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Exhibit 10.6
TECHNOLOGY LICENSE AGREEMENT
THIS TECHNOLOGY LICENSE AGREEMENT is entered into as of this 24th day of
September, 1998 (the "Effective Date"), between Ancor Communications,
Incorporated, a Minnesota corporation having its principal place of business at
6130 Blue Circle Drive, Minnetonka, Minnesota 55343 ("Ancor"), and INRANGE
Technologies Corporation, a Delaware corporation having its principal place of
business at 13000 Midlantic Drive, Mt. Laurel, New Jersey 08054 ("Inrange").
WHEREAS, Ancor has developed certain fibre channel technology including
ASICs, ASICs-related circuit design, boards, firmware and software, for use in
the storage area network markets;
WHEREAS, Inrange desires to obtain rights under Ancor's technology to
incorporate such technology into Inrange products for resale into the large data
center connectivity and storage area network market;
WHEREAS, Ancor desires to provide certain design and engineering services
to Inrange to modify and design four boards, all on the terms and conditions set
forth herein;
WHEREAS, Ancor has granted to Inrange certain warrants to purchase an
aggregate of 750,000 shares of Common Stock of Ancor, pursuant to a Warrant
Agreement dated of even date herewith; and
NOW, THEREFORE, in consideration of the premises contained in this
Agreement, the parties agree as follows:
1. DEFINITIONS
1.1 As used herein, the following capitalized terms shall have the
meanings indicated in this Section 1.1:
(a) "Ancor Products" shall mean the ASICs and the Software.
(b) "Ancor Technology" shall mean (i) U.S. Patent No. 4,821,034,
issued April 11, 1989, and any other patents or patent applications covering the
manufacture, use or sale of the Ancor Products and other Ancor products, (ii)
the Software, the design and layout of the ASICs and their circuits (whether on
the Boards or otherwise), and all other Ancor products, and all know-how,
copyrights, patents, trade secrets and other proprietary rights necessary for
the manufacture, use or sale of the Software, ASICs and their circuits (whether
on the Boards or otherwise), and all other Ancor products, and (iii) all
upgrades, corrections, modifications, improvements, additions to and derivatives
works of the Software, the design and layout of the ASICs and their circuits
(whether on the Boards or otherwise), and all other Ancor products, and all
know-how, copyrights, patents, trade secrets and other proprietary rights
related to such
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upgrades, corrections, modifications, improvements, additions to and derivative
works, which are developed by or for Ancor, but (iv) in all cases, excluding all
Developed Technology and all Inrange Technology that is included in, or used in
the manufacture, use or sale of, the Software, ASICs and their circuits, or the
Boards. The Ancor Technology is more particularly described on Exhibit 1 hereto,
and the parties expressly acknowledge that the Ancor Technology shall include
Ancor's existing ATM fibre channel tunneling and bridge technology, and all
upgrades, corrections, modifications, improvements, additions to or derivative
works thereof that are independently (i.e., without development funds by
Inrange) created by or for Ancor.
(c) "ASICs" shall mean Ancor's S-4.X and B-4.X series of Fibre
Channel Switch chips meeting the Description set forth on Exhibit 2, and any
upgrades, corrections, modifications, improvements, additions to or derivative
works thereof, including any redesigns thereof pursuant to Section 4.4 below.
The parties expressly acknowledge and agree that the term ASICS does not include
Ancor's S-16.X series of Fibre Channel Switch ASICs or any other current or
future products unless expressly agreed by the parties in writing.
(d) "Beta Level" shall mean that the Boards incorporate all of the
Ancor-provided operational functions set forth in the Descriptions. The
Ancor-provided portion of the design shall be stable and bug-free enough to
support field testing at a designated Inrange customer site to evaluate
operation under "real world" conditions. The FC/9000 Boards must also be able to
complete self-test. The CD/9000 Board must also be able to power-on and provide
the functionality of the Fibre Channel portion of the Board.
(e) "Boards" shall mean those four printed circuit boards to be
designed by Ancor and Inrange, on behalf of Inrange, pursuant to this Agreement,
which incorporate the ASICs and/or the Ancor Technology, and which meet the
Descriptions set forth on Exhibit 3, including all upgrades, corrections,
modifications, improvements, additions to or redesigns thereof as contemplated
hereunder.
(f) "Developed Technology" shall mean all upgrades, corrections,
modifications, improvements, additions to, derivative works or redesigns of the
Software, ASICs and their circuits, and the Boards, and all know-how,
copyrights, patents, trade secrets and other proprietary rights related to such
upgrades, corrections, modifications, improvements, additions to, derivative
works or redesigns which are developed by Ancor (whether alone or in conjunction
with Inrange or any third party) directly as a result of development efforts
funded by Inrange hereunder.
(g) "Descriptions" shall mean the descriptions of Ancor Products and
the Boards as set forth in Exhibits 2 and 3, respectively, as such descriptions
may be amended from time to time pursuant to the terms of this Agreement.
(h) "Inrange Market" shall mean the high end data center networking
and data center storage area network markets for the IBM and IBM-compatible MVS,
VM and TPF
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environments and any next generation of such environments. The parties expressly
acknowledge and agree that the Inrange Market excludes UNIX and Windows NT
storage area network markets.
(i) "Inrange Products" shall mean any of Inrange's fibre channel
connectivity products that incorporate the Ancor Products, Ancor Technology or
Developed Technology.
(j) "Inrange Technology" shall mean all designs, software, firmware
and other technology, and all upgrades, corrections, modifications,
improvements, additions to and derivative works thereof, and all related
know-how, copyrights, patents, trade secrets and other proprietary rights, that
Inrange owns or licenses as of the Effective Date or independently (i.e.,
without Ancor's or its agents' material assistance hereunder) creates or
acquires thereafter, and which are included in or used in the manufacture, use
or sale of the Software, ASICs and their circuits, the Boards, or the Inrange
Products.
(k) "Software" shall mean the computer software (including firmware)
developed by Ancor and incorporated into or associated with any of the ASICs and
all upgrades, corrections, modifications, improvements, additions to and
derivative works thereof. The parties acknowledge that portions of the Software
may be embedded as firmware.
(l) "Source Code" shall mean the Software in human readable form,
including programmers' comments, data files and structure, programming tools not
commercially available, technical specifications, flowcharts and logic diagrams,
schematics, annotations and documentation reasonably required or necessary to
enable an independent third-party programmer with a high level of programming
skill, to create a revised version of the object code version.
(m) "VHDL Simulation" shall mean VHDL design simulation for the
integration of Ancor and Inrange systems technologies to ensure interoperability
and performance.
2. TECHNOLOGY LICENSE
2.1 Grant of License. Subject to the terms and conditions of this
Agreement, Ancor hereby grants to Inrange a worldwide license, under the Ancor
Technology to (a) use, import, sell and offer for sale, but (subject to Section
5.1, 5.2 and 5.3 below) not make or have made, the ASICs solely for
incorporation into the Boards or the Inrange Products; (b) make, have made, use,
import, sell and offer for sale the Boards and Inrange Products; (c) use,
reproduce and distribute the Software, in object code format only, solely in
connection with the Boards and the Inrange Products; and (d) design,
manufacture, market, sell, lease, service and sublicense Inrange Products. In
addition, Inrange shall have the right to modify and use the Source Code to the
Software included in the Boards for the purposes of Inrange's development of
custom features. The license granted hereunder expressly excludes the rights to
modify, reengineer, reverse
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engineer (except as provided in Section 2.7(b)) or redesign the ASICs, and to
sell or distribute the ASICs at the chip level. Notwithstanding the foregoing,
the parties acknowledge that Inrange may sell the Boards in the Inrange Market
separately as after-market solutions for use with then-installed Inrange
products.
