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EXHIBIT 10.22
TECHNOLOGY DEVELOPMENT AND LICENSE AGREEMENT
THIS AGREEMENT is made and entered into on and as of September 27,1996
by and between SCM Microsystems, Inc., a Delaware corporation, (hereinafter
called "SCM") and Sun Microsystems, Inc., a Delaware corporation (hereinafter
called "Sun").
WHEREAS, Sun is an industry leader in the design, development and
manufacture of computing hardware platforms and related software, and
WHEREAS, SCM Microsystems has the technical and professional capability,
qualifications and existing technology required to perform hardware development
and systems integration tasks.
NOW THEREFORE, in consideration of the mutual covenants contained in
this Agreement, the parties hereby agree as follows:
1. DEFINITIONS
1.1. "Acceptance Criteria": A set of criteria developed to
determine if the S-bus Card Adaptor delivered to Sun conforms to the Statement
of Work and the Specifications.
1.2. "Enhancement" means a work which is based upon one or more
pre-existing works, such as a revision, modification, translation, abridgement,
condensation, expansion, collection, compilation or any other form in which such
pre-existing works may be recast, transformed or adapted.
1.3. "Loaned Equipment": Equipment either (i) owned by Sun and
loaned to SCM Microsystems, or (ii) purchased by SCM Microsystems and paid for
by Sun, which is used in the performance of the Services. Such equipment shall
be listed in Exhibit A, attached hereto, as the same may be amended from time to
time.
1.4. "Loaned Software": Software either (i) owned by Sun and
licensed to SCM Microsystems, or (ii) licensed by SCM Microsystems from a
third-party licensor, the fees for which are paid by Sun, and which is used in
the performance of the Services. Such software shall be listed in Exhibit A,
attached hereto, as the same may be amended from time to time.
1.5. "New Technology": Technology, ideas, methods and inventions
designed or implemented in the performance of this Agreement by SCM Microsystems
and resulting from the NRE, as that term is defined in paragraph 4.1, paid to
SCM Microsystems by Sun for the Services.
1.6. "S-bus Card Adaptor": A dual slot drive bay accessed S-bus
to PC card adapter extended over a flat ribbon or other cable to an available
drive bay on a computer, utilizing SCM Microsystems' bus extension technology to
ensure compatibility with current and future PC cards and conforming to Sun's
specifications for S-bus to PCMCIA ASICs developed by Sun.
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1.7. "SCM Microsystems Base Enhancements": Enhancements in or to
the SCM Microsystems Base Technology made or conceived in the performance of
this Agreement.
1.8. "SCM Microsystems Base Technology": Technology owned by SCM
Microsystems and developed outside the performance of this Agreement, including
technology that existed prior to the date of this Agreement as well as
technology that is developed concurrently with the term of this Agreement.
1.9. "Specifications": The electrical, mechanical and functional
specifications for the S-bus Card Adaptor as set out in the Statement of Work.
1.10. "Services": The services to be performed by SCM
Microsystems under this Agreement to design, develop and deliver to Sun the
S-bus Card Adaptor as described in the Statement of Work, as the same may be
amended from time to time.
1.11. "Statement of Work": The description of services to be
performed and specific product(s) to be developed pursuant to this Agreement and
delivered to Sun. The Statement of Work, as modified from time to time as
permitted by this Agreement, shall be attached hereto as Exhibit B.
1.12. "Sun Base Enhancements": Enhancements in or to the Sun
Base Technology made or conceived in the performance of this Agreement.
1.13. "Sun Base Technology": Technology owned by Sun and
developed outside this Agreement, including technology that existed prior to the
date of this Agreement as well as technology that is developed concurrently with
the term of this Agreement.
2. SCOPE OF SERVICES
2.1. SCM Microsystems shall design, develop and manufacture the
S-bus Card Adaptor conforming to the Specifications and within the schedule set
out in the Statement of Work.
2.2. The Statement of Work includes certain preliminary
specifications which may, during the term of this Agreement, be modified as the
design and development effort is undertaken. The Statement of Work may only be
modified as set out herein, in which case the Statement of Work as so modified
shall become the new Exhibit B and become part of this Agreement.
2.3. On or before the commencement of the term of this Agreement,
each party shall designate in writing a project manager who shall have overall
responsibility for the coordination of the development and implementation of the
Statement of Work. The project managers shall coordinate the joint
responsibilities of the parties as required hereunder, act as the communication
point for their respective companies, confer regularly and shall have
responsibility and authority for resolving any disputes that may arise with
respect to the Statement of Work or Specifications. The project managers shall
serve as the initial point of contact for the resolution of problems and
shall be
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responsible for devising and implementing problem management procedures with
respect to any dispute that may arise with respect to the scope or direction of
the development.
2.4. At the time(s) set out in the Statement of Work, SCM
Microsystems shall deliver to Sun ten (10) prototypes of the S-bus Card Adaptor
conforming to the Specifications.
2.4.1. Prior to the scheduled delivery of the prototypes,
the parties shall agree upon the final Specifications and the Acceptance
Criteria to determine if the prototype conforms to the Specifications.
2.4.2. SCM Microsystems shall demonstrate to Sun that the
prototype conforms to the Acceptance Criteria. Thereafter if Sun notifies SCM
Microsystems in writing and demonstrates to SCM Microsystems that the prototypes
do not substantially meet the Acceptance Criteria, SCM Microsystems shall make
corrections and modifications to the design of the S-bus Card Adaptor, the
manufacturing process or otherwise as necessary, to cause the S-bus Card Adaptor
to conform to the Specifications. Upon delivery of new prototypes, Sun shall
repeat the acceptance test as soon as reasonably requested by SCM Microsystems
and Sun shall notify SCM Microsystems within five (5) days of such request if
and when the new prototypes are accepted.
2.5. Upon notification from Sun that the prototypes described in
2.4.2 above conform to the specifications, SCM Microsystems shall deliver to Sun
fifty (50) pre-production prototypes of the S-bus Card Adaptor to verify that
the S-bus Card Adaptor can be manufactured in quantity.
