Exhibit 10.51
LICENSE AGREEMENT AND
MUTUAL RELEASE
THIS LICENSE AGREEMENT AND MUTUAL RELEASE (the "Agreement") is
made and entered into as of June 11, 2003(the "Effective Date"), by and between
ESS TECHNOLOGY INTERNATIONAL, INC. ("ETI"), ESS TECHNOLOGY, INC. ("ESS"), and
MEDIATEK INCORPORATION, a corporation duly organized and existing under the laws
of Taiwan, R.O.C.("MediaTek").
WHEREAS, on or about September 27, 2002 ESS, the parent of
ETI, filed a complaint for copyright infringement and unfair competition against
MediaTek. The complaint was filed in the United States District Court for the
Northern District of California, Case No. C02-4705 CRB (EMC), and has been
amended three times. In the current complaint, plaintiffs ESS and ETI assert
claims for copyright infringement, contributory copyright infringement, and
unfair competition. The case is referred to herein as "the Litigation."
WHEREAS, MediaTek filed an answer denying the claims of ESS
and asserting certain counterclaims against ESS.
WHEREAS, it is now the desire and intention of ESS and ETI, on
the one hand, and MediaTek, on the other hand, to settle and resolve all
disputes, differences and claims asserted in the Litigation or otherwise
existing as of the Effective Date of this Agreement, and to license certain
items of intellectual property,
NOW, THEREFORE, in consideration of the foregoing and of other
good and valuable consideration, and of the mutual covenants, terms and
conditions hereinafter set forth, it is agreed as follows:
1. DEFINITIONS
1.1. "ESS DVD Technology" means the following registered United
States Copyrights: ***.
1.2. "Product" means any DVD chip solution or chipset, any DVD
player, or any software or screen display designed for use
with or in a DVD chip solution, DVD chipset, or DVD player.
1.3. A "Subsidiary" of a company means a corporation or other legal
entity (a) the majority of whose shares or other securities
entitled to vote for election of directors (or other managing
authority) is now or hereafter controlled by such company
either directly or indirectly; or (b) which does not have
outstanding shares or securities but the majority of whose
ownership interest representing the right to manage such
corporation or other legal entity is now or hereafter owned
and controlled by such company either
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
1
directly or indirectly; but any such corporation or other
legal entity shall be deemed to be a Subsidiary of such
company only as long as such control or ownership and control
exists.
1.4. "Sale" or "Sold" means the distribution for payment of a
Product to a person or entity who is not a party to this
Agreement, except that returned Products shall be excluded
from this definition.
2. GRANTS
2.1. LICENSE GRANT. Subject to the terms and conditions provided in
this Agreement, ETI and ESS hereby grant MediaTek a
world-wide, perpetual, non-exclusive, indivisible,
nontransferable (with the exception of the conditions in
paragraph 9.5) license under the ESS DVD Technology to make,
have made pursuant to MediaTek's own specifications, use,
reproduce, distribute, and sell Products incorporating ESS'
***module and *** module, and derivative works created by
MediaTek therefrom, if any. No license is granted under this
Agreement to any other portions of the ESS DVD Technology, or
to the ESS DVD Technology in its entirety. This license shall
extend to customers of MediaTek who build DVD players or
components thereof, as well as distributors, retailers,
service providers, and end users of DVD players containing
chips or chipsets sold or supplied by MediaTek. The parties
agree that MediaTek's acceptance of this license grant is not
an admission of any liability in the Litigation.
3. LIMITATIONS ON RIGHTS AND RELATIONSHIPS
3.1. NO IMPLIED LICENSE. No license or right is hereby granted by
implication, estoppel, or otherwise with respect to any
patent, patent right, copyright, trademark, or other
intellectual property or property right not specifically
identified herein.
3.2. NO JOINT VENTURE. Nothing herein is intended to nor shall be
construed as creating any joint venture, agency, partnership
or relationship other than licensor-licensee between ESS, ETI
and MediaTek.
