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Exhibit 10.7
AGREEMENT
BETWEEN
AWARE, INC.
ONE OAK PARK
BEDFORD, MA 01734
AND
DSC TELECOM L.P.
1000 COlT ROAD
PLANO, TX 75075
2
A. STATEMENT OF GENERAL PURPOSE .................................. 3
B. DEFINITIONS ................................................... 4
C. MARKETING AND SALES ........................................... 6
D. MANUFACTURING ................................................. 7
E. PROCUREMENT OF COMPONENTS ..................................... 7
F. DESIGN AND DEVELOPMENT OF PRODUCTS: ........................... 7
G. LICENSE: ...................................................... 13
H. ATTACHMENT A- DIVISION OF RESPONSIBILITIES .................... 26
I. ATTACHMENT B- MEDIASPAN SCHEDULE .............................. 28
J. ATTACHMENT C: MINUTES OF ORGANIZATIONAL MEETING ............... 31
K. ATTACHMENT D: PROPRIETARY INFORMATION AGREEMENT ............... 41
L. ATTACHMENT F-. ................................................ 42
M. ATTACHMENT E .................................................. 44
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This Agreement is entered into as of the sixth day of March, 1996 by and between
AWARE, Inc. (hereinafter referred to as "AWARE") a corporation organized and
existing under the laws of Massachusetts, with offices in Bedford, MA and DSC
TELECOM L.P. (hereinafter referred to as "DSC"), a Texas limited partnership,
with offices in Plano, Texas. Collectively, DSC and AWARE are hereinafter
referred to as the "Parties."
WITNESSETH:
WHEREAS, DSC is engaged in the business of providing products and systems for
Hybrid Fiber Coax (HFC) telephony and related areas in which telephone and cable
television service providers will be supplied with system solutions;
WHEREAS, AWARE is engaged in the business of providing technology, systems
designs, hardware designs, software algorithms and implementations for HFC
telephony and related areas;
WHEREAS, AWARE agrees to develop proprietary computer software and hardware
designs, together with associated documentation, (the "Licensed Product") based
on AWARE'S proprietary discrete wavelet multitone (DWMT) modulation technology
that will permit integration of DSC's "Mediaspan" next generation digital loop
carrier hybrid fiber coax telephony product line (the "DSC Product"), which will
be based on DSC's current "Litespan" product line (as hereinafter defined), with
certain third party chipsets; and
WHEREAS, Aware wishes to grant, and DSC wishes to obtain a license to
manufacture and sell DSC Products that incorporate the Licensed Products;
NOW, THEREFORE, in consideration of the mutual covenants herein expressed and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound hereby:, the Parties
agree as follows:
A.STATEMENT OF GENERAL PURPOSE
The purpose of this Agreement is to establish a framework for a working
relationship between DSC and AWARE to jointly develop DSC's proposed
Mediaspan Hybrid Fiber Coax telephony extension of the Litespan product
line.
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B. DEFINITIONS
For the purposes of this Agreement, each of the following words and phrases
shall have the meanings; set forth in the adjacent column'
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TERM DEFINITION
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AWARE Bus The portion of the coax bank backplane that interconnects
the AWARE designed components: RF between CLUH and CST;
timing / control between CLUH and CST.
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CBIU DSC's Coax Bank Interface Unit. This unit is the interface
between Litespan common control and the CLUHs in a coax
bank.
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CBPS DSC's Coax Bank Power Supply. This unit produces all the
voltages necessary for coax bank operation.
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CBPT DSC's Coax Bandwidth management, Processor, Timing. This
unit distributes the Litespan signal from the CLUR to the
channel cards in a CNU-24.
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CLUH DSC's Coax Line Unit, Head end. This unit is installed in a
coax bank and converts the CBIU Litespan signal into an RF
signal.
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CLUR DSC's Coax Line Unit, Remote. This unit is installed in a
CNU-24 and converts the RF signal from the HFC network into
a CBPT Litespan signal.
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CNUPS DSC's Coax Network Unit Power Supply. This unit powers the
CNU-24.
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CNU-24 DSC's Coax Network Unit, 24 lines. This unit has six slots
for standard Litespan channel cards, the 24 assumes using
quad line units.
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Coax Bank DSC's Litespan bank assembly that interfaces with Litespan
common control and provides RF modem services. The coax bank
houses four types of PCB assemblies: CBIUs, CLUHs, CSTs,
CBPSs.
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Chipset A group of integrated circuits that form the core of the
DWMT RF modem. This group of integrated circuits is used
one per modem. 1 chipset is used per modem.
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Chipset for CLUH The DWMT chipsets and associated software utilized in the
Coax Bank plug-in modem units (CLUH)
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Chipset for CLUR The DWMT chipsets and associated software utilized in the
CNU-24 plug-in modem unit (CLUR)
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Chipset for CTU The DWMT chipsets and associated software utilized in the
CTU-x units
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CST DSC's Combiner / Splitter and Timing reference. This unit
serves two separate functions. (1) It combines the outputs
from all the CLUHs into a single bank output signal and
splits the received RF signal for distribution to the
CLUHRs. (2) It produces the clock references necessary for
the CLUHs.
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CTU-2 DSC's Coax Terminal Unit, 2 POTS lines. This is a
side-of-house box that passes through broadcast video
signals and also provides two lines of telephone service.
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DSC Product DSC's "Mediaspan" next generation digital loop carrier
hybrid fiber coax telephony product line, which will be
based on DSC's current "Litespan" product line
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DSC Bus DSC specific portion of the coax bank or CNU-24 backplane:
CBIU to CLUH, CBPS status, CLUR to CBPT
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DWMT Discrete Wavelet Multi Tone. Aware's proprietary, method
that will be used by the Mediaspan RF modems to transport
digital data across an HFC network. Each one of hundreds of
separate tones, or frequencies, per modem carry a portion of
the total digital information between the head-end HDT and
remote CTU or CNU. If interference occurs, one or more tones
may be deleted without affecting the data carried on the
remaining tones.