2.6. Support. SCM Microsystems shall, from time to time at Sun's
request, provide to Sun, support and maintenance services for the S-bus Card
Adaptors. The fees, if any for such support shall be negotiated prior to any
services being performed. In addition, SCM Microsystems shall provide
enhancements to keep current with each Sun operating system (OS) release, chosen
for Sun's IR production usage, provided that porting of the covered software to
the then new OS requires no or minimal source code changes. Porting efforts
requiring substantial source code changes shall be done on a time and materials
basis. SCM Microsystems shall use its best efforts to make such new releases
available within ninety (90) days after Sun delivers a copy of the latest OS
version to SCM Microsystems.
2.7. During the term of this Agreement, SCM Microsystems and
each of its contractors and suppliers who will perform any work hereunder, shall
become and remain compliant with ISO 9002 standards.
3. PURCHASE OF PRODUCTION QUANTITIES
3.1. From time to time Sun may purchase from SCM Microsystems,
and SCM Microsystems shall sell to Sun, the S-bus Card Adaptor (herein the
"Product"). The prices to be paid by Sun for the Product shall be as set out in
Exhibit C, attached hereto and incorporated herein. For purchases by Sun of the
Product for release or other distribution, from time to time Sun shall deliver
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to SCM Microsystems a one hundred eighty (180) day forecast (herein the
"Forecasts") of anticipated purchases of Product. An updated Forecast will be
provided to SCM Microsystems by Sun on or about the first calendar day of each
month. Purchase and delivery of products shall be made pursuant to purchase
orders and purchase order change notices that are issued in writing or
electronically by Sun. Individual purchase orders shall identify the quantities
of products ordered, the price, shipping schedule and destinations.
A purchase order for Products will be placed in accordance with
the schedule from the Forecast. The schedule will be comprised of three
categories as defined below. Sun may submit orders for incremental or advance
delivery according to the definitions set forth in each of the forecast zones.
Each Forecast shall be divided into three (3) periods: Fixed,
Firm and General, as further defined herein, below, and the quantities of
Product to be purchased within each period. Each period and applicable
quantities shall commence anew for each updated Forecast.
A. The Fixed Quantity shall mean the forecasted demand for
calendar days one through sixty (60) (herein the "Fixed Period") of the then
current Forecast. Sun shall purchase and take delivery of that Fixed Quantity of
Products specified in Sun's purchase orders for delivery within the Fixed
Period. SCM Microsystems shall sell and deliver Product to Sun consistent with
such schedule.
(i) Sun may request, and SCM Microsystems shall
deliver, subject to availability of component materials and labor, quantities of
Products in excess of the Fixed Quantity in an amount up to ten percent (10%) of
the Fixed Quantity in the then current Forecast.
(ii) In addition, if directed by Sun, SCM
Microsystems shall deliver, subject to availability of component materials and
labor, a quantity of Products of up to ten percent (10%) of the Fixed Quantity
for the then current Fixed Period that had originally been scheduled for
delivery in the then current Firm Period. The purchase and sale of such quantity
of Products in the Fixed Period shall not increase the overall quantity of
Products set forth in the Forecast.
B. The Firm Quantity shall mean the forecasted demand for
calendar days sixty-one (61) through ninety (90) (herein the "Firm Period") of
the then current Forecast. In the event Sun fails to purchase such quantity of
Product, Sun shall purchase from SCM Microsystems, at SCM Microsystems' cost,
long lead time component parts and materials (as defined by SCM Microsystems and
agreed to by Sun, which agreement shall be in writing signed by both parties and
made a part hereof). Sun shall not be required to purchase any long lead time
materials or components that SCM Microsystems is able to readily and in a timely
manner divert to use in other products or Products sold to third parties. SCM
Microsystems shall plan its material, labor and manufacturing capacity to
produce no more than the Firm Quantity for delivery within the Firm Period. On
or before the first business day of each month, Sun may increase or decrease the
Firm Quantity by no more than twenty percent (20%).
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C. The General Quantity shall mean the forecasted
demand for calendar days ninety-one (91) through one hundred eighty (180)
(herein the "General Period") of the then current Forecast. Sun shall not be
required to purchase nor take delivery of any Product comprising the General
Quantity and shall have no liability to SCM Microsystems for labor or materials
purchased by SCM Microsystems for Products to be delivered in the General
Period.
3.2. The terms of purchase and sale of the S-bus Card Adaptor are
set out in Exhibit D, attached hereto and incorporated herein by reference. In
the event of a conflict between the terms set out in Exhibit D and the terms of
this Agreement, this Agreement shall govern.
3.3. In the event SCM Microsystems must make commitments to AT&T
to procure ASIC chips ("AT&T Chips") in quantities in excess of those ultimately
needed to satisfy the requirements of Sun, Sun shall reimburse SCM Microsystems
the price paid by SCM Microsystems for such excess AT&T Chips that SCM
Microsystems is unable to use or resell to others. Prior to making any
commitment to AT&T for the purchase of AT&T Chips, SCM Microsystems shall first
notify Sun and obtain Sun's written approval as to the quantity of AT&T Chips
that SCM Microsystems may purchase hereunder. Sun shall not be liable to
reimburse SCM Microsystems for any AT&T Chips in excess of the quantity approved
by Sun. For those AT&T Chips for which SCM Microsystems receives reimbursement
from Sun, SCM Microsystems shall deliver the same, and transfer all right title
and interest therein, to Sun.
3.4. SCM Microsystems shall not sell the S-bus Card Adaptor to
third parties without the express written consent of Sun, provided, however,
such consent shall not be withheld so long as SCM Microsystems is satisfying
Sun's demand for the S-bus Card Adaptor, and remains capable of doing so. For
each S-bus Card Adaptor sold, or otherwise conveyed for value, by SCM
Microsystems to third parties as permitted hereunder, SCM Microsystems shall pay
to Sun the amount equal to [ * ] Within ten (10) business days after the end of
each calendar quarter, SCM Microsystems shall provide Sun with written reports
indicating the number of S-bus Card Adaptors sold by SCM Microsystems to third
parties [ * ]. Payments hereunder shall be made with, and at the time of, such
report.
4. CONSIDERATION
4.1. In consideration of SCM Microsystems' performance of the
Services and the delivery of the Deliverables and the other rights, licenses and
obligations herein set out, Sun shall pay to SCM Microsystems the amount of
[ * ] (herein, the "NRE") payable as follows:
[ * ]
[ * ]
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
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[ * ]
4.2. Payment terms are net-30 days after receipt of a correct
invoice. Late payments shall accrue interest at the prime rate plus one
percentage point. The prime rate shall be the prime rate quoted by the Bank of
America on the date that the payment becomes past due. Before such late charges
may be assessed against Sun for late payments, SCM Microsystems shall have
notified Sun in writing of said late payment and Sun has not, within ten (10)
days after receipt of such notice, made such payment.
