrictions under the export control laws and regulations of the United States
of America and other country or country group, laws and regulations, including,
without limitation, the U.S. Export Administration Act and the U.S. Export
Administration Regulations. Customer hereby gives its written assurance that
neither Products nor technical data provided by IBM under this Agreement, nor
the direct product thereof, will be exported, or re-exported, directly or
indirectly, to prohibited countries or nationals thereof without first obtaining
applicable government approval. Customer agrees it is responsible for obtaining
required government documents and approvals prior to export of any Product, or
technical data.
All obligations and duties which by their nature survive the expiration or
termination of this Agreement shall remain in effect beyond expiration or
termination and remain in effect and apply to respective successors and assigns
until they have been fulfilled. A waiver or failure by a party to demand
performance or to exercise a right, when entitled, will not prejudice the
party's ability to enforce such performance or right.
The United Nations Convention on Contracts for the International Sale of Goods
does not apply to this Agreement.
The headings in this Agreement are for reference only. They will not affect the
meaning or interpretation of this Agreement.
This Agreement, as well as any Task Orders issued hereunder, may only be
modified by a written amendment signed by both parties. This Agreement shall not
be supplemented or modified by any course of dealing, course of performance or
trade usage. The term "this Agreement" as used herein includes any applicable
Attachments or future written amendment(s) made in accordance with this Section.
22. SOLE AGREEMENT: Each party acknowledges that it has read this Agreement,
understands it, and agrees to be bound by its terms and conditions. Further, the
parties agree that this Agreement, any mutually agreed to Confidentiality
Disclosure Agreements relating to this Agreement, Task Orders, amendments, and
the Technology License Agreement (as it affects this Agreement), represent the
entire and complete agreement between the parties, which supersedes all prior
proposals, agreements , and all other communications (whether oral or written)
between the parties relating to the subject matter hereof.
AGREED TO AND ACCEPTED BY:
INTERNATIONAL BUSINESS MACHINES CORPORATION TRANSMETA CORPORATION
12
<PAGE> 13
BY: /S/ HANK J. GEIPEL BY: /S/ DAVID R. DITZEL
NAME: HANK J. GEIPEL NAME: DAVID R. DITZEL
TITLE: VP, ADVANCED STANDARD PRODUCTS TITLE: PRESIDENT AND CEO
IBM MICROELECTRONICS
DATED: DECEMBER 17, 1997 DATED: DECEMBER 18, 1997
13
<PAGE> 14
Exhibit A
Task Order
(Task Order #TASK-121297-P95)
This Task Order is governed by the terms and conditions of Agreement Number:
TM-MFG-121297
1.0 TERM OF TASK ORDER: This Task Order will be effective on December 12, 1997
and will expire on December 12, 2000.
2.0 PRODUCT NAME AND DESCRIPTION:
Product Name: [*]
Description: A very-long-instruction-word microprocessor containing a
combination of logic functions (e.g. integer unit, floating point unit,
peripheral control, etc) and memory functions (e.g. SRAM-cell type cache
memory).
Customer may purchase the Product as untested wafers, tested wafers, untested
modules or tested modules.
3.0 DELIVERABLE ITEMS:
3.1 Customer
<TABLE>
<CAPTION>
Item Date
------------------------------------------------------
<S> <C>
GDSII Tape in CMOS [*] groundrule format [*]
Packaging Specification [*]
P95 wafer test specification and vectors 5 weeks after GDS II tape out
P95 module test specification and vectors 5 weeks after GDS II tape out
</TABLE>
3.2 IBM
<TABLE>
<CAPTION>
Item Date
------------------------------------------------------
<S> <C>
CMOS [*] Design Manual Complete
CMOS [*] Spice models Complete
</TABLE>
4.0 PRODUCT SPECIFICATIONS, PROCESS TECHNOLOGY, WAFER ACCEPTANCE CRITERIA, YIELD
AND COST REDUCTION INCENTIVES, ASSUMPTIONS:
4.1 Product Specifications:
Die Size: [*]
Package: 473 C4 CBGA -[*] 25mm x 32.5mm, [*]
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
14
<PAGE> 15
4.2 Process Technology: The [*] will be manufactured in IBM's [*] process
technology with [*] levels of metal, using the process specification detailed in
the CMOS [*].
4.3 Wafer Acceptance Criteria: Exhibit B
4.4 Module Acceptance Criteria:
The product will be tested according to the Customer's test
specification and test vectors, as identified in Section 3 of this Exhibit A.
The Product will be packaged according to the module physical outline drawing
for the 473 C4 CBGA package.
5.0 SCHEDULE: ATTACHMENT 3
Yield and Cost Reduction Incentives: IBM and Customer will work together from
time to time to attempt to put in place mutually agreed upon programs whereby
both parties are financially interested in reducing the manufacturing cost,
reducing and eliminating burn in, improving the yield of the Products and
lowering the price of the Products to Customer.
6.0 PRODUCT DEMAND FORECAST:
The Parties anticipate that they will meet approximately once per calendar
quarter to review forecasts under this Task Order. The forecast listed below is
for tested modules.
<TABLE>
<CAPTION>
Year: 1998
Month : Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec.
---- ---- ----- ----- --- ---- ---- ---- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
</TABLE>
<TABLE>
<CAPTION>
Year: 1999
1Q99 2Q99 3Q99 4Q99
---- ---- ---- ----
<S> <C> <C> <C>
[*] [*] [*] [*]
</TABLE>
<TABLE>
<CAPTION>
Year: 2000
1Q00 2Q00
---- ----
<S> <C>
[*] [*]
</TABLE>
7.0 ENGINEERING EFFORT AND ENGINEERING CHARGES (NRE CHARGES):
Engineering Effort:
1) Prototypes NRE is [*] and includes the following:
Design center technical and logistical support
Spice models
CMOS process design rules
Processing of GDS II type tape (GDSII tape delivered in [*]
Ground Rules)
Mask build
Delivery of [*] packaged and tested modules
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
15
<PAGE> 16
2) Packaging NRE
Electrical, thermal and mechanical modeling [*]
Package design [*]
Fabricate masks [*]
Fixtures (volume dependent) [*]
3) Test NRE:
Wafer Test:
- Customer will supply the test specifications and vectors
- IBM will write, compile, simulate and debug the
manufacturing test program for the [*] [*]
- IBM will develop the software required to implement
memory cell redundancy [*] (Subject to a
good faith
negotiation to
occur within [*]
days of the
signing of this
Task Order)
- Probe cards [*]
Module Test:
- Customer will supply the test specifications and vectors
- IBM will write, compile, simulate and debug the
manufacturing
[*]
test program for the [*]
- Module DIB [*]
- Burn-in boards [*]
4) Metal mask revisions NRE
- Per mask [*]
- Engineering Charge per Revision (RIT) [*]
NRE Charges payable 50% at placement of purchase order and 50% upon delivery of
prototypes. Placement of purchase order for the mask set to be made
approximately [*].
