EXHIBIT 10.11
COOPERATION AGREEMENT BETWEEN
CENTILLIUM TECHNOLOGY CORPORATION
AND
NEC CORPORATION
This Cooperation Agreement (this "Agreement") is effective as of April 3,
1998 (the "Effective Date") by and between Centillium Technology Corporation, a
California corporation having its principal place of business at 00000 Xxxxxxxx
Xxxx. Xxxxxxx, XX 00000 Xxxxxx Xxxxxx of America ("Centillium") and NEC
Corporation, a Japanese Corporation with offices at 1131, Hinode, Abiko, Chiba
000-00 Xxxxx ("NEC").
- WITNESSETH -
WHEREAS, Centillium has expertise in the area of telecommunications
integrated circuits, including those which utilize multilevel modulation
techniques to enable high speed communications over copper, also known as
Digital Subscriber Line (xDSL) Technology; and
WHEREAS, NEC has expertise in the area of telecommunications systems and
associated technologies; and
WHEREAS, the parties hereto believe that each will derive benefits from a
business relationship in which they will work cooperatively to define an
integrated circuit solution for the copper interface portion of transmission
systems (the "G.lite Devices") and a specialized interface device for the
Japanese loop environment (the "JDSL Devices", the G.lite Devices and the JDSL
Devices collectively, the "Devices"); and
WHEREAS, Centillium will be in a position to provide NEC with early models,
system support, and loop environment engineering support in exchange for NEC's
commitment to use Centillium as its preferred vendor of the G.lite Devices and
JDSL Devices for as long as Centillium maintains competitive terms and
conditions and
WHEREAS, the parties hereto wish to set forth in this Agreement the
guidelines of their cooperation.
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows
1. Overall Objective of Cooperation
(a) The objective of this cooperation is for both companies to work
together in developing the proper G.lite and JDSL Devices,
technologies and systems that can significantly develop the broadband
telecommunications market. The first phase of this activity includes
product definition and joint marketing to telco customers. The basic
specification of the G.lite Devices shall be described in the
Attachment A hereto.
NEC
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Centillium
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(b) For the purpose of interpreting this Agreement, as used throughout
this Agreement "JDSL Devices" refers to those G.lite Devices
specifically designed to operate over the Japanese loop environment
and "G.lite Devices" refers to the Centillium's offering for markets
outside Japan.
(c) Each of the parties hereto will act in good faith and in a
commercially reasonable fashion to provide the resources necessary to
accomplish the objectives set forth in this Agreement. Each of the
parties hereto acknowledges and agrees that there are substantial
technical, financial and commercial risks associated with a
development activity of this type and, therefore, that neither of the
parties hereto can guarantee that any of the development activities
described in this Agreement or any subsequent activities to be
described in any future agreements will be completed successfully.
(d) All future obligations of the parties which are to be set forth in
future agreements are subject to the execution of definitive
agreements.
2. Scope of Cooperation
The parties' cooperation under this Agreement will be conducted in
following phases:
(a) Phase 1 Product Definition Phase
(i) The parties hereto will work in good faith to jointly approve
specifications for an integrated circuit solution for the JDSL
Devices.
(ii) The parties hereto will co-market the resultant solution to the
end customers (e.g., telcos) pursuant to separate agreements
mutually agreeable to the parties.
(b) Xxxxx 0 Xxxxxxxxxxx Xxxxx (Due Date September 1998)
(i) NEC will evaluate Centillium's first prototype, when available,
of the G.lite and JDSL Devices. Centillium will provide to NEC,
without additional payments from NEC (other than those stipulated
in Article 3), 12 evaluation boards for G.lite Devices (the
"Evaluation Boards") to NEC. The Evaluation Boards shall not be
used, sold or modified in any manner or for any purpose other
than as contemplated in this Agreement. NEC will provide a
written report on the evaluation. NEC agrees to provide
additional evaluation reports throughout the period of this
Agreement as subsequent iterations of the G.lite and JDSL Devices
are prototyped and forwarded to NEC for evaluation. Prototypes of
second and/or future iterations of the G.lite and JDSL Devices
will be provided free of charge unless they are custom iterations
for NEC in which case Centillium may charge a fee to be mutually
agreed upon by the parties hereto.
