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EXHIBIT 10.37
Confidential materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
JOINT DEVELOPMENT AGREEMENT
This joint Development Agreement is made this 11th day of June, 1991
(the "Effective Date") by and among Summa Four, Inc., a Delaware corporation
("Summa Four") and Junction, Inc., a Delaware corporation ("Junction").
1 DEFINITIONS.
1.1 "Business Plan" means that plan for the development and testing of the
Product by the Joint Venture, and the manufacture and distribution and
marketing of the Product by Summa Four, during Phase II.
1.2 "Joint Approval of the Business Plan" means the date on which each of
Summa Four and Junction have agreed in writing (in the manner
explicitly set forth in Section 2.5) that the Business Plan is
acceptable.
1.3 "Joint Venture" means that limited liability company or other joint
venture entity to be owned and operated by Summa Four and Junction and
to be formed by them for the purpose of carrying out the development
and testing of the Product.
1.4 "Joint Venture Agreement" means the agreement between Summa Four and
Junction describing their relative ownership interests in,
contributions to and rights and responsibilities in connection with
the Joint Venture.
1.5 "Phase I" means the period commencing on the date of this Agreement
and ending as described in Section 6.1.
1.6 "Phase II" means the period commencing upon joint Approval of the
Business Plan, if any, and ending as described in the Joint Venture
Agreement.
1.7 "Product" means the next generation switch platform having the
attributes described on SCHEDULE A.
1.8 "Project" means the development, testing, manufacture, distribution
and maintenance of the Product during Phase II in accordance with the
Business Plan.
2 DESCRIPTION OF PHASE I.
2
2.1 RESPONSIBILITIES OF THE PARTIES. During Phase I, Summa Four and Junction
will cooperate in the development of the Business Plan. Notwithstanding the
foregoing, the principal responsibilities of the parties relating to
development of the Business Plan will be as follows:
(a) Junction will:
(1) Perform the technical and business analysis necessary to develop
the Business Plan;
(2) Draft the Business Plan and all related designs, diagrams, charts
and other materials;
(3) Use its best efforts to complete the Business Plan as soon as
possible, but no later than the 120th day following the Effective
Date.
(b) Summa Four will:
(1) Provide overall structural and strategic direction for the
Business Plan and cooperate fully in the preparation of the
non-technical portions of the Business Plan, with a view toward
assisting Junction to complete the Business Plan no later than
the 120th day following the Effective Date;
(2) Fund Junction's development costs in the manner and to the extent
described in Section 4;
(3) Timely provide Junction with such information as is necessary to
enable Junction to design the Product in a manner compatible with
Summa Four's existing product lines;
(4) Timely provide Junction with estimates and projections relating
to the manufacture, distribution and marketing of the Product by
Summa Four.
2.2 SUBCONTRACTING. Junction shall not be permitted to subcontract any of its
duties under this Agreement to any third party without the express written
consent of Summa Four, which consent may be granted or withheld in Summa
Four's sole discretion. Any such subcontractor approved by Summa Four must
execute a written agreement in form and substance acceptable to Summa Four.
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2.3 COMMUNICATIONS. Each party will designate one or more representatives
(including business and technical persons) through which all communications
relating to the Business Plan should be communicated. The parties agree
that representatives from their respective teams working on the Business
Plan shall meet at least once per week to discuss the progress of the
Business Plan, and any issues that have arisen since the preceding meeting.
The parties will use all reasonable efforts to communicate openly and
frequently regarding scheduling and technical issues relating to the
development of the Business Plan, and each party agrees to notify the other
of any anticipated delays.
