Exhibit 10.6
SUPPLY AGREEMENT
Table of Contents
1. GENERAL........................................................ 1
2. SELLER'S REPRESENTATIONS....................................... 3
3. ACCESS TO SELLER'S SUBCONTRACTORS.............................. 3
4. KNOW-HOW AND SUPPORT........................................... 4
5. SALE AND PURCHASE OF PRODUCTS.................................. 5
6. INITIAL ORDER AND FEE PAYMENT.................................. 7
7. TERM; TERMINATION; RIGHTS AND OBLIGATIONS UPON TERMINATION..... 8
8. PRODUCT WARRANTY............................................... 10
9. PATENT INDEMNITY............................................... 11
10. DEFAULT........................................................ 12
11. POST WARRANTY OBLIGATIONS...................................... 13
12. FORCE MAJEURE.................................................. 14
13. MISCELLANEOUS.................................................. 15
14. APPLICABLE LAW; DISPUTES....................................... 17
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
1.
SUPPLY AGREEMENT
This Supply Agreement ("Agreement") is entered as of March 3, 1998 (the
"Effective Date"), by and between Terayon Communication Systems ("Terayon" or
"Seller"), having its principal place of business at Bunker Hill Lane, Santa
Clara, California and ECI Telecom Ltd. ("ECI"), having its principal place at 00
Xxxxxxx Xxxxxx Xxxxx Xxxxx, Xxxxxx.
WHEREAS, Seller is engaged in, among other things, the supply of production
grade modem modules or boards for cable telephony systems for transmission of
digital bit streams over coaxial or hybrid fiber/coax ("HFC") distribution
plants ("Modems");
WHEREAS, Buyer desires to purchase certain quantities of such Modem
subassemblies from Seller, and Seller is willing to supply such quantities of
such Modems subassemblies to Buyer, subject to the terms and conditions of this
Agreement and;
WHEREAS, ECI and some of its affiliated companies are engaged in sales of
HFC access platforms and such sales depend on the supply of Terayon modems, and
ECI has specific undertaking to a strategic customer (Telenet Flanders) with
which ECI has signed a supply agreement and which needs systems for deployment
at the end of March 1998;
WHEREAS, Seller and Telegate are parties to a "Development and Production
Agreement" dated January 4, 1995 and a subsequent "Amendment Agreement" dated
June 4, 1996 (collectively, the "Prior Agreements"); and
WHEREAS, it is the intention of the parties to terminate the Prior
Agreements, including all rights and obligations arising under the Prior
Agreements, as set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual promises
and
covenants set forth below, the parties agree as follows:
1. GENERAL
1.1 DEFINITIONS.
DEFINITIONS. In addition to the terms defined elsewhere in this Agreement and
its Annexes, the following terms shall have the meaning set forth below:
(a) THE SYSTEM means a cable access platform for carrying telecommunication
services over coaxial or HFC distribution plants, developed or being
developed by or for Buyer and/or Telegate; provided, however, any other
-------- -------
provision of this Agreement notwithstanding, Seller shall be obligated to
provide support to Buyer only with respect to modem issues related to
telephony applications.
(b) THE PRODUCT means a physical layer ("PHY") including a modem and radio
frequency ("RF") front end subsystem of the System, for transmission of
digital bit streams over coaxial or hybrid fiber/coax ("HFC") distribution
plants.
1.
The Product includes the following main functional building blocks:.
(c) CENTRAL UNIT ("CU") MODEM - including: Down Stream - ("DS") data
transmitter, Up Stream - ("US") data receiver, DS and US synchronizer,
Control & Logic, Handling of all physical layer functionalities between
modems, e.g.: Channel coding, US Ranging control (timing and power),
Received chips alignments, End-to-End connection set- up etc., R.F/IF
interface, Medium Access Control - ("MAC") interface, interface to Host, RF
module, filters for all signals (including for RF and clock signals),
Built-in testing capability. The CU Modem shall be implemented either on a
single 6U VME board, or two 6U VME boards. If CU modem consists of two
boards, than the definition extends to include interconnecting accessories
(e.g. cables) as well as on board linear supply voltage regulator.
(d) REMOTE UNIT ("RU") MODEM - including: US data transmitter, DS data
receiver, Control & Logic, DS Synchronizer, Handling of all physical layer
functionalities between modems, e.g.: channel coding, US Ranging (timing
and power), Transmit chips timing, End-to-End connection set-up etc., RF/IF
interface, MAC interface, CPU interface, RF module, Built-in testing
capability. The baseband functions excluding RF module shall be implemented
in a single low cost ASIC.
(e) PRODUCT SPECIFICATIONS means the specification of the Product as defined in
Annex B hereto.
(f) $ means dollar of the United States of America.
(g) SUBCONTRACTORS means all third party entities selling materials (except
standard off-the-shelf components) and/or performing other services (e.g.
assembly, testing, engineering) which are used for manufacturing and supply
of the CU and/or RU Modems.
(h) BUYER includes Telegate, provided Telegate has written permission from ECI
to act as a Buyer under the provisions of this Agreement, and further
provided Telegate undertakes to comply with the relevant provisions of this
Agreement.
(i) INTELLECTUAL PROPERTY RIGHTS in this Agreement shall be defined as set
forth in Section 4.3 of Annex B attached hereto.
(j) DELIVERABLE ITEMS means any item, or parts thereof, that Seller is
obligated to provide under this Supply Agreement including but not limited
to Products, documentation, know how, information.
1.2 ANNEXES. All the Annexes (and the Appendices thereto) enumerated
bellow shall be integral parts of this Agreement:
ANNEX A Product Pricing
ANNEX B Prior Agreements
ANNEX C Annex C- Technical Documentation
2.
CONFIDENTIAL TREATMENT REQUESTED
In the event that discrepancies exist between this Agreement and any Annex
hereto, the provisions of this Agreement shall prevail. An Appendix to any
of the Annexes will be considered to be an inseparable part thereof.
1.3 HEADINGS. The headings in this Agreement are for convenience only and
shall not be regarded in the interpretation hereof.
1.4 Notwithstanding anything in this Supply Agreement, if any of the
following activities are not fully completed before March 13, 1998
(except for items identified elsewhere in this Supply Agreement for
later delivery, and for such items the condition will apply with the
date specified for them), this Supply Agreement shall be void and
null, and any fees paid under the terms of this Agreement to Seller by
Buyer or Telegate shall be immediately returned.
(a) Know-how transfer as defined in section 4;
(b) Delivery of documentation as defined in Annex C attached hereto;
and
(c) Signed agreements with all Subcontractors as defined in Section
3.
1.5 The Prior Agreements shall be terminated when the Product is
commercially deployed at the Buyer's first customer (Telnet Flanders)
in quantities of no less than [*****] RU units, that were commissioned
and expressly accepted by Telenet Flanders, and provided that Terayon
has timely met all of its undertakings to supply Deliverable Items
that are scheduled prior to the occurrence of the Event mentioned
above in this provision 1.5 (hereafter "Event"), in accordance with
the provisions of ANNEX B attached hereto.
1.6 CHANGES TO PRODUCT SPECIFICATIONS. Changes to the Product
Specifications shall be made by the written agreement of ECI and
Terayon.
2. SELLER'S REPRESENTATIONS.
2.1 INTELLECTUAL PROPERTIES; NO INFRINGEMENT. Seller represents and
warrants that it owns or has the right to use the intellectual
property and know how currently being used in the Product and to be
used in the development of the Product, and that in undertaking and
performing its obligations hereunder, it will not use the intellectual
property of third parties in the development of the Product. Such
intellectual property and know-how do not infringe on the proprietary
rights of any third parties, nor does any third party have any rights
to such intellectual property or know-how that have not been assigned
to Seller. In the event of a breach of this provision, Buyer's sole
and exclusive remedy shall be the Patent Indemnity set forth in
Section 9.
