Patent Spinoff Agreement

SPINOFF AGREEMENT





This Spinoff Agreement (the "Agreement") is made by and between Integrated Telecom Express, Inc. ("ITeX" or "UMC SPINOFF"), a Delaware Corporation, having its principal place of business in Santa Clara, California, and United Microelectronics Corporation "UMC"), a corporation organized under the laws of the Republic of China having a place of business at No. 3 Li Hsin Road 2, Science Based Industrial Park, Hsin Chu City, Taiwan.





UMC has previously entered into a patent cross license agreement ("License Agreement") with Texas Instruments, Inc. ("TI") attached hereto as Exhibit B;



The License Agreement allows UMC to extend certain licenses granted by TI to certain UMC related entities (including without limitation ITeX) in exchange for royalties, patent cross licenses and other obligations;



ITeX has requested that UMC obtain such licenses for ITeX;



The parties are entering into this Agreement to document and sum marize ITeX's rights and obligations pursuant to the exercise of the option to include ITeX within the scope of the License Agreement as a UMC SPINOFF (as defined in the "License Agreement") but agree that the License Agreement shall in all events control ;



As such, the parties agree as follows:



1 LICENSES



1.1 LICENSES TO ITEX. Pursuant to Sections 1.1.3 and 1.1.4 of the License

Agreement, ITeX shall have a license from TI as follows:



1.1.1 TI PATENTS. Each TI ENTITY hereby grants and agrees to grant to

UMC SPINOFF a non-exclusive license under any TI PATENTS to

use, sell, lease, import, offer for sale or otherwise dispose

of UMC SPINOFF BRANDED PRODUCTS manufactured by UMC ENTITIES.



1.1.2 TI PARTICIPATION PATENTS. To the extent that each TI ENTITY has

the legal right to do so, each such TI ENTITY hereby grants and

agrees to grant to UMC SPINOFF non-exclusive licenses or

sub-licenses under any TI-PARTICIPATION PATENTS, to use, sell,

lease, import, offer for sale or otherwise dispose of UMC

SPINOFF BRANDED PRODUCTS manufactured by UMC ENTITIES.



1.2 LICENSES TO TI. ITeX hereby grants to TI licenses of the scope set forth in

Section 1.2.1 of the License Agreement as follows:







1.2.1 SPINOFF PATENTS. UMC SPINOFF hereby grants and agrees to grant

to each TI ENTITY non-exclusive, paid-up, royalty-free licenses

under any SPINOFF PATENTS, to make PRODUCTS. UMC SPINOFF

further grants and agrees to grant to each TI ENTITY the right

to use, sell, lease, import, offer for sale or otherwise

dispose of PRODUCTS made by any TI ENTITY. The grant to make

PRODUCTS shall include the right, under any SPINOFF PATENTS,

for any TI ENTITY to use manufacturing and business processes

and methods and shall further include the right under any

SPINOFF PATENTS for any TI ENTITY to use MANUFACTURING

EQUIPMENT AND SYSTEMS and BUSINESS EQUIPMENT AND SYSTEMS made

by any TI ENTITY or any other party.



1.2.2 SPINOFF PARTICIPATION PATENTS. To the extent that it has the

legal right to do so, UMC SPINOFF hereby grants and agrees to

grant to each TI ENTITY non-exclusive paid-up royalty-free

licenses or sub-licenses under any SPINOFF PARTICIPATION

PATENTS, to make PRODUCTS; and to use, sell, lease, import,

offer for sale, or otherwise dispose of PRODUCTS made by any TI

ENTITY. The grant to make PRODUCTS shall include the right,

under any SPINOFF PARTICIPATION PATENTS, for any TI ENTITY to

use manufacturing and business processes and methods and shall

further include the right under any SPINOFF PARTICIPATION

PATENTS to use MANUFACTURING EQUIPMENT AND SYSTEMS and BUSINESS

EQUIPMENT AND SYSTEMS made by any TI ENTITY or any other party.



1.2.3 TI ENTITY SUBCONTRACTING. The licenses granted hereunder to TI

ENTITIES include the right to have a third party make PRODUCTS

either in finished or semifinished form for the sole account of

a TI ENTITY, but only if:.



1.2.3.1 said PRODUCTS are to be sold, used. leased or otherwise

disposed of, by a TI ENTITY, and under the trademark, trade

name, or other commercial indicia, of a TI ENTITY;



1.2.3.2 the TI ENTITY provides its standard patent indemnities and

product warranties (that it would provide for the same or

similar products manufactured in its own facilities) for any

of said PRODUCTS sold, leased or otherwise disposed of, by the

TI ENTITY; and



1.2.3.3 said PRODUCTS are made by the third party using manufacturing

drawings, specifications, data base tapes, or the like:



1.2.3.3.1 originated by a TI ENTITY,



1.2.3.3.2 originated by any third party specifically and

exclusively for a TI ENTITY,



1.2.3.3.3 licensed to a TI ENTITY by an entity or person other

than the manufacturing party, or



1.2.3.3.4 which a TI ENTITY has the legal or contractual right

to so utilize except where such right derives from the

manufacturing party; provided however that such right shall

not extend to standard, off-









the-shelf products of such third party nor to

products originally designed by such third party

and to which only minor revisions are made to

conform to the specifications of a TI ENTITY.