8.0 PROTOTYPE UNIT PRICING AND DELIVERY:
The NRE Engineering Charges include delivery of [*] prototype parts per design.
These prototypes will be delivered having been tested to and successfully passed
test vectors provided by Customer and mutually agreed upon process control
monitors. Customer is responsible to insure the test program is correctly
testing the prototypes.
Additional [*] prototypes off of the initial lots (up to the quantity listed
below) can be purchased at the price quoted below. The additional order must be
placed at least [*] prior to the delivery of the original [*] prototypes.
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
16
<PAGE> 17
<TABLE>
<CAPTION>
Quantity Price
-------- -----
<S> <C> <C>
CMOS 6X3 5LM Die [*] [*]
CMOS 6X3 5LM Wafer [*] [*]
</TABLE>
Any further quantities beyond the initial prototype lots above may be purchased
by Customer using the [*] price quoted below.
9.0 PRODUCTION PRICE/QUANTITY MATRIX (PRODUCT UNIT PRICE)
<TABLE>
<CAPTION>
1998 Price 1999 Price 2000 Price
---------- ---------- ----------
<S> <C> <C> <C>
CMOS [*]Wafer[*]
[*] wafers/year [*] [*] [*]
[*] wafers/year [*] [*] [*]
[*] wafers/year [*] [*] [*]
[*] wafers/year [*] [*] [*]
[*] wafers/year [*] [*] [*]
[*] [*] [*]
CMOS [*] [*] [*]
473 CBGA Package [*] [*]
[*]
Test [*] [*] [*]
[*] Burn-in [*] [*]
</TABLE>
(1) The [*] die size estimate above is based on the utilization of IBM's CMOS
[*] process. If during the development cycle, changes warrant the use of a new
die size, packaging option or process technology, IBM will re-quote the prices
based upon such new information. The die size estimate used in calculating the
available gross die per wafer include the [*] in the chip data. Production
pricing was based on a ramp start during [*]. The estimated gross die per wafer
is [*]. The above [*] have been arrived at by an approximation of manufacturing
yield based upon [*] supplied by Customer. The above [*] prices have been
derived by dividing the above [*] prices by the above estimated [*]. An actual
targeted yield will be set by the Parties after the [*] production lots and will
be used by IBM to adjust the above [*] price accordingly. IBM will be
responsible for [*] issues. Customer will be responsible for [*] issues.
10.0 MANUFACTURING LEAD TIME (PURCHASE ORDER LEAD TIME):
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
17
<PAGE> 18
Minimum Order Quantity (MOQ): MOQ is [*].
Minimum Ship Pack Quantity (SPQ): SPQ is [*]
Prototype: Delivery of the [*] prototype parts will be no later than [*]
calendar days from receipt of a [*] GDS II tape by IBM.
Wafer Production: Production lead time for the Product in tested wafer form
using the [*] process will be no later than [*]calendar days from receipt of
Customer's purchase order by IBM.
Module Production: Production lead time for finishing the product in tested
module form will be no later than [*] calendar days from the completion of the
[*]. Forecasts and purchase orders for tested modules will be placed per Section
2 and Section 3 of the Agreement.
11.0 CANCELLATION CHARGES:
In accordance with Sections 2 and 6 of the Agreement, the following
charges will apply for failure to order against accepted forecasts and
for any canceled Customer order or portion thereof.
I. Canceled or Changed Forecast
a) If Customer fails to order forecasted quantities for [*] of
any accepted forecast, as described in Section 2 of the Agreement,
Customer will pay [*] for all Product not so ordered; however, there
shall be no charge for a given month if Customer orders at least [*] of
the forecasted quantities listed in the most recently accepted forecast,
for that month.
II. Canceled or Changed Purchase Orders
a) If any purchase order is canceled prior to wafer start date,
Customer shall pay [*],
b) If any purchase order is canceled after wafer start, Customer
shall pay [*].
12.0 TASK ORDER TECHNICAL COORDINATORS:
International Business Machines Corporation Transmeta Corporation
Dept. DZOV Dept.
1000 River Street 3940 Freedom Circle
Essex Jct., VT 05452 Santa Clara, CA. 95054
PH: (802) 769-3519 PH: (408) 327-9830 x 244
FAX: (802) 769-6800 FAX: (408) 327-9840
EMAIL: wslatter@us.ibm.com EMAIL: dal@transmeta.com
Attn: Bill Slattery Attn: Doug Laird, VP VLSI
Engineering
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
18
<PAGE> 19
13.0 SHIPPING/BILLING/ORDERING LOCATIONS:
Customer's Ship to Location: To be specified in individual purchase
orders
Customer's Bill to Location:
Transmeta Corporation
3940 Freedom Circle
Santa Clara, CA. 95054
Attention: Accounts Payable
ph: (408) 327-9830
fax: (408) 327-9840
IBM's Ordering Location:
International Business Machines Corporation
1055 Joaquin Rd.
Mountain View, CA 94043
Attention: Joe Larkins
Fax: (650) 694-3157
AGREED TO AND ACCEPTED BY:
INTERNATIONAL BUSINESS MACHINES CORPORATION TRANSMETA CORPORATION
BY: /S/ HANK J. GEIPEL BY: /S/ DAVID R. DITZEL
NAME: HANK J. GEIPEL NAME: DAVID R. DITZEL
TITLE: VP, ADVANCED STANDARD PRODUCTS TITLE: PRESIDENT AND CEO
IBM MICROELECTRONICS
DATED: DECEMBER 17, 1997 DATED: DECEMBER 18, 1997
19
<PAGE> 20
EXHIBIT B
Wafer Acceptance Criteria (for tested wafers)
1. Nothing in this Exhibit modifies or expands Customer's warranty
rights under the Agreement.