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Final Fit Hardware Final fit hardware are PCB assemblies that conform
mechanically to the intended production product.
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HFC Hybrid Fiber Coax. A transmission plant characterized by a
fiber optic distribution / coax feeder topology. This plant
is a bus architecture, i.e. all subscribers share access to
the transmission media.
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Litespan A DSC proprietary next generation digital loop carrier
(NGDLC) product. Litespan distributes telephony services
such as voice and data remotely throughout a service
provider's area via fiber optic connected electronic
equipment. Litespan's architecture separates common control
and services into different bank assemblies. Bank assemblies
are metal cages that hold PCB assemblies. References in this
Agreement to Litespan include Litespan and all its
derivatives including, but not imited to Airspan[trademark],
Metrospan and iMTNs. Litespan, Metrospan, and iMTN are
registered trademarks of DSC.
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PCB Assemblies Printed Circuit Board assemblies are electronic units that
contain the physical embodiment of a hardware and software
design.
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RF Modem A combination of hardware and software that transports
digital data across a coax or HFC network within Radio
Frequency (RF) channels. Different modems use different RF
channels (frequency division multiplexing) on a shared coax
media.
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Unit, System Test Unit level test evaluates a single hardware PCB assembly or
software module. System test evaluates the multiple
combination of hardware and/or software.
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Production Quality A level of design completeness such that all material
customer, engineering, marketing and manufacturing
requirements are substantially satisfied.
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Mediaspan The registered DSC trademark that is planned to be used in
marketing the DSC Product.
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"LICENSED AWARE's proprietary computer software and board level
PRODUCT(s)" hardware designs, together with associated documentation,
based on AWARE'S proprietary discrete wavelet multitone
(DWMT) modulation technology, that will permit integration
of DSC's "Mediaspan" next generation digital loop carrier
hybrid fiber coax telephony product line with certain third
party chipsets.
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"TRADEMARK(S)" The trademark "AWARE", WaveTel HFC and such other names or
marks as AWARE may use from time to time in connection with
the marketing of AWARE'S DWMT technology.
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"FIELD OF USE" subassemblies, systems and products for data and voice
services over HFC networks
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PRIOR MATERIAL Patents and copyrights (and all applications for the same),
trade secrets and other proprietary rights relating to this
development effort, designs, documentation, methods,
processes, inventions, works and other design, development
and manufacturing materials information which are in
existence and owned by such party prior to the date of this
Agreement all designs, documentation, methods, processes,
inventions, works and other design, development and
manufacturing materials information which are in existence
and owned by such the parties prior to the date of this
Agreement.
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C. MARKETING AND SALES
DSC will have exclusive marketing and sales responsibility for the DSC
Product. AWARE will support DSC in its sales and marketing efforts, as
reasonably requested, to assist in the successful application of the
product in the marketplace. Customer pricing for the DSC Product will be
set by DSC. Order
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entry, manufacturing, and customer service (including technical support)
will be provided by DSC.
D. MANUFACTURING
DSC will perform the assembly, test, and shipping of the assemblies
developed as a result of this Agreement. AWARE will provide expertise
during the development of the assemblies. Quality functions regarding the
manufactured product, including but not limited to repair and return, will
reside with DSC.
E. PROCUREMENT OF COMPONENTS
This agreement does not provide for the actual procurement of the modem
chipset components. Such procurement will be negotiated separately and may
be procured by DSC directly from the chip set manufacturer. AWARE will
direct the chipset manufacturer to permit direct acquisition of the
chipsets.
F. DESIGN AND DEVELOPMENT OF PRODUCTS:
1. Pre-production Hardware
AWARE agrees to provide DSC with hardware pre-production assemblies
for the coax bank subsystem, CNU-24 and CTU-2 of the DSC Product for
the purpose of finalizing the systems level design. Aware expects to
provide limited quantities of these pre-production units. Pricing will
be determined as requirements are better specified. These assemblies
will contain software and chipsets previously developed by AWARE to
implement DWMT for HFC telephony and new software to interface AWARE
designed DWMT chipsets to DSC's hardware. These assemblies are
detailed in Attachment D "Specifications" which will be attached when
agreed by the parties.
2. Production-level Hardware
AWARE and DSC agree to jointly develop production quality printed
circuit board (PCB) assemblies
In performing the design and development, both hardware and
software/firmware, of ASICs and Printed Wiring Board Assemblies AWARE
shall use commercially reasonable efforts to comply with any necessary
quality requirements including the following if applicable:
- Bellcore TR-NWT-000078 (Generic Physical Design Requirements for
Telecommunications Products and Equipment),
- Bellcore TR-NWT-000357 (Generic Requirements for Assuring the
Reliability of Components Used in Telecommunications Equipment),
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- Bellcore TR-NWT-000179 (Quality System Generic Requirements for
Software),
- ISO 9001 (Quality Systems-Model for quality assurance in
design/development, production, installation and servicing),
- ISO 9000-3 (Quality Management and Quality Assurance Standards -
Part 3: Guidelines for the Application of ISO 9000 to the
Development, Supply and Maintenance of Software),
- DSC procedure 003-4000-005 (PWB Design Rules and Guidelines).
In addition, AWARE is to select parts for design from the DSC Approved
Vendor List (AVL). DSC approval must be obtained prior to use of parts
that are neither "Q" (qualified) or "S" (Ship-to-Stock) status on the
DSC AVL.