(ii) Upon request made by NEC, within a reasonable time period after
the evaluation report stated above, and subject to the execution
of an agreement mutually agreeable to the parties (a "Scope of
Work Agreement") and payment of fees set forth in Article
2(b)(iii) below, Centillium shall incorporate into
NEC
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Centillium
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software portion of the JDSL Devices the modules created by NEC
for Japanese market specifications.
(iii) In order to cover the additional NRE costs (the "Additional NRE
Cost") incurred by Centillium in regards to the activities to be
set forth in the Scope of Work Agreement, as described in
Article 2(b)(ii) above for Japanese market specifications for
JDSL Devices. Centillium and NEC shall mutually agree in good
faith on payments in addition to the $250,000 as described in
Article 3 below by NEC to Centillium. Agreement on the amount of
Additional NRE Cost shall be determined by Centillium and NEC,
and shall be incorporated in the Scope of Work Agreement.
(iv) As a result of the co-development activities stated in Articles
2(b)(ii) and b(iii), and if so requested by NEC and accepted by
Centillium, technology, software and other intellectual property
of NEC may be incorporated in the JDSL Devices. In such case,
Centillium and NEC shall use their best efforts to agree on a
reasonable royalty fee which shall be paid by Centillium to NEC
under the terms and conditions to be separately agreed upon in
writing. Centillium shall have a royalty based non-exclusive
license to this NEC's technology for manufacturing, using and
selling the JDSL Devices to all Centillium's other customers.
(c) Phase 3 Pre-production and Production Phase (Due Date February and
April 1999 respectively)
(i) NEC will supply written acknowledgment that the G.lite and JDSL
Devices meet all the specifications agreed upon during the
Product Definition phase of this Agreement described in Article
2(a). Upon the execution of the Supply Agreement between
Centillium and NEC stipulated in Section 7, and subject to the
terms of the definitive Supply Agreement agreed upon by the
parties, the parties anticipate that NEC will provide Centillium
with a nonbinding forecast of its delivery requirements covering
the next twelve (12) month period for the G.lite and JDSL Devices
to be purchased from Centillium. Such forecast shall become
binding three (3) months prior to delivery. The details of Order
Acceptance methods and forecast will be included in the Supply
Agreement to be executed per Section 7 in the future.
(ii) NEC will use its commercially reasonable efforts to also assist
Centillium in establishing standards utilizing Centillium's
modulation schemes and will support Centillium's documentation
efforts for the G.lite and JDSL Devices. If Centillium produces
devices based upon such standards, Centillium will provide NEC
with access to such devices (e.g., alpha and beta test site)
prior to the general commercial release of such devices subject
to mutually agreeable terms.
NEC
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Centillium
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(d) Production facilities
As for the manufacturing of Devices Centillium will use the
manufacturing facilities of its semiconductor manufacturing partners
which Centillium may choose in its own discretion from time to time.
These manufacturing facilities are strictly used as sub-contractors
for Centillium (i.e. foundry). Centillium's foundry partners do not
have the right to design, sell, distribute, improve and use
Centillium's products.
(e) Performance
NEC expects that Centillium shall meet its reasonable delivery and
quality control criterion as agreed upon between the two parties in
their Supply Agreement. In the event that Centillium is unable to meet
NEC's quality and delivery requirements, and subject to procedures
outlined in Article 4, Centillium agrees to negotiate in good faith to
use NEC's production capabilities as an alternate source of foundry as
described above in Article 2(d). The terms of the foundry agreement
shall be reasonably similar to Centillium's existing foundry
agreements at that time.
3. Payments
(a) Following the execution of this Agreement, NEC will pay Centillium a
non-recurring engineering (NRE) charge of $250,000 to partially offset
costs associated with (i) Centillium's development of the G.lite
Devices, (ii) development and delivery of the Evaluation Boards for
the Central Office (CO), (iii) Evaluation boards for Customer premise
modem and application support, and (iv) limited special loop plant
modeling that may be requested by NEC. The $250,000 payment shall be
made according to the following schedule.
(I) $150,000 within 45 days after the signing of the Agreement.
(II) $100,000 within 45 days after the acceptance by NEC of the
prototype Devices and the Evaluation Boards for the CO and the
customer premise modem in accordance with the specifications
agreed upon pursuant to Article 2(a), not to exceed ninety (90)
days after the delivery by Centillium. All deliveries under this
Agreement shall be FOB Centillium's principal office. Acceptance
by NEC shall not be unreasonably withheld. If Centillium receives
no rejection within ninety (90) days, the Devices and Evaluation
Boards shall be deemed accepted.
