exv10w18a



 





Exhibit 10.18A




RESTATEMENT AND AMENDMENT OF

MASTER TECHNOLOGY LICENSE AGREEMENT*




     This Master Technology License Agreement (the “Agreement”) is effective as of the
1st day of January, 2003 (“Effective Date”), and is restated and amended as of December
19, 2003, by and between Sonics, Inc., a Delaware corporation with principal offices at 2440 West
El Camino Real, Suite 600, Mountain View, California 94040 (“Sonics”), and Broadcom Corporation, a
California corporation with principal offices at 16215 Alton Parkway, P.O. Box 57013, Irvine,
California 92619-7013, for itself and its Affiliates (“Broadcom”).



     WHEREAS, SonicsTM develops and licenses intellectual property (“IP”) cores in the
field of on chip or system on chip communication networks that connect IP cores in order to
optimize, improve, configure and automate on chip communications;



     WHEREAS Broadcom wishes to license the Licensed Technology in order to develop integrated
circuit devices that incorporate Sonics IP Cores.



     NOW THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:



1. DEFINITIONS




     For purposes of this Agreement, the following terms shall have the following meanings:



     1.1 “Affiliate” as applied to Broadcom, means any company other legal entity other
than Broadcom, in whatever country organized, controlling or controlled by Broadcom. The term
“control” means possession of the power to direct or cause the direction of the management and
policies whether through the ownership of voting securities, by contract or otherwise.



     1.2 “Change of Control” with respect to an entity means the occurrence of one or more
of the following: (i) the acquisition by any single third party, whether by tender or exchange
offer made directly to the stockholders, open market purchases or any other transaction or series
of transactions, of more than 40% of the capital stock entitled to elect the members of the Board
of Directors or other analogous governing body of such entity; (ii) a merger or consolidation in
which such entity is not the surviving entity, except for a transaction in which the securities of
such entity immediately prior to consummation of such merger or consolidation are converted by
means of such merger or consolidation into securities representing more than sixty percent (60%) of
the total combined voting power of the surviving entity; or (iii) any reverse merger in which such
entity is the surviving entity but in which the securities of such entity immediately prior to
consummation of such reverse merger represent less than sixty percent (60%) of the total combined
voting power of such entity’s capital stock outstanding immediately after consummation of such
merger.


 





* [***]: Certain information in this document has been omitted and filed
separately with the Commission. Confidential treatment has been requested with respect to the
omitted portions.




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     1.3 “Commencement Notice” means the notice attached hereto as Exhibit A, informing
Sonics of the commencement of the design or development of a Device under this Agreement.



     1.4 “Confidential Information” means all technical, financial, commercial, legal or
other information, in whatever form or media, that is not generally known to the public, whether or
not it is patented, registered or otherwise publicly protected, and includes, without limitation,
the Licensed Technology, databases and netlists generated with the Licensed Technology, the terms
and conditions of this Agreement and the commercial intentions of the parties. In the case of
disclosures in non-documentary form made orally or by visual inspection, the disclosing party shall
have the obligation to confirm in writing within thirty (30) days after the disclosure is made, the
fact that such information is confidential and protected hereunder.



     1.5 “Derivative Work” has the meaning given to such term in the Copyright Act of 1976,
as amended and in effect on the Effective Date.



     1.6 “Device” means a semiconductor device designed by Broadcom (with the use of
Licensed Technology) that incorporates at least one instance of a Sonics IP Core. A Device may be
in the form of an RTL Code instantiation, a gate level netlist, a mask layout, or hardened silicon.
Any changes to an existing Device’s features, functionalities or architecture constitutes a
separate Device, provided, however, that none of the following shall be considered the initiation
of a separate or new Device: [***].



     1.7 “Deliverables” means the documentation, development tools, synthesis tools, and
verification tools delivered with the SiliconBackplaneTM MicroNetwork IP core ([***]) and the
MemMaxTM Memory Scheduler IP core ([***]), as well as any updates or upgrades to the Deliverables
provided to Broadcom by Sonics pursuant to this Agreement.



     1.8 “Intellectual Property Rights” means all patents, copyrights, trade secrets and
proprietary know-how, as well as any applications for such rights.



     1.9 “Licensed Technology” means Sonics SiliconBackplane MicroNetwork IP core ([***]),
Sonics MemMax Memory Scheduler IP core ([***]), and the Deliverables, as well as any updates,
enhancements, upgrades, and modifications thereto that are provided by Sonics hereunder to Broadcom
during the Term of this Agreement.



     1.10 “Minimum Annual Payment” shall have the meaning given to it in Section 5.2.



     1.11 “Net Sales” means the gross sales amount invoiced to customers of Broadcom or its
Affiliates for each Device sold, less amounts invoiced for returned goods for which a refund or
other credit is given, and less charges for insurance, handling, duty, freight and taxes (where
such items are included in the invoiced price). Net Sales shall not be reduced by any offsets or
tradeoffs by Broadcom or its Affiliates against any amounts invoiced to customers of Broadcom or
its Affiliates for Devices. Net Sales shall also include the amount of fair market value of all
other consideration received by



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Broadcom or its Affiliates for the sale or transfer of Devices, whether such consideration is
in payment in kind, exchange or another form.




     1.12 “Sonics IP Core” means either Sonics SiliconBackplane MicroNetwork IP core or
Sonics MemMax Memory Scheduler IP core.



     1.13 “Trademarks” shall have the meaning given to it in Section 11.1.