4.3. All payments shall be made in U.S. dollars.
5. LOAN OF EQUIPMENT/SOFTWARE
5.1. On or before execution of this Agreement, Sun shall have
delivered to SCM Microsystems the Loaned Equipment and Loaned Software. SCM
Microsystems shall be responsible for the care and maintenance of the Loaned
Equipment from the time it is delivered to SCM Microsystems until it is returned
to Sun. SCM Microsystems shall reimburse Sun for any damage to the Loaned
Equipment sustained during the period it is in SCM Microsystems' possession,
reasonable wear and tear excepted. SCM Microsystems shall insure the Loaned
Equipment against loss or damage during the term of this Agreement, and shall
deliver to Sun, upon request, proof of such insurance. If applicable, upon
return of the Loaned Equipment, Sun shall provide SCM Microsystems with an
invoice for damage to the equipment, payable by SCM Microsystems upon receipt.
Failure by Sun to provide such an invoice within sixty (60) days following
return of the Loaned Equipment by SCM Microsystems shall constitute acceptance
of the equipment by Sun "as is" and no reimbursement by SCM Microsystems shall
be required. SCM Microsystems shall maintain the Loaned Equipment used in either
production or test capacity consistent with ISO 9002 standards.
5.2. Sun hereby grants to SCM Microsystems a nontransferable,
nonexclusive, limited right and license to use the Loaned Software in
machine-readable form on the Loaned Equipment at SCM Microsystems' facilities in
California, Singapore, and Germany, subject to SCM Microsystems obtaining any
necessary export and import licenses. Title to all copies of the Loaned Software
remains in Sun or in third parties from whom Sun has acquired license rights. No
license is granted for use of the Loaned Software on other than the Loaned
Equipment or for use on any work other than in the performance of the Services.
Loaned Software is the confidential and proprietary information of Sun or its
licensors and shall be subject to the obligations of Article 18.
Confidentiality, SCM Microsystems shall not disassemble, decompile, or reverse
engineer the Loaned Software.
5.3. THE LOANED EQUIPMENT AND LOANED SOFTWARE ARE PROVIDED "AS
IS." SUN MAKES NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF
DESIGN, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE
LOANED EQUIPMENT AND/OR SOFTWARE. IN NO EVENT SHALL SUN BE LIABLE FOR ANY
DIRECT, SPECIAL, INDIRECT, INCIDENTAL
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
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OR CONSEQUENTIAL DAMAGES RELATED TO THE USE OF THE LOANED EQUIPMENT AND/OR
LOANED SOFTWARE, EVEN IF SUN HAS BEEN ADVISED OF OR OTHERWISE HAS REASON TO KNOW
OF THE POSSIBILITY OF SUCH DAMAGES.
5.4. Upon the expiration or earlier termination of this
Agreement, SCM Microsystems shall return to Sun, at Sun's facility in Palo Alto,
California, or such other location in Northern California as Sun may designate,
the Loaned Equipment and return all copies of the Loaned Software and related
documentation. Upon such return, SCM Microsystems shall certify to Sun that it
has returned or, with the approval of Sun, destroyed all copies of the Loaned
Software. SCM Microsystems shall, at its cost and expense, de-install the Loaned
Equipment and package the same for return to Sun. The costs of shipping the
Loaned Equipment to Sun shall be borne by Sun.
6. INTELLECTUAL PROPERTY RIGHTS
6.1. Ownership of Technology
6.1.1. SCM Microsystems is and shall remain the
sole owner of the SCM Microsystems Base Technology and SCM Microsystems Base
Enhancements.
6.1.2. Sun is and shall remain the sole owner of the Sun
Base Technology and Sun Base Enhancements.
6.1.3. SCM Microsystems shall, subject to the limitations
hereinafter set forth, be owner of the New Technology.
6.2. Designation of Technology. During the performance of the
Services, Sun and SCM Microsystems shall designate whether any designs,
discoveries, inventions, product, computer programs (including source code, if
applicable), procedures, improvements, developments, drawings, specifications,
data, memoranda, notes, documents, manuals, information, and other materials,
made, conceived, or developed hereunder are SCM Microsystems Base Enhancements,
Sun Base Enhancements or New Technology. Such designation shall be evidenced by
a writing signed by an authorized representative of each party. In the event the
parties are unable to agree upon the correct designation of such technology,
such disagreement shall be resolved in the manner provided in Article 16.
Arbitration.
6.3. Protection of Intellectual Property Rights
6.3.1. Each party shall disclose in writing to the other,
all designs, discoveries, inventions, product, computer programs (including
source code), procedures, improvements, developments, drawings, specifications,
data, memoranda, notes, documents, manuals, information, and other materials,
made, conceived, or developed by such party which result from or relate to the
Services and which are either SCM Microsystems Base Enhancements, Sun Base
Enhancements or New Technology. Sun shall cooperate with and assist SCM
Microsystems, at SCM Microsystems'
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expense, as necessary to allow for the application for, and execution of, any
patent, copyright, trademark or other statutory protection for the New
Technology.
6.3.2. SCM Microsystems shall obtain from its employees
such agreements as will permit SCM Microsystems to full comply with the
provisions of this Article 6, and Article 15. Confidentiality.
6.4. Grant of License to Sun. SCM Microsystems shall, and does
hereby, grant to Sun a worldwide, nonexclusive, royalty free, right and license
to (i) use the New Technology and to make, have made, sell, transfer or
otherwise convey products incorporating the New Technology and (ii) sublicense
the New Technology to others, provided, however that the same is incorporated
into, or is a part of, other technology owned by Sun.
7. NO REVERSE ENGINEERING
Except as specifically provided in this Agreement, and then only to the
extent necessary to perform the Services, neither party shall, either directly,
or through a third party, reverse engineer, disassemble or decompile any
software provided by the other, or make any attempt in any fashion to obtain the
source code to any software of the other not delivered under this Agreement or a
separate license granted pursuant to this Agreement.
