THIS AGREEMENT is made the 29th day of January 1997
BETWEEN:
1. MSU (UK) Limited a Company registered in the United Kingdom, having its
principal place of business at Elder House, 526 to 528 Xxxxx Xxxx, Xxxxxxx
Xxxxxx Xxxxxx, XX0 0XX, Xxxxxx Xxxxxxx ('MSU').
2. Zilog Inc, a California registered Company, having its principal place of
business at 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx, 00000-0000
('Zilog').
WHEREAS:
(a) MSU is a Company with expertise in the design and development of inter alia
video chips and support software and reference hardware system for use in
televisions and TV set top boxes. MSU is the licenser of its technology to
OEM's and semi conductor manufacturers.
(b) Zilog Inc is a Company that designs, manufactures and sells integrated
circuits to many consumer OEM's who manufacture and sell televisions,
VCR's and TV Set Top Boxes.
(c) MSU wishes to grant and Zilog wishes to acquire the licence and rights to,
subject to the terms and conditions of this agreement, the MSU products
defined below.
IT IS AGREED AS FOLLOWS:
1. Definitions.
'Alternate Product Manufacturer' means an alternative manufacturer of the
Product to
whom MSU may grant a licence to manufacture, market and sell the Product
pursuant to Clause 2.1.1 or where any milestones agreed pursuant to Clause 2.2.1
are not met to develop, manufacture market and sell or to whom the saving
conditions reserved by Clause 2.2.2 apply.
'Application Development Kit' ('ADK') means a set of API Libraries for the
Netbox hardware reference design platform. The ADK may be used by Zilog
customers to produce additional application software to the binaries supplied.
The ADK may be used to develop alternative HTML browsers and E-Mail Clients.
'Application Software Suite' ('ASS') means the Netbox binary run time code for:
(a) The Netbox Operating System Environment;
(b) Flash Filing System;
(c) HTML Browser Client and associated MIME Clients (JPEG, GIF, AU, WAV);
(d) E-Mail Client.
The Application Software binaries are only designed to operate within the
parameters of the Netbox hardware reference design platform.
'Derivative products' are MSU or Zilog developed integrated circuits that may
cost reduce the MSU Netbox design and/or add functionality to the Product in the
MSU Netbox Market which are not pin compatible plug in replacements for the
Product.
'Family Products' means integrated super set or sub set versions of the Product
and which are built utilising part of the Product architecture but which are not
intended for use in MSU Netbox or to utilise MSU Netbox Software.
'Full Capability Units' means part number Z9060X addressing 16 megabytes of
memory and running MSU Netbox software, including Browser, E-mail and software
stack.
'ISP Chip Set' means the proprietary Internet Services Processor that provide
Internet Video and Audio output from a modem Internet input for display on
televisions.
'The Licence Fee' means
(a) the sum of [*] payable as to:
(a)(1) [*] which had been paid to MSU in stock and receipt of which MSU
acknowledges.
(a)(ii) [*] upon execution of this Agreement.
(b) The sum of [*] representing NRE payment to MSU payable as to:
(b)(i) [*] upon completion of silicon design. Completion of silicon design
* The omitted information is confidential and has been filed separately with the
Securities and Exchange Commission.
shall be deemed to have occurred when Zilog successfully complete pattern
generation (P6).
(b)(ii) [*] upon initial demonstration of functional silicon. Initial
demonstration of functional silicon shall be deemed to occur when
the MSU Netbox operates with the Product in an identical manner to
an MSU Netbox using MSU Silicon without evidence of material
glitches or bugs.
The NRE payment shall be treated as a repayment of Royalties to be returned to
Zilog by the reduced royalty on the first [*] units of product as set out in
clause 4.1.1(a) hereof.
'MSU Netbox' means an Internet Access Device based upon an MSU schematic
reference design attached hereto as Exhibit 1 which incorporates the proprietary
operating software programmes and routines together with application software
all developed by MSU.
'Netbox Software' shall mean collectively the Application Software Suite, the
Application Development Kit and the OEM Development Kit.
'Net Selling Price' Shall be Zilog's gross sales price invoiced to its
customers, less deductions made for cash and trade discounts, allowances and
returns in the ordinary course of business. Taxes, freight and other shipping
charges that are invoiced by separate line item on the invoice shall also be
excluded from the Net Selling Price.
'OEM Adaptation Kit' ('OAK') means the suite of tools to allow the Application
Software Suite to undergo a defined amount of customisation. This includes user
interface graphics and associated positioning dialler and connection parameters
and scripted log on procedures.
