<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q/A
(Mark One)
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended June 30, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the transition period from ______to ______
Commission file number: 0-20124
NETWORK COMPUTING DEVICES, INC.
(Exact name of registrant as specified in its charter)
California 77-0177255
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
350 North Bernardo Avenue, Mountain View, California 94043
(Address of principal executive offices and zip code)
Registrant's telephone number: (415) 694-0650
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ -----
The number of shares outstanding of the Registrant's Common Stock was 16,567,591
at July 31, 1996.
<PAGE>
FORM 10-Q/A
AMENDMENT NO. 1
PART II - OTHER INFORMATION
The undersigned registrant hereby amends the following item of its
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1996, as
set forth in the pages attached hereto.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith:
Exhibit 2.2 Asset Purchase Agreement dated June 3, 1996 by and
among the Registrant NCD Software Corporation and
NetManage, Inc.
Exhibits
Exhibit A Certain Definitions
Exhibit B-1 Assignment and Assumption Contract
Exhibit B-2 Assignment and Assumption Contract
Exhibit C NCD Disclosure Schedule(2)
Schedules
Schedule 1.1 Assets(2)
Schedule 1.1(b) Assumed Customer and Other Contracts(2)
Schedule 1.3(b) Assumed Liabilities
Schedule 1.5 Purchase Price Allocation(2)
Exhibit 10.42 Alliance Agreement dated June 27, 1996 by and between the
Registrant and International Business Machines
Corporation.(1)
*Exhibit 11.1 Statement Regarding Computation of Shares Used in Per Share
Earnings Computations.
*Exhibit 27 Financial Data Schedule.
(1) Confidential treatment has been requested as to a portion of this
exhibit. Confidential portions have been omitted and filed
separately with the Securities and Exchange Commission.
(2) Exhibits not filed herewith are identified in this agreement.
The Company will furnish supplementally any omitted exhibit to
the Commission upon request.
(b) The Company filed no reports on Form 8-K during the three-month period
ended June 30, 1996.
- ---------------
* Previously Filed
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Network Computing Devices, Inc.
(Registrant)
Date: March 19, 1997
By:
/s/ Rudolph G. Morin
------------------------------------------------
Rudolph G. Morin
Executive Vice President, Operations and Finance
(Duly Authorized and Principal Financial and
Accounting Officer)
3
<PAGE>
ASSET PURCHASE AGREEMENT
BY AND AMONG:
NETMANAGE, INC.,
A DELAWARE CORPORATION;
NETWORK COMPUTING DEVICES, INC.,
A CALIFORNIA CORPORATION;
AND
NCD SOFTWARE CORPORATION,
A CALIFORNIA CORPORATION.
DATED AS OF JUNE 3, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1. The Transaction.. . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Assets. . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Excluded Assets. . . . . . . . . . . . . . . . . . . .2
1.3 Liabilities. . . . . . . . . . . . . . . . . . . . . .3
1.4 Purchase Price and Method of Payment. . . . . . . . . .4
1.5 Tax Matters; Bulk Sales. . . . . . . . . . . . . . . .4
1.6 Limited License to NCD to Satisfy Post-Closing Support
Obligations . . . . . . . . . . . . . . . . . . . . .4
1.7 Closing. . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE 2. Representations and Warranties of NCD. . . . . . . . . . . . .4
2.1 Organization. . . . . . . . . . . . . . . . . . . . . .5
2.2 Power, Authority and Validity. . . . . . . . . . . . .5
2.3 Title and Related Matters. . . . . . . . . . . . . . .5
2.4 Proprietary Rights and Warranty Claims. . . . . . . . .6
2.5 Contracts. . . . . . . . . . . . . . . . . . . . . . .7
2.6 Orders, Commitments and Returns. . . . . . . . . . . .8
2.7 Compliance With Law. . . . . . . . . . . . . . . . . .9
2.8 Labor Difficulties; No Discrimination. . . . . . . . .9
2.9 Trade Regulation. . . . . . . . . . . . . . . . . . . .9
2.10 Employees. . . . . . . . . . . . . . . . . . . . . . 10
2.11 Litigation. . . . . . . . . . . . . . . . . . . . . . 10
2.12 Compliance with Environmental Requirements. . . . . . 10
2.13 No Brokers. . . . . . . . . . . . . . . . . . . . . . 11
2.14 Disclosure. . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 3. Representations and Warranties of NetManage. . . . . . . . . 11
3.1 Organization and Good Standing. . . . . . . . . . . 11
3.2 Power, Authorization and Validity. . . . . . . . . . 11
3.3 No Violation of Existing Agreements. . . . . . . . . 11
3.4 Compliance With Other Instruments and Laws. . . . . . 12
3.5 Litigation. . . . . . . . . . . . . . . . . . . . . . 12
3.6 No Brokers. . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 4. Conditions to NCD's Obligations . . . . . . . . . . . . . . . 12
4.1 Accuracy of Representations and Warranties. . . . . . 12
4.2 Covenants. . . . . . . . . . . . . . . . . . . . . . 12
4.3 Authorizations . . . . . . . . . . . . . . . . . . . 12
4.4 Government Consents . . . . . . . . . . . . . . . . . 12
4.5 No Litigation. . . . . . . . . . . . . . . . . . . . 13
4.6 Board of Directors Approval. . . . . . . . . . . . . 13
<PAGE>
4.7 Delivery of Cash Consideration and Executed Assignment
and Assumption of Contracts. . . . . . . . . . . . . 13
ARTICLE 5. Conditions to NetManage's Obligations. . . . . . . . . . . . 13
5.1 Accuracy of Representations and Warranties. . . . . . 13
5.2 Covenants.. . . . . . . . . . . . . . . . . . . . . . 13
5.3 Authorizations. . . . . . . . . . . . . . . . . . . . 13
5.4 No Litigation.. . . . . . . . . . . . . . . . . . . . 13
5.5 Board of Directors Approval.. . . . . . . . . . . . . 13
5.6 Government Consents.. . . . . . . . . . . . . . . . . 14
5.7 Due Diligence.. . . . . . . . . . . . . . . . . . . . 14
5.8 Assignment and Assumption of Contracts. . . . . . . . 14
5.9 Bill of Sale and Other Transfer Documents.. . . . . . 14
ARTICLE 6. Termination of Agreement. . . . . . . . . . . . . . . . . . . 14
6.1 Termination.. . . . . . . . . . . . . . . . . . . . . 14
6.2 Effect of Termination.. . . . . . . . . . . . . . . . 14
6.3 Certain Effects of Termination. . . . . . . . . . . . 14
ARTICLE 7. Indemnification.. . . . . . . . . . . . . . . . . . . . . . . 15
7.1 Survival of Representations.. . . . . . . . . . . . . 15
7.2 Indemnification by NCD. . . . . . . . . . . . . . . . 16
7.3 Indemnification by NetManage. . . . . . . . . . . . . 16
7.4 Threshold; Ceiling; Exclusivity.. . . . . . . . . . . 16
ARTICLE 8. Miscellaneous.. . . . . . . . . . . . . . . . . . . . . . . . 17
8.1 Governing Laws. . . . . . . . . . . . . . . . . . . . 17
8.2 Binding upon Successors and Assigns.. . . . . . . . . 17
8.3 Personnel.. . . . . . . . . . . . . . . . . . . . . . 17
8.4 Building Lease. . . . . . . . . . . . . . . . . . . . 17
8.5 Further Assurances; Benefits of Nonassignable Rights;
Notices.. . . . . . . . . . . . . . . . . . . . . . . 18
8.7 Severability. . . . . . . . . . . . . . . . . . . . . 18
8.8 Entire Agreement. . . . . . . . . . . . . . . . . . . 18
8.9 Facsimile; Counterparts.. . . . . . . . . . . . . . . 18
8.10 Expenses. . . . . . . . . . . . . . . . . . . . . . . 19
8.11 Amendment and Waivers.. . . . . . . . . . . . . . . . 19
8.12 Survival of Agreements. . . . . . . . . . . . . . . . 19
8.13 No Waiver.. . . . . . . . . . . . . . . . . . . . . . 19
8.14 Attorneys' Fees.. . . . . . . . . . . . . . . . . . . 19
8.15 Notices.. . . . . . . . . . . . . . . . . . . . . . . 19
8.16 Construction of Agreement.. . . . . . . . . . . . . . 20
8.17 No Joint Venture. . . . . . . . . . . . . . . . . . . 20
8.18 Pronouns. . . . . . . . . . . . . . . . . . . . . . . 20
8.19 Further Assurances. . . . . . . . . . . . . . . . . . 21
<PAGE>
8.20 Absence of Third Party Beneficiary Rights.. . . . . . 21
<PAGE>
EXHIBITS
EXHIBIT A Certain Definitions
EXHIBIT B-1 Assignment and Assumption of Contracts
EXHIBIT B-2 Assignment and Assumption of Contracts
EXHIBIT C NCD Disclosure Schedule
SCHEDULES
Schedule 1.1 Assets
Schedule 1.1(b) Assumed Customer and Other Contracts
Schedule 1.3(b) Assumed Liabilities
Schedule 1.5 Purchase Price Allocation
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of this
3rd day of June 1996, by and among NETMANAGE, INC., a Delaware corporation
("NetManage"), NETWORK COMPUTING DEVICES, INC., a California corporation ("NCD,
Inc.") and NCD Software Corporation, a California corporation ("NCD Sub").
"NCD" shall mean NCD, Inc. and its subsidiary NCD Sub. Certain other
capitalized terms used in this Agreement are defined in EXHIBIT A attached
hereto.
RECITALS
A. NCD is engaged in, among other things, the business of developing,
marketing and selling an electronic e-mail package for the UNIX, Macintosh, MS-
DOS and Windows marketplace (the "Z-Mail Business").
B. NetManage desires to purchase from NCD certain assets used or usable
in connection with the Z-Mail Business and to assume certain liabilities related
to the Z-Mail Business, and NCD desires to sell to NetManage such certain assets
and to transfer to NetManage such certain liabilities, all according to the
terms and subject to the conditions set forth in this Agreement (the
"Acquisition").
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, NetManage and NCD hereby agree as
follows:
ARTICLE I. THE TRANSACTION.
1.1 ASSETS. SUBJECT TO AND IN RELIANCE UPON THE REPRESENTATIONS,
WARRANTIES AND AGREEMENTS HEREIN SET FORTH, AND SUBJECT TO THE TERMS AND
CONDITIONS HEREIN CONTAINED, NCD, INC. AND NCD SUB AGREE TO GRANT, CONVEY, SELL,
ASSIGN, TRANSFER AND DELIVER TO NETMANAGE ON THE CLOSING DATE (AS HEREINAFTER
DEFINED), AND NETMANAGE AGREES ON THE CLOSING DATE TO PURCHASE, ACCEPT AND
ASSUME, THOSE ASSETS SET FORTH ON SCHEDULE 1.1 ATTACHED HERETO (COLLECTIVELY,
THE "ASSETS"). WITHOUT LIMITING THE FOREGOING, THE ASSETS SHALL INCLUDE THE
FOLLOWING, EXCEPT TO THE EXTENT THAT ANY OF THE FOLLOWING ARE EXCLUDED ASSETS:
(a) all proprietary software relating to the Assets, in every
case including all documentation, object code and source code with respect to
such software set forth on SCHEDULE 1.1;
(b) all customer contracts and service agreements relating to
the supply and servicing of the Z-Mail products and all other contracts relating
to the Z-Mail Business set
<PAGE>
forth on SCHEDULE 1.1(b), which Schedule shall be prepared and attached hereto
within 15 days following the Closing to include, among other things, technical
support and maintenance agreements and the agreement between NCD and
Software.com, Inc. dated December 14, 1995 (the "Software.com Agreement")
(collectively, the "Contracts");
(c) all inventory of the Z-Mail Business (collectively, the
"Inventory");
(d) certain tangible personal property located at the facility
held under the Lease (as defined in Section 8.4) (the "Property") but only as
determined by mutual agreement of the parties;
(e) all intellectual property rights, whether held by NCD as
owner or as licensee, relating to the Assets including, without limitation,
patents, patent applications, trademarks (whether registered or unregistered),
trademark applications, copyrights (whether registered or unregistered),
copyright applications, trade secrets, know-how, customer lists, franchises,
systems, computer software, computer programs (including both source and object
code forms), inventions, designs, proprietary products, technologies,
proprietary rights or other intellectual property or intangible assets and any
rights to use or exploit any of the foregoing (collectively, the "Proprietary
Rights");
(f) all tangible records of the Proprietary Rights, customer
lists, customer records and similar information relating to the ongoing conduct
of the Z-Mail Business, including, without limitation, commented source code and
other technical papers, inventory, maintenance, and asset records (the
"Proprietary Rights Records");
(g) all sales and promotional materials, catalogues and
advertising literature relating to the Assets; and
(h) any and all claims, choses in action, rights of
indemnification and rights against third parties if and to the extent that they
relate to (i) the condition of the Assets, including, without limitation, all
rights under manufacturers' and vendors' warranties, or (ii) the operation of
the Z-Mail Business prior to the Closing (collectively, the "Claims"); PROVIDED,
HOWEVER, that Claims shall not include any claims, choses in action, rights of
indemnification or rights against third parties arising solely in connection
with accounts receivable or accounts payable or prepaid expenses (other than
prepaid expenses, if any, relating to the Contracts).
1.2 EXCLUDED ASSETS. THERE SHALL BE EXCLUDED FROM THE ASSETS AND
RETAINED BY NCD ALL ITEMS NOT IDENTIFIED IN SECTION 1.1, INCLUDING TO THE EXTENT
IN EXISTENCE ON THE CLOSING DATE, THE FOLLOWING ASSETS (COLLECTIVELY, THE
"EXCLUDED ASSETS"):
(a) all cash or securities owned or held by NCD relating to the
Z-Mail Business;
<PAGE>
(b) all prepaid expenses (other than prepaid expenses relating
to the Contracts) and accounts receivable owned or held by NCD relating to the
Z-Mail Business;
(c) all contracts of insurance relating to Z-Mail Business;
(d) all pension, profit sharing and savings plans and trusts
relating to the Z-Mail Business and any assets thereof;
(e) any contracts relating to the Z-Mail Business not being
assumed by NetManage pursuant to Section 1.1(b) hereof; and
(f) any and all claims, choses in action, and rights against
third parties relating to the Z-Mail Business other than the Claims as defined
in Section 1.1(h).
1.3 LIABILITIES.
(a) NCD shall sell and convey the Assets to NetManage free and
clear of all mortgages, liens, deeds of trust, security interests, pledges,
restrictions, prior assignments, charges, claims, defects in title and
encumbrances of any kind or type whatsoever except: (i) for liens for taxes not
yet due and payable or that are being contested in good faith by appropriate
proceedings, and (ii) for the obligations of NCD under contracts which NetManage
hereby agrees to assume as described in Section 1.3(b) of this Agreement.
(b) NetManage agrees to assume at the Closing the certain
obligations arising, and expressly provided to be performed by NCD, after the
Closing Date under the technical support and maintenance agreements identified
in Schedule 1.1(b) and the obligations under the Software.com Agreement pursuant
to the form of Assignment and Assumption of Contracts attached hereto as EXHIBIT
B-1. At the time the parties have finalized Schedule 1.1(b), NetManage shall
execute and deliver an additional assignment and assumption of contracts in the
form attached hereto as Exhibit B-2 to assume, effective as of the Closing, all
Contracts identified in such Schedule 1.1(b). Notwithstanding the foregoing,
and subject to Section 8.5, NetManage shall not be obligated to assume any
obligations under any Contract as to which NCD fails to deliver any required
written consent of all other parties thereto.
(c) Except as otherwise specifically provided herein, NetManage
shall not assume or be liable for, and does not, and does not undertake to
attempt to, assume or discharge any liability of NCD relating to the Z-Mail
Business or otherwise.
(d) NCD retains and shall hereafter pay, satisfy, discharge,
perform and fulfill all such obligations and liabilities not expressly assumed
by NetManage hereunder as they become due, without any charge or cost to
NetManage, and NCD agrees to indemnify and hold NetManage and its successors and
assigns harmless from and against any and all such liabilities in accordance
with the terms of Article 7 below.
<PAGE>
1.4 PURCHASE PRICE AND METHOD OF PAYMENT. The purchase price for
the Assets shall be comprised of (i) One Million Three Hundred Twenty-Five
Thousand Dollars ($1,325,000) in cash (the "Cash Consideration"), and (ii) the
assumption of the liabilities identified on Schedule 1.3(b) (collectively with
the Cash Consideration, the "Purchase Price"). NetManage shall (i) pay, or
cause to be paid to NCD on thE Closing Date an amount equal to the Cash
Consideration by (A) check, or (B) bank wire transfer of immediately available
federal funds, as instructed by NCD, and (ii) execute and deliver to NCD the
Assignment and Assumption of Contracts in the form attached hereto as EXHIBIT B.
NetManage shall pay all sales and transfer taxes incurred in connection with thE
Acquisition.
1.5 TAX MATTERS; BULK SALES. NetManage and NCD agree on the
allocation of the Purchase Price for the Assets set forth on SCHEDULE 1.5
attached hereto based on the fair market value of the Assets as reasonably
determined by NetManage and NCD and as may be required by Section 1060 of the
Internal Revenue Code of 1986, as amended. NetManage and NCD each agree not to
take any tax position that is inconsistent with the allocation of the Purchase
Price set forth as SCHEDULE 1.5. NetManage waives compliance with any bulk
sales notice or other bulk sale provisions of applicable law.
1.6 LIMITED LICENSE TO NCD TO SATISFY POST-CLOSING SUPPORT
OBLIGATIONS. Subject to the terms and conditions herein contained, NetMAnage
grants to NCD a nontransferable, worldwide, royalty-free, nonexclusive and
nonassignable right and license to use the Proprietary Rights subsequent to the
Closing, solely for the purposes of (i) internal use by NCD, and (ii) providing
technical support under existing support and maintenance contracts and licenses
relating to thE Z-Mail Business which are not assumed by NetManage pursuant to
this Agreement.
1.7 CLOSING. The closing (the "ClosinG") of the sale and purchase
of the Assets shall take place at the offices of Gray Cary Ware & Freidenrich,
400 Hamilton, Palo Alto, California, on June 3, 1996 at 2:00 p.m., Pacific
Standard Time. The actual date of the Closing is sometimes herein referred to
as the "Closing Date."
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF NCD.
Except as otherwise set forth in the NCD Disclosure Schedule provided to
NetManage on the date hereof, a copy of which is attached hereto as EXHIBIT C,
NCD represents and warrants to NetManage as set forth below. No fact or
circumstance disclosed to NetManage shall constitute an exception to these
representations and warranties unless such fact or circumstance is set forth in
the NCD Disclosure Schedule.
2.1 ORGANIZATION.
(a) Each of NCD, Inc. and NCD Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and has corporate power and authority to carry on the Z-Mail Business
as it is now being conducted by each of them.
<PAGE>
(b) NCD, Inc. is duly qualified or licensed to do business and
in good standing in each jurisdiction in which the nature of the Z-Mail Business
or properties makes such qualification or licensing necessary, except where the
failure to so qualify or be licensed would not result in a material effect on
the Z-Mail Business, and NCD Sub is duly qualified or licensed to do business
in California.
(c) The NCD Disclosure Schedule contains a true and complete
listing of the locations of all sales offices, manufacturing facilities, and any
other offices or facilities of the Z-Mail Business and a true and complete list
of all states in which the Z-Mail Business maintains any employees.