2.2 Covenant, Retained Rights of Ancor. Ancor agrees not to sell, lease,
license or distribute, or authorize or permit any third party to sell, lease,
license or distribute, for use in the Inrange Market (a) the ASICs (i.e., at the
chip-level), (b) the ASICs and Software (i.e., at the component level), or (c)
any other Ancor products (i.e., at the board or box level) that will be
front-ended or configured for the purpose of providing essentially the same
high-redundancy and scale as is provided in the Inrange Products. An example of
front-ending is McData's ES-4000 use of Brocade's Silkworm Fibre Channel
switches. The parties acknowledge and agree that the foregoing does not limit in
any way Ancor's right to sell, lease, license and distribute (a) to any third
party for use in the Inrange Market, Ancor's current and future products (i.e.,
at the board or box level, but excluding the Boards) that will not be
front-ended or configured for the purpose of providing essentially the same
high-redundancy and scale as is provided in the Inrange Products, and (b) the
ASICs, Software and any current or future Ancor products (i.e., at the board or
box level, but excluding the Boards) to any third party for use in any market
other than the Inrange Market. Subject to this Section 2.2, Ancor retains all
rights not expressly granted to Inrange hereunder, including without limitation,
the right to sell, lease, license and distribute the Ancor Products (whether on
a chip, component, board or box level, but excluding the Boards), on a worldwide
basis in all markets other than the Inrange Market. The parties shall negotiate
in good faith a reduction of the royalty rate provided for in Section 3.3 if a
final unappealable judgment from a court of competent jurisdiction prohibits
Ancor from fulfilling its obligations under this Section 2.2 which reduction
shall be effective from the date Ancor does not fulfill its obligations.
2.3 Sublicenses. The rights granted to Inrange under Section 2.1 may not
be sublicensed, transferred or assigned to any third party except with the prior
written consent of Ancor; which may not be unreasonably withheld, provided that
Inrange may sublicense its rights hereunder without such consent to any
affiliate of Inrange. As used herein, the term "affiliate" means any corporation
or business entity that controls, is controlled by or is under common control
with Inrange, with "control" meaning beneficial ownership of 50% or more of the
voting stock of, or a 50% or greater interest in the income of, such corporation
or other business entity, or the maximum ownership permitted by law or
administrative practice.
2.4 Distribution in Inrange Market. Inrange shall have the right to
distribute the Inrange Products through its direct sales force, OEM
manufacturers, systems integrators, distributors and the like; provided that (a)
any OEM, systems integrator or distribution agreement shall contain terms
consistent with the terms hereof; and (b) Inrange shall use good faith efforts
to enforce such agreements against such OEMs, system integrators, distributors
and the like.
2.5 Distribution of Software. Any and all distribution of the Software
hereunder shall be pursuant to the terms of Ancor's standard shrinkwrap end-user
license agreement. Any
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references herein to the "sale" of the Inrange Products shall mean to include,
with respect to the Software, only the licensing of that Software, in object
code format, pursuant to the terms of such license agreement.
2.6 Rights to S-16 Products. The parties agree to include the S-16.X
series of Fibre Channel Switch chips as an ASIC subject to this Agreement,
subject to (a) payment by Inrange of a non-refundable license fee of $4 million
and (b) renegotiation of royalties payable hereunder for both the S-4.X and
S-16.X series of ASICs, to be negotiated in good faith by the parties within
thirty (30) days after Inrange notifies Ancor in writing of its desire to
include the S-16.X series.
2.7 Licensee Obligations.
(a) Best Efforts. Inrange shall use its best efforts, consistent
with its business plan, to further the promotion, marketing, and distribution of
the Inrange Products.
(b) Reverse Engineering. Except to the extent that Inrange has
rights to Source Code, Inrange shall not reverse engineer, decompile or
disassemble the Software (including without limitation any portions thereof that
are embedded as firmware) and shall not knowingly allow any other person to do
so.
2.8 Prices to OEMs, Distributors. Inrange shall, in its sole discretion,
determine the prices to be paid by third parties for the Inrange Products.
2.9 OEM Agreement. The parties shall use their best efforts to negotiate
and execute, within thirty (30) days of the Effective Date, an OEM agreement the
terms of which shall include (a) the appointment of Inrange as a nonexclusive
worldwide OEM distributor of Ancor's standard products; (b) pricing for such
products on a most-favored customer basis with respect to other OEM distributors
purchasing similar volumes of such products, and (c) other customary and
reasonable terms to be mutually agreed by the parties.
3. LICENSE FEE AND ROYALTIES
3.1 License Fee. In consideration of the rights granted hereunder, Inrange
shall pay to Ancor a license fee of $* million, payable as follows: $* million
on the date this Agreement becomes effective as provided in Section 5.3 below,
$* million on or before December 15, 1998 and $* mi1lion on or before March 31,
1999. Such license fee shall be non-creditable and nonrefundable.
3.2 Prepaid Royalties. Inrange shall pay to Ancor, on or before March 31,
1999, $* million in prepaid royalties. In consideration of such prepayment,
Inrange shall be entitled to a dollar for dollar credit of $* against royalties
which accrue under Section 3.3. The unused balance of such prepaid royalties
shall be refunded to Inrange in the following events: (a)
*Confidential treatment requested with respect to this information.
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the occurrence of any of the conditions set forth in Section 5.3; (b) the
acquisition or merger of Ancor with, or the sale of all of its assets to, any
Inrange competitor, or (c) the failure of the ASICs to meet the Descriptions,
which failure is not remedied within ninety (90) days written notice thereof
from Inrange or if such failure is not susceptible of cure within such period,
the failure of Ancor to commence implementation of a mutually agreed plan to
remedy such failure within such period. If the prepaid royalties are refunded to
Inrange on or before December 31, 1999, pursuant to this Section 3.2, the full
royalties set forth in Section 3.3 below shall apply to sales of Inrange
Products which occur after the date of the event giving rise to the refund. If
the refund occurs on or after January 1, 2000, the royalty payable by Inrange on
Inrange Products pursuant to Section 3.3 below shall be discounted in an amount
equal to * of the refunded prepaid royalty multiplied by the number of years
elapsing be the date of payment of the prepaid royalty (March 31, 1999) and the
date of the event giving rise to the refund. The discount shall be applied, on a
dollar for dollar basis, to royalties accrued by Inrange commencing upon said
date, until such the total discount amount exhausted.
3.3 Royalties to Ancor.
(a) Subject to Sections 3.2 and 3.4, Inrange shall pay Ancor the following
royalties for each Inrange Product sold, licensed, leased, distributed or
otherwise transferred by or on behalf of Inrange to any third party:
Product Royalty
------- -------
FC/9000 *
CD/9000 *
Broadband *
All other Inrange Products *
Such royalty shall accrue on the date of sale, license, lease, distribution or
other transfer of such Inrange Product to such third party, and shall be payable
on a calendar quarterly basis, within 30 days of the end of the quarter in which
such royalty obligation accrued. Notwithstanding the generality of the
foregoing, no royalty obligation shall accrue upon the transfer of Inrange
Products to customers for the purpose of maintenance and repair if the transfer
of the Inrange Products is not revenue generating. Along with each such royalty
payment, Inrange shall provide a report showing the model/type and number of
units of Inrange Products (and the corresponding number of user ports, if
applicable) sold, licensed, leased, distributed or otherwise transferred during
such quarter. The above royalty rates may be renegotiated in good faith based on
market pricing, competitive pressures or Inrange's sales volume.