2. IBM Products, with the reasonable cooperation of the Customer,
will be subject to the following quality standards.
A) Wafer Specifications
a. Wafer Size: IBM will ship 8 inch diameter wafers.
b. Wafer Thickness and Finish: IBM and Customer will
agree upon specifications for wafer thickness and
back finish.
c. Die Layout: IBM will be responsible for the reticle
layout and stepping of the Customer's die, consistent
with IBM's normal defect monitoring strategy
d. Packing:
1. Tested wafers: Tested wafers will be shipped
in containers using shipping methods approved by
the Customer, which approval will not be
unreasonably withheld.
2. Damaged Goods: The Customer will provide
feedback on wafers damaged during transit which
are related to inadequate packing. IBM will then
take reasonable corrective action if the damages
were caused by IBM. Customer may return the wafer
per Section 13 of the base foundry Agreement.
B) Wafer Yields:
a. Circuit limited yield loss is solely the
responsibility of the Customer so long as IBM
manufactures the Product in accordance with the [*],
both parties will reasonably work together to
determine appropriate corrective actions.
b. Minimum Yields: Wafers with process yields less than
[*] percent of the wafer target yield will not be
shipped, unless agreed to in writing by the Customer.
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
20
<PAGE> 21
C) Visual Criteria: The Customer's production Product will
meet the IBM's outgoing [*] criteria including [*].
D) Electrical Criteria:
a. Parametrics: Product will be screened via [*]. For
products that require special processing [*], IBM and
Customer will [*].
E) Prototypes:
a. Prototypes and other similar non-production material
will be accepted by the Customer and may not meet the
quality criteria described herein. Customer may not
use this material for production shipments.
F) Documentation:
a. In order to assist in [*] problem solving efforts,
[*] documentation can be made available to the
Customer upon Customer's written request. The
specific documentation provided will be [*].
Documentation that is available includes, a [*].
G) Test: Electrical test using functional, scan and memory based
tests will be done as [*] IBM and Customer. The details to be
identified after the completion of the first prototype wafers
delivered 1Q98.
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
21
<PAGE> 22
Task Order
(Task Order #TASK-043099-P95)
This Task Order is governed by the terms and conditions of Agreement Number
TM-MFG-121297 (the "Agreement").
1.0 TERM OF TASK ORDER: This Task Order will be effective on April 30, 1999 and
will expire on March 31, 2001.
2.0 PRODUCT NAME AND DESCRIPTION:
2.1 Product Name: [*]
Die Size: [*]
Package: 474 C4 CBGA - [*], 25mm x 32.5mm, [*]
Process Technology: The P95 Processor will be manufactured in IBM's [*] process
technology with [*] levels of metal, using the process specification detailed in
the CMOS [*].
Customer may purchase the Product as untested wafers or tested wafers; provided,
however, that Customer may only purchase Product in the form forecasted by
Customer, under forecasts accepted by IBM (meaning, for example, that if
Customer forecasts tested wafers, and IBM accepts such forecasts, then Customer
may purchase such Product; if Customer does not forecast tested wafers, then
Customer may not purchase such Product).
Customer may also purchase substrates and Bond, Assembly and Test Services ("BAT
Services") under this Task Order. As discussed above, Customer's forecasts must
identify the form in which Customer will purchase Product; if Customer wants
modules, whether tested or not, then Customer must submit forecasts for BAT
Services that identify the quantity of substrates and BAT Services requested by
Customer, on a monthly basis.
3.0 DELIVERABLE ITEMS:
3.1 Customer
<TABLE>
<CAPTION>
Item Date
--------------------------------------------------------------
<S> <C>
GDSII Tape in CMOS [*] groundrule format Complete
Packaging Specification Complete
P95 wafer test specification and vectors Complete
P95 module test specification and vectors Complete
</TABLE>
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
22
<PAGE> 23
3.2 IBM
<TABLE>
<CAPTION>
Item Date
--------------------------------------------------------------
<S> <C>
CMOS [*] Design Manual Complete
CMOS [*] Spice models Complete
</TABLE>
4.0 PRODUCT INSPECTION AND RELATED INFORMATION
4.1 Wafer Inspection Criteria: Attached hereto as Exhibit 1 to this Task Order.
4.2 Module Testing and Packaging Criteria: The Product will be tested by IBM
according to Customer's test specification and test vectors, as identified in
Section 3 of this Task Order. The Product will be packaged by IBM according to
the module physical outline drawing for the 474 C4 CBGA package, presently in
IBM's possession.
4.3 CUSTOMER'S SOLE AND EXCLUSIVE REMEDY FOR ANY PRODUCT RELATED DEFECT IS THE
WARRANTY PROVISION IN THE AGREEMENT (SEE SECTION 13 OF THE AGREEMENT). CUSTOMER
HAS NO RECOURSE AGAINST IBM FOR ANY BREACH BY IBM OF ANY OF THE FOREGOING
CRITERIA, UNLESS CUSTOMER WOULD OTHERWISE HAVE A WARRANTY CLAIM UNDER SECTION 13
OF THE AGREEMENT RESULTING FROM SUCH BREACH. HOWEVER, IN NO EVENT SHALL ANY OF
THE CRITERIA IN ANY WAY EXPAND, MODIFY, CHANGE OR EXTEND THE WARRANTY PROVIDED
BY IBM IN SECTION 13 OF THE AGREEMENT.