2.2 POWER, AUTHORITY AND VALIDITY. Each of NCD, Inc. and NCD Sub
has the corporate power and authority to enter into this Agreement and the other
Transaction Documents to which it is a party and to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement and the
Transaction Documents to which it is a party and the consummation of the
Acquisition have been duly authorized by the board of directors of NCD, Inc. AND
NCD Sub, and no other corporate proceedings are necessary to authorize this
Agreement and the other Transaction Documents. NCD is not subject to or
obligated under any charter, bylaw or contract provision or any license,
franchise or permit, or subject to any order or decree, which would be breached
or violated in a material manner by or in material conflict with its executing
and carrying out this Agreement and the Acquisition. To NCD'S knowledge, no
consent of any person who is a party to a contract which is material to NCD, nor
consent of any governmental body, is required to be obtained on the part of NCD
to permit the consummation of the Acquisition and continue the business
activities of the Z-Mail Business as previously conducted by NCD. This
Agreement is, and the other Transaction Documents to which NCD is a party when
executed and delivered by NCD shall be, the valid and binding obligations of NCD
enforceable in accordance with their respective terms, subject to (i) laws of
general application relating to bankruptcy, insolvency, and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
2.3 TITLE AND RELATED MATTERS. NCD has good title to the Assets,
free and clear of all mortgages, liens (including without limitation tax liens),
pledges, charges or encumbrances of any kind or character, except the lien of
current taxes not yet due and payable and except for liens which in the
aggregate do not secure more than Ten Thousand Dollars ($10,000) in liabilities.
<PAGE>
2.4 PROPRIETARY RIGHTS AND WARRANTY CLAIMS.
(a) Part 2.4 of the Disclosure Schedule sets forth, with respect
to each Proprietary Right registered with any Governmental Body or for which an
application has been filed with any Governmental Body, (i) a list of such
Proprietary Right, and (ii) the names of the jurisdictions covered by the
applicable registration or application. Part 2.4 of the NCD Disclosure Schedule
identifies each Proprietary Right licensed to NCD by any Person (except for any
Proprietary Right that is licensed to NCD under any third party software license
generally available to the public at a cost of less than One Thousand Dollars
($1,000), and identifies the license agreement under which such Proprietary
Right is being licensed to NCD. Except as set forth in Part 2.4 of the NCD
Disclosure Schedule, NCD has, to the best of NCD's knowledge good title to all
of the Proprietary Rights identified in Part 2.4 of the NCD Disclosure Schedule,
free and clear of all liens and other Encumbrances, and has a valid right to use
all Proprietary Rights identified in Part 2.4 of the NCD Disclosure Schedule.
(b) Except as set forth in Part 2.4 of the NCD Disclosure
Schedule, NCD has taken all reasonable and customary measures and precautions
necessary to protect and maintain the confidentiality and secrecy of all
Proprietary Rights (except Proprietary Rights whose value would be unimpaired by
public disclosure) and otherwise to maintain and protect the value of all
Proprietary Rights. Except as set forth in Part 2.4 of the NCD Disclosure
Schedule, NCD has not (other than pursuant to license agreements identified in
Part 2.4 of the NCD Disclosure Schedule) disclosed or delivered to any Person,
or permitted the disclosure or delivery to any Person of, (i) the source code,
or any portion or aspect of the source code, of any Proprietary Right, or (ii)
the object code, or any portion or aspect of the object code, of any Proprietary
Right.
(c) To the best of NCD's knowledge in connection with the
conduct of the Z-Mail Business, NCD is not infringing, misappropriating or
making any unlawful use of, and NCD has not at any time infringed,
misappropriated or made any unlawful use of, or received any notice or other
communication (in writing or otherwise) of any actual, alleged, possible or
potential infringement, misappropriation or unlawful use of, any proprietary
right owned or used by any other Person. To the best of NCD's knowledge, no
other Person is infringing, misappropriating or making any unlawful use of, and
no proprietary right owned or used by any other Person infringes or conflicts
with, any Proprietary Right.
(d) Except as set forth in Part 2.4 of the NCD Disclosure
Schedule: (i) each Proprietary Right conforms substantially to any
specification, documentation, performance standard, representation or statement
made or provided with respect thereto by or on behalf of NCD; and (ii) there has
not been any claim made against NCD by any customer or other Person alleging
that any Proprietary Right (including each version thereof that has ever been
licensed or otherwise made available by NCD to any Person) does not
substantially conform to any specification, documentation, performance standard,
representation or statement made or provided by or on behalf of NCD, and, to the
best of NCD's knowledge, there is no basis for any such claim.
<PAGE>
(e) The Proprietary Rights constitute all the Proprietary Rights
necessary, in NCD's reasonable judgment, to enable NCD to conduct the Z-Mail
Business in the manner in which such business has been and is being conducted.
Except as set forth in Part 2.4 of the NCD Disclosure Schedule, (i) NCD has not
licensed any of the Proprietary Rights to any Person on an exclusive basis, and
(ii) NCD has not entered into any covenant not to compete or contract limiting
its ability to exploit fully any of the Proprietary Rights or to transact
business in any market or geographical area or with any Person.
(f) Except as set forth in Part 2.4 of the NCD Disclosure
Schedule, (i) all current and former employees of the Z-Mail Business have
executed and delivered to NCD an agreement (containing no exceptions to or
exclusions from the scope of its coverage) that is substantially identical to
the forms of Confidential Information and Invention Assignment Agreements
previously delivered to NetManage, and (ii) all current and former consultants
and independent contractors to the Z-Mail Business have executed and delivered
to NCD an agreement (containing no exceptions to or exclusions from the scope of
its coverage) that is substantially identical to the form of Consultant
Confidential Information and Invention Assignment Agreement previously delivered
to NetManage.
2.5 CONTRACTS.
(a) Except as set forth in Part 2.5 of the NCD Disclosure
Schedule:
(i) NCD has not entered into any employment, independent
contractor or similar agreement, contract or commitment relating to the Z-
Mail Business that obligates NCD to pay more than $10,000 over the life of
the contract, or has a fixed term of more than one year, or that is not
terminable on not more than ninety (90) days' notice without penalty or
liability of any type, including without limitation severance or
termination pay.
(ii) NCD is not restricted by agreement from competing with
any person or from carrying on the Z-Mail Business anywhere in the world.
(b) The NCD Disclosure Schedule lists all agreements pursuant to
which NCD has agreed to manufacture for or supply to any third party any Z-Mail
Products or components thereto requiring, or expected to require, payments of
Fifty Thousand Dollars ($50,000) or more over the life of any such agreement.
The NCD Disclosure Schedule also lists each vendor who is the sole source for
any product or component included in the Products.
(c) Each Contract is valid and in full force and effect, and, to
the best of the knowledge of NCD, is enforceable by NCD in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies. To NCD's
knowledge, no party to any such Contract, agreement or instrument intends to
cancel, withdraw, modify or amend such Contract.
<PAGE>
(d) Except as set forth in Part 2.5 of the NCD Disclosure
Schedule:
(i) NCD has not violated or breached, or committed any
default under, any NCD contract relating to the Z-Mail Business, and, to
the best of NCD's knowledge, no other Person has violated or breached, or
committed any default under, any such contract; in each case which default
would have a Material Adverse Effect on the Z-Mail Business.
(ii) to the best of NCD's knowledge, no event has occurred,
and no circumstance or condition exists, that (with or without notice or
lapse of time) will, or could reasonably be expect to, (A) result in a
violation or breach of any of the provisions of any NCD contract relating
to the Z-Mail Business, (B) give any Person the right to declare default or
exercise any remedy under any such NCD contract, (C) give any Person the
right to accelerate the maturity or performance of any such contract; or
(D) give any Person the right to cancel, terminate or modify any such
contract, in each case, the result of which would have a Material Adverse
Effect on the Z-Mail Business.
(iii) The Lease, as defined in Section 8.4 herein, is valid,
binding, enforceable and effective in accordance with its terms. To the
best of NCD's knowledge, there is not any existing material default by NCD
or any other party of any provision of the Lease or event which, with
notice or lapse of time or both, would constitute a material default of any
such provision.
(e) The Lease contains no provision which would require the
consent of third parties to the Acquisition in the event of the subletting of
the Building, as defined in Section 8.4 or the assignment of the Lease by NCD to
NetManage. If the Lease contains any such provisions, then NCD has described in
the NCD Disclosure Schedule such actions as are necessary with respect to the
Lease to avoid any adverse consequence as a result of the subletting of the
Building or the assignment of the Lease.
2.6 ORDERS, COMMITMENTS AND RETURNS. All accepted and unfilled
orders entered into by NCD for the sale, license, or lease or other disposition
by ncd of the Z-Mail Products, and all agreements, contracts, or commitments for
the purchase of supplies by NCD relating to the Z-Mail Business, were made in
the ordinary course of business.
2.7 COMPLIANCE WITH LAW. With respect to its Z-Mail Business, NCD
is in compliance in all material respects with all applicable laws and
regulations. With respect to its Z-Mail Business, neither NCD nor, to the best
of NCD's knowledge, any of its employees has directly or indirectly paid or
delivered any fee, commission or other sum of money or item of property, However
characterized, to any finder, agent, government official or other party in the
United States or any other country, that was or is in violation of any federal,
state, or local statute or law or of any statute or law of any other country
having jurisdiction. With respect to its Z-Mail Business, NCD has not
participated directly or indirectly in any boycotts or other similar practices
affecting any of its customers. With respect to its Z-Mail Business, NCD has
complied in all material respects at all times with any and all applicable
federal, state and foreign
<PAGE>
laws, rules, regulations, proclamations and orders relating to the importation
or exportation of its products. All licenses, franchises, permits and other
governmental authorizations held by NCD and which are material to the Z-Mail
Business are valid and sufficient in all material respects for the Z-Mail
Business presently carried on by NCD.
2.8 LABOR DIFFICULTIES; NO DISCRIMINATION.
(a) To the best of NCD's knowledge, NCD is not with respect to
its Z-Mail Business engaged in any unfair labor practice and is not in violation
of any applicable laws respecting employment and employment practices, terms and
conditions of employment, and wages and hours.
(b) There is no strike, labor dispute, slowdown, or stoppage
actually pending or, to the best of NCD's knowledge, threatened against NCD that
would have a Material Adverse Effect on the Z-Mail Business.
(c) No union representation question exists respecting the
employees of NCD and to the best of NCD's knowledge no union organizing
activities are taking place.
(d) No collective bargaining agreement that is binding on NCD
restricts it from relocating or closing any of its operations relating to the Z-
Mail Business.
(e) NCD has not experienced any work stoppage or other labor
difficulty having a Material Adverse Effect on the Z-Mail Business.
2.9 TRADE REGULATION. NCD has not terminated its relationship
with or refused to ship Z-MAIL Products to any dealer, distributor, OEM, third
party marketing entity or customer which had theretofore paid or been obligated
to pay NCD in excess of Ten Thousand Dollars ($10,000) over any consecutive
twelve (12) month period. All of the prices charged by NCD in connection with
the marketing or sale of any Z-Mail Products or Z-Mail Business services have
been in compliance in all material respects with all applicable laws and
regulations. No claims against NCD have been communicated or threatened in
writing to NCD in connection with thE Z-Mail Business with respect to wrongful
termination of any dealer, distributor or any other marketing entity,
discriminatory pricing, price fixing, unfair competition, false advertising, or
any other violation of any laws or regulations relating to anti-competitive
practices or unfair trade practices of any kind, and to the best of NCD's
knowledge, no specific situation, set of facts, or occurrence provides any basis
for any such claim.
2.10 EMPLOYEES. The NCD Disclosure Schedule lists and describes all
currently effective written or, to NCD's knowledge, oral employment agreements
and other material agreements concluded with individual employees relating to
the Z-Mail Business and to which NCD is a party. True and correct copies of all
such written agreements have been provided to NetManage or NeTManage's
representatives. All salaries and wages paid by NCD in connection with the Z-
Mail Business are in compliance in all material respects with applicable
federal, state and local laws.
<PAGE>
2.11 LITIGATION. To the best of NCD's knowledge, there is no suit,
action or proceeding (i) pending, (ii) which has been threatened against or
materially affects the Z-Mail Business in each case other than immaterial
matters, or (iii) which questions or challenges the validity of this Agreement
or the transaction documents. There is no judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency, instrumentality
or arbitrator outstanding against NCD which relates to the Z-Mail Business.
2.12 COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS. To the best of
NCD's knowledge, NCD has obtained all material permits, licenses and other
authorizations which are required under federal, state and local laws applicable
to NCD and relating to pollution or protection of the environment, including
laws or provisions relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, or hazardous or toxic materials,
substances, or wastes into air, surface water, groundwater, or land, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants or
hazardous or toxic materials, substances, or wastes. Except as set forth in the
NCD Disclosure SchedulE, To the best of NCD's knowledge, NCD is in material
compliance with all terms and conditions of the required permits, licenses and
authorizations in connection with the Z-Mail Business. Except as set forth in
the NCD Disclosure Schedule, NCD is not aware of, nor has NCD received written
notice of, any conditions, circumstances, activities, practices, incidents, or
actions which may form the basis of any claim, action, suit, proceeding,
hearing, or investigation of, by, against or relating to the Z-Mail Business,
based on or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling, or the emission,
discharge, release or threatened release into the environment, of any pollutant,
contaminant, or hazardous or toxic substance, material or waste.
2.13 NO BROKERS. Neither NCD nor, to the best of NCD's knowledge,
any NCD shareholder is obligated for the payment of fees or expenses of any
broker or finder in connection with the origin, negotiation or execution of this
Agreement or in connection with the Acquisition.
2.14 DISCLOSURE. No statements by NCD contained in this Agreement,
its exhibits and schedules nor any of the certificates or documents required to
be delivered by NCD to NetManage under this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading in light
of the circumstances under which they were made.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF NETMANAGE.
Except as set forth in the NetManage Disclosure Schedule provided to NCD on
the date hereof, NetManage represents and warrants to NCD that:
3.1 ORGANIZATION AND GOOD STANDING. NetManage is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has full power and authority to carry on its businesses as now
conducted.
<PAGE>
3.2 POWER, AUTHORIZATION AND VALIDITY. NetManage has the right,
power, legal capacity and authority to enter into and perform its obligations
under this Agreement and the other Transaction Documents to which it is a party.
The execution and delivery of this Agreement and the other Transaction Documents
have been duly and validly approved and authorized by the Board of Directors of
NetManage. No authorization or approval, governmental or otherwise, is
necessary in order to enable NetManage to enter into and to perform the terms of
this Agreement or the other Transaction Documents on its part to be performed.
This Agreement is, and the other Transaction Documents when executed and
delivered by NetManage shall be, the valid and binding obligations of NetManage
enforceable in accordance with their terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
3.3 NO VIOLATION OF EXISTING AGREEMENTS. Neither the execution and
delivery of this Agreement nor the consummation of the Acquisition will conflict
with, or result in a material breach or violation of, any provision of
NetManage's certificate of incorporation or bylaws, as currently in effect; any
instrument or contract to which NetManage is a party or by which it is bound; or
any federal, state or local judgment, writ, decree, order, statute, rule or
regulation applicable to NetManage. Neither the execution and delivery of this
Agreement, nor any Agreement attached hereto as an Exhibit, nor the consummation
of the transactions contemplated hereby or thereby will have a Material Adverse
Effect on the operations, assets, or financial condition of NetManage.
3.4 COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS. NetManage is not in
violation of any provisions of its certificate of incorporation or bylaws as
currently in effect or in effect at the Closing, or any federal, state or local
judgment, writ, decree, or order applicable to NetManage.
3.5 LITIGATION. There is no suit, action, proceeding, claim or
investigation pending or, to the best of netmanage's knowledge, threatened
against NetManage before any court or administrative agency or which questions
or challenges the validity of this Agreement which could have a Material Adverse
Effect on the operations, assets or financial condition of NetManage.
3.6 NO BROKERS. Neither NetManage nor, to the best of NetManage's
knowledge, any NetManage shareholder is obligated for the payment of fees or
expenses of any broker or finder in connection with the origin, negotiation or
execution of this Agreement or in connection with the Acquisition.
ARTICLE 4. CONDITIONS TO NCD'S OBLIGATIONS
The obligations of NCD to close the transactions contemplated under this
Agreement are subject to the fulfillment or satisfaction on and as of the
Closing Date of each of the following
<PAGE>
conditions (any one or more of which may be waived by NCD but only in a writing
signed by NCD):
4.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of NetManage set forth in Article 3 shall be true and correct
when made and on and as of the Closing with the same force and effect as if they
had been made at the Closing.
4.2 COVENANTS. NetManage shall have performed and complied with all
of its covenants and obligations contained in this Agreement on or before the
Closing (to the extent such covenants are capable of being performed on or
before the Closing).
4.3 AUTHORIZATIONS. The execution, delivery and performance of
NetManage's obligations under this Agreement shall have been duly and validly
approved and authorized by the board of directors of NetManage.
4.4 GOVERNMENT CONSENTS. There shall have been obtained at or prior
to the Closing Date such permits or authorizations, if any, and there shall have
been taken such other action, if any, as may be required by any regulatory
authority having jurisdiction over the parties and the subject matter and the
actions herein proposed to be taken.
4.5 NO LITIGATION. On and as of the Closing Date, no litigation or
proceeding shall be threatened or pending against NetManage challenging the
validity of any of the transactions contemplated by this Agreement.
4.6 BOARD OF DIRECTORS APPROVAL. The boards of directors of NCD,
Inc. and NCD Sub shall have approved the Acquisition.
4.7 DELIVERY OF CASH CONSIDERATION AND EXECUTED ASSIGNMENT AND
ASSUMPTION OF CONTRACTS. NetManage shall have delivered the Cash Consideration
and the executed Assignment and Assumption of Contracts in accordance with
Section 1.4 hereof.
ARTICLE 5. CONDITIONS TO NETMANAGE'S OBLIGATIONS.
The obligations of NetManage are subject to the fulfillment or satisfaction
on and as of the Closing of each of the following conditions (any one or more of
which may be waived by NetManage, but only in a writing signed by NetManage):
5.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties made by NCD contained in Article 2 and in any certificate
delivered by NCD in connection with this Agreement shall be true and correct
when made and on and as of the Closing Date with the same force and effect as if
they had been made at the Closing (subject to changes to the NCD Disclosure
Schedule which, in the aggregate, would not constitute a Material Adverse
Change).
<PAGE>
5.2 COVENANTS. NCD shall have performed and complied with all of
its covenants and obligations contained in this Agreement on or before the
Closing (to the extent such covenants are capable of being performed on or
before the Closing).
5.3 AUTHORIZATIONS. The execution, delivery and performance of this
Agreement have been duly and validly approved and authorized by the boards of
directors of NCD, Inc. and NCD Sub.
5.4 NO LITIGATION. On and as of the Closing, no litigation or
proceeding shall be threatened or pending against NCD for the purpose or with
the probable effect (in the reasonable opinion of NetManage's counsel) of
enjoining or preventing the consummation of the Acquisition or which would have
a Material Adverse Effect on the business, liabilities, income, property, or
operations of the Z-Mail Business Subsequent to the Closing, and no judgment,
decree, injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator relating to the Z-Mail
Business shall be outstanding against NCD.
5.5 BOARD OF DIRECTORS APPROVAL. The board of directors of
NetManage shall have approved the Acquisition.
5.6 GOVERNMENT CONSENTS. There shall have been obtained at or prior
to the date of Closing such permits or authorizations, and there shall have been
taken such other action, as may be required by any regulatory authority having
jurisdiction over the parties and the subject matter and the actions herein
proposed to be taken.
5.7 DUE DILIGENCE. NetManage shall have satisfactorily completed
its due diligence investigation of the Z-Mail Business.
5.8 ASSIGNMENT AND ASSUMPTION OF CONTRACTS. NCD shall have executed
and delivered to NetManage the assignment and assumption of contracts in the
form attached as EXHIBIT B with respect to the Contracts.
5.9 BILL OF SALE AND OTHER TRANSFER DOCUMENTS. NCD shall execute
and deliver to NetManage such bills of sale, certificates of title,
endorsements, assignments and other good and sufficient instruments of sale,
conveyance and transfer and assignment, in form and substance satisfactory to
NetManage sufficient to sell, convey, transfer, and assign to NetManage all
right, title and interest of NCD in the Assets.
ARTICLE 6. TERMINATION OF AGREEMENT.
6.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing by the mutual written consent of each of the parties hereto.
