EXHIBIT 10.7
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COOPERATION AGREEMENT BETWEEN
CENTILLIUM TECHNOLOGY CORPORATION
AND
SUNGMI TELECOM ELECTRONICS., LTD
This Cooperation Agreement (this "Agreement") is effective as of March 2nd,
1998 (the "Effective Date") by and between Centillium Technology Corporation, a
California corporation, having its principal place of business at 00000 Xxxxxxxx
Xxxx, Xxxxxxx, Xx 00000, Xxxxxx Xxxxxx of America ("Centillium"), and Sungmi
Telecom Electronics Co., Ltd. a Korean Corporation with offices at 000-0,
Xxxxxx-Xxxx, Xxxxx-Xx, Anyang-Shi, Kyunggido, 430-030, Korea ("Sungmi").
- WITNESSETH -
WHEREAS, Centillium has expertise in the area of telecommunications
integrated circuits, including those which utilize multilevel modulation
techniques to enable high speed communications over copper, also known as
Digital Subscriber Line (xDSL) Technology; and
WHEREAS, Sungmi has expertise in the area of telecommunications systems and
associated technologies; and
WHEREAS, the parties hereto believe that each will derive benefits from a
business relationship in which they will work cooperatively to define an
integrated circuit solution for the copper interface portion of transmission
systems (the "Interface Devices"); and
WHEREAS, Centillium will be in a position to provide Sungmi with early
models, system support, and loop environment engineering support in exchange for
Sungmi's commitment to use Centillium as its preferred vendor of the Interface
Devices for as long as Centillium Maintains competitive pricing; and
WHEREAS, the parties hereto wish to set forth in this Agreement the
guidelines of their cooperation.
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1 Overall Objective of Cooperation
(a) The objective of this cooperation is for both companies to work together
in developing the proper "Interface Device" technologies and systems that can
significantly develop the broadband telecommunications market. The first phase
of this activity includes product definition and joint marketing to telco
customers.
(b) Each of the parties hereto will act in a commercially reasonable fashion
to provide the resources necessary to accomplish the objectives set forth in
this Agreement. Each of the parties hereto acknowledge and agrees that there are
substantial technical,
financial and commercial risks associated with a development activity of this
type and, therefore, that neither of the parties hereto can guarantee that any
of the development activities described in this Agreement or any subsequent
activities to be described in any future agreements will be completed
successfully.
(c) Both parties agree that the future phases of this agreement may include
the product development phase, and production phase. Both parties will work
together to develop a detail agreement covering the relationship agreement
between the two companies for future phases.
2. Scope of Cooperation
The parties' cooperation will be conducted in phases:
(a) Phase 1. Product Definition Phase
(i) The parties hereto will jointly approve specifications for an
integrated circuit solution for the Interface Devices.
(ii) The parties hereto will co-market the resultant solution to
the end customers (e.g., telcos).
(b) Phase 2: Prototyping Phase
(i) Sungmi will evaluate Centillium's first prototype of the
Interface Devices. Centillium will provide evaluation boards
to the Sungmi for this evaluation. Sungmi will provide a
written report on the evaluation. Sungmi agrees to provide
additional evaluation reports throughout the period of this
Agreement as subsequent iterations of the Interface Devices
are prototyped and forwarded to Sungmi for evaluation.
Prototypes of second and/or future iterations of the Interface
Devices will be provided free of charge unless they are custom
iterations for Sungmi in which case Centillium may charge a
fee to be mutually agreed upon by the parties hereto.
(c) Phase 3: Pre-production and Production Phase
(i) Sungmi will supply written acknowledgment that the Interface
Devices meet all the specifications listed in the Product
Specification agreed to by the parties. Upon acceptance of the
Interface Devices and upon acceptance of Centillium's pricing,
Sungmi will provide Centillium with a requirements forecast of
its delivery requirements covering the next twelve month
period for the Interface Devices to be purchased from
Centillium.
(ii) Sungmi will also assist Centillium in establishing standards
utilizing its modulation schemes and will support Centillium's
documentation efforts for the Interface Devices. If Centillium
produces devices based upon such standards, Centillium will
provide Sungmi with access to such devices (e.g., alpha and
beta test site) prior to the general
commercial release of such devices.