3. ACCESS TO SELLER'S SUBCONTRACTORS.
3.1 Immediately following the signing of this Agreement and in no event
later than March 5, 1998. Seller shall provide to Buyer a complete
list of Seller's Subcontractors who contribute to the manufacture,
production and/or assembling
[*] - Indicates confidential information that has been omitted and filed
separately with the Securities and Exchange Commission.
3.
of the Product. together with the name and telephone number of a
contact person at each such Subcontractor and a description of the
service performed by each such Subcontractor with respect to the
Product.
3.2 By March 18, 1998, Seller shall use its best efforts to amend its
agreements with all existing Subcontractors to provide for the
automatic and royalty-free assignment to Buyer of Seller's rights
under such agreements in the event that a Seller Triggering Event (as
defined in Section 7.3) occurs, and Seller shall keep Buyer apprised
of the results of such efforts and shall permit Buyer to participate
in all such discussions with existing Subcontractors regarding such
amendments. Seller hereby undertakes to use its best efforts to
include a substantially similar provision in each of its agreements
with its future Subcontractors. In the event that one or more
Subcontractors are unwilling to amend their agreements as set forth
above (the "Unwilling Subcontractors"), Seller shall use its best
efforts to locate a replacement source (the "Replacement Source") by
April 15, 1998 for the work to be performed by the Unwilling
Subcontractors. Seller shall be responsible for any increase in costs
of the Product to Buyer resulting from any Seller Triggering Event as
defined in Section 7.3. By April 30, 1998, Seller shall provide to
Buyer all know-how, documentation and setups for testing debugging and
integration and support of Subcontractors, as defined in Section 4.2,
for all phases of manufacturing and supply which are performed by
Seller.
4. KNOW-HOW AND SUPPORT.
4.1 Before March 13, 1998 (except for items identified elsewhere in this
agreement for later delivery, and for such items the condition will
apply with the date specified for them), Seller shall transfer
sufficient know-how to Buyer and Telegate, by way of frontal meetings
with relevant engineers and documentation, to enable Buyer and
Telegate to support the RU & CU Modems (Product), and Seller shall use
its best efforts to support Buyer's and Telegate's efforts to ensure
the successful interoperability of such Products with all other
elements of the System, independent of Seller. Time is of the essence
with respect to this provision.
4.2 The know how set forth in Section 3.2 and in this Section 4 shall
include all the details of modem functionality and design required for
detection and correction of all bugs or failures. In addition, this
know how shall enable Telegate to independently integrate and support
the Products themselves or other system functions related to or
affecting the Products, including engineering support to
Subcontractors.
4.3 This know how shall be accompanied by documentation (TECHNICAL
DOCUMENTATION) sufficient to enable independent and complete
purchasing of all components required for the manufacture and support
of CU and RU modems production, as well as full independent
maintenance, testing and integration of the Products alone and with
the System, including but not limited to the list of Technical
Documentation defined in ANNEX C.
4.
CONFIDENTIAL TREATMENT REQUESTED
This transfer of Technical Documentation and know how shall be deemed
to be complete only upon written approval by Telegate, which shall not
be unreasonably withheld. Notwithstanding the aforementioned, the
Technical Documentation and the know-how shall be deemed complete upon
the occurrence of the Event as set forth in Section 1.5 above.
4.4 Terayon will provide technical support during the term of this
Agreement in accordance with the terms of this Agreement for so long
as Buyer does not request any change in the Product Specifications as
set at the time the Event occurs.
5. SALE AND PURCHASE OF PRODUCTS.
5.1 ORDERS. Buyer shall purchase Products by submitting written purchase
order(s) ("PO(s)") to Seller. Any terms or conditions contained on any
Buyer purchase order that contradict the terms of this Agreement shall
be deemed rejected and shall be of no force or effect. Any additional
purchase commitment by Buyer, of cumulative quantities ordered beyond
[****], shall be valid only after the Event has been completed.
Prices for each item shall be determined in accordance with ANNEX A.
The final acceptance of Products shall be effective only after the
Event has been completed. Until that time, all acceptance shall be
provisional; provided, however, that in the event that Products
provided by Seller hereunder prior to the time the Event have been
completed are not accepted due to a reason that is unrelated to the
quality or working condition of such Products, such Products will be
deemed accepted when the Event have been completed.
5.2 DELIVERY AND TITLE. All Products will be delivered to Buyer in the
country of destination. However, it is agreed that the prices of the
Products are FOB United States airport. Seller will arrange in
coordination with Buyer for the air carriage insurance and freight
from such United States airport to country of destination, and the CIF
cost will be borne by Buyer. Buyer may itself make the arrangement
with the carrier, if it so chooses, and in such event, Seller will
coordinate, facilitate and effect the delivery as instructed by Buyer
from time to time.
5.3 ACCEPTANCE TESTING.
5.3.1 DEFINITION OF ACCEPTANCE TESTING. Acceptance testing is the
process of demonstrating and proving that the Product as a whole,
and/or any part of the Product, complies with all applicable
requirements of the Product Specifications.
5.3.2 TESTING REQUIRED. Acceptance testing shall be conducted by
Seller on each deliverable Product. Such acceptance testing shall
be successfully completed prior to delivery. Buyer shall be
permitted to witness all
[*] - Indicates confidential information that has been omitted and filed
separately with the Securities and Exchange Commission.
5.
acceptance tests and shall have access to all acceptance data.
Should the results of any of the tests performed by Seller prove
unsatisfactory, Seller shall immediately take all necessary steps
to rectify faults so as to bring the respective Products into
complete conformance with the Product Specifications and other
agreed upon requirements, and to obtain satisfactory results at
repeat tests that will be performed by Seller.
5.3.3 ACCEPTANCE TEST PROCEDURES.
(a) Seller shall prepare and submit to Buyer for approval Acceptance
Test Procedures ("ATP").
(b) ATP shall define comprehensive and sufficient tests to prove and
demonstrate that items passing the test meet all the requirements
of the Product Specifications.
(c) ATP shall define, among other things, the tests, signals inputs
and outputs, nominal values and tolerances, and the procedure
where test sequence is significant. Test equipment configuration,
test set-up, accuracy, loading and other arrangements shall be
defined for these tests.
5.4 CONFIGURATION MANAGEMENT.
Seller shall submit to Buyer a configuration management plan for approval.
An agreed upon document shall be released and implemented no later than
March 15,1998.
5.5 QUALITY ASSURANCE.
5.5.1 QUALITY SYSTEM. Seller shall use its best efforts to obtain ISO 9000
certification for the Quality System as soon as possible and shall
comply with the requirements of the Product Specifications.
5.5.2 QUALITY DOCUMENTATION. Drawings, procurement and process
documentation shall show evidence of Buyer's quality review by stamp,
signature or other means.
5.5.3 SERIALIZATION. All deliverable Products shall be serialized with
regard to the base part number. No two deliverable Products shall have
the same serial number. Serial numbers shall remain the same
regardless of configuration changes subsequent to acceptance testing.
Serial numbers of Products returned and subsequently not resubmitted
shall not be re-assigned.
5.5.4 SOURCE INSPECTION. Buyer shall have the option to perform source
inspection at Seller's facilities and/or Seller's Subcontractors;
provided such Subcontractors have consented to such source inspection.
Seller shall use its best efforts to obtain the consent of its
Subcontractors for such source inspection. The inspection shall be
performed by Buyer's
6.
CONFIDENTIAL TREATMENT REQUESTED
inspectors or by inspectors delegated by Buyer to perform the
source inspection by subcontracting. Seller shall give Buyer
access to all test equipment and facilities required to perform
the source inspection.
5.6 MAXIMUM DELIVERY TIME. Delivery dates in respect of each PO will be
agreed to by the parties from time to time, but in no event will
delivery exceed three months after the date a PO is issued.