This Agreement may also be terminated and abandoned by either NetManage or NCD
for any reason if the Closing has not occurred by June 3, 1996, or such later
date as the parties may agree in writing, provided that a party cannot terminate
under this provision if the failure to occur of the Closing is the result of the
failure on the part of such party to perform any of its obligations hereunder
(except
<PAGE>
the failure on the part of such party to satisfy a closing condition over which
such party has no control).
Any termination of this Agreement under this Section 6.1 shall be effective
by the delivery of written notice of the terminating party to the other parties
hereto.
6.2 EFFECT OF TERMINATION. Any termination of this Agreement
pursuant to this Article 6 shall be without further obligation or liability upon
any party in favor of any other party hereto; PROVIDED, HOWEVER that if such
termination by one party shall result from the willful failure of the other
party to carry out its obligations under this Agreement, then such party shall
be liable for Damages incurred by the other party, and such termination shall
not be deemed or construed as limiting or denying any legal or equitable right
or remedy of said party, and said party shall be entitled to recover its costs
and expenses which are incurred in pursuing its rights and remedies (including
reasonable attorneys' fees).
6.3 CERTAIN EFFECTS OF TERMINATION. In the event of the termination
of this Agreement by either NCD or NetManage as provided in Section 6.1 hereof:
(a) each party, if so requested by the other party, will (i)
return promptly every document (other than documents publicly available)
furnished to it by the other party (or any subsidiary, division, associate or
affiliate of such other party) in connection with the transactions contemplated
hereby, whether so obtained before or after the execution of this Agreement, and
any copies thereof which may have been made, and will cause its representatives
and any representatives of financial institutions and investors and others to
whom such documents were furnished promptly to return such documents and any
copies thereof any of them may have made, or (ii) destroy such documents and
cause its representatives and such other representatives to destroy such
documents, and such party shall deliver a certificate executed by its president
or vice president stating to such effect; and
(b) NCD and NetManage shall continue to abide by the provisions
of that certain Mutual Nondisclosure Agreement between NetManage and NCD dated
May ___, 1996. This Section 6.3 shall survive any termination of this
Agreement.
ARTICLE 7. INDEMNIFICATION.
7.1 SURVIVAL OF REPRESENTATIONS.
(a) The representations and warranties made by NCD (including
the representations and warranties set forth in Article 2 hereof and the
representations and warranties set forth in any certificate delivered by NCD in
connection with this Agreement) shall survive the Closing and shall remain in
full force and effect and shall survive until the end of the Indemnification
Period and shall survive thereafter only with respect to any claims made prior
to the end of the Indemnification Period; PROVIDED, HOWEVER, that the
termination hereunder of the representations and warranties made by NCD shall
not terminate or limit in any manner whatsoever any rights NetManage has or may
have for intentional misrepresentation or fraud.
<PAGE>
The representations and warranties made by NetManage shall survive the Closing
and shall remain in full force and effect and shall survive until the end of the
Indemnification Period; PROVIDED, HOWEVER, that the termination hereunder of the
representations and warranties made by NetManage shall not terminate or limit in
any manner whatsoever any rights which NCD has or may have for intentional
misrepresentation or fraud.
(b) The representations, warranties, covenants and obligations
of NCD, and the rights and remedies that may be exercised by the Indemnitees,
shall not be limited or otherwise affected by or as a result of any information
furnished to, or any investigation made by or knowledge of, any of the
Indemnitees or any of their Representatives.
(c) For purposes of this Agreement, each statement or other item
of information set forth in the NCD Disclosure Schedule or in any update to the
NCD Disclosure Schedule shall be deemed to be a modification of the
representations and warranties made by NCD in this Agreement.
7.2 INDEMNIFICATION BY NCD. From and after the Closing Date (but
subject to Section 7.1(a), NCD shall hold harmless and indemnify each of the
Indemnitees from and against, and shall compensate and reimburse each of the
Indemnitees for, any Damages which are directly or indirectly suffered or
incurred by any of the Indemnitees or to which any of the Indemnitees may
otherwise become subject (regardless of whether or not such Damages relate to
any third-party claim) and which arise from or as a result of, or are directly
or indirectly connected with: (i) any inaccuracy in or breach of any
representation or warranty set forth in Article 2 hereunder or in any
certificate delivered by NCD in connection with this Agreement; (ii) any breach
of any covenant or obligation of NCD hereunder; (iii) any Legal Proceeding
relating to any inaccuracy, breach or expense of the type referred to in clause
"(i)" or "(ii)" above (including any Legal Proceeding commenced by any
Indemnitee for the purpose of enforcing any of its rights under this Section 7.2
if such Indemnitee is the prevailing party in any such Legal Proceeding); or
(iv) any amounts exceeding the Software.com Obligation Cap as defined in
SCHEDULE 1.3(b) attached hereto.
7.3 INDEMNIFICATION BY NETMANAGE. From and after the Closing Date,
NetManage shall hold harmless and indemnify each of NCD, Inc., NCD Sub and their
respective officers, directors, shareholders, affiliates and their successors
and assigns (collectively, the "NCD Indemnitees") from and against, and shall
compensate and reimburse each of the NCD indemnitees for, any damages which are
directly or indirectly suffered or incurred by any of the NCD Indemnitees or to
which any of the NCD Indemnitees may otherwise become subject (regardless of
whether or not such Damages relate to any third-party claim) and which arise
from or as a result of, or are directly or indirectly connected with, (i) any
inaccuracy in or breach of any representation or warranty set forth in Article
3; (ii) any breach of any covenant or obligation of NetManage hereunder; or
(iii) any liability or obligation assumed by NetManage pursuant to Section
1.3(b) of this Agreement arising after the Closing Date.
7.4 THRESHOLD; CEILING; EXCLUSIVITY.
<PAGE>
(a) NCD shall not be required to make any indemnification
payment pursuant to Section 7.2 for any inaccuracy in or breach of any of the
representations and warranties set forth in Article 2 hereof or in any
certificate delivered by NCD in connection with this Agreement until such time
as the total amount of all Damages (including the Damages arising from such
inaccuracy or breach and all other Damages arising from any other inaccuracies
in or breaches of any representations or warranties) that have been directly or
indirectly suffered or incurred by any one or more of the Indemnitees, or to
which any one or more of the Indemnitees has or have otherwise become subject,
exceeds Fifty Thousand Dollars ($50,000).
(b) The maximum liability of (i) NCD to all Indemnitees for any
indemnification payments pursuant to Section 7.2 and (ii) NetManage to all NCD
Indemnitees for any indemnification payments pursuant to Section 7.3, shall be
One Million Dollars ($1,000,000). All indemnification payments shall be net of
any amounts received by NetManage from insurance proceeds related to the matters
for which indemnification is requested.
ARTICLE 8. MISCELLANEOUS.
8.1 GOVERNING LAWS. It is the intention of the parties hereto that
the internal laws of the State of California (irrespective of its choice of law
principles) shall govern the validity of this Agreement, the construction of its
terms, and the interpretation and enforcement of the rights and duties of the
parties hereto.
8.2 BINDING UPON SUCCESSORS AND ASSIGNS. Subject to, and unless
otherwise provided in, this Agreement, each and all of the covenants, terms,
provisions, and agreements contained herein shall be binding upon, and inure to
the benefit of, the permitted successors, executors, heirs, representatives,
administrators and assigns of the parties hereto provided that no party hereto
shall assign this Agreement to any such entity without the prior written consent
of the other party.
8.3 PERSONNEL. NetManage shall extend offers of employment
entailing responsibilities comparable to those currently in effect at NCD, Inc.
to all employees and consultants of the Z-Mail Business listed as "Hires" on
Schedule 8.4, at levels of compensation similar to those paid to NetManage
employees or consultants with similar responsibilities, such employment or
consultancy to be effective as of the Closing Date. NCD will use its reasonable
best efforts to encourage such employees and consultants to accept NetManage's
offers of employment. NCD shall retain at its expense all employees and
consultants listed on such schedule as "M" or "T," until the earlier of (i) the
date such person receives an employment or consultancy relationship offer from
NetManage or (ii) June 15 if labelled "M" or June 30 if labeled "T." In the
event NetManage determines to make offers of employment or consultancy to any of
such persons within such period, NCD will use its reasonable best efforts to
encourage such employees to accept NetManage's offers of employment or
consultancy. All employment and consultancy arrangements between NetManage and
any employee and consultant hired by NetManage will be negotiated directly
between such employees and NetManage, and NCD shall have no responsibility for
or liability from such negotiations or any hiring, employment or termination
decisions or related actions taken or made by NetManage. NetManage shall be
<PAGE>
responsible for all obligations to former employees of the Z-Mail business hired
by NetManage accruing after the Closing Date, and for its own conduct referred
to in the preceding sentence.
8.4 BUILDING LEASE. As of the Closing, NCD shall permit NetManage
to use specified portions of the building located at 101 Rowland Way, Suite 300,
Novato, California (the "Building") for a period of thirty (30) days without
charge. NetManage may use specified portions of the Building for up to an
additional sixty (60) days after the expiration of the initial thirty (30) day
period, but NetManage shall pay monthly rent in the amount of Forty Thousand
dollars ($40,000) to NCD during such additional period. Upon the expiration of
this additional sixty (60) day period, NetManage may in its sole discretion
assume the lease of the building (the "Lease") in full or enter into a sublease
for the Building for the duration of the term of the lease by providing NCD with
written notice of its intention to do so within sixty (60) days after the
closing, subject to the consent of the landlord under the Lease. If NetManage
does not provide such written notice, NetManage shall have no further obligation
with respect to the building after such 90 day period. Notwithstanding the
above, all phone charges incurred in connection with the Building on or after
the Closing Date and until NetManage vacates the Building shall be the sole
responsibility of NetManage.
8.5 FURTHER ASSURANCES; BENEFITS OF NONASSIGNABLE RIGHTS; NOTICES.
Both before and after the Closing, the parties shall execute and/or cause to be
executed such further documents, and perform such further acts, as may be
necessary to transfer and convey any of the Contracts to NetManage, on the terms
herein contained, and to otherwise comply with the terms of this agreement and
consummate the transactions contemplated hereby. NCD and NetManage will use
their best efforts to acquire any third party consents necessary for assigning
the Contracts to NetManage and to provide such assistance as is necessary to
pass through to the other party, as appropriate, relief from the obligations of
or the benefits of any contract, claim, cause of action, or other assets which
cannot be assigned to NetManage as required hereunder. NCD shall use its best
efforts to provide notices of this transaction to its distributors and instruct
them to destroy or return any inventory relating to the Z-Mail Business.
8.6 CUSTOMER ACCOUNTS. For a period of ninety (90) days following
the Closing, the parties hereto shall notify each other in writing as to each
problem that arises to their knowledge in connection with a customer's failure
to pay on a timely basis outstanding amounts owed to NCD under a Z-Mail Business
account.
8.7 SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall be interpreted so as best to reasonably
effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision which will achieve, to the extent possible, the economic,
business and other purposes of the void or unenforceable provision.
8.8 ENTIRE AGREEMENT. This Agreement, the exhibits hereto, the
documents referenced herein, and the exhibits thereto, constitute the entire
understanding and agreement of
<PAGE>
the parties hereto with respect to the subject matter hereof and thereof and
supersede all prior and contemporaneous agreements or understandings,
inducements or conditions, express or implied, written or oral, between the
parties with respect hereto and thereto.
8.9 FACSIMILE; COUNTERPARTS. This Agreement may be executed by
facsimile and in any number of counterparts, each of which shall be an original
as against any party whose signature appears thereon and all of which together
shall constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as signatories.
8.10 EXPENSES. Each party shall pay all of its own costs and
expenses incurred with respect to the negotiation, execution and delivery of
this Agreement and the exhibits hereto including all legal and accounting fees
and expenses, and broker's or finder's fees, whether or not the Acquisition is
consummated, PROVIDED, HOWEVER, that NetManage will pay all sales and transfer
taxes in connection with the Acquisition in accordance with Section 1.5.
8.11 AMENDMENT AND WAIVERS. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof for default in payment of any amount due
hereunder or default in the performance hereof shall not be deemed to constitute
a waiver of any other default or any succeeding breach or default.
8.12 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby notwithstanding any investigation of the parties hereto and shall
terminate on the date one year after the Closing Date.
8.13 NO WAIVER. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
8.14 ATTORNEYS' FEES. Should suit be brought to enforce or
interpret any part of this Agreement, the prevailing party shall be entitled
to recover, as an element of the costs of suit and not as damages, reasonable
attorneys' fees to be fixed by the court (including, without limitation,
costs, expenses and fees on any appeal). The prevailing party shall be the
party entitled to recover its costs of suit, regardless of whether such suit
proceeds to final judgment. A party not entitled to recover its costs shall
not be entitled to recover attorneys' fees. No sum for attorneys' fees shall
be counted in calculating the amount of a judgment for purposes of
determining if a party is entitled to recover costs or attorneys' fees.
8.15 NOTICES. Any notice provided for or permitted under this
agreement will be treated as having been given when (i) delivered personally,
(ii) sent by confirmed telex or telecopy, (iii) sent by commercial overnight
courier with written verification of receipt, or (iv) mailed postage prepaid by
certified or registered mail, return receipt requested, to the party
<PAGE>
to be notified, at the address set forth below, or at such other place of which
the other party has been notified in accordance with the provisions of this
section 8.14.
NCD: Network Computing Devices, Inc.
350 North Bernardo Avenue
Mountain View, CA 94043-5207
Attention: Joseph Ramirez, Esq.
NCD Software Corporation
c/o Network Computing Devices, Inc.
350 North Bernardo Ave.
Mountain View, CA 94043-5207
Attention: Joseph Ramirez, Esq.
With copy to: Graham & James LLP
600 Hansen Way
Palo Alto, CA 94304-1043
Attention: Joe C. Sorenson, Esq.
NetManage or Sub: NetManage, Inc.
10725 North De Anza Blvd.
Cupertino, CA 95014
Attention: Walter D. Amaral
With copy to: Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, CA 94301
Attention: J. Howard Clowes, Esq.
Such notice will be treated as having been received upon actual receipt.
8.16 CONSTRUCTION OF AGREEMENT. This Agreement has been negotiated
by the respective parties hereto and their attorneys and the language hereof
shall not be construed for or against any party. The titles and headings herein
are for reference purposes only and shall not in any manner limit the
construction of this Agreement which shall be considered as a whole.
8.17 NO JOINT VENTURE. Nothing contained in this agreement shall be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party shall have
the power to control the activities and operations of any other and their status
is, and at all times, will continue to be, that of independent contractors with
respect to each other. No party shall have any power or authority to bind or
commit any other. No party shall hold itself out as having any authority or
relationship in contravention of this Section 8.16.
<PAGE>
8.18 PRONOUNS. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
8.19 FURTHER ASSURANCES. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances, as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement.
8.20 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provisions of
this Agreement are intended, nor shall be interpreted, to provide or create any
third party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, partner of any party hereto or any other
person or entity unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof shall be personal solely between the parties
to this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
NETMANAGE, INC., NETWORK COMPUTING DEVICES, INC.,
a California corporation
a Delaware Corporation
By:
------------------------
Its:
By: -----------------------
-----------------------------------
WALTER D. AMARAL, Senior Vice
President, Finance, Chief Financial
Officer and Secretary
NCD SOFTWARE CORPORATION,
a California corporation
By:
----------------------------
Its:
---------------------------
<PAGE>
LIST OF EXHIBITS:
EXHIBIT A: CERTAIN DEFINITIONS
EXHIBIT B-1: ASSIGNMENT AND ASSUMPTION OF CONTRACTS
EXHIBIT B-2: ASSIGNMENT AND ASSUMPTION OF CONTRACTS
EXHIBIT C: NCD DISCLOSURE SCHEDULE
<PAGE>
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this EXHIBIT A):
CLOSING AND CLOSING DATE. "Closing" and "Closing Date" shall have the
meanings set forth in Section 1.6.
CONTRACTS. "Contracts" shall have the meaning set forth in Section 1.1(b).
CONFIDENTIAL INFORMATION. "Confidential Information" shall mean
confidential information of a party ("Disclosing Party") which is disclosed to
another party ("Receiving Party"). Confidential Information shall include, but
not be limited to, trade secrets, know-how, inventions, techniques, processes,
algorithms, software programs, schematics, designs, contracts, customer lists,
financial information, sales and marketing plans and business information.
DAMAGES. "Damages" shall include any loss, damage, injury, decline in
value, liability, claim, demand, settlement, judgment, award, fine, penalty,
tax, fee (including reasonable attorneys' fees), charge, costs (including
reasonable costs of investigation) of any nature.
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body, or Entity and any court or
other tribunal).
INDEMNIFICATION PERIOD. "Indemnification Period" shall mean the period
commencing on the Closing Date and ending at the close of business on the first
anniversary of the Closing Date.
INDEMNITEES. "Indemnitees" shall mean the following Persons: (a)
NetManage; (b) NetManage's current and future affiliates; (c) the respective
Representatives of the Persons referred to in clauses "(a)" and "(b)" above; and
(d) the respective successors and assigns of the Persons referred to in clauses
"(a)" and "(b)" and "(c)" above.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by
<PAGE>
or before, or otherwise involving any court or other Governmental Body or any
arbitrator or arbitration panel.
MATERIAL ADVERSE CHANGE. "Material Adverse Change" shall mean a change
which would have a Material Adverse Effect.
MATERIAL ADVERSE EFFECT. A violation or other matter will be deemed to
have a "Material Adverse Effect" on the Z-Mail Business or NetManage, as
applicable, if such violation or other matter would have a Material Adverse
Effect on (i), as to NetManage, NetManage's business, intellectual property
rights, condition, assets, liabilities, operations, or financial performance or
(ii) as to the Z-Mail Business, the business, intellectual property rights,
condition, assets, operations or financial performance of the Z-Mail Business.
MATERIAL CONTRACTS. "Material Contracts" shall mean the Contracts
designated as Material Contracts in Schedule 1.1(b).
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
TRANSACTION DOCUMENTS. "Transaction Documents" shall mean all documents or
agreements required to be delivered by any party hereunder including the
Agreement, and any related agreements.
<PAGE>
EXHIBIT B-1
ASSIGNMENT AND ASSUMPTION OF CONTRACTS
This Assignment and Assumption of Contracts Agreement (this
"Assignment") is entered into by and among Network Computing Devices, Inc., a
California corporation ("NCD"), NCD Software Corporation, a California
corporation ("Sub," and together with NCD, "Assignor"), and NetManage, Inc., a
Delaware corporation ("Assignee").
Assignor hereby assigns to Assignee, its successors and assigns, for
the consideration described in that certain Asset Purchase Agreement dated as of
June 3, 1996 by and among NCD, Sub and NetManage (the "Agreement"), the receipt
and sufficiency of which are hereby acknowledged, all of Assignor's right, title
and interest (as limited by the language set forth in SCHEDULE A attached
hereto) in and to the contracts listed in SCHEDULE A attached hereto (the
"Obligations").
Assignee hereby accepts assignment of the Obligations. Assignee
hereby assumes and agrees to pay, perform and discharge the obligations of
Assignor with respect to the Obligations arising after 11:59 p.m. on the day
preceding the Closing Date (as that term is defined in Section 1.7 of the
Agreement).
This Assignment may be executed in any number of counterparts, each of
which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall together constitute one and the same
instrument. This Assignment shall become binding when one or more counterparts
hereof, individually or taken together, shall bear the signatures of all of the
parties reflected hereon as the signatories.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assignment of
Contracts and Assumption to be executed and delivered as of the 3rd day of June
1996.
ASSIGNOR: NETWORK COMPUTING DEVICES, INC., a California
corporation
By:
--------------------------------------------
Its:
-------------------------------------------
NCD SOFTWARE CORPORATION, a California corporation
By:
--------------------------------------------
Its:
------------------------------------------
ASSIGNEE: NETMANAGE, INC., a Delaware corporation
By:
--------------------------------------------
WALTER D. AMARAL
Senior Vice President, Finance, and Chief
Financial Officer
<PAGE>
SCHEDULE A
OBLIGATIONS
A. NetManage will (i) provide all technical support, with respect to and
(ii) assume NCD's technical support obligations under those agreements set forth
on Schedule 1.1(b) arising after the Closing Date. NetManage will also assume
technical support obligations arising before the Closing Date in connection with
such agreements up to Four Hundred Twenty-Eight Thousand Dollars ($428,000).
