1
Signature Copy
EXHIBIT 10.10
Confidential Materials omitted and filed with the Securities and
Exchange Commission. Asterisks denote omissions.
CUSTOM SALES AGREEMENT
BASE AGREEMENT
International Business Machines Corporation 281 Winter St.
Waltham, MA 02254
AGREEMENT NO. 000147
CUSTOMER: Redstone Communications, Inc.
5 Carlisle Road
Westford, MA 01896
USA
This Custom Sales Agreement, which consists of this Base Agreement and Statement
of Work Attachments, shall be referred to as the "Agreement". The term of this
Agreement commences on January 1, 1999 and expires on December 31, 2001.
By signing below, the parties each agree to be bound by the terms and conditions
of this Agreement and the initial Statement of Work, Attachment No. 1, and no
additional signature on the initial Statement of Work is required. Subsequent
Statement of Work Attachments under this Agreement must be signed by the parties
to become effective.
Upon signature by both parties, it is agreed this Agreement constitutes the
complete and exclusive agreement between them superseding any prior agreements,
written or oral, relating to the subject matter notwithstanding anything
contained in any document issued by either party. This Agreement may not be
amended or modified except by a written amendment signed by both parties.
The parties expressly acknowledge that they have received and are in possession
of a copy of any referenced item which is not physically attached to the
Agreement and any such item will be treated as if attached.
ACCEPTED AND AGREED TO:
REDSTONE COMMUNICATIONS, INC. INTERNATIONAL BUSINESS MACHINES
CORPORATION
BY: /s/ Christopher Lawler BY: /s/ Peter Hansen
---------------------------- -----------------------------------
NAME: Christopher Lawler NAME: Peter Hansen
TITLE: VP of Engineering TITLE: VP North America Sales, IBM MD
DATE: 12/3/98 DATE: 12/3/98
------------------------------ ---------------------------------
Base Agreement
Custom Sales Agreement No. 000147
1
2
Signature Copy
1.0 DEFINITIONS
Capitalized terms in this Agreement have the following meanings. An Attachment
may define additional terms; however, those terms apply only to that Attachment.
1.1 "Item" shall mean any part, specification, design, document, report, data
or the like which Customer delivers to IBM under this Agreement.
1.2 "Product" shall mean production units to be sold or purchased under this
Agreement. Products shall not include Prototypes.
1.3 "Prototype" shall mean a preliminary version of a Product which may or may
not be functional, is intended for internal use and testing and not for resale,
and is not suitable for production in commercial quantities.
1.4 "Purchase Order Lead Time" shall mean the required minimum amount of time
between IBM's receipt of the purchase order issued by Customer and the requested
shipment date necessary to accommodate manufacturing cycle time.
1.5 "Related Company" of a party hereunder shall mean a corporation, company or
other entity which controls or is controlled by such party or by another Related
Company of such party, where control means ownership or control, direct or
indirect, of more than fifty (50) percent of: (i) the outstanding voting shares
or securities (representing the right to vote for the election of directors or
managing authority), or (ii) the ownership interests representing the right to
make decisions for such a corporation, company or other entity (as the case may
be in partnership, joint venture or unincorporated association having no
outstanding shares or securities). However, any such corporation, company or
other entity shall be deemed to be a Related Company of such party only so long
as such ownership or control exists.
1.6 "Service" shall mean any manufacturing activity or design, or engineering
work IBM performs.
1.7 "Shipment Date" shall mean IBM's estimated date of shipment.
2.0 AGREEMENT STRUCTURE
2.1 This Agreement consists of: (i) the Base Agreement which defines the basic
terms and conditions of the relationship between the parties; and (ii)
Attachments which specify the details of a specific work task. An Attachment may
include additional or differing terms and conditions, however such terms and
conditions apply only to that Attachment. Attachments also include any
specification documents agreed to by the parties applicable to the specific work
under that Attachment.
2.2 If there is a conflict among the terms and conditions of the various
documents, Attachment terms and conditions govern.
2.3 Purchase orders and acknowledgements will be used to convey information
only and any terms and conditions on those are void and replaced by this
Agreement.
2.4 Either party may include its Related Companies under this Agreement by
written agreement with the other party.
3.0 ORDER AND DELIVERY
3.1 Customer shall order Products and Services by issuing written purchase
orders, which are subject to acceptance by IBM. Purchase orders for Products
must be received by IBM in advance, with at least the Purchase Order Lead Time
specified in the applicable Attachment.
Base Agreement
Custom Sales Agreement No. 000147
2
3
Signature Copy
3.2 Products will be shipped to Customer FOB plant of manufacture, except for
Products shipped outside the United States which will be shipped EXWORKS (as
defined in ICC INCOTERMS 1990).
3.3 Title to the Products and risk of loss shall pass to the Customer upon
delivery to the carrier for shipment to the Customer.
4.0 CANCELLATION AND RESCHEDULING
4.1 If IBM's supply of the Product and/or Services ordered hereunder becomes
constrained, IBM will reduce the quantities of Products and/or Services to be
supplied to the Customer in proportion to the reduction in quantities of
products and/or services of the same technology or utilizing the same
manufacturing process to be supplied to satisfy others. Receipt of such
allocated supply and later delivery of all undelivered ordered quantities shall
constitute Customer's exclusive remedy in the event of such a supply constraint.
4.2 Customer may cancel or reschedule an order for Products and/or Services
only upon prior written notice to IBM. In the event of a cancellation or
reschedule which exceeds the rescheduling rights set forth in an applicable
Attachment, Customer shall pay the quoted price for Products and/or Services
delivered or ready for shipment and the cancellation charges set forth in the
applicable Attachment.
4.3 Customer agrees that if Customer decreases the total quantity of an order
that has a unit price based on an agreed to quantity Customer will pay an
applicable higher unit price for previous shipments and for new shipments.
5.0 PAYMENT
5.1 Prices for Products and Services shall be as set forth in an applicable
Attachment. IBM shall invoice Customer after the Products have been shipped or
the Services provided. Payment by the Customer will be due within thirty (30)
days from the date of invoice. Late payment of invoices will be assessed a
charge equal to the lesser of one and one-half percent (1.5%) per month or the
statutorily maximum rate of interest in accordance with the laws of the State of
New York. In addition, if Customer's account balance exceeds its credit limit
with IBM, or becomes delinquent, IBM may stop shipments to Customer or ship to
Customer on a prepaid basis until the account is current again.