2.4 BUSINESS PLAN DESCRIPTION.
(a) At a minimum, the Business Plan will contain detailed discussions of
the following areas and provide the following information:
(1) Technical: functional technical specifications and design plans
for the Product, preliminary development milestones and
schedules, and a description of how Summa Four's existing APIs
and current expansion plans (i.e. 5.0+) can be coordinated with
the development of the Product;
(2) Marketing: competitive analysis, marketing, sales and production
forecasts, anticipated impact on Summa Four's near-to-mid-term
commitments and revenue projections;
(3) Financial: projected development expenses and budget, including
detailed personnel (management, engineering, design, programming,
marketing, research and contractor), overhead, facilities and
equipment requirements, projected salary/bonus/benefits for
personnel; 5-year projected Product revenues and projections of
Summa Four's revenues operating profits from the Product over the
same term;
(4) Product Life Cycle: schedules and personnel requirements for
regular updates, enhancements and upgrades of the Product, and
Product maintenance and support; and
(5) any other mutually agreed elements customary in a business plan.
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2.5 JOINT APPROVAL OF BUSINESS PLAN. Joint Approval of the Business Plan
shall occur only when the Business Plan has been initialed and dated
by the senior executive officer of each of Summa Four and Junction.
2.6 JOINT VENTURE AGREEMENT. As promptly as possible following Joint
Approval of the Business Plan, the parties shall execute the Joint
Venture Agreement in a form which is reasonably acceptable to them.
The Joint Venture Agreement shall contain, at a minimum, the
provisions attached hereto as SCHEDULE B, and will also incorporate
the schedules, milestones and obligations pertaining to the Project
which are set forth in the Business Plan.
3 EXCLUSIVITY. Junction agrees that during Phase I and, as described in
Section 6.2(c) below, for certain periods following the termination of
Phase I, Junction shall not, and shall require each of its shareholders,
employees and consultants not to, engage, directly or indirectly, in any
activity which is or would be competitive with the Product or any variation
or derivative thereof. Junction agrees and acknowledges that the payments
to be made by Summa Four to Junction hereunder are sufficient to compensate
Junction and its shareholders, employees and consultants for the
non-competition obligation set forth in this Section 3, and that the level
of such payments has been set specifically contemplating this
non-competition obligation. Junction agrees that it shall require its
shareholders, employees and consultants to enter into binding, written
agreements (enforceable by Summa Four) requiring them to comply with the
terms of this Section 3, and Junction shall pay each such person such
amounts as are necessary to compensate them for such non-competition
obligation (it being understood that such amounts will be subject to
reimbursement by Summa Four as Personnel/Salary expense, subject to the
provisions and limitations of Section 4 and the caps set forth in Schedule
D).
4 FUNDING. Summa Four will pay or reimburse Junction's documented expenses
incurred in connection with development of the Business Plan during the
first 120 days of Phase I (or until earlier termination of Phase I pursuant
to Section 6.1), up to the amounts set forth on SCHEDULE D hereto. Summa
Four will reimburse Junction no later than thirty (30) days following the
end of each calendar quarter for such expenses incurred by Junction during
the preceding quarter as to which Junction has submitted an invoice
requesting reimbursement prior to the end of the quarter. At Junction's
option, Summa Four may pay Junction's suppliers directly, on terms and
conditions acceptable to Summa Four and such suppliers. Summa Four will not
be responsible for paying any amounts under this Section 4 in excess of
those shown on SCHEDULE D; provided, however, that if circumstances beyond
Junction's reasonable control result in increased costs to Junction, Summa
Four will in good faith discuss increasing the amount of funding with
Junction.
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5 INTELLECTUAL PROPERTY.
5.1 OWNERSHIP. Summa Four shall own all right, title and interest in and
to the Business Plan, and all ideas, inventions, designs, algorithms
and methods described therein or formulated during the development
thereof, and all patent, copyright, trademark, trade secret, mask work
and other industrial and intellectual property rights therein
throughout the world, together with all applications, registrations
and renewals thereof (collectively, the "Proprietary Rights").
Junction hereby irrevocably sells and assigns all its right, title and
interest in and to the Proprietary Rights throughout the world,
whether existing now or developed in the future, to Summa Four.
