PRECISION DIGITAL IMAGES CORP.
DEVELOPMENT AGREEMENT
This Development Agreement ("Agreement") is made and entered into as of the
later of the two dates on the signature page (the "Effective Date") by and
between IAT Multimedia, Inc. ("IAT"), a Delaware corporation, and Precision
Digital Images Corporation ("PDI"), a Washington corporation.
Recitals
WHEREAS, PDI has developed an ASIC that is an important component of a
product designed by IAT; and
WHEREAS, PDI and IAT have expressed a desire to work together to jointly
produce this ASIC; and
WHEREAS, pursuant to this Agreement, PDI is willing to perform certain
services relating to the further development of the ASIC pursuant to the terms
and conditions contained herein; and
WHEREAS, pursuant to an ASIC License Agreement, between the parties hereto
and dated as of the date of this Agreement, PDI is willing to grant to IAT a
license to produce the ASIC pursuant to the terms and conditions contained
therein (the "License Agreement");
NOW, THEREFORE, in consideration of the covenants and conditions
hereinafter set forth, PDI and IAT agree as follows:
AGREEMENT
1. Definitions. For purposes of this Agreement, any initially capitalized
terms shall have the meanings hereinafter assigned to them and any capitalized
terms not defined in his Agreement will have the meanings assigned to such terms
in the License Agreement.
2. Description of Services. Subject to the terms and conditions of this
Agreement, IAT hereby engages PDI to perform services hereunder (the "Services")
consisting in the development of the Deliverables specifically described in
Exhibit A ("ASIC Deliverables and Specifications") attached hereto and
incorporated herein and related materials and documentation (the
"Deliverables"), and PDI will perform the Services. In performing the Services
during the term of this Agreement, PDI shall report to such representatives of
IAT as IAT shall designate from time to time.
3. Payment. Upon acceptance of the Submissions by IAT in accordance with
Section 6 below, IAT shall pay PDI the development fees set forth in Exhibit B.
4. Delivery. PDI shall deliver to IAT a notice of completion ("Submission")
in accordance with the milestones set forth on Exhibit B. The last Submission
shall include the Design Documents and shall conform to the specifications set
forth in Exhibit A.
5. Acceptance Period. Upon receipt of the last Submission and IAT's
acknowledgment of such receipt, IAT shall have a period of fifteen (15) days
within which to reject or accept such Submission (the "Acceptance Period"). If
IAT rejects such Submission, IAT shall notify PDI of the reasons for such
rejection in a written report (the "Test Report").
6. Correction & Acceptance. If IAT notifies PDI within the Acceptance
Period that the Submission does not conform to the specifications set forth in
Exhibit A, PDI shall, within fifteen (15) days of the receipt of any such Test
Report, or within such longer period as IAT may expressly allow in writing in
each particular case (the "Correction Period"), make all necessary revisions or
corrections and re-deliver the revised or corrected version of such Submission
to IAT at no additional charge. The procedures set forth in Sections 5 and 6
shall be repeated until IAT accepts the Submission or cancels this Agreement in
accordance with the provisions of Section 13.
7. Sourcing of Production. PDI acknowledges and agrees that IAT has the
right to enter into separate agreements with such manufacturers of the ASICs
developed pursuant to this Agreement as IAT chooses and upon such terms and
conditions as IAT may agree to in its sole discretion pursuant to the terms and
conditions of this Agreement and the License Agreement.
8. Indemnity. PDI will indemnify and hold IAT harmless, and will defend IAT
against any and all loss, liability, damage, claims, demands or suits and
related costs and expenses and attorneys' fees to persons or property that
arise, directly or indirectly, from acts or omissions of PDI, or from breach of
any term or condition of this Agreement.
9. IAT Proprietary Materials. PDI understands that IAT possesses or will
possess "IAT Proprietary Materials" which are important to its business. For
purposes of this Agreement, "IAT Proprietary Materials" are documents or other
media or tangible items that contain or embody Confidential Information or any
other information concerning the business, operations or plans of IAT, whether
such documents have been prepared by PDI or by others. "IAT Proprietary
Materials" include, but are not limited to, blueprints, drawings, photographs,
charts, graphs, notebooks, customer lists, computer disks, tapes or printouts,
sound recordings and other printed, typewritten or handwritten documents, as
well as samples, prototypes, models, products and the like. All IAT Proprietary
Materials will remain the sole property of IAT. PDI agrees that during, the term
of this Agreement, PDI will not deliver any IAT Proprietary Materials to any
person or entity outside IAT, except as IAT may be required to do in connection
with performance of the Services under this Agreement. PDI further agrees that,
immediately upon IAT's request and in any event upon completion of the Services,
PDI will deliver to IAT all IAT Proprietary Materials.
10. Support. PDI shall provide support services to designated IAT personnel
to assist such personnel in resolving problems, obtaining clarification
relative to the Deliverables, and providing assistance regarding suspected
defects or errors in the Deliverables at no additional charge. PDI shall
promptly resolve and eliminate defects and errors in the Deliverables.