B. NetManage will assume all of NCD's obligations set forth in that
certain Software.com Software License Development Agreement including but not
limited to the obligation to purchase a minimum quantity of four thousand
(4,000) units through December 18, 1996; PROVIDED, HOWEVER, that the obligations
assumed by NetManage pursuant to this paragraph shall not exceed Three Hundred
Thirty Thousand Dollars ($330,000) (the "Software.com Obligation Cap"). In the
event that the obligations as set forth in this paragraph exceed the
Software.com Obligation Cap, NCD shall be liable for all such amounts exceeding
the Software.com Obligation Cap, not including costs incurred in the purchase of
those units which exceed the minimum quantity of 4,000.
<PAGE>
EXHIBIT B-2
ASSIGNMENT AND ASSUMPTION OF CONTRACTS
This Assignment and Assumption of Contracts Agreement (this
"Assignment") is entered into by and among Network Computing Devices, Inc., a
California corporation ("NCD"), NCD Software Corporation, a California
corporation ("Sub," and together with NCD, "Assignor"), and NetManage, Inc., a
Delaware corporation ("Assignee").
Assignor hereby assigns to Assignee, its successors and assigns, for
the consideration described in that certain Asset Purchase Agreement dated as of
June 3, 1996 by and among NCD, Sub and NetManage (the "Agreement"), the receipt
and sufficiency of which are hereby acknowledged, all of Assignor's right, title
and interest in and to the contracts listed in SCHEDULE A attached hereto (the
"Contracts").
Assignee hereby accepts assignment of the Contracts. Assignee hereby
assumes and agrees to pay, perform and discharge the obligations of Assignor
with respect to the Contracts arising after 11:59 p.m. on the day preceding the
Closing Date (as that term is defined in Section 1.7 of the Agreement).
This Assignment may be executed in any number of counterparts, each of
which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall together constitute one and the same
instrument. This Assignment shall become binding when one or more counterparts
hereof, individually or taken together, shall bear the signatures of all of the
parties reflected hereon as the signatories.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assignment of
Contracts and Assumption to be executed and delivered as of the 3rd day of June
1996.
ASSIGNOR: NETWORK COMPUTING DEVICES, INC., a California
corporation
By:
---------------------------------------
Its:
---------------------------------------
NCD SOFTWARE CORPORATION, a California corporation
By:
----------------------------------------
Its:
---------------------------------------
ASSIGNEE: NETMANAGE, INC., a Delaware corporation
By:
----------------------------------------
WALTER D. AMARAL
Senior Vice President, Finance, and Chief
Financial Officer
<PAGE>
SCHEDULE 1.3(b)
Assumed Liabilities
A. NetManage will (i) provide all technical support, with respect to and
(ii) assume NCD's technical support obligations under those agreements set forth
in Schedule 1.1(b) arising after the Closing Date. NetManage will also assume
technical support obligations arising before the Closing Date in connection with
such agreements up to Four Hundred Twenty-eight Thousand Dollars ($428,000).
B. NetManage will assume all of NCD's obligations set forth in that
certain Software.com Software License Development Agreement including but not
limited to the obligation to purchase a minimum quantity of four thousand
(4,000) units through December 18, 1996; PROVIDED, HOWEVER, that the obligations
assumed by NetManage pursuant to this paragraph shall not exceed Three Hundred
Thirty Thousand Dollars ($330,000) (the "Software.com Obligation Cap"). In the
event that the obligation as set forth in this paragraph exceed the Software.com
Obligation Cap, NCD shall be liable for all such amounts exceeding the
Software.com Obligation Cap not including costs incurred in the purchase of
those units which exceed the minimum quantity of 4,000.
C. NetManage will assume all obligations under the Contracts as defined
in Section 1.1(b).
<PAGE>
ALLIANCE AGREEMENT
NO. 350-148
BETWEEN
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND
NETWORK COMPUTING DEVICES, INC.
<PAGE>
ALLIANCE AGREEMENT
BETWEEN
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND
NETWORK COMPUTING DEVICES, INC.
TABLE OF CONTENTS
1. ALLIANCE MANAGERS 2
2. ALLIANCE AGREEMENT STRUCTURE 4
3. DEFINITIONS 4
4. PAYMENT 9
5. COPYRIGHTS 9
6. PATENTS AND INVENTIONS 13
7. TERM AND TERMINATION 15
8. CONFIDENTIALITY 17
9. MARKETING DISCRETION 17
10. INDEMNIFICATION 17
11. DISPUTE RESOLUTION 18
12. INSURANCE 18
13. GENERAL 19
- --------------------------------------------------------------------------------
BASE AGREEMENT PAGE 1 OF 24
<PAGE>
ALLIANCE AGREEMENT
Between
International Business Machines Corporation
and
Network Computing Devices, Inc.
BASE AGREEMENT
This Alliance Agreement ("Agreement"), effective on the date last signed below,
is agreed to by Network Computing Devices, Inc., a corporation of the State of
California, with offices located at 350 North Bernardo Avenue, Mountain View,
California 94043-4207 ("NCD") and International Business Machines Corporation, a
corporation of the State of New York, with offices at 3605 Highway 52 North,
Rochester, Minnesota 55901-7829 ("IBM").
RECITALS
A. Whereas IBM is a supplier of computing systems for information processing,
services and data communication applications.
B. Whereas NCD is a developer and manufacturer of computer display terminal
products and NCDware allowing interoperability across networks to gain
access to various applications.
C. Whereas this Alliance Agreement sets forth the terms and conditions by
which NCD and IBM believe that an alliance between them for the
development, manufacture, and support of an IBM network application
terminal ("thin client") product will be mutually advantageous.
NOW THEREFORE, NCD and IBM agree as follows:
1. ALLIANCE MANAGERS
1.1 ALLIANCE MANAGERS'S RESPONSIBILITIES:
The Alliance Managers will act as overall coordinators for the parties
under this Alliance Agreement. Contacts with a party regarding issues
relating to the terms of, or performance under, this Alliance
Agreement, shall be made first with the Alliance Manager for that
party. Either party may change the names and
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 2 OF 24
<PAGE>
addressees set forth above upon notice to the other party in accordance with the
terms hereof.
1.2 NCD ALLIANCE MANAGER:
Lorraine Hariton
Network Computing Devices, Inc.
350 North Bernardo Avenue
Mountain View, CA 94043-4207
TELEPHONE: (415) 694-0650
TELEFAX: (415) 961-6289
1.3 IBM ALLIANCE MANAGER:
Dean Hegrenes
International Business Machines Corporation
3605 Highway 52 North
Rochester, MN 55901-7829
TELEPHONE: (507) 253-3530
TELEFAX: (507) 253-8684
1.4 AUTHORITY TO COMMIT EXPENDITURES
Each party understands and agrees that only certain persons are
authorized on behalf of the other party to make commitments requiring
the expenditure of money. With respect to IBM, only IBM procurement
employees are authorized to make such commitments, and will do so only
in writing. To obtain such commitment, NCD shall first contact the
IBM Alliance Manager, who will be responsible for obtaining the
written approval of the appropriate procurement employee. In the case
of NCD, only the Alliance Manager is authorized to make such
commitments, and will do so only in writing. The parties agree that
they will take no actions in reliance upon any commitments requiring
the expenditure of money, other than those explicitly described in
this Alliance Agreement, without the express written authorization of
the persons identified in this section as having the authorization to
make such commitments.
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 3 OF 24
<PAGE>
2. ALLIANCE AGREEMENT STRUCTURE
The Alliance Agreement (hereinafter "Alliance Agreement" or "Agreement")
consists of this Base Agreement, which sets forth the basic terms and
conditions of the Alliance Agreement, its Appendices, and one or more
Articles, each of which may include attachments. Unless otherwise
specified, references in the Alliance Agreement to the Base Agreement shall
include any of its Appendices, and references to Articles shall include
their attachments.
The terms and conditions of this Base Agreement, including the definitions,
will apply to each Article, unless otherwise specified in the Article. An
Article may include additional terms and conditions that supersede terms
and conditions of this Base Agreement for the purpose of that Article only.
Except as otherwise specified in this Alliance Agreement, a reference to a
section of this Alliance Agreement shall incorporate all subsections
thereunder.
Each party shall perform its respective tasks and obligations as set forth
in this Base Agreement and in each Article.
3. DEFINITIONS
Capitalized terms in the Alliance Agreement have the following meanings.
Unless otherwise specified in an Article, the definitions listed below
apply to this Base Agreement and to all Articles.
"APPEARANCE DESIGN" is the appearance presented by an object, formed in
hardware or by software, that creates a visual impact or impression on an
observer. "Appearance Design" refers to the ornamental and not the
functional aspects of the object.
"CHANGE OF CONTROL" shall be deemed to have occurred if:
(a) any person or group (within the meaning of Rule 13d-5 under the
Securities Exchange Act of 1934 as in effect on the date hereof)
other than the party, or a Subsidiary of the party, shall become
the owner, directly or indirectly, beneficially or of record, of
voting securities representing in excess of fifty percent (50%)
of the total voting power of the party, or
(b) any person, or group of persons acting in concert, shall
otherwise directly or indirectly acquire control of the party.
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 4 OF 24
<PAGE>
"CODE" shall mean computer programming code and shall include both Object
Code and Source Code.
"OBJECT CODE" shall mean Code, substantially or entirely in binary
form, which is intended to be directly executable by a computer after
suitable processing but without the intervening steps of compilation
or assembly.
"SOURCE CODE" shall mean Code, other than Object Code, and related
source code level system documentation, comments and procedural code,
such as job control language, which may be printed out or displayed in
human readable form.
"DELIVERABLES" shall mean Materials and other materials provided to or
prepared for IBM by NCD pursuant to this Alliance Agreement. Unless
otherwise provided in an Article, Deliverables shall also include, in
addition to any Code, Documentation, or materials specifically identified
as Deliverables, any other code and documentation not listed in anArticle,
but which implements or conforms to the description of Deliverables in
Articles.
"DERIVATIVE WORK" shall mean a work which is based upon one or more
preexisting works, such as a revision, enhancement, modification,
translation, abridgement, condensation, expansion, or any other form in
which such preexisting works may be recast, transformed, or adapted, and
which, if prepared without authorization of the owner of the copyright in
such preexisting work, would constitute a copyright infringement. For
purposes hereof, a Derivative Work shall also include any compilation that
incorporates such a preexisting work.
"DESIGN VERIFICATION TEST (DVT)" shall mean a test of Product and
Deliverables conducted in NCD's engineering organization which will
satisfy the requirements as defined in the Product Development Plan. This
test does a complete and final verification of Product function, quality,
performance, serviceability, conformance to IBM and industry standards and
compliance to the specifications and drawings.
"DEVELOPMENT ENVIRONMENT" shall mean any Code, Documentation, device,
programming, media, and other materials, including compilers, workbenches,
tools, and higher-level or proprietary languages, used by NCD or necessary
for the development, maintenance and implementation of Deliverables.
"DISTRIBUTORS" shall mean those entities generally utilized for the
distribution of a party's products including, by way of illustration and
not limitation, that party and/or its Subsidiaries and its and their
subsidiaries, dealers, distributors and agents.
"DOCUMENTATION" shall mean user manuals and other written works that relate
to particular Code and hardware design, including works useful for design
(for example,
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 5 OF 24
<PAGE>
specifications, logic manuals, flow charts, and principles of operation),
and machine-readable text or graphic files subject to display or printout.
"ENHANCEMENT" shall mean a change or addition to a Deliverable to change or
improve its form, fit, function, or performance. Enhancements are in
addition to the Deliverables described in Article 1-Development and to any
changes or improvements performed within the scope of the Phase 1 and Phase
2 development tasks described in Article 1-Development.
"CUSTOM ENHANCEMENTS" shall mean any Enhancements (a) that are useful
only with or as part of an IBM Workstation Product, or (b) that the
parties agree in writing (pursuant to the terms set forth in an
Article) shall be developed or made by NCD for an IBM Workstation
Product.
"MAJOR ENHANCEMENTS" shall mean any Enhancements, other than Custom
Enhancements, that:
(a) provide substantial additional value and utility, and
(b) that result in works for which NCD charges its customers an
additional payment in the form of (i) an upgrade fee for
customers then currently using the applicable NCD product; or
(ii) a license fee for a customer acquiring the latest version of
the applicable NCD product containing such Enhancement.
"BASIC ENHANCEMENTS" shall mean any Enhancements that are not Major
Enhancements or Custom Enhancements.
"ENGINEERING VERIFICATION TEST" (EVT) shall mean a preliminary test of a
Product or Deliverable to verify function, quality, performance,
serviceability, conformance to IBM and industry standards, and compliance
with the functional specifications and drawings.
"IBM MATERIALS" shall mean Original Deliverables that are either (1)
specifically identified as IBM Materials in an Article, or (2) useful only
with or as part of an IBM Workstation Product.
"IBM WORKSTATION PRODUCT" shall mean any product, device, computer
programming code or other thing that interoperates with or utilizes for the
transfer of data, any one or more of the following: 3270 data stream, 5250
data stream, coax attachment, or twinax attachment. "IBM Workstation
Product" includes, but is not limited to, Product as defined herein.
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 6 OF 24
<PAGE>
"INVENTION" shall mean any idea, design, Appearance Design, concept,
technique, invention, discovery, or improvement, whether or not patentable,
that is conceived or reduced to practice in either party's performance or
activities under this Alliance Agreement.
"JOINT INVENTION" is an Invention made by NCD Personnel and IBM Personnel
jointly, within the meaning of United States Code, chapter 35, section 116.
"LICENSED WORKS" shall mean Deliverables that are not IBM Materials.
"MAINTENANCE MODIFICATIONS" shall mean any modifications or revisions,
other than Enhancements, to Code or Documentation that correct any defects
or provide any incidental corrections in such Code or Documentation.
"MANUFACTURING VERIFICATION TEST" (MVT) shall mean a series of tests
conducted to verify the ability of the manufacturing process and related
procedures to consistently produce in a production environment and at the
required quality level of a Product in quantities representative of a
program's volumes.
"MATERIALS" shall mean Code, Documentation, and the Development
Environment.
"MORAL RIGHTS" shall mean any personal rights that an author may have under
applicable law which are separate and apart from the proprietary aspect of
copyright, including, but not limited to, rights to identification of
authorship, rights of approval on modifications or limitation on subsequent
modification, and rights to withdraw a work from distribution.
"ORIGINAL DELIVERABLES" shall mean Deliverables other than Preexisting
Materials.
"PERSONNEL" are a party's employees or subcontractors working under the
Alliance Agreement.
"PREEXISTING MATERIALS" shall mean any Materials that exist prior to the
effective date of this Alliance Agreement, or that have been or will be
licensed or otherwise acquired by NCD or developed by NCD outside the scope
of this Alliance Agreement.
"PRODUCT" shall mean a terminal comprised of electronic circuitry
components, subassemblies, and Code which allows an individual user to
connect to a computer server for the purpose of downloading, inputting,
receiving, and processing data from the server, and which operates using
NCD's NCDware Code or Derivative Works thereof.
"PRODUCT DEVELOPMENT PLAN" shall mean a plan for how the project will be
managed which will include, but not be limited to, major activities, labor,
schedules, and checkpoints.
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 7 OF 24
<PAGE>
"PROTOTYPE UNIT" shall mean a product having the following minimum
characteristics.
* Partial function
* Limited error recovery
* Limited initialization tests
"RAISE" shall mean a test of a Product or Deliverable conducted in IBM's
engineering and system tests organization which will satisfy the
requirements as defined in the Product Development Plan. This test does a
complete and final verification of Product and Deliverable function,
quality, performance, serviceability, conformance to IBM and industry
standards and compliance with functional specifications and drawings.
"SUBSIDIARY" of a party means:
a) a corporation, company or other entity more than fifty percent
(50%) of whose outstanding shares or securities representing the right
to vote for the election of directors or other managing authority are
now or hereafter owned or controlled, directly or indirectly, by that
party, or
b) a corporation, company or other entity that does not have
outstanding shares or securities, as may be the case in a partnership,
joint venture or unincorporated association, if more than fifty
percent (50%) of the ownership interest representing the right to make
decisions for such corporation, company, or other entity is now or
hereafter owned or controlled, directly or indirectly by that party,
or
c) in the case of an "S" corporation under the Internal Revenue Code
of 1986, as amended, a Subsidiary shall include any entity controlled
directly or indirectly by an individual owning or holding fifty
percent (50%) or more of such "S" corporation's outstanding shares or
securities. .
Any such corporation, company, or other entity shall be deemed to be a
Subsidiary only so long as such ownership or controls exists.
"THIRD PARTY MATERIALS" shall mean Preexisting Materials in which third
parties have rights.
"GENERAL AVAILABILITY (GA)" shall mean the date at which IBM first ships
production versions of Products developed pursuant to this Alliance
Agreement in commercial quantities to customers who have ordered such
Products through IBM's standard ordering processes. GA shall not be deemed
to have occurred upon IBM's shipment of Products to customers or other
third parties for use in development evaluation and testing and early
shipment programs.
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 8 OF 24
<PAGE>
"INITIAL DESIGN FREEZE DATE" shall mean the agreed-upon date identified in
Article 1-Development in which the there shall be no additional
modifications to a the design of a particular Product prior to manufacture.
"BILLS OF MATERIAL" OR "B/M" shall mean a list of mechanical and/or
electrical parts, to the individual component level, needed to assemble a
Product or FRUs.
"FIELD REPLACEMENT UNIT" (FRU) shall mean an assembly that is replaced in
its entirety if one of its components fails.
"WORK AUTHORIZATIONS" (WAs) shall mean written or electronic purchase
orders or other electronic transactions that are expressly identified as an
authorization to perform work under Article 2-Manufacturing.
"TOOLING" shall mean all the required tools and/or equipment that are
unique to producing a Product.
"SIX SIGMA QUALITY LEVEL" shall mean a proven, statistical approach that
can achieve a zero defect process and a zero defect Product. It is a level
of product quality achievement equivalent to 3.4 defects per million parts
(PPM).
"STATISTICAL PROCESS CONTROL" (SPC) shall mean the use of certain
statistical techniques to analyse a manufacturing process in order to take
appropriate actions to achieve and maintain a statistically controlled
process and to improve the process capability of producing of parts with a
Six Sigma Quality Level.
4. PAYMENT
NCD will invoice IBM, and IBM will pay NCD, according to the terms set
forth in one or more Articles. All payments will be made in U.S. dollars.
NCD will be responsible for applicable taxes, expenses, and payments to
third parties that NCD owes unless specified otherwise in an Article.
5. COPYRIGHTS
5.1 GRANT OF LICENSE TO LICENSED WORKS
Subject to the conditions and limitations set forth in sections 5.1.1
and 5.1.2 of this Base Agreement, NCD grants IBM a worldwide,
copyright license to use, execute, reproduce, display, perform,
transfer, market, distribute, and to make Derivative Works of, the
Licensed Works (including audio and visual work
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 9 OF 24
<PAGE>
contained in or generated by such Licensed Works) for use in
conjunction with Products. NCD grants IBM the right to authorize
others to do any of the above, except that Derivative Works may be
prepared only by IBM, its Subsidiaries, and vendors and subcontractors
performing work for IBM and its Subsidiaries. Sublicenses to the
Licensed Works granted by IBM to third parties shall contain terms
consistent with IBM's standard practices for licensing or distributing
IBM's own goods and services.
IBM's license to Licensed Work that consists of Documentation shall be
fully paid up upon the effective date of this Alliance Agreement.
IBM's license to Licensed Work that consists of Code, other than Code
contained only in Development Environment, shall be subject to a
royalty as specified in Article 2 - Manufacturing, or in one or more
other Articles.
