<PAGE> 1
Exhibit 10.6
CONFIDENTIAL TREATMENT REQUESTED
COMPREHENSIVE AGREEMENT
This Comprehensive Agreement ("Agreement") is entered into as of July 2,
1999 (the "Effective Date"), by and between Conexant Systems, Inc. ("Conexant"),
a Delaware corporation, with principal offices located at 4311 Jamboree Road,
Newport Beach, CA 92660-3095 and Intellon Corporation ("Intellon"), a Florida
corporation, with principal offices located at 5100 West Silver Springs
Boulevard., Ocala, Florida 34482.
WHEREAS, Intellon has developed and is developing certain technology for
communication over existing home power lines, known as "Intellon's 11Mbps
PowerLine OFDM Technology ";
WHEREAS, Intellon has developed and is developing a specification for the
"Intellon's 11Mbps PowerLine OFDM Technology ";
WHEREAS, Intellon has developed and is developing certain protocol
technology known as "TAMA Protocol" that is a sub-layer between Intellon's power
line physical layer and a standard Ethernet MAC that isolates the Ethernet MAC
from the complexities of the power line medium. The TAMA protocol handles both
asynchronous and isochronous communications for support of data and multimedia
networking (e.g., quality voice);
WHEREAS, Intellon has developed and is developing the "Intellon 's 11Mbps
PowerLine OFDM Engine" that is the intellectual property block containing
Intellon's 11 Mbps physical layer technology and Intellon's TAMA Protocol.
WHEREAS, Conexant desires to license the "Intellon 's 11Mbps PowerLine
OFDM Engine";
WHEREAS, Conexant and Intellon would like to collaborate to promote the
formation of a Home PowerLine Networking Alliance to develop an industry
sponsored specification for in-home networking using power lines;
WHEREAS, Conexant and Intellon would like to collaborate in obtaining
approval by the Home PowerLine Networking Alliance of Intellon's specifications
as its sponsored specification;
WHEREAS, Conexant and Intellon would like to jointly define and develop
a Parent IC that would embody Intellon's 11Mbps PowerLine OFDM Engine, which
would be compliant with such industry sponsored specification.
WHEREAS, Conexant and Intellon would like to manufacture and sell such
Parent IC;
WHEREAS, Conexant and Intellon would like to develop, manufacture and
sell Derivative Products that include Intellon 's 11Mbps Power line OFDM Engine
and that are compatible with such specifications;
1
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 2
CONFIDENTIAL TREATMENT REQUESTED
WHEREAS, Conexant would like to make an equity investment in Intellon;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein, the parties agree as follows:
1. DEFINITIONS
For purposes of this Agreement the following terms have the meanings set
forth below:
1. "Affiliates" means an entity that directly or indirectly controls, is
controlled by or is under common control with another entity so long as
such control exists.
2. "Alliance Formation Plan" means a Conexant and Intellon joint defined
activity plan that contains coordinated action items and respective
timeframes that Conexant and Intellon shall take to promote the formation
of the HomePLNA and the ratification of the Proposal by the Ratification
Body. The Alliance Formation Plan is not yet fully documented; once the
parties agree on such documentation, they will amend this Agreement and
to include such documentation as an addendum hereto.
3. [Intentionally ommitted]
4. "Conexant & Intellon Foundry Partner" or "Chartered" means Chartered
Semiconductor in Singapore.
5. "Control" means beneficial ownership ( as such term is defined under the
Securities and Exchange Act of 1934) of more than fifty (50%) percent of
the voting stock or equity in an entity.
6. "Basic Exclusivity" means that until the day after the Premium IP
Decision Date, Intellon will not license its Premium IP Transfer Package
to any Semiconductor Manufacturer without Conexant's prior written
consent.
7. "Channel Price Adjustment" means the price adjustment applied
retroactively to a specific product in a specific marketing channel in
accordance with Conexant standard policies.
8. "Confidential Information" has the meaning set forth in Section 17.1,
below.
9. "Demonstration Expertise" means the Intellon know how, information,
instructions, software, firmware and specifications that Intellon will
provide to Conexant which Intellon reasonably believes will allow
Conexant to establish a Demonstration Setup to perform demonstrations of
the Intellon's 11Mbps Power line OFDM Engine. The Demonstration Expertise
is not yet fully documented; once the parties agree on such
2
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 3
CONFIDENTIAL TREATMENT REQUESTED
documentation, they will amend this Agreement to include such
documentation as an addendum hereto.
10. "Demonstration Setup" means a laboratory owned by Conexant that includes
the Demonstration Expertise that will be used by Conexant to demonstrate
the Intellon's 11Mbps Power line OFDM Engine .
11. "Derivative Products" means the devices subsequent to the Parent IC
developed by Conexant incorporating Intellon's 11Mbps PowerLine OFDM
Engine in whole or in part.
12. "Equity Investment" shall have the meaning set forth in Section 9.1 ,
below.
13. "Europe Decision Date" means the day on which Intellon licenses Europe
Rights and it is the later of a) March 31, 2000 or b) Premium IP Decision
Date plus 2 months.
14. "Europe Rights" means that Intellon may license its Premium IP Transfer
Package to an European Semiconductor Manufacturer if Conexant decides not
to purchase Extended Exclusivity on or before the Europe Decision Date.
15. "Evaluation Period" has the meaning set forth in Section 2.3, below.
16. "Extended Exclusivity" means that the Basic Exclusivity is extended,
pursuant to Section 9.3, to the later of (a) December 31, 2000 or (b)
Premium IP Decision Date plus 11 months.
17. "Exclusivity Period" means the period of time in which Conexant has Basic
Exclusivity first and optionally Extended Exclusivity later. The
Exclusivity Period starts on Effective Date and ends on a) Premium IP
Decision Date or b) the end of the Extended Exclusivity if Conexant has
elected to buy the Extended Exclusivity.
18. "Extended Exclusivity Decision Date" means the date on which Conexant
will decide whether to purchase Extended Exclusivity with an additional
equity investment and which date will be any day in the period from the
Premium IP Decision Date to the later of (a) June 30, 2000 or (b) Premium
IP Decision Date plus 5 months.
19. "HPNA" means the Home PhoneLine Networking Alliance, which is a
not-for-profit organization incorporated in the State of California.
20. "HPNA 1.0 Specification" and "HPNA 1.1 Specification" means the
specification and update adopted by the HPNA for the purpose of offering
home networking products using phone lines with a 1 Megabit per second
transmission rate.
3
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
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CONFIDENTIAL TREATMENT REQUESTED
21. "HomePLNA" means the Home PowerLine Networking Alliance. The HomePLNA
will be an industry alliance modeled after the HomePNA. The final name
for such association could be different. Conexant and Intellon agree to
amend this agreement when the name for such industry alliance will be
finalized.
22. "HPLNA 1.0 Industry Specification" means a document that contains
Intellon 's 11Mbps PowerLine OFDM Specification that is being developed
by Intellon, its industry collaborators, and Conexant. The HPLNA 1.0
Industry Specification shall be modeled after the HPNA 1.0 industry
specification, and is intended to evolve into the specification
ultimately adopted by Ratification Body. The final name for such HPLNA
1.0 Industry Specification could be different. Conexant and Intellon
agree to amend this agreement when the name for such HPLNA 1.0 Industry
Specification will be finalized.
23. "Key Customers" shall mean the key customers that Intellon and Conexant
will jointly contact to verify the Parent IC Specification and to promote
the formation of the HomePLNA. The key customers list is not yet fully
finalized; once the parties agree on such list, they will amend this
Agreement and include such list as an addendum hereto.
24. "Intellectual Property Rights" or "IPR" shall mean, with respect to any
technology, all right, title and interest in and to any patent, letters
patent, industrial model, design patent, petty patent, patent of
importation, utility model, certificate of invention, and/or other
indicia of inventorship and/or invention ownership, and any application
for any of the foregoing, and including any such rights granted upon any
reissue, division, continuation or continuation-in-part applications now
or hereafter filed, related to any such application; and all right, title
and interest in and to all trade secret rights arising under the common
law, state law, federal law or the laws of any foreign country; and all
right, title and interest in and to all semiconductor mask work rights,
and in all copyright rights and all other literary property and/or other
rights of authorship; and all right, title and interest in and to all
know-how and show-how; in each case, with respect to the subject
technology.
25. "Intellon's 11Mbps Power line OFDM Engine" is the intellectual property
block containing Intellon's 11 Mbps physical layer technology and
Intellon's TAMA protocol.