5.0 SCHEDULE: ATTACHMENT 3
Yield and Cost Reduction Incentives: IBM and Customer agree to discuss the
possibility of implementing programs whereby both parties would be financially
interested in reducing the manufacturing cost of Product, reducing and
eliminating burn in, improving Product yield and lowering Product price;
provided, however, that neither party shall have any obligation to the other
unless such obligation is set forth in a mutually agreed upon writing, signed by
authorized representatives of both parties.
6.0 PRODUCT DEMAND FORECAST:
The parties anticipate that they will meet approximately once per calendar
quarter to review forecasts under this Task Order.
Tested Modules:
Year: 1999
<TABLE>
<CAPTION>
Month: Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec.
---- ---- ----- ----- --- ---- ---- ---- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
</TABLE>
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
23
<PAGE> 24
<TABLE>
<CAPTION>
Year: 2000 1Q00 2Q00 3Q00 4Q00
-----------------------------------------------
<S> <C> <C> <C> <C>
[*] [*] [*] [*]
</TABLE>
<TABLE>
<CAPTION>
Year: 2001 1Q01 2Q01
-------------------
<S> <C> <C>
[*] [*]
</TABLE>
Tested Wafers:
Year: 1999 Year: 2000
<TABLE>
<CAPTION>
Month: April May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. March
----- --- ---- ---- ---- ----- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
</TABLE>
For the avoidance of doubt, Customer acknowledges and agrees that each forecast
for Product, which is accepted by IBM, creates binding purchase obligations for
Customer, pursuant to Sections 2 and 3 of the Agreement. As such, the above
forecasts each create separate and independent Customer obligation to purchase
Products.
Forecasts for substrates and BAT Services:
In addition to providing forecasts for Products, Customer shall provide
IBM's customer account representative with a forecast for substrates and
BAT Services, which shall each cover a minimum of [*] broken out by
month. The initial accepted forecasts for substrates and BAT Services
are set forth below. By the fifth (5th) calendar day of every month
during the term of this Task Order, Customer will provide IBM's customer
account representative with updated demand forecasts (in writing, fax or
email) covering a rolling [*] period (not to extend beyond the term of
this Task Order), which will be reviewed for acceptance by IBM. IBM
shall notify Customer whether the forecast has been accepted or rejected
within [*] after receipt. Such forecasts shall constitute good faith
estimates of Customer's anticipated requirements but shall not
contractually obligate IBM to supply, not contractually obligate
Customer to purchase, the quantities of substrates and BAT Services set
forth therein; provided, however, that Customer is committed to its
forecasts for Products, as set forth in Sections 2 and 3 of the
Agreement, and the failure of Customer to order the required quantity of
Products shall lead to a charge being assessed against Customer,
consistent with Section 11 of this Task Order.
No Product will be started based on substrate forecasts.
Year: 1999 Year: 2000
<TABLE>
<CAPTION>
Month: April May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. March
----- --- ---- ---- ---- ----- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Substrates [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
</TABLE>
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
24
<PAGE> 25
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BAT Services [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
(modules)
</TABLE>
7.0 ENGINEERING EFFORT AND ENGINEERING CHARGES (NRE CHARGES):
Engineering Effort:
1) Prototype NRE is [*] and includes the following:
Design center technical and logistical support (in an
amount determined by IBM)
Spice models
CMOS process design rules
Processing of GDS II type tape (GDSII tape delivered in
CMOS [*] Ground Rules)
Mask build
Delivery of [*] Prototypes
2) Packaging NRE
Package design [*]
Fabricate masks [*]
3) Test NRE:
Wafer Test:
- Customer will supply the test specifications and
vectors
- IBM will write, compile, simulate and debug
the manufacturing test program for the
[*] [*]
- Probe cards [*]
Module Test:
- Customer will supply the test specifications and
vectors
- IBM will write, compile, simulate and debug
the manufacturing test program for the
[*] [*]
- Module Device Interface Board [*]
- Burn-in boards [*]
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
25
<PAGE> 26
4) Metal mask revisions NRE:
- Per mask [*]
- Engineering Charge per Revision (RIT) [*]
For Prototype NRE: NRE Charges payable 50% at placement of purchase order and
50% upon delivery of Prototypes. Placement of purchase order for the mask set to
be made approximately [*].
For Packaging, Test and Metal mask revisions NRE: NRE Charges payable 50% at
placement of relevant purchase order and 50% upon completion of the services at
issue [*].
8.0 PROTOTYPE UNIT PRICING AND DELIVERY:
The Prototype NRE includes delivery of [*] Prototypes. The balance of the
remaining die on the wafers from which the Prototypes were taken are the
property of the Customer. Should Customer so request that IBM package these
additional die, then the cost of packaging these additional Prototypes will be
[*] the sum of the low volume price tiers [*] for substrates and BAT services
set forth in Section 9.0.
Prototypes are preliminary versions of a Product which may or may not be
functional, are intended for internal use and testing, are not for
resale, and are not suitable for production in commercial quantities.
ALL PROTOTYPES ARE PROVIDED "AS IS", WITHOUT WARRANTY OF ANY KIND. IBM
EXPRESSLY DISCLAIMS ALL WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
9.0 PRODUCTION PRICE/QUANTITY MATRIX (PRODUCT UNIT PRICE)
<TABLE>
<CAPTION>
1999 Price Dec. 99 Price 2000 Price Dec. 2000 2001 Price
<S> <C> <C> <C> <C> <C>
CMOS [*] Wafer [*]
Volume/Year
[*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*]
</TABLE>
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
26
<PAGE> 27
474 CBGA Package
[*]
SUBSTRATES
<TABLE>
<CAPTION>
Volume/Year 1999 2000
<S> <C> <C>
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
</TABLE>
BOND AND ASSEMBLY (includes shipping trays)
<TABLE>
<CAPTION>
Volume/Year 1999 2000
<S> <C> <C>
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
</TABLE>
If Customer desires Modules, whether tested or untested, then the pricing is
that of the applicable wafer price, plus the applicable substrate and BAT
Services prices.