Junction shall ensure that any subcontractor it engages to assist in
the development of the Business Plan or Product also assigns all
Proprietary Rights to Summa Four. At the request of Summa Four,
Junction and any such subcontractor shall execute and deliver all
assignments, instruments, affidavits, powers of attorney and other
documents as are necessary to effect the foregoing assignment. Summa
Four shall have the exclusive right to file patent and copyright
applications to protect the Proprietary Rights, and to assert the
Proprietary Rights against third parties.
5.2 LICENSED SUMMA FOUR TECHNOLOGY.
(a) Summa Four hereby grants to Junction, and Junction accepts, a
non-exclusive, non-transferable license during Phase I to
reproduce, use and create derivative works of that Summa Four
technology described in SCHEDULE C and related documentation (the
"Licensed Summa Four Technology"), solely at Junction's facility
in California and Summa Four's facilities, for the sole purposes
of preparing the Business Plan as described in this Agreement.
Junction shall have no right to sublicense any rights in the
Licensed Summa Four Technology without the express prior written
consent of Summa Four.
(b) Summa Four shall provide the Licensed Summa Four Technology to
Junction in a format which the parties reasonably agree is
necessary for Junction to perform its obligations hereunder.
Junction shall notify Summa Four immediately in the event of any
actual or suspected unauthorized access to, use of or tampering
with the Licensed Summa Four Technology. Junction agrees that the
Licensed Summa Four Technology shall constitute Confidential
Information of Summa Four, as defined in the Confidentiality
Agreement (as defined in Section 8 below).
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5.3 INDEMNIFICATION BY JUNCTION.
(a) Junction shall indemnify, defend and hold Summa Four harmless from and
against any losses, damages, settlements, costs and expenses
(including reasonable attorneys' fees) (collectively, "Damages")
arising from any claim that the Business Plan infringes or violates
any patent, copyright, trademark, trade secret, mask work or other
intellectual or industrial property right of any third party.
(b) Summa Four shall notify Junction promptly in writing of any third
party action (and provide information regarding all prior related
claims) brought against Summa Four based on a claim described in
Section 5.3(a) above and not otherwise described in Section 5.3(d)
below. Junction shall defend such action at its expense and pay all
Damages attributable to such claim incurred by Summa Four (as they are
incurred). Junction shall have sole control of the defense of any such
action and all negotiations for its settlement or compromise. Summa
Four shall reasonably cooperate with Junction in the defense of such
claim, and may be represented at Summa Four's expense, by counsel of
Summa Four's selection.
(c) In the event that a permanent injunction based solely on a claim
indemnified by Junction under Section 5.3(a) is obtained against the
parties' use or development of the Business Plan or their development,
use or distribution of the Product, then Summa Four shall have the
right to terminate this Agreement in accordance with Section 6.
(d) The provisions of Section 5.3(a) notwithstanding, Junction shall not
have any liability to Summa Four (including any obligation to
indemnify, defend or hold harmless) to the extent that any claim of
infringement or violation is based upon the Licensed Summa Four
Technology.
(e) Notwithstanding anything to the contrary contained above, in the event
that this Agreement is terminated by Summa Four pursuant to Sections
6.1(b) or 6.1(c), Junction shall not be required to indemnify Summa
Four with respect to Damages which are, in the aggregate, in excess of
the aggregate amounts paid by Summa Four to Junction under this
Agreement
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5.4 INDEMNIFICATION BY SUMMA FOUR.
(a) Summa Four shall indemnify, defend and hold Junction harmless
from and against any Damages arising from any claim that the
Licensed Summa Four Technology infringes or violates any patent,
copyright, trademark, trade secret, mask work or other
intellectual or industrial property right of any third party.
(b) Junction shall notify Summa Four promptly in writing of any third
party action (and provide information regarding all prior related
claims) brought against Junction based on a claim described in
Section 5.4(a) above. Summa Four shall defend such action at its
expense and pay all Damages attributable to such claim incurred
by Junction (as they are incurred). Summa Four shall have sole
control of the defense of any such action and all negotiations
for its settlement or compromise. Junction shall reasonably
cooperate with Summa Four in the defense of such claim, and may
be represented, at Junction's expense, by counsel of Junction's
selection.