(b) Should Ancor, during the term of this Agreement, grant to any
independent third party selling fibre channel connectivity products a license of
Ancor Technology on terms which, when viewed in their entirety (including,
without limitation, initial license fees, royalty rates charged and minimum
annual royalties due) are more favorable than the terms granted to Inrange
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hereunder, then Ancor shall promptly provide to Inrange a correct and complete
summary of such more favorable terms.
(c) Inrange shall be entitled, upon written request within ninety (90)
days after receipt of such summary from Ancor, to have the royalty terms in this
Agreement replaced with the more favorable terms, and the parties will effect an
appropriate amendment to this Agreement which shall be effective as of the date
Ancor receives such request from Inrange. Such amendment shall not affect any
transactions by the parties hereunder prior to its effective date. In no case
shall this provision be construed to impose any obligation on Ancor to repay to
Inrange any royalties previously paid pursuant to this Agreement or any
antecedent license agreement concerning the Ancor Technology.
3.4 Limitation on Exclusivity. The anticipate that, by December 31,2000,
Inrange Products shall have attained at least * market share (the "Minimum
Market Share"). Thereafter, the Minimum Market Share for each year this
Agreement is in effect will be mutually agreed to by the parties by December 31
of the prior year (i.e., the Minimum Market Share for 2001 will be agreed to by
December 31, 2000). If the parties fail to agree whether the actual market share
attained by Inrange Products for a particular year meets the Minimum Market
Share for such year, then each party will select one (1) independent nationally
recognized market analyst within forty-five (45) days of the end of such year to
determine and certify whether the applicable Minimum Market Share was met during
the prior year. If the two analysts do not agree, then they shall appoint a
third analyst, and the conclusion of two of the three analysts shall control. If
two of the analysts determine that the Minimum Market Share was not met in a
particular year, they shall also be required to deliver, by the end of the first
quarter of the next calendar year, a written report setting forth in detail the
reasons for the failure and make recommendations so Inrange may attain the
Minimum Market Share by the end of the second fiscal quarter following delivery
of such report. Inrange shall adopt a specific, mutually agreeable plan based on
the analysts' recommendations so as to achieve the Minimum Market Share in the
next year. The costs of the analysts shall be borne equally by the parties. If
Inrange does not meet the Minimum Market Share by the end of the second fiscal
quarter following delivery of the report in any particular calendar year, then
Ancor may, at its option terminate the covenant set forth in Section 2.2.
Notwithstanding the foregoing, Ancor may not exercise this option referred to in
the preceding sentence if the analysts conclude that the failure of Inrange to
meet the Minimum Market Share in a particular calendar year is principally due
to any factor within the reasonable control of Ancor, including, without
limitation, problems with ASICs' supplier(s) or defects in ASIC and Board
designs.
3.5 Audit Rights. Inrange shall keep adequate and complete books and
records related to the sales of the Inrange Products for a period of no less
than five (5) years following completion of the fiscal year in which the sale of
the Inrange Product occurred. Such books and records shall include all
information necessary to verify the total amount and computation of the sales of
such Products. Upon request, but no more than once per calendar year, Inrange
shall provide Ancor's independent auditors with access, during regular business
hours and upon
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reasonable prior notice, and subject to the undertakings contained in this
Agreement, to Inrange's books and records relating to the Inrange Products
solely for the purpose of verifying the accuracy of the calculations hereunder.
If such audit shows any underpayment or overpayment, a correcting payment or
refund, together with interest at the current prime lending rate established by
leading New York banks as published in The Wall Street Journal, shall be made
within thirty (30) days of completion of such audit and submission of the
results thereof, with details of the calculations included therein. The costs of
such audit shall be borne by Ancor; provided that Inrange shall reimburse Ancor
its actual out-of-pocket expenses of such audit, if such audit reveals any
underpayment of amounts owing hereunder of more than ten percent (10%) for any
period covered by such audit.
3.6 Tax Withholding. If any taxes are imposed as a result of this
Agreement or the performance of the parties hereunder, such taxes shall be borne
and paid by the party required to do so under applicable law or treaty. If law
or regulations in any country require that taxes be withheld, Inrange will (a)
deduct those taxes from the applicable royalty payment, (b) timely pay the taxes
to the proper taxing authority, and (c) furnish Ancor with a certificate of the
relevant tax authorities within such country, in a form issued by such tax
authorities and reasonably acceptable to the U.S. Internal Revenue Service,
documenting payment of such taxes.
4. DEVELOPMENT OF BOARDS, TECHNICAL ASSISTANCE AND TRAINING
4.1 Development. Ancor agrees to design and develop, on behalf of Inrange,
the four (4) Boards in accordance with the Descriptions and the development
program set forth on Exhibit 4, including the project development schedule
established as part of the development program. The parties agree to fully
cooperate in developing the Boards, and to provide all reasonably necessary
information and resources so that the contemplated development program, along
with its schedule, may be met; provided that if such schedule is not met due to
the fault of a party, the other party shall not be deemed to be in default of
this provision. Each party shall designate an individual to coordinate
communications between the parties with respect to development and technical
assistance activities hereunder.
4.2 Cost of Development. In consideration of such design and development
services hereunder, Inrange agrees to pay Ancor $* in development fees for the
first three (3) Boards listed on Exhibit 3, payable as follows: $* or each of
the three (3) Boards upon each of the following events: (1) start of the
functional requirements document therefor, (2) completion of the Beta Level
design of the applicable Board as agreed by Inrange, such agreement not to be
unreasonably withheld, and (3) final release by Inrange of the applicable Board.
Inrange also agrees to pay Ancor for development of the Internet Protocol or
Tunneling Board for Inrange's broadband products at a rate of $* per staff month
(i.e., 180 hours), not to exceed $* Ancor's responsibility in providing
assistance is limited to the Fibre Channel portion of the Board and layout, and
does not include changes to the ASICs for this Board. Such payments shall be
non-creditable and non-refundable.
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4.3 Additional Development. Upon Inrange's request, Ancor shall provide
reasonable development services, in addition to those development services
provided under Section 4.1, for development of additional boards incorporating
the ASICs, subject to availability of appropriate engineering personnel and
mutual agreement on the scope of such development services, at the rate of $*
per staff month.
4.4 ASIC Redesign. If, during the term of this Agreement, the ASICs become
obsolete, Inrange may notify Ancor of such obsolescence and the parties shall
negotiate in good faith to determine what changes, if any, need to be made to
the ASICs and how the costs of such development should be allocated between
them. Ancor shall provide to Inrange within fourteen (14) days (or such longer
period as the parties may agree) of Inrange's notice a proposed development plan
for such change and the parties shall negotiate a mutually agreed final
development plan within fourteen (14) days (or such longer period as the parties
may agree) of Inrange's receipt of Ancor's submittal. For the purpose of the
preceding sentence, "obsolete" shall mean that the ASICs have become, for any
reason, incapable of providing the features contracted for in this Agreement, in
accordance with the Descriptions, and/or remaining current with industry
standards (applicable only to the Inrange Market) and competitive products in
the Inrange Market, on a going-forward basis. The parties also understand that
market changes may necessitate changes to the ASICs. If the necessary
non-recurring engineering required for such development affects or responds to
all markets for the ASICs, Ancor shall bear the major portion of the costs of
such non-recurring engineering, and if the necessary non-recurring engineering
primarily affects or responds to the Inrange Market, Inrange shall bear the
major portion of costs for such non-recurring engineering. Notwithstanding the
foregoing, Ancor shall bear the costs of assuring backward compatibility of any
redesign of the ASICs. Notwithstanding any ASIC redesign hereunder, during the
term of this Agreement, Ancor covenants, at its cost, to maintain the
functionality of the ASICs, as set forth in the Description for the ASICs and to
support then current fibre channel standards for all Class 1, 2 and 3 of fibre
channel connectivity. Within fourteen (14) days (or such longer period as the
parties may agree) of the date of Inrange's notice of noncompliance, Ancor shall
produce an action plan acceptable to Inrange for the correction of an ASIC
redesign that is not backward compatible or fails to conform to the Descriptions
or the then current fibre channel standards.