3. Reference designs
AWARE agrees to provide DSC with hardware reference designs and
requisite software for the coax bank, CNU-24 and CTU-2 of the DSC
Products. These assemblies contain software and chipsets previously
developed by AWARE to implement DWMT for HFC telephony and new
software to interface AWARE designed DWMT chipsets to DSC hardware.
These assemblies are detailed in Attachment A of this Agreement.
4. DSC equipment for use by aware
DSC will install and configure (at DSC's cost) a full Litespan Host
Digital Terminal (HDT) with engineering debug capability at AWARE by
March 15, 1996. The equipment will be subject to the terms of a
Equipment Loan Agreement attached hereto as Attachment F.
5. System development and integration
System development and integration will occur in both Petaluma, CA and
Bedford, MA. AWARE's development contribution will concentrate on RF
modem coax performance and DSC's development contribution will
concentrate on telephony system performance. A staged integration plan
will be developed mutually by AWARE and DSC.
6. AWARE support for DSC manufacturing test programs
AWARE will provide engineering expertise reasonably sufficient for DSC
to produce a complete manufacturing test in a timely manner.
Commercially reasonable efforts to adhere to design for testability,
timely completion of FDS, and participation in design reviews (FDR),
LR, and PDR (as specified in Attachment B) will be required of AWARE.
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7. Timetable
Both parties acknowledge that the milestones set forth in this
Agreement and on Attachment B will be attempted on a "commercially
reasonable efforts" basis. Failure to meet the milestones on the dates
set forth shall not be deemed a breach of this Agreement unless it is
the result of substantial abandonment, or redirection of a significant
amount of the resources, of the effort by one of the parties. The
timetable for the performance of the obligations of the parties
hereunder is as shown in Attachment B.
8. Project milestones
Major planned project milestones are detailed in Attachment B.
9. AWARE support activities
a. Technical Support
AWARE will provide full support for software developed under this
Agreement, including problem corrections consistent with standard
telephony equipment industry practices, for four years. Support
thus rendered will be limited to incidents directly associated
with the maintenance, troubleshooting, diagnostics, and
"patching" (software fixes) of DSC Product and LICENSED PRODUCT.
Technical Support via telephone will be provided to DSC from
Aware 24 hours a day, 7 days a week. Aware will provide, on a
regular basis, current after hour technical assistance
information to include on-call assignments and a comprehensive
escalation list with contact instructions. Such information will
be used by DSC CTAC for direct contact with Aware designated
employees in the event that any 3rd party answering service or
other Aware call out procedures fails to meet DSC response
requirements.
b. Integretion and Manufacturing Support
During system integration and after DSC's release to manufacture,
AWARE will provide system integration support in the form of
consulting services. These will be billed as time and materials
(plus reasonable expenses). Reimbursable, travel expenses will be
per DSC's corporate travel policy. Senior engineers will be
billed at $800/day, engineers at $500/day and engineering
technicians at $350/day. Senior engineers have an understanding
of system level hardware and software issues. Engineers have an
understanding of card level hardware and software issues.
Engineering technicians are utilized for card level hardware
modifications. Customer support requests at Aware will initially
be directed to engineers and, if necessary, re-directed to senior
engineers.
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c. Upgrades and Enhancements
Subject to DSC's approval, upgrades and enhancements to the
LICENSED PRODUCTS will be jointly considered by AWARE and DSC as
the need arises. Examples of these include a CNU-24 capable of
more than one T1 transport as well as POTS transport, or use of a
CLUR-like card in ONU-96 or other upgrades to the CNU-24. Prices
and other terms and conditions for such upgrades shall be as
mutually agreed by the parties.
d. Change Notice
AWARE will inform DSC in a timely manner of any product hardware
or software defects which are reported to AWARE regarding the DSC
Product or LICENSED PRODUCTS, or are discovered by AWARE, to
enable DSC to perform timely resolution. AWARE will notify DSC of
hardware and software changes in the LICENSED PRODUCT initiated
by Aware prior to implementation and deployment. Such proposed
changes require DSC's approval to the extent that the LICENSED
PRODUCT's fit, form, function, performance, safety or reliability
will be affected by the change. Aware will provide compatibility,
dependency, and user impact analysis for all such changes.
Aware will provide with all software changes, including patches,
a software Icad description document ("release notes") that
includes, as appropriate: a list and description of the major
features of the release, description of changes to system
software and related hardware, man-machine interface information,
list of deliverables, resolved and open problems, and
installation procedures.
Aware will provide DSC all documentation regarding user impact of
design changes (software/hardware) that affect the operation and
maintenance of the LICENSED PRODUCT.
10. Customer visits
AWARE will be available for customer visits as reasonably
required to assist in technical marketing of the product and to
gain a first hand understanding of the customer requirements.