6.0 TERMINATION
6.1 If either party materially breaches a term of this Base Agreement or an
Attachment, the other party may, at its option, terminate this Agreement or any
or all Attachments provided the party in breach is given written notice and
fails to cure such breach within 30 days or immediately in the event of (i)
insolvency, dissolution or liquidation by or against either party, (ii) any
assignment of either party's assets for the benefit of creditors, (iii) any act
or omission of an act by a party demonstrating its inability to pay debts
generally as they become due (iv) any transfer of substantially all of either
party's business or assets to a third party, or (v) if IBM has a reasonable
basis to believe any of the Items infringe intellectual property rights.
6.2 If IBM terminates this Agreement or an Attachment, IBM shall be entitled to
treat any or all applicable outstanding purchase orders as if cancelled by
Customer and Customer shall pay (i) all applicable IBM procurement costs, (ii)
the quoted price applicable for any affected Products and/or Services delivered
or ready for shipment, and (iii) the cancellation charges set forth in the
applicable Attachment or Attachments. Monies owing IBM shall become immediately
due and payable.
Base Agreement
Custom Sales Agreement No. 000147
3
4
Signature Copy
6.3 If Customer terminates this Agreement or an Attachment, IBM will fill all
applicable previously accepted purchase orders for Products, but IBM shall not
be obligated to accept further applicable purchase orders after receiving
notice.
6.4 This Base Agreement will continue after its termination or expiration with
respect to any Attachments already in place until they expire, are terminated or
completed. Provided that no monies are due IBM, applicable Items shall be
disposed of as directed by Customer in writing at Customer's expense after a
termination or expiration.
7.0 CONFIDENTIAL INFORMATION
7.1 With the exception of the terms and conditions of this Agreement, no
information exchanged between the parties shall be considered confidential
and/or proprietary to either party, or to any third party except as may be
specified pursuant to Section 7.2 below.
7.2 In the event IBM or Customer needs to disclose specific confidential
information to the other in order for IBM to furnish Products and/or Services
hereunder, such information shall be disclosed only pursuant to the terms of a
confidential information exchange agreement executed by the parties.
8.0 LICENSE
8.1 No license, immunity or other right is granted herein to Customer whether
directly or by implication, estoppel or otherwise, with respect to any patent,
trademark, copyright, mask work, trade secret or other intellectual property
right of IBM with the exception of Customer's right to use or resell any Product
patented and sold by IBM to Customer pursuant to this Agreement.
9.0 TRADEMARK
9.1 Nothing in this Agreement grants either party any rights to use the other
party's trademarks or trade names, directly or indirectly, in connection with
any product, service, promotion, or to make any publication or publicity without
prior written approval of the other party or owner.
10.0 INTELLECTUAL PROPERTY AND INDEMNIFICATION
10.1 IBM agrees to indemnify Customer against damages assessed against Customer
as a result of a final judgment of a court of competent jurisdiction holding
that any Product sold or Service provided by IBM to Customer hereunder infringes
a patent or copyright of a third party in any country in which IBM sells or
provides similar products or services, up to the amount paid by Customer for
Products or Services provided hereunder; PROVIDED THAT Customer (1) promptly
notifies IBM, in writing, of the charge of infringement; (2) allows IBM to
control and cooperates with IBM in the defense and any related settlement
action; and (3) upon the written request of IBM (a) allows IBM to modify or
replace the Product, or (b) returns the Product to IBM for a credit equal to
Customer's purchase price for the Product, provided Customer has followed
generally accepted accounting principles. IBM has no obligation regarding any
claim of infringement to the extent such claim is based on any of the following:
(1) Customer's modification of a Product; (2) the combination, operation, or use
of a Product with any product, data, or apparatus that IBM did not provide; (3)
infringement by a non-IBM Product alone, as opposed to its combination as part
of a system of Products that IBM provides; or (4) IBM's manufacture or
modification of a Product in compliance with Customer's specifications. Customer
agrees to indemnify IBM against all damages and costs resulting from such a
claim of infringement. The foregoing states the entire obligation and exclusive
remedy of
Base Agreement
Custom Sales Agreement No. 000147
4
5
Signature Copy
IBM and Customer regarding any claim of patent or copyright infringement
relating to any Product sold or Service provided hereunder.
10.2 Customer warrants that it is the originator, rightful owner or licensee of
all Items supplied to IBM hereunder and that to the best of Customer's knowledge
no part of such Items infringes any intellectual property rights.
11.0 LIMITATION OF LIABILITY
11.1 Neither party shall be entitled to indirect, incidental, consequential or
punitive damages, including lost profits based on any breach or default of the
other party, including those arising from infringement or alleged infringement
of any patent, trademark, copyright, mask work, or any other intellectual
property.
11.2 Except for nonpayment, no action, regardless of form, arising from this
Agreement may be brought by either party more than one (1) year after the cause
of action has arisen. IBM's liability for any and all causes of action shall be
limited in the aggregate to the greater of: (1) $50,000.00 or (2) the applicable
IBM price to Customer for the specific Products and/or Services that caused the
damages or that are the subject matter of, or directly related to, the cause of
action.
11.3 The limitation of Section 11.2 does not apply to: (1) payments referred to
in Section 10.1 and (2) damages for bodily injury (including death) and damage
to real property and tangible personal property caused by IBM's negligence.
11.4 Under no circumstances is IBM liable for any of the following: (A) third
party claims against Customer for losses or damages other than those in 11.3(l)
and (2) above; or (B) loss of, or damage to, Customer's or another parties'
records or data; or (C) when the Products and/or Services are used in
conjunction with medical devices or nuclear materials.
12.0 WARRANTIES
12.1 IBM warrants all Products delivered hereunder to be free from defects in
material and workmanship for a period of thirty (30) days from the date of
shipment unless otherwise stated in an Attachment applicable to such Products.
Customer acknowledges that the functionality of Products is contingent on
Customer's designs and, therefore, such warranty does not apply to the
functionality of Products fabricated under this Agreement. All Prototypes are
provided "As Is" without warranty of any kind.
12.2 THE FOREGOING WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING THE IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS OR USAGE
FOR PARTICULAR PURPOSE.
12.3 No course of dealing, course of performance, usage of trade, or description
of Product, Prototype or Service shall be deemed to establish a warranty,
express or implied.