4.5 Technology Transfer and Technical Assistance. Ancor shall not be
required hereunder to produce or provide detailed documentation for the ASICs,
but will work with Inrange to transfer necessary Ancor Technology relating to
applying the ASICs to the Boards in a timely manner. Such transfer shall be
accomplished by allowing Inrange engineers to monitor the Board design process
and to attend design reviews for the Boards, and providing to Inrange pertinent
technical information and/or documentation as reasonably required to
successfully complete the transfer. Inrange shall allocate* to monitor the Board
design process, attend such design reviews for the Boards and participate in the
training to be provided pursuant to Section 4.6. Ancor and Inrange shall also
engage in joint VHDL Simulation to enable Inrange to complete systems
integration of the ASICs into the Inrange Products, and shall use their best
efforts to resolve integration issues. In addition, Ancor will make available to
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Inrange an engineer to provide "Application Engineer" Level assistance on
Inrange Products that incorporate the ASICs on a dedicated full time basis, for*
during the development of such Inrange Products or completion of the Boards,
whichever is longer,* , and thereafter, on an as-needed part time basis, at a
rate of * per staff month (i.e., 180 hours). Ancor further agrees to make
available sufficient technical resources to perform timely (i.e., within five
days unless otherwise agreed by both parties) and effective technical support to
correct design defects and perform bug fixes on the Boards.
4.6 Training. Ancor shall provide reasonable training and documentation,
at*, in the use of the object code of the Software to Inrange's technical staff,
and in the use of the Ancor Products generally, to Inrange's sales and support
personnel; provided, however, that Inrange shall bear the travel and living
expenses of such personnel. The parties agree that such training shall follow
the "train the trainer" model.
4.7 Sales and Marketing Support. Ancor shall provide Inrange with limited
sales and marketing support as reasonably requested by Inrange, including visits
to Inrange customers, participation by Ancor in one sales meeting per year and
in one Inrange Customer Advisory Council meeting per year; provided, however,
that Inrange shall bear the travel and living expenses of such personnel.
5. PURCHASE AND SUPPLY OF ASICS
5.1 Purchase from Ancor's Third Party Manufacturer. Inrange acknowledges
that the ASICs are manufactured for Ancor by a third party foundry, LSI Logic
("LSI"), and that Inrange shall purchase all ASICs directly from LSI or its
distributors pursuant to written purchase orders submitted by Inrange directly
to LSI or its distributors. Ancor agrees to authorize LSI and its distributors,
in writing, to supply the ASICs directly to Inrange solely for incorporation
into the Inrange Products and resale into the Inrange Market. If Inrange cannot
agree to terms with LSI, then Ancor shall supply ASICs to Inrange pursuant to
written purchase orders, at Ancor's cost plus administrative expenses of * which
administrative expenses shall be capped at * per calendar year.
5.2 Continuing Supply, Price and Quality of ASICs. Notwithstanding Section
14.6, Ancor agrees that if LSI or its distributors do not provide ASICs in the
quantities or at the price agreed with Inrange, or provide ASICs that do not
meet the performance warranties agreed with Inrange (as set forth in Exhibits 1,
2 and 3 hereof), Inrange shall so notify Ancor in writing and Ancor shall use
its best efforts to remedy such failures within forty-five (45) days of such
notice to Ancor, including if the parties deem appropriate after good faith
negotiations, locating and qualifying a second manufacturer for the ASICs and
porting the necessary Ancor Technology to such second manufacturer. The parties
shall mutually agree on how the costs of such technology porting shall be borne.
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5.3 Technology Escrow. As conditions precedent to the effectiveness of
this Agreement and Inrange's obligation to make payments hereunder: (a) the
parties shall execute, with Data Securities International, Inc. ("DSI"), as
escrow agent, a Preferred Escrow Agreement in the form attached hereto as
Exhibit 6 (the "Escrow Agreement"); (b) Ancor shall deliver to DSI the deposit
materials in accordance with Sections 1.1 and 1.2 of the Escrow Agreement; and
(c) the deposit materials shall have been verified by Inrange, and inspected and
accepted by DSI pursuant to Sections 1.3 and 1.4 of the Escrow Agreement. Such
escrowed technology shall include, without limitation, the Ancor Technology for
the manufacture and modification of the ASICs and the Source Code for the
Boards. Ancor shall update such escrow account from time to time during the term
of this Agreement, but no less than once in every six (6) month period, in order
to keep such account current. Inrange shall bear the costs and expenses of such
escrow account. Such escrow agreement shall provide Inrange with access to the
Ancor Technology in the following events:
(a) (i) the entry of an order for relief in a proceeding in
bankruptcy (other than Chapter 11 of Title 11 of the U.S.
Code, as the same may be amended) in which Ancor is the named
debtor; (ii) Ancor's making of an assignment for the benefit
of Ancor's creditors, (iii) the appointment of a receiver for
Ancor; (iv) the filing of (1) any bankruptcy proceeding
against Ancor, other than Chapter 11 of Title 11 of the U.S.
Code, (2) any proceeding for an assignment for the benefit of
Ancor's creditors or (3) any proceeding for appointment of a
receiver or custodian of the assets and property of Ancor,
which proceeding shall be consented to or acquiesced to by
Ancor or has not been discharged or terminated within ninety
(90) days; (v) the rejection by Ancor or any trustee of Ancor
of the Technology License agreement pursuant to 11 U.S.C.
ss.365; or (vi) following the filing of a proceeding under
Chapter 11 of Title 11 of the United States Code, the failure
by Ancor or its trustee to perform its obligations under the
Technology License Agreement;
(b) Ancor ceases to operate as a business for a period of thirty
(30) days;
(c) Any Change of Control (as defined herein) of Ancor by or with
CNT, Cornet, McData, IBM, Brocade or EMC or their respective
successors or assigns. The term "Change of Control" shall
mean. either (i) the acquisition by any individual, entity, or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act as amended (the "Exchange Act"))
of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either
(A) the then outstanding shares of common stock of Ancor or
(B) the combined voting power of the then outstanding voting
securities of Ancor entitled to vote generally in the election
of directors; or (ii)
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consummation of a reorganization, merger or consolidation, or
sale or other disposition of all or substantially all of the
assets of Ancor.
(d) Any Change of Control of Ancor that is not approved by a
majority of the Continuing Directors (as defined herein). The
term "Continuing Directors" shall mean those individuals who
are members of Ancor's Board of Directors on the date hereof
and any individual who subsequently becomes a member of
Ancor's Board of Directors, if such individual's nomination
for election or election to Ancor's Board of Directors is
approved by a vote of at least a majority of the Continuing
Directors; provided that no individual shall be considered a
Continuing Director if such individual initially assumed
office as a result of either an actual or threatened "Election
Contest" (as described in Rule 14a-1 promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of any entity or person
other than the Ancor Board of Directors (a "Proxy Contest")
including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest.
