1
ASIC AGREEMENT
THIS AGREEMENT is made the 31st day of ___________January___________ 1997
("Effective Date") by and between _____ IRE Secure Solutions, Inc.____ having a
principal place of business is at ___100 Conifer Hill Drive, Suite 513,
Danvers, Massachusetts 01923___ (hereinafter referred to as the "BUYER"), and
Analog Devices, Inc. having a principal place of business at Three Technology
Way, Norwood, Massachusetts 02062-1906 (hereinafter referred to as the
"SELLER").
WHEREAS
A. The BUYER (has designed/or requires to be designed) an application or
series of applications for a custom integrated circuit.
B. The BUYER wishes the applications (or part thereof) to be incorporated
by SELLER into a custom integrated circuit.
C. The BUYER and the SELLER desire to mutually cooperate in a program to
develop a custom integrated circuit in accordance with the terms and provisions
of this Agreement.
1. DEFINITIONS
The terms below shall have the following meanings:
(a) The term "Custom Product" shall mean a custom integrated
circuit manufactured, assembled or otherwise fabricated or obtained by SELLER.
Custom Products are either "Prototypes" or "Production Units" as defined below.
(b) The term "Prototype" shall mean a Custom Product fabricated
and delivered to BUYER by SELLER pursuant to Paragraph 2. Statement of Work.
(c) The term "Production Unit" shall mean a Custom Product other
than a Prototype produced by SELLER during the Production Period.
2. STATEMENT OF WORK
SELLER shall develop a Prototype in accordance with Schedule 1 incorporating
the design specifications set forth in Schedule 2 (the "Work").
3. TERM OF AGREEMENT
This Agreement shall have a term consisting of a Development Period followed by
a Production Period.
(a) Development Period - The Development Period shall commence on
the Effective Date and end on the Development Completion Date as defined in
Paragraph 7.
(b) Production Period - The Production Period shall commence on
the Development Completion Date and continue as long as the SELLER manufactures
the product for sale.
4. TIMETABLE
The parties acknowledge that design problems associated with a custom
integrated circuit and other delays may affect the timetable of delivery of a
Prototype as set forth in Schedule 1. In such event, changes to the timetable
in Schedule 1 shall be mutually agreed by both parties.
5. BUYER AND SELLER COOPERATION
The BUYER and SELLER, without cost to the other, shall each provide the other
upon request, such assistance as is reasonable and necessary for the completion
of the Work.
6. DEVELOPMENT CHARGES
BUYER shall pay SELLER'S nonrecurring engineering expenses ("NRE") set forth as
the development charges in Schedule 3.
7. PROTOTYPE ACCEPTANCE
(a) The parties shall mutually agree to a Prototype Acceptance
Specification and Test Procedure which shall be reduced to writing and
incorporated herein as Schedule 4. In the event the parties do not or cannot
agree to such Specification and Test Procedure, then the design specifications
set forth in Schedule 2 shall be deemed the criteria for Prototype acceptance
under this Paragraph 7.
(b) Within forty-five (45) days of delivery of the Prototypes to
BUYER, BUYER shall inspect and test such Prototypes. Representatives of SELLER
may be present at BUYER'S facility to observe such inspection and test
procedure. If any Prototype is nonconforming, BUYER shall advise the SELLER in
writing, specifying the nonconformance and return to SELLER the nonconforming
Prototype. Prototypes not otherwise identified as nonconforming within
forty-five (45) days after delivery to BUYER shall be deemed accepted by BUYER
and the Work will be deemed completed by SELLER.
(c) SELLER shall use reasonable efforts to replace all
nonconforming Prototypes within one hundred eighty (180) days of SELLER'S
receipt of such Prototypes. If SELLER, using reasonable efforts, is unable to
supply the BUYER with at least 10 Prototypes which are acceptable or deemed to
be acceptable, this Agreement shall forthwith terminate and SELLER shall refund
to BUYER all sums paid to SELLER hereunder for the remaining uncompleted Work.
(d) The Development Completion Date will be the date on which ten
(10) Prototypes in the aggregate are accepted or deemed to be accepted by
BUYER.