(c) The provisions of Section 5.4(a) notwithstanding, Summa Four
shall not have any liability to Junction to the extent that any
claim of infringement is based upon use of the Licensed Summa
Four Technology for any purpose unrelated to the development of
the Business Plan or the Product as described in this Agreement.
(d) Notwithstanding anything to the contrary contained above, in the
event that this Agreement is terminated by Summa Four pursuant to
Sections 6.1(b) or 6.1(c), Summa Four shall not be required to
indemnify Junction with respect to Damages which are, in the
aggregate, in excess of the aggregate amounts paid by Summa Four
to Junction under this Agreement.
6 TERM AND TERMINATION.
6.1 TERMINATION OF PHASE I. Phase I will terminate upon the earliest to
occur of
(a) Joint Approval of the Business Plan; or
(b) notice by Summa Four that it elects to terminate Phase I; or
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Confidential materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
(c) at either party's election, if Joint Approval of the Business
Plan has not occurred by the 120th day following the Effective
Date; or
(d) notice of termination by a party following a material breach of
this Agreement by the other party, provided that if such breach
is susceptible of cure, such breach has not been cured within
thirty (30) days following notice thereof by the other party; or
(e) notice of termination by Summa Four upon the issuance of an
injunction described in Section 5.3(c).
6.2 EFFECTS OF TERMINATION OF PHASE I. Upon any termination of Phase I,
all development and finding obligations of the parties under Sections
2 and 3 of this Agreement shall terminate, except as set forth below.
(a) If, and only if, Phase I is terminated pursuant to Section
6.1(a), then (1) Phase II shall commence immediately, (2) the
valuation procedure described in Section 7 shall commence and (3)
the parties shall, no later than 30 days following such
termination, execute the Joint Venture Agreement.
(b) If Phase I is terminated by Summa Four pursuant to Section
6.1(b), or by either party pursuant to Section 6.1(c), then Summa
Four shall, (1) no later than the fifth (5th) business day
following such termination, pay Junction ***** and (2) pay
Junction the Termination Royalty described in Section 6.3.
(c) If Phase I is terminated pursuant to Sections 6.1(b), 6.l(c) or
6.1(d), then the exclusivity described in Section 3 shall
continue during the period beginning on the date of such
termination and ending on the later of (1) the third anniversary
of such termination or (2) if Termination Royalties are required
to be paid by Summa Four, the date on which the last Termination
Royalty payment is required to be made.
(d) Upon any termination of Phase I other than pursuant to Section
6.1(a), Junction shall deliver to Summa Four all software,
documentation, designs, illustrations, flow charts, works in
progress, media and other materials which it has developed or had
developed, or otherwise has in its possession or control,
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Confidential materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
embodying, describing or including the Business Plan, the
Licensed Summa Four Technology or the Product.
6.3 TERMINATION ROYALTY. For purposes of this Agreement, "Termination
Royalty" shall mean ***** of Summa Four's revenue from the Product,
including any variation or derivative of such Product. The Termination
Royalty shall be payable quarterly, and shall be paid, if any is due,
commencing at the time specified in Section 6.2 and ending upon the
earlier of (a) such time as the aggregate Termination Royalty paid by
Summa Four equals ***** or (b) the ***** anniversary of the
termination of Phase I. The Termination Royalty shall be payable only
after termination of Phase I and only if required by Section 6.2.
Summa Four shall provide to Junction, together with each payment of
the Termination Royalty, a report showing the relevant revenues and
other information necessary to calculate the amount of the Termination
Royalty.
6.4 TERMINATION OF AGREEMENT. This Agreement shall remain in force until
the parties mutually agree in writing that it shall be terminated, or
until all obligations required to be discharged hereunder have been
discharged. The termination of Phase I shall not, of itself, cause the
termination of this Agreement.