4. PAYMENTS AND ROYALTIES
4.1. LICENSE FEE PAYMENT BY MEDIATEK. As an initial license fee,
MediaTek shall pay to ETI forty five million dollars
($45,000,000 USD). Because of the possibility of the
applicability of Taiwan withholding taxes, described below in
paragraph 4.2, MediaTek shall first pay into an escrow account
the cash sum of *** (***) ("principal amount"), pursuant to
the escrow agreement attached hereto as Exhibit A. The
principal amount in such escrow account shall be paid by the
escrow agent to ETI within two (2) business days following
notification to the escrow agent of the issuance of any
decision by the government of Taiwan on MediaTek's application
for exemption from Taiwanese withholding tax. This payment
shall be
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
2
nonrefundable and not creditable against the royalty called
for under paragraph 4.3. All accrued interest remaining in the
escrow account shall be paid by the escrow agent to MediaTek.
4.2. APPLICATION FOR WITHHOLDING TAX EXEMPTION. The parties shall
work *** to file for an exemption from Taiwan's withholding
tax obligations on payments to ETI. ETI and MediaTek each
agree to provide the other with all necessary documents in
connection with this exemption. MediaTek shall first submit to
ETI and ESS for approval all documents it proposes to provide
to the taxing authority of the government of Taiwan, and shall
incorporate any and all reasonable changes requested by ETI or
ESS. MediaTek agrees and warrants that it shall *** from any
government agency or other third party in connection with the
payment of withholding tax on MediaTek's payment to ETI.
4.2.1. TAX/ETI PAYMENT BY MEDIATEK. Within five (5) business
days after the issuance of a decision by the
government of Taiwan on MediaTek's application, and
as directed by the taxing authority of the government
of Taiwan, MediaTek shall pay *** (***) either (1) to
the taxing authority of the government of Taiwan to
satisfy the applicable withholding taxes imposed by
Taiwan, or (2) to ETI if MediaTek's application in
paragraph 4.2 is granted, or (3) in part to the
taxing authority of the government of Taiwan and in
part to ETI if the taxing authority of the government
of Taiwan sets a withholding rate of less than 20%.
Any such payment to ETI shall be nonrefundable and
not creditable against the royalty called for under
paragraph 4.3. Any such payment to ETI shall be paid
by wire transfer to an account specified by ETI.
4.2.2. TAX/ETI PAYMENT BY MEDIATEK ON QUARTERLY ROYALTIES.
If the government of Taiwan has not made a decision
on the application for exemption from withholding
taxes by the time that a quarterly royalty under
paragraph 4.3.1 is due, MediaTek shall pay that
quarterly royalty into the escrow account described
in paragraph 4.1, withholding 20% of the royalty for
possible withholding taxes. The quarterly royalties
less 20% in the escrow account shall be paid to ETI
when the paragraph 4.1 principal amount is paid to
ETI, and any interest accrued thereon shall be paid
to MediaTek. Within five (5) business days after the
issuance of a decision by the government of Taiwan on
MediaTek's application, and as directed by the taxing
authority of the government of Taiwan, MediaTek shall
pay any amounts withheld from quarterly royalties
under this paragraph either (1) to the taxing
authority of the government of Taiwan to satisfy the
applicable withholding taxes imposed by Taiwan, or
(2) to ETI if MediaTek's application in paragraph 4.2
is granted, or (3) in part to the taxing authority of
the government of Taiwan and in part to ETI if the
taxing authority of the government of Taiwan sets a
withholding rate of less than 20%. Any such payment
to ETI shall be paid by wire transfer to an account
specified by ETI.
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
3
4.3. QUARTERLY ROYALTY PAYMENTS BY MEDIATEK. MediaTek shall pre-pay
to ETI a royalty as described below by wire transfer to an
account specified by ETI, and shall transfer such funds from
MediaTek's account no later than 11:00 p.m. Pacific Time, on
the first business day of each August, November, February, and
May.