8. DEVELOPMENT WARRANTY EXCLUSION
The BUYER agrees that it will not sell or otherwise make available the
Prototypes to any third party without the consent of the SELLER which shall not
be unreasonably withheld. SELLER GIVES OR MAKES NO WARRANTY, REPRESENTATIONS
OR UNDERTAKING, EXPRESS OR IMPLIED, WITH
1/30/97 1
2
RESPECT TO THE PROTOTYPES, SELLER HEREBY DISCLAIMS THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE. ALL STATUTORY OR
IMPLIED WARRANTIES ARE HEREBY EXCLUDED SO FAR AS IS POSSIBLE BY LAW.
9. CHANCES TO DESIGN SPECIFICATION
During the term of this Agreement, either party may request a change to the
design specifications set forth in Schedule 2 provided such change is agreed to
in writing between the parties and the Schedules are amended to reflect any
changes in the cost or time schedule of the Work and/or Custom Product. If the
parties cannot agree, this Agreement shall continue unless either party
terminates this Agreement for convenience by giving notice to the other party.
10. SALE OF PRODUCTION UNITS
(a) SELLER'S or SELLER'S assignee's standard terms of sale in
effect on the date SELLER or its assignee accepts BUYER'S purchase order shall
be the exclusive terms of purchase and sale of the Production Units, as
supplemented by this Agreement. In the event of a conflict between a term
of this Agreement and SELLER'S or its assignee's terms of sale then the terms
of this Agreement shall prevail notwithstanding any conflicting term. SELLER'S
(or its assignee's) standard terms of sale are attached hereto as Schedule 5.
(b) All orders for Production Units require a minimum lead time of
ninety (90) days.
(c) BUYER'S FOB price and firm/fixed quantity commitment to
purchase Production Units shall be in accordance with Schedule 6.
11. PRODUCT WITHDRAWAL
SELLER reserves the right to discontinue the manufacture of any Custom Product
or of any process related thereto. In such event, SELLER shall notify the
BUYER in writing giving a minimum of two (2) year's notice for the last
delivery of such Custom Product. BUYER shall have the right to place a final
order within one (1) year of SELLER'S notification of SELLER'S election to
discontinue the Custom Product. In the event SELLER discontinues manufacture
of the Custom Product, SELLER shall give BUYER the right to use the current
mask set to contract with the existing foundry to purchase the Custom Product
directly, subject to mutually agreeable terms.
12. PRODUCTION UNIT TEST SPECIFICATION
Within thirty (30) days after the Development Completion Date the parties shall
agree upon and reduce to writing a Production Test Specification to be
incorporated in this Agreement as Schedule 7. Such specification shall be the
testing criteria performed by SELLER for Custom Products during the Production
Period. In the event the parties fail to reach agreement upon a Production
Unit Test Specification, such failure shall not be deemed a breach of this
Agreement and the design specification set forth in Schedule 2 shall be deemed
the criteria for Production Unit acceptance under this Paragraph 12.
13. WARRANTY OF PRODUCTION UNITS
SELLER warrants that each Production Unit will be free of defects in materials
and workmanship and perform according to the design specification set forth in
Schedule 2 for a period of one (1) year from the date the Production Unit is
first shipped by SELLER to BUYER. SELLER shall have no further warranty or
service obligation. SELLER'S sole liability and responsibility under the
warranty is to repair, replace, or at its option, to refund the purchase price
of any Production Unit which is returned by BUYER and which SELLER determines
does not conform to the warranty. Production Units returned to SELLER for
warranty service will be shipped to SELLER at BUYER'S expense and will be
returned to BUYER at SELLER'S expense. In no event shall SELLER be responsible
under its warranty for any defect which is caused by BUYER'S negligence, misuse
or mistreatment of a Production Unit or for any Unit which has been altered or
modified in any way. The warranty of replacement products shall terminate with
the warranty of the original product. EXCEPT AS PROVIDED IN THIS PARAGRAPH 13,
SELLER MAKES NO OTHER REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE
PRODUCTION UNITS. SELLER HEREBY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES Of MERCHANTABILITY
AND FITNESS FOR ANY PARTICULAR PURPOSE. ALL STATUTORY OR IMPLIED WARRANTIES
ARE HEREBY EXCLUDED SO FAR AS IS POSSIBLE BY LAW.
14. TERMINATION FOR CONVENIENCE
Subject to Paragraph 16, BUYER may at any time terminate this Agreement, or any
order hereunder, for its convenience upon giving one hundred twenty (120) days
written notice to SELLER.