12.4 If Customer claims that any Products and any incidental Services are
nonconforming, Customer shall (1) promptly notify IBM, in writing, of the basis
for such nonconformity; (2) follow IBM's instructions for the return of the
Products; and (3) return such Products freight collect to IBM's designated
facility. If IBM determines the Products are nonconforming, IBM will, at its
option, repair or replace the defective Products, or issue a credit or rebate
for the purchase price.
12.5 IBM's sole liability and Customer's sole remedy for breach of warranty
shall be limited as stated in this Section 12.
13.0 TAXES
Base Agreement
Custom Sales Agreement No. 000147
5
6
Signature Copy
13.1 IBM shall bill Customer for all applicable sales, use and gross receipts
taxes, unless Customer provides IBM with appropriate exemption certificates.
14.0 NOTICES
14.1 All communications and notices between the parties concerning this
Agreement shall be given to the appropriate individual listed in the applicable
Attachment and shall be deemed sufficiently made on the date if given by
personal service, sent via mail, facsimile or electronic data interchange.
Communication by facsimile or electronic data interchange is acceptable as a
"writing". The autographs of representatives of the parties, as received by
facsimile or electronic data interchange, shall constitute "original"
signatures.
15.0 INDEPENDENCE OF ACTION
15.1 Each party agrees that this Agreement will not restrict the right of either
party to enter into agreements with other parties for same or similar work, or
to make, have made, use, sell, buy, develop, market or otherwise transfer any
products or services, now or in the future, so long as confidential information
is not disclosed. IBM shall not sell, market or otherwise transfer to any third
party any Products using the trademark or trade name of Customer without prior
written consent.
16.0 UTILIZATION OF PRODUCTS
16.1 Customer represents that all Products purchased under this Agreement will
be: (1) incorporated into and made a part of Customer products; or (2) combined
with Customer products for sale or lease as a Customer system; or (3) sold or
leased in incidental additional quantities for sale or lease directly to an
unaffiliated third party in conjunction with an installed Customer system.
17.0 GENERAL
17.1 Neither party shall be responsible for failure to fulfill its obligations
under this Agreement due to fire, flood, war or other such cause beyond its
reasonable control and without its fault or negligence (excluding labor disputes
or payment obligations) provided it promptly notifies the other party.
17.2 The substantive laws of the State of New York govern this Agreement without
regard to conflict of law principles. Both parties agree to waive their right to
a jury trial in any dispute arising out of this Agreement and agree any action
concerning this Agreement shall be brought in a court of competent jurisdiction
in the State of New York. The prevailing party in any legal action hereunder
shall be entitled to reimbursement by the other party for its expenses,
including without limitation reasonable attorney's fees.
17.3 Customer may not assign its rights or obligations without the prior written
consent of IBM.
17.4 No delay or failure by either party to act in the event of a breach or
default hereunder shall be construed as a waiver of that or any subsequent
breach or default of any provision of this Agreement.
17.5 If any part, term or provision of this Agreement is declared unlawful or
unenforceable, by judicial determination or performance, the remainder of this
Agreement shall remain in full force and effect.
Base Agreement
Custom Sales Agreement No. 000147
6
7
Signature copy
17.6 Any terms of this Agreement which by their nature extend beyond expiration
or termination of this Agreement shall remain in effect until fulfilled and
shall bind the parties and their legal representatives, successors, heirs and
assigns.
17.7 The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
17.8 Each party will comply, at its own expense, with all applicable federal,
state and local laws, regulations and ordinances including, but not limited to,
the regulations of the U.S. Government relating to export and re-export.
Customer agrees that it is responsible for obtaining required government
documents and approvals prior to export and re-export of any commodity, machine,
software or technical data.
17.9 The UN Convention on Contracts for the International Sale of Goods shall
not apply to this Agreement.
17.10 Press releases and other like publicity, advertising or promotional
material which mention the other party by name, this Agreement or any term
hereof shall be agreed upon by both parties in writing prior to any release.
After the execution of this Agreement and upon request of Customer, IBM will
review Customer's press release to determine in writing whether it will agree to
the release.
Base Agreement
Custom Sales Agreement No. 000147
7
8
Signature Copy
Confidential Materials omitted and filed with the Securities and
Exchange Commission. Asterisks denote omissions.
ASIC ATTACHMENT NO. 1
CUSTOM SALES AGREEMENT NO. 000147
The following Statement of Work shall be incorporated into Custom Sales
Agreement No. 000147 as Attachment No. 1 effective on January 1, 1999.
Attachments are governed by the terms and conditions of the Base Agreement.
STATEMENT OF WORK
ASIC PRODUCT TASK ORDER
DEFINITIONS
"ASIC(S)" shall mean application specific integrated circuits. "
AT SHIPMENT OF PROTOTYPES " ("ASP") shall mean the date of shipment of
Prototypes to Customer.
"IBM DELIVERABLES" shall mean the information, materials and tools supplied
to Customer by IBM, as set forth in Part B of this Attachment, including,
without limitation, IBM Design Kits, ASIC tool kits, and Prototype devices.
"IBM DESIGN KITS" shall mean any IBM computer aided design software and
data (including libraries) provided to Customer and supported by IBM for
the purpose of designing or testing ASIC designs, as updated and enhanced
from time to time. IBM licenses any IBM Design Kits to Customer under the
terms and conditions of the IBM Design Kit License Agreement.
"INITIAL ASIC DESIGN REVIEW CHECKLIST" ("IDR") shall mean a report in form
and content as regularly used by IBM to make a preliminary assessment of
the feasibility of Customer's proposed Product design.
"MILESTONES" shall mean completion of the criteria specified in the (i)
initial design review ("IDR Milestone"), (ii) pre-layout and timing
analysis ("RTL Milestone"), and (iii) the release to manufacturing ("RTM
Milestone") stages of work and the NRE payment milestones ("Payment
Milestones") set forth in Section 7.3 of this SOW.
"NRE" shall mean non-recurring engineering Services.
"PRODUCT SPECIFICATIONS" shall mean those specifications for a Product,
including but not limited to, post-layout EDIF and timing requirements
(including clock skew requirements), a statement of post-layout test
coverage, and I/O placement that are set forth in a Product's RTM expressly
or by specific incorporation.
"PROTOTYPE ACCEPTANCE" shall mean Customer's written approval that its
evaluation process demonstrated Prototype conformance to Product
Specifications.