5.7 MARKS AND PACKAGING. All Products will be packaged according to
standards of trade generally applicable to similar products shipped on
a global basis. Packaging and Marking shall be in accordance with the
laws of the country of destination. Any additional packaging requested
by Buyer shall be provided at Buyer's expense.
5.8 NOTIFICATION. Upon each shipment, Terayon shall notify Buyer
immediately of the identity of the carrier and expected time of
arrival to an international airport in the country of destination.
5.9 WARRANTIES. Acceptance of a Product shall not relieve Terayon from its
obligations thereunder with respect to warranties under section 8
below.
5.10 EXPEDITED DELIVERIES OR INCREASED ORDERS. Buyer may increase the order
for any particular Product by written notice received by Seller and in
accordance with Seller's lead-time schedule and charges (charges are
based on the price of the portion of the order that is changed or
increased). Seller will use reasonable commercial efforts to meet
Buyers requests for increases in orders or expedited delivery for less
than Seller's normal lead-times.
5.10A. TITLE; RISK OF LOSS. Title to Deliverable Items covered by this
Agreement shall pass to Buyer upon delivery of the Deliverable Items
FOB to a United States airport. Risk of loss of or damage to
Deliverable Items shall remain with Seller until delivery FOB to a
United States airport. This provision shall not derogate from Seller's
responsibilities related to Purchase Orders and Warranties under this
Agreement.
5.11 ADVERSE RESULTS; GOVERNMENT ACTION. Each party agrees to promptly
notify the other party of any adverse or unexpected results or any
actual or potential government action relevant to a Product of which
it becomes aware.
6. INITIAL ORDER AND FEE PAYMENT.
6.1 INITIAL ORDER. Buyer will issue a firm purchase order for a certain
quantity of CU and RU modems (the "Product") upon execution of this
Agreement the value of which order shall be [$*********] (the "Initial
Order") Upon the receipt by Buyer of a signed purchase order by Seller
reflecting the Initial Order, Buyer will pay to Seller a down-payment
of [$*******] (the "Down Payment") against the Initial Order which
will shall be used to pay for Buyer's purchase of the first [$*******]
worth of Products from Seller.
[*] - Indicates confidential information that has been omitted and filed
separately with the Securities and Exchange Commission.
7.
CONFIDENTIAL TREATMENT REQUESTED
6.2 SECURITY FOR DOWN PAYMENT. As security for the Down Payment, within
ten (10 business days following any issuance and sale of Seller's
capital stock, whether in a public offering or in a private
transaction, Terayon shall provide to Buyer one of the following,
which shall be determined by Seller: (i) a guarantee to Buyer in the
amount of [********] (or, if any of such amount has been used by Buyer
to purchase the Products, the unused portion of the [********]) issued
by an FDIC-recognized financial institution as a performance bond or
(ii) immediate repayment of the then outstanding Down Payment which
has not been used by Buyer to purchase the Products.
6.3 PAYMENTS. Buyer shall make payments due to Terayon for Deliverable
Items either directly to Terayon or to such bank as Terayon may
designate in writing. All invoices received within a month shall be
paid before the end of the following month, except in the event that
Buyer protests or disputes an invoice during such period.
6.4 INVOICES; ERRORS. Invoices shall be submitted by Terayon in duplicate
(original and one copy) for each shipment and will enclose as an
integral part thereof documentary proof of delivery of the Deliverable
Items FOB United States airport, according to commercially accepted
standards for exports. Delays in invoices as well as errors and
omissions regarding Deliverable Items actually delivered, will be
considered just cause for withholding payment until such time as the
delay, errors or omission is remedied. Any such withholding pursuant
to this Section 6. 4 shall not be deemed a breach of this Agreement.
In no event shall Buyer have an obligation to pay for Deliverable
Items until such time as said Deliverable Items have been actually
delivered to Buyer and Buyer has been properly billed therefor.
6.5 TAXES. The prices of all Products and Deliverable Items hereunder are
inclusive of all taxes, duties, fees, excises and/or charges which are
now and may hereafter be directly imposed on the Products or
Deliverable Items or on Terayon with respect thereto at any time.
Notwithstanding the foregoing, Buyer shall bear the responsibility for
any taxes or duties imposed on Deliverable Items in Israel or other
country of destination, including, for example, taxes imposed on the
sale by Buyer of a System that includes Terayon products.
7. TERM; TERMINATION; RIGHTS AND OBLIGATIONS UPON TERMINATION.
7.1 The term of this Agreement, unless otherwise determined elsewhere in
this Agreement, shall be for two (2) years from the Effective Date,
unless terminated earlier by either party pursuant to the provisions
of this Section or extended by mutual written agreement of the
parties.
7.2 Notwithstanding the provisions of the previous paragraph 7.1 the
following provisions shall continue in effect after termination of
this Agreement in accordance with their terms:
[*] - Indicates confidential information that has been omitted and filed
separately with the Securities and Exchange Commission.
8.
CONFIDENTIAL TREATMENT REQUESTED
(a) Payment provisions: any payment due at the time of termination shall
be paid in accordance with the terms of this Agreement.
(b) All warranties specified in the Agreement in accordance with their
terms.
(c) All Patent Indemnity obligations.
(d) Sections 14.1 and 14.2 (Applicable Law; Disputes) shall survive
termination and shall govern any dispute between the parties under the
Agreement that may subsequently arise.
(e) Sections 13 land 13.2 (Confidentiality and Advertising).
(f) Section 11.3 (Spare Parts).
7.3 BUYER'S RIGHT TO TERMINATE. Buyer shall have the right, by providing Seller
with written notice, to immediately terminate this Agreement upon the
occurrence of any of the following events, any one of which shall be
considered a "Seller Triggering Event:"
(a) Seller fails to make payments as provided in this Agreement, unless
such failure is cured within thirty (30) days from receipt of written
demand for such payment. Any late payments shall bear interest at the
annual rate of LIBOR plus 2%;
(b) Seller discontinues the Product;
(c) Seller is adjudged bankrupt;
(d) Seller files a voluntary petition in bankruptcy or liquidation or for
the appointment of a receiver;
(e) Filing of an involuntary petition to have Seller declared bankrupt, or
subject to receivership, provided that such petition is not vacated or
set aside within ninety (90) days from the date of filing;
(f) The execution by Seller of any assignment for the benefit of
creditors;
(g) Seller breaches any material provision of this Agreement and fails to
cure such material breach within [*****] from receipt of written
notice describing the breach; and
(h) Breach by Seller of the Confidentiality Agreement or the Proprietary
Information Mutual Non Disclosure Agreement.
7.4 SELLER'S RIGHT TO TERMINATE. Seller shall have the right, by providing
Buyer with written notice, to immediately terminate this Agreement upon the
occurrence of any of the following events, any one of which shall be
considered a "Buyer Triggering Event:"
(a) Buyer fails to make payments as provided in this Agreement, unless
such failure is cured within thirty (30) days from receipt of written
demand for such payment. Any late payments shall bear interest at the
annual rate of LIBOR plus 2%;
(b) Buyer is adjudged bankrupt;
(c) Buyer files a voluntary petition in bankruptcy or liquidation or for
the appointment of a receiver;
[*] - Indicates confidential information that has been omitted and filed
separately with the Securities and Exchange Commission.
9.
CONFIDENTIAL TREATMENT REQUESTED
(d) Filing of an involuntary petition to have Buyer declared bankrupt, or
subject to receivership, provided that such petition is not vacated or
set aside within ninety (90) days from the date of filing;
(e) The execution by Buyer of any assignment for the benefit of creditors;
(f) Buyer breaches any material provision of this Agreement and fails to
cure such material breach within [*******] from receipt of written
notice describing the breach; and
(g) Breach by Buyer of the Confidentiality Agreement or the Proprietary
Information Mutual Non Disclosure Agreement.