(iii) Sungmi and Centillium agree that reasonable standard commercial
terms and conditions will apply to the sale of all devices to
Sungmi.
3. Payments
(a) Following the execution of this Agreement, Sungmi will pay
Centillium a non-recurring engineering (NRE) charge of US$215,000 to
offset costs associated with Centillium's development of the
Interface Devices, Development of the evaluation boards for the
Central Office (CO) and customer premise Modem. Application support
as well as limited special loop plant modeling that may be requested
by Sungmi. The US$215,000 payment shall be made according to the
following schedule:
(i) US$115,000 upon the signing of the Agreement
(ii) US$100,000 upon delivery of the prototype devices and the
evaluation board for the CO and the customer premise modem.
(b) Taxes
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(i) Taxes Generally. All taxes, charge, customs including but
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not limited to duties charged in connection with concluding this agreement
and its fulfillment on the territory of the United States of America will
be paid by Centillium. All other taxes, charge, customs including but not
limited to duties charged in connection with the concluding of this
agreement and its fulfillment will be paid by Sungmi.
(ii) Withholding Taxes. All payments by Sungmi shall be made free
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and clear of, and without reduction for, any withholding taxes. Any such
taxes which are otherwise imposed on payments to Centillium shall be the
sole responsibility of Sungmi. Sungmi shall provide Centillium with
official receipts issued by the appropriate taxing authority or such other
evidence as is reasonably requested by Centillium to establish that such
taxes have been paid.
4. Technology Ownership and Licenses
(a) Nothing herein will be constructed as an express or implied license
(under patents or otherwise) of any kind.
(b) Centillium will have exclusive right to design and market Devices and
any improvements of modifications thereto resulting from the activities of this
Agreement.
(c) Any information disclosed by Sungmi to Centillium under this Agreement
with respect to direct support of the Devices (i.e., with respect to
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characterization and performance of the Devices) may be freely used by
Centillium for the purpose of
implementation of design and implementation of manufacturing and supporting
Devices sold to Centillium's customers, and other substantially similar
activities; the restrictions with regard to Confidential Information set forth
in Section 4 hereof will not apply to the specific information set forth above
but will apply to all other Sungmi information.
5. Confidential Information and Non-Disclosure
Any technical information and other business information disclosed
hereunder by either party hereto to the other will be held in strict confidence
by the receiving party from the date of disclosure until three years after the
date this agreement expires or terminates, using the same degree of care as the
receiving party uses for its own information of a similar kind, and will not be
transferred or divulged to any third-party or any employee who does not have the
requisite need to know. For purposes of interpreting this Agreement, employees
of Sungmi's affiliates, divisions or subsidiaries do not have the requisite need
to know to obtain access to Centillium confidential information disclosed to
Sungmi hereunder. Such confidentiality obligation will not apply to portions of
such technical information and other business information, if any, (a) which
were previously known to the other party hereto free of any confidentiality
obligation, (b) which are or become known to the public, provided that such
public knowledge is not attributable to a breach of this Agreement by the other
party hereto, (c) which the furnishing party explicitly agrees in writing need
not be kept confidential (either in this Agreement or separately), or (d) which
are received by the other party hereto rightfully from a third-party without a
restriction on disclosure. Further, Centillium agrees not to disclose to any
other party any of the specifics of Sungmi's system testing and results that
might specifically indicate a problem related to such system. However, if the
Devices are modified by Centillium to remedy a system problem, Centillium may
disclose such test imformation as may be necessary to support such modified
Devices, to the extent that such disclosure coincides with the availability of
the Modified Devices.