IBM's license rights granted in this section 5.1 shall be revocable by
NCD only if IBM terminates the Alliance Agreement without cause prior
to the date that IBM's minimum order quantity obligation takes effect
pursuant to section 4.3 of Article 2-Manufacturing. Otherwise, the
licenses granted hereunder shall be irrevocable notwithstanding
termination or expiration of the Alliance Agreement.
5.1.1 LICENSE TO IBM WORKSTATION PRODUCTS
IBM's license to transfer, market, distribute and sublicense
those Licensed Works that are Original Deliverables shall be
exclusive in the field of use with IBM Workstation Products.
The other rights granted in section 5.1 shall be
nonexclusive.
Without limiting other Materials that are considered
Preexisting Materials under the terms of this Alliance
Agreement, the parties specifically acknowledge that NCD's
existing 3270 local client is considered a Preexisting
Material.
5.1.2 LICENSE TO SOURCE CODE OF LICENSED WORKS
IBM's license to the Source Code of Licensed Works is for
IBM's internal use only. IBM shall not display, perform,
transfer, market, distribute or sublicense, and shall not
authorize others to make Derivative Works of, the Source
Code of Licensed Works, except that IBM may display,
perform, distribute, sublicense, and allow its vendors and
contractors to prepare Derivative Works of, the Source
Code solely for the purpose of allowing such vendors and
subcontractors to provide services for IBM relating to such
Source Code, including but not limited to development and
support of Code. Where IBM utilizes such subcontractors and
vendors, IBM shall
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 10 OF 24
<PAGE>
have written agreements with such subcontractors and vendors
sufficient to require them to comply with the licensing
provisions herein and to treat the Source Code in accordance
with AECI No. M96-2424. IBM shall obtain NCD's approval
prior to allowing such Source Code to be used off IBM's
premises by such subcontractor or vendor, and NCD will not
unreasonably withhold such approval.
5.2 GRANT OF LICENSE TO DEVELOPMENT ENVIRONMENT
Except for Development Environment IBM provides NCD, within fifteen
(15) days after the effective date of any Article or attachment
thereto describing Deliverables having associated Development
Environment, NCD will deliver to IBM a written list of all such
Development Environment. NCD will deliver the listed Development
Environment that are not commercially available concurrent with
delivery of the associated Deliverables. NCD will update such written
list for all changes to such Development Environment and promptly
deliver updated Development Environment that are not commercially
available.
NCD grants IBM a nonexclusive, worldwide, copyright license to use,
execute, reproduce, display and perform, and to make or have made
Derivative Works of, all Development Environment (including audio or
visual works contained in or generated by such Development
Environment), except insofar as NCD's authority to grant such license
is restricted or limited by one or more third party agreements for
Third Party Materials contained within the Development Environment
and where NCD discloses to IBM such restrictions or limitations within
15 days after the effective date of this Alliance Agreement. If IBM
determines that any such disclosed agreements with third parties
significantly effect IBM's rights to use the Development Environment
for its intended purpose under this Alliance Agreement, IBM shall
notify NCD and NCD shall promptly and diligently take steps to
negotiate with such third parties for rights acceptable to IBM for the
use of such Third Party Materials in the Development Environment.
IBM's license rights granted in this section 5.2 shall be revocable by
NCD only if IBM terminates the Alliance Agreement without cause prior
to the date that IBM's minimum order quantity obligation takes effect
pursuant to section 4.3 of Article 2-Manufacturing. Otherwise, the
licenses granted hereunder shall be irrevocable notwithstanding
termination.
5.3 USE OF PREEXISTING MATERIALS IN DELIVERABLES
Unless IBM and NCD agree otherwise in writing with respect to certain
specified Preexisting Materials, NCD may include Preexisting Materials
in Deliverables only if such materials (1) are owned by NCD, or (2)
are licensable by NCD to IBM, its
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 11 OF 24
<PAGE>
Distributors and their customers under the terms of this Alliance
Agreement with no additional restrictions or requirements. Within
fifteen (15) days after the effective date of any Article or
attachment thereto describing Deliverables that will contain Third
Party Materials, NCD shall deliver to IBM a written list of such Third
Party Materials and shall provide IBM with copies of all license
agreements relating to such Third Party Materials. All Preexisting
Materials in Deliverables are deemed Licensed Works.
5.4 REGISTRATION OF LICENSED WORKS
NCD is responsible for copyright registration, maintenance and
enforcement of all Licensed Works. NCD authorizes IBM to act as its
agent in the copyright registration of the Licensed Works. In the
event IBM uses such authority to register a copyright on behalf of
NCD, IBM will promptly notify NCD of such registration. This section
does not authorize IBM to act as NCD's agent for any other purpose.
5.5 RIGHTS IN IBM MATERIALS AND CUSTOM ENHANCEMENTS
All IBM Materials and Custom Enhancements shall be owned exclusively
by IBM and shall be deemed works made for hire. To the extent any IBM
Materials or Custom Enhancements may not, by operation of law, be
deemed works made for hire, NCD hereby assigns to IBM ownership of
copyright in such items. IBM shall have the right to obtain and hold
in its own name copyrights, registrations, and similar protection
which may be available in such IBM Materials and Custom Enhancements.
NCD agrees to give IBM or its designees all assistance required to
perfect such rights, including the execution of any necessary
documents.
5.6 CERTIFICATE OF ORIGINALITY
Within sixty (60) days after the effective date of any Article or
attachment thereto, and at such other times as IBM may reasonably
request, NCD shall deliver to IBM a Certificate of Originality with
respect to any Preexisting Materials to be included in the
Deliverables listed in such Article, substantially in the form set
forth in "Appendix A - Sample Certificate of Originality." Upon
delivery of Deliverables to IBM, NCD shall submit an additional
Certificate of Originality for such Deliverables.
5.7 MORAL RIGHTS
NCD shall obtain a written agreement to waive and not to assert any
Moral Rights, including any right to identification of authorship,
rights of approval on modifications or limitation on subsequent
modification, from any person or entity
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 12 OF 24
<PAGE>
having Moral Rights with respect to any Deliverables hereunder. NCD
hereby waives and agrees not to assert any Moral Rights, including any
right to identification of authorship, rights of approval on
modifications or limitation on subsequent modification, NCD has or may
have in Deliverables.
5.8 TREATMENT OF THIRD PARTY MATERIALS
In rendering performance pursuant to this Alliance Agreement, NCD
shall comply at all times with all restrictions and covenants
applicable to Third Party Materials. NCD shall bear the
responsibility and expense of negotiating and obtaining any rights in
Third Party Materials necessary to fulfill its obligations under this
Alliance Agreement. Except as mutually agreed in writing by the
parties, NCD shall have sole responsibility for payment of all
royalties and other charges with respect to Third Party Materials,
including royalties, charges, and payments for the licenses granted in
section 5.1. If IBM is not satisfied that NCD has sufficient rights
with respect to any such Third Party Materials or that NCD has assumed
and discharged its responsibility for related royalties and other
charges, IBM may, at its election and without limiting its other
rights, suspend further action or payment or both upon notifying NCD
of the problem. Such suspension shall end when the problem is
remedied.
Nothing herein shall restrict IBM from dealing directly with any third
party with respect to such Third Party Materials or any other product
or service. Provided, however, that if IBM continues to distribute
the Third Party Materials after any third party claim for royalties or
other charges has been raised and such matter has not been resolved
within 30 days after IBM notifies NCD of such claim, IBM may either
(i) place any payment due NCD under this Article in escrow pending
resolution of said third party claim, or (ii) pay NCD all amounts due
hereunder, less deductions for (a) any royalty payments made by IBM to
such described third parties which are NCD's responsibility hereunder
but which NCD has not paid and (b) IBM's reasonable, documented
administrative costs in connection with making such royalty payments
which are otherwise NCD's responsibility.
5.9 CONFIRMATION
Promptly upon request by IBM, NCD agrees to confirm IBM's rights in
Deliverables identified by IBM by execution and delivery of a written
confirmation in such form as IBM may reasonably require.
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 13 OF 24
<PAGE>
6. PATENTS AND INVENTIONS
6.1 PATENT LICENSE
NCD hereby grants to IBM and its Subsidiaries, sublicensees and
customers, direct and indirect, a royalty free, worldwide,
irrevocable, nonexclusive license under any patent or patent
applications owned or licensable by NCD during the term of this
Alliance Agreement to make, have made, use, have used, lease, sell,
and/or otherwise transfer Deliverables, including Derivative Works
thereof, and to practice or have practiced any process or method
involving the use of any Deliverable.
6.2 RIGHTS IN INVENTIONS
Each party shall own Inventions made by its own Personnel, except for
Joint Inventions and Inventions relating to Appearance Designs.
6.2.1 INVENTIONS SOLELY BY EITHER PARTY'S PERSONNEL
Each party will disclose in writing to the other at least
quarterly during the term of the Alliance Agreement each
Invention made solely by its Personnel together with an
explanation of why the disclosing party believes it to be an
Invention. NCD will identify all countries in which it will
seek patent protection for each Invention. NCD authorizes
IBM to act as its agent in obtaining patent protection for
the Invention in countries where NCD does not seek patent
protection, and IBM will promptly notify NCD in writing upon
the filing of any patent application. NCD grants to IBM an
irrevocable, nonexclusive, worldwide, paid-up license under
these Inventions and patents issuing on and patent
applications filed on these Inventions, to make, have made,
use, have used, sell, license or transfer items and to
practice and have practiced methods, all in conjunction with
Products.
6.2.2 JOINT INVENTIONS
Both parties will jointly own all Joint Inventions and
resulting patents. Either party may license others under
Joint Inventions and patent applications filed on, or
patents issuing from, them without consent from or
accounting to the other.
When both parties equally share the costs associated with
seeking patent protection, IBM will prepare the patent
application, unless agreed to otherwise. IBM will advise
NCD of the status of the application, and the
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 14 OF 24
<PAGE>
parties will work together to complete such application. If
either party decides not to equally share the costs of
seeking or maintaining patent protection in a Joint
Invention, the other party may do so at its own expense.
The paying party will control the obtaining of, and
maintenance of, such patents. The non-paying party will
provide reasonable assistance and have required documents
signed at the request and expense of the paying party.
6.2.3 APPEARANCE DESIGNS
Unless agreed otherwise in writing, NCD assigns to IBM all
Inventions, and patents issuing on them, relating to an
Appearance Design of a Product. NCD will, at IBM's expense,
assist in the filing of patent applications on these
Inventions and have required documents signed.
6.2.4 NO OTHER PATENT LICENSES
Except as expressly granted in this Alliance Agreement,
neither party grants the other party any rights in any
patents or patent applications.
7. TERM AND TERMINATION
The initial term of this Alliance Agreement shall begin on the effective
date and end on December 31, 1998 (the "Initial Term"). Termination or
expiration of the Alliance Agreements shall terminate all Articles except
to the extent that an Article expressly states otherwise. This Base
Agreement will remain in effect for any Article or part thereof that
remains in effect after termination or expiration of the Alliance Agreement
until that Article fully expires or is terminated.
7.1 IBM'S RIGHT OF RENEWAL
IBM shall have the right to renew this Alliance Agreement through
December 31, 2000, by providing NCD with notice of renewal no later
than March 1, 1998. Except as otherwise specified in one or more
Articles or negotiated and agreed to in writing by the parties, all
terms and conditions of this Alliance Agreement, including
definitions, shall continue to apply throughout such renewal term.
7.2 IBM'S OBLIGATION TO RENEW CERTAIN ARTICLES
Any obligation of IBM to renew any Article of this Alliance Agreement
beyond the Initial Term shall be specified in the Article to which
such obligation applies.
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 15 OF 24
<PAGE>
7.3 IBM'S RIGHT TO TERMINATE WITHOUT CAUSE
IBM shall have the right to terminate this Alliance Agreement without
cause at any time by providing NCD with sixty (60) days written
notice. IBM's obligations, upon termination, if any, may be included
in one or more Articles.
7.4 TERMINATION FOR CAUSE
Either party may terminate this Alliance Agreement for cause, without
any liability or obligation to compensate the other, in the event
that:
the other party materially breaches the Alliance Agreement, and
such breach is not cured within 60 days after the notice of
termination is received; or
the other party becomes insolvent, files or has filed against it
a petition in bankruptcy, or undergoes a reorganization pursuant
to a petition in bankruptcy filed with respect to it; or
the other party is dissolved or liquidated or has a petition for
dissolution or liquidation filed with respect to it; or
the other party ceases ongoing business operations; or
the other party enters into any voluntary or involuntary
receivership, or upon the appointment of a receiver by a court;
or
there is a Change of Control of the other party.
Termination for any of the above causes shall take effect immediately
upon notice from the terminating party, except that (1) termination
for breach shall be effective sixty (60) days after the notice of
termination describing the breach is received and shall not take
effect if the breach is cured prior to such effective date, and (2)
termination solely for involuntary bankruptcy shall take effect 60
days after the service of the involuntary bankruptcy petition is
filed, unless such petition is dismissed within this 60 day period, in
which case the termination shall not take effect. In all cases, the
cause for termination shall be stated in the notice.
7.5 SURVIVAL OF CERTAIN PROVISIONS AFTER TERMINATION
The following provisions of this Base Agreement shall survive beyond
expiration or termination of this Alliance Agreement: Section 5
(excluding 5.6), Section 6, Section 8, Section 9, Section 10, Section
11, Section 12 (to the extent specified
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 16 OF 24
<PAGE>
therein), Section 13 (excluding 13.12), and all applicable definitions
of this Base Agreement, shall survive such expiration or termination.
In addition, terms in Articles may survive termination or expiration to
the extent specified in such Article.
8. CONFIDENTIALITY
The treatment of either party's confidential information will be governed
by AECI No. M96-2424 and all supplements thereto.
9. MARKETING DISCRETION
Except where marketing rights are expressly restricted in this Alliance
Agreement, the parties shall retain full freedom and flexibility concerning
the marketing of their products, including the decision whether to market
or discontinue marketing of products, and the decision of what level of
marketing effort to be undertaken. Neither party undertakes any obligation
to announce or market any products. Nothing in this Alliance Agreement
shall be construed as creating any obligation of "best efforts" or other
level of marketing effort.
10. INDEMNIFICATION
NCD, at its own expense, will settle or defend, and will pay any damages,
costs, attorneys' fees or fines as may be assessed by a court of competent
jurisdiction with respect to all proceedings, threats of proceedings, or
claims against IBM, its Distributors and their respective customers, for
the infringement or alleged infringement by Products or Deliverables
furnished under this Alliance Agreement or any part or use thereof, of
patents (including utility models and registered designs), mask work
rights, trade secrets, or copyrights in the following countries: the United
States of America, member states of the European Community, Japan, Canada,
and any other country where NCD, its Subsidiaries, Distributors or
affiliates, heretofore have furnished similar goods in substantial
quantities or have directly conducted their business with respect to NCD
products. IBM shall provide prompt notice to NCD of any such proceeding or
claim of which it becomes aware and at NCD's expense, shall provide
information and assistance that NCD may request in connection with the
defense and settlement of any such proceeding or claim.
NCD shall not have any liability hereunder for infringement or alleged
infringement resulting solely from (i) required compliance by NCD with
engineering drawings or manufacturing instructions or specifications
originating with or furnished by IBM (ii) alteration of Products or
Deliverables by persons other than NCD, or (iii) use of the
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 17 OF 24
<PAGE>
Products or Deliverables in combination with goods or services not provided
by NCD unless the Products or Deliverables contributorily infringe.
Each party will promptly notify the other in writing if it becomes aware of
any patent, copyright, trade secret, mask work right, or other right of a
third party which the Products or Deliverables furnished under this
Alliance Agreement may infringe or violate.
The indemnification provisions herein shall in no way limit or restrict
either party's right to indemnity, contribution, or other remedies
availables against the other as provided by statute or common law.
11. DISPUTE RESOLUTION
Each party will promptly notify the other party's Alliance Manager of any
dispute with the other party under or regarding this Alliance Agreement,
and will further promptly notify the other party's respective Article
Coordinator of any dispute with the other party under or regarding an
Article of this Alliance Agreement. The parties will negotiate in good
faith to resolve any dispute between them regarding this Alliance
Agreement. If the dispute cannot be settled by the Article Coordinators
and/or the Alliance Managers, both parties agree to engage their
executives in an attempt to resolve the matter before bringing action in a
court of law.
Except for actions brought to enforce the provisions involving intellectual
property rights and indemnification, no actions, regardless of form,
arising out of or in connection with performance or transactions covered by
this Alliance Agreement may be brought by either party more than two (2)
years after the cause of action has accrued. The running of this period is
not tolled during the time, if any, the parties are engaged in any effort
to resolve any dispute, unless the parties specifically agree in writing to
toll such period.
12. INSURANCE
NCD will maintain Commercial General Liability insurance at its own expense
with minimal coverage for two years following expiration or termination of
the Alliance Agreement in the amount of $1,000,000, with an aggregate
liability of $10,000,000 per event. This coverage includes:
(a) "Contractual Liability" NCD responsible for under the Alliance
Agreement, and
(b) "Products and Completed Operations."
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 18 OF 24
<PAGE>
NCD remains liable for any damages, including but not limited to damages in
amounts above the stated minimal coverage of this section.
The insurance will provide that the insurer notify IBM at least 30 days
before any non-renewal, cancellation or other material change in your
coverage. NCD will name IBM as an additional insured. NCD will provide
IBM with a certificate of insurance as proof of this minimal coverage on
request.
13. GENERAL
13.1 INDEPENDENT CONTRACTOR
IBM and NCD each represent and warrant to the other that its efforts
in relation to this Alliance Agreement shall be as an independent
contractor. Nothing contained in this Alliance Agreement shall
constitute the parties as entering upon a joint venture or
partnership, or shall constitute either party the agent for the other
party, or be construed as creating the relationship of employer and
employee, master and servant, or any similar relationship for any
purpose or any sense whatsoever. NCD and IBM and their employees
shall have no authority to bind or make commitments on behalf of the
other party for any purpose and shall not hold itself or themselves
out as having such authority. Each party shall have sole
responsibility for the supervision, daily direction and control,
payment of salary (including withholding of income taxes and social
security), worker's compensation benefits, and the like of its
personnel.
13.2 FREEDOM OF ACTIVITY
Except as explicitly stated in this Alliance Agreement with regard to
license or confidentiality restrictions, this Alliance Agreement shall
not prevent either party from entering into any agreement with any
third party or developing, manufacturing and/or selling any product or
service even if it competes with the other party's products or
services, or any product developed under this Alliance Agreement.
13.3 FORCE MAJEURE
Neither IBM nor NCD shall be in default or liable for any delay or
failure of compliance with this Alliance Agreement due to an act of
nature, public enemy, government action, or freight embargo beyond the
control of the defaulting party and the defaulting party shall provide
the nondefaulting party immediate notice of any such anticipated delay
or failure of compliance; provided, however, that any such act shall
not relieve the defaulting party's obligations hereunder and such
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 19 OF 24
<PAGE>
party hereby agrees to perform its obligations as soon as practicable
after the conditions causing such delay or failure have subsided.
13.4 LAWS
Each party shall, at it's own expense, comply with applicable
governmental laws, statutes, ordinances, administrative orders, rules
or regulations relating to its duties under this Alliance Agreement
and shall procure all licenses and pay all fees and other charges
required thereby.
To the extent applicable, each party will comply with Executive Order
11246 of the President of the United States on Equal Employment
Opportunity and the Occupational Safety and Health Act of 1970.
13.5 NOTICES
All notices to a party under this Alliance Agreement shall be
delivered to that party's Alliance Manager at the address stated in
this Base Agreement. All notices to a party under an Article shall be
delivered to that party's Article Coordinator at the address specified
in the Article.
All notices required or permitted to be given under this Alliance
Agreement or under an Article shall be in writing.
13.6 NO OTHER LICENSES
No licenses shall be implied by this Alliance Agreement other than
those specifically set forth herein.