(e) Ancor or any successor thereto has materially breached this
Agreement, and has failed to cure such breach within thirty
(30) days written notice hereof from Inrange or, if such
breach is not susceptible of cure within such period, has
failed to commence such cure within such period; or
(f) LSI (or any successor foundry for the ASICs) or Ancor fails to
supply the ASICs in the quantities subject to purchase orders
accepted by LSI (or any successor foundry) or Ancor, as
applicable, pursuant to the supply arrangement between LSI (or
any successor foundry), or Ancor and Inrange, as contemplated
under Section 5.1 for a period of thirty (30), or access to
such ASICs is materially disrupted for a period of thirty (30)
days; provided that Ancor has not created a plan to cure such
failure within thirty (30) days that is reasonably acceptable
to Inrange.
If Inrange is entitled to access such Ancor Technology, Inrange shall have the
nonexclusive, nontransferable and non-sublicenseable (except as expressly
provided below) right, pursuant to such escrow agreement, to design, modify, use
and create derivative works of the Ancor Technology solely for the purposes of
(1) manufacturing or having manufactured the ASICs solely for incorporation into
the Boards or the Inrange Products; (2) modifying the ASICs as contemplated in
Section 4.4; (3) modifying the Boards or Inrange Products; (4) using,
reproducing and distributing the Software (in object code format only) in
connection with the Boards and the Inrange Products; (5) designing,
manufacturing, marketing, selling, leasing,
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servicing and sublicensing Inrange Products, and for no other purpose, and
Inrange shall continue to pay royalties with respect to the Inrange Products
pursuant to Section 3.3. In addition, Ancor agrees to provide reasonable
assistance to Inrange, to the extent that Ancor has engineering staff then
available, to achieve an orderly transition from ASIC to technology utilization.
Notwithstanding the foregoing, if Inrange is required to transfer any of the
Ancor Technology to a third party in order to have the ASICs manufactured as
contemplated above, then (a) only such Ancor Technology as is necessary to
manufacture the ASICs may be transferred, and (b) such third party shall execute
a written nondisclosure agreement that is as least as protective of Ancor's
rights in such transferred Ancor Technology as is provided hereunder. Upon any
release of the deposit materials in escrow to Inrange pursuant to such escrow
agreement: (1) Ancor shall have no further obligation to maintain or update the
escrow account; (2) Ancor's obligations under Sections 4.3, 4.4, 4.5, 4.6 and
4.7 shall only continue for a period of two years following the release of the
materials in escrow, provided, however, Ancor's obligation to redesign ASICs
under Section 4.4 shall be limited to*; and (3) Ancor's obligations under
Section 5.2 shall terminate, provided, however, if Inrange thereafter proposes
to locate and qualify a second manufacturer for the ASICs and port the necessary
Ancor Technology to such second manufacturer (collectively, a "Second
Sourcing"), (i) Ancor will participate and provide technical assistance with
respect to such Second Sourcing only to the extent mutually agreed by the
parties after good faith negotiations and (ii) Inrange shall be entitled to a
discount of * off the royalties payable to Ancor under Section 3.3 until such
time as Inrange has recovered, through such discounts, the costs of the Second
Sourcing (excluding any costs borne by Ancor), which costs shall be documented
by Inrange to Ancor within a reasonable period of time after such costs are
incurred.
6. EXPORT CONTROL AND OTHER GOVERNMENTAL APPROVALS
6.1 Import Documentation. If applicable, Inrange shall be responsible for
obtaining all licenses and permits required to import the Ancor Products into a
particular country in accordance with applicable laws or regulations of such
country.
6.2 Export Regulations. If applicable, Inrange shall supply Ancor on a
timely basis with all necessary information and documentation requested by
governmental authorities for export of the applicable Products in accordance
with U.S. export control laws or regulations.
6.3 Written Assurance. If applicable, Inrange hereby assures Ancor that:
(a) Inrange shall not reexport, directly or indirectly, the Products or
the product of any Products to any country to which such reexport is
not permitted under a general license established under the United
States Export Administration Regulations unless and until Ancor
shall have applied for and obtained, at the request and expense of
Inrange, an individual validated license from the Office of Export
Administration, United States Department of Commerce for such
reexport.
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(b) Inrange's undertaking in subsection (a) of this Section shall apply
to all sales of Products occurring after the termination of this
Agreement.
6.4 Compliance with Laws. Inrange shall comply with all applicable laws
affecting this Agreement and its performance hereunder and, without limiting the
generality of the foregoing, shall maintain all registrations with governmental
agencies, commercial registries, chambers of commerce, or other offices which
may be required under local law in order to enable it lawfully to conduct its
business and perform its obligations under this Agreement. In addition, Inrange
acknowledges that Ancor is subject to certain United States laws, including but
not limited to the Foreign Corrupt Practices Act, which apply to activities
carried out on its behalf outside the United States and agrees to neither take
nor omit to take any action if such act or omission, as the case may be, might
cause Ancor to be in violation of any such law. Upon written notice from Ancor,
Inrange shall provide such information as Ancor shall reasonably consider
necessary to verify compliance by Inrange with the provisions of this Section
6.4.
7. CONFIDENTIALITY
7.1 Confidential Information; Term. All Confidential Information (as
defined in Section 7.2 below) shall be deemed confidential and proprietary to
the party disclosing such information hereunder. Each party may use the
Confidential Information of the other party during the term of this Agreement
only as permitted or required for the receiving party's performance hereunder.
The receiving party shall not disclose or provide any Confidential Information
to any third party and shall take reasonable measures to prevent any
unauthorized disclosure by its employees, agents, contractors or consultants
during the term hereof including appropriate individual nondisclosure
agreements. The foregoing duty shall survive any termination or expiration of
this Agreement for a period of five (5) years.
7.2 Definition. As used in this Agreement, the term "Confidential
Information" shall mean all information (a) designated by a party as
confidential and which is disclosed by Ancor to Inrange, or is disclosed by
Inrange to Ancor; (b) is embodied in the Ancor Products or Inrange Products,
regardless of the form in which it is disclosed; (c) the Source Code, or (d) any
information relating to markets, customers, products, patents, inventions,
procedures, methods, designs, strategies, plans, development efforts, assets,
liabilities, prices, costs, revenues, profits, organization, employees, agents,
resellers or business in general, or, the algorithms, programs, user interfaces
and organization of the disclosing party's Products.
7.3 Exclusions. The following shall not be considered Confidential
Information for purposes of this Article 7:
(a) Information which is or becomes in the public domain through no
fault or act of the receiving party;
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(b) Information which was independently developed by the receiving party
without the use of or reliance on the disclosing party's
Confidential Information;
(c) Information which was provided to receiving party by a third party
under no duty of confidentiality to the disclosing party; or
(d) Information which is required to be disclosed by law, provided,
however, prompt prior notice thereof shall be given to the party
whose Confidential Information is involved.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1 Representations, Warranties and Covenants of Inrange. Inrange hereby
represents and warrants to Ancor that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the state and country of its
incorporation and has the corporate power to own its assets and
properties and to carry on its business as now being and heretofore
conducted;
(b) It is duly authorized to execute and deliver this Agreement and to
perform its obligations and hereunder;
(c) The execution, delivery and performance of this Agreement have been
duly authorized, do not violate its certificate of incorporation,
bylaws or similar governing instruments or applicable law and do
not, and with the passage of time will not, materially conflict with
or constitute a breach under any other agreement, judgment or
instrument to which it is a party or by which it is bound;
(d) To the best of Inrange's knowledge (without having conducted any
intellectual property search), the Inrange Products do not, and the
Ancor Products to the extent modified by Inrange (or its agents or
sublicensees) and their use as permitted or contemplated hereunder
shall not infringe upon any third party intellectual property
rights, including without limitation any patent, copyright, mask
work registration or trade secret.