<TABLE>
<CAPTION>
TEST* 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 3Q00 4Q00
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Wafer [*] [*] [*] [*] [*] [*] [*] [*]
Per Module [*] [*] [*] [*] [*] [*] [*] [*]
Burn-in [*] [*] [*] [*] [*] [*] [*] [*]
</TABLE>
* Dependencies:
1) Test prices are based on the following matrix of parameters (tested on a
[*]).
Wafer Test
<TABLE>
<CAPTION>
2Q99 3Q99 4Q99 1Q00 2Q00 3Q00 4Q00
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Test Time (sec) [*] [*] [*] [*] [*] [*] [*]
Data Log (sec) [*] [*] [*] [*] [*] [*] [*]
</TABLE>
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
27
<PAGE> 28
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Data Log Sample/Wafer [*] [*] [*] [*] [*] [*] [*]
Module Test
Test Time (sec) [*] [*] [*] [*] [*] [*] [*]
Data Log (sec) [*] [*] [*] [*] [*] [*] [*]
Data Log Sample (%) [*] [*] [*] [*] [*] [*] [*]
Number of Times tested [*] [*] [*] [*] [*] [*] [*]
</TABLE>
2) Burn-in price includes burn-in per module as set forth below:
<TABLE>
<CAPTION>
2Q99 3Q99 4Q99 1Q00 2Q00 3Q00 4Q00
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Hours of [*] Burn In [*] [*] [*] [*] [*] [*] [*]
</TABLE>
(1) The [*] mm die size estimate above is based on the utilization of IBM's CMOS
[*] process. If during the development cycle, changes warrant the use of a new
die size, packaging option or process technology, IBM will re-quote all of the
above prices based upon such new information and it is agreed that none of the
prices contained herein shall apply and that IBM shall have no obligation to
provide Product at such prices.
10.0 MANUFACTURING LEAD TIME (PURCHASE ORDER LEAD TIME):
Minimum Order Quantity (MOQ):
Wafers: [*]
Modules: the number of modules resulting from [*], whichever is
greater
Minimum Ship Pack Quantity (SPQ):
Modules: [*]
Wafers: [*]
Prototypes: Delivery of the [*] Prototypes will be no later than [*] calendar
days from receipt of a [*] GDS II tape by IBM.
Wafer Production: For tested wafers, Production lead time is listed in the
following table in calendar days from receipt of Customer's purchase order by
IBM. IBM will provide lead times for untested wafers if Customer so desires.
2Q99 [*]
3Q99 [*]
Substrate Production: For substrates the Production lead time is [*] calendar
days from the receipt of the Customer's purchase order by IBM.
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
28
<PAGE> 29
BAT Services: Production lead time will be no later than [*] calendar days from
the [*].
11.0 CANCELLATION CHARGES:
In accordance with Sections 2 and 6 of the Agreement, the following
charges will apply for failure to order against accepted forecasts and
for any canceled Customer order or portion thereof. The rescheduling
rights set forth in Section 6 of the Agreement do not apply to
Substrates and BAT Services. The terms governing rescheduling and
cancellation of Substrates and BAT Services are set forth below.
I. Canceled or Changed Forecast
A. Wafers:
1) If Customer fails to order forecasted quantities
[*] of any accepted forecast, as described in Section 2 of
the Agreement, Customer will pay [*]; however, there shall
be no charge for a given month if Customer orders at least
[*] of the forecasted quantities listed in the most
recently accepted forecast, for that month.
B. Substrates: [*].
C. Bond Assembly Test Services: [*].
II. Canceled or Changed Purchase Orders
A. Wafers:
1) If any purchase order is canceled prior to wafer
start date, Customer shall pay [*].
2) If any purchase order is canceled after wafer
start, Customer shall pay [*].
III. Substrates*
1) Customer may cancel or reschedule an order for
substrates only upon the written agreement of IBM. In the
event of a
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
29
<PAGE> 30
cancellation, Customer shall pay [*] as of the date the
cancellation notice is received by IBM. In addition to
such payment, for any substrates partially built as of the
date the cancellation notice is received by IBM, Customer
shall pay [*].
IV. Bond Assembly Test Services*
1) Customer may cancel or reschedule an order for
services only upon the written agreement of IBM. In the
event of a cancellation, Customer shall pay [*] as of the
date the cancellation notice is received by IBM. In
addition to such payment, for any services partially
performed as of the date the cancellation notice is
received by IBM, Customer shall pay [*].
* Cancellation of Substrates and BAT Services are governed by Section 6.0 of the
Agreement.
12.0 TASK ORDER TECHNICAL COORDINATORS:
International Business Machines Transmeta Corporation
Corporation Dept.
Dept. DZOV 3940 Freedom Circle
1000 River Street Santa Clara, CA 95054
Essex Jct., VT 05452 PH: (408) 327-9830 x 244
PH: (802) 769-3519 FAX: (408) 327-9840
FAX: (802) 769-6800 EMAIL: dal@transmeta.com
EMAIL: wslatter@us.ibm.com Attn: Doug Laird, VP VLSI
Attn: Bill Slattery Engineering
13.0 SHIPPING/BILLING/ORDERING LOCATIONS:
Customer's Ship to Location: To be specified in individual purchase
orders.
Customer's Bill to Location:
Transmeta Corporation
3940 Freedom Circle
Santa Clara, CA 95054
Attention: Accounts Payable
ph: (408) 327-9830
fax: (408) 327-9840
IBM's Ordering Location:
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
30
<PAGE> 31
International Business Machines Corporation
1055 Joaquin Rd.
Mountain View, CA 94043
Attn: Joe Larkins
Fax: (650) 694-3157
Agreed To And Accepted By:
International Business Machines
Corporation Transmeta Corporation
By: By:
Authorized Signature Authorized Signature
Name: Peter Hansen Name: David R. Ditzel
Title: V.P. North America Sales Title: President and Ceo
IBM Microelectronics Transmeta Corporation
Dated: June 23, 1999 DATED: JUNE 1, 1999
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<PAGE> 32
Exhibit 1 to Task Order #043099-P95
Product Inspection Criteria - Tested Wafers
1. Wafers:
a. Wafer Size: IBM will ship 8 inch diameter wafers.
b. Wafer Thickness and Finish: IBM and Customer will agree upon
specifications for wafer thickness and back finish. (*see note below)
c. Die Layout: IBM will be responsible for the reticles layout and
stepping of the Customer's die, consistent with IBM's normal defect
monitoring strategy.
d. Packing:
1. Tested wafers: Tested wafers will be shipped in containers
using shipping methods approved by the Customer, which approval
will not be unreasonably withheld.
