EXHIBIT 10.9
COOPERATION AGREEMENT BETWEEN
CENTILLIUM TECHNOLOGY CORPORATION
AND
SUMITOMO ELECTRIC INDUSTRIES
This Cooperation Agreement (this "Agreement") is effective as of October
15, 1997 (the "Effective Date") by and between Centillium Technology
Corporation, a California corporation, having its principal place of business at
00000 Xxxxxxxx Xxxx, Xxxxxxx, Xx. 00000, Xxxxxx Xxxxxx of America
("Centillium"), and Sumitomo Electric Industries, Ltd., a Japanese Corporation
with its principal offices at 0-00 Xxxxxxxx 0-xxxxx, Xxxx-xx, Xxxxx, Xxxxx
("Sumitomo").
- WITNESSETH -
WHEREAS, Centillium has expertise in the area of telecommunications
integrated circuits, including those which utilize multilevel modulation
techniques to enable high speed communications over copper, also known as
Digital Subscriber Line (xDSL) Technology; and
WHEREAS, Sumitomo has expertise in the area of telecommunications systems
and associated technologies; and
WHEREAS, the parties hereto believe that each will derive benefit from a
business relationship in which they will work cooperatively to define an
integrated circuit solution for the copper interface portion of transmission
systems (the "Interface Devices"), The Interface Devices shall consist of
Digital Signal Processor ("DSP") and software, and are capable of addressing the
main markets for xDSL which includes the Internet access market, single pair
HDSL and FITL short reach DSL. The basic specification of the Interface Devices
shall be described in the Attachment A to be provided by Centillium; and
WHEREAS, Centillium will be in a position to provide Sumitomo with early
models, system support, and loop environment engineering support in exchange for
Sumitomo's commitment to use Centillium as its preferred vendor of the Interface
Devices for as long as Centillium maintains competitive terms and conditions;
and
WHEREAS, the parties hereto wish to set forth in this Agreement the
guidelines of their cooperation.
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. Overall Objective of Cooperation
(a) The objective of this cooperation is for both companies to work
together in developing the proper "Interface Device" technologies and systems
that can significantly develop the broadband telecommunications market. The
first phase of this activity includes product definition and joint marketing to
telco customers.
(b) Each of the parties hereto will act in a commercially reasonable
fashion to provide the resources necessary to accomplish the objectives set
forth in this Agreement. Each of the parties hereto acknowledge and agrees that
there are substantial technical, financial and commercial risks associated with
a development activity of this type and, therefore, that neither of the parties
hereto can guarantee that any of the development activities described in this
Agreement or any subsequent activities to be described in any future agreements
will be completed successfully.
(c) Both parties agree that the future phases of this agreement may
include the product development phase, and production phase. Both parties will
work together to develop a detail agreement covering the relationship agreement
between the two companies for future phases.
2. Scope of Cooperation
The parties' cooperation will be conducted in phases:
(a) Phase 1: Product Definition Phase
(i) The parties hereto will jointly approve specifications for an
integrated circuit solution for the Interface Devices.
(ii) The parties hereto will co-market the resultant solution to the
end customers (e.g., telcos).
(b) Phase 2: Prototyping Phase (Target Date: July 1998)
(i) Sumitomo will evaluate Centillium's first prototype of the
Interface Devices. Centillium will provide, without additional
payment, except those stipulated in Article 3, reasonable
quantities of evaluation boards to the Sumitomo for this
evaluation. Sumitomo will provide a written report on the
evaluation. Sumitomo agrees to provide additional evaluation
reports throughout the period of this Agreement as subsequent
iterations of the Interface Devices are prototyped and forwarded
to Sumitomo for evaluation. Prototypes of second and/or future
iterations of the Interface Devices will be provided free of
charge unless they are custom iterations for Sumitomo in which
case Centillium may charge a fee to be mutually agreed upon by
the parties hereto.
(ii) Upon request made by Sumitomo simultaneously with the evaluation
reports stated above. Centillium shall incorporate into software
portion of the Interface Devices the modules created by Sumitomo
for Japanese market specifications. Sumitomo may dispatch
reasonable numbers of its engineers to Centillium's facilities
in order to create such modules by using the development
environment of Centillium.
(iii) In order to cover the NRE costs incurred by Centillium in
regards to the abovementioned activities for Japanese Market
specifications.
Centillium and Sumitomo shall mutually agree on payments in
addition to the $250,000 as described in Article 2 below by
Sumitomo to Centillium. This shall be done simultaneously with
definition of the scope of the work for these activities by
Centillium.