Except as set forth above, the licenses granted hereunder to

TI ENTITIES shall not include have made rights.



1.2.4 THIRD-PARTY PRODUCTS. With respect to the licenses granted

hereunder to TI ENTITIES, and notwithstanding anything in

Section 1.2.3 to the contrary, a license to a TI ENTITY "to

use, sell, lease, offer for sale, import or otherwise dispose

of" PRODUCTS made by a TI ENTITY, does include the right of the

TI ENTITY to use, sell, lease, offer for sale, import, or

otherwise dispose of, standard, off-the-shelf PRODUCTS of, and

purchased directly or indirectly by such TI ENTITY from, any

third party; provided that such PRODUCTS are used, leased,

sold, offered for sale, imported, or otherwise disposed of

under the trademark, trade name or other commercial indicia of

such TI ENTITY.



1.2.5 TI FOUNDRY RESTRICTION. With respect to the licenses granted

hereunder to the TI ENTITIES, no such license includes the

right of any TI ENTITY to make or have made PRODUCTS, either in

finished or semifinished form (by way of example, "semifinished

form" includes (1) semiconductor wafers at any stage of their

manufacture, (2) foundry services and (3) assembly) for, or for

sale to, any third party to use, to lease, to sell, to offer

for sale, to import, or otherwise to dispose of, such PRODUCTS

under the trademark, trade name, or other commercial indicia of

such third party in any instance where the manufacturing

drawings, specifications, data base tapes, or the like, are in

whole or in part originated by, or on behalf of, such third

party. In the event of any such activity by a TI ENTITY, the

exclusive remedy for UMC SPINOFF for any claim of patent

infringement shall be against any-party other than a TI ENTITY.

The foregoing in this Section 1.2.5 notwithstanding, in any

instance in which such PRODUCTS are application-specific

INTEGRATED CIRCUITS (ASICs or CSICs), which are substantially

comprised of a TI ENTITY's ASIC or CSIC preconfigured cells,

whether macro or primitive, characterized to a TI ENTITY's

process, the licenses granted hereunder to the TI ENTITY shall

be deemed to be extended to such PRODUCTS.



1.3 THIRD PARTY DESIGNS. With respect to the licenses granted hereunder, and

except as provided otherwise in Section 1.2.4, a license to a LICENSED

PARTY, "to use, sell, lease, offer for sale, import, or otherwise

dispose of" PRODUCTS:



1.3.1 does not include any right for the LICENSED PARTY to act as a

sales agent, commission agent, sales representative, broker or

factor of products made by third parties; and



1.3.2 does not include any right for a LICENSED PARTY to act as a

distributor or reseller of products made by third parties.









1.4 GENERAL EXCLUSIONS.



1.4.1 Nothing in this Agreement shall be construed or interpreted as an

agreement to bring or prosecute actions or suits against third

parties for infringement or conferring any right to bring or

prosecute actions or suits against third parties for infringement.



1.4.2 Specifically excluded from the grants of licenses pursuant to this

Agreement, is any license, direct Or implied, under the U.S.

Semiconductor Chip Protection Act of 1984, or under the Japanese

Law Concerning Semiconductor Integrated Circuit Layouts of 1985,

or under any other corresponding legislation of any other country.



1.4.3 Specifically excluded from the grants of licenses pursuant to this

Agreement, is any license, direct or implied, under any

copyrights, trademarks, service marks, trade names, trade dress,

or trade secrets.



1.4.4 Specifically excluded from the grants of licenses pursuant to this

Agreement is any license, direct or implied, under any design

PATENTS except for any design PATENTS for packaging, modules, or

housing, for PRODUCTS.



1.4.5 Specifically excluded from the grants of licenses pursuant to this

Agreement is any right to sublicense.



2 RELEASES



ITeX agrees to grant the releases set forth below and shall enjoy the release granted by TI below all in accordance with the License Agreement:



2.1 UMC SPINOFF hereby releases, acquits and forever discharges each TI

ENTITY which is a TI ENTITY on or as of the EFFECTIVE DATE from any and

all claims or liability for infringement or alleged infringement of any

SPINOFF PATENTS under which a license is herein granted by UMC SPINOFF,

with respect to performance by any such TI ENTITY, prior to the

EFFECTIVE DATE, of acts which if performed on or after the EFFECTIVE

DATE would be acts licensed hereunder.