8. TERMINATION
8.1. SCM Microsystems may terminate this Agreement:
(a) Upon thirty (30) days prior, written notice in the
event Sun, its officers or employees violate any material provision of this
Agreement, including, but not limited to, Article 4. Consideration and Article
15. Confidentiality, provided that SCM Microsystems is in substantial compliance
with the terms of this Agreement. In the event a material breach occurs, SCM
Microsystems shall provide written notice of the breach to Sun. Sun shall have
thirty (30) days from the receipt of notice to remedy the breach to the
satisfaction of SCM Microsystems. If Sun is unable to correct the breach within
such period, SCM Microsystems may terminate this Agreement, unless the breach is
one which, by its nature, cannot be fully remedied in thirty (30) days, and Sun
has undertaken reasonable, good faith efforts toward remedying the breach within
such thirty (30) days, and continues to use reasonable, good faith and diligent
efforts to promptly remedy the breach.
In the event of termination pursuant to this Section 8.1
(a), Sun shall cease use of the Licensed Technology, except such Licensed
Technology for which all license fees or other consideration have been paid. As
for any Licensed Technology for which the license fees or other consideration
have been paid, Sun's right to use the same shall continue notwithstanding the
termination of this Agreement.
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(b) In the event Sun (i) terminates or suspends its
business, (ii) becomes subject to any bankruptcy or insolvency proceeding under
federal or state statute, or (iii) becomes insolvent or becomes subject to
direct control by a trustee, receiver or similar authority.
Without limiting the foregoing, in the event SCM
Microsystems terminates this Agreement for Sun's material breach that remains
uncured as provided above, Sun shall continue to be obligated for any payments
due prior to the termination date.
8.2. Sun may terminate this Agreement:
(a) Upon thirty (30) days prior, written notice in the
event SCM Microsystems, its officers or employees violate any material provision
of this Agreement, including, but not limited to, Article 15. Confidentiality,
provided, however, that Sun is in substantial compliance with the terms of this
Agreement. In the event a material breach occurs, Sun shall provide written
notice of the breach to SCM Microsystems. The default notice must be clearly
identified as such and specify in detail the basis for the alleged material
breach(es). SCM Microsystems shall have thirty (30) days from the receipt of
notice to remedy the breach to the satisfaction of Sun. If SCM Microsystems is
unable to correct the breach within such period, Sun may terminate this
Agreement, unless the breach is one which, by its nature, cannot be fully
remedied in thirty (30) days, and SCM Microsystems has undertaken reasonable,
good faith efforts toward remedying the breach within such thirty (30) days, and
continues to use reasonable, good faith and diligent efforts to promptly remedy
the breach.
(b) in the event SCM Microsystems (i) terminates or
suspends its business; (ii) becomes subject to any bankruptcy or insolvency
proceeding under federal or state statute; or (iii) becomes insolvent or becomes
subject to direct control by a trustee, receiver or similar authority.
(c) for Sun's convenience. In the event of
termination for Sun's convenience Sun shall give SCM Microsystems ninety (90)
days prior written notice. Upon receipt of notice of termination for Sun's
convenience SCM Microsystems shall immediately cease all work and Services and
attempt to terminate any subcontracts or contracts for the acquisition of goods
or services related to the performance of the Services by SCM Microsystems.
Within ninety (90) days after the effective date of termination SCM Microsystems
shall submit to Sun a final invoice for costs incurred by SCM Microsystems
(which may include payments made for professional services) and paid or payable
to third parties which could not be avoided and resulted from the early
termination of this Agreement. SCM Microsystems shall be entitled to recover, in
addition to the other costs described herein, the amount equal to (i) the
development costs described in paragraph 4.1 divided by (ii) the Commitment,
multiplied by the sum of (ii) the Commitment less the total number of S-bus Card
Adaptors actually purchased by Sun and the third parties described in paragraph
3.4, hereof, prior to termination. Such invoice, if not contested by Sun, shall
be payable as provided in Article 4.0. Consideration, above.
(d) for Sun's good faith dissatisfaction with either
the progress of the work or the quality of the work product delivered by SCM
Microsystems. In the event Sun is dissatisfied
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with the progress or quality of the work Sun shall advise SCM Microsystems in
writing of Sun's dissatisfaction. Such notice shall specify the reasons for such
dissatisfaction. SCM Microsystems shall have thirty (30) days from receipt of
such notice to correct the work to the satisfaction of Sun. If SCM Microsystems
is not able to correct the work to the satisfaction of Sun within such thirty
(30) day period Sun may terminate this Agreement on ten (10) days written
notice. Upon termination for Sun's dissatisfaction SCM Microsystems shall
immediately cease all work and Services and attempt to terminate any
subcontracts or contracts for the acquisition of goods related to the
performance of the Services by SCM Microsystems. Within ninety (90) days after
the effective date of termination SCM Microsystems shall submit to Sun a final
invoice for costs incurred by SCM Microsystems (which may include payments made
for professional services) and paid or payable to third parties, that could not
be avoided and resulted from the early termination of this Agreement. Such
invoice, if not contested by Sun shall be payable as provided in Article 4.0.
Consideration, above.
8.3. Effect of Termination
(a) Upon early termination of this Agreement for any
reason SCM Microsystems shall be entitled to receive payment only as provided
herein.
(b) As a condition to receiving any payment under this
Article, SCM Microsystems shall deliver to Sun, within fifteen (15) days from
the date of termination of this Agreement or otherwise as stated in this
Agreement:
(i) Any property of Sun, including, but not
limited to Loaned Equipment and Loaned Software, in the possession or control of
SCM Microsystems in good condition, reasonable wear and tear accepted; and
(ii) All documentation and files and all copies
thereof related to Sun Base Technology or Sun Base Enhancements whether finished
or unfinished, prepared or produced by SCM Microsystems for the benefit of Sun
under this Agreement.
(iii) Copies of all documentation and files
related to New Joint Technology whether finished or unfinished, prepared or
produced by SCM Microsystems for the benefit of Sun under this Agreement.
(c) Except as provided in clauses 8.2 (c) and 8.2 (d),
above in no event shall Sun be responsible for payment for Services or expenses
of SCM Microsystems provided or incurred after the effective date of termination
of this Agreement. Sun reserves the right to audit the relevant books, time
sheets, or other records of SCM Microsystems prior to any payment to SCM
Microsystems under this Article 8.