11. Intellectual property
a. Right, Title and Interest
All right, title and interest in and to all copyrights, patents,
trade secrets, trademarks, or other proprietary rights in and to
the Licensed Products is and shall remain the sole property of
AWARE. DSC shall be the sole owner of the DSC Product subject to
Aware's rights in the LICENSED PRODUCTS. In
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general, intellectual property developed by AWARE or DSC shall be the
property of the company that developed it. Each party shall continue
to retain sole title to and ownership of all Prior Materials. Each
party shall continue to retain sole title to and ownership of all
designs, documentation, methods, processes, inventions, works and
other design, development and manufacturing materials information
which, regardless of creation date, are not related to the development
effort which is the subject matter of this Agreement (collectively the
"Unrelated Materials"). Except as required for the operation of the
Agreement or as authorized by the party owning the same, in writing,
all such Prior Materials and all copies thereof shall be returned to
the owner upon the termination of this Agreement. Aware will deposit
Confidential Materials relating to its Background Materials and all
INTELLECTUAL PROPERTY (in the form of, including but not limited to,
schematics, bills of material, prototype cards, and source code)
developed pursuant to this Agreement with an escrow agent, the terms
of the release of the materials to DSC is described in Section 1lb,
prior to payment at each Milestone. The parties shall promptly
negotiate, in good faith, such escrow agreement, substantially similar
to Attachment E: Escrow Agreement, provided however, that DSC shall be
the only "Participating User", as defined therein, with respect to the
LICENSED PRODUCTS. If no such escrow agreement is negotiated, then the
terms and conditions of Attachment E shall apply, with the following
modifications - (i) the terms and conditions stated in this Paragraph
shall control any conflicting terms and condition in Attachment E,
(ii) DSC shall be the only Participating User unless otherwise agreed
by DSC, (iii) an "Event of Release" includes any event expressly
stated in this Agreement, and AWARE's failure to support the product
which would otherwise entitle DSC to terminate this Agreement, (iv)
AWARE shall be required to appoint a substitute escrow agent under
Section 10 of Attachment E, and (v)in Section 11 of Appendix C of
Attachment E, the requirement that DSC obtain AWARE's prior written
consent is deleted, provided that such export or re-export is in
compliance with all United States laws.
b. Escrow of AWARE Background Materials
In the event of a proper release of any Confidential Materials under
the Escrow Agreement, AWARE grants to DSC, effective upon such release
of Confidential Materials, a limited, nontransferable, nonexclusive,
worldwide license to use such Confidential Materials to perform
AWARE's obligations under this Agreement as if AWARE were still
required to perform them, but only as the obligations relate. to
customers to whom DSC sells Product under the terms of this Agreement
which protect the intellectual property of AWARE. DSC may set-off
against its obligation to make royalty payments, expenses incurred to
remedy the breach by Aware that caused the release under the Escrow
Agreement.
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Purchaser will use all such Confidential Materials released under this
Section 1lb solely for the purposes contemplated under this
Agreement, and Purchaser acknowledges and agrees that title to all
such Confidential Materials shall remain with Supplier at all times,
and that all such Confidential Materials shall remain confidential and
proprietary to AWARE and shall be treated in accordance with Section
G.1lb of this Agreement entitled "Confidentiality".
c. Ownership
Except as otherwise provided in this Agreement, intellectual property
jointly developed by the Parties will be jointly owned by the Parties,
each party owning an undivided one half interest therein. Each party
shall have the right to practice the jointly owned intellectual
property in any field and to grant rights, licenses and other
privileges as the party deems appropriate or necessary. Except as set
forth in Paragraph (a) above, neither party shall have any duty to
account to the other party with respect to the proceeds of any
intellectual property jointly owned by them. Each party shall have
such other rights with respect to such jointly owned intellectual
property as may be prescribed by applicable law.
d. Manufacturing Rights
In consideration of the funding by DSC to assist in the design and
development of the hardware and software necessary for the
pre-production units (for assemblies CLUH, CLUR, CTU-2 and CST, as
defined in Attachment A), the manufacturing rights for assemblies
CLUH, CLUR, CTU-2, and CST shall be owned exclusively by DSC.
e. Software Specific to Mediaspan
Tone management software implemented specifically for the DSC Product,
and tone management hardware designs for the CLUH, CTU-2, CLUR and CST
will be exclusively owned by DSC.
f. DSC Prior Material
The following, without limiting the generality of subparagraph (a)
above, shall be considered DSC Prior Material:
- CTU-2 line circuit, power supply and mechanical design
- Litespan system architecture and design
- CNU-24 backplane and mechanical design
- Coax bank backplane, CBIU, CBPS and mechanics
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g. AWARE Prior Material
The following, without limiting the generality of subparagraph (a)
above, shall be considered AWARE Prior Material:
- Analog front-end and RF circuit designs for DWMT modems
- Digital designs for DWMT modems
- DWMT modem software and all other DWMT technology
- Generic tone management software for DWMT modems
12. CAD Agreements
All AWARE bills of material (BOM) will be screened and approved by DSC
component engineering and loaded into the DSC component database by
DSC. All designs will use DSC part numbers or APR numbers.
AWARE will do the initial layout of the CLUH, CST, CTU-2 and CLUR due
to the critical placement and routing requirements of these designs.
These initial prototype designs will be fabricated and manufactured
either by AWARE or DSC (whichever is more expedient). As the
schematics, placement and layouts are created, they will be
transferred to DSC CAD by DSC CAD personnel.
13. Product Validation
Full PQA and HQA product validation of the designs transferred to DSC
CAD, will be performed by DSC. This includes all software
functionality, hardware performance and modem RF operation.
In order for DSC to properly test the complete system, AWARE will
provide functional design specifications on all assemblies in a timely
manner.
14.Manufacturing Support Agreement
AWARE wilt provide engineering expertise sufficient for DSC to produce
a complete manufacturing test solution.
G.LICENSE:
1. License Grant
a. AWARE hereby grants to DSC the royalty-bearing, non-exclusive
licenses:
1) to make, have made, use, demonstrate, distribute, and sell
LICENSED PRODUCTS as integrated into the DSC Products in the
FIELD OF USE; and
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2) to use the TRADEMARKS in connection with the marketing and sale
of the LICENSED PRODUCTS as integrated into the DSC Products in
the FIELD OF USE; and
3) to copy the computer software, hardware designs and documentation
included in the LICENSED PRODUCTS solely for the purpose of the
license set forth in sub-paragraph 1) above.
b. The license granted hereunder shall not be construed to confer any
rights upon DSC by implication, estoppel or otherwise, as to any
intellectual property not specifically included herein.