"RELEASE TO LAYOUT CHECKLIST" ("RTL") shall mean a performance approval
report in form and content as regularly used by IBM to document completion
of the pre-layout Level Sensitive Scan Design ("LSSD") and timing analysis
milestone of the Statement of Work.
Attachment No. 1
Agreement No. 000147
9
Signature Copy
"RELEASE TO MANUFACTURING CHECKLIST" ("RTM") shall mean a performance approval
report in form and content as regularly used by IBM to document the design
review milestone at the completion of the post-layout timing analysis.
1.0 SCOPE OF WORK
1.1 IBM will perform ASIC physical design layout services and manufacture the
ASIC Product(s) identified in Part A of this Attachment.
1.2 Customer will provide IBM with the Customer's Items and cooperate with IBM
to enable IBM to manufacture Product and to perform Services in accordance with
this Agreement.
2.0 ASIC DESIGN AND DEVELOPMENT METHODOLOGY
2.1 IBM's ASIC development checklists shall document the development of each of
Customer's Product design(s).
2.1.1 The IDR will be used to make a preliminary feasibility assessment of
Customer's proposed Product design(s) and to advise Customer of ASIC design
issues to ensure that Customer's design(s) will conform to IBM design
requirements.
2.1.2 The RTL shall include, expressly or by specific incorporation, the
design specifications for each Product required by Customer to successfully
enable IBM to place, route, perform static timing analysis and analyze LSSD
testability for Customer's Product design data. The RTL shall also document
the fact that such information is available to Customer and has been
communicated to Customer before each Product netlist is released to layout.
Customer's signature on the RTL shall record Customer's acknowledgment of
satisfactory completion of all work on such Product through such Milestone.
2.1.3 Customer's signature on the RTM shall record Customer's
acknowledgment of (i) satisfactory completion of all work on such Product
through the RTM Milestone and (ii) the specifications to which IBM's
warranty obligations apply. To the extent that specifications and test
coverage contained in the RTM vary the specifications and test coverage set
forth in the RTL, the specifications and test coverage contained in the RTM
shall govern.
2.1.4 Customer's signature on the RTL and RTM checklists shall not be
unreasonably withheld.
2.2 Any data relating to a Product design that Customer is to furnish to IBM
must be compatible with IBM design tools, with which IBM will verify all
design and engineering work.
Attachment No. 1
Agreement No. 000147
10
Confidential Materials omitted and filed with the Securities
and Exchange Commission. Asterisks denote omissions
Signature Copy
3.0 CHANGE CONTROL
3.1 Customer may, at any time and from time to time, by written notice to IBM,
request changes to the part numbers, specifications, or work scope. IBM
will submit a written report to Customer setting forth the probable effect,
if any, of such requested change on prices, payment or delivery. IBM shall
not proceed with any change until authorized in writing by Customer. The
parties shall promptly amend this Attachment to incorporate any agreed
changes.
3.2 IBM may implement engineering changes required to satisfy governmental
standards, protect Product or system integrity, or for environmental,
health or safety reasons ("Mandatory Engineering Changes"). If requested by
IBM, Customer will use reasonable efforts to incorporate Mandatory
Engineering Changes in Products already shipped by IBM. Except for
Mandatory Engineering Changes, IBM shall give Customer prior notice of
engineering changes affecting the form, fit or function of a Product.
4.0 FORECASTING
Prior to the IDR Milestone, Customer shall provide IBM's customer account
representative a Product demand forecast, which shall cover a minimum of [**]
months broken out by Product and month. By the fifth day of every month, during
the term of this Attachment, Customer will provide IBM's customer account
representative an updated Product demand forecast covering a rolling [**] month
period (not to extend beyond the term of this Attachment), which will be
reviewed for approval by IBM within ten (10) days of receipt by IBM. IBM shall
have the right to reject a forecast for any reason, provided that IBM notifies
Customer of such rejection within ten (10) days of receipt of Customer's
forecast by IBM. Forecasts shall constitute good faith estimates of Customer's
anticipated requirements for Products but shall not contractually obligate IBM
to supply, nor contractually obligate Customer to purchase, the quantities of
Product set forth in such forecasts.
5.0 ORDERS
5.1 Customer will request delivery of Products by issuing written purchase
orders to the IBM ordering location identified in Section 9.0 of this
Attachment. Purchase orders for Product shall only specify:
a) Customer's purchase order number;
b) Customer's tax status - exempt or non-exempt;
c) ship to location - complete address;
d) bill to location - complete address;
e) order from location - complete address;
Attachment No. 1
Agreement No. 000147
11
Signature Copy
Confidential Materials omitted and filed with the Securities and
Exchange Commission. Asterisks denote omissions.
f) shipping instructions, including preferred carrier and carrier
account number;
g) the agreement number of this Agreement;
h) name of Customer contact;
i) Product part numbers and quantities being ordered (in
increments of the Minimum Order Quantity ("MOQ");
j) the Product's applicable unit price; and
k) requested shipment dates.
5.2 Customer will request NRE (which includes Prototypes) by issuing written
purchase orders to the IBM ordering location identified in Section 9.0 of this
Attachment. Purchase orders for NRE shall only specify:
a) items a through h above;
b) Prototype part numbers and the Milestone(s) to which the
purchase order applies; and
c) the applicable price for the NRE.
6.0 DELIVERY
6.1 The Purchase Order Lead Time for the Products and/or Services after receipt
of Customer's purchase order or all Items, whichever is received later, is as
set forth in Section 3.0 of Part A of this Attachment.
6.2 RESCHEDULING RIGHTS: Customer may reschedule a Shipment Date provided: (i)
Customer sends IBM written notice of the request to reschedule; (ii) the notice
is received by IBM more than thirty (30) days prior to the Shipment Date; and
(iii) the rescheduled delivery date is within ninety (90) days after the
Shipment Date. If the foregoing requirements are met, no cancellation charge
will be imposed by IBM in connection with the rescheduling. Once a Shipment Date
is rescheduled, the new shipment date is firm and cannot be rescheduled by
Customer.
7.0 PRICING
7.1 Customer agrees to pay the following NRE charge: [**]dollars ($[**]).
7.2 NRE consist of the following:
Physical design of Customer's netlist
First full RIT A/B Mask set
Manufacturing slot and thirty (30) Prototypes
Attachment No. 1
Agreement No. 000147
12
Signature Copy
Confidential Materials omitted and filed with the Securities and
Exchange Commission. Asterisks denote omissions.
