Exhibit 10.25
CUSTOM SALES AGREEMENT
between
PEERLESS SYSTEMS CORPORATION
and
INTERNATIONAL BUSINESS MACHINES CORPORATION
* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *. A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
CUSTOM SALES AGREEMENT
BASE AGREEMENT
Signature Version
International Business Machines Corporation 000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Agreement No. 000334
Customer: Peerless Systems Corporation
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
This Custom Sales Agreement between Peerless Systems Corporation ("Peerless" or
"Customer") and International Business Machines Corporation ("IBM"), which
consists of this Base Agreement and Statement of Work Attachments, shall be
referred to as the "Agreement". The term of this Agreement commences on April
23, 2001 (the "Effective Date") and expires on April 22, 2004, unless the
parties agree in writing to extend it or unless terminated pursuant to Section
13 of this Base Agreement.
By signing below, the parties each agree to be bound by the terms and conditions
of this Agreement including the initial Statement of Work, Attachment No. 1, and
no additional signature on the initial Statement of Work is required. Subsequent
Statement of Work Attachments under this Agreement must be signed by both
parties to become effective.
Upon signature by both parties, it is agreed this Agreement constitutes the
complete and exclusive agreement between them superseding all contemporaneous or
prior agreements, written or oral, relating to the subject matter
notwithstanding anything contained in any document issued by either party. This
Agreement may not be amended or modified except by a written amendment signed by
duly authorized signatories of both parties.
The parties expressly acknowledge that they have received and are in possession
of a copy of any referenced item that is not physically attached to the
Agreement and any such item will be treated as if attached.
Accepted and Agreed To:
Peerless Systems Corporation International Business Machines
Corporation
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxx X. Xxxxxxxxxx
--------------------------------- ------------------------------
Name: Xxxxxxx X. Xxxx Name: Xxxx X. Xxxxxxxxxx
Title: Vice President of Finance and Title: Exec. Mgr. WW Contracts &
Chief Financial Officer Business Practices, IBM TG
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Custom Sales Agreement No. 000334 April 23, 2001
1.0 DEFINITIONS
Capitalized terms in this Agreement have the following meanings. An Attachment
may define additional terms; however, those terms apply only to that Attachment.
1.1 "Item" shall mean any part, specification, design, document, report, data or
the like which Peerless delivers to IBM under this Agreement.
1.2 "Product" shall mean production units to be sold or purchased under this
Agreement. Products shall not include Prototypes.
1.3 "Prototype" shall mean a preliminary version of a Product which may or may
not be functional, is intended for internal use and testing and not for resale,
and is not suitable for production in commercial quantities.
1.4 "Purchase Order Lead Time" shall mean the required minimum amount of time
between IBM's receipt of the purchase order issued by Peerless and the requested
shipment date that is necessary to accommodate manufacturing cycle time.
1.5 "Related Company" of a party hereunder shall mean a corporation, company or
other entity which controls or is controlled by such party or by another Related
Company of such party, where control means ownership or control, direct or
indirect, of more than fifty (50) percent of: (i) the outstanding voting shares
or securities (representing the right to vote for the election of directors or
managing authority), or (ii) the ownership interests representing the right to
make decisions for such a corporation, company or other entity (as the case may
be in a partnership, joint venture or unincorporated association having no
outstanding shares or securities). However, any such corporation, company or
other entity shall be deemed to be a Related Company of such party only so long
as such ownership or control exists.
1.6 "Service" shall mean any manufacturing activity or design, or engineering
work IBM performs.
1.7 "Shipment Date" shall mean IBM's estimated date of shipment.
2.0 AGREEMENT STRUCTURE
2.1 This Agreement consists of: (i) the Base Agreement which defines the basic
terms and conditions of the relationship between the parties; and (ii)
Attachments which specify the details of a specific work task. An Attachment may
include additional or differing terms and conditions, however such terms and
conditions apply only to that Attachment. Attachments also include any
specification documents agreed to by the parties applicable to the specific work
under that Attachment.
2.2 If there is a conflict among the terms and conditions of the various
documents, Attachment terms and conditions govern.
2.3 Except for Product part numbers, part number descriptions, prices and
quantities, purchase orders and acknowledgements will be used to convey
information only and any terms and conditions on those are void and replaced by
this Agreement.
2.4 Either party may include its Related Companies under this Agreement by
written agreement with the other party.
2.5 Any purchase order submitted by Peerless during the term of this Agreement
(whether or not it references this Agreement) for Products, Prototypes, or
Services from IBM's Microelectronics Division shall be subject to and governed
by the terms and conditions of this Agreement, unless there is another signed,
written agreement in place between IBM and Peerless with respect to the subject
matter of the purchase order. The foregoing shall be in effect regardless of
whether Peerless and IBM have executed any Attachment specific to the Products,
Prototypes, or Services ordered. If no such Attachment has been executed, then
the terms of the Attachment most recently executed by Peerless and IBM shall
control, except with respect to those matters which are uniquely applicable to
the specific Product, Prototype or Service in question (such as specific NRE
charges, Product pricing, specific Items, Product names and descriptions,
Purchase Order Lead Times, and demand forecasts).
2.6 Notwithstanding anything stated herein this Agreement, Services undertaken
by Peerless for IBM or undertaken by IBM for Peerless that are a result of or a
consequence of the Product shall be subject to the terms and conditions herein.
2.7 For non-U.S. sales (Peerless takes title outside the U.S.), the contract of
sale for Products and/or Prototypes purchased under this Agreement will be
between the IBM legal entity that will supply the Products and/or Prototypes
("the Plant") and Peerless. It is agreed that all such orders will incorporate
the terms of this Agreement whether expressly referenced or not, and will only
be accepted subject to the terms of this Agreement. Orders will be accepted by
the Plant when it issues an acceptance document thereby creating the contract of
sale for the Products. IBM reserves the right to enforce the provisions of this
Agreement on behalf of the Plant.