8. PRODUCT WARRANTY.
8.1 PRODUCT WARRANTY. The following items 8.l through 8.6 refer only to
Product Warranty.
(a) Terayon warrants that all Products, including components thereof, to
be delivered hereunder, will conform to the Product Specifications, be
free from defects in and malfunctions arising from workmanship,
material and design. Provided Buyer gives written notice of any
defect, deficiency or non-conformance of any Product, or parts
thereof, within: (i) 12 months from the date on which the
end-customer, the operator or network provider who uses the system for
providing services accepts an item of Product with respect to the
first [*****] units delivered hereunder; and (ii) 15 months from the
date on shipment date (airwaybill date) of an item of Product with
respect to subsequent units delivered hereunder (the "Warranty
Period") Seller shall, at no cost to Buyer, and within the
"Turn-Around Time" as defined in Section 8.2(a) below, repair or
furnish replacements for all such defective, deficient or
non-conforming items or parts thereof or accept their return and
provide a credit for their purchase amount.
(b) The above warranty shall not apply:
(i) if the Product or Deliverable Item is not used for its intended
purpose or is misused or abused;
(ii) if the nonconformity is caused by a modification to the Product
or Deliverable Item made by Buyer or a third party which was not
approved by Seller.
8.2 TURN-AROUND TIME.
(a) "Turn-Around Time" for the purposes of this Section 8 means
[********************] from the date on which such defective item, or
defective or non- conforming part thereof, is furnished to Terayon at
port of entry in the USA, for repair or replacement until the date on
which such replaced or repaired item is returned to Buyer in Israel or
to such other location specified by Buyer.
[*] - Indicates confidential information that has been omitted and filed
separately with the Securities and Exchange Commission.
10.
(b) Terayon shall bear air shipment costs of the deficient, repaired
or replaced item as well as the risk or loss or damage to the
item or its replacement throughout the period between the
shipment of the defective item and the receipt of the repaired or
replaced item. Repaired or replaced items shall be subject to the
warranty provided on the original Product only (the time during
which Seller repairs or replaces the item shall not be considered
as part of the warranty period), in accordance with this Section
8. Notwithstanding the above Buyer shall bear all expenses if no
fault was found in the items returned for repair; provided that
there is an identical test setup for such items at Seller and
Telegate.
8.3 INSPECTION; ACCEPTANCE. This warranty shall survive inspection,
acceptance, or payments by Buyer and is provided for the sole and
exclusive benefit of Buyer and shall not extend to any third party,
including, without limitation, any reseller or end-user.
8.4 EXCLUSIVE REMEDY. The warranty granted in this Section 8sets forth
Buyer's sole and exclusive remedies and Seller's sole and exclusive
liability for any claim of warranty for any product produced delivered
by Seller.
8.5 NO AUTHORITY. Buyer acknowledges that it is not authorized to make any
warranty or representation on behalf of Terayon or its suppliers
regarding the Product, whether express or implied, other than the
warranty terms set forth in this Section 8.
8.6 NO IMPLIED WARRANTY. The foregoing warranties are the sole and
exclusive warranties, whether express or implied, given by Seller in
connection with the product, and Seller disclaims implied warranties.
Except as expressly provided herein, Seller makes no additional
warranties, express, implied, arising from course of dealing or usage
of trade as to any matter whatsoever.
9. PATENT INDEMNITY.
9.1 PATENT INDEMNITY Seller shall, at its sole cost and expense,
indemnify, defend and hold Buyer harmless from and against any claims,
demands, liability or suit, including costs and expenses, for or by
reason of any actual or alleged infringement of any third party
patent, trademark, or copyright resulting from the design,
development, manufacture, use, sale or disposal of any Product or
Deliverable Items furnished hereunder. Buyer shall promptly notify
Seller in writing of any such infringement claim after Buyer first
learns of such claim, and shall provide Seller with such assistance
and cooperation as Seller may reasonably request from time to time in
connection with the defense thereof. In the event Buyer determines
that Seller is unable or unwilling to defend the claim, Buyer may
assume control of the defense of any infringement claim; provided that
under such circumstance Buyer shall bear all costs of such defense
(but not of any consequent judgment or liability). If any settlement
requires an affirmative obligation of, results in any ongoing
liability to, or prejudices or detrimentally
11.
impacts in any way, Buyer, then such settlement shall require Buyer's
written consent.
9.2 RIGHT TO SUBSTITUTE. Should Buyer be prevented as a result of such
claims, actions, or suits regarding infringement, from utilizing the
Product or Deliverable Items in question, or if Seller believes such a
claim is likely, then Seller shall, at Seller's expense, either
substitute an equivalent non- infringing item, or modify the item so
that same no longer infringes but remains equivalent, or obtain (at
its own expense) for Buyer the right to continue use of the item in
accordance with the terms of this Agreement.
9.3 PROCEDURE. Seller's obligation to indemnify will be subject to the
following terms and conditions:
(a) The obligation will arise only if Seller receives prompt written
notice of the infringement claim.
(b) The parties recognize that the Product or Deliverable Item will
be used within the System. The obligation will not cover any
claim that the Product infringes any third party's rights only as
used in combination with any soft-xxxx or hardware not supplied
by Seller, if that claim could have been avoided by the use of
the Product in combination with equivalent other available
software or hardware. The foregoing exclusion applies only if the
Product is used outside the System.
10. DEFAULT
10.1 Remedy Upon Occurrence of Triggering Event. In the event that this
Agreement is terminated pursuant to Section 7.3 above, Buyer shall
have the right to:
(a) Use the Know how in accordance with the terms and provisions of
Section 4;
(b) Obtain access to the Subcontractors and payment by Seller for any
increase in costs of the Product to Buyer resulting from any such
Seller Triggering Event;
(c) Exercise any and all financial guaranties provided by Seller; and
(d) Exercise any and all rights surviving such termination pursuant
to Section 7.2.
The foregoing expresses Buyer's sole remedy and Seller's sole liability in
the event of such occurrence.
10.2 SUBCONTRACTORS TRIGGERING EVENT. Subject to the terms of this
Agreement (including Seller's responsibility for any increase in costs
of the Product resulting from the Unwilling Subcontractors' refusal to
amend their agreements as set forth
12.
CONFIDENTIAL TREATMENT REQUESTED
in Section 3.2 above), Seller hereby grants Buyer, so that
Telegate may utilize a second source from which to purchase its
requirements of the Product, a worldwide, nonexclusive,
nontransferable, nonsublicensable, personal right and license
(the "License") to use in accordance with Section 4.1 above
Seller's INTELLECTUAL PROPERTY RIGHTS as defined in Section 4.3
of Annex B to modify, maintain, upgrade, support, manufacture and
distribute the Product only as part of Telegate's System, which
Telegate may exercise only after the occurrence of any of the
following events (collectively, "Subcontractors Triggering
Events"): (i) Seller's failure to support the Product in
accordance with this Agreement within thirty (30) days after
receipt of written notice from Telegate; (ii) Seller's failure to
supply Buyer with a reasonable supply of the Product within
ninety (90) days after receipt of a PO from Buyer; or (iii) Buyer
terminates this Agreement based upon a Triggering Event as
defined in Section 7.3 above; or (iv) in the event of Force
Majeure as defined in Section 12, which prevents Terayon from
performing its obligations.
Notwithstanding the foregoing, Buyer shall be entitled as and
from the occurrence of a "Subcontractors Triggering Event" to
sublicense the License as defined herein above to the extent
required to enable a second source to modify, maintain, upgrade,
support, manufacture and distribute the Product only as part of
Telegate's System.
11A. LIMITATION OF LIABILITY.