4.3.1. QUARTERLY ROYALTY PREPAYMENT. Each quarterly payment
*** (***) (absent a reduction based on previous
overpayments as described in paragraph 4.3.3),
representing a pre-payment of royalties for the
following three-month period (e.g., the November 3,
2003, royalty pre-payment shall be a prepayment of
royalties on Sales for November 2003, December 2003,
and January, 2004.)
4.3.2. CALCULATION OF ROYALTY DUE. The actual royalty due
over each three month period shall be calculated by
multiplying (1) the *** Sold by MediaTek or its
Subsidiaries during each such three-month period, by
(2) *** (***) per unit.
4.3.3. OVERPAYMENTS. To the extent that MediaTek's
prepayment of royalties at the beginning of any
three-month period exceeds the actual royalty due at
the conclusion of such three-month period, the amount
of any such overpayment shall be deducted from the
royalty prepayment due at the beginning of the next
three-month period.
4.3.4. QUARTERLY ROYALTY CAP. Each such quarterly royalty
shall be capped at *** (***) per quarter. If the
actual quarterly royalty calculated using the formula
in paragraph 4.3.2 for any quarter is more than ***
(***), the amount in excess of such amount shall not
become a royalty due under this Agreement.
4.3.5. PAID-UP LICENSE. The license granted to MediaTek in
paragraph 2.1 shall become fully paid-up and no
further royalties shall be due when MediaTek has paid
aggregate royalties under this paragraph 4.3 of
forty-five million dollars ($45 million USD).
4.3.6. TAXES. If the Taiwan withholding tax exemption in
paragraph 4.2 is granted, all royalty payments under
this paragraph 4.3 shall be made free and clear of
all taxes, duties or levies however designated or
computed other than any United States income tax
liabilities that may be related to such payments, and
MediaTek shall indemnify and hold ESS and ETI
harmless from all such taxes, duties and levies, if
any, imposed upon such payments. If the Taiwan
withholding tax exemption in paragraph 4.2 is not
granted, MediaTek shall withhold the amounts defined
by the Taiwan tax authorities of the sums paid under
paragraph 4.3.1 and shall pay those withheld monies
to the appropriate taxing authority of the government
of Taiwan as required by Taiwanese law.
4.4. NO REFUND OF ROYALTY PAYMENTS. No part of any royalty paid to
ETI hereunder shall be refundable for any reason, except if
ESS or ETI breaches paragraph 2.1 of this Agreement.
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
4
4.5. ROYALTIES PAID IN U.S. FUNDS. All royalties specified in this
paragraph 4 shall be payable in lawful money of the United
States of America.
4.6. ROYALTY REPORT. Within five (5) days of the end of each
three-month period identified in paragraph 4.3, MediaTek shall
either (a) furnish to ETI a certification that it Sold more
than *** (***) Products during the preceding quarter, or (b)
furnish to ETI a written royalty statement certified by an
officer of MediaTek separately setting forth (1) the number of
Products Sold by MediaTek during the preceding three-month
period; (2) the royalty accrued thereon; and (3) confirmation
of the wire transfer royalty pre-payment made by MediaTek.
MediaTek shall provide such a royalty report whether or not a
quarterly royalty payment is due. Any royalty report,
including a certification that MediaTek Sold more than ***
(***) Products during the preceding quarter, shall include the
percentage of Products which were Sold to customers in the
Americas or Europe.