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Custom Sales Agreement No. 000334 April 23, 2001
2.8 For U.S. sales (Peerless takes title within the U.S.), the contract of sale
for Products and/or Prototypes purchased under this Agreement will be between
IBM and Peerless.
3.0 ORDER AND DELIVERY
3.1 Peerless shall order Products, Prototypes and Services by issuing written
purchase orders, which are subject to acceptance by IBM. Purchase orders must be
received by IBM in advance, with at least the Purchase Order Lead Time specified
in the applicable Attachment.
3.2 Peerless is responsible for all freight and duty charges from IBM's shipping
location. Title and risk of loss pass to the Peerless upon tender to the carrier
for shipment to the Peerless.
4.0 PEERLESS' RESPONSIBILITIES
Peerless represents and warrants that:
4.1 Unless otherwise stated in an Attachment, Products will be: (1) integrated
or incorporated into systems sold under Peerless' logo or trade name or as
otherwise specified by IBM in an order confirmation; or (2) distributed in
incidental additional quantities for use as service or upgrade parts in systems
Peerless has sold. Peerless may also use up to 5% of the Products internally.
4.2 Peerless will not use any Products, Prototypes or Services acquired
hereunder, or sell or transfer such Products, Prototypes or Services to any
others including civilian end users for use, in conjunction with medical devices
or military or nuclear applications.
4.3 Peerless will not: (1) make any representations or warranties about IBM or
the Products, Prototypes or Services other than those IBM specifically
authorizes in writing; or (2) take any action or make any commitment in IBM's
name.
5.0 CANCELLATION AND RESCHEDULING
5.1 In the event that IBM's ability to supply Product becomes constrained, IBM
may, as IBM deems reasonable, reduce quantities or delay shipments to Peerless.
IBM shall give Peerless written notice of any such constraint and of the
reduction in quantities of Product as early as is reasonably practicable.
5.2 Peerless may cancel or reschedule an order only upon prior written notice to
IBM. In the event of a cancellation or reschedule which exceeds the rescheduling
rights set forth in an applicable Attachment, Peerless shall pay the quoted
price for Products, Prototypes and/or Services delivered or ready for shipment
and the cancellation charges set forth in the applicable Attachment.
5.3 Peerless agrees that if Peerless decreases the total quantity of an order
that has a unit price based on an agreed to quantity Peerless will pay an
applicable higher unit price for previous shipments and for new shipments
subject to the Pricing Schedule then in effect between the parties.
6.0 PAYMENT
6.1 Prices shall be as set forth in an applicable Attachment. IBM shall invoice
Peerless after the Products or Prototypes have been shipped or the Services
provided. Peerless shall pay the full amount of the invoice within thirty (30)
days of the invoice date, provided however, that IBM shall have the right, in
its sole discretion, to require payment before shipment or payment via letter of
credit. IBM may stop shipments to Peerless if Peerless does not comply with
applicable credit terms or limits or this Agreement. Late payment of invoices
may be assessed a charge equal to the lesser of 1.5% per month of the balance
due or the statutorily allowed maximum rate of interest in accordance with the
laws of the State of New York.
7.0 TAXES
7.1 Peerless is responsible for all taxes related to Products, Prototypes and
Services except for taxes based on IBM's net income.
8.0 LIMITED WARRANTY
8.1 Unless otherwise stated in an Attachment, IBM warrants all Products to be
free from defects in material and workmanship for a period of thirty (30) days
from date of shipment unless otherwise stated in an Attachment applicable to
such Products. Peerless acknowledges that the functionality of Products is
contingent on Peerless' designs and, therefore, such warranty does not apply to
the functionality of Products fabricated under this Agreement. IBM warrants
Services will be performed using reasonable care and skill.
8.2 IBM's sole liability and Peerless' sole remedy for breach of warranty shall
be limited as stated in this
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Custom Sales Agreement No. 000334 April 23, 2001
Section 8 and Section 12, and in applicable Attachments.
8.3 If Peerless claims that any Products are nonconforming, Peerless shall (1)
promptly notify IBM in writing of the basis for such nonconformity; (2) follow
IBM's instructions for return of the Products; and (3) at IBM's request, return
the Products freight collect to the IBM designated location. IBM has sole
discretion to apply minimum return quantities.
8.4 If IBM determines such Products do not meet warranty, IBM will, at its
option, repair or replace the Products or issue a credit at the most recent
price. If IBM replaces the Products, the returned Products become IBM's
property. This warranty does not cover Products that are defective because of
accident, abuse, misuse, negligence, modification, improper maintenance, removal
or alteration of labels by Peerless or a third party, failure caused by a
product which IBM did not provide or for which IBM is not responsible, or use or
storage in other than its specified operating environment.
8.5 This warranty is not transferable. No course of dealing, course of
performance, usage of trade, or description of Product, Prototype or Service
shall be deemed to establish a warranty, express or implied.
8.6 ALL PROTOTYPES ARE PROVIDED "AS IS" WITHOUT WARRANTY OR INDEMNIFICATION OF
ANY KIND BY IBM.
8.7 THE FOREGOING WARRANTIES ARE PEERLESS' EXCLUSIVE WARRANTIES AND REPLACE ALL
OTHER WARRANTIES OR TERMS, EXPRESS OR IMPLIED, INCLUDING THE WARRANTY OF
NONINFRINGEMENT AND THE IMPLIED WARRANTIES OR TERMS OF MERCHANTABILITY, FITNESS
OR USAGE FOR PARTICULAR PURPOSE, AND SATISFACTORY QUALITY.
9.0 PATENTS AND COPYRIGHTS
9.1 If a third party claims that a Product or Service IBM provides to Peerless
infringes that third party's patent or copyright, IBM will defend Peerless
against that claim at IBM's expense and pay all costs, damages, and attorney's
fees that a court finally awards, provided that Peerless:
1. promptly notifies IBM in writing of the claim; and
2. allows IBM to control, and cooperates with IBM in, the defense and
any related settlement negotiations.