11A1. IN NO EVENT SHALL SELLER'S AGGREGATE LIABILITY TO BUYER OR ANY
OTHER PARTY ARISING HEREUNDER OR IN CONNECTION WITH THE PRODUCTS,
HARDWARE, SOFTWARE OR DOCUMENTATION PROVIDED BY SELLER UNDER THIS
AGREEMENT EXCEED A SUM EQUAL TO U.S. [***********]. THIS
LIMITATION IS CUMLATIVE, WITH ALL PAYMENTS BY SELLER BEING
AGGREGATED TO SATISFY THE LIMIT. THE EXISTENCE OF ONE OF MORE
CLAIMS WILL NOT ENLARGE THE LIMIT.
11A2. NEITHER PARTY SHALL BE LIABLE FOR ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL, INDIRECT OR PUNITIVE DAMAGES (INCLUDING LOST
REVENUES OR PROFITS), REGARDLESS OF WHETHER SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
11. POST WARRANTY OBLIGATIONS
11.1 SUPPORT. Seller agrees that for the term of this Agreement, plus
the warranty period, it will retain at its offices, a staff of
technical personnel who are expert in the design, manufacture and
trouble-shooting of the Product and Deliverable Items supplied
under this Agreement. This staff will be available to render
assistance to Buyer upon request and will respond to Buyer's need
for special technical assistance regarding the Product or a
Deliverable Item and will provide such assistance as may be
required to support systems integration, system debug,
[*] - Indicates confidential information that has been omitted and filed
separately with the Securities and Exchange Commission.
13.
CONFIDENTIAL TREATMENT REQUESTED
basic parameter changes in the Product, Product modification, Product
upgrades, customer and production support in accordance with the
provisions of Section 4 ("Know-How and Support").
11.2 REPAIR. During the term of this Agreement, in the event that Buyer
requires repair of the Product, or any part thereof, after the date of
completion of Seller's warranty obligations under this Agreement,
Seller will perform such repairs on terms at and prices in accordance
with its standard support and maintenance fees, or at a fair and
reasonable prices if standard fees have not been set.
11.3 SPARE PARTS. Terayon undertakes, for a period of [*******] after the
completion Seller's warranty obligations under this Agreement, to
supply Buyer with spare parts for the Product and the Deliverable
Items as Buyer may request from time to time, at prices that are fair
and reasonable, considering prevailing market prices at the time said
items are ordered, and which in no event shall exceed the prices
charged by Seller to its most-favored customers purchasing the same
items in comparable quantities on equivalent terms.
11.4 The above does not derogate from all other warranties defined
elsewhere in this Agreement.
12. FORCE MAJEURE
12.1 EVENTS OF FORCE MAJEURE. Neither party shall be liable for a default
or delay in the performance under this Agreement if and to the extent
such default or delay is caused, directly or indirectly, by (i) fire,
flood, natural disturbances or other acts of God; (ii) any outbreak or
escalation of hostilities, war, civil commotion, riot or insurrection;
(iii) any act or omission of the other party or any governmental
authority; or (iv) any other similar causes beyond the control of such
party that arise without the fault or negligence of such party. Any
delay resulting from such events shall be referred to herein as a
"Force Majeure", shall not constitute a default by such party under
this Agreement and shall entitle the delayed party to a corresponding
extension of its delayed obligation. The party whose performance will
be delayed by such events will use its best efforts to notify the
other party within three (3) days after delayed party becomes aware of
such event, as well as the cessation thereof.
12.2 SUBCONTRACTOR'S DEFAULT. With respect to delays in performance by
Seller's semiconductor or fabrication subcontractors or suppliers,
such delays shall be deemed excusable delays with respect to Terayon
only if (i) such subcontractor's non-performance is caused by Force
Majeure and (ii) Seller could not have obtained the supplies or
services of such subcontractor from other sources in sufficient time
to prevent interruption of' Seller's performance of this Agreement.
12.3 TERMINATION.
(a) If Force Majeure results in the extending of any delivery under
this Agreement by more than sixty (60) days, Buyer may terminate
this
[*] - Indicates confidential information that has been omitted and filed
separately with the Securities and Exchange Commission.
14.
Agreement in whole or in part of the PO's delayed and such
termination shall not be deemed a breach of this agreement.
(b) If Buyer does not terminate by the said 60 days, and the Force
Majeure prevails for further 45 days Buyer may terminate this
agreement in whole or in pan of the PO's delayed, and will be
entitled to use the Know how in accordance with the provisions of
Section 4.2 and access to Subcontractors pursuant to Section 3,
but it shall have no right to claim damages from Terayon for
breach of the agreement. The foregoing expresses Buyer's sole
remedy and Seller's sole liability for such termination resulting
from Force Majeure.
13. MISCELLANEOUS
13.1 CONFIDENTIALITY OF AGREEMENT; PERMITTED DISCLOSURES. Throughout the
term of this Agreement, each party agrees that the terms of this
Agreement shall be kept confidential. No disclosure as to Buyer's
customers' or end-users' identity or other information concerning this
Agreement shall be released by Seller or its subcontractors without
the prior written consent of Buyer except (i) in Seller's or Buyer's
communication with its respective shareholders, investors or potential
investors, provided any such disclosure is made in confidence and (ii)
as to such advertising or other marketing in which Seller may engage
in the ordinary course of business.
13.2 REQUIRED DISCLOSURES; ADVERTISING. Notwithstanding Section 13.1 above:
(a) Each party may divulge information hereunder as is reasonably
required for the performance of the Agreement or as is required
by law; and
(b) Each party shall have the right to list any other party as a
customer or supplier (as the case may be) in its advertising
material.
13.3 EXPORT LICENSES; COMPLIANCE WITH EXPORT LAWS. Buyer's obligations
under this Agreement are conditional upon Seller obtaining valid
export license(s) from its government for shipment of the Product (if
required). If such licenses are not obtainable by Seller or are
revoked at any time prior to a scheduled shipment, Buyer shall have
the right to terminate this Agreement or cancel any purchase order for
which a license was refused, and such termination or cancellation
shall not be deemed to be a breach of this Agreement by Buyer. In the
event of such a termination, all payments paid by Buyer to Seller in
respect of untilled purchase orders will be refunded within thirty
(30) days of notice of such termination together with interest, using
the then current LIBOR plus 2% interest rate, thereon, to be
calculated from the date each such payment was made until the date
such payment is repaid in full. At their own expense, Seller and Buyer
shall comply with all applicable laws, regulations, rules, ordinances
and orders regarding their respective activities related to this
Agreement. Without limiting the foregoing, Seller and Buyer shall (i)
comply with the relevant export
15.
administration and control laws and regulations, as may be amended
from time to time, to ensure that the Products are not exported
(directly or indirectly) in violation of United States law and (ii)
comply with the U.S. Foreign Corrupt Practices Act and shall not make
any payments to third parties which would cause Seller or Buyer to
violate such law. In addition, Buyer shall obtain any required Israeli
governmental authorizations including, without limitation, any import
licenses and foreign exchange permits.
13.4 SEVERABILITY. If any provision of this Agreement shall be held illegal
or unenforceable, that provision shall be limited or eliminated to the
minimum extent necessary so that this Agreement shall otherwise remain
in full force and effect and enforceable.
13.5 ASSIGNMENT. Neither Seller nor Buyer may assign this Agreement in
whole or in part, or any rights hereunder without the prior written
consent of the other, except to (i) a wholly owned subsidiary of such
party, (ii) a successor in interest of all or substantially all of
such party's assets or business or (iii) a bank trust company or other
financial institution for money due or to become due under this
Agreement (iv) an assignment by Buyer to Telegate. In the event of any
assignment, the assigning party shall promptly supply the other party
with two (2) copies of such assignment and, in the instance of an
assignment pursuant to this Section 13.6, shall indicate on each
invoice to whom payment is to be made. In the event of any assignment
pursuant to this Section 13.6, the assigning party also shall provide
a written guarantee by such party of the obligations assigned to such
party's subsidiary.