2. FEES and ROYALTIES
For the rights, privileges and license granted hereunder, DSC shall pay
AWARE non-recurring engineering fees, license fees and royalties as
follows:
a. Non-Recurring Engineering Fee
A non-recurring engineering fee of [redact] shall be payable upon the
completion of each milestone as shown in the table in section G.2b and in
the table in Attachment B
b. License Fees
License fees for the license set forth in Section G.1 shall be payable upon
execution of this Agreement and upon completion of Milestones 1, 2 and 4,
as shown below. Any invoice dated during 1996 and paid prior to execution
of this Agreement will be offset against the License fees.
[redact]
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c. Royalties
Royalty payments shall be based upon the quantity of chipsets purchased by
DSC or its affiliates, sublicensees, or distributors for use in production
of DSC Products and will be calculated as follows:
For each Chipset utilized by DSC for use in DSC Products, royalties
will be paid to AWARE when DSC Products are transferred to DSC
Finished Goods or sold (whichever comes first), as shown in the
following schedule, continuing for the length of time in which the
Chipsets are used in DSC Products:
[redact]
The royalties will be reported on a monthly basis to AWARE and
payments will be made net thirty (30) days following the end of the
month for which royalties are due.
d. Payments
Except as otherwise provided herein, all DSC payments must be invoiced by
AWARE in US dollars. DSC will pay AWARE in US dollars no later than thirty
(30) days from the invoice date.
e. Reports and Accounting
DSC shall keep full, true and accurate books of account containing all
particulars that may be necessary for the purpose of showing the amounts
payable to AWARE hereunder. Said books of account shall be kept at DSC's
principal place of business or the principal place of business of the
appropriated division of DSC to which this Agreement relates. Said books
and the supporting data shall be open at all reasonable times for one (1)
year following the end of the calendar year to which they pertain to the
inspection of AWARE or its agents of the purpose of verifying DSC's royalty
statement or compliance in other respects with this Agreement. Records of
any year may be inspected given reasonable notice and only once. The
results of such inspection shall be provided promptly to DSC. If the agreed
results of such inspection show that DSC has under paid AWARE by ten
percent (10%) or more, then DSC shall pay AWARE such underpayment and pay
the reasonable cost of such audit, and to allow an
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inspection of the records of the prior three (3) years. If the agreed
results of such inspection show that DSC has over paid AWARE by ten percent
(10%) or more, then Aware shall reimburse DSC such overpayment. All records
to be inspected shall be kept confidential pursuant to the NDA.
1) DSC, within sixty (60) days after March 31, June 30, September 30 and
December 31, of each year, shall deliver to AWARE true and accurate
reports, giving such particulars of the business conducted by DSC
during the preceding three-month period under this Agreement as shall
be pertinent to a royalty accounting hereunder. These shall include at
least the following:
a. descriptions of DSC Products integrating LICENSED PRODUCTS;
b. number of DSC Products integrating LICENSED PRODUCTS sold by
or for DSC;
c. total royalties due.
2) With each such report submitted, DSC shall pay to AWARE the royalties
due and payable under this Agreement. If no royalties shall be due,
DSC shall so report.
f. Late Payments
The royalty payments set forth in this Agreement on amounts due under
Paragraph G2 shall, if overdue, bear interest until payment at a per annum
rate two percent (2%) above the prime rate in effect at the Chase Manhattan
Bank (N.A.) on the due date. The payment of such interest shall not
foreclose AWARE from exercising any other rights it may have as a
consequence of the lateness of any payment.
g. Most Favored Prices
AWARE agrees that if, during the term of this Agreement, the prices,
discounts, non-recurring engineering fees, license fees, and/or royalty
rates for the same or substantially similar services, licenses, or
products, or other terms offered by AWARE to DSC are or become less
favorable than those given by AWARE to any other customer purchasing the
same or substantially similar services, licenses, and or products in the
FIELD OF USE in similar or lesser quantities and under similar terms, AWARE
shall immediately provide such prices, discounts and other terms to DSC.
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3. AWARE REPRESENTATIONS AND WARRANTIES
a. Rights
AWARE represents and warrants that it owns the LICENSED PRODUCTS or
otherwise has the right to grant the LICENSES granted hereunder.
b. Warranty
AWARE warrants that the designs developed by AWARE under this Agreement
will perform substantially in accordance with jointly written and agreed
performance specifications, as developed pursuant to Attachment B. AWARE
warrants that it will perform all services under this Agreement in a
skillful and workmanlike manner.
c. LIMITATIONS OF WARRANTY
EXCEPT AS EXPRESSLY SET FORTH ABOVE, AWARE MAKES NO WARRANTY WITH RESPECT
TO THE LICENSED PRODUCTS, THE PERFORMANCE OF SERVICES HEREUNDER, OR
OTHERWISE IN CONNECTION WITH THIS AGREEMENT. EXCEPT AS EXPRESSLY SET FORTH
ABOVE, THE LICENSED PRODUCTS ARE PROVIDED TO DSC "AS IS." AWARE MAKES NO
OTHER WARRANTIES WHETHER EXPRESS, IMPLIED OR ARISING BY CUSTOM OR TRADE
USAGE, AND SPECIFICALLY DISCLAIMS OTHER WARRANTIES OF TITLE, NON
INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
4. COPYRIGHT
DSC acknowledges that title to the LICENSED PRODUCTS (including copyright)
shall remain with AWARE and that any copies of the LICENSED PRODUCTS and
related documentation, or portions thereof, made by DSC shall include an
AWARE copyright notice thereon the following form: "Copyright 199-, AWARE,
Inc. All Rights Reserved". DSC shall also affix such other notices as AWARE
may reasonably require from time to time, including trademark, patent, and
government restricted rights notices. All notices shall be affixed to all
copies or portions thereof in such manner and location as to give
reasonable notice of AWARE's claim of copyright. DSC shall at all times
hereafter protect the LICENSED PRODUCTS, and all related technical
information, data and materials supplied by AWARE, from transfer using
measures at least as strong as those used by DSC in protecting its own
proprietary software.