(iv) As the result of the co-development activities stated in item
(b)(ii) and b(iii), technology, software and other intellectual
property of Sumitomo may be incorporated in the Interface
Devices. In such a case, Centillium and Sumitomo shall agree on
a reasonable discount schedule offered to Sumitomo, which
applies only to Interface Devices sold to Sumitomo. Centillium
shall have a royalty free exclusive license to this Sumitomo's
technology for manufacturing, using and selling the Interface
Devices to all Centillium's other customers. Such license will
be terminated upon the occurrence of the event described in item
6 in the Agreement. Both parties acknowledge that Sumitomo has
been conducting certain activities with Analog Devices
Corporation as to ADSL, ANSI T1.413, DMT implementation (the
"ADSL project").
Sumitomo hereby confirms to Centillium that Sumitomo is not
cooperating with Analog Devices with respect to any other
projects than the "ADSL Project". Sumitomo also confirms that it
will not cooperate with any other entity on any other project
involving Sumitomo's DSL technology that may result in products
similar to the Interface Devices as set forth in the beginning
of this Agreement, software and other intellectual property of
Sumitomo (the "Sumitomo IP") related to the co-development
activities in item (b)(ii) and (b)(iii) hereof. In furtherance
of, and not in limitation to, Section 5 hereof any other
agreement between Sumitomo and Centillium. Sumitomo will not
disclose any of Centillium's confidential information to Analog
Devices. Further, Sumitomo will not disclose any Sumitomo IP to
Analog Devices other than such Sumitomo IP necessary for the
ADSL Project. [As used herein, the ADSL Project shall not mean
any modification, derivation or extension thereof not currently
contemplated.
(c) Phase 3: Pre-production and Production Phase (Target Date: September
1998)
(i) Sumitomo will supply written acknowledgment that the Interface
Devices meet all the specifications listed in the Product
Specification agreed to by the parties. Upon the execution of
the supply agreement between Centillium and Sumitomo stipulated
in Section 6, Sumitomo will provide Centillium with a
requirements forecast of its delivery requirements covering the
next twelve month period for the Interface Devices to be
purchased from Centillium.
(ii) Sumitomo will also assist Centillium in establishing standards
utilizing Centillium's modulation schemes and will support
Centillium's
documentation efforts for the Interface Devices. If Centillium
produces devices based upon such standards, Centillium will
provide Sumitomo with access to such devices (e.g., alpha and
beta test site) prior to the general commercial release of such
devices.
(iii) Sumitomo and Centillium agree that reasonable standard
commercial terms and conditions will apply to the sale of all
devices to Sumitomo.
3. Payments
(a) Following the execution of this Agreement Sumitomo will pay Centillium
a non-recurring engineering (NRE) charge of $250,000 to offset costs
associated with Centillium's development of the Interface Devices.
Development of the evaluation boards for the Central Office (CO) and
customer premise Modem. Application support as well as limited special
loop plant modeling that may be requested by Sumitomo. The $250,000
payment shall be made according to the following schedule:
(i) $150,000 upon the signing of the Agreement
(ii) $100,000 upon acceptance by Sumitomo of the prototype devices
and the evaluation board for the CO and the customer premise
modem-not to exceed ninety (90) days after the delivery of the
abovementioned by Centillium. Acceptance by Sumitomo shall not
be unreasonably withheld. If Centillium receives no rejection
within ninety (90) days, the Interfaces Devices shall be deemed
accepted and the payment shall be immediately due.
(b) This $250,000 is not part of the additional payments specified in
2(b)(iii) above.
4. Technology Ownership and Licenses
(a) Nothing herein will be constructed as an express or implied license
(under patents or otherwise) of any kind.
(b) Centillium will have exclusive right to design and market Devices and
any improvements of modifications thereto resulting from the activities of this
Agreement.
(c) Any information disclosed by Sumitomo to Centillium under this
Agreement with respect to direct support of the Devices (i.e., with respect to
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characterization and performance of the Devices) may be freely used by
Centillium for the purpose of implementation of design and implementation of
manufacturing and supporting Devices sold to Centillium's customers, and other
substantially similar activities Notwithstanding the confidential obligations in
section 5 hereof. Centillium may, with Sumitomo's prior consent, disclose the
specific information set forth above. Such consent shall not be un-reasonably
withheld.