If such a claim is made or appears likely to be made, Peerless agrees to permit
IBM to enable Peerless to continue to use the Product or Service, or to modify
it, or replace it with one that is at least functionally equivalent. If IBM
determines that none of these alternatives is reasonably available, Peerless
agrees to return the Product or Service to IBM upon written request. IBM will
then give Peerless a credit equal to the amount the Peerless paid for the given
Product or Service. Unless stated otherwise in a Statement of Work attached
hereto, this is IBM's entire obligation to Peerless regarding any claim of
infringement. 9.2 IBM shall have no obligation regarding any claim based on any
of the following:
1. anything Peerless provides which is incorporated into a Product or
Service (including, but not limited to, specifications, designs, documents,
reports, or data);
2. Peerless' modification of a Product or Service;
3. the combination, operation, or use of a Product or Service with any
product, data, or apparatus that IBM did not provide; or
4. infringement by a non-IBM product alone, as opposed to its
combination with Products or Services that IBM provides to Peerless as a system.
9.3 If a third party claims that a Product or Service IBM provides to Peerless
infringes that party's patent or copyright, and such claim is based upon any of
the factors which constitute grounds for IBM to have no obligation to indemnify
Peerless pursuant to the provisions of Section 9.2, Peerless will defend IBM
against that claim at Peerless' expense and pay all costs, damages, and
attorney's fees that a court finally awards.
9.4 Peerless warrants that it is the originator, rightful owner or licensee of
all Items supplied to IBM hereunder and that to the best of Peerless' knowledge
no part of such Items infringes any intellectual property rights.
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10.0 LICENSE
10.1 Except to the extent that IBM shall be entitled to any implied licenses
which enable it to exercise its rights and perform its obligations under the
terms of this Agreement, no license, immunity or other right is granted herein
to IBM whether directly or by implication, estoppel, or otherwise, with respect
to any patent, trademark, copyright, mask work, trade secret, utility model,
know-how, or other intellectual property right Except to the extent that
Peerless shall be entitled to certain rights arising by operation of the patent
exhaustion doctrine, no license, immunity or other right is granted herein to
Peerless whether directly or by implication, estoppel or otherwise, with respect
to any patent, trademark, copyright, mask work, trade secret, utility model,
know-how, or other intellectual property right.
11.0 TRADEMARK
11.1 Nothing in this Agreement grants either party any rights to use the other
party's trademarks or trade names, directly or indirectly, in connection with
any product, prototype, service, promotion, publication or publicity without
prior written approval of the other party or trademark owner.
12.0 LIMITATION OF LIABILITY
12.1 Circumstances may arise where, because of a default on IBM's part or other
liability, Peerless is entitled to recover damages from IBM. In each such
instance, regardless of the basis on which Peerless is entitled to claim damages
from IBM (including fundamental breach, negligence, misrepresentation, or other
contract or tort claim), IBM is liable for no more than:
1. payments referred to in the patents and copyrights terms above;
2. damages for bodily injury (including death) and damage to real
property and tangible personal property; and
3. the amount of any other actual direct damages up to the greater of
U.S. $200,000 (or equivalent in local currency) or the charges for the Product
or Service that is the subject of the claim. This limit also applies to any of
IBM's subcontractors. It is the maximum for which IBM and its subcontractors are
collectively responsible.
12.2 Under no circumstances is IBM, or its subcontractors, liable for any of the
following:
1. third-party claims against Peerless for damages (other than those
under the first two items listed above);
2. loss of, or damage to, Peerless' records or data; or
3. special, incidental, or indirect damages or for any economic
consequential damages (including lost opportunities, profits and savings), even
if IBM is informed of their possibility.
13.0 TERMINATION
13.1 If either party materially breaches a term of this Base Agreement or an
Attachment, the other party may, at its option, terminate this Agreement and/or
the applicable Attachment(s) provided the party in breach is given written
notice and fails to cure such breach within 30 days, or immediately in the event
of (i) insolvency, dissolution or liquidation by or against either party, (ii)
any assignment of either party's assets for the benefit of creditors, or (iii)
any act or omission of an act by a party demonstrating its inability to pay
debts generally as they become due. If IBM has a reasonable basis to believe any
of the Items infringe an intellectual property right of any third party, IBM may
immediately terminate its obligations hereunder as to Products relating to such
Items upon thirty (30) day written notice. In the event that either party
transfers substantially all of its business or assets to a third party, the
other party may terminate this Agreement upon one-hundred and eighty days prior
written notice, provided that any such notice must be given within thirty (30)
days of the date that the terminating party receives notice of such transfer.
13.2 If IBM terminates this Agreement or an Attachment, IBM shall be entitled to
treat any or all applicable outstanding purchase orders as if cancelled by
Peerless, and Peerless shall pay (i) all reasonable IBM procurement costs
applicable to the purchase orders cancelled,(ii) the quoted price applicable for
any affected Products, Prototypes and/or Services delivered or ready for
shipment, and (iii) the cancellation charges (if any) set forth in the
applicable Attachment or Attachments. Monies owing IBM shall become immediately
due and payable within thirty (30) days after IBM invoice.
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Custom Sales Agreement No. 000334 April 23, 2001
13.3 If Peerless terminates this Agreement or an Attachment, IBM will fill all
applicable previously accepted purchase orders for Products, but IBM shall not
be obligated to accept further applicable purchase orders after receiving
notice.
13.4 This Base Agreement will continue after its termination or expiration with
respect to any Attachments already in place until they expire, are terminated or
completed. Provided that no monies are due IBM, applicable Items shall be
disposed of as directed by Peerless in writing at Peerless' expense after a
termination or expiration.