2. Damaged Goods: The Customer will provide feedback on wafers
damaged during transit which are related to inadequate packing.
IBM will then take reasonable corrective action if the damages
were caused by IBM. If IBM determines that it was the cause of
the damages, then Customer may return the wafer using IBM's RMA
process, and IBM will provide a new wafer or credit for the
wafer, at IBM's option. This is Customer's exclusive remedy
against IBM for transit related damages caused by IBM.
2. Wafer Yields:
a. Circuit limited yield loss is solely the responsibility of the
Customer; provided, however, that IBM agrees to [*] the CMOS process
technology's [*].
b. Minimum Yields: Wafers with process yields less than [*] percent of
the wafer target yield will not be shipped.
3. Visual Criteria:
Product will meet IBM's [*].
4. Electrical Criteria:
Product will be screened via [*]. For Products that require special
processing [*], IBM and Customer will [*]. (*see note below)
5. Prototypes:
Prototypes and other similar non-production material may not meet the
criteria described in this Exhibit.
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
32
<PAGE> 33
6. Documentation:
In order to assist in [*] problem solving efforts, [*] documentation can
be made available to the Customer upon Customer's written request.
Documentation that is available includes a [*].
7. Test:
Electrical test using functional, scan and memory based tests will be
[*] IBM and Customer, the details to be identified after completion of
the first Prototype wafers.
(*Note: Failure of the parties to arrive at mutually acceptable specifications,
data, and/or tests within [*] after execution of this Task Order by both
parties, will result in IBM, at its sole discretion, determining the
specifications, data and/or tests.)
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
33
<PAGE> 34
International Business Machines Corporation
1000 River St.
Essex Jct. Vt. 05452
April 28, 1999
TRANSMETA CORPORATION
LARRY SLADOWSKI
3940 FREEDOM CIRCLE
SANTA CLARA, CA 95054
Subject: [*]
General Information:
Product Name: [*]
Technology: CMOS [*]
Custom Design
Image x dim: [*]
Package: 474 CBGA [*] 25x32mm
Reliability Grade: [*]
This quote does not include product qualification
Wafer manufacturing: Burlington
This product will have plated C4s: East Fishkill
Substrate manufacturing: East Fishkill
Bond, Assembly and Test: Bromont, Canada
Key Dates:
Purchase Order Place: 5/28/99
GL-1 Data Available: [*]
Test Programs Available: [*]
Assumptions:
Prototype Build
[*]
Burn In
[*].
Burn In time of [*] hours.
Tested good parts are required [*].
Pattern delivery required [*].
Customer [*].
Test
Wafer test time of [*].
Module test time of [*].
Customer [*].
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
34
<PAGE> 35
Manufacturing Ramp
<TABLE>
<CAPTION>
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
--- --- --- --- --- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000 [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
2001 [*] [*] [*] [*] [*] [*] [*] [*]
</TABLE>
Early User Hardware:
This schedule will consume [*].
Committed Committed
Date Supply
[*] [*]
[*] [*] Note: if there are enough good die to build [*]
NRE:
Prototypes: [*]
Design center technical and logistical support Spice models CMOS process
design rules Processing GDS II type tape
Mask build [*]
Delivery of 30 packaged and tested modules
Packaging: [*]
Package Design
Mask build [*]
Test: [*]
Probes cards
Module Dibs
Program support
Burn In: [*]
Development support
Total [*]
[*] [*]
Process Development
Unique Marking NRE: TBD
B RIT:
Each Mask Level [*]
Engineering Support [*]
Per Wafer Charge [*]
Rocket Slot Charge [*]
Volume Production:
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
35
<PAGE> 36
Minimum Order Quantity
Wafers: [*]
Substrates: [*]
Bond Assembly Services: [*]
UNTESTED WAFER WITH C4
Prices include: [*]
Wafer Volume Tier 1999 2000 2001
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
WAFER TEST
1999 2000 2001
per wafer [*] [*] [*]
MODULE TEST (PER MODULE)
1999 2000 2001
per module test [*] [*] [*]
Burn-in Price per Module
1999 2000 2001
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
SUBSTRATE
Volume Tier 1999 2000 2001
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
BOND AND ASSEMBLY (includes shipping trays)
Volume Tier 1999 2000 2001
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
36
<PAGE> 37
Productivity Estimates:
Raw chips per wafer: [*]
Good chips per Wafer
1Q 2Q 3Q 4Q
[*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
Good Modules per Wafer
1Q 2Q 3Q 4Q
[*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
Principal Terms and Conditions (Full contract T's and C's available upon
request)
1 IBM will ship to within [*] wafer of the ordered quantity, whichever is
greater.
2 IBM reserves the right to schedule the delivery according to factory
capacity.
3 Shipments are FOB factory. Cost of shipment is borne by customer.
4 Wafers to be shipped according to IBM's wafer acceptance criteria,
available upon request.
5 Standard and minimum yield targets are mutually agreed by IBM and customer
after first [*].
6 IBM reserves the right to temporarily suspend shipment of products at
these prices and volumes if the yield should fall below [*] of the
expected target yield for an extended time. The customer will provide
product and yield improvement resources to resolve.
7 Customer to provide [*] firm orders (rolling). With an additional [*]
rolling forecast that is non-binding on the Customer and IBM.
8 NRE payments are due 50% at initiation and 50% at completion of the NRE
work item pending adequate credit. License NRE is due 100% at delivery of
the Intellectual Property.
9 Payment term is net 30 days assuming adequate credit limit has been
established. IBM will stop shipment if account is in arrears.
10 Customer assumes full responsibility for, and indemnifies IBM against any
claims beyond warranty.