13.7 PUBLICITY
Except as required by law, NCD will not, without IBM's prior approval,
with such approval not to be unreasonably withheld, issue press
releases or other publicity regarding the Alliance Agreement or the
parties relationship to it.
If the joint activities of the parties or general terms and conditions
of this Alliance Agreement are to be publicly announced by mutual
agreement by the parties, procedures and restrictions for disclosure
will be jointly agreed to in writing prior to any disclosure.
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 20 OF 24
<PAGE>
13.8 SEVERABILITY
If any provision of this Alliance Agreement is for any reason found to
be ineffective, unenforceable or illegal, such condition shall not
affect the validity or enforceability of any of the remaining portions
thereof. The parties shall negotiate in good faith to replace any
ineffective, unenforceable or illegal provision with an effective
replacement as soon as is practical.
13.9 SUBSIDIARIES
Except as explicitly stated otherwise in this Alliance Agreement, the
rights and licenses granted under this Alliance Agreement shall apply
to a party's Subsidiaries so long as such Subsidiaries agree to comply
fully with the obligations imposed on that party. Each party shall
remain fully responsible for actions and omissions of its Subsidiaries
relative to rights granted under this Section.
13.10 TAXES
Each party shall be responsible for the payment of any taxes and
duties imposed on such party arising out of its performance hereunder.
Without limiting the foregoing, the parties specifically agree that
IBM shall be responsible for all taxes and duties associated with its
distribution of Products to its customers.
13.11 TRADEMARK USAGE
Nothing in this Alliance Agreement shall imply the grant to a party of
a license to use any trademark or service mark of the other party.
Such a grant may only be made by explicit statement in this Alliance
Agreement.
13.12 TRANSFER OR ASSIGNMENT
Neither party may transfer, assign, or sell any right or obligation
under this Alliance Agreement, except as expressly provided herein,
without the prior written consent of the other, except IBM may assign
its obligations to an IBM Subsidiary upon written notice to NCD.
NCD may not subcontract any part of the work to be performed under
this Alliance Agreement without the prior written consent of IBM.
Purchase of services or components normally purchased by NCD, and use
of on-site contract Personnel, will not be construed as an assignment
or subcontract. The parties agree that IBM's written approval for the
subcontracting of any part of the work will not relieve NCD of the
responsibility for subcontractor performance. IBM will not
unreasonably withhold its consent.
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 21 OF 24
<PAGE>
Any act of derogation of the foregoing shall be null and void and may
be deemed a material breach of this Alliance Agreement.
13.13 WAIVER
The waiver of any term, condition, or provision of this Alliance
Agreement by either party must be in writing. No such waiver shall be
construed as a waiver of any other term, condition, or provision
except as provided in writing, nor as a waiver of any subsequent
breach of the same term, condition, or provision.
13.14 WARRANTIES
The following warranties are in addition to any other warranties
described in one or more Articles:
13.14.1 NO CONFLICT
Each party represents and warrants that it is under no
obligation or restriction, or will it assume any such
obligation or restriction, that does or would in any way
interfere or conflict with, or that does or would present a
conflict of interest concerning each party's performance
under this Alliance Agreement or would restrict any of the
rights and licenses granted to the other party herein.
13.14.2 NO INFRINGEMENT
NCD represents and warrants that no valid copyright, mask
work, or trade secret right of a third party would be
infringed by any Deliverables provided to IBM under this
Alliance Agreement. NCD represents and warrants that it has
the right and power to enter into and perform under this
Alliance Agreement and under the Articles.
13.14.3 INTERFERING CODE
NCD represents and warrants that the Deliverables do not
contain any Code that is intentionally constructed with the
purpose of damaging, interfering with or otherwise adversely
affecting Code, data files, or hardware without the consent
and intent of the computer user. NCD shall establish and
enforce commercially reasonable procedures, which shall be
reviewed with IBM at IBM's request, to prevent any such Code
from being incorporated by NCD's Personnel into
Deliverables and shall promptly notify IBM
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 22 OF 24
<PAGE>
of any knowledge or suspicion of NCD's that any such
materials have been incorporated in any Deliverables.
13.14.4 NO IMPLIED WARRANTIES
No warranties other than those expressly set forth in this
Alliance Agreement (including this Base Agreement and
Articles) shall be implied.
13.15 LIMITATION OF LIABILITY
Neither party shall be liable to the other for any consequential
damages, incidental damages, or special damages (including loss
profits, lost savings, loss of business, or interruption of business)
even if informed that they may occur. This limitation does not apply
to liabilities for indemnity to the extent such damages are included
in settlements and court awards.
13.16 GOVERNING LAW/FORUM
This Alliance Agreement and the performance of the parties thereunder
shall be construed in accordance with and governed by the substantive
laws of the United States of America and the State of Minnesota which
pertain to agreements executed in, and fully performed within, the
State of Minnesota. Any proceeding to enforce, or to resolve disputes
arising under or relating to this Alliance Agreement shall be brought
before a court of competent jurisdiction in the State of Minnesota,
including a Federal District Court sitting within the State. The
parties hereby expressly waive any right to a jury trial and agree
that any proceedings related to this Alliance Agreement shall be
tried by a judge without a jury, regardless of the type or form of the
action.
13.17 EXECUTION AND MODIFICATION
Execution of this Alliance Agreement shall be by signature of an
authorized representative of each party. This Alliance Agreement may
only be modified in a writing executed by authorized representatives
of both parties or their designees.
13.18 ENTIRE AGREEMENT
This Alliance Agreement along with AECI No. M96-2424 and its
supplements, set forth the entire agreement and understanding between
the parties as to their subject matter and merge all prior discussions
and agreements between the parties, whether oral or written, related
to the subject matter of the alliance.
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 23 OF 24
<PAGE>
Neither party relies on any promises, inducements, representations
made by the other or expectations of more business dealings except as
expressly provided in this Alliance Agreement. The Alliance Agreement
accurately states our business agreement.
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 24 OF 24
<PAGE>
IN WITNESS WHEREOF, each party has reviewed this Agreement and each party has
executed this Agreement by signature of its authorized representative.
NETWORK COMMUNICATION DEVICES, INC. INTERNATIONAL BUSINESS MACHINES
CORPORATION
Signature /s/ Lorraine Hariton Signature /s/ Bhawnesh C. Mathur
------------------------------- -------------------------
Printed Name Lorraine Hariton Printed Name Bhawnesh C. Mathur
---------------------------- ----------------------
Printed Title V.P. of Strategic Accounts Printed Title Dir. of
--------------------------- Procurement, IBM Server Group
-----------------------------
Date 6/27/96 Date June 27, 1996
------------------------------------ --------------------
- --------------------------------------------------------------------------------
BASE AGREEMENT-PAGE 25 OF 24
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
NO. 350-148
ARTICLE 1
DEVELOPMENT
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 1 DEVELOPMENT
This Article 1, effective on the date last signed below, is agreed to by Network
Computing Devices Corporation ("NCD"), a corporation of the State of California,
with offices located at 350 North Bernardo Avenue, Mountain View, California
94043-4207 and International Business Machines Corporation ("IBM"), a
corporation of the State of New York, with offices at 3605 Highway 52 North,
Rochester, Minnesota 55901-7829.
RECITALS
A. NCD and IBM have entered into an alliance between them in the area of an
IBM network application terminal ("thin client") Product.
B. This Article describes, among other things, terms and conditions of
development and describes Deliverables.
1. ARTICLE COORDINATORS
1.1 NCD ARTICLE 1 COORDINATOR:
Philip R. Graham
350 North Bernardo Avenue
Mountain View, CA 94043-4207
TELEPHONE: (415) 919-2796
TELEFAX: (415) 961-6289
1.2 IBM ARTICLE 1 COORDINATOR:
Ordean F. Hegrenes
International Business Machines Corporation
3605 Highway 52 North
Rochester, MN 55901-7829
TELEPHONE: (507) 253-3530
TELEFAX: (507) 253-8684
- --------------------------------------------------------------------------------
ARTICLE 1-PAGE 1 OF 13
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 1 DEVELOPMENT
1.3 DUTIES OF ARTICLE COORDINATORS
The Article Coordinators will act as overall coordinators for the
parties under this Article. Each party will advise the other in
writing of any change regarding its Article Coordinator.
2. GENERAL DESCRIPTION
This Article sets forth the terms and conditions under which the parties
will jointly develop a "thin client" terminal Product for IBM, which is
intended to be positioned as a network computer terminal and as a
replacement for existing non-programmable type terminals. This terminal
Product will contain graphical user interface ("GUI") capabilities,
download capabilities from various servers, including AS/400, S/390,
RS/6000, and PC servers, and shall utilize network computing technologies
such as web browsers, and JAVA applets.
The "thin client" terminal Products shall be composed of a logic unit with
microprocessor, memory, connectivity interface (Token Ring, Ethernet,
twinax, coax, serial, and others), power supply, and enclosures. There
will be multiple models of the "thin client" Product that will accomodate
differing using system and customer requirements. The unit would attach to
IBM PC Company selected keyboard models, mice, and standard displays of
VGA/XGA and better.
The IBM "thin client" terminal Product shall be based on existing and
enhanced versions of NCD's EXPLORA (WILDCAT) product, and will operate
using a modified version of NCD's NCDware Code, boot code loaded in
programmable devices, and certain other NCD software licensed to IBM. The
Product will remotely load the Code that provides functionality from the
server it is logically attached to. This software would provide a basis
for emulation of existing devices (e.g. 5250, 3270) as well as extend the
functionality with web browsers, [ ], and other Code.
The initial development of the Product shall be comprised of two phases.
The following is a general description of the Phase 1 and Phase 2 versions
of the Product and their contemplated availability dates:
PHASE 1 VERSION (LAN VERSION)
The Phase I Product will be comprised of the following function:
* WILDCAT product enhancement version of the EXPLORA NCD device
- --------------------------------------------------------------------------------
ARTICLE 1-PAGE 2 OF 13
[ ] Confidential Treatment Requested. Omitted Portions Filed Separately with
the Securities and Exchange Commission.
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 1 DEVELOPMENT
* [ ]
* [ ]
* [ ]
* [
]
* [ ]
* [ ]
* [ ]
* [ ]
* [ ]
* [ ]
* [
]
* NCDware 4.1 or later version
* [ ]
* [ ]
* [ ]
* [
]
Although the [ ] application is not a Deliverable within
Phase 1 and Phase 2, compatibility shall be provided with the [
] application for the the Phase I, Phase II, and follow on
products.
It is intended that limited shipments of the Phase 1 version of
Products to IBM's customers for development evaluation and early ship
programs, and General Availability of the Phase 1 version of the
Product, will occur in the fourth calendar quarter of 1996.
PHASE 2 VERSION OF PRODUCT
The Phase 2 Product will be comprised of the Phase 1 Product, plus the
following functional additions to the Product family, including the
integration of the host programming support into the base operating
system (AS/400 specifically):
* [ ]
* [ ]
* [ ]
* [ ]
* [
]
* [ ]
- --------------------------------------------------------------------------------
ARTICLE 1-PAGE 3 OF 13
[ ] Confidential Treatment Requested. Omitted Portions Filed Separately with
the Securities and Exchange Commission.
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 1 DEVELOPMENT
* [
]
* [ ]
* [ ]
* [ ]
* [ ]
Although the [ ] application is not a Deliverable under
Phase 1 and Phase 2, compatibility shall be provided with the [
] application for the Phase I, Phase II, and follow on
Products.
It is intended that General Availability of the Phase 2 version of the
Product will occur in July of 1997.
3. NCD'S RESPONSIBILITIES
NCD shall perform the following tasks and provide IBM with the following
Deliverables as set forth below:
3.1 TASKS
In accordance with this Article, and with IBM's advice and joint
development, NCD will develop for IBM a cost and performance effective
Product for use in IBM's server system platform product lines (ie. AS
/ 400, RS/6000, S/390, and PC servers) in accordance with the Phase 1
and Phase 2 descriptions set forth above and other specifications set
forth in the Product Development Plan. Included but not necessarily
all inclusive, are the following tasks.
* Specific joint design, development and testing of the Product
* Assist IBM in ensuring that Product design will meet IBM
Corporate instructions and standards as identified and validated
by IBM.
* [ ]
* [
]
* Development activities necessary to ensure Bi-Directional
keyboard support.
* Provide support and assistance to IBM for IBM-conducted testing
* Conduct unit level Engineering Verification Testing and Design
Verification Testing and report test results.
- --------------------------------------------------------------------------------
ARTICLE 1-PAGE 4 OF 13
[ ] Confidential Treatment Requested. Omitted Portions Filed Separately with
the Securities and Exchange Commission.
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 1 DEVELOPMENT
* NCD shall give IBM the documentation and support necessary to
obtain necessary agency and government approvals.
* Provide Product Engineering support for Product
* [
]
* Conduct compatibility testing to ensure functionality is
maintained commensurate with changes to the supported network
computer functions.
* Provide support for token ring device driver.
* Provide L3 support for early shipment programs.
* Provide a local printer support and JAVA local print support.
* [ ]
* Provide consultation and design support (HW and SW) to IBM
* Setup of IBM-owned Sun systems with NCD Development Environment
* Education of IBM development personnel on NCDware internals,
tools, architecture, processes, procedures.
* [ ]
* [
]
* [
]
* Other tasks determined by the parties to be necessary for
development the Products specified herein according to the
schedules specified herein or in the Product Development Plan.
3.2 DELIVERABLES
NCD shall provide the following Deliverables to IBM:
3.2.1 CODE
The following Code shall be provided to IBM. Unless otherwise
specified, all Code provided shall be provided in Source Code and
Object Code forms:
* [
]
* [ ]
* [ ]
* [ ]
- --------------------------------------------------------------------------------
ARTICLE 1-PAGE 5 OF 13
[ ] Confidential Treatment Requested. Omitted Portions Filed Separately with
the Securities and Exchange Commission.
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 1 DEVELOPMENT
* [ ]
* [
]
* [
]
[ ]
Although NCD's implementation of [ ] is not considered to be a
Deliverable within the scope of Phase 1 and Phase 2 development
described above, NCD agrees that upon IBM's request it will make
good faith efforts to acquire appropriate license rights to allow
[ ] to be added as a Licensed Work under Phase 1 of
development solely for the purpose of supporting the [ ]
browser, provided IBM agrees to pay third-parties royalties
resulting from IBM's use of such [ ] software licensed by
- --------------------------------------------------------------------------------
ARTICLE 1-PAGE 6 OF 13
[ ] Confidential Treatment Requested. Omitted Portions Filed Separately with
the Securities and Exchange Commission.
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 1 DEVELOPMENT
NCD. Other than such third-party royalties that may be necessary,
NCD will not charge IBM any separate fee for providing [ ] in
support of the [ ] browser.
[ ]
NCD agrees that it will work in good faith with IBM to acquire
appropriate license rights to allow its implementation of the
[ ] to be added as a Licensed Work under Phase
1 of Development. NCD agrees to license the [ ] to IBM under
the licensing terms of this Alliance Agreement if such rights
exist or are obtained, provided that IBM shall be responsible for
third-parties royalties, if any, resulting from IBM's use of such
software licensed by NCD.
3.2.2 DEVELOPMENT ENVIRONMENT
NCD shall provide all Development Environment for other
Deliverables herein. NCD shall be responsible for providing all
equipment necessary for its performance under this Article. IBM
may loan or otherwise supply unique IBM equipment.
Determination of need will be evaluated on a case-by-case basis.
IBM will provide a loan of an AS/400 and necessary training
through a separate equipment loan agreement.
3.2.3 DOCUMENTATION
* NCD's Bill of Material (B/M) for Products to be supplied by
NCD.
* A complete list of NCD's approved suppliers for each
component of the Product.
* All NCD documentation source files for Products and
Deliverables, including user manuals, installation guides,
and system administrator manuals. (For use in IBM
publications).
* NCD development documentation files for Products and
Deliverables. (For development and support group education
and reference).
* Design documentation for Products (both hardare and
software).
* Educational materials in support of skills transfer classes.
* A source paper to be used as input to existing service and
customer documentation.
* Specifications for components, hardware, circuits, and
function used by NCD in its Product development.
* Other documentation deemed necessary by IBM or by NCD for
- --------------------------------------------------------------------------------
ARTICLE 1-PAGE 7 OF 13
[ ] Confidential Treatment Requested. Omitted Portions Filed Separately with
the Securities and Exchange Commission.
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 1 DEVELOPMENT
development of the Phase 1 and Phase 2 Products.
4. IBM'S RESPONSIBILITIES
IBM is responsible for the following tasks, in which NCD shall assist as
requested by IBM:
* [
]
* [ ]
* [ ]
* [ ]
* [ ]
* [
]
* [ ]
* [ ]
* [
]
* [
]
* [ ]
* [ ]
* [ ]
* [ ]
* [ ]
* [ ]
* [ ]
* [ ]
* [ ]
* [ ]
* [ ]
* [ ]
* [
]
* [ ]
* [ ]
* [
- --------------------------------------------------------------------------------
ARTICLE 1-PAGE 8 OF 13
[ ] Confidential Treatment Requested. Omitted Portions Filed Separately with
the Securities and Exchange Commission.
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 1 DEVELOPMENT
]
* [
]
5. PRODUCT DEVELOPMENT PLAN AND DEVELOPMENT SCHEDULES
5.1 PRODUCT DEVELOPMENT PLAN
The parties shall use best efforts to mutually agree to and complete a
Product Development Plan covering Phases 1 and 2 of the Product
development within 30 days after execution of this Article. The
Product Development Plan shall include schedules designed to meet the
intended GA timelines described in the Phase 1 and Phase 2 overviews
in the General Description Section of this Article, however, actual
schedules will be mutually agreed to by the parties. The Product
Development Plan for Phase 1 Product shall be firm at that time to
allow meeting the initial hardware design freeze date and the limited
shipment and GA timelines. The Product Development Plan for Phase 2
shall contain the schedules and plans for completion of the key
checkpoints required to meet the Phase 2 General Availability plan
dates and shall be subject to further enhancement and modification.
Such Product Development Plan shall be an attachment to this Article
and shall be signed by the Article 1 Coordinators. The Product
Development Plan shall describe the details of the development tasks,
development schedules and milestones, function and content of
Deliverables, design verification testing, acceptance criteria for
Deliverables, and other items deemed appropriate for efficient
management of the development process. The parties shall comply with
the Product Development Plan.
5.2 INITIAL HARDWARE DESIGN FREEZE DATE
The initial hardare design freeze date for Phase 1 Product shall be
[ ]. The Article 1 Coordinators may change this date by
mutual agreement in writing. However, any change of more than 30 days
(forward or backward) in the initial hardware design freeze date
shall require the concurrence and signatures of the parties' Alliance
Managers.
6. ENHANCEMENTS
6.1 BASIC ENHANCEMENTS
Throughout the term of this Article, NCD shall offer to provide to IBM
at no
- --------------------------------------------------------------------------------
ARTICLE 1-PAGE 9 OF 13
[ ] Confidential Treatment Requested. Omitted Portions Filed Separately with
the Securities and Exchange Commission.
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 1 DEVELOPMENT
additional charge all Basic Enhancements. Such Basic Enhancements shall
be offered to IBM within a reasonable time period prior to the
availability of any such Basic Enhancements in NCD's own products
to allow IBM to incorporate and make available such Basic
Enhancements in its Products. Basic Enhancements accepted by IBM
shall be deemed Licensed Works.
6.2 MAJOR ENHANCEMENTS
Throughout the term of the Article, NCD shall offer to provide to IBM
Major Enhancements for a reasonable fee (which may incorporate NCD's
costs for third party royalties and other costs incurred by NCD) to be
determined in good faith by the parties, and mutually agreed upon in
writing, provided that such fees shall be no greater than the lowest
charges paid by other NCD customers for such Major Enhancements. Such
Major Enhancements shall be offered to IBM within a reasonable time
period prior to the availability of any such Major Enhancements in
NCD's own products to allow IBM to incorporate and make available such
Major Enhancements in its Products. Major Enhancements shall be
deemed Licensed Works.