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9. WARRANTY
9.1. SCM Microsystems warrants that, subject to the terms of the
SCM Microsystems warranty, attached hereto as Exhibit D, for a period of three
(3) years after delivery, the S-bus Card Adaptor as purchased by Sun will
substantially conform to the Specifications.
9.2. SCM Microsystems warrants that (i) it is the exclusive owner
of all right, title and interest in the SCM Microsystems Base Technology and,
(ii) with respect to third party proprietary rights incorporated into the S-bus
Card Adaptor, it has the necessary rights to manufacture and sell the same to
Sun as provided in this Agreement.
10. COMPLIANCE WITH LAW
This Agreement is subject to all laws, regulations, orders or other
restrictions on the export of the Deliverables, or information about the
Deliverables, which may be imposed at any time or from time to time by the U.S.
Government. The parties (i) shall comply with all such laws, regulations,
permits, orders and other restrictions to the extent that they are applicable
and (ii) shall not, directly or indirectly, export or re-export (as defined in
the United States Export Administration Regulations) the Deliverables or any
information about the Deliverables to any country for which the U.S. Government,
or any agency thereof, requires an export license or other governmental approval
without first obtaining the same.
11. APPLICABLE LAW
The laws of the State of California, as applied to transactions to be
carried out wholly within California by California residents, applies to this
Agreement and the rights, duties and obligations of the parties hereto. The
United Nations Convention on Contracts for the International Sale of Goods is
excluded from application hereto.
12. PROPRIETARY RIGHTS INDEMNITY
12.1. SCM Microsystems shall defend, indemnify and hold harmless
Sun with respect to any claim, demand, cause of action, debt, or liability,
including attorneys' fees, to the extent that it is based upon a claim that the
SCM Microsystems Base Technology or the products derived therefrom and purchased
by Sun pursuant to this Agreement infringes any patent, copyright, or any trade
secret protected under federal or state law; provided that SCM Microsystems is
immediately notified in writing of such claim and provided further that SCM
Microsystems shall have the exclusive right to control such defense. Sun shall
not settle or compromise any claim, lawsuit or proceeding without SCM
Microsystems' prior written approval unless SCM Microsystems has failed to
defend and indemnify or is unable to defend and indemnify Sun. In the event of
any such claim, litigation or threat thereof, SCM Microsystems, at its sole
option and expense, shall either (i) procure for Sun the right to continue to
use the Deliverables, or (ii) replace or modify the Deliverables with
functionally compatible software and materials. If such settlement or such
modification is not reasonably practical and Sun is required to remove the S-bus
Card Adaptor from its systems or is otherwise prohibited
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from using the same, SCM Microsystems may, upon fifteen (15) days' written
notice to Sun, refund to Sun the purchase price paid for the S-bus Card Adaptor
The foregoing states the entire liability of SCM Microsystems
with respect to the infringement of any third party proprietary rights by the
S-bus Card Adaptor or any of its parts.
13. GENERAL INDEMNITY
The parties acknowledge that it may be necessary for the employees of
each to be present at the facilities of the other for extended periods of time.
The parties agree to provide the employees of the other with all reasonable
facilities and services to assure that the Services may be properly performed.
Each party shall instruct its employees to conform with the internal regulations
and procedures of the other party while on such party's premises. In addition,
each party agrees to indemnify, defend, and hold harmless the other party, its
officers, agents and employees from any and all claims, demands and causes of
action arising out of or resulting from any personal injury or tangible property
damage suffered by a third party (which term shall include the employees, agents
and contractors of each party hereto) by reason of the sole negligence of the
party against whom indemnification is sought (the "Indemnitor"), provided that
the Indemnitor is immediately notified in writing of such claim and provided
further that the Indemnitor shall have the exclusive right to control such
defense. The indemnified party shall not settle or compromise any claim, lawsuit
or proceeding without the Indemnitor's prior written approval unless the
Indemnitor has failed to defend and indemnify or is unable to defend and
indemnify the indemnified party.
14. LIMITATION OF LIABILITY
Except as otherwise provided, neither party shall be liable to the other
for incidental, consequential or special damages regardless of whether the party
was made aware of the possibility of such damages.
15. CONFIDENTIALITY
15.1. During the term of this Agreement each party (the
"Disclosing Party") may disclose to the other (the "Receiving Party") certain
information which the Disclosing Party deems to be the proprietary and
confidential information of the Disclosing Party, including, but not limited to,
documents and discussion of its technology, strategy, operations, internal
corporate information, sources of supply, and methods and procedures.
The Receiving Party agrees that all oral communications, which at
the time of the oral disclosure are identified as confidential or are identified
as such in a writing delivered to the Receiving Party within thirty (30) days
after the oral disclosure, and written materials received by it bearing an
appropriate legend indicating the confidential nature of the material, or to
which it may gain access, during or in connection with the performance of
Services will be deemed the Proprietary Information of the disclosing Party,
unless and until such time as:
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(a) Such information is generally available to the public,
through no fault of the Receiving Party and without breach of this Agreement,
(b) Such information was already in the possession of the
Receiving Party without restriction and prior to any disclosure hereunder,
(c) Such information is or has been lawfully disclosed to
the Receiving Party by a third party without obligation of confidentiality upon
the Receiving Party,
(d) The Receiving Party can prove that such information
was developed independently by employees of the Receiving Party.
15.2. The Receiving Party agrees that for a period of five (5)
years from the date of disclosure to it will:
1. not copy, sell, disclose, make public, or
authorize any disclosure or publication of any Proprietary Information;
2. take all reasonable and necessary steps to assure
that all principals, officers, agents, employees, representatives, or any other
persons affiliated in any manner with SCM Microsystems are given Proprietary
Information on a need-to-know basis only, and they in turn do not disclose, or
make public, or authorize any disclosure or publication of any Proprietary
Information;
3. not use the Proprietary Information for any
purpose other than for the purpose of performing the obligations under this
Agreement;
4. return all such Information to the Disclosing
Party no later than fifteen (15) days after the date of termination or
expiration of this Agreement unless otherwise directed in writing by the
Disclosing Party; and
5. require each individual assigned by the Receiving
Party to perform Services hereunder to execute a Confidential Disclosure
Agreement conforming to the requirements of this Article.