15. TERMINATION FOR CAUSE
This Agreement may be terminated by either party in the event the other party
breaches a material term of this Agreement and fails to cure such breach within
thirty (30) days after written notice thereof from the non-breaching party, or
if such breach cannot reasonably be cured within said thirty (30) days, fails
to commence to cure such breach within thirty (30) days after written notice
and diligently pursues such
1/30/97 2
3
cure to completion within ninety (90) days of the date of such notice.
16. TERMINATION CHARGES
(a) Termination During Development Period.
(i) If the BUYER terminates for convenience or if the SELLER
terminates for BUYER'S breach under Paragraph 15 then BUYER shall pay SELLER
the total amount of NRE in Schedule 3, less costs not incurred at the date of
notice.
(ii) If the BUYER terminates for SELLER'S breach under Paragraph
15 then SELLER shall refund to BUYER all sums paid to SELLER by BUYER hereunder
for the remaining uncompleted Work.
(b) Termination During Production Period.
(i) If the BUYER terminates for convenience or if the SELLER
terminates for BUYER'S breach under Paragraph 15 then BUYER shall pay SELLER
the termination charge specified in Schedule 8.
(ii) BUYER may cancel without liability if BUYER terminates for
SELLER'S breach under Paragraph 15.
17. DEVELOPMENT TECHNOLOGY AT TERMINATION
In the event of termination, SELLER shall deliver to BUYER the following
information: (a) all BUYER documentation provided by BUYER to SELLER, (b) all
test results generated by SELLER during the Work, (c) all net lists, test
vectors and bonding diagrams generated by SELLER during the Work. Both BUYER
and SELLER shall have the unrestricted right to use such information except for
the confidential information of the other.
18. LIMITATION ON CLAIMS
(a) IN NO EVENT SHALL SELLER BE LIABLE FOR INDIRECT, SPECIAL,
INCIDENTAL, OR CONSEQUENTIAL DAMAGES FOR ANY CLAIMS ARISING OUT OF THIS
AGREEMENT. No suit or action shall be brought against SELLER more than one (1)
year after the related cause of action has occurred.
(b) The maximum liabilities of SELLER shall be as follows:
(i) Warranty and Patent Indemnity liabilities shall be in
accordance with Paragraphs 13 and 23.
(ii) In no event shall the accrued total liability of SELLER
from any claim, lawsuit, warranty, or indemnity related to this Agreement
exceed the aggregate NRE paid to SELLER by BUYER under this Agreement.
19. REJECTION BY BUYER
All Production Units delivered under this Agreement may be rejected by the
BUYER within thirty (30) days after receipt by BUYER if they do not conform to
the Prototype specifications. If Production Units are not rejected within such
thirty (30) days, they shall be deemed to have been accepted, subject only
thereafter to claims arising under the Warranty of Production Units, set forth
in Paragraph 13.
20. NO EXCLUSIVITY
(a) SELLER may deliver the Custom Product to any third party
subject to the provisions of Paragraph 21(c).
(b) BUYER acknowledges that SELLER'S business is developing
integrated circuits and, therefore, BUYER further acknowledges that SELLER is
the exclusive owner of and reserves the right to use the technology owned
and/or developed by SELLER including, but not limited to, all cell based
architecture methodology, standard cells, mixed signals simulation tools,
process technology for mixed signals and other design process and CAD tools to
develop layouts, layout designs and other requirements for making integrated
circuits. SELLER may develop other integrated circuits for sale to third
parties at any time during the term of this Agreement.
(c) BUYER warrants to SELLER that the Custom Product will not be
resold as a discrete IC device.
21. LICENSES AND PROPRIETARY INFORMATION
(a) All information relating to the design and fabrication of the
Custom Product shall be included under this Section 21, including but not
limited to mask sets, design tapes, and information relating to circuits,
layout, testing and processing.
(b) Except as expressly provided herein, this Agreement does not
grant to either party by implication, estoppel, or otherwise, a license to any
patents or know how owned or controller by the other party.
(c) In consideration of the license granted hereunder with respect
to the Custom Product of BUYER, SELLER shall pay BUYER a royalty per Product
delivered, sold or otherwise desposed of by SELLER (except for sales to BUYER)
which incorporates one or more material elements of BUYER'S Custom Product.