6.3 CUSTOM ENHANCEMENTS
Throughout the term of this Article, NCD shall offer to provide to IBM
all Custom Enhancements for a reasonable fee to be determined in good
faith by the parties and mutually agreed upon in writing. IBM shall
own all Custom Enhancements.
6.4 CATEGORIZING ENHANCEMENTS
Prior to NCD's commencement of work on any Custom Enhancement, and
prior to delivering any Enhancement to IBM, the parties shall describe
the Enhancement in writing, and categorize the Enhancement as a Basic,
Major, or Custom Enhancement. If the Enhancement is categorized as a
Major or Custom Enhancement, the parties shall agree in writing to the
compensation to be paid for such Enhancement and the provisions for
ongoing maintenance and support of such Enhancements.
6.5 ENHANCEMENTS CREATED BY IBM
Prior to creating any Enhancements to Licensed Works during the term
of the Alliance Agreement, other than Custom Enhancements, IBM shall
describe the
- --------------------------------------------------------------------------------
ARTICLE 1-PAGE 10 OF 13
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 1 DEVELOPMENT
planned Enhancement to NCD and give NCD a reasonable opportunity to
offer to provide such Enhancement to IBM under the terms set forth in
sections 6.1 and 6.2 above. In the event IBM determines not to
obtain the Enhancement from NCD, IBM shall negotiate in good faith
with NCD to grant NCD a license back to such Enhancements created
by IBM. Nothing in this section shall prevent IBM from also
requesting NCD to offer to provide Custom Enhancements, except that
IBM shall not be required to negotiate with NCD for the licensing
back of such Custom Enhancements.
7. WARRANTIES
NCD represents and warrants that Original Deliverables have been or shall
be prepared and/or procured by NCD with professional diligence and skill,
and will conform to the material specifications and requirements set forth
or incorporated in this Alliance Agreement.
NCD warrants that each Deliverable will perform in accordance with the
functional specifications defined in or incorporated into this Article.
These warranties will survive termination of the Alliance Agreement.
8. COMPENSATION
Upon this Alliance Agreement becoming effective, NCD will be paid a
non-recoverable expense in the amount of $[ ] per month, beginning
June 15, 1996, up to the time of General Availability of the Phase 1
Product. That NRE will be invoiced to IBM on a monthly basis beginning
July 15, 1996 covering the period dating back to the 15th of the previous
month. These monthly payments will continue until GA or until the
cumulative total of all such payments is of $[ ], whichever comes
first. IBM will pay the invoice within 30 days of receiving it. The
final payment will be prorated to the GA date. This NRE is to be used by
NCD in the agressive pursuit of the achievement of the milestones set for
the Product Development Plan and in recognition of their expenses
incurred in early production tooling and ramp-up requirements to meet the
IBM and NCD joint development schedules as defined in this Article.
Except for this NRE payment and except where expressly stated otherwise
in regard to Custom and Major Enhancements, there shall be no additional
separate compensation for the work performed pursuant to this Article.
- --------------------------------------------------------------------------------
ARTICLE 1-PAGE 11 OF 13
[ ] Confidential Treatment Requested. Omitted Portions Filed Separately with
the Securities and Exchange Commission.
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 1 DEVELOPMENT
9. PRODUCT DEVELOPMENT PLAN
9.1 SPECIFICATIONS
NCD and IBM Product specifications will be jointly defined and
reviewed by the Product teams covered by this Agreement. Since the
intent is to have common IBM / NCD design content on the base Product,
these specifications for the Product must be agreed on and monitored
closely as to implementation and tradeoffs made throughout the design.
Primary vehicle for making that happen is the weekly scheduled IBM /
NCD development team conference call, schedule tracking, and work item
tracking, managed by the Development Article coordinators. These work
item tracking project logs will serve as extensions and clarifications
to the Product specification as agreed to therein, and are available
for review by both parties.
9.2 DESIGN
The Products covered by this Alliance Agreement will be jointly
designed by NCD and IBM. NCD and/or IBM may subsequently request
design changes based on the results of usability testing, market
surveys, and Product Plan Reviews. Development Article coordinators
will jointly agree on the design changes based on the merits of the
design change for the Product as a whole and as related to each
platform.
9.3 UNIT TEST
NCD is responsible for performing unit testing. The mission of the
unit testing is to verify that the control unit of the Product
correctly implements the Product Specification and it's manufacturing
quality criteria. This testing will be performed during NCD's and
IBM's Engineering Verification Test (EVT) test phase.
9.4 IBM TESTING
NCD shall conform with the entry and exit criteria for IBM EVT, RAISE,
and MVT as defined in the EVT/RAISE Hardware System Test Process
(available from the IBM Development Article I coordinator).
- --------------------------------------------------------------------------------
ARTICLE 1-PAGE 12 OF 13
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 1 DEVELOPMENT
9.5 INFORMATION PLAN
NCD will provide IBM Information Development with current
specifications and documents that could be used by IBM in generating
the IBM publications in support of the Product upon request that
provides enough overview, conceptual, reference, how-to, and other
detailed information to enable IBM information developers to extract
information from it and merge that information into existing IBM
Product manuals and on-line help information to support the Product.
Examples of types of information to be provided in the source paper
are:
a) description of overall service strategy
b) problem isolation procedures
c) reference code descriptions
IN WITNESS WHEREOF, each party has reviewed this Article and each party has
executed this Article by signature of its authorized representative.
NETWORK COMMUNICATION DEVICES, INC. INTERNATIONAL BUSINESS MACHINES
CORPORATION
Signature /s/ Lorraine Hariton Signature /s/ Bhawnesh C. Mathur
------------------------ ----------------------------
Printed Name Lorraine Hariton Printed Name Bhawnesh C. Mathur
--------------------- -------------------------
Printed Title V.P. of Strategic Accounts Printed Title Dir. of Procurement,
--------------------------- IBM Server Group
-------------------------------------
Date 6/27/96 Date June 27th, 1996
----------------------------- ---------------------------------
- --------------------------------------------------------------------------------
ARTICLE 1-PAGE 13 OF 13
<PAGE>
IBBM-NCD ALLIANCE AGREEMENT
NO. 350-148
ARTICLE 2
MANUFACTURING
<PAGE>
This Article 2, effective on the date last signed below, is agreed to by Network
Computing Devices, Inc., ("NCD"), a corporation of the State of California,
with offices located at 350 North Bernardo Avenue, Mountain View, California
94043-4207 and International Business Machines Corporation ("IBM"), a
corporation of the State of New York, with offices at 3605 Highway 52 North,
Rochester, Minnesota 55901-7829.
RECITALS
A. NCD and IBM have entered into an alliance between them in the area of a
network application terminal ("thin client") product.
B. This Article describes, among other things, the terms and conditions under
which NCD will custom manufacture a thin client for IBM, including but not
limited to forecasting, ordering, quantity, and pricing, and shipping terms
and conditions.
1. ARTICLE COORDINATORS
1.1 NCD ARTICLE 2 COORDINATOR:
Randy Wagner
Manufacturing Project Manager
Network Computing Devices, Inc.
350 North Bernardo Avenue
Mountain View, CA 94043-4207
TELEPHONE: (415) 919-2756
TELEFAX: (415) 961-7774
1.2 IBM ARTICLE 2 COORDINATOR :
Michael Heaser
International Business Machines Corporation
3605 Highway 52 North
- --------------------------------------------------------------------------------
ARTICLE 2-PAGE 1 OF 15
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 2 MANUFACTURING
Rochester, MN 55901-7829
TELEPHONE: (507) 253-8784
TELEFAX: (507) 253-3648
1.3 DUTIES OF ARTICLE COORDINATORS
The Article Coordinators will act as overall coordinators for the
parties under this Article. Each party will advise the other in
writing of any change regarding its Article Coordinator. All
communications between the parties regarding this Article shall be
conducted through the Article Coordinators.
2. PRODUCTS
NCD shall supply Products to IBM. Products to be supplied to IBM under
this Alliance Agreement may include NCD's existing EXPLORA products, as
well as Products developed under this Alliance Agreement which are
generally described in Development-Article 1, and shall be specified in
more detail in the Product Specification and Price List (PSPL) which shall
be an attachment to this Article. Product descriptions and specifications
may be changed from time to time by mutual agreement. NCD will supply such
Products according to the terms and conditions of this Article and the PSPL
attachment. No changes of any kind shall be made by NCD in the form, fit
or function of Products without IBM's prior written consent. However, if
either party determines that such changes are necessary for compliance with
government-imposed safety requirements, that party will promptly inform the
other, and the parties will promptly take the reasonable and necessary
steps to implement such changes.
The parties shall use their best efforts to negotiate and complete the
initial PSPL within 30 days after the Initial Design Freeze Date as
specified in Article 1-Development. The PSPL shall be amended when the
Product specifications and/or the Product prices are changed pursuant to
this Alliance Agreement.
3. QUALITY
- --------------------------------------------------------------------------------
ARTICLE 2-PAGE 2 OF 15
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 2 MANUFACTURING
NCD will ensure that all work performed pursuant to this Article is
performed in a professional and competent manner consistent with the
highest industry standards and safety practices, and with IBM's
specifications, drawings, standards, directions and procedures.
NCD will ensure that a total management quality system such as the Malcolm
Baldridge National Quality Award Criteria, ISO 9000, or equivalent national
standard, is maintained for all aspects of the key processes related to
performance of work under this Article. NCD will strive to implement and
maintain a Product defect level at or below a Six Sigma level. NCD will
monitor the steps in all Product-related processes to identify deviations
and potential improvements. NCD will employ Statistical Process Control
(SPC) techniques to ensure that the quality requirements are consistently
met by all Product-related processes. Upon request by IBM, NCD will
provide IBM written reports and/or numerical data files containing quality
information related to the Product manufacturing process. IBM will
determine the structure of such reports.
Upon reasonable notice during NCD's normal business hours, IBM will have
the right to review NCD's quality plans and initiatives, assembly methods,
manufacturing processes, and production facilities on or off NCD's premises
in order to assess their adequacy.
4. PRICING AND QUANTITIES
NCD shall make the Product available to IBM at the price determined as set
forth below. NCD warrants that pricing of Products does not include taxes
and that NCD will not include any sales taxes on any Products purchased by
IBM. Upon request, IBM will provide NCD with a valid Reseller's Exemption
Certificate for each taxing jurisdiction for which NCD will ship Products.
4.1 INITIAL PRICE FOR PRODUCTS
The initial price of the Products shall be determined no later than 30
days after the hardware design freeze date specified in Article
1-Development, and shall be specified in the PSPL. The initial prices
of Products shall be determined by adding the B/M cost to a markup
amount ("Markup"). The B/M cost shall be determined by actual cost of
the components that make up the B/M, including the cost of assembly,
test, and delivery of the finished card assembly to NCD or the NCD-
- --------------------------------------------------------------------------------
ARTICLE 2-PAGE 3 OF 15
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 2 MANUFACTURING
designated assembly point. Upon IBM's written request to do so,
NCD will utilize a second source for the manufacture of Products,
however the B/M cost will be adjusted to reflect any incremental costs
associated with obtaining such second source.
The Markup during the Initial Term of this Alliance Agreement shall be
as follows:
Cumulative Total Products Ordered Markup
--------------------------------- ------
[ ] $[ ]
[ ] $[ ]
[ ] $[ ]
[ ] $[ ]
[ ] $[ ]
[ ] $[ ]
For purposes of determining the Markup, the cumulative total products
ordered according to the above table shall include all Products
ordered by IBM during the Initial Term.
In addition to the price as determined above, NCD may charge IBM for
reimbursement of any import duty actually incurred by NCD resulting
from the shipment of IBM-ordered Products to any IBM-designated
location outside of the United States, provided however, that
regardless of the country from which NCD ships the Products, the
amount charged shall be no greater than the amount of duties that NCD
would have incurred for shipment of the Products from the United
States to the same IBM-designated location on the same date, and
provided further that NCD may make this charge only to the extent NCD
has notified IBM in writing of any such import duty charge prior to
IBM's placement of the order to which it applies. Such charge shall
be reflected as part of the piece price for Products ordered, and
shall be reflected on the same invoice. This shall be IBM's sole
obligation for any import duties associated with the shipment of
Products.
4.2 QUARTERLY PRICE REVIEWS AND ADJUSTMENTS
No less frequently than quarterly after the determination of the
initial prices for Products, the Manufacturing Article Coordinators
shall meet and review B/M
- --------------------------------------------------------------------------------
ARTICLE 2-PAGE 4 OF 15
[ ] Confidential Treatment Requested. Omitted Portions Filed Separately with
the Securities and Exchange Commission.
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 2 MANUFACTURING
costs and adjust the Product prices to reflect any changes in such
costs. IBM will bear the risk of such cost fluctuations in B/M, and
the Product prices shall be adjusted for the full amount of such
increase or reduction. However, if IBM can demonstrate that a lower
cost for one or more components of the B/M is available to NCD, the
Product prices for Products containing such component(s) shall be
determined using that lower cost, unless NCD can demonstrate to IBM
after a reasonable inquiry that the component cannot be obtained from
a supplier offering competitive lead times and comparable quality.
The new prices for Products shall take effect on a schedule mutually
agreed by the parties, taking into consideration the lead times of the
components on which such price changes are based and NCD's current
inventory of, and contractual commitments to purchase, such components
based on IBM's forecasts , but in no case shall the price adjustment
take effect later than 90 days after the determination is made. In the
event of a significant price change occuring between quarterly
reviews, the parties shall discuss in good faith an accelerated change
in Product prices to reflect the change.
4.3 MINIMUM ORDER QUANTITY
There shall be a minimum order quantity of [ ] Products during
the Initial Term of the Alliance Agreement which shall apply only if no
notice of termination of the Alliance Agreement has been provided
prior to (a) March 30, 1997, or (b) General Availability (GA) of
Products, whichever is earlier. If this minimum order quantity is
triggered and IBM has failed to order [ ] Products by the
expiration of the Initial Term through no fault of NCD, then IBM shall
pay NCD a cancellation charge of $[ ] for each unit of the [ ]
minimum order quantity not ordered. This cancellation charge shall be
NCD's full and exclusive remedy in the event IBM has failed to order
[ ] Products during the Initial Term. All IBM orders of Products
(whether NCD's existing EXPLORA products or enhanced or derivative
versions thererof) during the Initial Term shall be applied against
this minimum order quantity, including those units ordered prior to
the trigger date described above. Unless the parties agree in
writing to a different payment schedule for such cancellation charge,
NCD shall invoice IBM for the full cancellation charge no later than
30 days after the Initial Term, and IBM shall remit payment on NCD's
invoice no later than 60 days after expiration of the Initial Term.
IBM's obligations in this section shall cease upon IBM's termination
of the
- --------------------------------------------------------------------------------
ARTICLE 2-PAGE 5 OF 15
[ ] Confidential Treatment Requested. Omitted Portions Filed Separately with
the Securities and Exchange Commission.
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 2 MANUFACTURING
Alliance Agreement for cause. If IBM terminates this Alliance
Agreement without cause after the minimum order quantity obligation
has been triggered, then the full cancellation charge of $[ ] for each
unit of the [ ] minimum order quantity not ordered by IBM as of
the date such termination without cause is effective shall become due
and owing by IBM. If IBM terminates for cause, no such payment shall
be due. NCD shall invoice IBM for such payment no later than 30 days
after the effective date of the termination, and IBM shall pay the
invoice no later than 60 days after receiving it.
5. INVOICING AND PAYMENT
NCD will invoice IBM upon shipment of Product to IBM's facilities. Unless
otherwise specified in writing by the parties, IBM shall make payment on
undisputed invoices within 30 days from receipt of the invoice provided
such invoices have been transmitted electronically in accordance with the
parties' Electronic Data Interchange (EDI) Agreement. For undisputed
invoices delivered through non-electronic means, IBM shall pay such
invoices within 45 days of receipt of the invoice. In the event payment is
not received within such period, NCD will notify IBM and IBM will make
prompt payment of the amount due. IBM will notify NCD of any dispute
regarding an invoice no later than the date payment of the invoice would
otherwise be due. IBM's repeated and substantial failure to pay undisputed
invoices when due may be treated by NCD as a material breach.
6. WORK AUTHORIZATION LOGISTICS
NCD will deliver Products as specified in WAs. The agreed to lead time for
IBM to issue WAs prior to delivery shall be 30 days. NCD agrees to
cooperate and use best efforts for cases where IBM requests a shorter
lead-time. If NCD requires an additional charge to cover added cost for
fulfilling IBM's orders on a shorter lead time, NCD shall inform IBM of
such charge in writing before NCD accepts such an order. Any increase in
the agreed to lead-time must have IBM's prior written approval. The parties
specifically contemplate that a longer lead time may be necessary for the
ramp up of volumes for initial availability of the Products, and agree to
negotiate a schedule for such ramp up volumes.
IBM shall provide a 12 month rolling estimated forecast, updated on a
monthly basis, for
- --------------------------------------------------------------------------------
ARTICLE 2-PAGE 6 OF 15
[ ] Confidential Treatment Requested. Omitted Portions Filed Separately with
the Securities and Exchange Commission.
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 2 MANUFACTURING
any quantities of Product that may be required. The first three months of
a given forecast shall be binding only to the extent that each of the first
three months of the forecast may vary from the previous month's forecast by
no more than the following amounts:
Month 1: +/- [ ]%
Month 2: +/- [ ]%
Month 3: +/- [ ]%
For example, if a forecast is issued on January 1 showing requirements for
[ ] units each month in March, April, and May, IBM may order from [ ] to
[ ] units on February 1 for delivery on March 1. The forecast for April
may be adjusted to [ ] units, and the May forecast may be adjusted to
[ ] units. This process and the applicable percentages of allowable
variance will continue to roll each month with the forecast. There will be
no premiums or penalties for Products ordered within these parameters.
The remaining portion of any given forecast (beyond 3 months) shall be
completely preliminary and non-binding.
Upon termination of this Article, NCD shall cease production of all
Products ordered. If IBM terminates without cause, IBM shall be responsible
for paying NCD for all finished Products which have been ordered by IBM
through WAs issued prior to the date the notice of termination is provided
and which have actually been produced by NCD. In addition, the parties
will negotiate in good faith IBM's reimbursement to NCD for the cost of any
components and work-in-process associated with IBM's binding portion of the
latest forecast that NCD or its supplier cannot utilize. All such Products,
components, and work-in-process paid for by IBM are the sole property of
IBM, and upon termination the disposition of all such IBM property shall be
in accordance with IBM's written instructions.
7. DELIVERY LOGISTICS
7.1 DELIVERY POINT
All references to delivery as it applies to this Article shall mean
delivery to IBM locations that may be specified by IBM in a WA or
separate document.
- --------------------------------------------------------------------------------
ARTICLE 2-PAGE 7 OF 15
[ ] Confidential Treatment Requested. Omitted Portions Filed Separately with
the Securities and Exchange Commission.
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 2 MANUFACTURING
The delivery point shall be F.O.B. IBM Location.
7.2 ON -TIME DELIVERY
Products must be delivered on the dates specified in WAs. If NCD will
be late in meeting a scheduled delivery date by more than one
business day, NCD shall promptly notify IBM of NCD's revised delivery
date and IBM may, at its option, without limitation (i) cancel
Products not delivered without charge, (ii) buy elsewhere, or make,
and charge NCD any cost differential, subject to IBM's duty to
reasonably mitigate its damages, and (iii) charge NCD for any premium
shipping and handling costs incurred as a result of the late delivery,
subject to IBM's duty to reasonably mitigate its damages. NCD shall
not deliver Products to IBM more than 2 days earlier than the
designated shipment date without IBM's prior written approval. NCD's
repeated or substantial failure to meet its scheduled delivery dates
may be treated by IBM as a material breach of the Alliance Agreement.
In any case in which NCD is unable to timely deliver Products ordered
by IBM, such orders shall be credited to IBM's minimum order quantity
requirement as specified in section 4.3.
