Exhibit 10.58
DEVELOPMENT, SUPPLY AND LICENSE AGREEMENT
BETWEEN INTER-TEL AND QUALCOMM
This Development, Supply and License Agreement (the "Agreement") is entered into
as of January 17, 1996 (the "Effective Date"), by and between QUALCOMM
Incorporated, a Delaware corporation ("QUALCOMM'), with offices located at 6455
Lusk Boulevard, San Diego, California 92121-2779 and Inter-Tel Integrated
Systems, Inc., an Arizona corporation ("Inter-Tel"), with offices located at
7300 West Boston Street, Chandler, Arizona 85226-3224, with regard to the
following facts:
RECITALS
A. QUALCOMM is developing multiplexer equipment known as a Concentrated
Subscriber Station, or the QCT 8000 series (the "CSS"), which will incorporate
its proprietary Code Division Multiple Access (CDMA), which will incorporate its
proprietary Code Division Multiple Access (CDMA) technology for use in wireless
local loop communication systems.
B. Inter-Tel has represented that it has previously developed multiplexer
equipment, including switch software programs and hardware, known as the AXXESS
Key System (hereinafter referred to as the "Multiplexer"), and that it has the
expertise to design, develop, manufacture and test, as applicable, the
Deliverables (as defined below) to meet QUALCOMM's applicable CSS
specifications.
C. QUALCOMM desires to purchase the Devices (or license in the case of Software
and Multiplexer Designs) (as defined below), from Inter-Tel and Inter-Tel
desires to sell the Devices (or license in the case of Software and Multiplexer
Designs) to QUALCOMM, and to perform certain customized software modifications
and design and engineering services for QUALCOMM in accordance with the terms
and conditions of this Agreement.
D. QUALCOMM has relied, and is relying, upon Inter-Tel's stated expertise and
experience in providing design and engineering services to develop and deliver
the Deliverables.
NOW, THEREFORE, the parties agree as follows:
AGREEMENT
1. DEFINITIONS.
Capitalized terms used in this Agreement shall have the meanings given
to them below:
"Basic Features" means the features that are included in the
Pre-existing Software with a zero point programmable logic device as described
in the AXXESS 3.0 Product Definition Notebook dated August 31, 1995, Feature Set
section.
"Configuration Device(s)" means the integrated circuit programmable
logic devices which determine the configuration size and feature access to the
Software.
"Critical Error" means any Error, whether or not known to QUALCOMM or
its customers, which has or may have a substantial adverse impact on the
operations of QUALCOMM or its customers or on the use of the Software, Devices
or Products.
"Deliverables" means the documentation, materials and services
pertaining to the Software, Configuration Devices, Multiplexer Designs,
Development Units, Qualification Units and Early Production Units which are more
particularly described in the SOW and Specification.
"Development Units" means the first five (5) Early Production Units
delivered to QUALCOMM for testing and to demonstrate the performance
characteristics of the Early Production Units.
"Design and Development "("D&D") means the design, development,
qualification and delivery of the Development Units and Qualification Units and
other Deliverables described in the SOW.
"Devices" means the Configuration Devices and Early Production Units.
"Early Production Units" means the early order production units of the
Product (containing the Software), its variations, and subsequent
configurations, or components thereof, as specified in QUALCOMM's purchase order
therefor, all of which comply with the requirements of this Agreement, the
Specifications and SOW. The term "Early Production Units" includes Qualification
Units.
"Error" means computer code in the Software or Configuration Devices
which produces unintended results or actions, or which produces results or
actions other than those described in the Specification or Software Acceptance
Document. Error includes, without limitation, any Critical Error.
"Escrow Agreement" means that certain Escrow Agreement entered into
between Inter-Tel and QUALCOMM concurrently with the execution of this
Agreement.
"Intellectual Property Rights" means any and all rights of Inter-Tel in
and to patents, patent applications, copyrights, trade secrets and know-how,
mask work rights and industrial design rights of any kind, recognized in any
country of the world, whether or not currently perfected, owned as of the
Effective Date or hereafter acquired during the term of this Agreement, whether
by creation, transfer, license with right of sublicense or by any other means
which relate to the Licensed Technology.
"Licensed Technology" means the Software, Configuration Devices,
Multiplexer Designs and other materials to be delivered to QUALCOMM as
Deliverables in accordance with the Specification and SOW.
"Multiplexer Designs" means that documentation relating to the design
of the Multiplexer that is written or in electronic form which Inter-Tel uses to
manufacture (or have manufactured) the Qualification Units and Early Production
Units. The Multiplexer Designs will include the following (if and to the extent
they exist): design documents, detailed circuit schematics, circuit board layout
files, electronic design files, mechanical design files, application and
operational software, manufacturing assembly documents, component lists, test
specifications, test set drawings, manufacturing assembly aids, test set
instructions, test set software, embedded firmware, interface specifications,
product specifications, OEM product specifications, installation and
commissioning documents, system provisioning documents, product repair documents
and customer documentation.
"Pre-existing Software" means the Multiplexer switch software that
Inter-Tel has developed as of the Effective Date as more particularly described
in the AXXESS 3.0 Product Definition Notebook dated August 31, 1995. For
purposes of this Agreement, Pre-existing Software shall include all Basic
Features and all Updates to the Basic Features as provided herein.
"Product(s)" means QUALCOMM's Concentrated Subscriber Station product,
its variations and subsequent configurations, as more particularly described in
the Specification.