15.3. SCM Microsystems and Sun admit for all purposes that
monetary damages for any breach or threatened breach of this Article are
inadequate and that any breach or threatened breach shall constitute an
irreparable injury to the party whose information has been improperly disclosed.
In addition to all other rights provided by law to which a party shall hereby be
entitled, Sun or SCM Microsystems, as the case may be, shall have the right to
have an injunction issued against the other to prevent any further breach. In
the event that a party seeks an injunction hereunder, the non-moving party
hereby waives any requirement for the posting of a bond or any other security.
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15.4. Nothing herein shall convey to the Receiving Party any
right or license to the confidential information disclosed to the Receiving
Party.
15.5. Either party and its Subsidiaries that receive Proprietary
Information of the other shall be free to use the residuals of such party's
Proprietary Information, for any purpose including use and distribution in the
development, manufacture, marketing and maintenance of the using party's
products and services, subject to the obligation of confidentiality for the
period specified in Section 15.2, above, and provided that such use does not
violate any patent rights (including rights under any patent applications filed
and patents pending during the term of this Agreement) or copyrights of the
Disclosing Party and provided, further that such residual information was not
gained with the intent to use such information to compete against the other
party. As used herein the term "residuals" means information, data, ideas and
concepts in non-tangible form which may be retained by the employees of the
Receiving Party or its Subsidiaries who have had access to the Proprietary
Information of the Disclosing Party disclosed pursuant to this Agreement.
16. ARBITRATION
16.1. Resolution of Disputes In the event of any dispute between
the parties hereto, the matter(s) in dispute shall first be brought to the
attention of the project manager of each party for resolution. If the project
managers are unable to resolve the dispute the matter shall then be brought to
the attention of a Sun's Vice President of Information Resources and SCM
Microsystems' President for resolution. Such individuals shall meet at a
mutually convenient location to attempt to resolve such dispute. If such parties
are unable to resolve the dispute the matter shall be subject to arbitration as
provided in this Article 16.
16.2. Notice to Arbitrate. Any controversy or claim arising out
of or relating to this Agreement, or the breach thereof, shall be settled by
arbitration held in Palo Alto, California, and in such event either party may
serve upon the other a written notice demanding that the dispute be submitted to
arbitration pursuant to this Article 16.
16.3. Appointment of Arbitrators
16.3.1. After the giving of a notice to arbitrate pursuant
to Section 16.1 hereof, each party within fifteen (15) days of such notice shall
nominate and appoint an arbitrator and shall, within the fifteen (15) day
period, notify the other party in writing of the name and address of the
arbitrator so chosen. Upon the foregoing appointment of the two (2) arbitrators,
such arbitrators shall forthwith, and within fifteen (15) days after their
appointment and before exchanging views as to the question at issue, jointly
appoint in writing a third arbitrator and give prompt written notice of such
appointment concurrently to each of the parties.
16.3.2. If either party fails to appoint an arbitrator
within fifteen (15) days of a notice to arbitrate or if the two (2) arbitrators
appointed by the parties shall fail to appoint or agree upon such third
arbitrator within fifteen (15) days after their appointment and in the latter
case if the parties do not agree upon such third arbitrator, then either party
on behalf of both parties in
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the latter case, may request such appointment by the then President of the San
Francisco chapter of the American Arbitration Association (or any organization
successor thereto) or any person or committee designated by such President.
Thereafter, the arbitration shall proceed as set forth in this Article 16.
16.3.3. The arbitrators appointed pursuant to this Section
16.3 need not be selected from any list of the American Arbitration Association,
but may not be employees, affiliates or contractors of either party. All
arbitrators selected hereunder shall have at least five years experience in
distributed data processing systems.
16.4. Arbitration Proceedings.
16.4.1. The arbitrators chosen in accordance with Section
16.3 hereof shall, after affording to both parties a reasonable opportunity to
undertake discovery, take depositions and then submit evidence and to otherwise
be heard, make their determination in writing and shall give prompt written
notice thereof concurrently to both parties. In conducting such proceedings, the
arbitrators shall be governed by the commercial Arbitration Rules of the
American Arbitration Association then in effect in San Francisco, California.
The concurring determination of a majority of said arbitrators shall be binding
upon both parties, or, in case a majority of the arbitrators shall not render a
concurring determination, then the determination of the third arbitrator
appointed pursuant to Section 16.3, above, as the case maybe shall be binding
upon the parties and, in either case, such determination shall not be
appealable. Judgment upon the determination rendered by the arbitrator or
arbitrators may be entered in any court having jurisdiction thereof. The
arbitrator or arbitrators shall have no power to award punitive or consequential
damages.
16.4.2. The fees and expenses of the arbitrators shall be
borne equally between both parties hereto. If either party (hereinafter in this
sentence referred to as the "defaulting party") shall fail to pay its share of
any fees or expenses of the arbitrators, then the other party (hereinafter in
this sentence referred to as the "creditor party") may pay the share of the
defaulting party on behalf of the defaulting party and the defaulting party
shall, upon demand, reimburse the creditor party for such payment together with
interest thereon at the prime rate (as quoted by the Bank of America on the date
the obligation to make payment arises). Each party shall bear its own expenses
arising from such arbitration, except as may be otherwise determined by the
arbitrators.
16.4.3. Each party shall have the right to obtain discovery
and, upon leave of the arbitrators, to take depositions, of the scope and in the
manner provided in Sections 1283.05 and 1283.1 of the Code of Civil Procedure of
the State of California, whether or not the California Arbitration Act is deemed
to apply to said arbitration.
17. NOTICES
Any notice, request, or other communication to be given in writing under
this Agreement shall be deemed to have been given by either party to the other
party:
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(a) Five (5) days after the date of mailing thereof, as shown on
the post office receipt, if mailed to the other party by registered or certified
mail at the applicable address specified by the other party in writing; or
(b) Upon the date of the receipt thereof by such other party, if
not so mailed by registered or certified mail.
The mailing addresses for the parties are as follows:
For Sun:
Sun Microsystems, Inc.
0000 Xxxxxx Xxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
M/S UMIL09-03
Attn: Xxxxx Xxxxxxxx, Commodity Manager
With a copy to the Office of the General Counsel, M/S:
XXXX 01-521
For SCM Microsystems:
SCM Microsystems, Inc.