8.2 Representations, Warranties and Covenants of Ancor. Ancor hereby
represents and warrants to Inrange that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the state and country of its
incorporation and has the corporate power to own its assets and
properties and to carry on its business as now being and heretofore
conducted;
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(b) Ancor is duly authorized to execute and deliver this Agreement and
to perform its obligations hereunder;
(c) The execution, delivery and performance of this Agreement have been
duly authorized, do not violate its Articles of Incorporation or
bylaws or applicable law and do not, and with the passage of time
will not, materially conflict with or constitute a breach under any
other agreement, judgment or instrument to which it is a party or by
which it is bound;
(d) To the best of Ancor's knowledge (without having conducted any
intellectual property search), the Ancor Products (except to the
extent modified by Inrange or its agents or sublicensees) and their
use as permitted or contemplated hereunder, do not and shall not
infringe upon any third party intellectual property rights,
including without limitation any patent, copyright, mask work
registration or trade secret;
(e) Ancor has the right to grant the licenses granted herein, and
(f) The design of the Ancor Products and portions of the Boards to be
designed by Ancor as contemplated hereunder, will meet the
Descriptions; Inrange's sole remedy and Ancor's exclusive liability
for any breach of this warranty shall be for Ancor to redesign the
Ancor Products and/or the Boards to correct such non-conformance, at
no expense to Inrange.
8.3 Warranty Disclaimers and Limitations. EXCEPT AS SET FORTH IN SECTION
8.2 ABOVE, ANCOR MAKES NO WARRANTIES TO INRANGE OR ITS CUSTOMERS WITH RESPECT TO
THE ANCOR TECHNOLOGY, THE ANCOR PRODUCTS OR THE BOARDS, EXPRESS OR IMPLIED, AND
SPECIFICALLY, WITHOUT LIMITATION, ANCOR DISCLAIMS ANY IMPLIED WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE. EXCEPT AS SET FORTH ABOVE, ANCOR NEITHER
ASSUMES NOR AUTHORIZES ANY PERSON TO ASSUME ANY LIABILITY OR WARRANTY IN
CONNECTION WITH THE ANCOR PRODUCTS AND BOARDS. ANCOR DOES NOT WARRANT THAT THE
USE OR OPERATION OF THE ANCOR PRODUCTS AND BOARDS WILL BE UNINTERRUPTED OR
ERROR-FREE.
9. OWNERSHIP OF INTELLECTUAL PROPERTY
9.1 Ownership of Ancor Technology. Inrange acknowledges that Ancor shall
retain the entire right, title and interest in and to the Ancor Technology (and
all proprietary rights therein, including, without limitation, all patents,
copyrights and trade secrets). Inrange shall do or cause to be done all matters
and things as may reasonably and lawfully be required to secure to Ancor the
full right of ownership, use and enjoyment thereof in and for all countries.
Upon request of Ancor, all of Inrange's agents, servants, representatives and
employees performing
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work pursuant to or related to this Agreement shall be required to confirm that
all right, title and interest therein remain in Ancor.
9.2 Ownership of Inrange Technology. Ancor acknowledges that Inrange shall
retain the entire, right, title and interest in and to all Inrange Technology
(and all proprietary rights therein, including, without limitation, all patents,
copyrights and trade secrets). Ancor shall do or cause to be done all matters
and things as may reasonably and lawfully be required to secure to Inrange the
full right of ownership, use and enjoyment thereof in and for all countries.
Upon request of Inrange, all of Ancor's agents, servants, representatives and
employees performing work pursuant to or related to this Agreement shall be
required to confirm that all right, title and interest therein remain in
Inrange.
9.3 Developed Technology. All Developed Technology (and all proprietary
rights therein, including, without limitation, all patents, copyrights and trade
secrets) shall be jointly owned by the parties, and each party shall be free to
use such Developed Technology without any accounting to the other party during
the term of this Agreement and thereafter.
9.4 Registration and Protection. The parties agree that they shall
cooperate reasonably and in good faith to jointly decide the manner in which
their joint interests in the Developed Technology shall be perfected and
enforced. Specifically, the parties shall jointly decide: (i) the subject matter
for which patent applications and applications for copyright registrations will
be prepared; (ii) the resources to be utilized in the preparation and
prosecution of such applications; (iii) the parties' rights to review and/or
approve such applications and other papers prior to filling in, or submission
to, the United States Patent and Trademark Office and/or with the Registrar of
Copyrights; (iv) the allocation of expenses incurred in the preparation,
prosecution and maintenance of patent applications, patents, and copyright
registrations and the like; (v) matters regarding the enforcement, through
litigation, licensing or otherwise of the technology against third parties; or
(vi) as mutually agree otherwise by the parties. Should a party choose not to or
fail to participate in securing or protecting an element of such Developed
Technology, the other party may secure or protect its claims to such technology
and shall be entitled to reap the benefit of its efforts without accounting to
the other party, including without limitation retaining the full amount of any
settlement or damage award from a third party.
9.5 Ownership and Use of Boards. The parties acknowledge and agree that
Inrange shall own all right, title and interest into the embodiment of the
Boards, subject to Ancor's ownership of the Ancor Technology included therein,
all of which is licensed to Inrange pursuant to Section 2.1 (and, if applicable,
Section 5.3) hereof. Thus, the parties agree that Ancor shall not be entitled to
make, have made, import, sell and offer for sale the Boards to any third party
during the term of this Agreement and thereafter, as such Boards contain Inrange
Technology that is owned by Inrange. Further, Inrange shall not be entitled to
make, have made, import, sell and offer for sale the Boards during the term of
this Agreement and thereafter, except as expressly permitted, and only during
the term of, the license to the Ancor Technology granted to Inrange pursuant to
Section 2.1 (and, if applicable, Section 5.3) hereof.
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10. TRADEMARKS
10.1 Use of Trademarks. Ancor hereby grants to Inrange a nonexclusive,
nontransferable, and royalty-free license to use Ancor's Trademarks set forth on
Exhibit 5 ("Ancor Trademarks), solely in connection with the distribution,
promotion, advertising and maintenance of the Inrange Products. All such Ancor
Trademarks shall be used by Inrange in accordance with Ancor's standards,
specifications and instructions communicated to the licensee, but in no event
beyond the term of the license as provided in this Agreement. Ancor may inspect
and monitor Inrange's activities to ensure that such use of the Ancor Trademarks
is in accordance with such standards, specifications and instructions. Inrange
is not granted any right, title or interest in such Ancor Trademarks other than
the foregoing limited license, and Inrange shall not use any of Ancor's
trademarks as part of its corporate or trade name or permit any third party to
do so. Inrange shall not adopt, use or register any words, phrases or symbols
which are identical to or confusingly similar to any of the Ancor Trademarks.
10.2 Registration. Ancor shall use its best efforts to register the Ancor
Trademarks, when and if it determines, in its sole discretion, that registration
is necessary or useful to the successful distribution of the Inrange Products.
Ancor shall be the sole party to initiate any such registration and shall bear
all the expenses thereof.
10.3 Markings. The licensee shall not remove or alter any of Ancor's trade
names, trademarks, copyright notices, serial numbers, labels, tags or other
identifying marks, symbols or legends affixed to, any of Ancor Products,
documentation or containers or packages.
11. INDEMNIFICATION
11.1 Indemnification by Ancor. Ancor hereby agrees to indemnify, defend
and hold Inrange harmless from any third party suit, claim or other legal action
("Legal Action") including any reasonable costs or legal fees thereby incurred
by Inrange that alleges the use of the Ancor Technology infringes any patent,
copyright, or trade secret. If Ancor Technology is found to infringe any such
third party intellectual property right in such a Legal Action, at Ancor's sole
discretion and expense, Ancor shall (a) obtain a license from such third party
for the benefit of Inrange and its customers; or (b) replace or modify the
foregoing so that it is no longer infringing.