2. PRIOR AGREEMENTS




     2.1 Prior Agreements and Payments. Sonics and Broadcom have previously entered into
the License Agreement for Sonics Products and Technology “NA000701BRCM dated July 31, 2000
(“Original Agreement”) and the Amendment to and Renewal of License Agreement dated July 1, 2001
(“Amendment”) (collectively “Prior Agreements”). The Amendment and the Original Agreement expired
on December 31, 2002. Certain provisions in the Original Agreement and the Amendment may survive
in accordance with the terms of such agreements. In addition, Broadcom paid to Sonics a royalty
payment on [***]. Sonics and Broadcom desire to enter into this Agreement to govern the future use
of the Licensed Technology by Broadcom, and do so by virtue of this Agreement.



     2.2 In order to simply the royalty accruing, reporting and payment structure for all Devices
designed under all agreements between the parties, the parties hereby make the following
amendments: except as set forth in Section 2.2(a) below, all Devices incorporating a Sonics IP
Core (including those developed and designed under the Prior Agreements and those developed and
designed under this Agreement) sold or transferred at any time shall bear a royalty at the rates in
the schedule stated in Section 5.3 of this Agreement. All royalties for Devices shall be earned,
accrued, reported and paid under the provisions of Article 5, with the below exceptions.



          (a) [***].




          (b) On the execution of this restatement to the Agreement, Broadcom shall submit to Sonics a
royalty report and royalty payment for all cumulative Devices sold or transferred by Broadcom prior
to September 30, 2003 that are not subject to the moratorium in Section 2.2(a) above. In making
such royalty payment, Broadcom shall first deduct from the amount of any payment the Royalty
Deposit. In the event the amount deducted from the Royalty Deposit is less than the Royalty
Deposit, Broadcom shall apply the reminder of the Royalty Deposit to subsequent royalty payments
from Broadcom to Sonics. Subsequent to this report, Broadcom shall issue royalty reports and
payments in the normal manner in accordance with this Section 2.2 and Article 5.




     2.3 STIPULATION AND RELEASE



          (a) Release. In consideration for the value conferred hereunder including, without
limitation, the acceleration of royalty payments made under Section 2.2 above, Sonics hereby
(i) stipulates that other than the BCM 4309 version C0 and BCM 4306 version C0 (and later versions
to either), all revisions, changes,




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alterations or other modifications (made up to the date of this restatement to the Agreement)
to Devices commenced under the Prior Agreements have not resulted in the creation of any new
Devices under those Agreements, (ii) agrees that no additional license fees, royalties or other
amounts for the licensing of the Licensed Technology are due except as set forth in this Article 2
and (iii) releases Broadcom and its past, present, and future agents, attorneys, employees,
officers, directors, shareholders, partners, predecessors, successors, assigns, representatives,
parents, affiliated and subsidiary companies, and all persons acting by, through, under, or in
concert with either party, from any claim for additional license fees, royalties or other amounts
for the licensing of the Licensed Technology arising out of under the Prior Agreements and due
prior to the Effective Date (except solely as provided for under Section 2.2(b) above).




          (b) Civil Code Section 1542. The Parties acknowledge that the releases provided for herein
are limited in nature. Notwithstanding, as to those claims specifically and generally released
herein (known or unknown), the Parties specifically waive any and all rights or benefits which they
may enjoy under the terms of Section 1542 of the California Civil Code, 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.”




3. LICENSE GRANTS




     3.1 Subject to the terms and conditions of this Agreement, Sonics hereby grants to Broadcom a
royalty-bearing, nonexclusive, nonsublicensable, nontransferable license under Sonics Intellectual
Property Rights in the Licensed Technology to:



          (a) use the Licensed Technology internally for the design and development of Devices for
itself during the Term of this Agreement; and




          (b) make, have made, offer to sell, import or otherwise distribute the Devices designed and
developed under the license granted in Section 3.1(a).




     3.2 Restrictions on Use of Licensed Technology.


Broadcom agrees to the following restrictions on its use of the Licensed Technology:




          (a) Broadcom may not reverse engineer any Licensed Technology not delivered in source format
(the “binary materials”), nor may Broadcom decompile, disassemble, or otherwise reduce the binary
materials or any component thereof to human-readable or non-binary form. The Licensed Technology
may only be used in, transferred to, or accessed from, sites in the United States, Canada, India,
Singapore, Israel, Japan, the European Union, Korea, Taiwan or any other country where Broadcom has
an Affiliate, provided, however, that the Licensed Technology may not be used in, transferred to,
or accessed from sites in China or any country where use is in conflict with Broadcom’s obligations
under Section 11.7.




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          (b) Broadcom agrees to restrict access to the Licensed Technology solely to those of its
employees or consultants who have a need to use the Licensed Technology in performing Broadcom’s
duties and exercising Broadcom’s rights under this Agreement. Broadcom agrees to comply with the
reasonable requests of Sonics to provide Sonics with information required to determine whether
unauthorized individuals did or did not have access to the Licensed Technology or any portion
thereof.




          (c) The Licensed Technology may be placed on file servers only if access to such server(s) is
restricted to a known set of computer systems. The Licensed Technology shall be protected using,
at a minimum, native operating system permissions capabilities to restrict all access (including
read access) to a known and specific group of users, each of whom has a need to use. Moreover,
such users shall use commercially reasonable password security, and “log off” or “lock access” to
their systems when not in use. The Licensed Technology may be backed up only to a medium that
complies with the restrictions of this Section 3.2. Broadcom shall prevent remote access to the
Licensed Technology from other locations by any party other than Broadcom’s employees, contractors
or consultants that need to have access. Should files move to another system, whether or not
remote, the same access limitations shall apply.