7.2.1 Design data preparation will be limited as follows:
7.2.1.1 Customer may submit design data for two (2) passes (1.
analysis netlist (for Customer's first design only) and 2. preliminary
netlist) up to but not including the RTL Milestone.
7.2.1.2 Customer may submit design data for one (1) pass between the
RTL Milestone and the RTM Milestone and one (1) additional pass for
timing closure only. Engineering changes for the one (1) additional
pass shall be limited to a select number of cells and shall be subject
to IBM's agreement that such changes are limited to the purpose of
timing closure.
a. Requests for additional design iterations shall be subject to
Section 3.1 of this Attachment.
b. 1 pass testing (test cycles limited to one test buffer).
7.3 Payment Milestones for NRE:
Part Number IDR RTL ASP TOTAL NRE
- -------------------------------------------------------------------------------------------------
IFA [**] [**] [**] [**]
IDR = on date of execution of IDR by Customer
RTL = on date of execution of RTL by Customer
ASP = on date of shipment of Prototypes
COMPENSATION FOR OTHER SERVICES:
Other service(s): To be determined by IBM on a request for quote basis.
Attachment No. 1
Agreement No. 000147
13
Signature Copy
Confidential Materials omitted and filed with the Securities and
Exchange Commission. Asterisks denote omissions.
7.4 Prices:
7.4.1 Prototype device pricing:
Subject to availability, as determined by IBM, Customer may order from the
first Prototype lot additional Prototypes (in excess of the Prototypes
included in the NRE charge), provided that IBM receives Customer's purchase
order for such additional Prototypes no later than five (5) working days
prior to the scheduled RTM signoff.
Each Prototype device in excess of the Prototype devices included in the
NRE charge shall cost $[**] per Prototype unit.
7.4.2 Product unit pricing: Price Per Unit
Number of Units Per 1999 2000 2001
Calendar Year
2.5K<5K $[**] $[**] $[**]
5K<10K $[**] $[**] $[**]
10K<25K [**] $[**] $[**]
Minimum Order Quantity ("MOQ"): [**] units per order
Minimum Shipment/Pack Quantity ("SPQ"): [**] units per shipment
8.0 CANCELLATION CHARGES
8.1 NRE Cancellation Charge:
If Customer cancels a purchase order for NRE or otherwise cancels NRE, then IBM
may cease work in connection with the Product. Additionally, Customer shall pay
IBM the total of all NRE charges due and owing at the time of cancellation, all
unpaid NRE charges applicable to the next NRE Payment Milestone according to the
schedule set forth in Section 7.3 of this Attachment and the cancellation
charges in the table below. Should Customer fail to purchase any Product within
the first twelve months after ASP, then Customer shall be deemed to have
cancelled all work under this Attachment and the cancellation charge pertaining
to "anytime after RTM" in the table below shall apply in addition to any amounts
due and owing.
If a Cancellation Notice is Received by IBM Cancellation Charge
- ------------------------------------------- -------------------
Up to but not including IDR $[**]
between IDR and RTL $[**]
any time after RTM $[**]
Attachment No. 1
Agreement No. 000147
14
Signature Copy
Confidential Materials omitted and filed with the Securities and
Exchange Commission. Asterisks denote omissions.
8.2 Product Cancellation Charge:
In accordance with Section 4 of the Base Agreement, the following charges will
apply for any cancelled Customer order for Product or any portion thereof. The
"Cancellation Charge" referred to below is the percentage to be applied to the
prices stated above in Section 7.4 of this Attachment.
Cancellation Notice Cancellation charge
Received by IBM
Anytime after
wafer start [**]%
Prior to
wafer start [**]%
SHIP TO: BILL TO:
9.0 ORDERING LOCATION:
IBM Redstone Communications, Inc. Redstone Communications, Inc.
281 Winter Street 5 Carlisle Road 5 Carlisle Road
Waltham, MA 02154 Westford, MA 01886 Westford, MA 01886
10.0 TERM
The term of this Attachment expires on December 31, 2001.
11.0 COORDINATORS/NOTICES
Technical Coordinators:
Customer: Christopher Lawler IBM: Eric Senn
Phone: 978-692-1999 Phone: 802-769-6749
Fax: 978-692-9992 Fax: 802-769-1833
Email: cplawler@redstonecom.com Email: ericsenn@us.ibm.com
Pursuant to section 14 of the Base Agreement, any notices hereunder shall be
given to the following persons:
Customer: Christopher Lawler IBM: John Beiswenger
Address: 5 Carlisle Road Address: 1000 River Street
Address: Westford, MA 01886 Address: Essex, Jct., VT 05452
Phone: 978-692-1999 Phone: 802-769-1212
Fax: 978-692-9992 Fax: 802-769-3988
Email: cplawler@redstonecom.com Email: jbeiswen@us.ibm.com
Attachment No. 1
Agreement No. 000147
15
Signature Copy
12. UNIQUE TERMS AND CONDITIONS
The following terms and conditions are applicable to this Attachment only.
Referring to the Base Agreement:
12.1 Modify section 12.1 of the Base Agreement, by deleting that provision in
its entirety and replacing it with the following:
IBM warrants that each unit of Product will be free from defects in
material and workmanship and will conform to the Product Specifications as
set forth in the RTM for twelve (12) months after delivery. For purposes of
this provision only, delivery to Customer of each unit of Product is deemed
to occur five (5) calendar days after shipment from IBM. This warranty does
not include repair of damage resulting from failure to provide a suitable
installation environment, any use for other than the intended purpose,
accident, disaster, neglect, misuse, transportation, alterations, or
non-IBM repairs or activities. Customer acknowledges that the functionality
of Products is contingent on Customer's designs and, therefore, such
warranty does not apply to the functionality of Products fabricated under
this Agreement. All Prototypes are provided "AS IS" without warranty of any
kind.