(b) This $250,000 is not part of the Additional NRE Cost to be agreed upon
between the parties under Article 2(b)(iii) above. However, this
$250,000 shall be deemed to cover any and all compensation due to
Centillium from NEC in connection with the provisions of this
Agreement covering the G.lite Devices.
(c) In the event that any development by Centillium hereunder is not
completed in accordance with the schedule in Article 2 above and
subject to procedures outlined in Section 4 below, NEC may terminate
this Agreement and Centillium shall refund to NEC forthwith fifty
NEC
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Centillium
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(50%) of any payments made by NEC prior to such termination.
Centillium shall not be liable to NEC for any other amounts.
4. Relationship Management
The parties hereto agree that during the course of development and the
supply relationship performance issues may arise in the area of development,
manufacturing quality and delivery schedules. The parties agree that in such
events the following procedure is followed
(a) The dissatisfied party shall notify the affected party about such
issues in writing.
(b) The affected party shall have 3 months from the time of the
notification to resolve the issues or present a plan acceptable to the
dissatisfied party.
(c) If the dissatisfied party is not satisfied with the resolution within
6 months from the time of notification, they may pursue remedy
according to Section 9 herein.
5. Technology Ownership and Licenses
(a) Unless otherwise specifically provided for in this Agreement, nothing
herein will be constructed as an express or implied license (under patents or
otherwise) of any kind.
(b) Centillium will have exclusive right to design and market the Devices
and any improvements or modifications thereto resulting from the activities of
this Agreement. Centillium warrants that the G.lite and JDSL Devices shall not
infringe or misappropriate any patent, copyright, trade secret or other
intellectual property rights of any third party. The Supply Contract stipulated
in Section 7 below will provide an indemnity to the effect that Centillium will
use its best efforts to obtain a license to or design around any intellectual
property right Centillium is found to have infringed, and will indemnify NEC and
hold NEC harmless from any and all damages, liabilities, costs, losses and
expenses incurred by NEC as a result of or arising from any third party claim
that the G.lite and JDSL Devices purchased by NEC under the Supply Contract.
Details of the indemnity conditions shall be set forth in the Supply Contract.
(c) Any information disclosed by NEC to Centillium under this Agreement
with respect to direct support of the G.lite and JDSL Devices (the "Device
Specific Information") (i.e., with respect to characterization and performance
of the G.lite and JDSL Devices) shall remain the property of NEC. Such Device
Specific Information may be freely used by Centillium, without charge, for the
purpose of implementation of design and implementation of manufacturing and
supporting G.lite and JDSL Devices sold to Centillium's customers, and other
substantially similar activities. Notwithstanding the confidential obligations
in section 6 hereof, Centillium may, with NEC's prior written consent, disclose
the Device Specific Information set forth above. Such consent shall not be
unreasonably withheld. If Device Specific Information contains NEC's
intellectual property, then such intellectual property shall be treated as a
license from NEC to Centillium under Article 2(b)(iv) above. Any information
referenced in this (c) is provided "AS IS" NEC specifically disclaims any
warranties, express or implied, including, without limitation, the warranties of
merchantability and fitness for a particular purpose.
NEC
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Centillium
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6. Confidential Information and Non-Disclosure
Any technical information and other business information which is disclosed
hereunder by either party hereto to the other in written or other tangible form
and clearly marked with a legend it as confidential, or which is identified as
confidential at the time of oral disclosure and within fourteen (14) days after
the oral disclosure is provided in written or other tangible form to the
receiving party with such legend will be held in strict confidence by the
receiving party from the date of disclosure until three (3) years after the date
this agreement expires or terminates, using the same degree of care as the
receiving party uses for its own information of a similar kind, and will not be
transferred or divulged to any third-party or any employee who does not have the
requisite need to know. For purposes of interpreting this Agreement, employees
of NEC's affiliates, divisions or subsidiaries do not have the requisite need to
know to obtain access to Centillium confidential information disclosed to NEC
hereunder. Such confidentiality obligation will not apply to portions of such
technical information and other business information, if any, (a) which were
previously known to the other party hereto free of any confidentiality
obligation, (b) which are or become known to the public, provided that such
public knowledge is not attributable to a breach of this Agreement by the
receiving party, (c) which the furnishing party explicitly agrees in writing
need not be kept confidential (either in this Agreement or separately), (d)
which are received by the receiving party rightfully from a third-party without
a restriction on disclosure. Further, Centillium agrees not to disclose to any
other party any of the specifics of NEC's system testing and results that might
specifically indicate a problem related to such system. However, if the G.lite
or JDSL Devices are modified by Centillium to remedy a system problem,
Centillium may disclose such test information as may be necessary to support
such modified G.lite or JDSL Devices to the extent that such disclosure
coincides with the availability of the modified G.lite or JDSL Devices.