14.0 EXPORT REGULATIONS
14.1 Regardless of any disclosure made by Peerless to IBM of an ultimate
destination of Products, Prototypes and technical data, Peerless will not export
either directly or indirectly any Product, Prototype or technical data, or any
system incorporating them, without first obtaining all required licenses and
permits from all relevant government agencies and departments. In addition,
Peerless warrants that Products and Prototypes are not for space or missile use,
do not contain encryption, and do not relate to radiation hardened design,
circuitry, manufacturing or testing.
14.2 Whenever IBM arranges for export or import, with respect to all relevant
governmental and administrative authorities, including the United States and
European Union, Peerless: (1) recognizes that IBM may not know or have reason to
know the intended function of Peerless' products and technical data and must
rely on Peerless to provide correct information for export and import of
Products, Prototypes and technical data, (2) agrees to provide all information
necessary to determine all relevant export authorizations and to export and
import the Products, Prototypes and technical data, including as applicable the
Export Classification Control Number (ECCN) and subheadings, and (3) agrees to
assist with obtaining any required licenses and authorizations for export and
import of Products, Prototypes and technical data and with making any required
filings. Peerless shall be fully responsible for the correctness of information
provided by Peerless and any use of it to comply with applicable regulations.
14.3 FAILURE TO COMPLY WITH THE EXPORT REGULATIONS PROVISIONS ABOVE SHALL VOID
ALL WARRANTIES PROVIDED BY IBM HEREIN.
15.0 NOTICES
15.1 All communications and notices between the parties concerning this
Agreement shall be given to the appropriate individual listed in the applicable
Attachment and shall be deemed sufficiently made on the date personally served
or sent via mail, facsimile or electronic data interchange. Communication by
facsimile or electronic data interchange is acceptable as a "writing". The
autographs of representatives of the parties, as received by facsimile or
electronic data interchange, shall constitute "original" signatures.
16.0 INDEPENDENCE OF ACTION
16.1 Each party agrees that this Agreement will not restrict the right of either
party to enter into agreements with other parties for same or similar work, or
to make, have made, use, sell, buy, develop, market or otherwise transfer any
products or services, now or in the future, so long as confidential information
is not disclosed. IBM shall not sell, market or otherwise transfer to any third
party any Products using the trademark or trade name of Peerless without prior
written consent.
17.0 GENERAL
17.1 The terms and conditions of this Agreement shall be considered
confidential. The parties hereto have executed a Confidential Disclosure
Agreement with Agreement No. V4718 and a Supplement for Disclosure with
Agreement No. V4718-4719 ("xxx XXX") and the parties agree that any confidential
information will be exchanged pursuant to the CDA, or pursuant to the terms and
conditions of any separately executed confidentiality agreement signed by and
between the parties, including but not limited to any separately executed
confidentiality agreement which supplements, replaces, or supersedes the CDA.
Peerless shall not disclose the terms or conditions of this Agreement without
IBM's prior written approval.
17.2 Each party shall comply, at its own expense, with all applicable United
States (local, state and federal), European Economic Union, and other country or
country group laws and regulations, and shall procure all licenses and pay all
fees and other charges required thereby.
17.3 Except for Peerless' obligation to pay, neither party will be responsible
for failing to perform under this Agreement for acts of God, natural disasters,
or other similar causes beyond its reasonable control.
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17.4 The validity, construction, and performance of this Agreement will be
governed solely by the substantive laws of the State of New York, United States
as though this Agreement were executed in and fully performed within the State
of New York. The United Nations Convention on Contracts for the International
Sale of Goods shall not apply to this Agreement. Neither party will bring a
legal action against the other more than one (1) year after the cause of action
arose, except for actions for non-payment or to enforce intellectual property
rights. Both parties agree that any action concerning this Agreement shall be
brought in a federal Court of competent jurisdiction in the State of New York
and hereby consent to the exclusive personal jurisdiction of any such court and
to the venue in the Southern District of New York. If the federal court for the
Southern District of New York lacks subject matter jurisdiction over the action,
then the parties agree such action shall be brought in a state court of
competent jurisdiction in the State of New York and hereby consent to the
exclusive personal jurisdiction of any such court.
17.5 Except for IBM's right to payment, neither party may assign its rights or
delegate its obligations under this Agreement without the prior written consent
of the other party. Notwithstanding the foregoing, IBM may subcontract sore or
all of its obligations under this Agreement, provided that IBM's subcontractor
shall be subject to the same terms and conditions herein.
17.6 No delay or failure by either party to act in the event of a breach or
default hereunder shall be construed as a waiver of that or any subsequent
breach or default of any provision of this Agreement.
17.7 If any part, term or provision of this Agreement is declared unlawful or
unenforceable by a court of competent jurisdiction, the remainder of this
Agreement shall remain in full force and effect.
17.8 The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
17.9 All notices shall be in writing, sent in a manner that generates a reliable
written receipt, and addressed to the attention of the individual signatories of
this Agreement on behalf of the parties, unless either party specifies otherwise
in an Attachment that notices for specific Products should be sent to the
attention of a different addressee.
17.10 Any terms of this Agreement which by their nature extend beyond expiration
or termination of this Agreement shall remain in effect until fulfilled and
shall bind the parties and their legal representatives, successors, heirs and
assigns.
17.11 The parties shall attempt in good faith to resolve any dispute arising out
of or relating to this Agreement promptly by negotiations between executives who
have authority to settle the controversy. Any party may give the other party
written notice of any dispute not resolved in the normal course of business.
Within twenty (20) business days after delivery of said notice, executives of
both parties who have the authority to settle the dispute shall meet at a
mutually acceptable time and place (or shall appoint a representative with such
authority to meet at a mutually agreeable time and place), and thereafter as
often as they reasonably deem necessary, to exchange relevant information and to
attempt to resolve the dispute. If the matter is not resolved within sixty (60)
business days of the disputing party's notice, or if the parties fail to meet
within twenty (20) business days, either party may seek any applicable remedies
under law or at equity.