"Qualification Units" means the first four (4) prototype Early
Production Units (other than Development Units) delivered to QUALCOMM to
demonstrate compliance of such Early Production Units with the Specification and
SOW.
"Software" means the software program to be designed, developed,
tested, furnished and licensed (in binary form) by Inter-Tel hereunder,
consisting of the Pre-existing Software as modified by Inter-Tel to meet the
requirements of the Specification and SOW.
"Software Acceptance Document" means the document developed by the
parties subsequent to the execution of this Agreement which shall contain the
Software acceptance test procedures.
"Specification" means: QUALCOMM's Specification for a Concentrated
Subscriber Station (QUALCOMM Doc. No. 80-12467), dated September 25, 1995, a
copy of which is attached hereto as Exhibit A.
"Statement of Work" or "SOW" means QUALCOMM's SOW, QCT-8000 Series
Multiplexer, dated September 21, 1995, a copy of which is attached hereto as
Exhibit B.
"Updates" means any enhancement, revision, improvement, addition, or
modification of or to the Multiplexer Designs and/or the Basic Features of the
Pre-existing Software, which enhancement, revision, improvement, addition, or
modification is developed by or for Inter-Tel or to which Inter-Tel obtains
sub-licensable rights (whether or not royalty bearing) at any time after the
Effective Date.
"Warranty Period" means for Early Production Units, Software and
Configuration Devices twenty-four (24) months after the date of acceptance by
QUALCOMM.
2. DEVELOPMENT PHASE.
2.1 D&D Schedule. Inter-Tel shall design, develop, qualify and deliver
the Development Units and Qualification Units in strict accordance with the
development schedule set forth in the SOW (the "Development Schedule").
Inter-Tel shall satisfactorily complete all tests required by the SOW and
Specification prior to delivering the Qualification Units to QUALCOMM. Final
inspection and acceptance of the Qualification Units shall be made by QUALCOMM
in accordance with such acceptance criteria as mutually agreed upon by the
parties in writing subsequent to the execution of this Agreement. QUALCOMM shall
either accept or reject the Qualification Units within the later of (a)
one-hundred twenty (120) days after completion of the Development Schedule or
(b) one-hundred twenty (120) days after receiving the last of the Qualification
Units. If QUALCOMM does not notify Inter-Tel that QUALCOMM rejects any
Qualification Units, Inter-Tel will assume acceptance of such Qualification
Units. At QUALCOMM's option, QUALCOMM may return non-conforming Qualification
Units to Inter-Tel, freight collect. If QUALCOMM elects to return such
non-conforming Qualification Units, Inter-Tel shall issue a return material
authorization number (RMA) for all non-conforming Qualification Units, and such
non-conforming Qualification Units shall be the property of Inter-Tel.
2.2 Design and Development Payment. In consideration for its
satisfactory performance of the design, development, qualification, and delivery
effort, QUALCOMM shall pay Inter-Tel the sum of two hundred eighty-five thousand
dollars ($285,000) (the "D&D Payment"). The D&D Payment shall be due and payable
as follows:
Installment Milestone
- ----------- ---------
33% of the D&D Payment Delivery of Development Units and
prototype Software (in PROM form)
33% of the D&D Payment QUALCOMM's acceptance of all
four Qualification Units
34% of the D&D Payment Satisfactory completion of the Production
Readiness Review and QUALCOMM's acceptance
of the Software in accordance with Section
2.4
2.3 Deliverables. Inter-Tel shall deliver to QUALCOMM the Deliverables
strictly in accordance with the Development Schedule. In addition, Inter-Tel
shall perform acceptance tests on each delivered unit of Devices in accordance
with the acceptance test procedures set forth in the Specification. Inter-Tel
shall not ship to QUALCOMM any Devices which have failed to satisfy the
applicable acceptance test.
2.4 Acceptance of Software. The Software will be tested by QUALCOMM and
Inter-Tel in accordance with the requirements established under the Software
Acceptance Document. The parties intend to negotiate and finalize the Software
Acceptance Document within one hundred eighty (180) days after the Effective
Date. The Software Acceptance Document will be subject to the terms of this
Agreement and will reference this Agreement. QUALCOMM may reject the Software by
delivering written notice to Inter-Tel within one year after the Effective Date
of this Agreement if in QUALCOMM's sole and reasonable discretion the Software
fails to satisfy the specifications and parameters set forth in the Software
Acceptance Document or Specification. Failure of QUALCOMM to notify Inter-Tel
within said period shall be deemed as acceptance. Any rejection by QUALCOMM of
the Software for acceptance purposes shall be in writing and provide a detailed
description of the failure of the Software to conform to the applicable
requirements set forth in the Software Acceptance Document or Specification.
QUALCOMM shall cooperate with Inter-Tel's reasonable requests in carrying out
remedial measures and Inter-Tel shall not be responsible for delays caused by
QUALCOMM. Immediately following its receipt of such rejection notice, Inter-Tel
shall commence work to correct the failures specified in such notice and shall
use its best efforts, at its own expense, to correct such failures within ten
(10) days of its receipt of such rejection notice so that the Software meets the
requirements of the Software Acceptance Document and Specification. When it
believes it has made the necessary corrections, Inter-Tel will again deliver the
Software to QUALCOMM and the acceptance/rejection/correction provisions above
shall be reapplied until the Software is accepted; provided, however, that upon
the third or any subsequent rejection, or if the corrections are not made within
thirty (30) days of the initial rejection, QUALCOMM may terminate this Agreement
by delivering written notice to Inter-Tel. Upon QUALCOMM's return of the
Software previously delivered hereunder, Inter-Tel shall immediately refund to
QUALCOMM all amounts paid by QUALCOMM hereunder.