26. "Intellon's 11Mbps PowerLine OFDM Specifications" means, at any time, the
most current version of the specifications for Intellon's 11Mbps
PowerLine OFDM Engine developed by Intellon. The scope of Intellon's
11Mbps PowerLine OFDM Specifications is restricted to that information
descriptive (i) of the electrical characteristics and protocols of
physical interfaces, (ii) of a standard set of transmitted signals and
(iii) of such test procedures as required to establish conformance of
devices to items (i) and (ii).
4
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
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CONFIDENTIAL TREATMENT REQUESTED
27. "Intellon Product" means a Home Networking over Power Line IC product
sold by Intellon.
28. "Japan Decision Date" means the day on which Intellon licenses Japan
Rights and is the day after the Premium IP Decision Date.
29. "Japan Rights" means that Intellon may license its Premium IP Transfer
Package to a Japanese Semiconductor Manufacturer if Conexant decides not
to purchase Extended Exclusivity on or before the Japan Decision Date.
30. "Licensed Products" means both Parent IC and/or Derivative Products.
31. "Net Sales" means the gross selling price of the Licensed Product
invoiced to a customer less if applicable; 1) actual charges for
handling, freight, sales taxes, insurance costs and import duties when
such items are separately stated on the invoice and paid by the customer;
2) discounts and or credits customarily given and actually taken and/or;
3) Channel Price Adjustments.
32. "Parent IC" means the initial IC implementation of Intellon's 11Mbps
PowerLine OFDM Engine as jointly defined by the parties.
33. "Parent IC Development Phase" means the required set of actions, to be
completed in defined timeframe, that Conexant and Intellon will perform
in order to develop the Parent IC and to enable the Conexant & Intellon
Foundry Partner to manufacture it. The Parent IC Development Phase is not
yet fully documented; once the parties agree on such documentation, they
will amend this Agreement and to include such documentation as an
addendum hereto.
34. "Parent IC Test Package" shall mean the test vectors set in industry
standard format, and test program, in electronic form or otherwise, to be
used by the Conexant & Intellon Foundry Partner to test the Parent IC
wafer. The Parent IC Test Package is not yet fully documented; once the
parties agree on such documentation, they will amend this Agreement to
include such documentation as an addendum hereto.
35. "Parent IC Data Sheet" means technical document for customer use that
describes how to use the jointly defined Parent IC
36. "Parent IC Specification" means the detailed technical specification that
describes the jointly defined Parent IC to be used solely for internal
use by Intellon and Conexant.
37. "Per Unit Royalty" has the meaning set forth in Section 14.4 below.
38. "Premium IP Decision Date" means the date on which Conexant will decide
whether to license the Premium IP Transfer Package, which date shall be
the later of (a)
5
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
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CONFIDENTIAL TREATMENT REQUESTED
January 31, 2000 or (b) two (2) working days after finalization by Intellon of
the Premium IP Transfer Package.
39. "Premium IP Package" or Premium IP Transfer Package" means Intellon's
11Mbps PowerLine OFDM Engine in the following form:
VHDL Netlist
Receiver model
Channel model
Test bench including test vectors
Generic IC specification
Firmware source code
Memory specification
I/O specification
40.
"Private Label IC Product" shall mean the Parent IC or any Derivative Product
manufactured by Conexant for Intellon bearing the trademark and/or logo of
Intellon, in a manner to identify it as an Intellon product.
41. "Professor" shall have the meaning set forth in paragraph no. 14.7 of
this Agreement.
42. "Proposal" means Intellon's 11Mbps PowerLine OFDM Specifications
submitted by Intellon to the Ratification Body for possible adoption as
the HPLNA 1.0 Specification.
43. "Ratification Body" means the standard organization or the HomePLNA that
will be in charge of ratifying the HPLNA 1.0 Industry Specification.
Conexant and Intellon agree to amend this agreement when the name for
such Ratification Body will be finalized
44. "Ratio" shall have the meaning set forth in Section 14.7, below.
45. "Royalty Prepayments" shall have the meaning set forth in Section 9.3,
below.
46. "Royalty Rate" has the meaning set forth in Section 14.5, below.
47. "Royalty Value Cap" means the maximum amount of royalties that Conexant
will pay to Intellon to use the Intellon's 11Mbps PowerLine OFDM Engine.
The Royalty Value Cap is defined to**********.
48. "Sell" means to sell, lease, or otherwise transfer or distribute the
product or item ("sold," "sale," and other forms of "sell" shall have the
same meaning).
49. "Semiconductor Manufacturer" means a company or a semiconductor division
of a parent company with or without a semiconductor fabrication plant
which designs, manufactures and/or sells semiconductors and could as a
result of a license from
6
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 7
CONFIDENTIAL TREATMENT REQUESTED
Intellon, design, manufacture or sell a semiconductor or IP licensable
semiconductor block incorporating the Intellon's 11Mbps Power line OFDM
Technology Engine. System divisions of parent companies are exempt from
this definition, provided that said system division can provide assurance
of and certify and warrant that information provided to the system
division will not be shared with the semiconductor division of said
parent company.
50. "Semiconductor Foundry" means a semiconductor fabrication plant which
manufactures semiconductors for third parties and could, as a result of a
license from Intellon and / or Conexant, manufacture but not sell the
Parent IC or Parent IC Wafers to anyone but Conexant and/or Intellon.
51. "Standard IP Package" or "Standard IP Transfer Package" means Intellon's
11Mbps PowerLine OFDM Engine in the following form:
Intellon's Industry Specification
Transmitter reference model
Interoperability test cards
Receiver test data
Analog front-end specification
52. "Subcontractor" means a third party that performs subcontract
manufacturing of the Licensed Products for Conexant.
53. "Subsidiary" of a company means a corporation or other legal entity (i)
the majority of whose shares or securities entitled to vote for election
of directors (or other managing authority) is now or hereafter owned or
otherwise controlled by such company either directly or indirectly; or
(ii) which does not have outstanding shares or securities but the
majority of whose ownership interest representing the right to manage
such corporation or other legal entity is now or hereafter owned or
otherwise controlled by such company either directly or indirectly; but
any such corporation or other legal entity shall be deemed to be a
Subsidiary of such company only as long as such ownership or control
exists.
54. "TAMA Protocol" means the sub-layer between Intellon's PowerLine physical
layer and a standard Ethernet MAC that isolates the Ethernet MAC from the
complexities of the power line medium. The TAMA protocol handles both
asynchronous and isochronous communications for support of data and
multimedia networking (e.g. quality voice).
55. "Term" has the meaning set forth in Section 18.1, below.
56. "Testing Material" means the Intellon test silicon, at least five (5)
evaluation boards, schematics, instructions, software, firmware and
specifications that Intellon will provide to Conexant and which Conexant
will use to field test the Intellon's 11Mbps Power line OFDM Engine.
7
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 8
CONFIDENTIAL TREATMENT REQUESTED
57. "Warrant" shall mean that certain Warrant issued by Intellon to Conexant
for 700,000 shares of Intellon Series C Preferred Stock and which
provides for two possible exercise scenarios: 1) Subject to Conexant's
payment of the full Phase ONE $5.25 million on or before January 31,
2000, Conexant may on or before the Premium IP Decision Date, exercise
the Warrant for all the shares at $.01 per share until June 30, 2000, or
2) Upon the earlier of (a) the licensing of the Premium IP Package or (b)
July 1, 2000, the Warrant for all the shares shall automatically reprice
at $3.50 per share. The Warrant shall be in the form mutually agreed by
the parties. The Warrant expires on November 30, 2000.
2. SPECIFICATION REVIEW
2.1 Grant of Access. Subject to the terms and conditions herein,
Intellon shall permit Conexant to have access to the Intellon' s 11Mbps
PowerLine OFDM Specifications for the Evaluation Period solely for the purpose
of performing an internal review and evaluation of the Intellon' s 11Mbps
PowerLine OFDM Specifications ("Evaluation"). Conexant shall not make any use of
the Intellon' s 11Mbps PowerLine OFDM Specifications or any Confidential
Information it receives from Intellon during the Evaluation Period except for
the Evaluation.
2.2 Specification Delivery.
(a) Not later than one (1) business day after the
Effective Date, Intellon shall deliver to Conexant an electronic copy of the
Intellon' s 11Mbps PowerLine OFDM Specifications solely for the purpose of
defining the Parent IC. Conexant agrees that title and, as except expressly
permitted hereunder, all rights to any and all copies and other Confidential
Information delivered to Conexant under this Agreement shall at all times remain
with Intellon.