13.6 RELATIONS OF THE PARTIES. Nothing in this Agreement shall be construed
as creating relationship of principal and agent or of employer and
employee between the parties. Furthermore, nothing in this Agreement
is intended to constitute, create, give effect to or otherwise
contemplate a joint venture, partnership or formal business entity of
any kind. The rights and obligations of the parties with respect to
this Agreement shall not be construed as providing for sharing of
profits or losses arising out of the effort of either of the parties.
The parties shall not incur any liability on behalf of the other.
13.7 WAIVER. No waiver by either Seller or Buyer of any breach of this
Agreement shall be held to be a waiver of any other subsequent breach.
No waiver or time extension given by either Seller or Buyer shall have
effect unless made expressly and in writing.
13.8 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties, supersedes and cancels any previous
understandings or agreements between all the parties relating to the
provisions hereof, and expresses the complete and final understanding
of the parties in respect thereto. This Agreement may not be changed,
modified, amended or supplemented except by a written instrument
signed by the parties. This Agreement shall supersede the
16.
Prior Agreements in their entirety upon the occurrence of the Event
identified in Section 1.5.
13.9 GOOD FAITH. Each party undertakes to carry out all its undertakings
hereunder in good faith and not to act in any way - directly or
indirectly and whether itself or with or through any third party -
which may breach or be incompatible with any of its undertakings
under this Agreement.
13.10 NOTICES. Any notice contemplated by or made pursuant to this
Agreement shall be in writing and shall be deemed delivered on the
date of delivery if delivered personally or by commercial overnight
courier with tracking capabilities or by fax, or five (5) days after
mailing if placed in the mail, postage prepaid, registered or
certified mail, return receipt requested, addressed to Buyer or
Seller (as the case may be). Any change of address shall be
designated by at least ten (10) days prior written notice.
Company ECI Telecom Ltd.
Attention Uri Kashti
Address 00 Xxxxxxx Xxxxxx
Xxxxxx Xxxxx 00000
Fax Number (000-0) 000-0000
Company TERAYON COMMUNICATION SYSTEMS INC.
Attention Xx. Xxxx Xxxxx
Address 0000 Xxxxxx Xxxx Xxxx
Xxxxx Xxxxx, XX 00000
Fax Number (000) 000-0000
Company Telegate Ltd.
Attention Xxxx Xxxxx
Xxxxxxx 0 Xxxxxxx Xxxxxx
Xx-Xxxxxx 00000
Fax Number (000-0) 000-0000
14. APPLICABLE LAW; DISPUTES
14.1 APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of Israel, providing the performance by
Seller hereunder does not result in any violation of the laws of the
state of California USA.
14.2 DISPUTES. It is the intent of the parties to settle all disputes
within the scope of this Agreement amicably by discussion and
negotiation. If, despite the parties' best efforts, the parties are
not able to settle a dispute, such dispute shall be resolved before
the courts of Tel-Aviv Israel. The parties hereby consent to the
exclusive jurisdiction of such courts for the purpose of resolving
disputes hereunder.
17.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the Effective Date written above.
SELLER: TERAYON COMMUNICATION SYSTEMS
By:
-----------------------------------
Printed Name:
-------------------------
Title:
--------------------------------
BUYER: ECI TELECOM LTD.
By:
-----------------------------------
Printed Name:
-------------------------
Title:
--------------------------------
TELEGATE
By:
-----------------------------------
Printed Name:
-------------------------
Title:
--------------------------------
18.
Supply Agreement Between:
ECI Telecom Ltd. And Terayon Corporation
March 3, 1998
ANNEX A
PRODUCT PRICING
CONFIDENTIAL TREATMENT REQUESTED
Product Pricing
---------------
The following units and pricing tables shall govern sales of the modems by
Seller to Buyer:
1. RU MODEM PRICE
RU Modem selling price to Buyer shall be fixed according to the following table:
All time-slots will be available to Buyer without any limit or additional
payment.
Cumulative Units Per [********]* Price Per Unit (US$)
------------------------------------------------------------------------
Up to [******] [***]
------------------------------------------------------------------------
From [****************] [***]
------------------------------------------------------------------------
From [****************] [***]
------------------------------------------------------------------------
Cumulative Units Per [********]* Price Per Unit (US$)
------------------------------------------------------------------------
Up to [******] [***]
------------------------------------------------------------------------
From [****************] [***]
------------------------------------------------------------------------
From [****************] [***]
------------------------------------------------------------------------
*) The first [*********************] from the Effective Date of this
Agreement.
**) The second [*********************].
Note.
For the first [*****] RU modems of [********] there will be an additional
fee of [****] for each deliverable RU modem.
2. CU MODEM PRICE
CU Modem selling price to Buyer shall be fixed according to the following table:
[*] - Indicates confidential information that has been omitted and filed
separately with the Securities and Exchange Commission.
CONFIDENTIAL TREATMENT REQUESTED
-------------------------------------------------------------------
For Any Quantity Price Per Unit (US$)
-------------------------------------------------------------------
First [***] [****]
-------------------------------------------------------------------
From [**********] [****]
-------------------------------------------------------------------
All modem time slots will be available to Buyer without any limit or additional
payment.
4. OTHER TERMS
a) The parties to this Agreement agree that these tables reflect the prices to
be paid for the number of units to be sold to Buyer, if any. Buyer may
order any quantity of these units at its sole discretion, in accordance
with these tables and the limitations set forth therein.
b) There will not be any additional fees and/or payments in the [*********],
associated with any item or service (such as for: licensing, maintenance
and maintenance support, integration support, production license etc.;
herein, "Support Services") for so long as Buyer does not request any
change in the Product Specifications as set at the time the Event is
completed.
[*] - Indicates confidential information that has been omitted and filed
separately with the Securities and Exchange Commission.
Supply Agreement Between:
ECI Telecom Ltd. And Terayon Corporation
March 3, 1998
ANNEX B
PRIOR AGREEMENTS
4.
CONFIDENTIAL TREATMENT REQUESTED
PRIOR AGREEMENTS
The Prior Agreements shall be terminated upon the successful and timely
fulfillment of the Event under the terms agreed between Seller Telegate and ECI
in this Annex B.
1. COMPLETION OF DEVELOPMENT
1.1. Terayon undertakes to complete the design, development, testing and
manufacture of the Product in accordance with this Agreement;
1.2. The development of the Product shall be deemed to be complete when all of
the Events set forth in Section 1.5 of the Supply Agreement have been
completed.
1.3. Following the completion of all of the Events, the parties agree that
Telegate shall not be entitled to demand from Terayon any feature,
component or functionality in the Product which exceeds the Product
Specifications that specify the latest production version at the date upon
which completion of development has been achieved.
1.4. Currently the tasks ("Tasks") known to be required for the system to be
qualified for deployment are detailed in Appendix 1 of this Annex B. These
Tasks must be completed in accordance with the technical requirements of
Telegate and on time as agreed in Appendix 1 of this Annex B (and time is
of the essence)
1.5. TERAYON'S SOLE RESPONSIBILITY. It is hereby declared and agreed by the
parties that Terayon alone shall be responsible to Telegate for completing
the development and production of the Product and for the performance of
all its undertakings hereunder, whether performed by itself and/or
Terayon's subcontractors, and that Telegate's participation, approvals,
observation or inspection as provided for hereunder shall not be construed
in any way as derogating from or minimizing Terayon's obligations
hereunder; provided that Terayon's performance is not prevent, delayed or
hampered by an act or omission of Telegate and/or Buyer.
2. PRODUCT SPECIFICATIONS
2.1. Within five (5) days following the date on which [****] RU modems were
shipped, Seller shall update the Product Specifications to reflect the then
current production version of the Product and the then latest design
version of the Product, and such update shall be the final Product
Specifications.