000 Xxxxxxxx Xxx
Xxx Xxxxx, XX 00000 Attention: Xxxx Xxxxx
with copy to Xxxxxxx Xxxxx, Chief Financial Officer
18. ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
parties' respective successors and permitted assigns. Neither party may assign
this Agreement and/or any of its rights and/or obligations hereunder without the
prior written consent of the other party and any such attempted assignment shall
be void, except that either party may assign this Agreement and/or any of its
rights and/or obligations hereunder, upon written notice to the other party or
to another entity in that party's merger or consolidation with another entity,
without the consent of the other party, provided that the assignee is capable of
fulfilling and intends to fulfill the obligations of the assigning party under
this Agreement.
19. GENERAL
19.1. Audit Rights. During the term of this Agreement and for a
period of three (3) years after the termination or expiration hereof, Supplier
shall keep proper books of record and account in accordance with generally
accepted accounting practices consistently applied. Upon five (5) business days
notice Supplier shall permit Sun or an independent accounting firm designated by
Sun to examine and inspect, at Supplier's facility and during normal business
hours, the books and financial records of Supplier and make copies therefrom for
the purpose of determining Supplier's
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compliance with the terms of this Agreement, including, but not limited to
paragraph 3.4, and the correctness of any bills or invoices for costs and
expenses for which Supplier has sought reimbursement or payment under this
Agreement.
19.2. This Agreement constitutes the complete and exclusive
statement of the agreement between the parties as relates to the subject matter
and supersedes all proposals, oral or written, and all other representations,
statements, negotiations and undertakings relating to the subject matter.
19.3. No change in, addition to, or waiver of any of the
provisions of this Agreement shall be binding upon either party unless in
writing signed by an authorized representative of such party. No waiver by
either party of any breach by the other party of any of the provisions of this
Agreement shall be construed as a waiver of that or any other provision on any
other occasion.
19.4. In the event any one or more of the provisions of this
Agreement shall be held by a court of competent jurisdiction to be invalid,
illegal or unenforceable, the remaining provisions of this Agreement shall
remain in effect and the Agreement shall be read as though the offending
provision had not been written or as the provision shall be determined by such
court to be read.
19.5. Upon termination or other expiration of this Agreement,
each party shall forthwith return to the other all papers, materials and other
properties of the other held by it for purposes of the performance of this
Agreement.
19.6. The captions used in this Agreement are inserted for the
convenient reference of the parties and in no way define, limit or describe the
scope or intent of this Agreement or any part hereof.
19.7. Except as otherwise permitted herein, neither Sun nor SCM
Microsystems shall disclose the contents of this Agreement to third parties
unless required to do so by legal proceedings.
19.8. This document, its contents, Exhibits, Attachments, and
Amendments, and any and all correspondence and Deliverables related thereto
shall be considered and treated as "Confidential Information" of each party.
19.9. Dates or times by which SCM Microsystems is required to
make performance under this license shall be postponed automatically for so long
as SCM Microsystems is prevented from meeting them by causes which are Sun's
responsibility.
19.10. The prevailing party in a controversy or claim shall have
the right to collect its reasonable expenses incurred in enforcing this
Agreement, including reasonable attorney's fees.
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19.11. This Agreement may be executed in two original
counterparts, which together shall constitute the same Agreement, but only one
of which need be produced to evidence the Agreement.
19.12. The parties further agree that the rights and obligations
set forth in Sections 2.5, 3.1, 3.3, 3.4, 8.3 and 19.5 and Articles 5, 6, 7, 10,
12, 13, 14, 15, 16 and 17 shall survive the completion or termination of this
Agreement for any reason and enforcement thereof pursuant to this article shall
not be subject to any conditions precedent.
IN WITNESS WHEREOF, each party has caused counterpart originals of this
Agreement to be executed as of the date first above written, by its authorized
representative.
SUN MICROSYSTEMS, INC. SCM MICROSYSTEMS, INC.
By:________________________ By:________________________
___________________________ ___________________________
(Print Name) (Print Name)
Title:_____________________ Title:_____________________
Date: _____________________ Date:_____________________
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EXHIBIT A
LOANED EQUIPMENT & SOFTWARE
20
EXHIBIT B
STATEMENT OF WORK & SPECIFICATIONS
SCOPE
SCM Microsystems shall design, manufacture, test and deliver to Sun,
S-bus Card Adaptors fully compatible with Sun's SS-5; SS-20, Ultra 1 and Ultra 2
products.
SCM Microsystems shall study the SBus specifications (IEEE 1496
standard), the specifications of the proprietary S-Bus to PCMCIA ASIC developed
by Sun, as well as the existing rear--access S-Bus PC Card adapter (X1030)
design currently sold by Sun to determine what additional technical challenges
might present themselves in the development and system-level qualification of
their product.
SCM Microsystems will use Sun's supporting software for testing and
demonstrating the functionality of their product. SCM Microsystems will perform
all necessary tests and evaluations to determine the electrical conditions that
exist within Sun workstation products in which the S-bus Card Adaptor will be
installed to determine what design precautions will be required to ensure system
safety, EMI compliance to Class B, and functional compatibility.
Sun shall provide SCM Microsystems with information regarding Sun's
products and their components as necessary to allow SCM to make the S-bus Card
Adaptor fully compatible with the Sun products.
FIRST ARTICLE INSPECTION
Mechanical Fit - SMCC D/T Mechanical Engineering
Functional Compatibility - SMI IR
Installation - SMI IR
Documentation - SMI IR
QUALITY REQUIREMENTS
TBD
ACCEPTANCE CRITERIA
Mechanical Fit - SMCC D/T Mechanical Engineering
Functional Compatibility (SSQA PCMCIA Test Suite) - SMI IR
Installation Process Review - SMI IR
Documentation Review - SMI IR
21
Each S-bus Card Adaptor shall be packaged in a single box to allow Sun
to assign a single part number to the S-bus Card Adaptor.
SHIPPING INSTRUCTIONS
Detailed in Purchase Order.
WARRANTY
See Section 9 of this Agreement.