(b) Conexant shall not directly disclose, reproduce,
display, provide, transfer or otherwise make available all or any part of the
Intellon' s 11Mbps PowerLine OFDM Specification or other Confidential
Information to any person other than an employee of Conexant directly involved
with the Evaluation or an independent contractor or consultant that has entered
into a written agreement with Conexant containing materially equivalent
restrictions regarding Intellon's Confidential Information to those contained
herein.
(c) Intellon represents and warrants as of the Effective
Date thatIntellon intends to submit Intellon' s 11Mbps Power line OFDM
Specifications delivered to Conexant pursuant to Section 2.3(a) above, or one
substantially similar thereto, to the HomePLNA for adoption as the Proposal. If
Intellon updates the Intellon' s 11Mbps PowerLine OFDM Specifications prior to
submission of the Proposal, Intellon shall provide Conexant with such updated
Intellon' s 11Mbps PowerLine OFDM Specifications.
8
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
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CONFIDENTIAL TREATMENT REQUESTED
2.3 Specification Evaluation. Following delivery of the Intellon' s
11Mbps PowerLine OFDM Specifications, Conexant shall evaluate the specification
at its own expense for a period no longer than thirty (30) days from the date of
its receipt ("Evaluation Period"). Intellon shall use commercially reasonable
efforts to respond to any reasonable inquiries relating to the Intellon' s
11Mbps PowerLine OFDM Specification made by Conexant in writing during the
Evaluation Period within two (2) business days of Intellon's receipt thereof.
9
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 10
CONFIDENTIAL TREATMENT REQUESTED
3. PARENT IC DATA SHEET
3.1 Joint Definition. Once Conexant has satisfactorily reviewed
Intellon' s 11Mbps Power line OFDM Specification, Conexant and Intellon shall
jointly define the Parent IC Data Sheet
3.2 Customer Verification. Conexant and Intellon shall each use
commercially reasonable efforts to jointly verify the suitability of the Parent
IC Data Sheet with Key Customers.
3.3 Parent IC Data Sheet Refinement. Once Conexant and Intellon
have completed the Customer Verification phase Conexant and Intellon shall each
use commercially reasonable efforts to a) modify the Parent IC Data Sheet to
reflect mutually agreed upon requirements suggested by Key Customers and b)
start development of the Parent IC Specification pursuant to Section 8..
3.4 Parent IC Data Sheet. Conexant and Intellon shall use
commercially reasonable efforts to complete the items 3.1, 3.2 and 3.3(a) by
August 31, 1999.
3.5 Parent IC Data Sheet Ownership. The Parent IC Data Sheet will
be owned by Intellon, and Conexant shall have the right to use and modify such
Parent IC Data Sheet.
4. POWER LINE DEMONSTRATION CAPABILITIES TRANSFER
4.1 Demonstration Transfer. Intellon shall use commercially
reasonable efforts to provide to Conexant Demonstration Expertise which Conexant
shall use to establish a Demonstration Setup for the Intellon' s 11Mbps Power
Line OFDM Engine on Conexant's premises.
4.2 Demonstration Support. Intellon shall use commercially
reasonable efforts to train and support Conexant personnel in using the
Demonstration Setup while they perform demonstrations for the Intellon' s 11Mbps
Power line OFDM Engine.
4.3 Demonstration Transfer Milestone. Intellon shall use
commercially reasonable efforts to complete item 4.1 and 4.2 by August 30, 1999.
5. TEST SILICON AND MATERIAL TRANSFER
5.1 Test Material Transfer. Intellon shall use commercially
reasonable efforts to provide to Conexant Testing Material which Conexant shall
use to field test the Intellon' s 11Mbps Power line OFDM Engine and shall
consist of at least five (5) hardware boards and associated software drivers..
10
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 11
CONFIDENTIAL TREATMENT REQUESTED
5.2 Field Test Support. Intellon shall use commercially reasonable
efforts to train and support Conexant personnel in using the Testing Material
while they perform field tests of Intellon' s 11Mbps Power line OFDM Engine.
5.3 Test Material Transfer Milestone. Intellon shall use
commercially reasonable efforts to complete the item 5.1 on or before October
31, 1999.
6. PREMIUM IP ACQUISITION
6.1 Finalization of the Premium IP Transfer Package. Intellon
shall use commercially reasonable efforts to finalize the Premium IP Transfer
Package 2 working days before January 31st 2000. During the development of the
Premium IP Transfer Package, Conexant and Intellon will hold one or more design
review meetings to demonstrate Intellon's design process and the requirements to
complete the Premiun IP Transfer Package, that is, what the parties agree is
necessary for the Premium IP Transfer Package to satisfy the Proposal and enable
Conexant to design Licensed Products.
6.2 Verification of the Premium IP Transfer Package. Conexant
shall use commercially reasonable efforts to review the finalized Premium IP
Transfer Package in 2 working days.
6.3 Decision. On Premium IP Decision Date, Conexant shall notify
Intellon in writing of its decision to license or not to license the Premium IP
Transfer Package.
(a) If Conexant decides to license the Premium IP
Transfer Package;
(i) Basic Exclusivity will be extended until
Extended Exclusivity Decision Date.
(ii) Conexant's Exclusivity will not be disclosed
to any third party without written
permission from Conexant except as permitted
under the parties' non disclosure agreement
dated March 3,1999 ("NDA").
(iii) Intellon will deliver a copy to Conexant of
the Premium IP Transfer Package. Conexant
will have license as set forth in Section 11
to the Premium IP Transfer Package and may
use it to develop the Parent IC and / or
Derivative Products.
(b) If Conexant decides to not license the Premium IP
Transfer Package.
(i) Conexant loses the Basic Exclusivity.
(ii) Intellon will not deliver to Conexant a copy
of the Premium IP Transfer Package. Conexant
will not receive or have rights to the
Premium IP Transfer package. Conexant may
not use the Premium IP Transfer Package to
develop the Parent IC and Derivative
Products and any other products.
11
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
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CONFIDENTIAL TREATMENT REQUESTED
7. EXCLUSIVITY
7.1 Basic Exclusivity Upon the Effective Date, Intellon hereby
grants Conexant Basic Exclusivity.
7.2 Extended Exclusivity. Subject to Sections 7.3 and 7.4,
Conexant, in its sole discretion may decide to purchase the Extended Exclusivity
in accordance with Section 9.3, and thereby the Basic Exclusivity will be
extended to the later of; a) December 31, 2000, or b) the Premium IP Decision
date plus eleven (11) months.
7.3 Japan Rights. If Conexant fails to purchase the Extended
Exclusivity before Intellon exercises the Japan Rights, Conexant may thereafter
purchase the Extended Exclusivity which will be effective against all parties
except those licensed under the Japan Rights.
7.4
Europe Rights. If Conexant fails to purchase the Extended Exclusivity before
Intellon exercises the Europe Rights, Conexant may thereafter purchase the
Extended Exclusivity which will be effective against all parties except those
licensed under the Japan Rights and/or the Europe Rights.
8. PARENT IC DEVELOPMENT AND MANUFACTURING
8.1 Parent IC Development. Upon Conexant's licensing the Premium
IP Package Intellon, shall as described below, develop the Parent IC for
production by the Conexant & Intellon Foundry Partner .
(a) Intellon Development Responsibilities
(i) Intellon shall use commercially reasonable
efforts to develop the system architecture,
DSP algorithm design, chip design, logic
design and the layout for the Parent IC
chip, Parent IC Test Package and the Parent
IC Specification pursuant to the jointly
defined Parent IC Data Sheet. Intellon shall
deliver a copy of the Parent IC Test Package
and the Parent IC Specification to Conexant
upon the availability of the first Parent IC
silicon wafer from Chartered. Conexant shall
have the right to use the foregoing as
permitted pursuant to Section 11.
(ii) To facilitate the development efforts of
Intellon, Conexant shall disclose and
deliver to Intellon all necessary technical
information, including without limitation
Confidential Information relating to the
Parent IC.
12
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
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CONFIDENTIAL TREATMENT REQUESTED
(iii) Intellon shall use commercially reasonable
efforts to fully specify the Analog Front
End (AFE), as a companion to the Parent IC
chip.
(iv) Intellon shall use commercially reasonable
efforts to complete the Parent IC layout and
physical design within hundred twenty (120)
days from Premium IP Decision Date.