7 VALUATION.
7.1 Promptly following the commencement of Phase II, the business Plan
will be provided to Xxxxxxx, Xxxxxx & Xxxxxxxxx, Xxxxxxxxxx Securities
or other investment banking firm of national standing (as may be
agreed upon by the parties) to determine a formula for the value,
during the Exit Period defined below, of the Product to Summa Four
(assuming that Summa Four had a paid-up, royalty-free, exclusive
license to the Product and variations and derivatives thereof) for
purposes of the put and call arrangements described in SCHEDULE B. The
valuation formula will include such factors as revenues from the
Product, impact of the Product on Summa Four's stock price, Junction's
success during Phase II in meeting time and Product performance
milestones, dilution effect (if any) on the valuation of Summa Four
stock (in the event Summa Four uses its stock to exercise any portion
of its call option under the Joint Venture Agreement) and such other
factors as Summa Four and Junction may agree upon or as the investment
banker may deem relevant. The investment banker will also recommend
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Confidential materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
a relative percentage ownership of the Joint Venture by Summa Four as
of the commencement of Phase II for the purposes described in Section
7.2, which shall be not less than ***** and not greater than ***** and
which shall be based upon the relative value of (i) Summa Four's
funding of Phase I and Summa Four's contributions to be made during
Phase II pursuant to the Business Plan in relation to (ii) the value
of the contributions, financial or otherwise, made by Junction during
Phase I (to the extent that the value of such contributions during
Phase I are in excess of the amount of the "Personnel" expenses
reimbursed by Summa Four pursuant to Section 4 of this Agreement and
SCHEDULE D), and the contributions, financial or otherwise, to be made
by Junction during Phase II pursuant to the Business Plan. The fees of
the investment banker for such services shall be paid by the Joint
Venture.
7.2 Upon receipt of the investment banker's report pursuant to Section 7.1
the ownership of the Joint Venture will be allocated to Summa Four and
Junction in accordance with such report.
8 CONFIDENTIALITY. All information of the parties developed during the term
of this Agreement shall be subject to the provisions of that
Confidentiality Agreement dated April 15, 1997 between Summa Four and
Junction (the "Confidentiality Agreement"). Junction agrees that the
Business Plan, and all information contained therein, and the Summa Four
Licensed Technology shall constitute the Proprietary Information of Summa
Four, and shall be treated accordingly under the Confidentiality Agreement.
9 MISCELLANEOUS.
9.1 PUBLICITY. Any advertising or promotional literature or announcement
by a party to this Agreement regarding its relationship with the other
party or this Agreement must be approved by the other party in advance
in writing.
9.2 AGREEMENT TERMS. Neither party hereto shall disclose the terms or
conditions of this Agreement to any third party, except as required by
order or rule of a governmental authority including, without
limitation, the United States Securities and Exchange Commission.
9.3 GOVERNING LAWS. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Hampshire, excluding its
choice of law rules.
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9.4 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof, and
shall not be released, discharged, supplemented, interpreted, amended,
varied, or modified in any manner except by an instrument in writing
signed by an authorized officer or representative of each of the
parties hereto. The Schedules following the operative part of this
Agreement shall be deemed to be incorporated in this Agreement.
9.5 NO WAIVERS. No delay or omission on the part of either party to this
Agreement in requiring performance by the other party or in exercising
any right hereunder shall operate as a waiver of any provision hereof
or of any right or rights hereunder, and the waiver, omission or delay
in requiring performance or exercising any right hereunder on any one
occasion shall not be construed as a bar to or waiver of such
performance or right on any future occasion.
9.6 SEVERABILITY. If any provision of this Agreement shall for any reason
be held illegal or unenforceable, such provision shall be deemed
separable from the remaining provisions of this Agreement and shall in
no way affect or impair the validity or enforceability of the
remaining provisions of this Agreement.
9.7 SECTION HEADINGS. Section headings of this Agreement are for
descriptive purposes only and shall not control or alter the meaning
of this Agreement.