5. TRADEMARK and GOODWILL
DSC agrees that it is critical that the goodwill associated with the
TRADEMARK(s) be protected and, toward this end, DSC shall not during the
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term of this Agreement or thereafter: apply to register or maintain any
application or registration of the TRADEMARK(s) or any other mark
confusingly similar thereto in any jurisdiction, domestic or foreign; use
any colorable imitation of any of the TRADEMARK(s). or any variant form
including variant design forms, logos, colors, or type styles of the
TRADEMARK(s) not specifically approved by AWARE; misuse the TRADEMARK(s);
take any action that would bring the TRADEMARKS(s) into public disrepute;
use the TRADEMARK(s), or any mark or name confusingly similar thereto, in
its corporate or trade name; or take any action that would tend to destroy
or diminish the goodwill in the TRADEMARK(s). All use by DSC of the
TRADEMARK(s) shall inure to the benefit of AWARE.
DSC agrees to reasonably cooperate with AWARE in securing and maintaining
the goodwill of AWARE in the TRADEMARK(s).
All LICENSED PRODUCTS shall be designed and manufactured to the quality
standard inherent in DSC's product portfolio.
DSC agrees that it shall mark the LICENSED PRODUCTS to indicate the rights
of AWARE in the TRADEMARK(s), including registration status of the
TRADEMARK(s) and that the products are manufactured pursuant to a license.
AWARE agrees to maintain the goodwill of DSC.
Neither party will take any action which may destroy or diminish the
goodwill of the other.
6. INFRINGEMENT AND INDEMNITIES
a. Indemnity
AWARE will defend, at its own expense, and hold DSC harmless from any
action brought against DSC to the extent that it is based on a claim that
any PROGRAMS, DESIGNS, COPYRIGHTS, PATENTS, or TRADEMARKS supplied by AWARE
pursuant to this Agreement constitutes a direct infringement of a patent
issued prior to the execution of this Agreement, copyright or trademark, or
intellectual property right of a third party. AWARE will pay all damages
and costs finally awarded against DSC in such action which are attributable
to such actions provided that AWARE is promptly informed in writing and
furnished a copy of each communication, notice, or any other action and
provided that DSC does not make any admissions against AWARE's interest
relating to the alleged infringement and is given authority, information,
and assistance at AWARE's expense necessary to defend or settle such claim.
AWARE shall have sole control of the defense of any such action and all
negotiations for its settlement or
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compromise. DSC shall cooperate fully with AWARE in the defense, settlement
or compromise of any such action. Prior to DSC's requesting that AWARE
honor its defense and hold harmless obligations described above, DSC shall
make a reasonable, good-faith effort, with AWARE's advice and consultation,
to determine the actual basis of the claim, that is, whether or not AWARE
has liability under this Paragraph, subject to the limitations in this
Paragraph. DSC shall bear its own costs prior to making such determination.
If DSC determines that the actual basis of the claim is not substantially
based upon matters for which AWARE is required to defend and hold harmless
DSC, then DSC shall have sole control of the defense of any such action and
all negotiations for its settlement or compromise, and AWARE shall
cooperate fully with DSC in the defense, settlement or compromise of any
such action. DSC and AWARE shall bear damages and costs in proportion to
their respective liability for such claims. Should the PROGRAMS, DESIGNS,
COPYRIGHTS, PATENTS, or TRADEMARKS become, or in AWARE's opinion be likely
to become, the subject of a claim of infringement of a patent, copyright or
trademark, or intellectual property right of a third party, then AWARE may,
at its sole option, either procure for DSC the right to use such PROGRAMS,
DESIGNS, COPYRIGHTS, PATENTS, or TRADEMARKS free of any liability for
infringement; or replace or modify such PROGRAMS, DESIGNS, COPYRIGHTS,
PATENTS, or TRADEMARKS so that they become noninfringing, but functionally
and cost equivalent. Notwithstanding any language to the contrary in this
Paragraph, AWARE shall have no liability to DSC under this Paragraph to the
extent that any infringement or claim thereof is based upon AWARE's
compliance with designs, specifications or instructions provided by DSC.
THE FOREGOING STATES THE SOLE AND EXCLUSIVE LIABILITY OF AWARE AND THE SOLE
AND EXCLUSIVE REMEDIES OF DSC TO THIS AGREEMENT FOR PATENT, COPYRIGHT,
TRADEMARK INFRINGEMENT OR INTELLECTUAL PROPERTY RIGHT INFRINGEMENT, AND IS
IN LIEU OF ALL CONDITIONS OR WARRANTIES, EXPRESSED, IMPLIED, OR STATUTORY,
IN REGARD THERETO.
b. Notification
Each of AWARE and DSC agrees to notify the other promptly in writing when
it learns of any patents, copyrights or other proprietary rights belonging
to third parties which are allegedly being infringed by the manufacture,
use, sale or other disposition of products licensed under this Agreement.
c. Rights
In the event AWARE is unable or unwilling to provide the indemnity
indicated in Paragraph(a) above, DSC shall have the right to offset
royalties otherwise
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payable under this Agreement against costs incurred by DSC in defending any
claim or suit of the type specified in (a) and/or in the settlement thereof
or the payment of any judgment or award or royalty arrangement to a third
party resulting therefrom. Any funds remaining in such escrow on the
completion of all claims and action and the payments of all expenses, award
and the like resulting therefrom shall be promptly paid to AWARE. To the
extent DSC is at any time obligated to pay royalties for the continued
right to sell products licensed under this Agreement as a result of
infringement of third party intellectual property rights based on the
manufacture, use or sale by DSC of hardware or software developed and/or
provided by AWARE under this Agreement, DSC shall have the right to deduct
from the royalties payable by DSC to AWARE under this Agreement any amounts
so paid by DSC.