7. Supply Agreement of G.lite and JDSL Devices
(I) Centillium and NEC agree to negotiate in good faith to enter into a
Supply Agreement of G.lite and JDSL Devices in which Centillium agrees
to continue to sell the G.lite and JDSL Devices (including those
designed for Japanese market) to NEC for at least a seven (7) year
period. The parties will seek to execute such Supply Agreement within
a reasonable time after written acknowledgement of NEC that the
Devices meet all the specifications listed in the product
specification agreed to by both parties.
(II) NEC and Centillium agree that reasonable standard commercial terms and
conditions will apply to the sale of all devices to NEC.
8. Term
(a) This Agreement will expire four (4) years after the Effective Date
unless extended in writing by mutual parties.
(b) If either party hereto files a petition in bankruptcy or makes a
general assignment for the benefit of creditors or otherwise
acknowledges insolvency or if either party is adjudged a bankrupt or
goes or is placed
NEC
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Centillium
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into a complete liquidation, or if a receiver is appointed for the
benefit of either party, the other party hereto may terminate this
Agreement and/or any existing individual contract immediately.
9. Governing Law
(a) The construction, interpretation and performance of this Agreement
will be governed by the laws of the State of California without
reference to its conflict of laws and principals. The United Nations
Convention on Contracts for the International Sale of Goods will not
apply to the sale of Devices hereunder.
(b) The parties hereto shall endeavor to settle amicably all disputes,
controversies or differences which may arise between them out of or in
relation to or in connection with this Agreement by mutual
consultation. In the event that the parties fail to reach an amicable
settlement within sixty (60) days after receiving notice from the
other that such disputes, controversies or differences exist, such
disputes, controversies or differences shall be finally settled by
arbitration in Tokyo, Japan if the defendant is NEC, and in Fremont,
California, U.S.A. if the defendant is Centillium, in accordance with
the arbitration rules of the International Chamber of Commerce. The
award of arbitration shall be final and binding upon the parties
hereto and shall not be subject to appeal to any court, and shall not
be entered in any court of competent jurisdiction for execution
forthwith.
10. Entire Agreement
This Agreement sets forth the entire agreement and understanding between
the parties hereto with respect to its subject matter. It merges all discussions
between them and voids and replaces each and every other agreement (including
the Mutual Nondisclosure Agreement between the parties dated November 11, 1997)
or understanding which may heretofore have existed between Centillium and NEC
regarding such subject matter. Any and all information which has been disclosed
under the Mutual nondisclosure Agreement shall be regarded as such disclosed
under 6 above.
11. Publicity
(a) Neither party hereto will disclose the existence or content of this
Agreement without the other's prior written consent, which will not be
unreasonably withheld. Each party will submit to the other all proposed
publicity material relating to the disclosure of this Agreement or the
relationship of the parties hereto.
(b) This Section 11 will not prohibit disclosure by a party if such
disclosure is required by a court of competent jurisdiction, law or regulation.
12. Limitation of Liability
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT,
INCLUDING, BUT NOT LIMITED TO ANY LOSS OF PROFIT OR REVENUE, EVEN IF IT HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
NEC
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Centillium
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13. Independent Contractor
Nothing in this Agreement shall be construed as creating a partnership
between the parties or as constituting either party as the agent of the other
party for any purpose whatsoever and neither party shall have the authority or
power to bind the other party or to contract in the name of or create a
liability against the other party in any way or for any purpose.
IN WITNESS WHEREOF, each of Centillium Technology Corporation and NEC
Corporation have executed this Agreement, in duplicate originals, by their
respective officers hereunto duly authorize the day and year first above
written.
CENTILLIUM TECHNOLOGY CORP. NEC CORPORATION,
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Data Communications Division
Xxxxx Aalaer Xxxxx Xxxxx
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/s/ Xxxxx Aalaer /s/ Xxxxx Xxxxx
V.P. Planning and Business Development Assistant General Manager
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5/27/98 5/27/98
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NEC
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Centillium
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