          (d) Broadcom shall not distribute, disclose, assign, sublicense, or otherwise transfer the
Licensed Technology to any third party, except for the Sonics IP Core and then only as part of a
Device where the configuration parameters of the Sonics IP Core have been specified by Broadcom.




          (e) Broadcom shall not modify, translate or create any Derivative Works of the Licensed
Technology or any portion thereof; provided, however, that Broadcom may modify the RTL Code, gate
level netlist, mask layout and hardened silicon created through the licensed use of the Licensed
Technology. Broadcom shall not remove or alter any copyright, trademark, trade name or other
proprietary notices, legends, symbols or labels appearing on or in copies of the Licensed
Technology.




          (f) Broadcom retains the right to use other on-chip interconnection technology and to develop
proprietary on-chip interconnection technology that may be functionally equivalent to the Licensed
Technology; provided, however, such development occurs without use of or reference to the Licensed
Technology.




     3.3 Rights and Reservations. No license or other right is granted, by implication,
estoppel or otherwise, to Broadcom under any Intellectual Property Rights now or hereafter owned or
controlled by Sonics except for the licenses and rights expressly granted in this Agreement.
Except for any third party software or open source software which may be included as a part of the
Licensed Technology and submit to the licenses and rights granted herein, Sonics retains all
rights, title, ownership and interest in and to the Licensed Technology, including, all
Intellectual Property Rights embodied therein, and all revisions, upgrades and updates of any of
the foregoing.



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4. DELIVERY AND MAINTENACE




     4.1 Delivery. Upon execution of this Agreement, Sonics shall deliver to Broadcom the
Licensed Technology as detailed in the following table.



	 	 	 	 	 
	Sonics IP Core	 	Delivery Date
	Silicon
Backplane MicroNetwork and its Deliverables
	 	Upon execution of this Agreement
	 
	 	 	 	 
	MemMax
Memory Scheduler and its Deliverables
	 	Upon receipt of a Commencement Notice for
	 
	 	a Device incorporating MemMax Memory
	 
	 	Scheduler






     4.2 Commencement Notices. Broadcom shall deliver to Sonics a Commencement Notice upon
the start of design or development of each Device during the Term of this Agreement. The form of
the Commencement Notice is attached hereto as Exhibit A. Sonics may only use Commencement Notices
to authorize maintenance requests, to verify use of licenses, and to track royalties. Maintenance
services and technical support cannot be provided for any Devices for which a Commencement Notice
has not been received. All such Commencement Notices will be the Confidential Information of
Broadcom.



     4.3 Maintenance, Training and Technical Support. Sonics will provide best-of-breed
maintenance, training and technical support to Broadcom for the Licensed Technology at the
following rates:



          (a) Maintenance Services. Upon payment, maintenance services will be provided by
Sonics in six (6) months terms by knowledgeable, qualified Sonics’ engineers. Maintenance services
will include bug fixes to the Licensed Technology, and analysis of, and response to reported errors
in the Licensed Technology. Maintenance will also include all revisions, upgrades and updates to
the Licensed Technology that are made generally available to any other Sonics’ customer.




	 	 	 	 	 
	 	 	Maintenance Fee
	 	 	per Six-Month Term
	Sonics IP Core	 	per Broadcom Location
	SiliconBackplane MicroNetwork
	 	 	[***]	 
	 
	 	 	 	 
	MemMax Memory Scheduler
	 	 	[***]	 





If Broadcom fails to pay maintenance services for one or more maintenance terms, Broadcom may in
its sole discretion re-start maintenance at any time thereafter (during the Term of this Agreement
and for three (3) years thereafter) by paying for all maintenance terms (that were unpaid) up to
and including the then-current maintenance term (and Sonics may not refuse receipt of such
maintenance fees).




          (b) Training (SB and OCP). Upon payment, Sonics will provide training and system
analysis on the SiliconBackplane Micronetwork and on the Open Core Protocol Specification. Each
training class will be provided by knowledgeable,


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qualified Sonics’ engineers, will be [***] and will be for up to [***] Broadcom employees.
Training classes shall cost [***] per class, plus reasonable travel and lodging expenses for Sonics
engineers.




          (c) Training (MemMax). Sonics will provide training on MemMax Memory Scheduler upon
receipt of a Commencement Notice for a Device incorporating MemMax
Memory Scheduler. [***]. Each training class will be provided by knowledgeable, qualified Sonics’ engineers,
will be [***] and will be for up to [***]. Training classes shall cost [***] per class, plus
reasonable travel and lodging expenses for Sonics engineers.




          (d) Contract Services. Upon payment, Sonics will provide technical support for the
Licensed Technology consisting of telephone, fax, and email support in response to requests for
assistance in understanding and use of the Licensed Technology. Technical support shall be
provided by knowledgeable, qualified Sonics’ engineers, will be contracted in [***] blocks and each
block shall cost [***]. The technical contact designated in Section 11.11 shall coordinate the
technical support.




     4.4 Delivery of Non-Expiring Keys. Within ten (10) business days of the execution of
this restatement to the Agreement Sonics shall deliver to Broadcom an electronic key or other
activating item or device enabling sue of the Licensed Technology (“Key”) that (a) shall never
expire and (b) Broadcom may use if there is a Change of Control of Sonics and only (i) to the
extent the surviving entity is not in compliance with the terms and conditions of this Agreement
and to the extent this Agreement is still in effect or (ii) in accordance with Section 6.3 below.
Sonics hereby acknowledges that any delay in providing Broadcom with Keys under this Agreement will
result in irreparable injury to Broadcom.