11. Representations of PDI. PDI hereby represents and warrants to IAT that:
(a) With respect to the Deliverables and any and all matters pertaining
thereto which PDI may disclose, use, and/or deliver in connection with the
performance of PDI's obligations hereunder, PDI has the right to make such
disclosure, use and/or delivery thereof without liability to any third party;
(b) The Deliverables shall not infringe upon or violate any patent,
copyright, trademark, trade secret or other proprietary right of any third
party;
(c) The execution, delivery and performance of this Agreement by PDI shall
not be in conflict with or in breach of any applicable legislation or
regulations or other agreement by which PDI is bound;
(d) There are no liens or encumbrances on or against the Deliverables which
could derogate from or be inconsistent with any of the rights, title and
interest herein granted to IAT;
(e) PDI has obtained all the necessary approvals and licenses, if any such
approvals or licenses are required, and has the full power and authority to
enter into this Agreement, to perform PDI's obligations hereunder, and to grant
the rights herein granted to IAT with respect to the Deliverables; and
(f) The Deliverables will, under normal use, perform substantially in
accordance with the specifications set forth in Exhibit A.
12. Disclaimer, Limitation of Liability.
(a) DISCLAIMER. NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT,
CONSEQUENTIAL, INCIDENTAL OR EXEMPLARY DAMAGES (INCLUDING WITHOUT LIMITATION
DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS OF BUSINESS
INFORMATION, AND THE LIKE) EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
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(b) LIMITATI0N OF LIABILITY. IN NO EVENT SHALL EITHER PARTY'S TOTAL
LIABILITY FOR ANY DAMAGES IN CONNECTION WITH THIS AGREEMENT EXCEED THE
DEVELOPMENT FEES PAID BY IAT HEREUNDER, REGARDLESS OF WHETHER SUCH LIABILITY
ARISES FROM ANY CLAIM BASED UPON CONTRACT, WARRANTY, TORT, OR OTHERWISE.
13. Termination. Either party may terminate this Agreement immediately upon
written notice in the event the other party is in material breach of this
Agreement, and such breach is not cured by the breaching party within thirty
(30) days after receipt of written notice of default from the other party. In
the event of breach by PDI, all Submissions, Deliverables and any revisions or
modifications thereto which have been completed or are in progress at the time
of termination (the "Completed Work") shall be assigned and delivered to IAT.
14. Best Efforts/Conflict of Interest. PDI shall, at all times during
the term of this Agreement, exercise its best efforts in the performance of the
duties set forth herein and perform the Services with all diligence and in
accordance with the practices and standards of the industry. PDI covenants that
PDI presently has no interest or obligation which would conflict in any manner
or degree with the performance of the Services required hereunder and that PDI
shall not, during the term hereof, make any commitments which would interfere
with PDI's ability to perform the Services.
15. Intellectual Property and Proprietary Rights. PDI maintains ownership
of the intellectual property rights in the Deliverables, including documentation
generated for the ASIC design, subject to the licenses granted to IAT pursuant
to the License Agreement. IAT will have the right to modify, improve and enhance
the Deliverables from time to time. PDI will not have any ownership with respect
to rights to any such modification, improvement or enhancement developed by IAT.
16. Non-Disclosure. The confidentiality provisions of the License Agreement
shall apply equally to any Confidential Information that is exchanged pursuant
to this Agreement.
17. Notices and Requests. All notices and requests in connection with this
Agreement shall given in a manner consistent with the provisions set forth in
the License Agreement.
18. Miscellaneous. The provisions of Section 11 of the License Agreement,
entitled, "Miscellaneous" shall apply equally to this Agreement.
19. Time of Essence. Time is of the essence in this Agreement.
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Precision Digital Images Corporation IAT Multimedia, Inc.
("PDI") ("IAT")
/s/ G. Xxxxx Xxxxx /s/ Xxxxxx Xxxx
By (Sign) By (Sign)
G. Xxxxx Xxxxx Xx. Xxxxxx Xxxx
Name (Print) Name (Print)
CEO CEO
Title Title
06/06/97 06/20/97
Date Date
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EXHIBIT A
ASIC Deliverables and Specifications
The "Deliverables" will be a ASIC verified and ready for volume production and
satisfactorily tested on the Vision Point 80 board.
The Specifications for the Deliverables will be as defined in the License
Agreement.
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EXHIBIT B
Development Milestones and Fees
1. Milestones. PDI shall deliver to IAT the Submissions in accordance with
the following milestones and completion dates:
ESTIMATED DEVELOPMENT
MILESTONES: COMPLETION DATES FEE
----------- ---------------- ---
Pre-layout simulation completed and verified 14 June, 1997 $15,000
Post-layout simulation completed and verified 14 July, 1997 $15,000
First samples of the ASIC out of fabrication 19 August, 1997 $ 5,000
ASIC verified and ready for volume production 30 August, 1997 $15,000
2. Fees. IAT shall pay PDI a total of Fifty Thousand Dollars (US$50,000)
upon completion of all the milestones set forth above. The Development Fees
shall be paid upon receipt of Submission for each milestone, except for the
Final Fee, which shall be paid upon acceptance of the final Submission pursuant
to Sections 4 through 6 of this Agreement.
[DATES TO BE PROVIDED BY PDI]
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