d. Indemnification
Each Party ("Indemnifying Party") hereby indemnifies and holds the other
Party ("Indemnified Party"), its directors, of-ricers, agents, and
employees harmless against any and all claims, actions, damages,
liabilities, or expenses, including reasonable attorney's fees and other
legal costs for injury to or death of any person, and for loss of or damage
to any and all property arising out of the negligent or willful wrongful
acts or omissions of the Indemnifying Party, its employees, agents,
subcontractors, or representatives.
e. Limitation of Liability
IN NO EVENT SHALL EITHER PARTY OR ITS THIRD PARTY LICENSORS OR SUPPLIERS BE
LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT
LIMITED TO, LEGAL FEES, LOSS OF DATA, LOSS OF USE, LOSS OF PROFITS OR LOSS
RESULTING FROM BUSINESS DISRUPTION, EVEN IF SUCH PARTY OR ITS THIRD PARTY
LICENSORS OR SUPPLIERS HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
NO SUIT OR ACTION SHALL BE BROUGHT AGAINST ONE PARTY BY THE OTHER MORE THAN
ONE YEAR AFTER THE RELATED CAUSE OF ACTION HAS ACCRUED, OR IN THE CASE OF
AN INDEMNIFIABLE CLAIM MORE THAN ONE YEAR AFTER RECEIPT OF NOTICE OF THE
CLAIM. EXCEPT FOR INDEMNIFIED MATTERS, IN NO EVENT SHALL THE LIABILITY OF
AWARE TO DSC, WHETHER ARISING IN TORT, CONTRACT, OR OTHERWISE, FOR ANY
CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THE
LICENSED PRODUCTS OR THIS AGREEMENT, EXCEED THE FEES AND ROYALTIES PAID BY
DSC TO AWARE UNDER THIS AGREEMENT.
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7. PRODUCT LIABILITY
Subject to the indemnity stated in Paragraph G6, DSC shall at all times
during the term of this Agreement and thereafter, indemnify, defend and
hold AWARE, its officers, employees and affiliates, harmless against all
claims and expenses, including legal expenses and reasonable attorneys'
fees, arising out of the death of or injury to any person or persons or out
of any damage to property and against any other claim, proceeding, demand,
expense and liability of any kind whatsoever resulting from the production,
manufacture, sale use, lease, consumption or advertisement of the LICENSED
PRODUCT(s) by DSC.
8. ASSIGNMENT
This Agreement shall not be assignable by either party without the prior
written consent of the other party and any attempt to do so shall be void.
Notwithstanding the preceding sentence, DSC may market and/or distribute
the LICENSED PRODUCTS utilizing affiliated companies and other
distributors, and may sublicense DSC's rights hereunder which are
reasonably required for such marketing and distribution to such affiliated
companies or distributors, without the requirement for such consent. Not
withstanding the foregoing, AWARE or DSC may assign the Agreement, to a
wholly owned affiliate, and AWARE may assign this Agreement without
restriction after completion of development of the LICENSED PRODUCTS,
provided that AWARE shall not transfer any proprietary information of DSC
to any competitor of DSC in connection with such assignment.
9. TERMINATION
a. DSC Failure to make payment
Should DSC fail to make any payment whatsoever due and payable to AWARE
hereunder unless contested in good faith, this Agreement shall terminate
effective on thirty (30) days' notice, unless DSC shall make all such
payments to AWARE within said thirty (30) day period. Upon the expiration
of the thirty (30) day period, if DSC shall not have made all such payments
to AWARE, the rights, privileges and license granted hereunder shall
automatically terminate.
b. Material Breach
Upon any material breach or default of this Agreement by Aware or DSC,
other than that set out in Paragraph (a) above, this Agreement and the
rights, privileges and license granted hereunder shall terminate effective
ninety (90) days after notice from one party to the other, unless the other
shall have cured any such material breach or default prior to the
expiration of the ninety (90) day
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period. A termination by DSC for convenience as described by paragraph 10c
below shall not be considered a Material breach under this paragraph 10b.
c. Termination by DSC for Convenience
If DSC substantially abandons or redirects a significant amount of its
resources and such abandonment or redirection causes a delay in the
milestone schedule set forth on Attachment B, DSC shall pay Aware the NRE
and license payments that would have been due for the current Milestone in
process and all subsequent Milestones in complete satisfaction of its
obligations to Aware.
d. Change of Control
Prior to completion of the development of the LICENSED PRODUCTS, DSC may
terminate this Agreement without liability in the event that AWARE is
acquired by, merged into, or sells more than 25% of any class of its stock
to an entity that competes with DSC or could materially harm DSC through
the inside information gained through the acquisition of AWARE. Prior to
the completion of any such merger or acquisition, AWARE agrees to return
all information, material, and DSC furnished or owned equipment. Upon such
termination the license granted pursuant to Section G of this Agreement
shall terminate, and DSC shall have no further right to make, have made,
use, sell, copy, market or distribute DSC Products that integrate the
LICENSED PRODUCTS. DSC's obligation to pay royalties shall survive any such
termination.
e. Effect of Termination
Upon termination of this Agreement for any reason, nothing herein shall be
construed to release either party from any obligation that matured prior to
the effective date of such termination, nor shall such termination affect
the rights of DSC customers of the LICENSED PRODUCTS who have purchased
such LICENSED PRODUCTS prior to such termination nor shall such termination
effect the rights of DSC to provide service and support to DSC customers
who had purchased such LICENSED PRODUCTS prior to such termination. Upon
such termination the license granted pursuant to Section G of this
Agreement shall terminate, and DSC shall have no further right to make,
have made, use, sell, copy, market or distribute DSC Products that
integrate the LICENSED PRODUCTS. DSC's obligation to pay royalties shall
survive any such termination.