3. GRANT OF RIGHTS.
3.1 License Grant. Inter-Tel hereby grants to QUALCOMM a perpetual,
non-exclusive (except as set forth in Section 3.2), worldwide right and license
under the Intellectual Property Rights to (i) use, copy or otherwise exploit the
Software, (ii) use or otherwise exploit the Configuration Devices, and (iii)
use, copy, modify, have modified, or otherwise exploit the Multiplexer Designs,
to design, develop, make, have made, use, market, maintain, support, distribute,
sell, lease or otherwise dispose of Products.
3.2. Exclusivity. Inter-Tel agrees that for a period of ten (10) years
after the Effective Date, Inter-Tel will not itself make, use or sell, and it
will not license or grant any rights to any third party to make, use or sell,
any product incorporating the Software, without the prior written consent of
QUALCOMM. The limitations of this Section 3.2 shall not apply to the
Pre-existing Software or future versions of any Inter-Tel software which do not
contain the Software in whole or in material part.
3.3. Updates. As soon as an Update is made available by Inter-Tel for
commercial application, Inter-Tel shall immediately so notify QUALCOMM in
writing. Inter-Tel shall grant QUALCOMM a royalty-free license (subject to
Section 3.4) to use the Update to design, develop, make, have made, use, market,
maintain, support, distribute, sell, lease or otherwise dispose of Products in
accordance with the license granted to QUALCOMM under Section 3.1. Inter-Tel
shall promptly deliver to QUALCOMM such materials as are necessary to enable
QUALCOMM to incorporate the Update in the Products. In the event that the Update
materials cannot be made readily available to QUALCOMM in a format that enables
QUALCOMM to incorporate the Update in the Products, Inter-Tel will promptly
notify QUALCOMM and the parties shall mutually agree upon a revised delivery
schedule.
3.4 Updates Licensed from Third Parties. If Inter-Tel acquires by
license from any third party the right to sublicense any Updates furnished by
such third party, then Inter-Tel shall immediately so notify QUALCOMM and offer
to grant to QUALCOMM all rights and licenses in the Updates as though such
Updates were included within the original Licensed Technology. If such Updates
are sublicensable by Inter-Tel only on condition that it pay a royalty to its
third party licenser (whether in the form of an up-front fee or otherwise), then
the notice shall fully and accurately disclose the terms of such royalty
obligation. If QUALCOMM accepts such offer (which it may only do by signed
writing), it will pay to Inter-Tel the same royalties and charges as those
designated in Inter-Tel's notice to the extent that they actually accrue against
Inter-Tel in respect of the sublicense.
4. PRODUCTION.
4.1 Orders. At any time after QUALCOMM's acceptance of the
Qualification Units delivered in accordance with Section 2 above, QUALCOMM may
issue to Inter-Tel purchase orders for Early Production Units. The terms and
conditions stated in such purchase order and in any confirmation and
acknowledgment thereof shall be of no force and effect other than to specify the
quantities and types of Early Production Units to be delivered and the requested
or anticipated delivery dates. Each such purchase order shall be subject to the
terms of this Agreement and will reference this Agreement.
4.2 Prices. Inter-Tel shall sell to QUALCOMM each Early Production Unit
for which QUALCOMM places a purchase order at the prices set forth in Exhibit C
attached hereto.
4.3 Most Favored Customer. Inter-Tel agrees that the prices established
under this Agreement for the Early Production Units shall not exceed those
offered or imposed with respect to similar products provided to other customers
of Inter-Tel. If, at any time during the term of this Agreement, Inter-Tel
offers or accepts lower prices for similar products involving other customers,
Inter-Tel shall so notify QUALCOMM and promptly rebate to QUALCOMM the
differences between the amount of the payments theretofore made by QUALCOMM for
the Early Production Units and the amount that would have been payable if such
lower prices had been in effect.
4.4 EPU Lead Time. Inter-Tel shall maintain the capability of producing
and delivering, and if requested by QUALCOMM, shall deliver to QUALCOMM, the
Early Production Units within ninety (90) days after receipt of QUALCOMM's
purchase order therefore (the "EPU Lead Time"). Subject to the applicable EPU
Lead Time, Inter-Tel shall deliver the Early Production Units on or before the
applicable "Due Date" indicated in each purchase order; provided, however, that
QUALCOMM, in its sole discretion, may refuse to accept Early Production Units
delivered more than two weeks prior to such Due Date, without QUALCOMM's prior
approval. QUALCOMM agrees to provide a monthly update of a rolling twelve (12)
month forecast of requirements as production requirements develop. QUALCOMM
shall have the right to amend such forecast from time to time during the term
hereof; provided that no such amendment shall alter or revise the quantities
forecasted for the initial four (4) week period of a previously delivered
forecast. Inter-Tel shall use its best efforts to deliver Early Production Units
sooner than the EPU Lead Time if so requested by QUALCOMM.