4.7. RIGHT TO AUDIT. With respect to the royalty set forth in
paragraph 4.3, MediaTek shall keep clear and accurate records
with respect to Sales of Products. These records shall be
retained for a period of three (3) years from date of the
reports described in paragraph 4.6 above, notwithstanding any
termination of this Agreement. For any three-month period in
which MediaTek reports that it Sold less than *** (***)
Products, the financial information for that three-month
period shall be subject to audit by an independent auditor
selected by ETI, during normal business hours, with prior
reasonable notice by ETI. If the audit determines a
discrepancy of ten percent (10%) or more between Sales
reported and the amount accurately calculated using the
formula in paragraph 4.3.2, then the reasonable expense of the
audit shall be borne by MediaTek and MediaTek shall
immediately pay the past due amounts plus interest, calculated
under paragraph 4.8.1. Otherwise, the expense of the audit
shall be borne by ETI. MediaTek may require the auditor to
sign a confidentiality agreement requiring the auditor to
maintain as confidential all information of MediaTek disclosed
in the course of the audit and preventing the auditor from
disclosing to ETI or ESS any information designated
confidential by MediaTek other than the total Sales by
MediaTek of Products during the quarter at issue, as well as
the percentage of such Products which were Sold to customers
in the Americas or Europe during that quarter. Confidentiality
obligations on the auditor shall survive the termination of
this Agreement.
4.8. LATE PAYMENTS. Any royalty prepayment hereunder that has not
been deposited into ETI's bank account and become available as
good funds by the close of business, Pacific Time, five
business days following each date listed in paragraph 4.3
above, shall be considered late.
4.8.1. LATE PAYMENTS BEAR INTEREST. All late payments of
amounts due under paragraph 4.3. shall bear interest
from the due date at the
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
5
lower of (1) the Prime Lending Rate as quoted in the
Money Rate section of the Wall Street Journal on the
last business day before payment is made, plus three
percent (3%); and (2) the maximum legal rate of
interest applicable to loans to corporations then in
effect under the laws of the State of California.
4.8.2. LOST OPPORTUNITY AND DAMAGE IF PAYMENT 30 DAYS LATE.
If a royalty prepayment in the amount specified
pursuant to paragraph 4.3 has not been paid within
thirty (30) days of the due date, the parties agree
that the lost opportunity cost and damage to ETI is
well in excess of *** (***) and agree that any such
late payment shall carry an additional charge, not
creditable against the royalty payments, to
compensate ETI for this damage, of *** (***).
4.8.3. TERMINATION OPTION IF PAYMENT 60 DAYS LATE. If a
royalty prepayment has in the amount specified
pursuant to paragraph 4.3 not been paid within sixty
(60) days of the due date, the parties agree that ETI
will be entitled to terminate this Agreement pursuant
to paragraph 9.4, and MediaTek hereby stipulates to
entry of judgment in the following amount of one and
two tenths (1.2) times the amount then owing (the
amount then owing calculated as ninety million
dollars ($90 million USD), less all amounts actually
paid under paragraphs 4.1, 4.2, and 4.3).
5. SETTLEMENT AND RELEASES
5.1. LITIGATION DISMISSAL. Immediately upon MediaTek's funding of
the escrow account called for under paragraph 4.1, ESS, ETI
and MediaTek shall sign and jointly submit to the Court an
Order of Dismissal, dismissing the Litigation with prejudice.
Each party shall bear its own costs and attorney fees.
5.2. WAIVER AND RELEASE OF MEDIATEK. As of the Effective Date, ESS,
ETI, and their subsidiaries hereby release, waive, acquit, and
forever discharge MediaTek, its predecessor(s) in business,
and each of its employees, officers, directors, agents,
representatives, attorneys, privies and consultants from any
and all claims, demands, and causes of action asserted in the
Litigation, or otherwise existing as of the Effective Date
relating to MediaTek's current DVD software and all derivative
works created therefrom, and all claims existing as of the
Effective Date for copyright infringement and unfair
competition, patent infringement, trademark infringement,
misappropriation of trade secrets or other infringement of any
intellectual property right. This release and waiver shall not
extend to any DVD software features or functionality which are
not present in MediaTek's DVD software as of the Effective
Date. ESS and ETI hereby covenant not to file suit in the
future against MediaTek on any of the matters herein waived or
released. ESS and ETI agree that this waiver and release may
be used by MediaTek in defense against a suit filed on any of
the waived or released matters, and that if ESS or ETI
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
6
brings suit against MediaTek on any of the waived or released
matters, MediaTek shall be entitled to recover its reasonable
attorneys' fees and costs from ESS and ETI. In addition, if
ESS or ETI is found to have brought a suit after the Effective
Date against MediaTek on any of the waived or released
matters, ***.