BUYER and SELLER agree that the royalty will be specified in a separate
agreement. Within thirty (30) days after the close of each calendar quarter
following the initial shipment of products incorporating BUYER's Custom
Product, an officer of SELLER shall certify, for that quarter, in a written
report to BUYER and shall make royalty payments to BUYER on the net sales of
any such Products incorporating BUYER'S Custom Product (except those Products
sold to BUYER and/or its Affiliates). Royalty payments shall be made by wire
transfer to BUYER'S designated account, with notice of payments to BUYER, Attn:
Treasurer. SELLER shall keep full, clear and accurate records with respect to
such Products. Such records shall be
1/30/97 3
4
retained for a period of three (3) years from the date of reporting and
payment. BUYER shall have the right through its independent auditors and at
its expense, to examine and audit, not more than once a year, all such records.
Prompt adjustment shall be made by SELLER to compensate for any errors. If the
amount of any such error exceeds 5% of the royalties due, SELLER shall
reimburse BUYER for the costs of the audit.
(d) BUYER hereby grants and SELLER hereby accepts a non-exclusive,
fully-paid, worldwide, nontransferable right and license (without rights of
sublicense) for the term of this Agreement to BUYER'S intellectual property
rights, (not including any host or DSP source or object code) including but not
limited to the ASIC Design, patents, copyrights and trade secrets only to the
extent that it is incorporated in the Custom Product, so as to permit SELLER to
make, have made, distribute and sell the Custom Product, or any derivative
thereof, to BUYER and any other customers of SELLER.
(e) All discoveries, developments, improvements, and inventions
conceived or first reduced to practice in the performance of this Agreement by
BUYER'S employees shall be the sole and exclusive property of BUYER, and BUYER
shall retain any and all rights to file any patent application thereon. All
discoveries, developments, improvements, and inventions conceived or first
reduced to practice in the performance of this Agreement by SELLER'S employees
shall be the sole and exclusive property of SELLER, and SELLER shall retain any
and all rights to file any patent application thereon.
(f) In the event that the employees of SELLER and BUYER jointly
invent devices, circuits, processes, apparatus, systems or any other technology
relating to the subject matter of this Agreement, then the joint invention
shall be jointly owned by both parties without accounting to either party. In
the event of a joint invention which is patentable, the patent expenses shall
be divided equally between the parties, unless one party states in writing that
it does not wish to join in the patent application in which case the
non-joining party shall assign its rights therein to the other party and shall
receive a nonexclusive, royalty-free, personal, worldwide license under such
patent (without the right to sublicense) the subject matter of the patent.
22. CONFIDENTIALITY
The BUYER and SELLER agree that any information, technical data or know how,
which is furnished to the other in written or tangible form by either party
under or in connection with this Agreement and marked as "Proprietary
Information" or "Confidential", will be maintained by the receiving party in
confidence during the term of this Agreement and for a period of five (5) years
thereafter and will not be used by the receiving party except to fulfill the
receiving party's obligations under this Agreement. Oral disclosure will be
covered by this Agreement only if such disclosures are reduced to writing and
transmitted by the disclosing party to the other within thirty (30) days of the
original disclosure and marked as provided above. Neither party shall be under
any obligation to maintain in confidence any portion of the received
information which is: (i) already in the possession of the receiving party or
its subsidiaries; (ii) independently developed by the receiving party or its
subsidiaries; (iii) publicly disclosed by the disclosing party; (iv) rightfully
received by the receiving party or its subsidiaries from a third party that is
not under an obligation to keep such information confidential; (v) approved for
release by written agreement with the disclosing party; (vi) available by the
inspection of products marketed or offered for sale by either party hereto or
others in the ordinary course of business; or (vii) disclosed pursuant to the
requirement or request of a governmental agency or third party to the extent
such disclosure is required by operation of law, regulation or court order,
provided that prompt notice of such request is given to the disclosing party
and the disclosing party is given the opportunity, if possible, to challenge
such request.