17.12 Peerless may authorize other parties to purchase Products from IBM
("Authorized Purchasers") at any time upon reasonable prior written notice to
IBM. Peerless shall provide IBM with written authorization to sell to each such
Authorized Purchaser. Such authorization shall state the name and address of the
Authorized Purchaser and the specific Product(s) that Peerless authorizes such
Authorized Purchaser to purchase. IBM may perform credit reviews of any
Authorized Purchaser and based on the credit reviews, or for any other reason,
IBM shall have the right to not sell Product to such Authorized Purchaser or to
sell Product to such Authorized Purchaser under cash-in-advance, letter of
credit or other payment terms, in IBM's sole discretion. IBM reserves the right
to require each Authorized Purchaser to agree, in writing, to separate terms and
conditions for the purchase of Product before IBM will accept its purchase
orders. Peerless agrees to guarantee the performance of its Authorized
Purchaser's performance under such agreement. Nothing herein prevents IBM from
terminating any such agreement with an Authorized Purchaser in accordance with
such agreement's terms and conditions, and Peerless shall not have any rights as
against IBM with respect to IBM's sales to any Authorized Purchasers and
Peerless shall not be a third party beneficiary of any such agreement.
Upon sixty (60) days prior written notice, Peerless may provide IBM
with notice that an Authorized Purchaser is no longer authorized to purchase
Product under this Agreement, provided that (1) any remedy Peerless may be
entitled to or seek resulting from any shipments to any such withdrawn
Authorized Purchaser shall be between Peerless and such Authorized Purchaser and
shall not involve or
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Custom Sales Agreement No. 000334 April 23, 2001
otherwise affect IBM; and (2) in the event of such a withdrawal, Peerless will
either cancel any open orders and pay any applicable cancellation charges or
accept delivery of and pay for any Products then being manufactured by IBM for
the Authorized Purchaser.
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Custom Sales Agreement No. 000334 April 23, 2001
CSSP Attachment No. 1
Custom Sales Agreement No. 000334
Statement of Work
CSSP PRODUCT TASK ORDER
Definitions
"ASIC(s)" shall mean application specific integrated circuits.
"Architectural Specification" shall mean the specification designating the
design elements of the CSSP, which shall include, without limitation, the
following: block diagrams showing all functional units on the CSSP; descriptions
of the functional units on the CSSP referencing the core specifications where
appropriate; system address map; DCR bus address map; clock domains and clock
logic descriptions; preliminary pin-out description; and operating conditions
and requirements.
"Architectural Specification Report" ("ASR") shall mean a written report
containing the Architectural Specification for the CSSP, which shall be agreed
upon by Peerless and IBM.
"At Shipment of Prototypes" ("ASP") shall mean the date of shipment of
Prototypes to Peerless. "CSSP(s)" shall mean customer specific standard
product(s).
"CSSP Verification Plan" shall mean a written report describing the process for
verifying the overall design of the CSSP.
"IBM Deliverables" shall mean the information, materials and tools supplied to
Peerless by IBM, as set forth in Part B of this Attachment, including, without
limitation, the Prototype devices.
"IBM Design Kits" shall mean any IBM computer aided design software and data
(including libraries) provided to Peerless and supported by IBM for the purpose
of designing or testing CSSP designs, as updated and enhanced from time to time.
IBM licenses any IBM Design Kits to Peerless under the terms and conditions of
the IBM Design Kit License.
"Initial ASIC Design Review Checklist" ("IDR") shall mean a report in form and
content as regularly used by IBM to make a preliminary assessment of the
feasibility of Peerless' proposed Product design.
"Milestones" shall mean completion of the criteria specified in the (i) Initial
ASIC Design Review ("IDR Milestone"), (ii) the Release to Layout Review ("RTL
Milestone"), (iii) the release to manufacturing ("RTM Milestone"); and at
shipment of Prototypes ("ASP") stages of work and the NRE payment milestones
("Payment Milestones") set forth in Section 7.0 of this SOW, except that the RTM
milestone is considered a stage of work only and not a Payment Milestone.
"NRE" shall mean non-recurring engineering Services.
"Program Initiation" shall mean IBM's acceptance of Peerless' first purchase
order for NRE.
"Product Specifications" shall mean those specifications for a Product,
including but not limited to, post-layout EDIF and timing requirements
(including clock skew requirements), a statement of post-layout test coverage,
and I/O placement that are set forth in a Product's RTM expressly or by specific
incorporation.
"Prototype Acceptance" shall mean Peerless' written approval that its evaluation
process demonstrated Prototype conformance to Product Specifications.
"Release to Layout Checklist" ("RTL") shall mean a performance approval report
in form and content as regularly used by IBM to document completion of the
pre-layout Level Sensitive Scan Design ("LSSD") and timing analysis milestone of
the Statement of Work.
"Release to Manufacturing Checklist" ("RTM") shall mean a performance approval
report in form and
Attachment No. 1 Page 1 of 9 Peerless Systems Corporation
Custom Sales Agreement No. 000334 April 23, 2001
content as regularly used by IBM to document the design review milestone at the
competition of the post-layout timing analysis.
1.0 Scope of Work
1.1 IBM will perform the CSSP functional design designated in Part B, CSSP
physical design layout services and manufacture the CSSP Product(s) as described
in Part A of this Attachment.
1.2 Peerless will provide IBM with the Peerless Items and cooperate with IBM to
enable IBM to manufacture Product and to perform Services in accordance with
this Agreement.
2.0 CSSP Design and Development Methodology
2.1 IBM's CSSP development checklists shall document the development of
each of the Product design(s).
2.1.1 The IDR will be used to make a feasibility assessment of
Peerless' functional and operational requirements, and each of
Peerless' and IBM's proposed functional specifications. The parties
will also agree to a preliminary ASR and a preliminary CSSP
Verification Plan. Peerless' signature on the IDR shall record
Peerless' acknowledgment of satisfactory completion of all work on such
Product through such Milestone, including, without limitation, the ASR
and the preliminary CSSP Verification Plan.