11 Minimum order quantity is [*].
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
37
<PAGE> 38
Warranty
IBM warrants Product(s) to be free from defects in material and workmanship for
one (1) year after the date of delivery to Customer. Customer acknowledges that
the functionality of Products is contingent upon Customer's designs and,
therefore, no warranty applies to the functionality of Products manufactured for
or sold to Customer.
8.0 General
THIS BUDGETARY FOUNDRY QUOTATION IS FOR INFORMATION PURPOSES ONLY AND SHALL NOT
BE CONSTRUED AS AN OFFER TO SELL. THIS INFORMATION IS CONTINGENT UPON THE
EXECUTION, BY CUSTOMER AND IBM, OF A WRITTEN AGREEMENT FOR THE PURCHASE BY
CUSTOMER OF IBM MANUFACTURED PRODUCTS. THIS INFORMATION IS VALID FOR A PERIOD OF
THIRTY (30) DAYS FROM THE DATE OF ISSUE AND IS SUBJECT TO EXTENSION OR
REVOCATION BY IBM UPON WRITTEN NOTICE TO CUSTOMER. THIS INFORMATION IS EXPRESSLY
LIMITED TO THE PRODUCT(S) AND/OR SERVICE(S) DESCRIBED ABOVE. IBM CONSIDERS THIS
INFORMATION TO BE CONFIDENTIAL AND REQUESTS THAT YOU NOT REVEAL ITS CONTENTS TO
THIRD PARTIES WITHOUT IBM'S PRIOR WRITTEN CONSENT.
/s/ W. J. Slattery
William J. Slattery
Technical Coordinator
IBM Microelectronics
38
<PAGE> 39
Section 5 of the Agreement being referenced in Section 9 above.
5.0 INFORMATION TRANSFERS / TRANSFER OF LICENSED TECHNOLOGY
5.1 Deliverables. The IBM Deliverables and Transmeta Deliverables, discussed
in Section 2.0 and deliverables disclosed under a Section 4.0 project
agreement, contain Information which may or may not be confidential
Information of the Party disclosing the Information. Such Information
shall be treated in accordance with this Section 5.0.
5.2 Additional Confidential Information Disclosure: IBM or Transmeta may
have at its disposal Information, other than as set forth in Section
5.1, developed independent of this Agreement which may be useful for the
development of Microprocessors or otherwise of interest to the other
Party. In the event that the Party that has such information, in its
sole discretion, chooses to disclose any such Information to the other
Party, upon written agreement by the Technical Coordinators, such
information may be so transferred to the other Party, who shall treat
such information as part of the confidential Information of the
disclosing Party (so long as such Information is disclosed pursuant to
the requirements of Section 5.4).
5.3 Status of Disclosed Information: Unless otherwise agreed to in a project
agreement or in this Agreement, all disclosures of Information by a
Party will be deemed to be non-confidential, unless specifically
designated at the time of disclosure, pursuant to Section 5.4, as
including Information which is confidential to the disclosing Party.
With respect to all Information, except any such Information which is
designated as being confidential to the disclosing Party, the disclosing
Party grants to the receiving Party and its Subsidiaries, to the extent,
if any, of its interest therein, a nonexclusive, paid-up, irrevocable,
unrestricted, and worldwide license, subject to the applicable
copyrights (whether or not registered) and Patent rights of the
disclosing Party, to use, have used, disclose to others, and dispose of
such non-confidential Information in any manner it determines, including
the use of such non-confidential Information in the development,
manufacture, marketing, and maintenance of products and services
incorporating such non-confidential Information.
5.4 Identification of Confidential Information:
(a) Any confidential Information disclosed by one Party to the other in
performance of this Agreement or any project related work shall be
clearly designated (in writing, orally or otherwise), at the time of
disclosure, as confidential to the disclosing Party (such as "IBM
Confidential" or "Transmeta Confidential", for example). Any such
disclosure which is made orally or visually shall be confirmed in
summary written form (e.g. a listing of descriptive topics) under a like
designation within thirty (30) days after the date of disclosure unless
there has been distributed contemporaneously with such disclosure a
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<PAGE> 40
written document or slide identifying that the meeting topics were
confidential, so long as the written document or slide provides a
summary of the confidential Information discussed. An occasional and
unintentional failure to designate particular Information as
confidential shall not signify that the Information is not confidential,
so long as that Information is routinely, and in the ordinary course,
appropriately designated confidential or is subsequently identified as
confidential within a reasonable period of time, not to exceed ninety
(90) days from the date of disclosure, sufficient so that the Technical
Coordinator of the Receiving Party can identify and notify all
recipients. Notwithstanding the foregoing sentence, a Receiving Party
will not be responsible for (i) disclosures that may have occurred prior
to such identification and notification; and (ii) disclosures that occur
subsequent to such identification and notification provided that the
Receiving Party has made reasonable attempts to notify recipients of the
confidential nature of such Information.
(b) The Technical Coordinators shall be responsible for monitoring
disclosure of confidential Information. The Technical Coordinators may
mutually agree in writing that certain narrowly defined Information
exchanges may be declared "IBM or Transmeta Confidential", with the
result that future disclosures of such narrowly defined Information no
longer require such markings (e.g., in the event both Parties are
working jointly under exigent circumstances, on the discovery and fix of
a chip bug, then the two Technical Coordinators may agree that
subsequent Information disclosures pertaining to the chip bug are
confidential).
5.5 Jointly Developed Information: Jointly developed Information shall be
deemed by each Party to be the confidential Information of both Parties,
shall be marked with both "IBM Confidential" and "Transmeta
Confidential" legends, and shall be subject to the confidentiality
restrictions referred to in this Section 5.0. However, each Party shall
be deemed the owner of such confidential Information for disclosure
purposes and may disclose and use it in the ordinary course of business
in the manner it does its own confidential Information. Notwithstanding
the foregoing, IBM and Transmeta will each continue to own, under their
respective Intellectual Property Rights, their respective confidential,
preexisting or independently developed Information, disclosed to the
other Party which may be incorporated into any jointly developed
Information. Accordingly, to the extent any jointly developed
Information contains preexisting or independently developed confidential
Information of either Party, such portions of the jointly developed
Information shall be subject to the rights and obligations regarding
such confidential Information of the other Party contained in this
Section 5.0 and Section 6.0.