9.8 RELATIONSHIP OF THE PARTIES. The parties shall for all purposes be
considered independent contractors with respect to each other, and
neither shall be considered an employee, employer, agent, principal,
partner or joint venturer of the other, unless by separate agreement
such relationship is established.
9.9 NOTICES. For the purposes of this Agreement, and for all notices and
correspondence hereunder, the addresses of the respective parties are
as follows:
If to Summa Four: Summa Four, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attn: President
Fax: (000)000-0000
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with a copy to Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
Attn.: Xxxx X.X. Xxxxx, Esq.
If to Junction: Junction, Inc.
00000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
with a copy to Stanwood & Price
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxx, Esq.
Fax: (000) 000-0000
No change of address shall be binding upon the other party hereto
until written notice thereof is received by such party at the address
shown herein. All notices shall be in English and shall be effective
upon receipt if delivered personally or sent by facsimile, two days
after shipment by overnight delivery service and five (5) days after
mailing if sent by certified mail return receipt requested.
9.10 ASSIGNMENT AND CORPORATE REORGANIZATION. Except as provided herein,
neither this Agreement nor any rights granted hereby may be assigned
by either party voluntarily or by operation of law without the prior
written consent of the other party, and any such attempted assignment
shall be null and void. For purposes of this Agreement, "assignment"
shall be deemed to include the transfer of all or substantially all of
the assets of, or a majority interest in the voting stock of, a party,
or the merger of a party with one or more entities, in which such
party is not the surviving entity. This Agreement shall inure to the
benefit of and be binding upon any permitted successor or assign of
either party.
[Remainder of Page Intentionally Blank]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the dates written below:
JUNCTION, INC. SUMMA FOUR, INC.
By: /s/ Xxx Xxxxxx By: /s/ Xxxxxx X. Xxxxx
---------------------------- ----------------------------
Name: Xxx Xxxxxx Name: Xxxxxx X. Xxxxx
-------------------------- --------------------------
Title: President Title: President & CEO
------------------------- -------------------------
Date: June 13, 1997 Date: June 13, 1997
-------------------------- --------------------------
(Signature Page to Joint Development Agreement].
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Confidential materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
SCHEDULE A
DESCRIPTION OF PRODUCT
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Confidential materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
SCHEDULE B
PROVISIONS TO BE INCLUDED IN JOINT VENTURE AGREEMENT
1 At the commencement of Phase II, Summa Four and Junction will each
contribute all rights and interest they may have in the Product to the
Joint Venture. The interests of Summa Four and Junction in the Joint
Venture shall initially be **% for Summa Four, and **% for Junction,
subject to adjustment as described in Paragraph 6 below.
2 Summa Four will engage the Joint Venture to develop and test the Product
according to the Business Plan, pursuant to a Development Agreement which
is mutually acceptable to Summa Four and Junction, and which will include
customary arm's-length warranties and indemnities for a software
development contract. Summa Four will make cash payments to the Joint
Venture sufficient to fund those expenses called for in the Business Plan.
Summa Four will also procure and contribute or lease to the Joint Venture
equipment and software required to conduct development of the Product and
any variation or derivative thereof. Summa Four will license any necessary
Licensed Summa Four Technology to the Joint Venture for purposes of its
development of the Product. In the event that the expenses of the Joint
Venture exceed those estimated in the Business Plan, the parties will
explore in good faith means of funding the ongoing operations of the Joint
Venture, including but not limited to additional capital contributions by
the parties and outside sources of funding.
3 The Joint Venture will subcontract the development of the Product to
Junction, which will be responsible for providing a sufficient number of
qualified technical personnel (including engineering, design and
programming personnel) to successfully complete the Project and procuring
and providing sufficient office and laboratory space for the Project.