5. CONSIDERATION




     5.1 Per Device License Fee. In consideration of the license grants and access to the
Licensed Technology, Broadcom agrees to pay to Sonics a license fee for each Device designed or
developed by Broadcom, as detailed in the following table. For purposes of clarity, as used in
this Section 5.1, “per Device” or each Device” means each distinct type of Device (for which a new
Commencement Notice is due pursuant to Section 4.2) and not multiple reproductions of the same type
of Device.



	 	 	 	 	 	 	 	 	 
	 	 	Per Device	 	 
	Sonics IP Core	 	License Fee	 	Payment Due Dates
	SiliconBackplane
MicroNetwork
	 	 	[***]	 	 	 	[***]	 
	 
	 	 	 	 	 	 	[***]	 
	 
	 	 	 	 	 	 	 	 
	MemMax Memory Scheduler
	 	 	[***]	 	 	 	[***]	 






     5.2 Minimum Annual Payment for SiliconBackplane MicroNetwork. Broadcom agrees to
purchase a minimum of [***] for Devices incorporating a SiliconBackplane MicroNetwork IP Core per
contract year during the Term of this Agreement, payable as follows: upon execution of this
Agreement, and within forty five



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(45) days of invoice by Sonics (which invoice shall be provided no earlier than one (1) month
before every anniversary of the Effective Date while this Agreement is in effect), Broadcom shall
pay to Sonics [***] for [***] for use in the applicable contract year (the “Minimum Annual
Payment”). Notwithstanding the foregoing payment terms, should Broadcom decide to make the Minimum
Annual Payment for contract year 2004, such payment shall be made by Broadcom and received by
Sonics on or before December 31, 2003. Broadcom shall be permitted to use the [***], purchased
each contract year with the Minimum Annual Payment, to commence the design and development of [***]
Devices during such contract year. Evidence of the commencement of a Device shall only be shown by
receipt by Sonics of a Commencement Notice for such Device. If Broadcom commences more than [***]
Devices in a contract year, Broadcom shall pay Sonics the per Device license fee of [***], due upon
the submission of a Commencement Notice for each such Device. Broadcom shall have the right to
continue to design and develop any Device commenced in a contract year in subsequent years while
this Agreement is in effect without any additional license fee or cost; provided, however, any
license not used in a contract year (as evidenced by a Commencement Notice) shall expire at the end
of the contract year (i.e., there is no roll-over of un-used licenses to subsequent years).
Subject to the provisions of this Section 5.2, in the event that Broadcom discontinues the design
and development of a Device prior to its production (on a Device which Broadcom has already
provided a Commencement Notice to Sonics), then Broadcom may transfer the license for such
discontinued Device to a new Device, provided that (i) the Commencement Notice for the design or
development for the new Device commences within twelve (12) months of the first tape-out of the
discontinued Device, and (ii) Broadcom informs Sonics of this substitution of the New Device in
such new Commencement Notice.



Notwithstanding the foregoing, should Broadcom choose not to make the Minimum Annual Payment in any
contract year, this Agreement shall terminate on the date when the Minimum Annual Payment shall
have been due for such contract year, and all licenses and rights granted hereunder and the
obligations imposed hereunder shall cease except for those surviving pursuant to Section 6.4. The
decision not to make a Minimum Annual Payment shall not be considered a breach of this Agreement
nor shall Broadcom have any liability except for the obligations and liabilities that survive in
accordance with the terms of this Agreement, to Sonics for making such choice.




     5.3 Royalties. In further consideration of the license grants and access to the
Licensed Technology, Broadcom will pay Sonics running royalties of the lesser of (i) a percentage
of Net Sales per Device or (ii) the maximum royalty per Device; sold or disposed of by Broadcom or
its Affiliates, in accordance with the schedule below. No multiple royalties shall be payable or
due because any single Device incorporates more than one (1) Sonics IP Core.



	 	 	 	 	 	 	 	 	 
	 	 	Royalty Rate Per	 	Maximum Royalty
	Sonics IP Core	 	Device (% of Net Sales)	 	Per Device
	SiliconBackplane Micronetwork
	 	 	[***]	 	 	 	[***]	 
	MemMax Memory Scheduler
	[***]






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Sales or transfers by Broadcom of Devices to its Affiliates shall not be counted as royalty-bearing
sales so long as such Devices are thereafter sold or transferred by such Affiliates to customers.




     5.4 Special Royalty Provisions for Certain Devices.



Physical Disablement. Broadcom shall not have to pay royalties on any Device incorporating
a SiliconBackplane MicroNetwork IP core where the SiliconBackplane MicroNetwork IP core has been
disabled by package wire bonding or other physical mechanism, such that no transactions may pass
across the Open Core Protocol boundary or may pass across the SiliconBackplane MicroNetwork. Such
Devices shall still require the payment of a per Device license fee subject to Section 5.1.
Broadcom shall identify (by internal Broadcom design number) on the appropriate Commencement
Notice, which Devices are not subject to royalties under the provisions of this Section 5.4.
Software disabling of a SiliconBackplane MicroNetwork IP Core on a Device shall not qualify for the
royalty waiver in this Section 5.4.