11.2 Limitation. The foregoing indemnification obligations of Ancor shall
not extend to, and Ancor shall have no liability for, (i) any combination or use
of the Ancor Technology with materials or technology not furnished by Ancor if
such infringement would have been avoided by use of the Ancor Technology alone,
and (ii) any modification of the Ancor Technology by any party other than Ancor
if the infringement would have been avoided without such modification.
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11.3 Indemnification by Inrange. Inrange hereby agrees to indemnify,
defend and hold Ancor harmless from any Legal Action including any reasonable
costs or legal fees thereby incurred by Ancor, (a) that alleges the manufacture,
use or sale of the Inrange Products (other than the Ancor Technology contained
therein), Ancor Products (to the extent modified by Inrange or its agents or
sublicensees), or any of them, infringe any patent, copyright, or trade secret;
or (b) that arises or results from the marketing, distribution, maintenance and
support of the Inrange Products by Inrange (including, without limitation, any
warranties or representations made by Inrange or any of its subdistributors or
agents with respect to such Products or in connection with such activities of
Inrange or any of its subdistributors or agents) or any unfair business practice
of Inrange or any of its subdistributors or agents, except to the extent Ancor
is required to indemnify Inrange pursuant to Section 11.1 above.
11.4 Indemnification Procedures. The indemnified party shall give written
notice of any Legal Action promptly after its first actual knowledge thereof,
and any failure to give such prompt notice to the indemnifying party shall
terminate the indemnifying party's duty of indemnification hereunder if such
failure to notify promptly materially prejudices the indemnifying party's
ability to defend. The indemnifying party shall have sole and exclusive control
of the defense of any Legal Action, including the choice and direction of any
legal counsel. The indemnified party may not settle or compromise any Legal
Action without the written consent of the indemnifying party.
11.5 Sole Obligation. THE FOREGOING STATES THE SOLE OBLIGATION AND THE
EXCLUSIVE LIABILITY OF THE PARTIES FOR ANY INFRINGEMENT OR CLAIMS OF
INFRINGEMENT OF ANY PATENT, COPYRIGHT, TRADEMARK, TRADE SECRET OR OTHER
INTELLECTUAL PROPERTY RIGHT.
12. TERM AND TERMINATION
12.1 Term. The term of this Agreement shall commence on the Effective Date
and shall continue until the fifth anniversary hereof, and shall thereafter
automatically renew for additional one year terms unless either party gives
ninety (90) days' notice to the other party of its intent not to renew.
12.2 Termination. Notwithstanding Section 12.1, this Agreement may be
terminated prior to the expiration hereof as follows:
(a) Either party hereto may terminate this Agreement at any time
upon written notice to the other party if a petition of any type as to the other
party's bankruptcy is filed (which petition is not dismissed within ninety (90)
days), is declared bankrupt, makes an assignment for the benefit of creditors,
goes into liquidation or receivership;
(b) Either party may, at its option, terminate this Agreement upon
written notice to the other party if the other party is in material breach of
this Agreement and has, within
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thirty (30) days of receipt of written notice thereof from the first party, (i)
failed to cure such breach, or (ii) failed to diligently pursue corrective
action with respect to any such material breach that cannot be reasonably cured
within thirty (30) days; or
(c) Ancor may, at its option, terminate this Agreement upon written
notice to Inrange if the escrow agreement described in Section 5.3 is terminated
due to Inrange's uncured material breach of the license grant and/or
confidentiality provisions of such escrow agreement, provided that such
provisions contain terms identical to the license terms in Section 5.3 and the
confidentiality terms in Section 7.
12.3 Rights and Obligations on Expiration or Termination of this
Agreement. In the event of the expiration or termination of this Agreement for
any reason, the parties shall have the following rights and obligations:
(a) Except as expressly provided in this Section 12.3, expiration or
termination of this Agreement shall not affect any rights and liabilities of the
parties that accrue prior to expiration or termination hereof;
(b) Each party shall return to the other or destroy, at the other
party's instruction, all Confidential Information of the other party, including
advertising matter; subject to each party's right to retain specific
Confidential Information that is required for the exercise of rights hereunder
that survive such expiration or termination (e.g., Inrange's right to continue
to use the Ancor Technology if its license panted pursuant to Section 2.1 is not
terminated).
(c) Except if this Agreement is terminated by Ancor pursuant to
Section 12.2 hereof, (i) Ancor shall continue to authorize LSI and its
distributor, or such other foundry as shall at the time be manufacturing ASICs,
in writing, or shall itself supply Inrange (as provided in Section 5.1), ASICs
directly to Inrange for its use as provided in Section 2.1 above, (ii) Inrange's
licenses granted pursuant to Section 2.1 (along with the restrictions in Section
2.3, 2.4, 2.5 and 2.7) and 10.1 hereof shall continue (until such time as an
event described in paragraph (f) below occurs), (iii) the parties' respective
rights and obligations under Sections 2.2 and 3.4 shall continue until the later
of (A) the second anniversary of the effective date of such expiration or
termination or (B) the seventh anniversary of the Effective Date (or until such
time as an event described in paragraph (f) below occurs in which case such
rights and obligations shall immediately terminate), and (iv) unless Inrange has
the right to obtain a release of escrow pursuant to escrow agreement described
in Section 5.3 prior to the date of termination, such escrow agreement shall
continue until such time as an event described in paragraph (f) below occurs.
(d) If this Agreement is terminated by Ancor pursuant to Section
12.2 hereof, (i) Inrange shall have no right to continue to obtain ASICs
hereunder, (ii) Inrange's license to the Ancor Technology and Ancor Trademarks
granted in Section 2.1 and 10.1 hereof shall immediately terminate, and (iii)
Inrange's license to the Ancor Technology pursuant to the
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escrow agreement described in Section 5.3 shall immediately terminate and the
parties shall immediately terminate such escrow agreement (if it has not been
previously terminated); provided, however, Inrange shall have the right to
obtain ASICs and to use the Ancor Technology to support Inrange Products
transferred by or on behalf of Inrange to any third party prior to the
termination.
(e) Any expiration or termination of this Agreement (i) shall not
terminate Inrange's obligation to pay royalties as provided in Section 3.3, (ii)
shall terminate Ancor's obligation to update the escrow account as described in
Section 5.3, and (iii) shall terminate Ancor's obligations under Section 4.4.
(f) If, after expiration or termination of this Agreement, Inrange
retains the licenses granted in Section 2.1 and 10.1 hereof, and the right to
continue to obtain ASICs as described in paragraph (c) above, all such licenses
and rights shall be terminable at any time thereafter by Ancor upon with written
notice to Inrange if:
(i) a petition of any type as to Inrange's bankruptcy is
filed (which petition is not dismissed within ninety
(90) days), Inrange is declared bankrupt, makes an
assignment for the benefit of creditors, goes into
liquidation or receivership;
(ii) Inrange is in material breach of its surviving
obligations under this Agreement (e.g., obligation to
pay royalties, confidentiality restrictions in Section 7
hereof, restrictions placed on use of Ancor Technology
as provided in Sections 2.3, 2.4, 2.5 and 2.7(b)) and
has, within thirty (30) days of receipt of written
notice thereof from Ancor, (y) failed to cure such
breach, or (z) failed to diligently pursue corrective
action with respect to any such material breach that
cannot be reasonably cured within thirty (30) days; or
(iii) the escrow agreement described in Section 5.3 is
terminated due to Inrange's uncured material breach of
the license grant and/or confidentiality provisions of
such escrow agreement, provided that such provisions
contain terms identical to the license terms in Section
5.3 and the confidentiality terms in Section 7.