2.1.2 The RTL shall include, expressly or by specific incorporation,
the design specifications for each individual functional unit of the
Product to successfully enable IBM to place, route, perform static
timing analysis and analyze Level Sensitive Scan Design ("LSSD")
testability for the Product design data. The RTL shall document that
the verification of the interconnect of the functional units is
complete in accordance with the Preliminary CSSP Verification Plan. At
RTL, the final ASR is complete. After RTL, the ASR is not subject to
further change. The RTL shall also document the fact that all such
information is available to Peerless and has been communicated to
Peerless. Peerless' signature on the RTL shall record Peerless'
acknowledgment of satisfactory completion of all work on such Product
through such Milestone.
2.1.3 Peerless' signature on the RTM shall record Peerless'
acknowledgment of (i) satisfactory completion of all work on such
Product through the RTM Milestone and (ii) the Product Specifications
to which IBM's Product warranty obligations apply. To the extent that
Product Specifications and test coverage contained in the RTM vary the
Product Specifications and test coverage set forth in the IDR, the ASR,
or the RTL, the Product Specifications and test coverage contained in
the RTM shall govern.
2.1.4 Peerless' signature on the IDR, the RTL, and the RTM checklists
shall not be unreasonably withheld.
2.2 Any data relating to a Product design that Peerless is to furnish to
IBM must be compatible with IBM Design Kits and Design Tools. All
verification plans and Peerless verification procedures shall be
compatible with IBM Design Kits, Tools and CSSP designs.
Attachment No. 1 Page 2 of 9 Peerless Systems Corporation
Custom Sales Agreement No. 000334 April 23, 2001
3.0 Change Control
3.1 Peerless may, at any time and from time to time, by written notice to
IBM, request changes to the part numbers, Product Specifications,
Architectural Specifications, or work scope. IBM will submit a written
report to Peerless setting forth the probable effect, if any, of such
requested change on prices, payment or delivery. IBM shall not proceed
with any change until the parties mutually agree to such change in
writing and Peerless agrees in writing to pay any additional charges.
The parties shall promptly amend this Attachment to incorporate any
agreed changes.
3.2 If during the development cycle, any change warrants the use of a new
image size, packaging option or technology, IBM reserves the right to
re-quote the pricing in Section 7.0 based on the new design and the
parties shall promptly amend this Attachment to incorporate the new
pricing agreed to by the parties.
3.3 IBM may implement engineering changes required to satisfy governmental
standards, protect Product or system integrity, or for environmental,
health or safety reasons ("Mandatory Engineering Changes"). If
requested by IBM, Peerless will use reasonable efforts to incorporate
Mandatory Engineering Changes in Products already shipped by IBM.
Except for Mandatory Engineering Changes, IBM shall give Peerless prior
notice of engineering changes affecting the form, fit or function of a
Product.
4.0 Forecasting
Prior to the IDR Milestone, Peerless shall provide IBM's customer account
representative a Product demand forecast, which shall cover a minimum of twelve
(12) months broken out by Product and month. By the fifth day of each month,
during the term of this Attachment, Peerless will provide IBM's customer account
representative an updated Product demand forecast covering a rolling twelve (12)
month period (not to extend beyond the term of this Attachment), which will be
reviewed for approval by IBM within ten (10) days of receipt by IBM. IBM shall
have the right to reject a forecast for any reason. Forecasts shall constitute
good faith estimates of Peerless' anticipated requirements for Products but
shall not contractually obligate IBM to supply, nor contractually obligate
Peerless to purchase, the quantities of Product set forth in such forecasts.
5.0 Orders
5.1 Peerless will request delivery of Products by issuing written purchase
orders to the IBM ordering location identified in Section 9.0 of this
Attachment. Purchase orders shall only specify:
a) Peerless' purchase order number;
b) Peerless' tax status - exempt or non-exempt;
c) ship to location - complete address;
d) xxxx to location - complete address;
e) order from location - complete address;
f) shipping instructions, including preferred carrier and
carrier account number;
g) the Agreement Number of this Agreement;
h) name of customer contact;
Attachment No. 1 Page 3 of 9 Peerless Systems Corporation
Custom Sales Agreement No. 000334 April 23, 2001
i) Product part numbers and quantities being ordered (in
increments of the Minimum Order Quantity ("MOQ");
j) the Product's applicable unit price; and
k) requested shipment dates.
5.2 Peerless will request NRE (which includes Prototypes) by issuing
written purchase orders to the IBM ordering location identified in Section 9.0
of this Attachment. Purchase orders for NRE shall only specify:
a) items a through h above
b) Prototype part numbers and the Milestone to which the
purchase order applies; and
c) the applicable price of the NRE.
6.0 Delivery
6.1 The Purchase Order Lead Time for the Products and/or Services after receipt
of Peerless' Purchase Order or all Items, whichever is received later, is as set
forth in Section 3.0 of Part A of this Attachment.
6.2 Rescheduling Rights: Peerless may reschedule a Shipment Date for Product
provided: (i) Peerless sends IBM written notice of the request to reschedule;
(ii) the notice is received by IBM more than thirty (30) days prior to the
Shipment Date; and (iii) the rescheduled delivery date is within ninety (90)
days after the Shipment Date. If the foregoing requirements are met, no
cancellation charge will be imposed by IBM in connection with the rescheduling.
Once a Shipment Date is rescheduled, the new shipment date is firm and cannot be
rescheduled by Peerless.
7.0 Pricing
7.1 Peerless agrees to pay the following NRE charges:
WorldWide Design Center NRE Charge: $* U.S.
Slot Charges $* U.S.
7.2 NRE consists of the following:
CSSP Design Services including the following:
.. Simulation support of customer A15 405 assembler tests. This will consist of
assistance in 405 initialization to enable execution of the assembler tests.
.. CSSP level integration.
.. Design and functional verification of the clock generation, Power
management, reset control, and JTAG logic.