'Partial Capability Units' means part number Z9060Y which may:
(i) not be using MSU Netbox software;
(ii) be limited to 1 megabyte of memory address by omitting to bond 4 address
pins;
(iii) be such partial specification as should from time to time be agreed.
'the Product' means the discrete ISP Chipset revision 2 and future discrete pin
compatible plug in replacements intended for use in the MSU Netbox designs and
which do not require major MSU Netbox Software changes or hardware changes to be
used.
* The omitted information is confidential and has been filed separately with the
Securities and Exchange Commission.
'Source Code Licence' shall mean a licence to perform modification of the ASS by
modifying the 'C' based source code and by utilising functions provided by the
ADK and add to the original source code of the current release of the
Application Software Suite and Application Development Kit.
2. Grant of Licence
2.1 In consideration of the Licence Fee and the premises herein MSU hereby
grants to Zilog the licences set out below:
2.1.1 A worldwide perpetual (except as set forth in Section 10 non
exclusive licence to manufacture market and sell the Product. MSU
agrees that during the term of this agreement it will not grant a
licence in similar terms to this clause 2.1.1 to more than one
Alternate Product Manufacturer to manufacture market and sell the
Product.
2.1.2 A worldwide perpetual (except as set forth in Section 10 below)
non exclusive licence to develop manufacture market and sell
Derivative Products and Family Products.
2.1.3 Subject only to agreement as to commercially acceptable terms as
to price volume and delivery:
(a) a non exclusive licence to foundry the Products.
(b) a first opportunity/option to negotiate with MSU or MSU
customers (other than any Alternate Product Manufacturer) who
have foundry requirements (but not further or otherwise) for
the foundry on their behalf of either proprietary or non
proprietary Derivative Products and Family Products.
2.2 MSU will not grant a licence to an Alternate Product Developer in
similar terms to clause 2.1.2 for so long as Zilog is successful in:
2.2.1 meeting commercial milestones for the development marketing and
sale of Derivative Products and Family Products as may be agreed
upon between the parties in a subsequent written agreement.
2.2.2 maintian technological and innovation supports as an Alternate
Product Developer of Derivative Products and Family Products.
SAVE that MSU may at any time licence an Alternate Product
Developer who may also develop market manufacture and sell
products which do not compete directly with the Product,
Derivative Products or Family Products or where the Alternate
Product Developer has new technology or core licences which the
parties are not otherwise able to obtain in their own right.
2.3 For the purposes of clarification development manufacturing marketing
or sale by MSU per se of the Products, that are the subject of this
agreement, shall not be deemed to be development manufacture marketing
or sale by an Alternate Manufacturer or Alternate Product Developer
referred to in clauses 2.1.1 and 2.1.2 above. At all times MSU shall be
free to commercially exploit its technology in its own right.
3. Derivative Products and Family Products
3.1 Prior to the commencement of work upon Derivative Products Zilog will
obtain from MSU prior approval of the proposed product specification
and project goals for development. No such approval shall be required
to be given by MSU for Family Products.
3.2 Notwithstanding clause 3.1 above, Zilog shall be required to notify MSU
in writing of its plans for the development of Family Products.
Notification shall be provided in advance of completion of the
Engineering Objective Specification ('EOS') for the family Product.
3.3 Where Derivative Products and Family Products are developed
independently by the parties and which are not customer proprietary
licences shall be granted upon an exchange basis on terms to be agreed
upon at the time that the licence is requested to manufacture, develop,
market and sell.
3.4 Where licence back of Zilog Derivative Products and Family Products are
granted to MSU as provided in clause 3.3 above MSU will foundry such
products at Zilog subject to most favoured customer terms.
3.5 The parties will co-operate with a view to defining future integrated
versions of the Product and development plans to the mutual
understanding of the parties.
3.6 MSU agrees that where it has developed Derivative Products or Family
Products
it will not grant a Licence to more than one Alternate Product
Manufacture to manufacture, market and sell such Derivate Products or
Family Products.
4. Royalties
4.1 MSU shall be paid by Zilog a royalty for each unit of the Product,
Derivative Product or Family Product manufactured and shipped by Zilog.
Such royalties shall be calculated as follows:
4.1.1 For Full Capability units sold as an embedded application using
MSU Netbox software;
(a) for the first [*] units [*] per unit;
(b) for the next [*] units [*] per unit;
(c) thereafter, [*]% of the net selling price.
4.2 For Partial Capability Units:
4.2.1 Not using MSU Netbox software [*] to be agreed when final
specification agreed of net selling price of discreet versions of
the ISP Chipset. There shall be no minimum price for this
Product.