2.2 Each TI ENTITY which is a TI ENTITY on or as of the EFFECTIVE DATE hereby

releases, acquits and forever discharges UMC SPINOFF from any and all

claims or liability for infringement or alleged infringement of any TI

PATENTS under which a license is herein granted by any such TI ENTITY, with

respect to performance by UMC SPINOFF, prior to the EFFECTIVE DATE, of acts

which if performed on or after the EFFECTIVE DATE would be acts licensed



2.3 UMC SPINOFF hereby waives any and all claims or liability for

infringement or alleged infringement which UMC SPINOFF itself may have

against any TI ENTITY which is a TI ENTITY on or as of the EFFECTIVE

DATE, based on any SPINOFF-PARTICIPATION PATENT with respect to

performance by any such TI ENTITY, prior to the EFFECTIVE DATE, of acts

which if performed on or after the EFFECTIVE DATE would be acts







licensed hereunder, and UMC SPINOFF agrees to release each such TI ENTITY

from any and all such claims or liability to the extent UMC SPINOFF has or

later acquires the legal right to grant such a release.



2.4 Each TI ENTITY which is a TI ENTITY on or as of the EFFECTIVE DATE hereby

waives any and all claims or liability for infringement or alleged

infringement which any such TI ENTITY itself may have against UMC SPINOFF

based on any TI-PARTICIPATION PATENT, with respect to performance by UMC

SPINOFF, prior to the EFFECTIVE DATE, of acts which if performed on or

after the EFFECTIVE DATE would be acts licensed hereunder, and each such

TI ENTITY hereby agrees to release UMC SPINOFF from any and all such claims

or liability to the extent any TI ENTITY has or later acquires the legal

right to grant such a release.



3 ROYALTIES



3.1 ROYALTY. UMC SPINOFF shall pay a royalty equal to one percent of the NET

SALES BILLED for all UMC SPINOFF BRANDED PRODUCTS purchased or otherwise

transferred from a UMC ENTITY to UMC SPINOFF, provided however that UMC

SPINOFF BRANDED PRODUCTS manufactured prior to the EFFECTIVE DATE shall

not be subject to payment of royalties.



3.2 DUE DATES. UMC SPINOFF shall pay the applicable royalties to UMC as

follows:



3.2.1 All royalties due herein during each calendar semi-annual period

commencing on January 1st and ending on June 30th or commencing

on July 31st and ending on December 31st, as the case may be,

shall be paid within thirty (30) days after that June 30th or

December 31st, as the case may be;



3.2.2 In the event this Agreement expires or terminates during a

calendar semi-annual period, other than on June 30th or December

31st, all royalties payable for that calendar semi-annual period

shall be paid within thirty (30) days after such termination or

expiration of this Agreement.



3.2.3 Royalties for UMC SPINOFF BRANDED PRODUCTS purchased or

transferred from a UMC ENTITY on or before December 31, 1999 (and

manufactured after the EFFECTIVE DATE) shall be reported and paid

by April 1, 2000.



3.3 ROYALTY TRIGGERING EVENTS. For purposes of NET SALES BILLED and determining

royalties hereunder, UMC SPINOFF BRANDED PRODUCTS shall be deemed to be

sold or otherwise disposed of, when a UMC ENTITY bills UMC SPINOFF, or upon

delivery to UMC SPINOFF by a UMC ENTITY, whichever event occurs first.



3.4 SURVIVAL. The obligation to pay unpaid royalties which accrued during the

term of this Agreement shall survive any termination or expiration of this









3.5 ACCOUNTING AND RECORDS.



3.5.1 COMPUTATION. All computations relating to determination of the

amounts of royalties due and payable pursuant to this Agreement

shall be made in accordance with internationally recognized and

generally accepted accounting principles as reflected in the

practice of independent certified public accountants of

international reputation.



3.5.2 AUDIT.



3.5.2.1 ACCESS TO RECORDS. Upon the reasonable written request of TI

or UMC, UMC SPINOFF shall permit access to its books and

records relating to UMC SPINOFF BRANDED PRODUCTS by UMC or an

independent accounting firm selected by TI and/or UMC, for the

sole purpose of, and solely to the extent reasonable for,

verifying the calculation of royalties due and payable

pursuant to this Agreement.



3.5.2.2 FREQUENCY. TI and UMC shall each seek permission for an audit

of UMC SPINOFF no more than once each calendar year, and no

such request may be made at a time longer than four (4) years

after the due date for the payment(s) involved.



3.5.2.3 SCOPE. All information concerning manufacture, use, lease,

sale or other disposition of UMC SPINOFF BRANDED PRODUCTS,

including without limitation, sales prices and customers

and other confidential business information shall be made

available to the independent accounting firm or UMC to the

extent necessary to verify the calculation of royalties;

provided that such information shall not be made available

to TI by UMC or the independent accounting firm and

provided further that UMC or such accounting firm shall

agree in writing to maintain such information as

confidential, not to disclose it to anyone other than as

necessary to verify such calculation (and then only upon

such terms as ensure protection for confidentiality at

least as stringent as provided herein), and not to use it

for any purpose other than such verification.



3.5.3 RECORD KEEP ...