5.6 Restrictions on Confidentiality and Use: Except as otherwise provided in
this Agreement, for a period of five (5) years from the date of
disclosure ([*]) the receiving Party shall use the same efforts to avoid
publication or dissemination of confidential Information of the other
Party as it employs with respect to Information of its own which it does
not desire to be published or disseminated.
*Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities Exchange Commission.
40
<PAGE> 41
In addition to the foregoing restrictions on disclosure, the use of
confidential Information is subject to the rights and licenses granted
in this Agreement.
5.7 Limited Disclosure to Customers: Transmeta may disclose IBM confidential
Information relating to Category I Products to its customers in the
process of selling and marketing those products. IBM may disclose
Transmeta confidential Information relating to Category II and III
Products to its customers in the process of selling and marketing those
products. Such disclosures shall be to the extent required for such
sales and marketing efforts, and to the extent permitted under the
license rights of Section 6.0 and under confidentiality terms no less
restrictive than those set forth in this Section 5.0. This does not
include the disclosure of any Source Code of x86-CMS or Design Databases
or process technology that either Party may disclose to the other.
5.8 Residual Information: Notwithstanding anything to the contrary in
Section 5.6 and in Section 6.0, the receiving Party and its Subsidiaries
shall be free to use all Residual Information which is retained by the
receiving Party in non-tangible form, for any purpose it may deem
appropriate, subject only to the copyrights (whether or not registered)
and Patent rights of the other Party and subject to the confidential
Information of the other Party not being disclosed to third parties
except as provided for in this Section 5.0. It is understood that
receipt of any confidential Information under this Agreement shall not
create any obligation in any way limiting or restricting the assignment
and/or reassignment of employees within the receiving Party or to or
from or within any Subsidiary of the receiving Party.
5.9 Supporting Documentation and Publication: The announcement, marketing,
and support of any product or service by either Party or its
Subsidiaries, including any supporting documentation thereof, which
inherently discloses confidential Information of either Party required
for the use or support of the product or service shall not in itself be
deemed publication or disclosure of such Information prevented by
Section 5.6 of this Agreement. The term "supporting documentation" as
used in this Section shall not, however, include any semiconductor
development, process, manufacturing or testing documentation, or Source
Code of x86-CMS or Design Databases. Notwithstanding the above, both
Parties agree that prior written approval is required for technical
topics being published in technical journals or otherwise disclosed to
the public through conferences, interviews or publications, where
information contained therein discloses the confidential Information of
the other Party.
5.10 Non-Disclosure Exceptions: Disclosure of confidential Information shall
not be precluded, if such disclosure is:
(a) in response to a valid order of a court or other governmental body
of the United States or any political subdivision thereof; provided,
however that the receiving Party shall first have given notice to the
disclosing Party and made a
41
<PAGE> 42
reasonable effort to obtain a protective order requiring that the
Information and/or documents so disclosed be used only for the purposes
for which the order was issued;
(b) otherwise required by law; or
(c) necessary to establish rights under this Agreement.
5.11 Applicable Confidential Information: Notwithstanding any other
provisions of this Agreement, the nondisclosure obligations specified in
Section 5.6 shall not apply to any Information which:
(a) is, at the time of an alleged breach of Section 5.6, already in the
possession of the receiving Party without obligation of confidentiality;
(b) is, at the time of an alleged breach of Section 5.6, publicly
available without breach of this Agreement;
(c) has been, at the time of an alleged breach of Section 5.6, released
for public disclosure by the disclosing Party with its written consent;
(d) can be shown by the receiving Party, as of the time of an alleged
breach of Section 5.6, to have been rightfully received independently of
this Agreement from a third party without any obligation of
confidentiality; or
(e) can be shown by the receiving Party to have been internally
developed by it completely independently of this Agreement prior to the
date of an alleged breach of Section 5.6.
5.12 Effect of Disclosures under Prior Agreement. Any disclosures made under
the Prior Agreement shall be governed by the confidentiality terms in
the Prior Agreement; however, the Parties acknowledge that those terms
are the same as those in this amended Agreement and that confidential
Information delivered under the Prior Agreement shall also be treated as
confidential Information under this amended Agreement for purposes of
exploitation of license rights under this amended Agreement.
5.13 Intentionally omitted.
5.14 Disclosures to Partners/Subcontractors. Notwithstanding the
confidentiality obligations set forth herein, each Party and its
Subsidiaries may release confidential Information to third party design
sources, IBM Alliance Partners (but excluding release of Source Code for
x86-CMS, except to the extent that such an IBM Alliance Partner is only
acting in the capacity of a development subcontractor to IBM), have-made
manufacturers, subcontractors, and original equipment manufacturer's
("OEM's") under confidentiality obligations no less restrictive than
those contained herein where the purpose is to have the third party
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<PAGE> 43
assist in the design, in-kind services or development work to be
performed for a Party to this Agreement that has made the disclosure or
in furtherance of that Party's rights and licenses under this Agreement.
5.15 Use of Tools, Tests and Models. Notwithstanding the foregoing, Design
Tools embodying Transmeta's confidential Information (other than
Genesys-x86 licensed pursuant to Attachment H hereto) delivered by
Transmeta to IBM shall be used by IBM only for the purpose of exploiting
the rights licensed under this Agreement or on a project sanctioned by
this Agreement. Notwithstanding the foregoing, x86-Tests and Transmeta's
x86 Architecture Simulator Model delivered by Transmeta to IBM, shall be
used by IBM solely as provided for in Attachment H.
5.16 Removal of Information from Sites. Each Party agrees that its employees
shall not remove any tangible Information from the premises of the other
Party without first obtaining permission from the other Party's
Technical Coordinator and giving the other Party's Technical Coordinator
the opportunity to mark Information as confidential if appropriate.
43