10. PAYMENT, NOTICES, AND OTHER COMMUNICATIONS
Any payments, notice or other communication pursuant to this Agreement
shall be sufficiently made or given on the date of mailing if sent to such
party by certified first class mail, postage prepaid, addressed to it at
its address below or as it shall designated by written notice given to the
other party;
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In the case of AWARE:
AWARE, Inc.
One Oak Park
Bedford, MA 01730-1413
Attn: James C. Bender
In the case of DSC:
Invoices: Other matters:
DSC Communications Corporation DSC Communications
Corporation
1000 Coit Road 1000 Coit Road
Plano, TX 75075 Plano, TX 75075
Attn: Accounts Payable Attn: Legal Department
11.MISCELLANEOUS PROVISIONS
a. Applicable Laws
This Agreement shall be construed, governed, interpreted and applied in
accordance with the laws of the State of Texas, without regard to its
choice of laws rules, except that questions affecting the construction and
effect of any patent shall be determined by the law of the country in which
the patent was granted.
b. Confidentiality
All information exchanged between the parties under this Agreement, whether
pre-existing or developed under this Agreement, shall come under, and shall
be treated in accordance with, the terms and conditions of the Proprietary
Information Agreement between DSC Communications Corporation and AWARE,
dated March 17, 1995, and such Proprietary Information Agreement may, from
time to time, be amended or extended. A copy of the Proprietary Information
Agreement forms Attachment D to this Agreement. Notwithstanding the
foregoing, or any language in such Proprietary Information Agreement to the
contrary, for the purpose of exchanging information under this Agreement,
(i) termination of such Proprietary Information Agreement shall only be
coterminous with this Agreement, but termination of such Proprietary
Information Agreement for other purposes shall be pursuant to such
Proprietary Information Agreement, (ii) Proprietary Information (as
defined in the Proprietary Information Agreement) exchanged in connection
with the present Agreement or the discussion
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associated with this Agreement, may be used by the Recipient thereof for,
and only for, Recipient's performance under the present Agreement or such
discussion, and (iii) the period of years in Section 5 of the Proprietary
Information Agreement shall be five (5) years as applied to the Proprietary
Information exchanged in connection with the present Agreement or such
associated discussions. The source code component of the LICENSED PRODUCTS
is and shall remain a proprietary trade secret of AWARE. DSC shall hold any
such source code in its possession in strict confidence, notwithstanding
the expiration or termination of this Agreement or the Proprietary
Information Agreement.
c. No Publicity
Neither party shall use the name of the other party in any news release,
public announcement, advertisement, or general publicity without the prior,
written consent of such other party. Notwithstanding the foregoing, AWARE
may use the name of DSC in connection with any offering of the securities
of AWARE or, as may be required by law or regulation or for the purpose of
borrowing capital from a financial institution.
d. Entire Agreement
The parties hereto acknowledge that this Agreement, and the Attachments
hereto, set forth the entire Agreement and understanding of the parties
hereto as to the subject matter hereof, and shall not be subject to any
change or modification except by the execution of a written instrument
subscribed to by the parties hereto.
e. Validity
No provision of the Agreement is intended to conflict with any law, and the
provisions should be construed in a manner that will uphold their validity.
In the event that any provision is found to be contrary to any law, it
shall be deemed unenforceable, and the parties or the court shall
substitute a lawful provision in its place which is equitable and which, to
the extent possible, reflects the original intent of the parties. Unless it
would be inequitable to so, all other provisions of the Agreement shall
remain in full force and effect.
f. Waiver of Rights
The failure of either party to assert a right hereunder or to insist upon
compliance with any term or condition of this Agreement shall not
constitute a waiver of that right or excuse a similar subsequent failure
to perform any such term or condition by the other party.
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g. Relationship of the Parties
It is expressly understood that, except as otherwise provided herein, DSC,
on the one hand, and AWARE, on the other hand, do not intend to undertake
the relationship of principal and agent, or to create a joint venture or
partnership between them or their respective successors in interests, but
are and remain independent contractors. Except as otherwise provided
herein, neither DSC, on the one hand, nor AWARE, on the other hand, shall
have any authority to create or assume, in the name of or on behalf of the
other party, any obligation, express or implied, nor to act or purport to
act as the agent or the legally empowered representative of the other party
hereto for any purpose whatsoever.
h. Expenses
Except as stated in this Agreement, any and all costs, expenses, or
liability to either AWARE or DSC caused by or arising out of this Agreement
shall be borne by such party separately and individually, and neither party
shall be liable or obligated to the other for any such costs, expenses, or
liability, except to the extent that such costs, expenses, or liability are
reimbursed, paid, or provided for under a subcontract, if any, entered into
between the parties.
i. Source Code Escrow
The parties agree to negotiate in good faith to establish a source code
escrow agreement with respect to the LICENSED PRODUCTS within a reasonable
time after execution of this Agreement.
In WITNESS WHEREOF, the parties duly execute this Agreement the day and year set
forth below.
DSC TELECOM L.P. AWARE, INC.
By: /s/ Scott Smith By: /s/ James C. Bender
- -------------------- ------------------------------
for
Name: Dave Ehreth Name: James C. Bender
Title: VP of Finance Title: Chief Executive Officer
------------- ------------------------------
Date: 3/6/96 Date: March 6, 1996
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