     5.5 Royalty Reports and Payments. Sonics will send an invoice for royalty payments,
for an unspecified amount, to Broadcom at the end of each [***] during the Term of this Agreement,
as a courtesy to Broadcom. Broadcom shall deliver to Sonics, within [***] days after receiving
such quarterly invoice from Sonics a report substantially in the form of the royalty reporting form
attached hereto as Exhibit B, together with payment of the royalty with respect to such Devices.
All such royalty reports will be the Confidential Information of Broadcom and may only be accessed
within Sonics by its Chief Executive Officer, Chief Financial Officer (and his or her immediate
direct reports) and Director of Legal Affairs (and his or her immediate direct reports), or outside
financial or legal advisors, but only so long as such outside financial or legal advisors enter
into confidentiality agreements with Sonics with restrictions on the use or dissemination of such
royalty reports at least as restrictive as the terms and conditions in this Agreement.
Notwithstanding any provision to the contrary set forth in this Section 5.5 or elsewhere in this
Agreement, upon a Change of Control of Sonics involving a competitor of Broadcom, the only
information Broadcom shall be obligated to provide in a royalty report shall be the amount of
royalties due to Sonics or its successor-in-interest.



     5.6 Payments. All amounts paid by Broadcom hereunder shall be non-refundable and
non-creditable. All royalties shall be earned upon invoicing by Broadcom for Devices for which
royalties are owed to Sonics. All payments due under this Agreement shall be made by check or bank
wire transfer in immediately available funds to a bank account designated by Sonics. Any payments
due hereunder that are not paid when due shall bear interest at the lesser of one and one-half
percent (1.5%) per month or the maximum rate permitted by law, calculated on the number of days
such payment is delinquent.



     5.7 Books and Records. Broadcom shall maintain accurate books and records that enable
the calculation of royalties payable hereunder to be verified. Broadcom shall



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retain the books and records for each calendar quarter for three (3) years after the
submission of the corresponding report (but no later than two (2) years after the termination of
this Agreement). Upon ten (10) days prior written notice to Broadcom, independent certified public
accountants selected by Sonics, reasonably acceptable to Broadcom, may have access (pursuant to
Broadcom’s standard confidentiality agreement) to Broadcom’s books and records during Broadcom’s
normal business hours at mutually agreed times to conduct a review or audit no more than once per
calendar quarter (and lasting no longer than four (4) days), for the purpose of verifying the
accuracy of Broadcom’s payments and compliance with this Agreement. Any such inspection or audit
shall be at Sonics’ expense, however, in the event an inspection reveals underpayment of five
percent (5%) or more in any audit period. Broadcom shall pay all reasonable costs of the
inspection. Broadcom shall promptly pay to Sonics any underpayment identified in such an audit
with interest from the date such amount(s) were due at a rate calculated as set forth in
Section 5.6. Notwithstanding any provision to the contrary set forth in this Section 5.7 or
elsewhere in this Agreement, upon a Change of Control of Sonics involving a competitor of Broadcom,
the only information the auditor may provide to such competitor (or Sonic) concerning the audit of
Broadcom’s records shall be limited to the fact of whether Broadcom is in compliance or not, and if
not, the amount by which Broadcom is not in compliance.




6. EXPIRATION AND TERMINATION




     6.1 Expiration. This agreement shall expire [***] from the Effective Date unless
terminated in accordance with this Article 6 (“Term”), or in accordance with Section 5.2.



     6.2 Termination by Parties. If either Broadcom or Sonics breaches a material
provision of this Agreement and does not cure such breach within thirty (30) days after written
notice from the non-breaching party or fails to commence in good faith such cure during this period
in the event such breach is not capable of cure within thirty (30) days, the non-breaching party
shall have the right at its option to terminate this Agreement immediately and all licenses granted
hereunder shall be deemed immediately terminated; provided, however, that if the parties pursue
dispute resolution under this Agreement, the non-breaching party shall have no right to terminate
this Agreement (and if Sonics is the non-breaching party, Sonics shall not terminate, without
limitation, the licenses granted under Section 2 hereof) until such time as the arbiters have
rendered a decision that the party as to which termination is sought has breached this Agreement
and has failed to cure, or shall not be given the opportunity to cure, such breach.



     6.3 No Retention of Licensed Technology. Upon expiration or termination of this
Agreement, Broadcom shall immediately destroy or delete all copies of all Licensed Technology in
its possession whether in electronic or any other form. Upon written request by Sonics, Broadcom
shall certify in writing that all Licensed Technology or Confidential Information (and any copies
in written or other tangible form) have been destroyed or deleted. Notwithstanding the foregoing
and subject to the provisos at the end of this sentence, after the termination of this Agreement or
any extensions or renewals thereof (and provided Broadcom was not in material breach at the time of
such



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termination), Broadcom shall have the right to sue the Key, Deliverables and the Documentation
solely to perform Bug Fixes (as defined below) on any Devices for which Broadcom has taped out
integrated circuits by the end of the Term; provided, that Broadcom has paid in full and in a
timely manner any and all maintenance and support fees set forth herein, and continues to pay such
maintenance and support fees during the period Broadcom continues to use the Key, Deliverables and
Documentation under this Section 6.3. For purposes of this Section 6.3, the term “Bug Fix” means
correcting logic or timing errors in the Deliverables. The term Bug Fix does not include changes
of any kind whatsoever to the functionality or features of a Device. Broadcom may retain
sufficient copies of the Deliverables and Documentation for use as contemplated under this
Section 6.3 after termination of this Agreement so long as Broadcom continues to pay such
maintenance and support fees.