2.2. This final Product Specifications shall be the applicable specifications
for the purpose of this Supply Agreement and changes to the Product
Specifications shall be made only by mutual agreement between the Parties.
2.3. Until such final Product Specifications exists the Product Specifications
pursuant to the Prior Agreements shall prevail.
[*] - Indicates confidential information that has been omitted and filed
separately with the Securities and Exchange Commission.
5.
3. CONSIDERATION
3.1. It is agreed that the payments in this Agreement are in complete
replacement of all NRE payments, that have not been paid yet, by Telegate
listed in the Prior Agreements.
4. TERMS OF TERMINATION
4.1. Seller and Telegate mutually agree to extinguish the Prior Agreements
referred to above. Agreements in accordance with paragraph 1.5 and other
terms of the Supply Agreement.
4.2. EXPLICIT WAIVER AND CONSENT. Upon completion of the Event as set forth in
Section 1.5 of the Supply Agreement, Telegate hereby knowingly and
explicitly waives any and all rights it has or may have had against Seller
in the Prior Agreements. Seller hereby knowingly and explicitly waives any
and all rights it has or may have had against Telegate in the Prior.
Agreements. The above waiver shall mean a full waiver and release of each,
every and all claims, demands, actions and causes of action, of every kind
and nature arising out of or relating to the Prior Agreements, which either
Telegate or Seller ever had, now has or may in the future have; and no such
claim, demand, action or cause of action, whether known or unknown or
suspected or unsuspected to Telegate or Seller.
4.3. Intellectual Property Rights. Intellectual Property Rights in the Prior
Agreements shall be amended as follows:
Section 14 of Prior Agreement shall read in its entirety as follows:
INTELECTUAL PROPERTY RIGHTS
The ownership of all intellectual property rights arising out of the performance
of this Agreement and all intellectual property rights owned by or licensed to
either of the parties hereto and required to carry out the terms of this
Agreement and/or to design, manufacture, sell, use and maintain Products (and
parts) produced, including without limitation, all related patent rights,
designs, copyrights, mask works, and applications therefor and trade secrets,
hereinafter the "INTELLECTUAL PROPERTY RIGHTS," falls into only one of the
following two categories:
1. Terayon shall own all rights, title and interest in and to the INTELLECTUAL
PROPERTY RIGHTS to all Product and parts thereof and software drivers of
the Product delivered by Terayon and design tools and technology therefor
(except as provided in category 2 below); and
2. Terayon and Telegate shall jointly own all rights, title and interest in
and to the INTELLECTUAL PROPERTY RIGHTS to interfaces between the System
and the Product and protocols for communicating between them, and protocols
for monitoring or controlling the Product.
Terayon hereby grants to Telegate an irrevocable, fully paid-up, non-
exclusive, non-transferable, non sublicensable license to use the Product
only within Telegate's System."
6.
4.4 PROVISIONS SURVIVING THE TERMINATION OF PRIOR AGREEMENTS
Notwithstanding anything in this Supply Agreement the following provisions
shall continue in effect after termination of this Agreement in accordance
with their terms for any Products provided to Buyer under the Prior
Agreements:
a) Payment provisions: any payment due at the time of termination shall
be paid in accordance with the terms of this Agreement.
b) All warranties specified in the Prior Agreement.
c) All Patent Indemnity obligations.
d) All Intellectual Property Rights (Section 14) as amended above unless
otherwise specified in the Prior Agreements.
e) Section 26 (Applicable Law; Disputes) shall survive termination and
shall govern any dispute between the parties under the Agreement that
may subsequently arise.
f) The signed Non-Disclosure Agreement dated September 26, 1994.
g) Section 19 (Confidentiality and Advertising).
SELLER: TERAYON COMMUNICATION SYSTEMS
By:
-----------------------------------
Printed Name:
-------------------------
Title:
--------------------------------
BUYER: ECI TELECOM LTD.
By:
-----------------------------------
Printed Name:
-------------------------
Title:
--------------------------------
TELEGATE
By:
-----------------------------------
Printed Name:
-------------------------
7.
APPENDIX 1 OF ANNEX B
The Tasks listed below, for technical development, as a result of
deviations from the Product Specification are the currently known minimum
required corrections to the modems as supplied on December 1997 that are
required for deployment. In the event that additional Tasks become required in
the course of testing and deploying the System, Telegate will notify Terayon,
and the parties shall promptly and jointly pursue a solution to the Task.
LIST OF TASKS
NO. TOPIC REQUIREMENT NOTES DATE
-------------------------------------------------------------------------------------------------------
1 Spectral Characteristics: a) 48dbc Customer requires -- 1/98
adjacent channels b) all other channels 55dbc 60 dbc
-------------------------------------------------------------------------------------------------------
2 Spectral Characteristics: c) US 50dbc Customer requires -- 1/98
Spurious & Hum d) DS 55dbc 60 dbc
-------------------------------------------------------------------------------------------------------
3 Support of APP-CMC Ongoing until event occurs Now to
integration Event
-------------------------------------------------------------------------------------------------------
4 Frame Shift Fix bug 31/3/98
-------------------------------------------------------------------------------------------------------
5 Performance Monitoring a) Specifications 17/2/98
b) SW delivery 30/4/98
-------------------------------------------------------------------------------------------------------
6 Time slot SNR status c) Specifications 17/2/98
d) SW delivery 30/4/98
-------------------------------------------------------------------------------------------------------
7 Fall back on individual Specification 17/3/98
codes S/W Delivery 30/4/98
-------------------------------------------------------------------------------------------------------
8 Recovery time 250 RU in 5 min or less 17/2/98
a) Specifications 31/3/98
b) SW delivery
-------------------------------------------------------------------------------------------------------
9 Linear Regulatory on PCB layout and testing Delivery 3 month after 3 month
CU-RF receiving definition
from Telegate and
Telegate sign-off
-------------------------------------------------------------------------------------------------------
10 Channel setup time 130ms concurrent on 6 Required by 28/2/98 TR Prop.
channels 31/3/98
-------------------------------------------------------------------------------------------------------
11 Channel deactivations Non-sequential and less than Required by 28/2/98 TR Prop.
10ms for 6 channels 31/3/98
-------------------------------------------------------------------------------------------------------
12 CU SW Source Code Delivery a) Required now for 13/3/98
integration
b) TR to support CMC
& APP SW merge
-------------------------------------------------------------------------------------------------------
13 Recovery from TR to participate in finding a TF plant problem (50 30/3/98
intermittent DS solution to the problem to 100ms)
connection loss
-------------------------------------------------------------------------------------------------------
8.
Supply Agreement Between:
ECI Telecom Ltd. And Terayon Corporation
March 3, 1998
ANNEX C
TECHNICAL DOCUMENTATION
9.
TECHNICAL DOCUMENTATION
-----------------------
NEED TO SPECIFY DATES
1. The following documentation as defined below will be generated and provided
to Telegate during the development of the Product. This documentation
shall be under full configuration control and updates will be provided as
required.:
NO. DESCRIPTION DATE
--------------------------------------------------------------------------------------------------
1 Detailed Product Specifications Delivered
--------------------------------------------------------------------------------------------------
2 Detailed block diagrams, released schematics including pin 10/2/98
out, connectors, released mechanical drawings, released
printed circuit boards assembly drawings and component
placement, xxxx of material.
--------------------------------------------------------------------------------------------------
3 Test points module signals, description, level, waveform 28/2/98
or spectrum and expected level. See details below.
--------------------------------------------------------------------------------------------------
4 Existing released Internal S/W documentation delivery 20/2/98
including functional specifications, memory maps, H/W
S/W interface document.
--------------------------------------------------------------------------------------------------
5 Face to face meetings at Terayon. March 2nd 1998 to
March 13 1998
- Terayon will present the functional description of the CU
PHY S/W including functional modules and subsystems,
interrupt and service routines, tasks, inter-task
communications, inter-working with the operating system,
changes to the operating system, boot ROM S/W, real time
requirements and constrains, etc.