.. Co-Verification of the CSSP-level functionality. C
.. Co-Development of the I/O assignment and analysis.
.. CSSP-level synthesis and chip-level timing.
.. XXXX processing.
.. Physical design.
.. Static timing analysis.
.. First full RIT A/B mask set
.. Manufacturing slot and 30 Prototypes.
* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *. A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
Attachment No. 1 Page 4 of 9 Peerless Systems Corporation
Custom Sales Agreement No. 000334 April 23, 2001
7.3 Payment Milestones for NRE Services
Part Name Program
Initiation RTL ASP TOTAL NRE
--------------------------------------------------------------------------------
WWDC NRE: QP+405 $* $* $* $*
Slot Charges $* $* $* $*
Program Initiation = on date of Program Initiation
RTL = on date of execution of RTL by Peerless.
ASP = on date of shipment of Prototypes.
Compensation for Other Services:
Other service(s): To be determined by IBM on a request for quote basis.
7.4 Price Quantity Matrix:
Prototype pricing: Subject to availability, as determined by IBM, Peerless may
order from the first Prototype lot additional Prototypes (in excess of the
Prototypes included in the NRE charge), provided that IBM receives Peerless'
purchase order for such additional Prototypes no later than five (5) working
days prior to the scheduled RTM signoff.
Each Prototype device in excess of the thirty (30) Prototype devices included in
the NRE charges shall cost $* per Prototype unit.
Product unit pricing:
Volume 2001 2002 2003
(units per year) Price per Unit Price per Unit Price per Unit
25,000 - 49,999 $* $* $*
50,000 - 99,999 $* $* $*
100,000 - 249,999 $* $* $*
250,000 or more $* $* $*
Minimum Order Quantity ("MOQ"): * units per order
Shipment Pack Quantity ("SPQ"): * units per shipment
Minimum Purchase Quantity ("MPQ"): * units during the initial term of
this Attachment.
IBM will credit any Product purchases made by a Peerless Authorized
Purchaser pursuant to Section 17.12 of the Base Agreement toward
Peerless' MPQ.
7.5 Low Volume Charges
Peerless will owe IBM a "low volume" charge if Peerless does not purchase the
MPQ over the initial term of this Attachment. The low volume charge shall be
equal to the number of units by which Peerless' purchases of the Products during
the initial term of this Attachment falls below the MPQ multiplied by the * tier
price for the year 2002. If applicable, IBM shall invoice Peerless pursuant to
Section 6.0 of the Base Agreement.
* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *. A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
Attachment No. 1 Page 5 of 9 Peerless Systems Corporation
Custom Sales Agreement No. 000334 April 23, 2001
Thus, for example, if Peerless purchases * units during the initial term of this
Attachment, Peerless would owe a low volume charge of $* [*].
In the event Peerless' purchases during the initial terns of this Attachment
fall below * for any of the following reasons-
(a) under Section 5.1 IBM reduces the number of Products it delivers to
Peerless;
(b) IBM is unable to deliver Product that meets the requirements of
Section 8.1;
(c) IBM issues a credit to Peerless pursuant to 8.4; or
(d) Peerless terminates the Agreement or this Attachment pursuant to
13.1--
then the parties will negotiate in good faith a reasonable modification of the
MPQ based upon the reduction in the quantity of Product delivered due to any of
the above reasons
8.0 Cancellation Charges
8.1 NRE Cancellation Charge:
If Peerless cancels a purchase order for NRE, fails to issue a purchase order
for a Milestone within thirty (30) days after the completion of the previous
Milestone, unreasonably withholds its signature on a Milestone, or otherwise
cancels NRE, then IBM may cease work in connection with the Product.
Additionally, Peerless shall pay IBM the total of all NRE charges due and owing
at the time of the cancellation and all unpaid NRE charges applicable to the
next NRE Payment Milestone according to the schedule set forth in Section 7.3 of
this Attachment.
8.2 Product Cancellation Charge:
In accordance with Section 5 of the Base Agreement, the following charges will
apply for any cancelled Peerless order or portion thereof. The "Cancellation
Charge" referred to below is the percentage to be applied to the prices stated
above in Section 7 of this Attachment.
Cancellation Cancellation
Notice charge
Received by
IBM
Anytime
after wafer
start 100%
Prior to
wafer start 0%
9.0 Ordering Location: Ship To: Xxxx To:
IBM Peerless Systems Corporation Peerless Systems Corporation
000 Xxxxxx Xxxxxx 0000 Xxxxxxxxx Xxx., Xxxxx 000 0000 Xxxxxxxxx Xxx., Xxxxx 000
Xxxxxxx, XX 00000 Xx Xxxxxxx, XX 00000 Xx Xxxxxxx, XX 00000
Attn: Xx. Xxxxxxx Xxxxxxxxx Attn: Xx. Xxxxxxx Xxxxxxxxx
10.0 Coordinators/Administrators
Technical Coordinators:
Peerless: Xxxxxxx Xxxxxxxxx IBM: Xxxxxxx Xxxxxxx
Phone: (000) 000 0000 Phone: (000) 000 0000
Fax: (000) 000 0000 Fax: (000) 000 0000
Email: xxxxxxxxxx@xxxxxxxx.xxx Email: xxxxxxxx@xx.xxx.xxx
* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *. A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
Attachment No. 1 Page 6 of 9 Peerless Systems Corporation
Custom Sales Agreement No. 000334 April 23, 2001
Pursuant to Section 15 of the Base Agreement, any notices hereunder shall be
given to the following persons:
Peerless: Peerless Systems Corporation IBM: MD WW Contracts and Business Practices
Address: 0000 Xxxxxxxxx Xxx., Xxxxx 000 Address: IBM Technology Group
Xx Xxxxxxx, XX 00000 0000 Xxxxx Xxxxxx, 965-3B
Attn: Xx. Xxxxxxx Xxxxxxxxx Essex Jct., VT 05452
Phone: 000 000-0000 Phone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
Email: xxxxxxxxxx@xxxxxxxx.xxx Email: xxxxxxxx@xx.xxx.xxx
11.0 Term
The term of this Attachment expires on April 22, 2004.