5.3. WAIVER AND RELEASE OF ESS. As of the Effective Date, MediaTek
hereby waives, releases, acquits, and forever discharges ESS,
its subsidiaries, its predecessor(s) in business, and each of
its employees, officers, directors, agents, representatives,
attorneys, privies and consultants from any and all claims,
demands, and causes of action arising out of the matters
alleged in the Litigation or otherwise existing as of the
Effective Date, including, but not limited to, MediaTek's
counterclaim for trade secret misappropriation, patent
infringement, trademark infringement, copyright infringement
or other infringement of any intellectual property right.
5.4. WAIVER OF CALIFORNIA CIVIL CODE Section 1542. As of the
Effective Date, the parties hereby waive the provisions of
California Civil Code Section 1542, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS
FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
6. INDEMNIFICATION
6.1. INDEMNIFICATION BY MEDIATEK. MediaTek agrees to hold ESS and
its subsidiaries harmless against all liabilities, demands,
damages, expenses or losses arising out of third parties'
claims against the manufacture, use, sale or other disposition
by MediaTek or its vendees or other transferees of Products,
to the extent such third parties' claims relate to the
technology licensed in paragraph 2.1.
7. REPRESENTATIONS AND WARRANTIES
7.1. AUTHORITY TO GRANT LICENSES. ETI and ESS warrant and represent
that they have the authority to grant the licenses granted
hereinabove.
7.2. NO WARRANTY OF NON-INFRINGEMENT BY ESS. ESS and ETI make no
warranty that the manufacture, use, sale, lease, transfer or
other disposition of Products by MediaTek will not infringe
patents or other intellectual property rights of any third
parties. It is agreed that ESS and ETI have no obligation to
indemnify or defend MediaTek with respect to any claim, demand
or cause of action for infringement or alleged infringement of
any patent, copyright, trademark, trade secret or other
intellectual property
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
7
right arising out of or connected with the manufacture, use,
sale, lease or other transfer or disposition of operation of
Products.
7.3. DISCLAIMER BY ESS AND ITS SUBSIDIARIES. EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED HEREIN, ESS AND ITS SUBSIDIARIES MAKE NO
REPRESENTATIONS, EXTEND NO WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, AND ASSUME NO
RESPONSIBILITIES WHATEVER, INCLUDING ANY RESPONSIBILITIES OF
INDEMNIFICATION, WITH RESPECT TO THE USE, SALE OR OTHER
DISPOSITION BY MEDIATEK, ITS VENDEES OR OTHER TRANSFEREES OF
PRODUCTS INCORPORATING OR OPERATING IN ACCORDANCE WITH THE
LICENSE GRANTED HEREUNDER.
8. TRANSFERABILITY
8.1. NON-TRANSFERABLE BY MEDIATEK. This Agreement shall inure to
the benefit of the parties hereto and, insofar as expressly
provided for herein, to their respective Subsidiaries.
MediaTek shall not assign or transfer, or attempt to assign or
transfer, any of its rights or privileges hereunder, whether
by merger, sale or purchase of a controlling interest of
voting shares or other securities, sale or purchase of assets,
or otherwise, without the prior written consent of ESS and
ETI, as described in paragraph 9.5.
9. TERMINATION
9.1. EFFECTIVE DATE. This Agreement is effective as of the
Effective Date identified in the first paragraph of this
Agreement.
9.2. PERPETUAL LICENSE. Unless earlier terminated in accordance
with the terms and provisions of this Agreement, the Agreement
and the licenses and rights granted hereunder shall be
perpetual.