- Terayon will present the physical implementation of the PHY
S/W (source file structure, include file structure, make
files structure etc.)
- Terayon will present the CU PHY S/W build process.
- Terayon will transfer all source and any auxiliary files to
a Telegate's supplied.
SUN work station with installed WRS Tornado environment.
The build process will be executed at this work station to
obtain identical to current production operation executable
files. The process of delivery of the CU PHY S/W will be
deemed complete only after the successful completion of
activities as defined in this paragraph.
--------------------------------------------------------------------------------------------------
6 Terayon will support e-mail and phone Q&A's regarding As required
10.
CU PHY S/W as it should be necessary.
--------------------------------------------------------------------------------------------------
7 If required another three day meeting will be held at TBD
Terayon to complete the process of S/W transfer
--------------------------------------------------------------------------------------------------
8 Terayon will deliver to Telegate the technical 20/2/98
documentation as defined in paragraph 4 and Annex C
(defined content of principle of operation).
--------------------------------------------------------------------------------------------------
9 Terayon will deliver test points document describing: 28/2/98
module signals description, level, waveform or spectrum and
expected level as defined explicitly in Annex C.
--------------------------------------------------------------------------------------------------
10 A face to face meeting will be held at Terayon. During March 2nd 1998 to
this meeting the following topics will be covered: Xxxxx 00 0000
- Xxxxxxx will present the functional description of the
test points of CU and RU modems and provide measurement
interpretation and explanation.
- Principle of operation explanation as defined in
Annex C of the Supply Agreement.
--------------------------------------------------------------------------------------------------
11 Terayon will support by e-mail and phone Q&A's regarding As required
principle of operation issues as it shall be necessary.
--------------------------------------------------------------------------------------------------
12 If required another three day meeting will be held at TBD
Terayon to complete the process of principle of operation
and performance transfer.
--------------------------------------------------------------------------------------------------
13 Register contents, description, functionality, 20/2/98
initialization and expected ranges.
--------------------------------------------------------------------------------------------------
14 Released test procedures and test set-ups for ATP and VTP. 28/2/98
Relevant S/W for special test procedures. System level
tests.
--------------------------------------------------------------------------------------------------
15 QA plans and procedures. 7/3/98
--------------------------------------------------------------------------------------------------
16 MTBF analysis. 2/4/98
--------------------------------------------------------------------------------------------------
17 Presentation of regulatory and environment issues: 17/2/98
Temperature, Cooling, Safety, EMC/EMI, handling --
vibration as performed on Seller's system
--------------------------------------------------------------------------------------------------
2. TEST POINTS
Test points places shall be indicated on the board layout and schematics.
2.1 CU
. TX signal D/A output, expected analogue level voltage output, noise level,
DC offset, clock frequency
. RX signal A/D input & clock frequency - same, (analogue input for A/D)
. TX CU analogue IF connection (after BPF)- (spectrum measurement): expected
level, min/max, spectrum mask, spur, harmonics, RF module gain, intermod
11.
. TX HW ALC attenuation: min/max attenuation, min/max control voltage.
. RX CU analogue IF connection (atter BPF)- expected level, rain/max,
spurious rejection , noise level, RF module gain, intermod
. RX HW AGC attenuation: min/max attenuation, min/max control voltage.
. Synthesizers freq.- spur, noise (spectrum measurement), locking scheme
(i.e. reference freq., step, range), lock range after unlock, VCO control
voltage range
. Clock - frequency, level, timing, reference to other clocks/data: delays,
min/max PW
. Synthesizers freq. (or equivalently part mane/number): control signals,
timing, bit meaning.
. VCC (supply) voltage: level min/max, peak/RMS ripple, if filtered at
specific pin same
. Peak power consumption from each board at each voltage. (Expected power
consumption for each voltage measured already)
2.2 RU
. TX signal D/A output & clock frequency, expected analogue level voltage
output, noise level, DC offset,
. RX signal A/D input & clock frequency - same, (analogue input for A/D)
. TX RU RF output (after BPF) (spectrum measurement): expected level,
min/max, spectrum mask, spat, harmonics, m6dule gain: nominal, rain/max,
intermod
. TX HW ALC attenuation: min/max attenuation, min/max control voltage.
. RX RU analogue 12F (after BPF) -level expected, min/max: spurious
rejection, noise level, module gain: nominal, min/max, intermod
. RX HW AGC attenuation: min/max attenuation, min/max control voltage.
. Synthesizers freq.- spur, noise (spectrum measurement), locking scheme
(i.e. reference freq., step, range), lock range after unlock, VCO control
voltage range
. Clock - frequency, level, timing, reference to other clocks/data: delays,
min/max PW
. Synthesizers freq. (or equivalently part mane/number): control signals,
timing, bit meaning.
. Synthesizers freq. control signals, timing, bit meaning.
. VCC (supply) voltage: level min/max, peak/RMS ripple, if filtered at
specific pin same
12.
CONFIDENTIAL TREATMENT REQUESTED
. Peak power consumption at each voltage. (Expected power consumption for
each voltage measured already)
4 PRINCIPLE OF OPERATION
Note: Some of the data is given in the "Telegate external SW spec" dated 2/25/97
[****************************************.]
. CU initialization scheme, step from switch on to full operational- wait
time and conditions for each step.
. ame as in 1 above in case of recovery from any event such as long
intermittence. Time to detect synchronization or comm. Loss, time to
declare recovery is done.
. AGC process- internal/external partition, lock time & preferred
programmable parameters, lock in speed, controlled level variation,
expected error.
. ALC process (RU) - internal/ external partition, lock time & preferred
programmable parameters, lock in speed, controlled level variation,
expected error, activation rate.
. GAP processor- status timing, meaning, windows, missing relation of gap
detection thresholds to real world and level.
. CU Time base generator- status meaning, offset
. Non applicable
. Clock recovery - - lock time & preferred programmable parameters , lock
range, jitter on Clock recovery, freq. offset lock in range loop values -
clock recovery error, VCXO control voltage.
. Equalizer Upstream - process steps, timing, interval between step/process,
equalizer factor values, gain factor (LMS) recommended , success criteria,
pre-equalizer programming , including register descriptions.
. Equalizer downstream - - process steps, timing , interval between step/
process, equalizer factor values , gain factor (LMS) recommended , success
criteria, including register descriptions.
. R.X noise power, RX noise power- relationship, accepted level, integration
time, reset
. Non applicable
. Non applicable
. Ranging - sequences, process steps both CU and RU, timing, interval between
step/process, level/timing factor values: success criteria to pass from
step to step.
[*] - Indicates confidential information that has been omitted and filed
separately with the Securities and Exchange Commission.
13.
CONFIDENTIAL TREATMENT REQUESTED
. Performance monitoring- meaning of each parameters, update rate, min/max
expected values.
. Access process collision detection and connection setup- update of
document.
. There is a "RACM" rotator amplifier [*****]
Non applicable
4 Terayon hereby undertakes to deliver to Telegate two sets of the Product
related documentation listed here above. Terayon undertakes to update said
documentation within 30 days after incorporation of any modifications in
the Product and to provide Telegate with copies as specified above of any
said updates.
Any documentation distribution, such as but not limited to: schematics,
drawings, specifications, software etc. related to the Product, shall be
limited as defined in the Non Disclosure Agreement dated 26 September 1994.
All documents shall be numbered and any additional copies shall be
destroyed after use.
5. Each item of the Product supplied (on or after January 31,1998) by Seller
shall be accompanied by individual ATP results and Certificate Of
Compliance (COC) both approved by signature of Seller's QA tester.
[*] - Indicates confidential information that has been omitted and filed
separately with the Securities and Exchange Commission.
14.