HARDWARE DELIVERABLES
Qty. Description Due Date
---- ----------- --------
10 ea Prototype Units [ * ]
50 ea Pre-production Units [ * ]
DOCUMENTATION DELIVERABLES
Qty. Description Due Date
Mechanical Design Drawings yes, tbd SCM Microsystems
Electrical (DVT) Test Report yes, tbd SCM Microsystems
EMI Test Report yes, tbd SCM Microsystems
Functional Test Plan yes, tbd SCM Microsystems
MILESTONE SCHEDULE
Event Due Date
Preliminary Schematic [ * ]
Schematics, Layout & 1st Prototype [ * ]
Electrical Testing [ * ]
Delivery of 10 Prototypes [ * ]
Pre-production Units [ * ]
US, FCC, CE and CSA Approvals [ * ]
Ship production units [ * ]
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
22
EXHIBIT C
PRODUCTION UNIT PRICES
The purchase price of S-bus Card Adaptors shall be as follows:
[ * ]
The foregoing notwithstanding, Sun acknowledges that certain mechanical
and enclosure design specifications in its Ultra2 machine may require
modifications to the S-bus Card Adaptor by SCM Microsystems, which modifications
may affect the unit price to be paid by Sun for such product. The parties shall
negotiate in good faith the affect of the same on the unit price.
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
23
EXHIBIT D
PRODUCTION UNITS TERMS AND CONDITIONS OF SALE
1. Definitions:
Award Letter shall mean that document delivered by Sun to, and accepted
by, SCM Microsystems setting out the particular commitments of the parties with
respect to specific Products, prices, Product Leadtimes, and other terms
relative to the purchase of specific Products.
Leadtime shall mean the number of days from placement of a Purchase
Order to the date of delivery to the F.O.B. point. Leadtimes shall be set out in
the Award Letter.
Notice shall mean the giving of notice in the following manner: notices
or communications made in writing and hand delivered, or sent by registered mail
return receipt requested, or sent by overnight courier service to the receiving
party at the address specified in the Award Letter, or such other address as a
party may specify.
Product(s) shall mean those component parts, materials or finished goods
offered for sale by SCM Microsystems and as further described in the Award
Letter.
Purchase Order shall mean an offer from Sun received by SCM
Microsystems, whether in written or other form, or in electronic form pursuant
to Exhibit 1, attached hereto and incorporated herein, to purchase or schedule
delivery of a particular amount of Products. The Purchase Order shall specify
the relevant information such as quantity, price and proposed delivery dates of
the Products. When acknowledgment of receipt and acceptance thereof is made by
SCM Microsystems the Purchase Order shall be deemed a commitment to purchase and
sell the Products pursuant to the terms of this Agreement and the Purchase
Order.
Specifications shall mean the applicable product specifications for
Products from SCM Microsystems Sun shall issue and deliver to SCM Microsystems
Purchase Orders setting out the agreed upon schedule of deliveries. SCM
Microsystems shall accept Sun's Purchase Order to the extent that such Purchase
Order is consistent with Sun's forecast and SCM Microsystems' Leadtimes.
2. Purchase of Product(s): In the event that Sun elects to purchase
Products from SCM Microsystems Sun shall issue and deliver to SCM Microsystems
Purchase Orders setting out the agreed upon schedule of deliveries. SCM
Microsystems shall accept Sun's Purchase Order to the extent that such Purchase
Order is consistent with Sun's forecast and SCM Microsystems' Leadtimes.
3. [ * ]
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
24
4. Payment Terms: Sun shall make payment to SCM Microsystems in the
manner and at the times set out in the Award Letter.
5. Delivery: Unless otherwise set out in the Award Letter delivery shall
be F.O.B. point of manufacture.
6. Cancellation/Rescheduling. Sun may cancel or reschedule all or any
part of a Purchase Order prior to Product shipment. Sun shall pay a cancellation
or rescheduling charge, as the case may be, as follows:
Cancellation notice given more than sixty (60) days of original
scheduled delivery date.... No cancellation fee.
Cancellation notice given more than thirty (30) but less than sixty (60)
days of original scheduled delivery date...cancellation fee equal to...percent
of the purchase price of Products cancelled.
Cancellation notice given more than ten (10) but less than thirty (30)
days of original scheduled delivery date...cancellation fee equal to...percent
of the purchase price of Products cancelled.
Cancellation notice given more than one (1) but less than ten (10) days
of original scheduled delivery date...cancellation fee equal to...percent of the
purchase price of Products cancelled.
No rescheduling fee shall be payable if the Product is to be delivered
within thirty (30) days of the original scheduled delivery date.
Rescheduling notice given more than thirty (30) days of original
scheduled delivery date.... A rescheduling fee of...if the Product is to be
delivered more than thirty (30) days of the original scheduled delivery date.
Rescheduling notice given more than ten (10) but less than thirty (30)
days of original scheduled delivery date.... A rescheduling fee of...if the
Product is to be delivered more than thirty (30) days of the original scheduled
delivery date.
Rescheduling notice given more than one (1) but less than (10) days of
original scheduled delivery date.... A rescheduling fee of...if the Product is
to be delivered more than thirty (30) days of the original scheduled delivery
date.
7. Upside Support: When requested by Sun from time to time, SCM
Microsystems shall use best efforts to sell and deliver to Sun Product(s) (i) in
excess of the then latest forecast or (ii) at an accelerated delivery schedule
(collectively "Upside Support"). The particulars of SCM Microsystems' obligation
to provide Upside Support shall be set out in the Award Letter.
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8. Allocation: If SCM Microsystems is unable to deliver the quantities
set out in a Purchase Order, due to shortages of Product, raw materials or SCM
Microsystems' capacity, SCM Microsystems shall allocate Product to Sun under
whichever of the following formulas would give Sun the greatest amount of
Product:
a. In proportion to Sun's percentage of all of SCM Microsystems'
customer orders and forecast for such Products in effect at the time of the
shortage; or
b. The most favorable allocation formula used with any of SCM
Microsystems' customers.
9. Product Discontinuance: SCM Microsystems shall provide Sun with one
(1) year's written notice prior to discontinuing the manufacture or sale of a
Product.
10. Subsidiaries. All current and future subsidiaries of Sun
Microsystems, Inc., and contractors of Sun, designated by Sun, may purchase
Product pursuant to this Agreement.
11. Attorney's Fees: In the event of any litigation arising out of this
Agreement or its enforcement by either party, the prevailing party shall be
entitled to recover as part of any judgment, reasonable attorneys' fees and
court costs.
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