5. SUPPLY OF CONFIGURATION DEVICES.
5.1 Orders. At any time after QUALCOMM's acceptance of the
Qualification Units and Software in accordance with Section 2 above, QUALCOMM
may issue to Inter-Tel purchase orders for Configuration Devices. The terms and
conditions stated in such purchase order and in any confirmation and
acknowledgment thereof shall be of no force and effect other than to specify the
quantities to be delivered and the requested or anticipated delivery dates. Each
purchase order shall be subject to the terms of this Agreement and will
reference this Agreement.
5.2 Royalty. Inter-Tel shall deliver to QUALCOMM Configuration Devices
for which QUALCOMM places a purchase order. With respect to Configuration
Devices purchased by QUALCOMM from Inter-Tel, QUALCOMM shall pay to Inter-Tel a
royalty in accordance with the applicable royalty fee set forth in Exhibit D
attached hereto. Except for the royalties and D&D Payment expressly provided for
in Sections 3.4 and 5.2 and Section 2.2, respectively, QUALCOMM shall have no
liability for any royalties, fees or other compensation of any kind in respect
of Inter-Tel's grant to QUALCOMM, or the exercise by QUALCOMM, of the rights and
licenses arising under this Agreement. Notwithstanding anything to the contrary
contained herein, no royalties shall accrue or otherwise be due and owing from
QUALCOMM to Inter-Tel on any Configuration Devices that QUALCOMM purchases from
Inter-Tel for the purpose of internal testing. However, any Configuration
Devices that QUALCOMM purchases from Inter-Tel for the purpose of internal
testing which are subsequently resold by QUALCOMM shall be subject to royalties
hereunder in accordance with the applicable royalty fee set forth in Exhibit D
attached hereto.
5.3 CD Lead Time. Inter-Tel shall maintain the capability of producing
and delivering, and if requested by QUALCOMM, shall deliver to QUALCOMM, the
Configuration Devices within thirty (30) days after receipt of QUALCOMM's
purchase order therefore (the "CD Lead Time"). Inter-Tel shall use commercially
reasonable efforts to deliver Configuration Devices sooner than the CD Lead Time
if so requested by QUALCOMM;.
6. DELIVERY, ACCEPTANCE AND PAYMENT.
6.1 Deliveries; Title and Risk of Loss. Unless otherwise mutually
agreed, all deliveries of Devices, Qualification Units and Development Units
(collectively, the "Deliverable Items") shall be made FOB Inter-Tel's Chandler,
Arizona facility. Title and risk of loss or damage to the Deliverable Items
shall pass to QUALCOMM upon delivery to QUALCOMM's designated carrier, subject
to QUALCOMM's right to reject non-conforming units. Notwithstanding the
foregoing, risk of loss of any Deliverable Items shall remain with Inter-Tel
unless and until QUALCOMM finally accepts such units or deliveries or unless
such non-conformance is due to damage occurring after the Deliverable Items have
been delivered to QUALCOMM's designated carrier.
6.2 Inspection and Acceptance of Configuration Devices and Early
Production Units. Inter-Tel shall satisfactorily complete all tests required by
the Specification and SOW prior to delivering the Devices to QUALCOMM. Final
inspection and acceptance of the Devices delivered shall be made by QUALCOMM
unless otherwise specified in writing signed by both parties. QUALCOMM shall
either accept or reject the Devices within the later of (a) thirty (30) days
after the Due Date specified in the purchase order or (b) thirty (30) days after
receiving such Devices. If QUALCOMM does not notify Inter-Tel that QUALCOMM
rejects any of the Devices, Inter-Tel will assume acceptance of such Devices. At
QUALCOMM's option, QUALCOMM may return non-conforming Devices to Inter-Tel,
freight collect, or QUALCOMM with agreement from Inter-Tel may modify or adapt
non-conforming Devices or deliverables to render them acceptable. If QUALCOMM
elects to return such non-conforming Devices, Inter-Tel shall issue a return
material authorization (RMA) number for all non-conforming Devices within one
workday after QUALCOMM's request, and such non-conforming Devices shall be the
property of Inter-Tel. If QUALCOMM modifies or adapts non-conforming Early
Production Units, QUALCOMM may offset all costs incurred in performing any such
modifications and adaptations against any and all amounts otherwise due to
Inter-Tel or, at QUALCOMM's option, may bill Inter-Tel directly for such costs.
Neither QUALCOMM's modifications or adaptations in accordance with the
provisions of this Section 6.2 nor QUALCOMM's inspection and acceptance of
Devices shall in any way affect the warranty on such Devices.
6.3 Payment Terms. Inter-Tel may submit invoices to QUALCOMM for the
(i) applicable percentage of the D&D Payment upon satisfactory completion of the
D&D milestone in accordance with Section 2.2, (ii) applicable royalties upon the
shipment of the Configuration Devices, and (iii) purchase price for Early
Production Units upon shipment of such Early Production Units. Each such invoice
shall specify the quantity, fees and type of deliveries, the date of shipment
and such other information as may be reasonably requested by QUALCOMM from time
to time. QUALCOMM shall pay Inter-Tel within thirty (30) days after the invoice
date or within thirty (30) days after QUALCOMM's acceptance of the shipment,
whichever is later. QUALCOMM shall have no obligation to pay for any Devices or
Deliverables that are rejected or as to which acceptance is revoked.
6.4 Taxes. The fees specified herein do not include applicable sales,
use, excise, or similar taxes, duties, or other charges. To the extent such
taxes or other charges are required by law to be collected by Inter-Tel, such
taxes shall be separately itemized on the invoices to which they apply.