(b) Conexant Development Responsibilities
(i) Conexant shall use commercially reasonable
efforts to convert the Parent IC Test
Package to suitable format compatible with
Conexant testing capabilities.
13
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 14
CONFIDENTIAL TREATMENT REQUESTED
9. FINANCIAL STRUCTURE
9.1 Financial Limits. Conexant's financial stake in Intellon may,
in the sole discretion of Conexant, vary from a minimum
investment of $5.25 million for an ownership stake of 1.5
million shares of Series C Preferred Stock, subject to the
receipt of Intellon shareholder approval and compliance with
provisions of Article III, Section 9, of its Restated Articles
of Incorporation at $3.50 per share of Intellon common stock
(or equivalent) which represents no less than 5% of fully
diluted ownership as of the Effective Date (the "Equity
Investment") up to a maximum of $10.25 million, which amount
would consist of a combination the Equity Investment (not to
exceed $5.25 million) plus up to $5 million of NRE/Royalty
Prepayments. Payments for both the Equity Investment and
NRE/Royalty Prepayments will be based on achieved milestones
and/or timeframes. The Series C Preferred Stock for the Equity
Investment shall be issued in accordance with a Stock Purchase
Agreement between the parties.
9.2 Phase ONE: $5.25 Million Commitment Conexant shall pay
Intellon a total of $5.25million with the following timeframe and subject to
Intellon achieving the following milestones:
9.2.1 If this Agreement is executed by July 2nd, 1999
9.2.1.1 Conexant shall make a payment of $2.8
million in equity investment (800,000 shares
of Series C Preferred Stock @ $3.50 per
share) promptly after the Effective Date and
at that time Intellon will issue the
Warrant.
9.2.1.2 Conexant shall make a payment equal to $1
million dollars of nonrecurring engineering
expenses ("NRE") promptly after the
Effective Date and delivery of Intellon' s
11Mbps Power line OFDM Specifications.
9.2.1.3 Conexant shall make an NRE payment of $1
million on modification of the Parent IC
Data Sheet to reflect mutually agreed upon
requirements suggested by Key Customers
9.2.1.4 Conexant shall make an NRE payment of
$250,000 upon Intellon's providing the
Demonstration Expertise to Conexant.
9.2.1.5 Conexant shall make an NRE payment of
$200,000 on Intellon's providing the Testing
Material to Conexant.
14
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 15
CONFIDENTIAL TREATMENT REQUESTED
9.2.2 If this Agreement is executed after July 2nd, 1999
9.2.2.1 Conexant shall make a payment of $2.8 million - of
which $500,000 will be the sum already deposited in
Escrow - in exchange for the Equity Investment
(800,000 of Series C Preferred Stock shares at $3.50
per share) promptly after the Effective Date; and at
that time Intellon will issue the Warrant.
9.2.2.2 Conexant shall make an NRE payment of $1.45 million
on modification of the Parent IC Data Sheet to
reflect mutually agreed upon requirements suggested
by Key Customers.
9.2.2.3 Conexant shall make an NRE payment of $500,000 on
Intellon's providing the Demonstration Expertise to
Conexant.
9.2.2.4 Conexant shall make an NRE payment of $500,000 on
Intellon's providing the Testing Material to
Conexant.
9.2.3 As a consequence of such initial investment Conexant will
obtain:
9.2.3.1 Standard IP Package: Conexant will obtain the
Standard IP Package and a license to use it to
develop and manufacture the Parent IC and/or
Derivative Products pursuant to Section 11.
9.2.3.2 Basic Exclusivity: Conexant will obtain the Basic
Exclusivity. Conexant, at its sole discretion, if it
judges it necessary to obtain maximum support in the
HomePLNA for Intellon' s 11Mbps Power line OFDM
Specifications, may decide to authorize in writing
Intellon to provide the Premium IP Package to a
Semiconductor Manufacturer on terms and conditions
negotiated between Intellon and the Semiconductor
Manufacturer.
9.2.3.3 Early Notification of Change in Ownership: Intellon
will provide to Conexant a written notification of
any potential change of 5% or greater ownership of
Intellon five (5) working days before the event
should happen if known in advance; and in any event
promptly upon knowledge of such event. This
obligation shall end on the occurrence of a public
offering of Intellon securities as described in the
Stock Purchase Agreement.
15
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 16
CONFIDENTIAL TREATMENT REQUESTED
9.2.3.4 Conexant will have a seat on Intellon's Technology
Advisory Board. Conexant will provide to Intellon
written notification with the name of Conexant's
representative on Intellon 's Technology Advisory
Board who shall be subject to Intellon's policies for
such board members.
9.2.3.5 The Royalty Value Cap will be reduced by the amount
of the total NRE $2.45 million paid in Phase ONE.
9.3 Phase TWO: Optional $5 Million Commitment. Conexant, at its
sole discretion, may decide to license the Premium IP Package on the Premium IP
Decision Date and buy the Extended Exclusivity on the Extended Exclusivity
Decision Date, and if so Conexant will pay Intellon an additional $5 million.
9.3.1 If on or before the Premium IP Decision Date Conexant
decides not to license the Premium IP Package and not
to buy the Extended Exclusivity, then Conexant shall
make a payment of $7,000 in equity investment to
exercise the Warrant for all the shares represented
by the Warrant at $.01 per share.
9.3.2 If Conexant has not previously exercised the Warrant
and decides to license the Premium IP Package and to
buy the Extended Exclusivity on Premium IP Decision
Date, then
9.3.2.1 Conexant shall make a payment of $1.0
million in Prepaid Royalties within 30 days
of the Premium IP Decision Date.
9.3.2.2 Conexant shall make a payment of $1.55
million in Prepaid Royalties upon Intellon's
providing the Premium IP Package to
Conexant.
9.3.2.3 Conexant shall make a payment of $2.45
million as an Equity Investment to exercise
the Warrant for all the shares represented
by the Warrant at the repriced $3.50 per
share within 30 days from Premium IP
Decision Date.
9.3.2.4 As a consequence of such additional
investment Conexant will obtain:
9.3.2.4.1 Premium IP Package: Conexant will
obtain a copy of the Premium IP
Package and a license to use it
pursuant to Section 11 to develop
and manufacture the Parent IC and
or Derivative Products.
16
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 17
CONFIDENTIAL TREATMENT REQUESTED
9.3.2.4.2 Wafer Rights: Conexant will have
rights to procure the wafers of the
Parent IC from the Conexant &
Intellon Foundry Partner
9.3.2.4.3 Parent IC Test Package: Conexant
will obtain from Intellon the
Parent IC Test Package and a
license to use it to test the
Parent IC wafers.
9.3.2.4.4 Extended Exclusivity: Conexant
will obtain the Extended
Exclusivity. Conexant, at its sole
discretion, if it judges it
necessary to obtain maximum support
in the HomePLNA for Intellon' s
11Mbps Power line OFDM
Specifications, may decide to
authorize in writing Intellon to
provide the Premium IP Package to a
Semiconductor Manufacturer upon
terms and conditions to be
negotiated between Intellon and the
Semiconductor Manufacturer.
9.3.2.4.5 The Royalty Value Cap will be
reduced by the amount of the total
Prepaid Royalty $2.55 million paid
in Phase TWO. Conexant will only
make cash payments for additional
royalties in calendar year 2000 if
the aggregate total of all Per Unit
Royalties that otherwise would be
paid as defined in Section 14.4
exceed $2.55 million.
9.3.3 If Conexant has not previously exercised the Warrant
and decides to license the Premium IP Package but not
to buy the Extended Exclusivity on Premium IP
Decision Date
9.3.3.1 Conexant shall make a payment of $1.0
million in Prepaid Royalties within 30 days
of Premium IP Decision Date.
9.3.3.2 Conexant shall make a payment of $1.55
million in Prepaid Royalties upon Intellon's
providing the Premium IP Package to
Conexant.
9.3.3.3 As a consequence of such additional
investment Conexant will obtain:
9.3.3.3.1 Premium IP Package: Conexant will
obtain a copy of the Premium IP
Package and a license to use it
pursuant to Section 11 to develop
and
17
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 18
CONFIDENTIAL TREATMENT REQUESTED
manufacture the Parent IC and / or
Derivative Products.
9.3.3.3.2 Wafer Rights: Conexant will have
rights to procure the wafers of the
Parent IC from the Conexant &
Intellon Foundry Partner
9.3.3.3.3 Parent IC Test Package: Conexant
will obtain from Intellon the
Parent IC Test Package and a
license to use it to test the
Parent IC wafers.