     6.4 Consequences of Expiration or Termination. Upon expiration or termination of this
Agreement, the licenses and rights granted hereunder and the obligations imposed hereunder shall
cease except that the following shall survive any expiration or termination: (i) the obligations
of Sections 2.1, 2.2, 3.2, 3.3, 4.3, 5.3, 5.4, 5.5, 5.6, 5.7, 6.3 and 6.4 and Articles 7, 8, 9, 10
and 11; (ii) subject to the continuing payment of royalties, Broadcom’s right to make, have made,
offer to sell, sell, import or otherwise distribute Devices under Section 3.1(b), where such
Devices have already been taped out as of the expiration or termination, and (iii) any right or
obligation of a party that has accrued as of the Effective Date of any termination or expiration,
including without limitation, obligations to pay amounts owed, shall survive termination or
expiration.



7. WARRANTIES



Sonics represents and warrants that, for a period of [***] from Sonics’ delivery to Licensee of
each Deliverable, the Licensed Technology and such other Deliverables shall operate in conformity
with all Documentation and other detailed and functional specifications for the Licensed Technology
and such Deliverables and that the media on which the Licensed Technology and other Deliverables
are delivered will be free from defects under normal use. Sonics’ obligations under this warranty,
at Sonics’ option, are limited to promptly providing the Broadcom with a copy of corrected
Deliverables (or portion thereof) or refunding the license fee and any maintenance charges paid
hereunder.



In addition, Sonics represents and warrants that (a) as of the date of execution of this Agreement
by Sonics, there is no Intellectual Property Right licensed from a third party with respect to the
Licensed Technology and all other Deliverables for which Sonics is obligated to pay royalties or
other consideration to any third party; (b) Sonics owns the Licensed Technology and all other
Deliverables, or uses the Licensed Technology and all other Deliverables pursuant to a valid
license that will be validly assigned to Licensee, and Licensee has the right to transfer or
license the Licensed Technology and all other Deliverables and as contemplated by this Agreement;
(c) it has and, at all times during which this Agreement remains in effect, will have title to the
Licensed Technology and all other Deliverables; (e) Sonics has the full power and authority to
grant the licensees being granted under this Agreement; (f) the Licensed Technology or its use
thereof by




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Licensee as contemplated hereunder does not infringe the Intellectual Property Rights of any third
party or violate any third party rights, violate or constitute a material default under or a
material breach of any agreement with third parties, require the consent or approval of any party
or result in the creation of any right that may adversely effect the exercise of Licensee’s rights
under this Agreement; and (g) Sonics does not have any knowledge of any pending or threatened
claims, suits, challenges or similar actions relating to Licensed Technology and warrants that it
will promptly notify Licensee if it becomes aware of any such claim, suit, challenge or similar
action.



EXCEPT AS PROVIDED FOR IN THIS AGREEMENT, BROADCOM ACKNOWLEDGES AND AGREES THAT THE LICENSES
GRANTED UNDER THIS AGREEMENT, THE LICENSED TECHNOLOGY AND THE CONFIDENTIAL INFORMATION ARE PROVIDED
“AS IS” AND THAT SONICS MAKES NO WARRANTIES UNDER THIS AGREEMENT, EITHER EXPRESS, IMPLIED OR
STATUTORY, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE AND NONINFRINGEMENT OF PARTY RIGHTS, OR WARRANTIES ARISING FROM A COURSE OF
DEALING, COURSE OF PERFORMANCE, USAGE OR TRADE PRACTICE.



SONICS DISCLAIMS ON BEHALF OF ALL CONTRIBUTORS TO ANY OPEN SOURCE SOFTWARE USED IN THE LICENSED
TECHNOLOGY ALL WARRANTIES AND CONDITIONS, EXPRESS AND IMPLIED, INCLUDING WARRANTIES OR CONDITIONS
OF TITLE AND NON-INFRINGEMENT, AND IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE; SONICS EXCLUDES ON BEHALF OF ALL SUCH CONTRIBUTORS ALL LIABILTY FOR
DAMAGES, INCLUDING, BUT NOT LIMITED TO, DIRECT, INDIRECT, SPECIAL, INCIDENTAL AND CONSEQUENTIAL
DAMAGES. THE SOURCE CODE FOR ALL SUCH OPEN SOURCE SOFTWARE IS AVAILABLE FROM SONICS.




8. INDEMNIFICATION




     8.1 [***].



     8.2 [***].



     8.3 [***].



9. LIMITATION OF LIABILITY



IN NO EVENT WILL EITHER PARTY HAVE ANY LIABILITY TO THE OTHER HEREUNDER FOR ANY LOST PROFITS, LOSS
OF DATA, OR FOR ANY OTHER INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES ARISING IN ANY WAY OUT OF
THIS AGREEMENT UNDER ANY CAUSE OF ACTION, OTHER THAN (i) IN CONNECTION WITH SONICS’ INDEMNIFICATION
OBLIGATIONS UNDER SECTION 8, (ii) FOR A MATERIAL BREACH BY EITHER PARTY OF THE CONFIDENTIALITY
PROVISIONS OF THIS AGREEMENT, EVEN IF SUCH




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PARTY HAS BEEN INFORMED OF THE POSSIBILITY OF SUCH DAMAGES. EXCEPT IN CONNECTIONWITH SONICS’
INDEMNIFICATION OBLIGATIONS HEREUNDER, IN NO EVENT WILL EITHER PARTY’S AGGREGATE LIABILITY UNDER
ANY LEGAL THEORY RELATED TO THIS AGREEMENT EXCEED THE AMOUNT PAID BY BROADCOM TO SONICS HEREUNDER,
PROVIDED, HOWEVER, THAT NOTHING IN THE FOREGOING SECTION SHALL OPERATE TO DEPRIVE EITHER PARTY OF
ANY REMEDIES OR DAMAGES THEY ARE OR MAY BE ENTITLED TO FOR THE MISAPPROPRIATION OF TRADE SECRETS,
OR THE INFRINGEMENT OF ANY PATENTS, COPYRIGHTS OR TRADEMARKS.