Attachment No. 1
Agreement No. 000147
16
Signature Copy
Part A
1.0 Product Name and Description
Product Type: ASIC (Application Specific Integrated Circuit)
Buyer's Product Name: IFA
Process Technology: SA 12E
Chip Image Description: 10.99 mm x 10.99 mm, 4LM
Package Description: 824 CCGA, dual power supply, 1.27 mm pitch, 32.5 mm x 42.5
mm
2.0 Design Schedule
Step Description Responsible Party Estimated Completion Date
Month/Year
1. IDR Milestone Both 11/98
2. Design Kit Delivery IBM Completed
3. Requirements analysis
meeting Both Completed
4. Analysis Netlist to IBM Customer 12/98
(required of first-time customers only)
5. Preliminary Netlist to IBM Customer 1/99
6. Updated EDIF, SDF & timing
reports to Customer IBM 2/99
7. Production Netlist to IBM Customer 2/99
8. RTL Milestone Both 2/99
9. Physical Design Complete IBM 3/99
10. Release to checking IBM 4/99
11. RTM Milestone Both 4/99
12. Initial Prototype Delivery IBM 5/99
13. Design Verification
and Prototype Acceptance Customer 8/99
14. Start of Volume Production IBM 12/99
3.0 Purchase Order Lead Times: (to include purchase order approval and
manufacturing lead time):
Prototype: Prototypes to be delivered within forty-three (43) weeks.
Attachment No. 1
Agreement No. 000147
17
Signature Copy
Part B
Items/Deliverables
1.0 Items and IBM Deliverables associated with the IDR Milestone:
Items IBM Deliverables
Library requirements Design Kit to support synthesis simulation
Netlist processing requirements timing and testability
Test Coverage requirements Testability guidelines
Simultaneous switch requirements Clocktree process description
Clocking requirements Timing specification form
Power requirements Module physical outline drawing
Operating conditions/requirements Pin-out template (location of test, power
and ground pins)
Detailed requirements analysis report
2.0 Items and IBM Deliverables associated with the RTL Milestone:
Items IBM Deliverables
Preliminary netlist Updated EDIF, SDF and timing reports
Final netlist
Chip I/O assignment
Chip timing assertion files
Special logic functions placement directives
3.0 Items and IBM Deliverables associated with the RTM Milestone:
Items IBM Deliverables
Design functionality Post layout EDIF, SDF and timing reports
Verification Final test coverage number for Customer's design
Prototypes
Attachment No. 1
Agreement No. 000147
18
Confidential Materials omitted and filed with the Securities and
Exchange Commission. Asterisks denote omissions.
ASIC ATTACHMENT NO. 2
CUSTOM SALES AGREEMENT NO. 000147
When signed by the parties where provided below, the following Statement of Work
shall be incorporated into Custom Sales Agreement No. 000147 as Attachment No. 2
effective on January 1, 1999. Attachments are governed by the terms and
conditions of the Base Agreement.
STATEMENT OF WORK
BASIC PRODUCT TASK ORDER
DEFINITIONS
"ASIC(s)" shall mean application specific integrated circuits.
"AT SHIPMENT OF PROTOTYPES" ("ASP") shall mean the date of shipment of
Prototypes to Customer.
"IBM DELIVERABLES" shall mean the information, materials and tools supplied
to Customer by IBM, as set forth in Part B of this Attachment, including,
without limitation, IBM Design Kits, ASIC tool kits, and Prototype devices.
"IBM DESIGN KITS" shall mean any IBM computer aided design software and
data (including libraries) provided to Customer and supported by IBM for
the purpose of designing or testing ASIC designs, as updated and enhanced
from time to time. IBM licenses any IBM Design Kits to Customer under the
terms and conditions of the IBM Design Kit License Agreement.
"INITIAL ASIC DESIGN REVIEW CHECKLIST" ("IDR") shall mean a report in form
and content as regularly used by IBM to make a preliminary assessment of
the feasibility of Customer's proposed Product design.
"MILESTONES" shall mean completion of the criteria specified in the (i)
initial design review ("IDR Milestone"), (ii) pre-layout and timing
analysis ("RTL Milestone"), and (iii) the release to manufacturing ("RTM
Milestone") stages of work and the NRE payment milestones ("Payment
Milestones") set forth in Section 7.3 of this SOW.
"NRE" shall mean non-recurring engineering Services.
"PRODUCT SPECIFICATIONS" shall mean those specifications for a Product,
including but not limited to, post-layout EDIF and timing requirements
(including clock skew requirements), a statement of post-layout test
coverage, and I/O placement that are set forth in a Product's RTM expressly
or by specific incorporation.
"PROTOTYPE ACCEPTANCE" shall mean Customer's written approval that its
evaluation process demonstrated Prototype conformance to Product
Specifications.
"RELEASE TO LAYOUT CHECKLIST" ("RTL") shall mean a performance approval
report in form and content as regularly used by IBM to document completion
of the pre-layout Level Sensitive Scan Design ("LSSD") and timing analysis
milestone of the Statement of Work.
19
"RELEASE TO MANUFACTURING CHECKLIST" ("RTM") shall mean a performance approval
report in form and content as regularly used by IBM to document the design
review milestone at the completion of the post-layout timing analysis.
1.0 SCOPE OF WORK
1.1 IBM will perform ASIC physical design layout services and manufacture the
ASIC Product(s) identified in Part A of this Attachment.
1.2 Customer will provide IBM with the Customer's Items and cooperate with IBM
to enable IBM to manufacture Product and to perform Services in accordance with
this Agreement.
2.0 ASIC DESIGN AND DEVELOPMENT METHODOLOGY
2.1 IBM's ASIC development checklists shall document the development of each of
Customer's Product design(s).
2.1.1 The IDR will be used to make a preliminary feasibility assessment of
Customer's proposed Product design(s) and to advise Customer of ASIC design
issues to ensure that Customer's design(s) will conform to IBM design
requirements.
2.1.2 The RTL shall include, expressly or by specific incorporation, the
design specifications for each Product required by Customer to successfully
enable IBM to place, route, perform static timing analysis and analyze LSSD
testability for Customer's Product design data. The RTL shall also document
the fact that such information is available to Customer and has been
communicated to Customer before each Product netlist is released to layout.
Customer's signature on the RTL shall record Customer's acknowledgment of
satisfactory completion of all work on such Product through such Milestone.
2.1.3 Customer's signature on the RTM shall record Customer's
acknowledgment of (i) satisfactory completion of all work on such Product
through the RTM Milestone and (ii) the specifications to which IBM's
warranty obligations apply. To the extent that specifications and test
coverage contained in the RTM vary the specifications and test coverage set
forth in the RTL, the specifications and test coverage contained in the RTM
shall govern.