6. Intellectual Property Indemnification
(a) Limited Indemnity. Sungmi agrees that Centillium has the right to
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defend, or at its option to settle, and Centillium agrees, at its own expense,
to defend or at its option to settle, any third party claim, suit or proceeding
(collectively, Action) brought against Sungmi alleging any of the Interface
Devices infringe any intellectual property rights of any third party in
existence as of the effective date of this Agreement, subject to the limitations
hereinafter set forth. Centillium shall have sole control of any such Action or
settlement negotiations, and Centillium agrees to pay, subject to the
limitations hereinafter set forth, any final judgement entered against Sungmi on
such issue in any such Action defended by Centillium. Sungmi agrees that
Centillium will be relieved of the foregoing obligations unless Sungmi notifies
Centillium in writing of such Action within five (5) days after becoming aware
of such action, gives Centillium authority to proceed as contemplated herein,
and gives Centillium proper and full information and assistance to settle and/or
defend any such Action. If it is adjudicatively determined, or if Centillium
believes, that any of the Interface Devices, or any part thereof, infringe any
intellectual property rights of any third party, or if the sale of use of the
Interface Devices, or any part thereof, is, as a result, enjoined, then
Centillium may, at its election, option and expense. (i) procure for Sungmi the
right under such intellectual property rights to sell or use, as appropriate,
the Interface Devices or such part thereof; (ii) replace the Interface Devices,
or part thereof, with other noninfringing suitable products or parts; (iii)
suitably modify the Interface Devices or part thereof; or (iv) remove the
Interface Devices, or part thereof, terminate distribution or sale thereof and
refund the payments paid by Sungmi for such Interface Devices less a reasonable
amount for use and damage. Centillium shall not be liable for any costs or
expenses incurred without its prior written authorization, or for any
installation costs of any replaced Interface Devises.
(b) Limitations. Notwithstanding the provisions of Section 6(a) above,
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Centillium assumes no liability for infringement claims arising from (i)
combination of the Interface Devices or portions thereof with other devices not
provided by Centillium if such infringement would not have occurred but for such
combination, or (ii) the modification of the Interface Devices or portions
thereof unless such modification was made or authorized by Centillium, when such
infringement would not have occurred but for such modification.
(c) Disclaimer. Centillium's liability arising out of or relating to this
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Section 6 shall not exceed the aggregate amounts paid by Sungmi to Centillium
for the allegedly infringing Products that are the subject of the infringement
claim. The foregoing provisions of the Section 6 state the entire liability and
obligation of Centillium and the exclusive remedy of Sungmi with respect to any
alleged infringement of any intellectual property rights by the Products or any
part thereof.
(d) Limitation of Liability. In no event shall Centillium's liability
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arising out of or relating to this Agreement exceed the aggregate amounts paid
by Sungmi to Centillium hereunder, including but not limited to liability under
Section 6. In no event shall either party be liable for lost profits, cost of
procurement of substitute goods, or any other special, reliance, incidental, or
consequential damages, however caused and under any theory of liability whether
based in contract, tort (including negligence), products liability, or
otherwise. The foregoing limitations shall apply regardless of whether such
party has been advised of the possibility of such damages and notwithstanding
the failure of essential purpose of any limited remedy stated herein.
7. Term
This Agreement will expire Four (4) years after the Effective Date
unless extended in writing by mutual parties.
8. Governing Law
The construction, interpretation and performance of this Agreement will
be governed by the laws of the State of California without reference to its
conflict of laws and principals. The United Nations Convention on Contracts for
the International Sale of
Goods will not apply to the sale of Devices hereunder.
9. Entire Agreement
This Agreement sets forth the entire agreement and understanding between
the parties hereto with respect to its subject matter. It merges all
discussions between them and voids and replaces each and every other agreement
or understanding which may heretofore have existed between Centillium and Sungmi
regarding such subject matter. Notwithstanding the foregoing, the Nondisclosure
Agreement between the parties hereto, dated September 1997, as amended, will be
deemed incorporated herein by reference, provided that each party hereto will
be permitted to use any information disclosed thereunder to the extent permitted
in this Agreement.
10. Publicity
(a) Neither party hereto will disclose the existence or content of this
Agreement without the other's prior written consent, which will not be
unreasonably withheld. Each party will submit to the other all proposed
publicity material relating to the disclosure of this Agreement or the
relationship of the parties hereto.
(b) This Section 10 will not prohibit disclosure by a party if such
disclosure is required by a court of competent jurisdiction, law or regulation.
IN WITNESS WHEREOF, each of Centillium Technology Corporation and Sungmi
have executed this Agreement, in duplicate originals, by their respective
officers hereunto duly authorized, the day and year first above written.
Centillium Technology Corp. Sungmi Telecom Electronics Co., Ltd.
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By /s/ Xxxxx Xxxxxx By /s/ X. X. Xxx
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Name Xxxxx Xxxxxx Name Xxxx Xxxx Xxx
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Title V.P. Marketing Title Managing Director
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