9.3.3.3.4 Basic Exclusivity will be extended
until Extended Exclusivity Decision
Date. Conexant, at its sole
discretion, if it judges it
necessary in order to obtain
maximum support in the HomePLNA for
Intellon' s 11Mbps Power line OFDM
Specifications, may decide to
authorize in writing Intellon to
provide the Premium IP Package to a
Semiconductor Manufacturer.
9.3.3.3.5 The Royalty Value Cap will be
reduced by the amount of the total
Prepaid Royalty $2.55 million paid
in Phase TWO. Conexant will only
make cash payments for additional
royalties in calendar year 2000 if
the aggregate total of all Per Unit
Royalties that otherwise would be
paid as defined in Section 14.4
exceed $2.55 million.
9.3.4 If Conexant decides to buy the Extended Exclusivity
on Extended Exclusivity Decision Date after having
licensed pursuant to Section 11 the Premium IP
Package on Premium IP Decision Date
9.3.4.1 Conexant shall make a payment of $2.45
million in equity investment to exercise the
Warrant for all the shares represented by
the Warrant at the repriced $3.50 per share
within 30 days from Extended Exclusivity
Decision Date.
9.3.4.2 As a consequence of such additional
investment Conexant will obtain:
9.3.4.2.1 Extended Exclusivity: Conexant
will obtain the Extended
Exclusivity. Conexant, at its sole
discretion, if it judges it
necessary to obtain maximum
support in the HomePLNA for
Intellon' s 11Mbps Power line OFDM
Specifications, may decide to
authorize in
18
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 19
CONFIDENTIAL TREATMENT REQUESTED
writing Intellon to provide the
Premium IP Package to a
Semiconductor Manufacturer
9.4 Other Financial Conditions Conexant and Intellon agree on the
following:
The Series C Preferred Stock shall have terms and conditions comparable to the
Series B Preferred Stock, including without limitation a redemption period from
the date of issuance of the Series C Preferred Stock equal to that of the Series
B Preferred Stock.
10. MARKETING ACTIVITIES
10.1 Principle. Conexant and Intellon intend to collaborate to
promote the formation of the HomePLNA and the HPLNA 1.0 Industry Specification,
which is intended to become a worldwide industry sponsored specification for
in-home data and telecommunications networking over power line that incorporates
Intellon's 11Mbps OFDM PowerLine Engine and potentially Conexant's intellectual
property.
10.2 Activities and Timeframes. Conexant and Intellon shall use
commercially reasonable efforts to coordinate respective activities in the
implementation of the Alliance Formation Plan to promote the formation of the
HomePLNA and the ratification of the Proposal by the Ratification Body.
10.3 Public Announcement. Within thirty (30) days of Proposal
ratification by the Ratification Body, Conexant shall announce the existence of
this Agreement and of the license granted by Intellon to Conexant in Section
11.3 and the license granted by Conexant to Intellon in Section 11.4 in a public
announcement mutually acceptable to both parties.
10.4 Customers and HomePLNA Forum. Upon execution of this
Agreement, Conexant and Intellon may disclose Conexant's co-sponsorship of the
Proposal to promoters and other participants and adopters in the HomePLNA or
prospective promoters, participant and adopters of the HomePLNA. Before
proceeding with such disclosure, either party shall inform the other party in
writing on the identity of the third party that will receive the disclosure and
shall obtain written authorization by the other party Program Manager before
proceeding. Either party, at its sole discretion, may request that a reasonably
satisfactory Non-Disclosure Agreement be in place with the third party before
the other party may proceed with the disclosure.
10.5 Joint Customer Visits. Upon execution of this Agreement,
Conexant and Intellon may participate in joint visits to existing and potential
customers of each other for the Parent IC product, including computer
manufacturers, telephone companies and other equipment manufacturers. Either
party, at its sole discretion, may request that a reasonably satisfactory NDA is
in place with the third party before Conexant and Intellon may proceed with the
joint visit.
19
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 20
CONFIDENTIAL TREATMENT REQUESTED
10.6 Standard Organization. Upon execution of this agreement,
Conexant and Intellon shall collaborate and coordinate their positions and
contributions to key standards-setting bodies such as ITU, UAWG, ANSI, and ETSI
10.7 Sales and Marketing. Until at least the second anniversary of
the Effective Date, the sales and marketing organizations of each of the parties
shall cooperate with those of the other party to promote, based on mutually
agreed upon activities, the Parent IC product to be developed pursuant to this
Agreement. This shall include each party stimulating its own internal sales and
marketing organizations to present to customers the advantages and benefits to
each company of the cooperative arrangement provided for in this Agreement and
the combination of the design and development efforts of Conexant and Intellon
in regard to the Parent IC. It shall also include Conexant and Intellon sales
and marketing organizations presenting joint displays, marketing efforts and
seminars and other customer awareness/educational efforts jointly at relevant
principal conferences and trade shows stressing the advantages and benefits of
the cooperative arrangement and of the jointly developed Parent IC.
11. OWNERSHIP AND LICENSING OF INTELLECTUAL PROPERTY RIGHTS
11.1 Ownership. Each party owns and shall retain all right, title
and interest in and to all of its Intellectual Property Rights and the other
party shall have no rights with respect to such IPR except as expressly
permitted under this Agreement..
11.2 Conexant License. Subject to all the terms and conditions of
this Agreement and Conexant's compliance therewith, Intellon hereby grants, as
far as it lawfully and contractually may at no additional cost, to Conexant, a
worldwide, royalty-bearing, non-exclusive, non-transferable license, without the
right to sub-license to Intellon's 11Mbps Power line OFDM Engine, solely for the
purpose of making, having made, using, importing, exporting, offering for sale,
or otherwise selling Licensed Products and for no other purpose.
11.3 Future Cross Licenses. After the Parent IC is jointly defined
the parties will decide what elements of their respective IPR will be cross
licensed to each other for use in or with the Parent IC.
11.4 Parent IC Exclusivity. Subject to all the terms and conditions
of this Agreement, Intellon shall not, except to a Semiconductor Foundry, engage
in a similar technology transfer and/or license regarding the Parent IC, with
any third party, to design or develop a third party Parent IC. Intellon shall
not provide the Parent IC design to any Semiconductor Manufacturer.
20
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 21
CONFIDENTIAL TREATMENT REQUESTED
11.5 Inventions. During the term of this Agreement, all
discoveries, improvements, inventions and trade secrets whether patentable or
not ( Inventions):
11.5.1 made in the performance of this Agreement solely by
Conexant personnel ("Conexant Development") shall be
the sole and exclusive property of Conexant and
Conexant shall retain any and all rights to file any
patent applications on such Conexant Developments.
11.5.2 made in the performance of this Agreement solely by
Intellon personnel ("Intellon Development") shall be
the sole and exclusive property of Intellon and
Intellon shall retain any and all rights to file any
patent applications on such Intellon Developments.
11.5.3 made in the performance of this Agreement jointly by
Conexant and Intellon personnel ( "Joint Development
") shall be jointly owned and the property of
Intellon and Conexant. Conexant and Intellon shall
jointly retain any and all rights to file any joint
patent applications on such Joint Developments.
During the prosecution of any applications filed
pursuant to this Section 11.5, and prior to
responding to Office Actions from the patent
authority of any country, each company agrees to
provide the other company with timely copies of all
correspondence and official papers related to the
prosecution any such patent application. All expenses
incurred pursuant to the drafting, filing and
prosecution of such applications shall be borne
equally by both Conexant and Intellon.
11.5.4 As to all patentable Joint Developments, Intellon and
Conexant shall jointly determine whether to file for
patent protection in any country or not. If one of
the two companies (Refusing Company) decides not to
pursue filing a patent application on the patentable
Joint Development in any given country, the other
company (Proceeding Company) may independently pursue
patent protection of the patentable Joint Development
in such country on behalf of Proceeding Company and
shall bear all expenses therefor. If Proceeding
Company so pursues patent protection in such country,
the Proceeding Company shall be the sole owner of any
and all resulting patents and shall be entitled to
all revenues derived by Proceeding Company relating
to the issued patent, provided, however, that
Refusing Company shall have a non-exclusive,
irrevocable, royalty-free license (with no right to
sublicense) under such patent within such country to
make, have made, use, import, export, offer for sale,
or otherwise sellproducts or processes utilizing or
embodying the subject matter claimed in such patent.