5. Confidential Information and Non-Disclosure
Any technical information and other business information disclosed
hereunder by either party hereto to the other will be held in strict confidence
by the receiving party from the date of disclosure until three years after the
date this agreement expires or terminates, using the same degree of care as the
receiving party uses for its own information of a similar kind, and will not be
transferred or divulged to any third-party or any employee who does not have the
requisite need to know. For purposes of interpreting this Agreement, employees
of Sumitomo's affiliates, divisions or subsidiaries do not have the requisite
need to know to obtain access to Centillium confidential information disclosed
to Sumitomo hereunder. Such confidentiality obligation will not apply to
portions of such technical information and other business information, if any,
(a) which were previously known to the other party hereto free of any
confidentiality obligation, (b) which are or become known to the public,
provided that such public knowledge is not attributable to a breach of this
Agreement by the other party hereto, (c) which the furnishing party explicitly
agrees in writing need not be kept confidential (either in this Agreement or
separately), or (d) which are received by the other party hereto rightfully from
a third-party without a restriction on disclosure. Further, Centillium agrees
not to disclose to any other party any of the specifics of Sumitomo's system
testing and results that might specifically indicate a problem related to such
system. However, if the Devices, are modified by Centillium to remedy a system
problem, Centillium may disclose such test information as may be necessary to
support such modified Devices, to the extent that such disclosure coincides with
the availability of the Modified Devices.
6. Supply Agreement of Interface Devices
Centillium and Sumitomo agree to execute the supply agreement of Interface
Devices purchased by SEI from Centillium simultaneously with written
acknowledgement of Sumitomo that the Interface Devices meet all the
specifications listed in the product specification agreed to by both parties.
Such Supply Agreement shall include the following statement.
(i) Centillium may elect at any time during the term of this
Agreement, to discontinue the manufacture of the Interface
Devices, provided that Centillium shall continue to supply to
Sumitomo upgrade version of the Interface Devices, if any upgrade
exist. If Centillium makes the election described in the
foregoing sentence, it shall provide Sumitomo twelve (12) months
prior written notice and the opportunity to make a life time
supply purchase. Sumitomo may place orders for an amount of
Interface Devices not to exceed three (3) times the pre-notice
production rate at any time during such twelve (12) months for
delivery up to eighteen (18) months after receipt of notice. The
supply of any upgrade version shall be subject to the terms of a
new Supply Agreement reasonably acceptable to both parties.
(ii) Centillium shall place into escrow both of the source code and
object
code of the software utilized for Interface Devices, and all the
necessary data to manufacture the Interface Devices ("Escrowed
Items"). If Centillium ceases the manufacture of the Interface
Devices and Centillium is unable to provide Sumitomo with the
purchase right similar to the one stated in (6)(1), for the
reason of voluntary or involuntary bankruptcy. Escrowed items
shall be disclosed to Sumitomo. In such a case, Centillium shall
grant to Sumitomo a royalty free, non-exclusive license of the
relevant know-how and patents owned by Centillium for the purpose
of production of the Interface Devices.
7. Term
This Agreement will expire Four (4) years after the Effective Date unless
extended in writing by mutual parties.
8. Governing Law
The construction, interpretation and performance of this Agreement will be
governed by the laws of the State of California without reference to its
conflict of laws and principals. The United Nations Convention on Contracts for
the International Sale of Goods will not apply to the sale of Devices hereunder.
9. Entire Agreement
This Agreement sets forth the entire agreement and understanding between
the parties hereto with respect to its subject matter. It merges all
discussions between them and voids and replaces each and every other agreement
or understanding which may heretofore have existed between Centillium and
Sumitomo regarding such subject matter. Notwithstanding the foregoing, the
Nondisclosure Agreement between the parties hereto, dated August 27, 1997, as
amended, will be deemed incorporated herein by reference, provided that each
party hereto will be permitted to use any information disclosed thereunder to
the extent permitted in this Agreement.
10. Publicity
(a) Neither party hereto will disclose the existence or content of this
Agreement without the other's prior written consent, which will not be
unreasonably withheld. Each party will submit to the other all proposed
publicity material relating to the disclosure of this Agreement or the
relationship of the parties hereto.
(b) This Section 9 will not prohibit disclosure by a party if such
disclosure is required by a court of competent jurisdiction, law or regulation.
IN WITNESS WHEREOF, each of Centillium Technology Corporation, and Sumitomo
Electric Industries Ltd. have executed this Agreement, in duplicate originals,
by their respective officers hereunto duly authorize, the day and year first
above written.
CENTILLIUM TECHNOLOGY CORP. Sumitomo Electric Industries, Ltd.
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Xxxxx Xxxxxx: Xxxxx Xxxxxxxxx
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VP Planning and Business Development General Manager, Systems and Electronics
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R&D
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/s/ Xxxxx Xxxxxx /s/ Xxxxx Xxxxxxxxx
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10/13/97 10/24/97