7. WARRANTIES.
7.1 Inter-Tel warrants and represents that:
7.1.1 It has the corporate power and authority to execute and
deliver this Agreement, grant the rights and licenses set forth herein and
perform its obligations hereunder.
7.1.2 During the Warranty Period the (i) Software and
Configuration Devices delivered under this Agreement shall conform in all
respects to the performance capabilities, specifications, functions and
requirements set forth in the Specification, and the Software Acceptance
Document, and shall conform to Inter-Tel's specifications therefor to the extent
such specifications are not inconsistent with the Specification or Software
Acceptance Document; (ii) the Early Production Units delivered under this
Agreement shall conform in all respects to the performance capabilities,
specifications, functions and requirements set forth in the Specification and
shall conform to Inter-Tel's specifications therefor to the extent such
specifications are not inconsistent with the Specification; (iii) the media on
which the Configuration Devices are provided to QUALCOMM and the Early
Production Units shall be free from defects in materials and workmanship; (iv)
all Early Production Products shall contain all new materials, and (v) the
Software and Configuration Devices shall be free from errors that materially
impair the operation of the Early Production Products or Products, as the case
may be; provided that it is understood that minor Software errors may develop.
In such case, Inter-Tel shall correct such Software errors in accordance with
the provisions of Section 7.2. However, in the case of any defect caused or
concealed by fraud or gross negligence, the Warranty Period solely with respect
to the specific defect shall be extended until the expiration of twenty-four
(24) months after QUALCOMM's actual discovery of such defect.
7.1.3 The Licensed Technology is a wholly original work,
solely originated and created by Inter-Tel, and if any persons other than
Inter-Tel personally participated in the preparation or development of the
Licensed Technology, such persons did so only for hire as employees of Inter-Tel
and within the scope of employment thereby, and never had and do not have any
rights or interests in the Licensed Technology. Inter-Tel is the sole lawful
owner of the Licensed Technology and all rights therein.
7.1.4 The Multiplexer Designs are accurate and complete models
or other characterization of the Qualification Devices and Early Production
Products inspected and accepted in accordance by QUALCOMM in accordance with the
terms and conditions of this Agreement and conform in all respects with the
specifications and requirements of the Specification.
7.1.5 Inter-Tel has not made and will not hereafter enter into
any agreement with third persons or take any action which shall restrict its
legal right to grant to QUALCOMM the rights and licenses contemplated under this
Agreement or to perform its obligations under this Agreement.
7.1.6 Title to all the Early Production Units (excluding the
Software) shipped to QUALCOMM or QUALCOMM's customers shall pass, upon payment
in full, to QUALCOMM free and clear of any liens, charges, encumbrances,
restrictions or security interests created in, by or against the Early
Production Units or against Inter-Tel.
7.1.7 THE ABOVE WARRANTIES ARE MADE EXPRESSLY IN LIEU OF ALL
OTHER WARRANTIES INCLUDING IMPLIED WARRANTIES OF MERCHANTIBILITY AND FITNESS FOR
A PARTICULAR PURPOSE.
7.2 Correction of Software Errors. During the Warranty Period,
Inter-Tel shall provide the following support services at no charge to QUALCOMM.
Thereafter, Inter-Tel shall provide the following support services at a price to
be mutually agreed upon. Such price shall, in no event, exceed Inter-Tel's
standard price for the provision of support services.
7.2.1 Classification of Software Errors. Inter-Tel shall
correct any Error which becomes known to it, in accordance with the severity of
the Error involved and its actual or potential impact upon QUALCOMM's operations
or business. QUALCOMM shall inform Inter-Tel of these facts in a written trouble
report. Following receipt of any trouble report, Inter-Tel shall immediately
undertake all necessary and appropriate action to satisfactorily resolve the
reported problem. QUALCOMM reserves the right to reclassify in its reasonable
discretion any Error as a Critical Error, or vice versa, at any time. The fact
that an Error is not classified as a Critical Error, however, shall in no way
prejudice QUALCOMM's rights or remedies under this Agreement.
7.2.2. Response. Inter-Tel shall respond to every QUALCOMM
trouble report, as follows, commencing upon receipt of QUALCOMM's trouble
report:
(a) Error Reporting. Within Inter-Tel's first normal
working hour, Inter-Tel shall initiate telephone consultation with QUALCOMM.
(b) Non-Critical Errors. For Errors other than
Critical Errors, Inter-Tel shall use its best efforts to promptly correct them
through the development and provision of corrective code for the Software.
Inter-Tel shall replace any "work-around," "patches,." or other temporary
correction provided to QUALCOMM in response to an Error with a permanent
correction in accordance with a delivery schedule mutually agreed upon by the
parties.
(c) Critical Errors. For Critical Errors, Inter-Tel
shall respond in the same manner as that described in the preceding paragraph,
but shall deliver suitable corrective code for the Software in PROM format or
Configuration Devices as needed to restore lost functionality and performance
within five (5) calendar days of receipt of QUALCOMM's trouble report. Whenever
reasonably possible, QUALCOMM shall return the defective PROMs and/or
Configuration Devices to Inter-Tel. Inter-Tel shall promptly reimburse QUALCOMM
for one-half (1/2) of the costs incurred by QUALCOMM in removing any defective
PROMs or Configuration Devices from Products and reinstalling any replacement
PROMs or Configuration Devices. Upon Inter-Tel's reasonable request, QUALCOMM
shall provide written documentation to evidence such costs.