2.1.4 Customer's signature on the RTL and RTM checklists shall not be
unreasonably withheld.
2.2 Any data relating to a Product design that Customer is to furnish to IBM
must be compatible with IBM design tools, with which IBM will verify all
design and engineering work.
20
Confidential Materials omitted and filed with the Securities
and Exchange Commission. Asterisks denote Omissions
3.0 CHANGE CONTROL
3.1 Customer may, at any time and from time to time, by written notice to IBM,
request changes to the part numbers, specifications, or work scope. IBM
will submit a written report to Customer setting forth the probable effect,
if any, of such requested change on prices, payment or delivery. IBM shall
not proceed with any change until authorized in writing by Customer. The
parties shall promptly amend this Attachment to incorporate any agreed
changes.
3.2 IBM may implement engineering changes required to satisfy governmental
standards, protect Product or system integrity, or for environmental,
health or safety reasons ("Mandatory Engineering Changes"). If requested by
IBM, Customer will use reasonable efforts to incorporate Mandatory
Engineering Changes in Products already shipped by IBM. Except for
Mandatory Engineering Changes, IBM shall give Customer prior notice of
engineering changes affecting the form, fit or function of a Product.
4.0 FORECASTING
Prior to the IDR Milestone, Customer shall provide IBM's customer account
representative a Product demand forecast, which shall cover a minimum of [**]
months broken out by Product and month. By the fifth day of every month, during
the term of this Attachment, Customer will provide IBM's customer account
representative an updated Product demand forecast covering a rolling [**] month
period (not to extend beyond the term of this Attachment), which will be
reviewed for approval by IBM within ten (10) days of receipt by IBM. IBM shall
have the right to reject a forecast for any reason, provided that IBM notifies
Customer of such rejection within ten (10) days of receipt of Customer's
forecast by IBM. Forecasts shall constitute good faith estimates of Customer's
anticipated requirements for Products but shall not contractually obligate IBM
to supply, nor contractually obligate Customer to purchase, the quantities of
Product set forth in such forecasts.
5.0 ORDERS
5.1 Customer will request delivery of Products by issuing written purchase
orders to the IBM ordering location identified in Section 9.0 of this
Attachment. Purchase orders for Product shall only specify:
a) Customer's purchase order number;
b) Customer's tax status - exempt or non-exempt;
c) ship to location - complete address;
d) bill to location - complete address;
21
Confidential Materials omitted and filed with the Securities and
Exchange Commission. Asterisks denote omissions.
e) order from location - complete address;
f) shipping instructions, including preferred carrier and
carrier account number;
g) the agreement number of this Agreement;
h) name of Customer contact;
i) Product part numbers and quantities being ordered (in
increments of the Minimum Order Quantity ("MOQ");
j) the Product's applicable unit price; and
k) requested shipment dates.
5.2 Customer will request NRE (which includes Prototypes) by issuing written
purchase orders to the IBM ordering location identified in Section 9.0 of this
Attachment. Purchase orders for NRE shall only specify:
a) items a through h above;
b) Prototype part numbers and the Milestone(s) to which the
purchase order applies; and
c) the applicable price for the NRE.
6.0 DELIVERY
6.1 The Purchase Order Lead Time for the Products and/or Services after receipt
of Customer's purchase order or all Items, whichever is received later, is as
set forth in Section 3.0 of Part A of this Attachment.
6.2 RESCHEDULING RIGHTS: Customer may reschedule a Shipment Date provided: (i)
Customer sends IBM written notice of the request to reschedule; (ii) the notice
is received by IBM more than thirty (30) days prior to the Shipment Date; and
(iii) the rescheduled delivery date is within ninety (90) days after the
Shipment Date. If the foregoing requirements are met, no cancellation charge
will be imposed by IBM in connection with the rescheduling. Once a Shipment Date
is rescheduled, the new shipment date is firm and cannot be rescheduled by
Customer.
7.0 PRICING
7.1 Customer agrees to pay the following NRE charge: [**] dollars ($[**]).
22
Confidential Materials omitted and filed with the Securities and
Exchange Commission. Asterisks denote omissions.
7.2 NRE consist of the following:
Physical design of Customer's netlist
First full RIT A/B Mask set
Manufacturing slot and thirty (30) Prototypes
7.2.1 Design data preparation will be limited as follows:
7.2.1.1 Customer may submit design data for two (2) passes (1.
analysis netlist (for Customer's first design only) and 2. preliminary
netlist) up to but not including the RTL Milestone.
7.2.1.2 Customer may submit design data for one (1) pass between the
RTL Milestone and the RTM Milestone and one (1) additional pass for
timing closure only. Engineering changes for the one (1) additional
pass shall be limited to a select number of cells and shall be subject
to IBM's agreement that such changes are limited to the purpose of
timing closure.
a. Requests for additional design iterations shall be subject to
Section 3.1 of this Attachment.
b. 1 pass testing (test cycles limited to one test buffer).
7.3 Payment Milestones for NRE:
Part Number IDR RTL ASP TOTAL
- -------------------------------------------------------------------------------------------------
NRE
- ---
EFA [**] [**] [**] [**]
IDR = on date of execution of IDR by Customer
RTL = on date of execution of RTL by Customer
ASP = on date of shipment of Prototypes
COMPENSATION FOR OTHER SERVICES:
Other service(s): To be determined by IBM on a request for quote basis.
23
Confidential Materials omitted and filed with the Securities and
Exchange Commission. Asterisks denote omissions.
7.4 Prices:
7.4.1 Prototype device pricing:
Subject to availability, as determined by IBM, Customer may order from the
first Prototype lot additional Prototypes (in excess of the Prototypes
included in the NRE charge), provided that IBM receives Customer's purchase
order for such additional Prototypes no later than five (5) working days
prior to the scheduled RTM signoff.
Each Prototype device in excess of the Prototype devices included in the
NRE charge shall cost $[**] per Prototype unit.