10. CONFIDENTIALITY




     10.1 Confidentiality Obligations. A party receiving Confidential Information
(“Receiving Party”) shall treat as confidential all Confidential Information received from the
other party (“Disclosing Party”) and shall not use such Confidential Information except as
expressly permitted under this Agreement. Without limiting the foregoing, the Receiving Party
shall use at least the same degree of care that it uses to prevent the disclosure of its own
confidential information of like importance, but in no event with less than reasonable care, to
prevent the disclosure of Confidential Information. The Receiving Party agrees to limit access to
Confidential Information to those of its employees and contractors having a reasonable need to know
such information in connection with this Agreement or their reasonable business needs. The
Receiving Party agrees not to provide access to the Confidential Information to persons other than
its employees or contractors without the prior written consent of the Disclosing Party. Any person
to whom such Confidential Information is disclosed by the Receiving Party shall be subject to the
same obligations as regards disclosure and non-use as the Receiving Party. The Receiving Party
shall assume responsibility and accept liability for the non-fulfillment of these obligations from
any person given access to the Confidential Information. The Receiving Party shall not directly or
indirectly cause or permit any Confidential Information to be copied or reproduced unless such copy
or reproduction is necessary to fulfill the purposes of this Agreement. Any such copy shall be
marked confidential and, when appropriate, marked as proprietary to the Disclosing Party.
Disclosures in non-documentary form made orally or by visual inspection shall be deemed
Confidential Information and protected hereunder unless otherwise provided in writing by the
Disclosing Party.



     10.2 Exclusions. The obligations in this Article 10 shall not apply if and to the
extent that the Receiving Party establishes by written proof that the Confidential Information:



          (a) was already known to the Receiving Party prior to its first receipt of the same from the
Disclosing Party;




          (b) was in the public domain on the Effective Date or is subsequently placed in the public
domain without breach of this Agreement;




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          (c) was received by the Receiving Party in good faith from a third party lawfully in
possession thereof and without an obligation to maintain the confidentiality of the Confidential
Information;




          (d) was developed independently by the receiving Party’s employees or subcontractors;




          (e) was required by law to be disclosed, provided that notice of such legally required
disclosure is delivered to the Disclosing Party prior to disclosure so that the Disclosing Party
may contest such disclosure; or




          (f) was approved for release in advance and in writing by the Disclosing Party.




     10.3 Continuing Obligation. The obligations imposed by this Article 10 shall expire
three (3) years after the expiration or termination of this Agreement.



11. GENERAL PROVISIONS




     11.1 Trademark Grant. Sonics hereby grants to Broadcom a nonexclusive,
nontransferable license (without the right to sublicense) to sue, reproduce and display any
trademarks owned or controlled by Sonics and authorized explicitly in writing for use by Broadcom
(“Trademarks”) in connection with (i) the exercise of Broadcom’s rights hereunder with respect to a
Device or a customer License and/or (ii) any related packaging, marketing, publicity,
demonstration, promotional, advertising, instructional or other material. Broadcom shall include
an appropriate trademark indicator (“TM” or “®”) in connection with the use of the Trademarks in any
packaging, marketing, publicity, demonstration, promotional, advertising, instructional or other
material. Broadcom acknowledges that, as between the parties, all worldwide rights associated with
Trademarks and all goodwill attached thereto belong exclusively to Sonics. Broadcom shall not
reproduce or sue the Trademarks in any manner whatsoever other than as expressly authorized by this
Agreement or permitted by applicable law without a license. Broadcom acknowledges that it has not
acquired, and will not acquire, any right, title or interest in or to the Trademarks except the
limited right to use the Trademarks as expressly set forth in this Agreement. Sonics shall retain
the exclusive right to apply for and obtain registrations for its Trademarks throughout the world.
Broadcom agrees to immediately discontinue any use of any Sonics’ Trademarks by Broadcom to which
Sonics objects.



     11.2 Severability. If any provision of this Agreement is held to be ineffective,
unenforceable or illegal for any reason, such decision shall not affect the validity or
enforceability of any or all of the remaining portions thereof.



     11.3 No Assignment. Neither this Agreement nor any interest therein or part thereof
shall be transferable or assignable by Broadcom, by operation of law or otherwise, without Sonics’
prior written consent.



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     11.4 Relationship of Parties. The relationship of Broadcom and Sonics established by
this Agreement is that of independent contractors, and nothing contained in the Agreement shall be
construed to (i) give either party the power to direct and control the day-to-day activities of the
other, (ii) constitute the parties as partners, joint venturers, co-owners or otherwise as
participants in a joint or common undertaking, or (iii) allow either party to create or assume any
obligation on behalf of the other party for any purpose whatsoever.



     11.5 Governing Law. This Agreement shall be governed in all respects by the laws of
the State of California, except that its conflict of law rules shall not apply. Any action arising
out of any dispute between any of the parties to this Agreement shall be brought in either the
Superior Court for the County of Santa Clara or the United States District Court for the Northern
District of California, and each of the parties hereto hereby submits itself to the exclusive
jurisdiction of such courts for purposes of any such action.



     11.6 Waiver. No failure or delay on the part of either party in the exercise of any
power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or further exercise
thereof, or of any other power, right or privilege.