(d) Extraordinary Circumstances. If Inter-Tel
encounters unforeseen circumstances which delay or make it impossible for
Inter-Tel to perform the obligations in accordance with the schedule set forth
above, Inter-Tel shall, at its sole expense, provide appropriate work-arounds,
interim support, on-site personnel, or other remedial measures commensurate with
the severity and impact of the Error. QUALCOMM shall cooperate with Inter-Tel's
reasonable requests in carrying out such remedial measures and Inter-Tel shall
not be responsible for delays caused by QUALCOMM. Failure by Inter-Tel to
restore lost functionality and performance within the applicable period set
forth above, or any longer period prescribed by the authorized QUALCOMM
representative, is a failure to perform under this clause, and constitutes a
trigger event (as defined under the Escrow Agreement).
7.3 Failure of Early Production Units. If, at any time during the
Warranty Period, an Early Production Unit malfunctions or becomes defective or
is determined to be unreasonably dangerous, Inter-Tel shall, at Inter-Tel's sole
expense: (a) promptly diagnose the source of the failures of the Early
Production Unit, (b) correct any and all defects or non-conformities in the
design, manufacture and/or testing of the Early Production Unit which are the
source of such failures and (c) replace all failed Early Production Units with
fully conforming Early Production Units within five (5) calendar days. QUALCOMM
will promptly notify Inter-Tel when it has identified such failures and will
provide reasonable assistance to Inter-Tel in identifying the source of such
failures.
7.4 Shipping Defective Devices. All costs of shipping defective PROMs
and Devices back to Inter-Tel and the return from Inter-Tel to QUALCOMM, or its
designated location, shall be at the sole expense of Inter-Tel. Within 24 hours
of any request by QUALCOMM, Inter-Tel will provide a Return Material
Authorization (RMA) for all defective such items specified by QUALCOMM. The RMA
will permit QUALCOMM to return defective items to Inter-Tel without delay.
7.5 Survival. The obligations of Inter-Tel under this Section 7 shall
survive expiration or other termination of this Agreement as to the subject of
any claims or notices sent by QUALCOMM hereunder prior to such termination or
expiration. No receipt, acceptance or use of the Licensed Technology or Early
Production Units by QUALCOMM shall constitute a waiver of or otherwise prejudice
QUALCOMM's rights under this warranty.
8. INDEMNIFICATION FOR INFRINGEMENT.
8.1 Inter-Tel. In addition to the warranties set forth in Section 7
above, Inter-Tel warrants that all Licensed Technology, Early Production Units
and work performed are free of infringement of any patent, copyright, trade
secret or other intellectual property right of any third party, except in so far
as such claims are based on Inter-Tel's literal compliance with QUALCOMM's
written Specification for such Deliverables. Inter-Tel shall indemnify, defend
and hold QUALCOMM and its customers harmless from and against any losses,
damages, liabilities, expenses and costs (including reasonable attorneys' fees),
arising out of or resulting from any claim alleging that any Licensed
Technology, Early Production Units or other Deliverables infringe any patent,
copyright, trade secret, or other proprietary right of any third party ("IPR"),
so long as QUALCOMM notifies Inter-Tel of such claim and permits Inter-Tel to
defend or settle such claim in accordance with this Section 8.1. In the event
that any Licensed Technology, Early Production Units or Deliverables delivered
or performed by Inter-Tel hereunder is determined to infringe any IPR, Inter-Tel
shall, at Inter-Tel's sole expense, in addition to its other obligations under
this Section 8.1 and at QUALCOMM's option, either: (i) obtain from such third
party the right for QUALCOMM and QUALCOMM's customers to continue using the
infringing Licensed Technology, Early Production Units and/or Deliverables, or
(ii) modify or replace the infringing Licensed Technology, Early Production
Units and/or Deliverables so as to render them non-infringing, while maintaining
fit, form and function acceptable to QUALCOMM.
8.2 QUALCOMM. QUALCOMM shall indemnify, defend and hold Inter-Tel
harmless from and against any losses, damages, liabilities, expenses and costs
(including reasonable attorneys' fees), arising out of or resulting from any
claim alleging that the work performed by Inter-Tel on behalf of QUALCOMM
infringe third party IPR, so long as (i) Inter-Tel notifies QUALCOMM promptly in
writing of such claim and permits QUALCOMM sole control over the defense and
settlement of such claim, and (ii) such work is in literal compliance with
QUALCOMM's written Specification.
9. QUALCOMM PROPERTY.
All property and documentation (including without limitation the Specification)
used by Inter-Tel in connection with its performance under this Agreement which
is owned, furnished, or consigned by QUALCOMM ("Property") shall be and remain
the property of QUALCOMM. Unless already so marked by QUALCOMM, Inter-Tel shall
identify and conspicuously mark all Property as belong to QUALCOMM and, upon
request, shall furnish QUALCOMM a list of all Property being held by Inter-Tel.
all Property shall be used only for Inter-Tel's performance under this Agreement
and held at Inter-Tel's risk. Inter-Tel shall return such Property to QUALCOMM
upon QUALCOMM's demand at Inter-Tel's sole expense.
10. NON-EXCLUSIVE.
Except as set forth in Section 3.2, nothing in this Agreement shall be construed
to create an exclusive relationship between the parties hereto or to prevent any
of the parties from entering into any discussion, negotiations or relationship
with any other party.