During the prosecution of any applications filed
pursuant to this Section 11.5, and prior to
responding to Office
21
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 22
CONFIDENTIAL TREATMENT REQUESTED
Actions from the patent authority of any country,
Proceeding Company agrees to provide Refusing Company
with timely copies of all correspondence and official
papers related to the prosecution any such patent
application. All expenses incurred pursuant to the
drafting, filing and prosecution of such applications
shall be borne by Proceeding Company.
11.6 Subcontractors and Subsidiaries
11.6.1 Conexant and Intellon shall have the right to
subcontract manufacturing of all or part of Licensed
Products to Subcontractors or Semiconductor Foundries
provided that each Subcontractor or Semiconductor
Foundry agrees in writing to confidentiality
provisions materially equivalent to the NDA and
otherwise not to disclose or use the Intellon' s
11Mbps PowerLine OFDM Specification for any purpose
other than such subcontract manufacturing for
Conexant or Intellon, respectively.
11.6.2 Conexant and Intellon shall have the right to
purchase from Conexant & Intellon Foundry Partner
either (a) untested Parent IC wafers, or (b) tested
Parent IC wafers.
11.6.3 Conexant may exercise any of its rights and perform
any of its obligations under this Agreement through
any of its Subsidiaries, but Conexant shall remain
primarily liable for any act or omission of such
Subsidiary which results in a violation or other
breach of this Agreement.
22
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 23
CONFIDENTIAL TREATMENT REQUESTED
12. WARRANTIES AND INDEMNIFICATION
12.1 Principle. In the case of Intellon, subject to the receipt of
shareholder approval and compliance with the provisions of Article III, Section
9 of its Restated Articles of Incorporation, each party represents and warrants
that, as of the Effective Date it has the right to grant the licenses granted by
it herein, and that the terms and conditions of this Agreement do not violate
its respective Articles of Incorporation or By-Laws and do not conflict with any
other agreement to which it is a party or by which it is bound.
12.2 No Infringement. Except as specifically noted below as of the
Effective Date, each party warrants that it has not received notice from a third
party that any design previously developed by it, or to be developed by it
pursuant to this Agreement infringes upon any Intellectual Property Rights of
any such third party. It is acknowledged by each party that the other party has
not conducted, and is not responsible for conducting, a patent, copyright or
other Intellectual Property Rights search, to determine if there are any
Intellectual Property Rights of others subject to the warranty provided for in
this Section 12.
12.3 Indemnification. Should any information or technology licensed
by a party pursuant to this Agreement, become e subject of a claim of
infringement of any Intellectual Property Rights, such party, at its own option
and expense (except as set forth in this Section 12), will (a) correct the
design, within a commercially reasonable time, so that it is non-infringing
without loss of performance or functionality or demonstrate that the design is
non-infringing without correction, or (b) procure for the other party, within a
commercially reasonable time, the right to continue using such information or
technology without liability for infringement, and without further cost to the
other party beyond its obligations provided for under this Agreement, or (c)
return to the other party royalties paid to the other party under this
Agreement, except to the extent that the other party is able itself to obtain
such a license, then such party's obligation to return such royalties shall be
limited to the other party's commercially reasonable cost of obtaining such
license. In the event that the other party remains obligated to pay royalties
under this Agreement, then, to the extent that the license so obtained involves
ongoing royalty payments, such royalty payments shall be credited against
contemporaneous ongoing royalty payments due and owing hereunder by such other
party. The indemnification obligation of this Section 12 shall apply only where
the claim of infringement would not have occurred but for the presence of
information or technology licensed by a party, and shall expressly not include
those cases where the claim of infringement arises because of the combination by
the licensee of such information or technology with other information or
technology of its own or of a third party, and such combination gives rise to
such claim of infringement (except where such combination is the parties
expected natural and intended use of such information or technology), and shall
also expressly not include those cases where the claim of infringement arises
because of the licensor incorporating into such information or technology
subject matter that was expressly directed, instructed or specified by the
licensee to be so incorporated.
23
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 24
CONFIDENTIAL TREATMENT REQUESTED
12.4 DISCLAIMER. EXCEPT AS EXPRESSLY WARRANTED ABOVE, THE LICENSED
INTELLON' S 11MBPS POWER LINE OFDM ENGINE, INTELLON'S INTELLECTUAL PROPERTY AND
OTHER CONFIDENTIAL INFORMATION IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND.
EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 12, INTELLON HEREBY DISCLAIMS ALL
OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO ALL
TECHNOLOGY, DELIVERABLES, SPECIFICATIONS, CONFIDENTIAL INFORMATION, MATERIALS,
SERVICES AND ALL OTHER MATTER PROVIDED HEREUNDER, INCLUDING WITHOUT LIMITATION,
ANY WARRANTY OF DESIGN, MERCHANTABILITY, NONINFRINGEMENTOR THE VALIDITY,
ENFORCIBILITY OR SCOPE OF ANY IPR, FITNESS FOR A PARTICULAR PURPOSE, WHETHER
ARISING FROM A COURSE OF DEALING OR TRADE PRACTICE AND REGARDLESS OF WHETHER
INTELLON HAS BEEN ADVISED OF ANY OF THE FOREGOING. WITHOUT LIMITING THE
FOREGOING, INTELLON DISCLAIMS ANY WARRANTY THAT CONEXANT WILL BE SUCCESSFUL IN
ITS EFFORTS TO DEVELOP LICENSED PRODUCTS OR THAT LICENSED PRODUCTS WILL
COMMUNICATE IN ANY MANNER OR TO ANY EXTENT WITH ANY OTHER PRODUCTS BASED UPON
THE INTELLON' S 11MBPS POWER LINE OFDM SPECIFICATIONS.
13. IP COOPERATION
13.1 Principle. Conexant and Intellon shall cooperate in order to
maximize Intellon's 11Mbps Power Line OFDM Engine (and Conexant's) IP position
in the Proposal.
13.2 IP Review. In recognition of the importance of the strength of
Intellon' s IP portfolio to the successful inclusion of Intellon-based IP in the
HomePLNA Standard, Conexant has the right to contribute certain resources to
maximize Intellon's (and thereby, indirectly, Conexant's) IP position. Such
contribution might include a full review of Intellon' s patent applications and
patents directly related to Intellon's 11Mbps Power Line OFDM Engine, for the
purpose of assessing and making recommendations for maximizing Intellon' s IP
portfolio.
13.3 Timing. Any IP cooperation contemplated by this Agreement
would take place from the Effective Date through Premium IP
Decision Date.
Process. In the event that Conexant were to recommend in writing that
Intellon file a new patent application for a specific country(s), Intellon would
have sixty (60) days from that date of such recommendation to opt whether or not
to file for the recommended patent protection.
24
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 25
CONFIDENTIAL TREATMENT REQUESTED
If Intellon were to pursue the recommended patent protection, then
Intellon would be the sole owner of any and all resulting patents and would be
entitled to all revenues derived by Intellon relating to the issued patent;
provided, however, that Conexant would have a non-transferable, non-exclusive,
royalty-free license (with no right to sublicense) under such patent within each
relevant country to make, have made, use or sell products or processes utilizing
or embodying the subject matter claimed in such patent. During the prosecution
of any applications filed pursuant to this Section, and prior to responding to
Office Actions from the patent authority of any country, Intellon would agree to
provide Conexant with timely copies of all correspondence and official papers
related to the prosecution any such patent application. All expenses incurred
pursuant to the drafting, filing and prosecution of such applications would be
borne by Intellon.
If Intellon were to decide not to pursue filing for patent protection
as recommended by Conexant within sixty (60) days of the date of Conexant's
written recommendation, then Conexant could independently pursue patent
protection in each such country on behalf of and for its sole benefit, and
Conexant would bear all expenses therefor. If Conexant were to pursue patent
protection in any such country, Conexant would be the sole owner of any and all
resulting patents and would be entitled to all revenues derived by Conexant
relating to the issued patent; provided, however, that Intellon would have a
non-transferable, non-exclusive, royalty-free license (with no right to
sub-license) under such patent within such country to make, have made, use or
sell products or processes utilizing or embodying the subject matter claimed in
such patent. During the prosecution of any applications filed pursuant to this
Section, and prior to responding to Office Actions from the patent authority of
any country, Conexant would agree to provide Intellon with timely copies of all
correspondence and official papers related to the prosecution any such patent
application. All expenses incurred pursuant to the drafting, filing and
prosecution of such applications would be borne by Conexant.