9.3. TERMINATION ON BREACH. In the event of a material breach of a
term or condition of this Agreement by a party, the other
party shall have the right to terminate the Agreement
forthwith by notice in writing identifying and describing the
breach. The Agreement will terminate thirty (30) days
following the sending of such notice, unless the breach is
cured within that time. The right to terminate shall be in
addition to all other rights and remedies which a party may
have in law or equity to enforce this contract or to seek
damages for breach thereof. On termination of the Agreement,
the releases granted in paragraphs 5.2, 5.3, and 5.4 shall
also terminate.
8
9.4. TERMINATION FOR FAILURE TO PAY ROYALTY. Notwithstanding the
provisions of paragraph 9.3, any failure on the part of
MediaTek to make any payment due under paragraph 4.1 within
five (5) days of the due date, or to make any payment due
under paragraph 4.3 within ninety (90) days of the due date,
shall constitute a material breach of the Agreement, and shall
entitle ESS and ETI to immediately terminate the Agreement on
written notice without any requirement to provide advance
notice as provided in paragraph 9.3. On termination of the
Agreement, the releases granted in paragraphs 5.2, 5.3, and
5.4 shall also terminate.
9.5. TERMINATION ON ATTEMPTED TRANSFER. This Agreement may be
transferred by MediaTek only under the conditions set out in
paragraphs 9.5.1 or 9.5.2. Any other assignment, transfer or
sublicense, or attempted assignment, transfer or sublicense of
this Agreement or of any license or other rights granted
hereunder by MediaTek in violation of the terms and conditions
hereof shall constitute a material breach of the Agreement,
and shall entitle the ESS and ETI to immediately terminate the
Agreement on written notice without any requirement to provide
advance notice as provided in paragraph 9.3. On termination of
the Agreement, the releases granted in paragraphs 5.2, 5.3,
and 5.4 shall also terminate.
9.5.1. TRANSFER TO APPROVED ENTITY. If MediaTek wishes to
transfer this Agreement to another entity, it shall
give written notice of its desire to ETI and ESS. If
ESS and ETI grant permission in writing, this
Agreement and all rights and obligations under it may
be transferred by MediaTek to the identified entity.
If ESS and ETI do not grant permission to transfer
this Agreement, it may only be transferred in
accordance with paragraph 9.5.2 under a fully paid-up
license.
9.5.2. TRANSFER FOLLOWING PAID-UP LICENSE. If the license
has become fully paid-up under paragraph 4.3.5, it
may be transferred by MediaTek to any entity on
written notice. If the license has not been fully
paid up under paragraph 4.3.5, it may be transferred
only if MediaTek first fully pays up the license
royalties as described in paragraph 4.3.5.
9.6. TERMINATION ON BANKRUPTCY. In any of the following events, ESS
or ETI shall have the right to terminate this Agreement at any
time if:
9.6.1. MediaTek files a voluntary petition in bankruptcy; or
9.6.2. an involuntary petition in bankruptcy is filed naming
MediaTek; or
9.6.3. MediaTek makes an assignment of assets for the
benefit of creditors; or
9.6.4. if a receiver or trustee of MediaTek's assets shall
be appointed; or
9
9.6.5. MediaTek shall cease or discontinue conducting
business in the ordinary course.
On termination of the Agreement for any of the foregoing reasons, the
releases granted in paragraphs 5.2, 5.3, and 5.4 shall also terminate.
9.7. NO WAIVER. The waiver by either party of a breach or default
in or of any provision of this Agreement by the other party
shall not act or be construed as a waiver by such party of any
other or succeeding breach of the same or other provision(s),
nor shall any delay or omission on the part of either party to
exercise or avail itself of any right, power or privilege that
it has or may have hereunder, operate as a waiver of any
right, power or privilege by such party.
10. CONFIDENTIALITY
10.1. ESS and MediaTek each agree to keep the terms of this
Agreement (with the exception of the financial terms detailed
in paragraph 4 of the Agreement) confidential and to refrain
from disclosing the terms of the Agreement to any third party
except as required by law (civil or criminal), and except as
is reasonably necessary to each of the parties' insurers and
respective legal, tax, and investment advisors. This provision
shall not restrict either party from disclosing that the
parties have entered into a settlement of the Litigation. All
parties recognize and agree that, except for documents and
information filed under seal, the Court's files in this matter
are public records and not affected by this provision.