4.2.2 Where a super-set or sub-set of the ISP Chipset is integrated
with other functions or cores into a Derivative Product a royalty
shall be calculated as to a percentage of the fractional ratio of
the ISP Chipset net selling price to the total Chipset selling
price where the ratio is the same as the area ratio of the ISP
Chipset to the entire Derivative Product developed. In the
calculation of this formula, bonding pad area and repetitive
design areas such as ROM and RAM shall be excluded.
4.2.3 This agreement contemplates that Derivative Products shall have a
royalty which reflects:
(a) The added value from the use of MSU Netbox software at the
rate referred to in clause 4.1 above (discrete versions) or;
(b) subject to the area ratio calculation in 4.2.2 above.
4.3 A minimum ISP published selling price of [*] per unit is initially
required to conform with MSU contractual arrangements in place at the
date of this agreement. MSU has a commitment to customers that requires
Zilog not to sell Full Capability Units with MSU Netbox software at
prices below (US)
* The omitted information is confidential and has been filed separately with the
Securities and Exchange Commission.
[*] in any volume. In the event that MSU grants prices below this
minimum MSU will notify Zilog of the new minimum price Zilog shall be
permitted to sell at or above the new minimum price. Zilog and MSU
agree to negotiate prices below this level if the MSU ISP Chipset
becomes unprofitable or uncompetitive when sold at any agreed price.
4.4 Where a new product is redesigned to obtain a significantly increased
performance version of the ISP Chipset function new royalty terms shall
be renegotiated.
4.5 MSU agrees that in the event of:
(a) Other Chipset solutions and software being available in volume to
end use customers at a lower price, or;
(b) MSU or Zilog introduce more integrated ISP versions of the Product
that displace the need for the discrete Product:
renegotiation of the price of the ISP Chipset to under [*] and the
royalties to under [*] of the net selling price may be allowed.
4.6 Zilog agrees to keep true and accurate records and books of account for
two (2) years past their date of creation containing all the data
necessary for the determination of the royalties payable under this
clause which records and books of account shall upon reasonable notice
of MSU be open at all reasonable times during business hours for
inspection by MSU or an independent accountant selected by MSU and
acceptable to Zilog (which acceptance shaould not be unreasonably
withheld) for the purpose of verifying the accuracy of Zilog's report
hereunder. All such requests by MSU must be made within two (2) years
of the date of receipt of the report at issue or such claims or actions
shall be forever waived by MSU. MSU shall be solely responsible for the
costs of the account unless the accountant certifies that any reports
are inaccurate in any material respect in which event Zilog shall
reimburse MSU for its reasonable costs.
4.7 Zilog shall submit to MSU within thirty days of the end of each
calender month a statement setting forth with a respect to its
operations hereunder during that period setting out in particular:
(a) The quantity of the products manufactured;
(b) the quantity of the products shipped;
* The omitted information is confidential and has been filed separately with the
Securities and Exchange Commission.
4.8 MSU agrees to maintain confidential all financial information received
that document or relate to Zilog's operations pursuant to this
agreement.
5. MARKS
5.1 It is anticipated that from time to time the product will carry a
distinctive xxxx or logo together with an acknowledgement of MSU design
and ownership of rights. Zilog will ensure that such marks are carried
on the topmark or shipping cartons for the Product.
5.2 Zilog shall leave in position and will not cover or erase any notice or
other marks (including without limitation details of patents or
trademarks or copyright relating to the Product or its ownership by MSU
which MSU may reasonably insist are placed or fixed to the Products or
their casing or packaging.
5.3 Zilog shall be permitted to place marks on Product, Derivative Products
or Family Products that protect any intellectual property or other
rights that Zilog may claim in the Product, Derivative Products or
Family Products.
6. MSU OBLIGATIONS
6.1 TO GRANT SOFTWARE LICENSES.
6.1.1 MSU shall grant licenses to Zilog customers of the Netbox
software in substantially the form of MSU's Application Software
Suite Licence or Source Code Licence as shall be current from
time to time (individually called a Licence Agreement). Such
licences shall only be granted to Zilog customers who:
(a) Have completed Product evaluation and have placed irrevocable
chip orders for the ISP Chipset;
(b) Who have signed a Licence Agreement providing for the payment
to MSU of a royalty of [*] for each unit of ISP Chipset
shipped incorporating any part of the ADK executable code;
(c) In the case of a Source Code Licence pay an up front licence
fee of [*]. This may at MSU's discretion be waived and
modified where appropriate with individual customer;
* The omitted information is confidential and has been filed separately with the
Securities and Exchange Commission.
(d) Such Licence Agreements shall also provide for registration
with MSU prior to market release, and for MSU to have the
first right of refusal to licence back such code for use with
the ISP Chipset.