13.5 Non Competing Technology. During the Exclusivity Period Conexant agrees
to not develop or have a third party develop for Conexant any similar product.
14. ROYALTY
14.1 Principle. Conexant and Intellon agree to have different
Royalty Rates. Such Royalty Payments combined with **********.
14.2 **********
14.3 Manufacturing for Intellon. Conexant would owe no royalties to
Intellon for Parent IC or Derivative Products manufactured by Conexant for
Intellon.
14.4 Per Unit Royalty. Conexant would pay to Intellon a per unit
royalty in an amount equal to the mathematical ********** (i)**********; (ii)
**********; and (iii) ********** for each Licensed Product Sold to any third
party by Conexant.
25
Portions of this agreement have been omitted and filed separately with the
Commission pursuant to an application for confidential treatment under Rule 406.
<PAGE> 26
CONFIDENTIAL TREATMENT REQUESTED
14.5 Royalty Rates. Four royalty rates are defined for the purpose
of this agreement:
**********
**********
**********
**********
**********
14.6 Limitations. Total License and/or Royalties paid by Conexant
would not exceed the Value Cap or the Time Cap from January 1st 2000, whichever
accrues or occurs first.
14.7 Ratio Determination. The Ratio is the ratio in which the
numerator is the die area occupied by the HPLNA 1.0 functionality (as embodied
by Intellon 's 11Mbps PowerLine OFDM Engine) less the area required for any
external memory buffers and the denominator is the total die area less the area
required for any external memory buffers. Prior to the first shipment by
Conexant of any Licensed Product, Conexant and Intellon shall appoint a mutually
agreed upon, objective, third party with proper experience and skill in the art
to determine the Ratio ("Professor"). Conexant shall disclose to the Professor
all information and materials necessary to determine the Ratio. Intellon and
Conexant agree that the Ratio established by the Professor shall be conclusive
and binding upon the parties. The parties shall share equally the costs of
retaining the Professor; provided, however, that if the Professor is asked to
determine whether the die area occupied by the HPLNA 1.0 functionality includes
die area that is not embodied by Intellon's 11Mbps PowerLine OFDM Engine, then
all costs of retaining the Professor shall be borne by Conexant alone.
14.8 Future Generations. If the Ratification Body (i) adopts a
second generation specification, ********** year later than HPLNA 1.0
ratification date, with a speed greater than the one provided by the Intellon's
11Mbps OFDM PowerLine Engine ("HPLNA 2.0 Specification") and (ii) such HPLNA 2.0
Specification requires the Intellon's 11Mbps OFDM PowerLine Engine solely for
the purposes of supporting backwards compatibility, ********** for the sale of
future generation licensed products that incorporate both Intellon's 11Mbps OFDM
PowerLine Engine and the new HPLNA2.0 higher speed PowerLine Engines
manufactured after the date of such adoption. If the HomePLNA (i) adopts a third
generation specification, ********** later than HPLNA 1.0 ratification date,
********** ("HPLNA 3.0 Specification") and (ii) such HPLNA 3.0 Specification
requires the Intellon's 11Mbps OFDM PowerLine Engine solely for the purposes of
supporting backwards compatibility, ********** licensed products that
incorporate the Intellon's 11Mbps OFDM PowerLine Engine and the new HPLNA 3.0
higher speed PowerLine Engines manufactured after the date of such adoption. If
Intellon were the technology provider of the new HPLNA 2.0 and HPLNA
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CONFIDENTIAL TREATMENT REQUESTED
3.0 to be adopted by the Ratification Body, then Conexant shall negotiate new
licenses with Intellon.
14.9 Payments and Reporting.
14.9.1 Records and Audits. With respect to the Per
Unit Royalties set forth herein, Conexant shall keep
complete and accurate records. These records shall be
retained for a period of at least three (3) years
from the date of payment, notwithstanding the
expiration or other termination of this Agreement.
Intellon through an independent accounting firm shall
have the right to examine and audit, not more than
once a year unless the preceding audit revealed a
discrepancy, and during normal business hours, all
such records and such other records and accounts as
may contain, under recognized accounting practices,
information bearing upon the amount of Per Unit
Royalties payable to Intellon under this Agreement.
Prompt adjustment shall be made by Conexant to
compensate for any errors and/or omissions disclosed
by such examination or audit which result in an
underpayment of royalties hereunder.
14.9.2 Reports and Payment Terms. Within sixty (60)
days after the end of each calendar quarter, until
all Per Unit Royalties payable hereunder shall have
been reported and paid, Conexant shall furnish to
Intellon a statement, in suitable form, showing the
number of Licensed Products Sold to third parties
itemized by product, and the amount of royalty
payable thereon. If no products subject to payment of
Per Unit Royalties have been Sold, that fact shall be
shown on such statement. Also, within such sixty-(60)
day period Conexant shall pay to Intellon the Per
Unit Royalties payable hereunder for such quarter.
14.10 Taxes. Conexant shall be solely responsible for any
withholding tax imposed by the country in which the Conexant is located or any
other non-United States government tax imposed by any other non-United States
Government, with respect to the License Fees, NRE, Per Unit Royalties, and other
payments to be made pursuant to this Agreement; i.e., the amounts specified in
this Agreement shall be the amounts actually received by Intellon from Conexant,
without any deductions.
15. MANUFACTURING & PRODUCTION
Principle. Conexant and Intellon will have the right to manufacture and market
the Parent IC and Derivative Products under the companies' respective trademarks
and other labels.
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CONFIDENTIAL TREATMENT REQUESTED
16. LIMITATION OF LIABILITY
16.1 Cap. ********** REGARDLESS WHETHER THE UNDERLYING CLAIM IS BASED
IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE.
16.2 Exclusion. IN NO EVENT SHALL CONEXANT OR INTELLON BE LIABLE FOR
ANY SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES WHATSOEVER
(INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF PROFITS OR BUSINESS
INTERRUPTION) ARISING OUT OF THIS AGREEMENT OR THE USE OF OR INABILITY TO USE
ANY PRODUCT, EQUIPMENT OR ASSOCIATED SOFTWARE DESCRIBED HEREIN EITHER SEPARATELY
OR IN COMBINATION WITH ANY OTHER PRODUCT, EQUIPMENT, SOFTWARE OR OTHER MATERIALS
EVEN IF INTELLON OR CONEXANT HAS BEEN ADVISED OF THE POSSIBILITY OR CERTAINTY OF
SUCH DAMAGES.
16.3 Failure of Essential Purpose. The limitations in Sections 16 shall
survive and apply even if any limited remedy in this Agreement is found to have
failed of its essential purpose.
17. CONFIDENTIAL INFORMATION
17.1 NDA. The term "Confidential Information" hereunder shall
have the same meaning as in the NDA and shall be subject to and treated in
accordance therewith, except as expressly modified pursuant to this Section 17.
17.2 Amendment of NDA. The purposes of the NDA shall include, in
addition to the discussion of a business relationship, all disclosures of
Confidential Information made pursuant to this Agreement. Furthermore, if there
is a "required" disclosure pursuant to Section 4(vii) of the NDA, the parties
shall cooperate with each other to minimize the scope of such disclosure. Also,
to the extent Section 16 of the NDA conflicts with this Agreement, this
Agreement shall control, and Section 5 of the NDA shall be considered void and
of no effect. Finally, all Confidential Information disclosed pursuant to the
NDA shall be considered disclosed hereunder.
17.3 Additional Responsibilities. Where applicable, or as
otherwise required by this Agreement, each party shall obtain the execution of
confidentiality agreements with its Subsidiaries, employees, agents and
consultants having access to Confidential Information of the other party, and
shall diligently enforce such agreements, or shall be responsible for the
actions of such Subsidiaries, employees, agents and consultants and
Subcontractors in this respect.
17.4 Remedies. Conexant and Intellon agree that the unauthorized
use by a party of Confidential Information will diminish the value of such
information. Therefore, if a
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CONFIDENTIAL TREATMENT REQUESTED
receiving party breaches any of its obligations with respect to the
confidentiality or use of the Confidential Information hereunder, the disclosing
party is entitled to seek equitable relief to protect its interest herein,
including injunctive relief, as well as money damages.