7.4.2 Product unit pricing: Price Per Unit
Number of Units Per 1999 2000 2001
Calendar Year
2.5K<5K $[**] $[**] $[**]
5K<10K $[**] $[**] $[**]
10K<25K [**] $[**] $[**]
Minimum Order Quantity ("MOQ"): [**] units per order
Minimum Shipment/Pack Quantity ("SPQ"): [**] units per shipment
8.0 CANCELLATION CHARGES
8.1 NRE Cancellation Charge:
If Customer cancels a purchase order for NRE or otherwise cancels NRE, then IBM
may cease work in connection with the Product. Additionally, Customer shall pay
IBM the total of all NRE charges due and owing at the time of cancellation, all
unpaid NRE charges applicable to the next NRE Payment Milestone according to the
schedule set forth in Section 7.3 of this Attachment and the cancellation
charges in the table below. Should Customer fail to purchase any Product within
the first twelve months after ASP, then Customer shall be deemed to have
cancelled all work under this Attachment and the cancellation charge pertaining
to "anytime after RTM" in the table below shall apply in addition to any amounts
due and owing.
If a Cancellation Notice is Received by IBM Cancellation Charge
- ------------------------------------------- -------------------
Up to but not including IDR [**]
between IDR and RTL $[**]
any time after RTM $[**]
24
Confidential Materials omitted and filed with the Securities and
Exchange Commission. Asterisks denote omissions.
8.2 Product Cancellation Charge:
In accordance with Section 4 of the Base Agreement, the following charges will
apply for any cancelled Customer order for Product or any portion thereof. The
"Cancellation Charge" referred to below is the percentage to be applied to the
prices stated above in Section 7.4 of this Attachment.
Cancellation Notice Cancellation charge
Received by IBM
Anytime after [**]%
wafer start
Prior to [**]%
wafer start
9.0 ORDERING LOCATION: SHIP TO: BILL TO:
IBM Redstone Communications, Inc. Redstone Communications, Inc.
281 Winter Street 5 Carlisle Road 5 Carlisle Road
Waltham, MA 02154 Westford, MA 01886 Westford, MA 01886
10.0 TERM
The term of this Attachment expires on December 31, 2001.
11.0 COORDINATORS/NOTICES
Technical Coordinators:
Customer: Christopher Lawler IBM: Eric Senn
Phone: 978-692-1999 Phone: 802-769-6749
Fax: 978-692-9992 Fax: 802-769-1833
Email: cplawler@redstonecom.com Email: ericsenn@us.ibm.com
25
Pursuant to section 14 of the Base Agreement, any notices hereunder shall be
given to the following persons:
Customer: Christopher Lawler IBM: John Beiswenger
Address: 5 Carlisle Road Address: 1000 River Street
Address: Westford, MA 01886 Address: Essex, Jct., VT 05452
Phone: 978-692-1999 Phone: 802-769-1212
Fax: 978-692-9992 Fax: 802-769-3988
Email: cplawler@redstonecom.com Email: jbeiswen@us.ibm.com
12. UNIQUE TERMS AND CONDITIONS
The following terms and conditions are applicable to this Attachment only.
Referring to the Base Agreement:
12.1 Modify section 12.1 of the Base Agreement, by deleting that provision in
its entirety and replacing it with the following:
IBM warrants that each unit of Product will be free from defects in
material and workmanship and will conform to the Product Specifications as
set forth in the RTM for twelve (12) months after delivery. For purposes of
this provision only, delivery to Customer of each unit of Product is deemed
to occur five (5) calendar days after shipment from IBM. This warranty does
not include repair of damage resulting from failure to provide a suitable
installation environment, any use for other than the intended purpose,
accident, disaster, neglect, misuse, transportation, alterations, or
non-IBM repairs or activities. Customer acknowledges that the functionality
of Products is contingent on Customer's designs and, therefore, such
warranty does not apply to the functionality of Products fabricated under
this Agreement. All Prototypes are provided "AS IS" without warranty of any
kind.
26
PART A
1.0 Product Name and Description
Product Type: ASIC (Application Specific Integrated Circuit)
Buyer's Product Name: EFA
Process Technology: SA 12E
Chip Image Description: 9.29 mm x 9.92 mm, 4LM with last layer of metal MT
Package Description: 824 CCGA, dual power supply, 1.27 mm pitch, 32.5 mm x
42.5 mm
2.0 Design Schedule
Step Description Responsible Party Estimated
Completion Date
Month/Year
1. IDR Milestone Both 1/99
2. Design Kit Delivery IBM 2/99
3. Requirements analysis
meeting Both 2/99
4. Analysis Netlist to IBM Customer 2/99
(required of first-time customers only)
5. Preliminary Netlist to IBM Customer 3/99
6. Updated EDIF, SDF & timing
reports to Customer IBM 4/99
7. Production Netlist to IBM Customer 4/99
8. RTL Milestone Both 4/99
9. Physical Design Complete IBM 5/99
10. Release to checking IBM 5/99
11. RTM Milestone Both 6/99
12. Initial Prototype Delivery IBM 7/99
13. Design Verification
and Prototype Acceptance Customer 8/99
14. Start of Volume Production IBM 12/99
3.0 Purchase Order Lead Times: (to include purchase order approval and
manufacturing lead time):
Prototype: Prototypes to be delivered within forty-three (43) calendar days
after RTM.
27
Production: fifteen (15) weeks.
28
PART B
Items/Deliverables
1.0 Items and IBM Deliverables associated with the IDR Milestone:
Items IBM Deliverables
Library requirements Design Kit to support synthesis simulation
Netlist processing requirements timing and testability
Test Coverage requirements Testability guidelines
Simultaneous switch requirements Clocktree process description
Clocking requirements Timing specification form
Power requirements Module physical outline drawing
Operating conditions/requirements Pin-out template (location of test, power
and ground pins)
Detailed requirements analysis report
2.0 Items and IBM Deliverables associated with the RTL Milestone:
Items IBM Deliverables
Preliminary netlist Updated EDIF, SDF and timing reports
Final netlist
Chip I/O assignment
Chip timing assertion files
Special logic functions placement directives
3.0 Items and IBM Deliverables associated with the RTM Milestone:
Items IBM Deliverables
Design functionality Post layout EDIF, SDF and timing reports
Verification Final test coverage number for Customer's design
PrototypesAccepted and Agreed To:
REDSTONE COMMUNICATIONS, INC. INTERNATIONAL BUSINESS MACHINES CORPORATION
BY: /s/ Christopher Lawler BY: /s/ Peter D. Hansen
------------------------------- ----------------------------------
NAME: CHRISTOPHER LAWLER NAME: PETER D. HANSEN
TITLE: VP OF ENGINEERING TITLE: VP NORTH AMERICAN SALES, IBM MD