11. GENERAL
11.1. COMPLETE AGREEMENT. This instrument embodies the complete and
only agreement between the parties and supersedes and cancels
any and all previous understandings, agreement, negotiations,
commitments and any other writings or communications
pertaining to its subject matter, whether written or oral.
11.2. MODIFICATION AND WAIVER. This Agreement may not be modified or
amended, nor may any right or obligation set forth herein be
waived, except in a writing signed by the parties with at
least the same formalities as are observed herein. A waiver as
to any particular term shall not operate as a waiver as to any
other terms.
11.3. SEVERABILITY. In the event any provision of this Agreement
shall be held to be invalid or unenforceable in any respect or
for any reason, such holding shall not impair the validity and
enforceability of the remaining provisions of this Agreement,
which shall continue to be given full force and effect, except
that the Parties agree to make such other and further
agreements as
10
may be necessary to provide the full intended economic
benefit, if any, associated with any provisions held invalid
or unenforceable.
11.4. ADVICE OF COUNSEL. Each party acknowledges to the other party
that it has been represented by legal counsel of its own
choice throughout all of the negotiations which preceded the
execution of this Agreement and that it has executed this
Agreement with the consent and on the advice of such legal
counsel. Each party further acknowledges that it and its
counsel have had adequate opportunity to make whatever
investigation or inquiry it may deem necessary or desirable in
connection with the subject matter of this Agreement prior to
the execution hereof and the delivery and acceptance of the
consideration specified herein.
11.5. CHOICE OF LAW AND VENUE. This Agreement shall be construed and
interpreted with the laws of the State of California. The
language of this Agreement shall be construed as a whole
according to its fair meaning, and not strictly for or against
either of the parties. In the event suit is filed by either
party involving a dispute concerning the construction,
interpretation, enforcement, or breach of this Agreement, or
the enforcement of any intellectual property rights which are
the subject hereof, the parties agree to submit to personal
jurisdiction and venue of the United States District Court for
the Northern District of California.
11.6. COUNTERPARTS. This Agreement may be executed in counterparts
which, taken together, shall constitute one and the same
agreement.
11.7. CAPTIONS AND HEADINGS. Captions and paragraph headings used in
this Agreement are for convenience and shall not be used to
govern, construe, or interpret this Agreement.
11.8. NOTICES. Any notice, request, report, or remittance required
or permitted to be given under or in connection with this
Agreement or the subject matter hereof, shall be deemed to
have been sufficiently given when addressed as follows and
sent by Certified Mail, postage prepaid, or (except for
remittance of royalties) by facsimile.
TO ESS or ESS Technology International:
ESS
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx Xxxx and Xxxxx Xxxx
Fax 000-000-0000
11
With a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx LLP
Attention: Xxxxx Xxxxxx
0 Xxxx Xxxx Xxxxxx, 0xx Xxxxx,
Xxxx Xxxx, XX 00000
Fax 000-000-0000
TO MediaTek:
MediaTek, Inc.
0X, Xx. 0-0 Xxxxxxxxxx Xxxx 1
Science-Based Industrial Park, Hsin-Chu City
Taiwan, R.O.C.
Fax: 000-0000-0000
With a copy to:
Xxxxxxx X. Xxxxxx
Xxxxx & Xxxxxxx, L.L.P.
000 X. Xxxxx Xxx., Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Fax 000-000-0000
The date of receipt of any such notice or request shall be
deemed to be the date of actual receipt by the addressee
thereof, but in any case not later than five (5) days after
the date of dispatch thereof. Either party may give written
notice of change of address to the other and, after such
notice has been received, any notice or request required to be
given to such party shall be given at such changed address, in
the manner provided above.