11. TRAINING AND SUPPORT.
Inter-Tel shall provide training, documentation and technical support to
QUALCOMM and its customers pursuant to the terms and conditions set forth in the
SOW.
12. CONFIDENTIALITY; PUBLICITY.
Except as required for its performance under this Agreement, Inter-Tel shall not
disclose to any person (including but not limited to any company affiliated with
Inter-Tel and any consultant or independent contractor of Inter-Tel), reproduce,
or use any information furnished by QUALCOMM under this Agreement (whether or
not marked as confidential or proprietary), except as required for performance
under this Agreement, and, at QUALCOMM's request, Inter-Tel shall return all
such information to QUALCOMM. Further, Inter-Tel shall not issue any news
release, advertisement, publicity, or promotional material regarding this
Agreement or Inter-Tel's relationship with QUALCOMM without QUALCOMM's prior
written consent. The provisions of this Section 12 shall survive any expiration
or termination of this Agreement.
13. CHANGES.
QUALCOMM may at any time instruct Inter-Tel to make changes within the general
scope of this Agreement in any of the following: (i) the Specification; (ii)
Inter-Tel's method of shipment or packing; (iii) the quantities of Devices to be
delivered hereunder; (iv) the place of delivery; and/or (v) the delivery
schedule. If any such change causes an increase or decrease in the cost of, or
time required for, performance under this Agreement, Inter-Tel shall have thirty
(30) days to request adjustments in the fees and/or delivery schedule for
Devices or other materials directly affected by QUALCOMM's changes. To the
extent that QUALCOMM and Inter-Tel mutually agree to such adjustments, this
Agreement shall be amended accordingly in a writing signed by both parties. Any
request by Inter-Tel for adjustments under this Section 13 shall be deemed
waived if not asserted within such 30-day period, and if QUALCOMM and Inter-Tel
fail to agree to an adjustment, then QUALCOMM and Inter-Tel will decide whether
to (1) proceed in accordance with the Agreement as then in effect, or (2)
terminate this Agreement in accordance with Section 14 below.
14. TERM AND TERMINATION.
14.1 Term. This Agreement shall commence on the Effective Date and,
unless otherwise terminated or canceled as provided herein, shall continue in
full force and effect thereafter. No license granted with respect to any Product
manufactured prior to any termination of this Agreement shall be diminished or
abridged by any termination of this Agreement.
14.2 Termination for Convenience. QUALCOMM may terminate this
Agreement, with or without cause, at any time, effective upon delivery of
written notice thereof (the "Termination Notice") to Inter-Tel. Upon any such
termination, or termination in accordance with Sections 13 or 15 hereof,
QUALCOMM's sole and exclusive liability to Inter-Tel shall be to pay to Inter
Tel (i) those installments of the D&D Payment which have become due and payable
in accordance with Section 2.2 of this Agreement, to the extent not previously
paid, (ii) if a D&D Payment is not yet due and payable, a percentage amount (not
to exceed 100%) of the applicable D&D Payment based on the value of items
received by QUALCOMM shall be negotiated by the parties in good faith and
mutually agreed upon, and (iii) the fees specified in this Agreement for any
Devices which have been delivered and accepted by QUALCOMM, to the extent not
previously paid.
14.3 Termination for Default. QUALCOMM may terminate this Agreement
upon written notice to Inter-Tel, if Inter-Tel: (i) fails to make adequate
progress to develop the Software, Development Devices and/or Qualification
Devices in accordance with the schedule set forth in the SOW, (ii) fails to
deliver the Multiplexer Designs within a reasonable time, not to exceed thirty
(30) days, after the Effective Date, (iii) fails to deliver any Devices ordered
by QUALCOMM within ten (10) days after the scheduled delivery date, (iv) files
or has filed against it any proceeding in bankruptcy or insolvency, (v) makes a
general assignment for the benefit of creditors, or (vi) otherwise fails to
comply in any material respect with the terms and conditions of this Agreement
within thirty (30) days after the date of QUALCOMM's written notice of such
non-compliance. Inter-Tel may terminate this Agreement upon written notice to
QUALCOMM if QUALCOMM fails to comply with any material obligation under this
Agreement and such failure is not cured within thirty (30) days after
Inter-Tel's written notice of such non-compliance.
14.4 Rights Upon Termination. Any and all work related to this
Agreement shall cease immediately upon any expiration or termination of this
Agreement in accordance with Section 14.1, 14.2, or 14.3 above. Upon any such
expiration or termination of this Agreement, Inter-Tel shall immediately deliver
to QUALCOMM the Specification, all materials containing information furnished or
disclosed by QUALCOMM hereunder, and all Deliverables in whatever their current
state of production. In addition, in the event of any termination pursuant to
Section 14.3 by reason of Inter-Tel's default, all rights and licenses granted
to QUALCOMM pursuant to Section 3 shall continue in full force and effect;
except that QUALCOMM shall also have the right to independently produce and copy
Configuration Devices in conjunction with the use of the Software. Any
termination pursuant to Section 14.3 by reason of Inter-Tel's default shall
constitute a trigger event under the Escrow Agreement.