12.4 Surviving Obligations. Termination or expiration of this Agreement
shall not relieve either party of its rights or obligations under Sections
2.7(b), 3.5, 3.6, 5.3, 12.3 and Articles 6, 7, 8, 9, 11, 13 and 14 hereof.
13. DISPUTE RESOLUTION
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13.1 Dispute Resolution. A party must not start court proceedings (except
proceedings seeking interlocutory relief) in respect of a dispute arising out of
or in connection with this Agreement (in this Section a "Dispute") unless it has
complied with this Section:
(a) A party claiming that a Dispute has arisen must notify the other party
in writing.
(b) Within seven days after a notice is given under Section 13.1(a), the
chief executive, managing director or general manager ("Managers") of each party
must meet for the purpose of attempting to resolve the Dispute within a further
seven (7) day period.
(c) If the Managers of each party are unable to meet or to resolve the
Dispute within the further seven (7) day period, each party must then nominate
in writing to the other party a representative authorized to settle the Dispute
on its behalf.
(d) Each party must ensure that within a period of twenty (20) days
immediately following the date on which the nomination notice is given under
Section 13.1(c) (or longer period agreed between the parties) its representative
uses his or her reasonable endeavors, with the other representative:
(i) to resolve the Dispute; or
(ii) to agree on:
(a) a process to resolve all or at least part of the Dispute
without court proceedings (e.g., mediation, arbitration, conciliation, executive
appraisal or independent expert determination);
(b) the selection and payment of any third party to be engaged
by the parties for, and the involvement of any dispute resolution organization
in, the process;
(c) any procedural rules;
(d) the timetable, including any exchange or relevant
information and documents; and
(e) the place where any meetings will be held.
(e) The role of any third party will be to assist in negotiating a
resolution of the Dispute. A decision of any third party is not binding on a
party unless that party's representative has so agreed in writing.
(f) Any information or documents disclosed by a representative under this
Section:
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(i) must be kept confidential; and
(ii) may not be used except to attempt to settle the Dispute.
(g) Each party must bear its own costs of resolving a Dispute under this
Section and the parties must bear equally the cost of any third party (e.g.,
mediator, arbitrator) engaged.
(h) Pending the resolution of any Dispute that is subject to the dispute
resolution process described in this Section 13.1, each party will continue to
perform all of its obligations under this Agreement without prejudice to any
final resolution of the Dispute.
(i) In the event that a Dispute cannot be settled in accordance with the
foregoing procedure, the parties shall be free to pursue any and all remedies
available to them.
13.2 Governing Law. This Agreement shall be governed by, and interpreted
and construed in accordance with, the laws of the State of Minnesota, excluding
its choice of law rules.
14. MISCELLANEOUS
14.1 Relationship. This Agreement does not make either party the employee,
agent or legal representative of the other for any purpose whatsoever. Neither
party is granted any right nor authority to assume or to create any obligation
or responsibility, express or implied, on behalf of or in the name of the other
party. Each party is acting as an independent contractor.
14.2 Assignment. Neither party shall have the right to assign or otherwise
transfer its rights and obligations under the Agreement except with the prior
written consent of the other party, whose consent shall not be unreasonably
withheld, except that no consent shall be required in the case of a merger,
acquisition, or sale of all or substantially all of the assets of such party
provided that such successor is bound by all of the predecessor's rights and
obligations hereunder. Ancor hereby consents to the proposed acquisition, merger
or consolidation of Inrange and/or its parent, General Signal Corporation, by or
with SPX Corporation or any of its affiliates. This Agreement shall inure to the
benefit of the parties hereto and their respective permitted assignees. Any
prohibited assignment shall be null and void.
14.3 Notices. Notices permitted or required to be given hereunder shall be
deemed sufficient if given by (a) registered or certified mail, postage prepaid,
return receipt requested, (b) private courier service, or (c) facsimile
addressed to the respective addresses of the parties as first above written or
at such other addresses as the respective parties may designate by like notice
from time to time. Notices so given shall be effective upon (1) receipt by the
party to which notice is given, or (2) on the fifth (5th) day following mailing,
whichever occurs first.
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14.4 Entire Agreement. This Agreement and the Warrant Agreement, including
the Exhibits hereto and thereto which are incorporated herein and therein,
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede all proposals, oral or written, and all
negotiations, conversations and discussions between the parties.
14.5 Amendment. This Agreement may not be modified, amended, rescinded,
canceled or waived, in whole or in part, except by written amendment signed by
both parties hereto.
14.6 Force Majeure. If the performance of this Agreement or any obligation
hereunder (other than the payment of monies due and owing hereunder) is
prevented, restricted or interfered with by reason of any event or condition
other than a shortage of money beyond the reasonable control of such party
(including without limitation acts of State or governmental action, riots, war,
prolonged shortage of energy, epidemics, fire, flood, hurricane, typhoon,
earthquake, lightning and explosion, or any refusal or failure of any
governmental authority to grant any export license legally required), the party
so affected shall be excused from such performance, only for so long as and to
the extent that such a force prevents, restricts or interferes with the party's
performance and provided that the party affected gives notice thereof to the
other party and uses diligent efforts to remedy such event or conditions.
14.7 Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and do not constitute a part of this
Agreement.
14.8 Publicity. This Agreement is confidential, and no party shall issue
press releases or engage in other types of publicity of any nature dealing with
the commercial or legal details of this Agreement without the other party's
prior written approval, which approval shall not be unreasonably withheld.
However, approval of such disclosure shall be deemed to be given to the extent
such disclosure is required to comply with governmental rules, regulations or
other governmental requirements. In such event, the publishing party shall
furnish a copy of such disclosure to the other party.
14.9 Severability. If any provision of this Agreement is found
unenforceable under any the laws or regulations applicable thereto, such
provision terms shall be deemed stricken from this Agreement, but such
invalidity or unenforceability shall not invalidate any of the other provisions
of this Agreement.
14.10 Counterparts. This Agreement may be executed in two or more
counterparts, and each such counterpart shall be deemed an original hereof.
14.11 Waiver. No failure by either party to take any action or assert any
right hereunder shall be deemed to be a waiver of such right in the event of the
continuation or repetition of the circumstances giving rise to such right
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14.12 Limitation of Liability. NEITHER PARTY SHALL HAVE ANY LIABILITY OF
ANY KIND HEREUNDER FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL LOSSES
OR DAMAGES, EVEN IF A PARTY SHALL HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH
POTENTIAL LOSS OR DAMAGE BY THE OTHER PARTY OR ANY THIRD PARTY. IN NO EVENT
SHALL EITHER PARTY BE LIABLE FOR ANY DAMAGES IN EXCESS OF THE AGGREGATE AMOUNTS
ACTUALLY PAID TO ANCOR BY INRANGE UNDER THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives below.
ANCOR COMMUNICATIONS, INRANGE TECHNOLOGIES
INCORPORATED CORPORATION
By /s/ Calvin G. Nelson By /s/ Robert Coackley
----------------------------- ----------------------------------
Title PRESIDENT Title President
-------------------------- -------------------------------
Exhibits:
Exhibit 1 - Ancor Technology
Exhibit 2 - Specifications for ASICs
Exhibit 3 - Specifications for Boards
Exhibit 4 - Development Program
Exhibit 5 - Ancor Trademarks
Exhibit 6 - Form of Preferred Escrow Agreement
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