12.0 Unique Terms and Conditions
The following terms and conditions are applicable to this Attachment only.
Referring to the Base Agreement:
(a) Add the following terms to the Base Agreement:
9.5 Notwithstanding anything to the contrary contained herein, neither
party shall be liable to the other party for any claims arising under
this Section 9 which exceed, in the aggregate Two Million U.S. Dollars
($2,000,000.00).
13.5 In the event that IBM determines to discontinue the manufacture of
a Product, IBM will provide Peerless with at least one (1) year prior
written notice of any such discontinuance. Peerless shall place any and
all orders for such Product within six (6) months after such notice is
given by IBM. Peerless must take final delivery of all Product under
any such orders on or before the date that IBM has notified Peerless
that such Product will be discontinued. All such orders will be
completed and filled by IBM in the ordinary course of business and in
accordance with the terms and conditions of this Agreement.
(b) Modify the terms of the Base Agreement as follows:
Delete section 4.1 in its entirety and replace it with the following:
4.1 Products will be: (1) integrated or incorporated into systems sold
under the logo or trade name of an Original Equipment Manufacturer
("OEM") under contract with Peerless or as otherwise agreed in writing
by IBM and Peerless; or (2) distributed in incidental additional
quantities for use as service or upgrade parts in systems in which
Peerless has licensed its intellectual property. Peerless may also use
up to 5% of the Products internally.
Delete section 8.1 in its entirety and replace it with the following:
8.1.1 IBM shall correct any errors in the CSSP design that are caused
solely by IBM's acts and/or omissions, provided that Peerless notifies
IBM's technical coordinator of the error prior to Prototype Acceptance
and that Peerless provides Items IBM requires to correct any such
error. IBM is not responsible for correcting any errors in the design
caused by Peerless' acts and/or omissions, and Peerless shall pay IBM
for correcting any such errors at a price to be mutually agreed upon by
the parties. Once Peerless issues its Prototype Acceptance, IBM shall
have no further warranty obligations for NRE provided by IBM hereunder.
Notwithstanding the foregoing, if Peerless fails to issue its Prototype
Acceptance within six (6) months of IBM's first delivery of Prototypes,
then IBM shall have no further warranty obligations for NRE provided by
IBM hereunder.
8.1.2 IBM warrants that each unit of Product will be free from defects
in material and workmanship and will conform to the Product
Specifications as set forth in the RTM for twelve (12) months after
delivery. For purposes of this provision only, delivery to Peerless of
each unit of Product is deemed to occur five (5) calendar days after
shipment from IBM. This warranty does not include repair of damage
resulting from failure to provide a suitable installation environment,
any use for other than the intended purpose, accident, disaster,
neglect, misuse, transportation, alterations, or non-IBM repairs or
activities. Peerless acknowledges that the functionality of Products is
contingent on Peerless' designs and, therefore, such warranty does not
apply to the functionality of Products fabricated under this Agreement.
Attachment No. 1 Page 7 of 9 Peerless Systems Corporation
Custom Sales Agreement No. 000334 April 23, 2001
Part A
1.0 Product Names and Descriptions
Product Type: CSSP
Peerless' Product Name: QP+405
Process Technology: CMOS 6SF
Chip Image Description: 7.43 mm x 7.43 mm, 5 levels of metal, 585k gates
Package Description: ePBGA 385 lead
Product's Export Classification Control Number ("ECCN"): TBD
2.0 Product Design Schedule:
Description Responsible Company Estimated Completion
Date
Program Initiation Both Completed
Preliminary ASR Peerless Completed
Preliminary CSSP Verification Plan Both Completed
Initial Design Review (IDR) Both Completed
First Chip Netlist IBM Completed
Final CSSP Verification Plan Both Completed
Final ASR Peerless Completed
Completion of CSSP Verification Both Completed
RTL review and sign-off (RTL) Both Completed
RTM (Including Review and Sign-off) Both Completed
Functional specs, Timing Reports, Power data, and test coverage. Both Completed
Prototype Shipment IBM Completed
Prototype Acceptance Peerless Completed
Production IBM Completed
3.0 Purchase Order Lead Times: (to include purchase order approval and
manufacturing lead time):
Prototype: Prototypes to be delivered within seventy (70) calendar
days after RTM.
Production: Sixteen (16) weeks.
Attachment No. 1 Page 8 of 9 Peerless Systems Corporation
Custom Sales Agreement No. 000334 April 23, 2001
Part B
Items /Deliverables
1.0 IBM Deliverables and Items associated with the IDR Milestone:
Items:
Functional requirements.
Operating conditions and requirements.
Architectural Specifications.
Unit Verification Plans and testcases
Sign-off on IBM and Peerless' Preliminary CSSP Verification Plans
Sign-off on Peerless' Preliminary Architectural Specifications.
IBM Deliverables:
PLB bus functional models
Unit Verification Plans for modified/custom logic.
2.0 IBM Deliverables and Items Associated with the RTL Milestone
Items:
Final CSSP gate level netlist
Final CSSP timing assertion files with sign-off.
Sign-off on the Final Architectural Specification.
CSSP functional verification completion with sign-off.
Final CSSP pin-out with sign-off.
IBM Deliverables:
Final CSSP gate level netlist
Sign-off on the Final CSSP Verification Plan and Status.
Sign-off on the Final Architectural Specification.
Pre-layout timing results. Sign-off on final pin-out listing. Final timing
assertion files with sign-off.
3.0 IBM Deliverables associated with the RTM Milestone
IBM Deliverables:
Post layout timing reports.
All required manufacturing data and checklists.
Final test coverage for CSSP.
Attachment No. 1 Page 9 of 9 Peerless Systems Corporation
Custom Sales Agreement No. 000334 April 23, 2001