15. FORCE MAJEURE.
Any delay and/or failure in performance shall not be deemed a breach hereof when
such failure or delay is caused by or due to causes beyond the reasonable
control of the party charged with such performance hereunder, including but not
limited to: fire, flood, accidents, explosions, acts of God and acts of local,
state and/or federal governments or acts of war or acts of others. Should a
delay occur, the party claiming force majeure shall notify the other party, in
writing, specifying the nature and anticipated duration of the delay. The date
on which a party's obligations hereunder are due to be fulfilled shall be
extended for a period equal to the time lost as a result of any such delay.
Notwithstanding the foregoing, in the event any delay extends for a period of
more than sixty (60) days, or such longer period as the parties may mutually
agree upon, the party against whom force majeure has been asserted as an excuse
for non-performance shall have the right to terminate this Agreement by notice
to the other party.
16. ESCROW.
The parties intend to finalize and execute the Escrow Agreement (substantially
in the form of Exhibit __ attached hereto) within sixty (60) days following the
effective Date, pursuant to which Inter-Tel shall deliver into an escrow account
(at an institution located in San Diego, California or such other institution as
mutually agreed upon) all applicable object code and source code documentation
for the Software and Configuration Devices and all other technical information
required for the manufacture and delivery of the Configuration Devices and for
the use and maintenance of the Software. QUALCOMM shall be entitled to access
such materials in accordance with the Escrow Agreement.
17. GENERAL PROVISIONS.
17.1 Assignment. Inter-Tel shall not assign any of its rights or
delegate any of its obligations under this Agreement without the prior written
consent of QUALCOMM, and any assignment in violation of this provision shall be
null and void, unless such assignment is as a result of the sale of all or
substantially all of the assets of Inter-Tel. Notwithstanding the foregoing,
Inter-Tel may assign claims for monies due or to become due under this Agreement
without QUALCOMM's consent provided that Inter-Tel promptly furnishes QUALCOMM
with two signed copies of all documentation evidencing such assignment and
further provided that payment to any assignee shall be subject to setoff or
recoupment of any present or future claim(s) that QUALCOMM may have against
Inter-Tel. Regardless of any such assignment, QUALCOMM shall continue to deal
directly with Inter-Tel with respect to all matters other than payment of monies
due under the Agreement.
17.2 Governing Law. This Agreement shall be governed by the laws of the
State of California. All disputes arising in connection therewith shall be heard
only by a court of competent jurisdiction in San Diego County, California, and
the prevailing party in any legal proceeding shall be entitled to recover its
reasonable attorneys' fees incurred in connection therewith.
17.3 Disclaimer of Consequentials. Neither party shall be liable to the
other party or to any other company or entity for any incidental or
consequential loss or damage arising out of this Agreement or any obligation
resulting herefrom or the use of any intellectual property received hereunder,
whether in an action for or arising out of breach of contract, tort, or any
other cause of action.
17.4 Entire Agreement. This Agreement, together with all documents
expressly referenced herein, which are incorporated herein by this reference,
shall constitute the entire agreement between QUALCOMM and Inter-Tel with
respect to the subject matter set forth herein and shall supersede all prior
agreements, understandings and representations between Inter-Tel and QUALCOMM
with respect thereto. Any additional or different terms stated by Inter-Tel in
any proposal, quotation, confirmation, acknowledgment, invoice, or otherwise
shall be of no force and effect, and no course of dealing, usage of trade, or
course of performance shall be relevant to explain or supplement any term
expressed in this Agreement.
17.5 Modification: Non-Waiver, Severability; Cumulative Remedies. No
addition or modification of this Agreement shall be effective unless made in
writing and signed by the respective representatives of Inter-Tel and QUALCOMM.
Any delay or failure to enforce at any time any provision of this Agreement
shall not constitute a waiver of the right thereafter to enforce each and every
provision thereof. If any of the provisions of this Agreement is determined to
be invalid, illegal, or otherwise unenforceable, such provision shall be
enforced to the fullest permissible extent and the remaining provisions shall
remain in full force and effect. The rights and remedies provided to each party
herein are cumulative and in addition to any other rights and remedies available
to such party in law or in equity.
17.6 Notices and Correspondence. Inter-Tel shall place QUALCOMM's
applicable P. O. number and Project number on all notices, correspondence,
invoices, packing slips and packages pertaining thereto. All written
correspondence from supplier to QUALCOMM other than invoices shall be sent to:
6455 Lusk Boulevard, San Diego, CA 92121-2779, Attention: Director, CDMA
Subscriber Programs and Product Development. All invoices shall be sent to the
attention of the Accounts Payable Department at the same address. All written
correspondence from QUALCOMM to Inter-Tel shall be sent to 7300 West Boston
Street, Chandler, Arizona 85226-3224, Attention: Thomas Parise or Mike Sargent.
17.7 No Agency. The relationship between QUALCOMM and Inter-Tel is that
of independent contractors. This Agreement does not constitute, and shall not be
deemed to constitute, a joint venture or partnership between the parties hereto,
and neither party shall be deemed to be an agent of the other, or have authority
to bind, obligate or contract for the other.
17.8 Survivability. The terms and conditions of this Agreement that by
their sense and context are intended to survive after performance hereunder
shall survive the termination or expiration of this Agreement.
IN WITNESS WHEREOF, the parties have caused their authorized representatives to
execute this Agreement as of the Effective Date.
INTER-TEL Integrated Systems, Inc. QUALCOMM Incorporated
BY: /s/ Thomas C. Parise By: /s/ Paul Jacobs
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Name:Thomas C. Parise Name: Paul Jacobs
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Title: President Title: Vice President and General Manager
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