11.9. ATTORNEYS' FEES. In the event a party hereto initiates any
legal action to interpret any provision or term of the
Agreement or to enforce any right or obligation thereunder,
the prevailing party shall be entitled, in addition to any
other relief or award granted, to an award of reasonable
attorney's fees and all costs of such action.
11.10. REPRESENTATIONS OF AUTHORITY. Each of the parties to this
Agreement warrants and represents to the other that it has the
power to enter into this Agreement and that the person
executing this Agreement on its behalf has been authorized to
do so by any and all appropriate corporate bodies. Each of the
undersigned represents and warrants that he or she has the
12
authority and capacity to act on behalf of the entity on
behalf of whom he or she signed this Agreement and on behalf
of all who might claim through such entity and to bind them to
the terms and conditions of this Agreement.
12. DESTRUCTION OF CONFIDENTIAL AND ATTORNEYS ONLY MATERIALS.
Within ten (10) days of the Effective Date of this Agreement,
all materials designated as "Confidential" or "Attorneys Only"
pursuant to the Protective Order in this action, and all
copies thereof including summaries and excerpts, any copies of
ESS or ETI source or object code acquired by MediaTek or its
counsel, and any copies of MediaTek source or object code
acquired by ESS or ETI or their counsel, shall be destroyed.
Such destruction shall be certified by each party in writing,
and the certifications shall be delivered to the opposing
party. Outside counsel for the parties shall be entitled to
retain court papers and attorney work product (including court
papers, transcripts and exhibits, and attorney work product
that contain information or material designated as
"Confidential" or "Attorneys Only").
13. ESCROW ACCOUNT PAYMENTS FOR WITHHOLDING TAX EXEMPTION
13.1. *** shall pay *** (***) into an escrow account. Such sum shall
be paid by wire transfer, and shall be transmitted from***'s
account no later than 11:00 p.m. Pacific Time on the earlier
of June 30, 2003, or three business days after the escrow
account is opened. Such payment shall be made free and clear
of all taxes, duties or levies however designated or computed.
*** shall indemnify and hold harmless *** from all taxes,
duties and levies, if any, imposed upon such payment (other
than United States income taxes).
13.2. ***shall pay *** (***) into the same escrow account. Such sum
shall be paid by wire transfer, and shall be transmitted
from***'s account no later than 11:00 p.m. Pacific on the
earlier of June 30, 2003, or three business days after the
escrow account is opened. Such payment shall be made free and
clear of all taxes, duties or levies however designated or
computed. *** shall indemnify and hold harmless *** from all
taxes, duties and levies, if any, imposed upon such payment
(other than income taxes).
13.3. The escrow account shall be governed by the escrow agreement
attached hereto as Exhibit B. If MediaTek's application for a
withholding tax exemption described in paragraph 4.2 is
granted by the taxing authority of the government of Taiwan
and the *** (***) called for in paragraph 4.2 is paid to***,
then the escrow agreement shall ***. In all other cases, the
escrow agreement shall***.
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
13
13.4. All funds specified in this paragraph 13 shall be paid in
lawful money of the United States of America.
IN WITNESS WHEREOF, the Parties hereto have executed this
License Agreement and Mutual Release as of the day and year written below.
DATED: _______________, 2003 ESS TECHNOLOGY INTERNATIONAL,
INC.
By: /s/ Xxxx Xxxx Xxxxx Xxxx
Its: Chairman
DATED: _______________, 2003 ESS TECHNOLOGY, INC.
By: /s/ Xxxxxx X. Xxxxx
Its: President and CEO
DATED: _______________, 2003 MEDIATEK, INCORPORATION.
By: /s/ [ILLEGIBLE]
______________________________
Its: Chairman of the Board
14
APPROVED AS TO FORM:
DATED: _______________, 2003 Milbank, Tweed, Xxxxxx and XxXxxx, LLP
By: /s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
Attorneys for ESS
DATED: _______________, 2003 Xxxxx & Xxxxxxx, LLP
By: /s/ Jai Rho
Jai Rho
Attorneys for MediaTek
15