6.1.2 Zilog shall have the right to supply evaluation copies of the ADK
and OAK to approved Zilog customers who have entered into
obligations of confidentiality satisfactory to MSU.
6.2 TO PROVIDE A DEVELOPMENT KIT
6.2.1 MSU will supply to approved Zilog customers a Development Kit
consisting of a Netbox Appliance, connecting cables to a PC
Computer, Schematics, the ASS and OAK.
6.2.2 The list price of the Development Kit shall be [*]. This may
at MSU discretion be waived or modified where appropriate with
individual customers.
6.3 TO PROVIDE SOFTWARE SUPPORT
6.3.1 At all times during the term of this agreement MSU will support
the Netbox Software on the X86 CPU platform of the Netbox
reference design licenced pursuant to the terms of this agreement
to the extent provided for in Exhibit 2 hereto.
6.4 TO FULFILL DEVELOPMENT CONTRACTS
6.4.1 Where Zilog customers do not have the necessary resources subject
to agreement as to terms, MSU will offer Zilog customers a
software development service to modify/or customise Netbox
software.
6.4.2 MSU shall charge normal MSU rates for such activities.
6.5 TO PROVIDE A CUSTOMER TELEPHONE SUPPORT SERVICE
6.5.1 Subject to demand, MSU shall offer Zilog customers of ISP
hardware or software a limited availability of telephone support.
6.5.2 MSU reserves the right to limit the extent of free support
services according to the capability and competence of the
customer and magnitude of the business with MSU.
* The omitted information is confidential and has been filed separately with the
Securities and Exchange Commission.
7. ZILOG OBLIGATIONS
7.1 MSU has agreements with Internet Service Providers ("ISPs") that
provide MSU customers with optional use of ISP's services when using
the MSU Netbox Reference Design Browser software. Customers developed
by MSU for ISPs provide MSU with a finders fee in compensation for
developing such customers. Zilog is willing to pass through to
customers the software that offers such services in the form of the
Browser and will negotiate compensation for the benefit of MSU from
ISPs.
8. INDEMNITIES
8.1 MSU shall fully indemnify and hold harmless Zilog against claims costs
and expenses that Zilog or its OEM customers may incur in connection
with any claim of infringement of the third party intellectual property
rights caused by or arising out of the manufacture or sale or use of
the Product or Netbox software. This indemnity shall include all costs
and expenses of refuting defending or settling any claim as well as any
damages or compensation ordered to be paid to any third party by any
Court.
8.2 Zilog shall fully indemnify and hold harmless MSU against any claims or
actions brought by third parties against MSU due to manufacturing
defects in the Product or design defects of any Derivative Products or
Family Products developed by Zilog. This indemnity shall include all
costs and expenses of refuting defending or settling any claim as well
as any damage or compensation ordered to any third party by any Court.
8.3 Zilog shall not be responsible for any changes requested or required by
MSU or third parties to any Product, Derivative Product, or Family
Product. Zilog shall not be responsible for flaws or defects created by
MSU or third parties because of alterations to the Products, Derivative
Products, or Family Products, or because of damages that arise as a
result of combination of the Product, Derivative Products, or Family
Products in systems designed, engineered or developed by MSU or third
parties.
8.4 NEITHER ZILOG NOR MSU SHALL BE LIABLE TO THE OTHER OR TO ANY OTHER
PERSON (TO THE MAXIMUM EXTENT THAT EITHER PARTY CAN DISCLAIM SUCH
LIABILITY) FOR ANY CLAIM FOR
INCIDENTAL, SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS
OF PROFIT, LOSS OF PLANT OR EQUIPMENT OR PRODUCING ARISING FROM THE
SALE OR SUBSEQUENT USE OF PRODUCTS, DERIVATIVE PRODUCTS OR FAMILY
PRODUCTS.
9. INTEREST
9.1 All sums due from either of the parties to the other which are not paid
on the due date shall bear interest from day to day at the annual rate
of 3% over the current National Westminster Bank Plc daily base rate
with a minimum of 10% per annum.
10. TERMINATION
10.1 Either party may by notice in writing to the other terminate this
agreement immediately upon the happening of any one of the following
events:
(a) Either party shall become bankrupt or be wound up or make any
arrangement or composition with its creditors;
(b) If either party is in material breach of any term of this Agreement
and fails to cure the breach within 45 days, (21 days for non
payment of monetary sums owed) after written notice of that breach
and of the first party's intention to terminate;
(c) On either party for any reason of whatsoever nature being
substantially prevented from performing or becoming unable to
perform its obligations hereunder;
(d) On Zilog or MSU assigning or attempting to assign this Agreement
without the prior written consent of the other;
(e) If control of Zilog or MSU shall pass from the present shareholders
or owners or controllers to other persons whom the other party
shall in its absolute discretion regard as unsuitable.