17.5 Confidentiality of Agreement. Each party agrees that the terms
and conditions of this Agreement shall be treated as Confidential Information
and that neither party will disclose the terms or conditions to any third party
(including any promoters, or adopters or participants in the HPLNA) without the
prior written consent of the other party, provided, however, that each party may
disclose the terms and conditions of this Agreement: (i) as required by any
court or other governmental body provided the receiving party uses reasonable
efforts to give the disclosing party reasonable notice of such required
disclosure; (ii) as otherwise required by law provided the receiving party uses
reasonable efforts to give the disclosing party reasonable notice of such
required disclosure; (iii) to accountants and other professional advisors
provided such accountants or professional advisors have entered into a written
agreement with the respective party containing substantially equivalent
restrictions regarding Confidential Information to those contained herein; (iv)
to banks, investors or other financial sources and their advisors provided such
banks, investors and other financial sources and their advisors have entered
into a written agreement with the respective party containing substantially
equivalent restrictions regarding Confidential Information to those contained
herein; or (v) in connection with the enforcement of this Agreement or rights
under this Agreement
18. TERM AND TERMINATION
18.1 Term. The Agreement shall commence as of the Effective Date
and, unless and until terminated hereunder, shall continue (the "Term").
18.2 Termination
(a) If Intellon's shareholders do not approve the
issuance of the Series C Preferred Stock as contemplated hereunder, then this
Agreement shall terminate automatically without any further action by the
parties. Upon such termination the parties shall return all monies paid to date.
(b) If either party defaults in the performance of any
material obligation hereunder and if any such default is not corrected within
forty-five (45) days after the defaulting party receives written notice thereof
from the non-defaulting party, then the non-defaulting party, at its option,
may, in addition to any other remedies it may have, terminate this Agreement.
(c) Either party may terminate this Agreement effective
upon written notice to the other party in the event that the other party becomes
the subject of a voluntary or involuntary petition in bankruptcy or any
proceeding relating to insolvency, or reorganization for the benefit of
creditors, (and in the case of an involuntary petition, if that petition or
proceeding is not dismissed within one hundred twenty (120) days after filing).
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CONFIDENTIAL TREATMENT REQUESTED
(d) Either party may terminate this Agreement effective
upon written notice to the other party in the event that the Proposal is not
adopted, in whole or in part, by the HPLNA as the HPLNA 1.0 Specification.
18.3 Sale of Inventory. Unless this Agreement is terminated by
Intellon for a default by Conexant, upon expiration or termination of this
Agreement, Conexant shall have one hundred and eighty (180) days to sell any
Licensed Products in its inventory as of the effective date of such expiration
or termination.
18.4 Survival
(a) Upon any termination or expiration of this Agreement for any
reason, the parties shall return to the disclosing party, or certify the
destruction of, all Confidential Information of the disclosing party, including
all copies thereof in whole or in part.
(b) Upon termination of this Agreement for (i) a material breach by a
party or (ii) the insolvency of a party, all licenses and rights granted to the
defaulting or insolvent party shall terminate, and the defaulting or insolvent
party shall promptly certify the destruction of or deliver to the other party
all materials comprising, incorporating, or using, in whole or in part, any of
the other party's Confidential Information.
(c) In addition, except as otherwise specified herein, all amounts (i)
paid to Intellon prior to the date of termination or expiration are
nonrefundable; and all amounts (ii) due or payable to Intellon as a result of
events prior to the date of termination or expiration shall remain due and
payable. The provisions of Sections 3.5, 11.1, 12.3, 12.4, 16, 17, 18, and 19
shall survive any expiration or termination of this Agreement for any reason.
19. GOVERNING LAW; DISPUTE RESOLUTION
19.1 Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of New York without reference
to conflict of laws principles.
19.2 Dispute Resolution. All disputes and claims arising out of this
Agreement shall be subject to the exclusive jurisdiction and venue of
the state and federal courts nearest the principal place of business
of the defendant, and the parties agree and consent to the personal and
exclusive jurisdiction of these courts.
20. MISCELLANEOUS
20.1 Assignment. Neither party may assign or delegate this
Agreement or any of its licenses, rights or duties under this Agreement, by
operation of law or otherwise, without the prior written consent of the other
party, except either party may assign this Agreement to a person or entity into
which it has merged or which has otherwise succeeded to all or substantially all
of its business and assets, and which has assumed in
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CONFIDENTIAL TREATMENT REQUESTED
writing or by operation of law its obligations under this Agreement. Any
attempted assignment in violation of this Section 20.1 shall be void.
20.2 Authority. Each party represents that all corporate action
necessary for the authorization, execution and delivery of this Agreement by
such party and the performance of its obligations hereunder has been taken.
20.3 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed (by registered or
certified mail if available), postage prepaid, or otherwise delivered by hand,
by messenger or by telecommunication, addressed to the addresses first set forth
above or at such other address furnished with a notice in the manner set forth
herein. Such notices shall be deemed to have been served when delivered or, if
delivery is not accomplished by reason of some fault of the addressee, when
tendered.
20.4 Program Manager. Each party shall assign one or two qualified
individuals (Program Manager) for purposes of acting as a liaison for delivery
and receipt of technical information pursuant to this Agreement. As of the
Effective Date, **********. Either party may designate new Program Managers to
be effective upon written notice to the other party.
20.5 Export Controls. Conexant understands and acknowledges that
Intellon is subject to regulation by agencies of the U.S. government, including
the U.S. Department of Commerce, which prohibit export or diversion of certain
products and technology to certain countries. Any and all obligations of
Intellon to provide Intellon' s 11Mbps Power line OFDM Engine, and any other
materials in any media in which any of the foregoing is contained, training,
technical assistance, and related technical data (collectively, "Data") shall be
subject in all respects to such United States laws and regulations as shall from
time to time govern the license and delivery of technology and products abroad
by persons subject to the jurisdiction of the United States, including the
Export Administration Act of 1979, as amended, any successor legislation, and
the Export Administration Regulations issued by the Department of Commerce,
International Trade Administration, Bureau of Export Administration. Conexant
agrees to cooperate with Intellon, including without limitation, providing
required documentation, in order to obtain export licenses or exemptions
therefrom. Conexant warrants that it will comply in all respects with the export
and re-export restrictions set forth in the export license (if necessary) for
every item shipped to Conexant and will otherwise comply with the Export
Administration Regulations or other United States laws and regulations in effect
from time to time.
20.6 Partial Invalidity. If any paragraph, provision, or clause
thereof in this Agreement shall be found or be held to be invalid or
unenforceable in any jurisdiction in which this Agreement is being performed,
the remainder of this Agreement shall be valid and enforceable and the parties
shall negotiate, in good faith, a substitute, valid and enforceable provision
which most nearly effects the parties' intent in entering into this Agreement.
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CONFIDENTIAL TREATMENT REQUESTED
20.7 Counterparts. This Agreement may be executed in two (2) or
more counterparts, all of which, taken together, shall be regarded as one and
the same instrument.
20.8 Relationship of Parties. The parties hereto are independent
contractors. Nothing contained herein or done in pursuance of this Agreement
shall constitute either party the agent of the other party for any purpose or in
any sense whatsoever, or constitute the parties as partners or joint ventures.
20.9 Modification. No alteration, amendment, waiver, cancellation
or any other change in any term or condition of this Agreement shall be valid or
binding on either party unless the same shall have been mutually assented to in
writing by both parties.
20.10 Waiver. The failure of either party to enforce at any time the
provisions of this Agreement, or the failure to require at any time performance
by the other party of any of the provisions of this Agreement, shall in no way
be construed to be a present or future waiver of such provisions, nor in any way
affect the right of either party to enforce each and every such provision
thereafter. The express waiver by either party of any provision, condition or
requirement of this Agreement shall not constitute a waiver of any future
obligation to comply with such provision, condition or requirement.
20.11 Section Headings. The Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
20.12 Currency. All dollar amounts are specified and payable in U.S.
dollars.
20.13 Entire Agreement. This Agreement and the Exhibits hereto
constitute the entire agreement between the parties and supersede all previous
agreements and understandings, whether oral or written, between the parties
hereto with respect to the subject matter hereof and no agreement or
understanding varying or extending the same shall be binding upon either party
hereto unless in a written document signed by the parties to be bound thereby.
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CONFIDENTIAL TREATMENT REQUESTED
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by duly authorized officers or representatives as of the date first above
written.
INTELLON, INC. CONEXANT SYSTEMS, INC.
("Intellon") ("Conexant")
By: By:
--------------------------------- --------------------------------
Name: Name:
------------------------------- --------------------------------
Title: Title:
------------------------------ --------------------------------
Date: Date:
------------------------------- --------------------------------
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Commission pursuant to an application for confidential treatment under Rule 406.