     11.7 Export. All obligations by Sonics to furnish Licensed Technology under this
Agreement are subject to U.S. export control laws and regulations and agrees to comply with such
laws and regulations prior to undertaking any such reexports to the extent, of course, such actions
are expressly authorized under the terms of this Agreement.



     11.8 Announcement. Neither party shall publish a press-release announcing the
existence of this Agreement. Both parties shall be free to disclose their relationship with the
other party in sales or marketing presentations to companies that desire to use that party’s
products. However, the terms of this agreement shall not be disclosed by either party.



     11.9 Entire Agreement. This Agreement contains the entire agreement and understanding
between the parties with respect to the subject matter hereof and merges and supersedes all prior
oral and written agreements, understandings and representations. No addition or modification to
this Agreement is valid unless made in writing and signed by both parties hereto.



     11.10 Notice. Unless either party notifies the other of a different address, any
notice or other communication required or permitted hereunder shall be sufficiently given, if sent
by facsimile, overnight delivery, registered mail, postage prepaid, return receipt requested,
addressed as follows:



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	For Sonics:

	 	For Broadcom:
	 
	 	 
	     2440 W. El Camino Real, Ste. 600

	 	     16215 Alton Parkway
	 
	 	 
	     Mountain View, CA 94040

	 	      Irvine, CA 92618
	 
	 	 
	     Fax: 650-938-2577

	 	     Fax: 949-450-0504
	 
	 	 
	     Attention: President

	 	     Attention: Vice President of
Business Affairs and General
Counsel
	 
	 	 
	With copy to: Director, Legal Affairs
	 	 






     11.11 Technical Contacts. The Parties hereby appoint the following persons as the
technical contacts for this Agreement. The technical contacts shall be responsible for
coordinating disseminating and receiving all technical information or Licensed Technology,
monitoring the development and use of the Licensed Technology, evaluating any Deliverables, and any
other technical discussion relating to this Agreement.



	 	 	 	 	 	 	 
	Sonics Technical Contact	 	Broadcom Technical Contact
	Name:

	 	John Ivie
	 	Name:
	 	David Crohn
	Title:

	 	Director, Applications Engineering
	 	Title:
	 	Senior Manager, Engineering
	Phone:

	 	650-605-6120
	 	Phone:
	 	480-753-2281
	Mobile:

	 	408-805-0485
	 	Mobile:
	 	                                                            
	E-Mail:

	 	ivie@sonicsinc.com
	 	E-Mail:
	 	dcrohn@broadcom.com






     IN WITNESS WHEREOF, each of the parties hereto has caused the Agreement to be executed in
duplicate originals by its duly authorized officers or representatives.



	 	 	 
	SONICS, INC

	 	BROADCOM CORPORATION
	 
	 	 
	By: /s/ Grant A. Pierce

	 	By: /s/ Edward H. Frank
	 
	 	 
	Name: Grant A. Pierce

	 	Name: Edward H. Frank
	 
	 	 
	Title: President & CEO

	 	Title: VP
	 
	 	 
	Date: December 19, 2003

	 	Date:12/19/03






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BROADCOM CONFIDENTIAL

EXHIBIT A

COMMENCEMENT NOTICE




	 	 	 	 	 	 	 
	TO:

	 	Sonics Inc. (“Sonics”)
	 	FROM:
	 	                                        
	ATTN:

	 	Program Manager
	 	AT:
	 	                     (“Broadcom”)
	FAX NO.:

	 	(650) 938-2577
	 	FAX NO.:
	 	                                                            
	DATE:

	 	                    
	 	 	 	(Please provide fax number to
which Sonics should respond)







In accordance with the terms and conditions of the Master Technology License Agreement
entered into by and between Broadcom and Sonics as of January 1, 2003 (the “Agreement”) and
pursuant to Section 4.2 thereof, Broadcom hereby notifies Sonics of the start of development
of a new Device as identified below:


Development
of the following Device has been commenced as of                     ,
200___, using the Licensed Technology licensed to Broadcom in the Agreement.



Name of Broadcom Device:



Broadcom Location where Device is Being Designed:



Description:




	 	 	 
	Sonics IP Core Used: (check all that apply)

	 	Signature:                                        
	      SiliconBackplaneTM MicroNetwork IP Core


      MemMaxTM Memory Scheduler IP Core
	 	 






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BROADCOM CONFIDENTIAL

EXHIBIT B

ROYALTY REPORTING FORM




Broadcom Royalty Report for Devices incorporating Sonics IP Cores




(pursuant to January 1, 2003 Master Technology License Agreement)




FOR REVIEW SOLELY BY THOSE AUTHORIZED UNDER SECTION 5.5 THEREIN




	 	 	 
	Quarter Ending:                    

	 	Report Date:                    






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Broadcom Part	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Number/Bond out	 	Units sold this	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Royalty Rate	 	 	 	 	 	 	 
	Number	 	quarter (or	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Basis (per Device/	 	 	 	 	 	 	 
	incorporating	 	cumulatively for	 	 	Net Sales price of	 	 	 	 	 	 	 	 	 	 	or percentage of	 	 	 	 	 	 	 
	Sonics IP	 	initial report)	 	 	each device	 	 	Total Net Sales	 	 	Royalty Rate	 	 	Net Sales)	 	 	Royalty Due	 	 	Comment	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	TOTAL ROYALTY DUE	 	 	 	 	 	 	 	 





This report is, to the best of my knowledge, a true and correct representation of the facts
set forth herein.



BROADCOM CORPORATION



By:                                                            



Name:                                                            



Title:                                                            



Date:                                                            




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