23. PATENT INDEMNITY
(a) SELLER agrees to indemnify and defend BUYER against any claim
that a Production Unit, as delivered by SELLER, infringes a patent, copyright,
trademark, or other intellectual property right, provided SELLER is promptly
advised of any such claim or action and has sole control of the defense of any
such action and all negotiations for its settlement or compromise. If, at any
time, the use of the Production Units is enjoined or is discontinued because of
a settlement, SELLER shall have the right, but not the obligation, at its sole
option and expense, to either procure for BUYER the right to continue using the
Units, replace or modify the Units so that they become non-infringing or refund
the purchase price for the Units as depreciated, and accept their return on a
five year straight line basis. SELLER shall not have any liability to BUYER
under this paragraph if the infringement or other violation of a third party
right is based in any way upon (i) the use of a Production Unit in combination
with other components, equipment or software not furnished by SELLER, (ii) use
of a Production Unit in practicing any process; (iii) any Production Unit which
has been modified or altered; (iv) the manner in which the Production Unit is
used even if SELLER has been advised of such use; or (v) infringement which is
based primarily on the result of SELLER'S compliance with BUYER'S designs,
specifications, or instructions.
1/30/97 4
5
(b) The provisions of this Paragraph shall survive termination or
cancellation of this Agreement.
24. SUBCONTRACTING
SELLER may, with the consent of BUYER, which shall not be unreasonably
withheld, subcontract all or any of its obligations hereunder relating to the
design or manufacture of the Production Units to any company which is a fully
qualified subcontractor of SELLER. SELLER remains solely responsible to BUYER.
25. NOTICES
Written notices hereunder are deemed to be given when telexed, faxed or mailed
first class, postage prepaid, to the addresses of the parties as set forth
herein, or such other addresses as shall be furnished in writing, by either
party. Such notices shall be effective upon receipt.
26. NON-ASSIGNABILITY
Except as provided herein, this Agreement is not assignable by either party
without the prior written consent of the other party. Any attempt to assign
this Agreement without the prior written consent of the other party shall be
void. SELLER may assign this Agreement to an affiliate of SELLER provided that
SELLER shall remain primarily responsible to BUYER for SELLER'S obligations
under this Agreement. BUYER may assign this Agreement to an affiliate of BUYER
provided that BUYER shall remain primarily responsible to SELLER for BUYER'S
obligations under this Agreement.
27. OTHER AGREEMENTS
This Agreement contains the entire understanding of the parties with respect to
the subject matter hereof and supersedes all prior agreements relating thereto,
written or oral, between the parties. Amendments to this Agreement must be in
writing, signed by the duly authorized officers of the parties. Except as
provided herein, the parties agree that the terms and conditions of this
Agreement shall prevail, notwithstanding contrary or additional terms, in any
purchase order, sales acknowledgment, confirmation or any other document issued
by either party. Preprinted terms on any such documents shall not have effect
on any party to this Agreement.
28. FORCE MAJEURE
Neither party shall be liable for delay in performance or failure to perform
in whole or in part the terms of this Agreement due to strike, labor dispute,
act of war, labor shortage, riot or civil commotion, act of public enemy, fire,
flood or act of God or other cause beyond the control of such party.
29. USE IN LIFE SUPPORT APPLICATIONS
Custom Products sold by SELLER are not designed for use in life support
equipment where malfunction of such Custom Product can reasonably be expected
to result in personal injury or death. BUYER uses or sells such Custom Product
for use in life support equipment at BUYER'S own risk and agrees to fully
indemnify SELLER from any and all damages resulting from such use or sale.
30. SET-OFF
Amounts owed by the BUYER with respect to which there is not a dispute shall be
paid without set-off for any amounts which the BUYER may claim are owed by
SELLER and regardless of any other controversies which may exist.
31. PROPER LAW AND JURISDICTION
The construction validity and the performance of this Agreement shall be
governed by the law of the place where SELLER has its principal office as set
forth herein.
IN WITNESS WHEREOF the duly authorized representatives of the parties have
executed this Agreement as of the Effective Date.
Analog Devices Inc.
By /s/ XXXXX XXXXXX
------------------------
Xxxxx Xxxxxx
Title:_Vice President and General Manager
Date 1/31/97
------------------------
Notice Address:
Attention: Corporate Counsel
Analog Devices
Xxx Xxxxxxxxxx Xxx
Xxxxxxx, XX 00000
Fax No.__000-000-0000__
Buyer:
By: /s/ [SIG]
-------------------------
Title PRESIDENT
-----------------------
Date 1/31/97
----------------------
Notice Address IRE Secure Solutions, Inc.
-------------------------
000 Xxxxxxx Xxxx Xx-, Xxxxx 000
------------------------------------------
Xxxxxxx, XX 00000
------------------------------------------
Fax No. 000-000-0000
-----------------------------------
1/30/97 5