4 Upon the commencement of Phase II, the Joint Venture will xxxxx Xxxxx Four
a five-year, paid-up, royalty-free, exclusive, worldwide license to use,
manufacture, distribute and exercise all other rights with respect to the
Product and all other technology developed or owned by the Joint Venture,
under all intellectual property therein. Such license shall provide that at
the expiration of such five-year period, Summa Four shall be entitled to
extend the term of the license for such fees and/or royalties as Summa
Four, Junction and the Joint Venture shall unanimously reasonably agree
upon.
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Confidential materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
5 The Joint Venture will be managed by a Board of Managers appointed by Summa
Four and Junction. The Board of Managers will be comprised of the President
of Junction, the President of Summa Four, and one additional member
designated by Summa Four and such additional members as Junction and Summa
may agree upon, provided that at all times a majority of the Board shall be
designees of Summa Four. The Board will act by majority vote on all
matters.
6 Between the second and fifth anniversaries of the commencement of Phase II
(the "Exit Period"), a set of puts and calls will be exercisable to allow
either Junction to sell all or any portion of its interest in the Joint
Venture to Summa Four at a specified discount to the valuation at the time
of exercise (which discount shall be determined by the financial advisor
described in Section 7.1 by reference to the valuation formula provided for
in Section 7.1), or to allow Summa Four to purchase from Junction all or
any portion of Junction's interest in the Joint Venture at a specified
premium over such valuation, but subject to a minimum value (to be
determined by reference to the valuation formula), which minimum value
shall be used only if Product sales are less than projected in the Business
Plan due to causes other than Product underperformance or other factors
primarily the responsibility of Junction. The price payable by Summa Four
in any such purchase may be payable, at Summa Four's election, in whole or
in part in cash or in shares of stock in Summa Four valued at market,
subject to any dilution discount provided for in the investment banker's
report.
7 Phase II shall continue until the earlier of (i) Summa Four's acquisition
of ***** of the interests in the Joint Venture pursuant to the exercise of
the put or call arrangements described in Section 7.1, or (ii) the fifth
anniversary of the commencement of Phase II. During Phase II and following
the development of the first commercial version of the Product, the Joint
Venture shall perform (or subcontract Junction or another entity to
perform) such maintenance and further development functions with respect to
the Product as shall be provided for in the Business Plan.
8 For a ****** following the termination of Phase II, none of the
shareholders, employees or consultants of Junction will directly or
indirectly engage in any activity which is or would be competitive with the
Joint Venture, the Product or any variation or derivative thereof.
9 Each party shall indemnify and hold harmless the other party and the Joint
Venture, without limitation as to amount, on terms similar to those set
forth in Section 5.3 and 5.4, in respect of intellectual property
infringements by the technology contributed by such party to the Business
Plan.
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SCHEDULE C
LICENSED SUMMA FOUR TECHNOLOGY
a. All marketing requirement, functional specification and design documents
associated with Summa Four's current products and planned enhancements;
b. All system source code associated with Summa Four's current products and
planned enhancements;
c. All documentation related to next generation product definition and
system/hardware/software architectures;
d. Any other proprietary Summa Four technology that Summa Four makes available
to Junction during Phase I in connection with the development of the
Business Plan.
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Confidential materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
SCHEDULE D
FUNDING OBLIGATION
Expense Unit Charge Units Est. Total
------- ----------- ----- ----------
Personnel (salary/benefits) --- --- *****
California office space *****/month ** months *****
N.H. corporate apartment *****/person/month **months *****
** persons
Travel ***** per CA-NH *** round *****
round trip trips
Cal. Office Setup --- 1 time *****
Misc. *****
Moving buyout *****/person ** people *****
TOTAL *****
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I have read and agree to the Summa Four, Inc. & Junction, Inc. Joint Venture
Business Plan executed on this day of 13 June 1997, on behalf of:
SUMMA FOUR, INC. JUNCTION, INC.
/s/ Xxxxxx X. Xxxxx /s/ Xxx Xxxxxx
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Xxxxxx X. Xxxxx, President and CEO Xxx Xxxxxx, President
June 13, 1997 June 13, 1997
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Date Date
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