10.2 The indemnities and obligations of confidentiality contained in this
Agreement and the provision for payment of an account in respect of
continuing royalties and other sums due to either party under this
Agreement shall survive the termination or expiry of this Agreement.
11. GENERAL
11.1 Force Majeure. Neither party shall be liable to the other for any
failure to perform or delay in performance of its obligations
hereunder (other than an obligation to pay monies) caused by:
(a) Act of God;
(b) outbreak of hostilities, riots, civil disturbance, acts of
terrorism;
(c) the act of any government or authority (including revocation
of any licence or consent);
(d) fire, explosion, flood, fog or bad weather;
(e) theft or malicious damage, strike, lockout or industrial
action of any kind;
(f) any cause or circumstances whatsoever beyond its reasonable
control.
11.2 The parties agree to submit to the exclusive jurisdiction of the
courts of England and Wales.
11.3 Waiver. The failure of a party to insist in any one or more
instances upon the performance of any provisions of this agreement
shall not be construed as a waiver or relinquishment of that
party's rights to future performance of such provision and the
other party's obligation in respect of such future performance
shall continue in full force and effect.
11.4 Severability. In the event that any one or more of the provisions
contained in this agreement shall for any reason be held to be
unenforceable, illegal or otherwise invalid in any respect under
the law governing this agreement or its performance such
unenforceability, illegality or invalidity shall not effect any
other provision of this agreement and this agreement shall then be
construed as if such unenforceable illegal or invalid provisions
had never been contained herein.
11.5 Compliance with Laws. In the performance of this agreement both
parties should comply with all laws, rules, regulations, decrees
and other ordinances issued by any governmental or other state
authority relating to the subject matter of this agreement and the
performance by the parties hereto or their obligations hereunder.
11.6 Whole Agreement. This Agreement sets forth and shall constitute the
entire agreement between both the parties with respect to any of
the subject matter hereof and shall supersede any and all promises,
representations, warranties or
other statements whether written or oral, made by or on behalf of
one party to the other of any nature whatsoever or contained in any
leaflet brochure or other document given by one party to the other
concerning such subject matter.
11.7 This Agreement may not be released, discharged, supplemented,
interpreted, amended, varied, or modified in any manner except by
an instrument in writing signed by a duly authorised officer or
representative of each of the parties hereto.
12. NO JOINT VENTURE OR PARTNERSHIP
Nothing in this Agreement should create a partnership or joint venture
between the parties hereto and save that expressly provided in this
Agreement, neither party shall enter into or have authority to enter into
any engagement or make any representation of warranty on behalf of or
pledge to credit or otherwise bind or oblige the other party hereto.
13. CONFIDENTIALITY
13.1 Each party shall enter into a trust and confidence agreement in the
form set out in Schedule 1 - regulating to the fullest extent
allowed by the law in respect of responsibilities and duties of
confidentiality governing the ISP Chipset, the software,
intellectual property rights, know how and technical information,
the subject of this Agreement.
13.2 Zilog undertakes to ensure that all employees, suppliers, sub
contractors, sub licensees, and any other persons or organisations
who it is reasonable to contemplate having access to the
intellectual property rights know how or technical information will
covenant directly with MSU in the same terms as the trust and
confidence agreement.
14. NOTICES
14.1 Unless otherwise specified herein all notices or reports permitted
or required under this Agreement shall be in writing and shall be
delivered in person, mailed by first class postage prepaid or sent
by telex, telegram or telecopier to the designated person at the
address set forth below or as amended in writing and provided to
the other party at their last designated address.
14.2 Notices and payments to MSU shall be sent to the following:
Elder House
526 to 000 Xxxxx Xxxx
XXXXXXX XXXXXX XXXXXX
Xxxxxx Xxxxxxx MK9 1LR For the attention of Xx X X Xxxxxxxx
14.3 Notice to Zilog shall be sent to the following address:
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxx
XXXXXXXXXX 00000
XXX
For the Attention of the Legal Department
Signed on behalf )
of MSU ) /s/ Xxxxxxx Xxxxxxx
in the presence of ) ____________________________________
Secretary
AUTHORISED SIGNATORY
[signature]
_________________________
WITNESS
Signed on behalf ) [signature]
of MSU ) ___________________________________
in the presence of ) AUTHORISED SIGNATORY
_________________________
WITNESS