8. TOOLING
NCD shall be responsible for acquiring and maintaining production-level
Tooling required to perform its obligations under this Article. In the
event that retooling is required after NCD has acquired such
production-level tooling solely due to an IBM mechanical design change,
then IBM will be responsible for providing the new Tooling, and will own
such new Tooling. NCD shall be responsible for acquiring any replacement
Tooling when such replacement Tooling is necessary at the Tooling's end of
life. In the event NCD ceases manufacturing Products for IBM for any
reason other than IBM's termination without cause, IBM shall have the right
to immediately purchase Tooling owned by NCD at the Tooling's fair market
value based on its usage to date. In the event any such Tooling is in the
possession of a third-party, NCD shall ensure that there are agreements in
place with such third parties which allow such third parties to utilize
such tooling to continue supplying IBM with Products or Product components
pending completion of the sale. This obligation shall survive termination
of the Alliance Agreement.
- --------------------------------------------------------------------------------
ARTICLE 2-PAGE 8 OF 15
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 2 MANUFACTURING
9. PACKAGING FOR SHIPMENT TO IBM
In packaging Products for shipment, NCD will take the necessary precautions
to ensure maximum protection of Product from damage due to rough handling
and any other hazard which might occur in transit.
In addition, NCD will package all Products to conform with IBM's document
no. GA 21-9261-10 titled "Packaging and Handling - Supplier and Interplant
Requirements," which shall be an attachment to this Article.
10. ELECTRONIC DATA INTERCHANGE
NCD and IBM shall handle manufacturing transactions in accordance with the
IBM Electronic Data Interchange (EDI) Agreement, which shall be an
attachment to this Article. NCD will implement all required EDI
capabilities no later than initial GA of the Products.
11. DEMONSTRATION AND DEVELOPMENT VERSIONS OF PRODUCTS
During the Initial Term of this Alliance Agreement, NCD shall provide IBM,
at no charge, up to [ ] Products for demonstration and development
purposes. Such demonstration and development Products may be requested from
time to time by IBM in the quantities and versions (whether Base Products
or Added Feature Products) that IBM chooses, so long as the cumulative
total of such Products requested by IBM does not exceed [ ]. NCD shall
inform IBM in writing when the total development and demonstration
allotment has been exhausted. This development and demonstration allotment
shall not be counted against IBM's minimum order quantity.
12. NCD'S REPRESENTATIONS/WARRANTIES
12.1 REPRESENTATIONS AND WARRANTIES
In addition to the representations and warranties set forth in the
Base Agreement,
- --------------------------------------------------------------------------------
ARTICLE 2-PAGE 9 OF 15
[ ] Confidential Treatment Requested. Omitted Portions Filed Separately with
the Securities and Exchange Commission.
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 2 MANUFACTURING
NCD represents and warrants: (i) NCD's performance of this Article
will not violate the terms of any license, contract, note or other
obligations to which NCD is a party, or any statute, law, regulation
or ordinance to which NCD is subject, including without limitation,
all health, safety and environmental statutes, laws, regulations and
ordinances; (ii) no claim, lien or action is pending or threatened
against NCD or its suppliers, Subsidiaries, affiliates, or parent
company that would interfere with IBM's, its Subsidiaries',
Distributors', or customers' use of Products; (iii) the Products do
not infringe any patent, trademark, copyright or other intellectual
property rights of a third party in the geographic territories
specified in section 10 ("Indemnification") of the Base Agreement, and
NCD is not aware of any such infringement in any other areas; (iv)
none of the Products contain nor are any of the Products manufactured
using ozone depleting substances including, without limitation,
chlorofluorocarbons, halons, methyl chloroform and carbon
tetrachloride; (v) each of the Products is safe for its intended use,
and (vi) all Products provided to IBM under this Agreement are new and
do not contain anything used or reconditioned.
The warranties in this section 12.1 shall survive termination of the
Alliance Agreement.
12.2 PRODUCT WARRANTY
NCD warrants that all Products provided to IBM are free from defects
in design (except for designs provided by IBM), material, workmanship,
and will conform to all Product specifications and quality
requirements.
NCD shall, at NCD's option, repair or replace Products that do not
conform to this warranty, and that are returned to NCD by IBM or IBM's
customer within the earlier of : (a) 1 year after the date of purchase
as indicated by documented proof of the customer's purchase date
submitted to NCD by IBM, IBM's Distributor, or the customer, or (b) 1
year plus 120 days after the date of NCD's shipment of the Product to
IBM. Such repair or replacement shall be made and shipped back by NCD
within 7 business days after NCD receives the nonconforming Product.
Repair or replacement shall be at no charge to IBM or the customer.
Unless a different return shipment destination is specified, NCD shall
ship the repaired Product, or the replacement Product, to the IBM
location or the customer location from which the non-conforming
Product was shipped to NCD. The customer or
- --------------------------------------------------------------------------------
ARTICLE 2-PAGE 10 OF 15
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 2 MANUFACTURING
IBM shall be responsible for shipping the product to NCD, and NCD
shall be responsible for shipping back the repaired or replacement
Product. NCD shall specify whether the Product it returns has been
repaired or is a replacement Product.
Prior to initial GA of the Products, IBM and NCD shall negotiate in
good faith regarding any additional administrative or logistical
details associated with fulfilling warranty obligations. In addition,
IBM and NCD may agree to extend the warranty period for an additional
two years beyond the warranty period described in the preceding
paragraph for a mutually agreed-upon charge.
13. IBM'S RIGHT TO UTILIZE OTHER MANUFACTURING SOURCES
If IBM markets Products during the Initial Term of this Alliance Agreement,
IBM shall utilize NCD for the supply of at least [ ]% of the volume of
Products, provided:
1. NCD has not breached this Article, or any other part of the
Alliance Agreement, and;
2. IBM reasonably determines that NCD has consistently shipped
Products that conform to all Product specifications in a timely
manner according to IBM's forecasts and WAs, and;
3. IBM reasonably determines that the Product supplied by NCD is
competitive regarding price (excluding Markup), performance,
quality, function, features and technology.
14. IBM'S RENEWAL OBLIGATION/RIGHTIBM'S
14.1 IBM'S OBLIGATION TO RENEW
In the event IBM continues to market Products after expiration of the
Initial Term of the Alliance Agreement and the conditions listed below
have been satisfied, this Article shall remain in effect for an
additional two years unless terminated earlier
- --------------------------------------------------------------------------------
ARTICLE 2-PAGE 11 OF 15
[ ] Confidential Treatment Requested. Omitted Portions Filed Separately with
the Securities and Exchange Commission.
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 2 MANUFACTURING
pursuant to the Base Agreement. The initial Markup for Products
supplied to IBM by NCD during the renewal term shall be calculated
based on the cumulative total Products ordered by IBM during the term
of the Alliance Agreement.
IBM shall utilize NCD for the supply of at least [ ] units
of its volume of Products, whichever is less, during the first year of
such renewal term, and for the supply of at least [ ] units
of its volume of Products, whichever is less, for the second year of
the renewal term, provided:
1. NCD has not breached this Article, or any other part of the
Alliance Agreement, and;
2. IBM reasonably determines that NCD has consistently shipped
Products that conform to all Product specifications in a timely
manner according to IBM's forecasts and WAs, and;
3. IBM reasonably determines that the Product supplied by NCD is
competitive regarding price (excluding Markup), performance,
quality, function, features and technology.
14.2 IBM'S RIGHT TO RENEW
If IBM chooses to renew the Alliance Agreement for an additional two
years (through December 31, 2000) under the terms of the Base
Agreement, then during the renewal term the provisions of section
14.1 of this Article shall apply.
14.3 NO MINIMUM ORDER QUANTITY DURING RENEWAL TERM
There shall be no minimum order quantity required of IBM during the
renewal term.
15. ROYALTIES FOR PRODUCTS NOT SUPPLIED BY NCD
For each Product that is supplied to IBM by a party other than NCD prior to
December 31, 2000, IBM shall pay to NCD a royalty of [ ]
($[ ]). This royalty shall not
- --------------------------------------------------------------------------------
ARTICLE 2-PAGE 12 OF 15
[ ] Confidential Treatment Requested. Omitted Portions Filed Separately with
the Securities and Exchange Commission.
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 2 MANUFACTURING
apply to the extent the supply of Products by a third party is necessary
due to NCD's failure to meet delivery schedules, NCD's failure to meet
quality obligations, or due to events described in the Force Majeure
section of this Alliance Agreement. Nor shall this royalty apply to IBM's
acquisition or manufacture of up to [ ] Products (1) for IBM's own
internal use, or (2) for limited shipments by IBM for the purpose of early
testing, development-level evaluation and similar early-ship programs prior
to the General Availability of such Products.
No later than 30 days after the end of each calendar quarter in which such
Products have been supplied to IBM by a third party, IBM shall submit a
statement to NCD showing the number of units of Products supplied by third
parties. NCD shall submit an invoice to IBM for the royalty as set forth
in this section, and IBM shall pay the invoice in accordance with section 5
of this Article.
After December 31, 2000, IBM's license to Licensed Work that consists of
Code delivered by NCD pursuant to Phase 1 and Phase 2 of Development as
described in Article 1-Development shall be fully paid up as of that date.
This shall not include Code contained within Major Enhancement or Custom
Enhancements for which NCD and IBM have agreed to a different payment
arrangement. Nothing herein shall require IBM to pay royalties to NCD on
IBM products or offerings other than the Products. The royalty obligations
under this section shall cease upon IBM's termination of the Alliance
Agreement with cause, but shall continue until December 31, 2000 in the
event IBM terminates the Alliance Agreement without cause prior to that
date.
16. MOST FAVORED CUSTOMER
The prices provided by NCD to IBM under this Agreement should not exceed
those offered to other customers purchasing similar products or services in
like or lesser quantities under similar terms and conditions. If NCD
offers prices to other customers which are lower than those offered to IBM
in like or lesser quantities under similar terms and conditions during the
same time period, then those prices shall become available to IBM at the
time of their availability to that other customer. IBM and NCD shall
maintain the confidentiality of prices provided to IBM.
- --------------------------------------------------------------------------------
ARTICLE 2-PAGE 13 OF 15
[ ] Confidential Treatment Requested. Omitted Portions Filed Separately with
the Securities and Exchange Commission.
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 2 DEVELOPMENT
IN WITNESS WHEREOF, each party has reviewed this Article and each party has
executed this Article by signature of its authorized representative.
NETWORK COMMUNICATION DEVICES, INC. INTERNATIONAL BUSINESS MACHINES
CORPORATION
Signature /s/ Lorraine Hariton Signature /s/ Bhawnesh C. Mathur
-------------------------------- -----------------------
Printed Name Lorraine Hariton Printed Name Bhawnesh C. Mathur
----------------------------- --------------------
Printed Title V.P. of Strategic Accounts Printed Title Dir. of
---------------------------- Procurement, IBM Server Group
---------------------------------
Date 6/27/96 Date June 27, 1996
------------------------------------- ----------------------------
- --------------------------------------------------------------------------------
ARTICLE 2-PAGE 14 of 15
<PAGE>
Attachment 2 to Article 2 of
IBM -- NCD Alliance Agreement
ELECTRONIC DATA INTERCHANGE/ELECTRONIC FUNDS TRANSFER TRADING PARTNER
AGREEMENT
- ------------------------------------------------------------------------------
This EDI Agreement is an Attachment to Article 2 of the Alliance Agreement
between IBM and NCD.
NCD and International Business Machines Corporation (IBM) intend to create
legally binding purchase and sale obligations by the electronic transmission
of business documents (Documents) and agree that the following terms and
conditions apply to such transmissions:
1. TRANSMISSION - Each party may electronically transmit and receive
Documents through the assistance of a network in accordance with mutually
agreed upon standards. Each party, at its own expense, shall provide and
maintain the equipment, software, services, including network charges, and
testing necessary to effectively and reliably transmit and receive documents.
2. RECEIPT - A Document is received when it arrives at the receiving party's
mailbox. Upon receipt of any Document, the receiving party shall promptly
send an acknowledgment which will conclusively establish receipt of a
Document. If any Document is received in an unintelligible or garbled form,
the receiving party shall promptly notify the originating party (if
identifiable from the received Document) in a reasonable manner. In the
absence of such a notice, the originating party's records of the contents of
such Document shall prevail.
3. SIGNATURE AND ENFORCEABILITY - Each party shall adopt as its signature an
electronic identification consisting of symbol(s) or code(s) (User ID) that
shall be affixed to or contained in each Document. Each party will maintain
security procedures to prevent unauthorized use or disclosure of either
party's User ID.
Any Document containing, or to which there is affixed, a User ID shall be
considered: (a) a "writing" or "in writing"; (b) to have been "signed"; (c)
an "original" when printed from electronic files or records established and
maintained in the normal course of business; and (d) admissible to the same
extent and under the same conditions as other business records originated and
maintained in documentary form.
4. THIRD PARTY SERVICE PROVIDERS - Documents will be transmitted
electronically to each party either directly or through any third party
service provider (Provider) with which either party may contact. Either party
may modify its election to use, not use or change a Provider upon 60 days'
prior written notice. Each party shall be responsible for the costs of any
Provider with which it contracts. Each party shall be liable for the acts or
omissions of its Provider while transmitting, receiving, storing or handling
Documents, or performing related activities for such party.
5. TRANSACTION TERMS - Unless specifically superseded in other written
agreements between the parties, the terms and conditions of the Base
Agreement will be incorporated and will apply to all Documents.
6. ELECTRONIC FUNDS TRANSFER - By completing this Section 6, you hereby
authorize IBM to initiate electronic credit entries to the account listed
below. You agree that such transactions will be governed by the National
Automated Clearing House Association rules. This authority is to remain in
effect until IBM has received written notification of termination in such
time and such manner as to afford IBM a reasonable opportunity to act on it.
Account Party (if different)
NCD
- ----------------------------------------------------------------------------
Address 350 North Bernardo Ave
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
City, State, Zip Mt. View, Ca 94043
- ----------------------------------------------------------------------------
Financial Institution
- ----------------------------------------------------------------------------
Contact Name/Title
- ----------------------------------------------------------------------------
Contact Phone Number
- ----------------------------------------------------------------------------
Address
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
City, State, Zip
- ----------------------------------------------------------------------------
Account Number (max 17)
- ----------------------------------------------------------------------------
Bank Routing/Transit Code (max 9)
- ----------------------------------------------------------------------------
7. LIMITATION OF REMEDIES - In addition to the limitation of liability
described in the Base Agreement, the following limitations apply to this EDI
Attachment. Neither party shall be liable to the other for any special,
incidental, exemplary, or consequential damages arising from or as a result
of: (1) any delay, omission, or error in the electronic transmission or
receipt of any Documents; or (2) any delay, omission, or error of an
electronic credit entry by IBM, even if the other party has been advised of
the possibility of such damages. In addition, neither party shall be liable
for any damages claimed by the other party based on any third party claim, in
no event will either party be liable for any damages caused by the other
party's failure to maintain security procedures to prevent the unauthorized
use or disclosure of its User ID.
8. TERMINATION - This Agreement shall apply as long as Article 2,
Manufacturing, is in effect, unless terminated by mutual agreement of the
parties.
- ----------------------------------------------------------------------------
The parties acknowledge that they have read this Agreement, understand it and
agree to be bound by its terms.
By International Business Machines By Network Computing Devices, Inc.
Corporation
/s/ Bhauvesh C. Mathar /s/ Lorraine Hart
-------------------------------- --------------------------------
Authorized Signature Authorized Signature
Name Bhauvesh C. Mathar Name Lorraine Hart
Title Director of Server Title VP Strategic
Procurement
Date June 27, 1996 Date 6/27/96
Address 3605 Highway 52 North Address 350 North Bernardo
Rochester, MN 55901 Mt View, Ca 94043
Revision JUNE 1994
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
NO. 350-148
ARTICLE 3
PRODUCT SUPPORT AND MAINTENANCE
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 3 PRODUCT SUPPORT AND MAINTENANCE
This Article 3, effective on the date last signed below, is agreed to by Network
Computing Devices Corporation ("NCD"), a corporation of the State of California,
with offices located at 350 North Bernardo Avenue, Mountain View, California
94043-4207 and International Business Machines Corporation ("IBM"), a
corporation of the State of New York, with offices at 3605 Highway 52 North,
Rochester, Minnesota 55901-7829.
RECITALS
A. NCD and IBM have entered into an alliance between them in the area of an
IBM network application terminal ("thin client") Product.
B. This Article describes , among other things, the terms and conditions
related to product support and maintenance for the Product.
1. ARTICLE COORDINATORS
1.1 NCD ARTICLE 3 COORDINATOR
Barry Davis
Network Computing Devices, Inc.
350 North Bernardo Avenue
Mountain View, CA 94043-4207
TELEPHONE: (415) 919-2747
TELEFAX: (415) 961-7774
1.2 IBM ARTICLE 3 COORDINATOR
Chuck Pavesich
International Business Machines Corporation
3605 Highway 52 North
Rochester, MN 55901-7829
TELEPHONE: (507) 253-7648
TELEFAX: (507) 253-4901
- --------------------------------------------------------------------------------
ARTICLE 3-PAGE 1 OF 6
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 3 PRODUCT SUPPORT AND MAINTENANCE
1.3 DUTIES OF ARTICLE COORDINATORS
The Article Coordinators will act as overall coordinators for the
parties under this Article. Each party will advise the other in
writing of any change regarding its Article Coordinator.
2. LEVEL 3 SUPPORT RESPONSIBILITIES
In addition to the Product warranties found elsewhere in this Alliance
Agreement, NCD shall provide Level 3 support for Deliverables and Products.
Level 3 support is the support IBM provides its customers after the first
two levels of support, Levels 1 and 2, have been exhausted. This support
will involve the determination of whether there is a defect (patent or
latent), error or other problem ("Defects") with the Product or
Deliverables. These will include both problems actually reported by IBM's
customers ("APARs"), as well as problems discovered internally by IBM and
reported to NCD ("PTRs").
Level 3 support shall be conducted so that IBM is the single point of
contact for customer-reported problems. Unless requested by IBM in
particular situations, NCD will have no direct contact with the customer,
and will receive support requests only through IBM support representatives
after reasonable efforts to resolve the problem using IBM resources have
been exhausted.
The IBM support representatives will determine which Defects appear to be
related to Deliverables provided under this Alliance Agreement and, after
exhausting IBM internal resources, will contact NCD for further diagnosis
and correction if the Defect appears to be related to such Deliverables,
including Code as well as Firmware. Upon notification of a Defect
identified by IBM, NCD will be responsible for isolating and correcting all
reported or discovered Defects with the Deliverables, and providing
responses and corrections to IBM in accordance with the parameters set
forth below:
SEVERITY LEVEL 1 DEFECT REPORTS
Severity Level 1 (SL1) is for reported Defects that result in an
emergency condition that can cause critical impact to a customer or to
an IBM delivery schedule. Defect reports classified by IBM as SL1
require immediate and
- --------------------------------------------------------------------------------
ARTICLE 3-PAGE 2 OF 6
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 3 PRODUCT SUPPORT AND MAINTENANCE
sustained work until the problem is solved. NCD shall work with IBM
around the clock to provide a correction for the SL1 Defect, and shall
use its best efforts to complete the correction within 24 hours of the
earlier of NCD discovering the SL1 Defect or being informed of the
possible SL1 Defect, unless the parties agree that a different time
schedule is appropriate in light of the circumstances of the Defect
report.
SEVERITY LEVEL 2 DEFECT REPORTS
Severity Level 2 (SL2) is for reported Defects that significantly
affects an IBM schedule or that make the performance or continued
performance of any feature or function difficult and that cannot
easily be circumvented or avoided on a temporary basis by the end user
("Severity Level 2 Defect" or "SL2 Defect"). NCD shall use its best
efforts to provide corrections within 7 days of the earlier of NCD
discovering the SL2 Defect or being informed of the possible SL2
Defect, unless the parties agree that a different time schedule is
appropriate in light of the circumstances of the Defect report.
SEVERITY LEVEL 3 DEFECT REPORTS
Severity Level 3 (SL3) is for reported Defects that are not critical
in that performance can be continued without difficulty or loss of
data by circumvention or avoidance by the end user ("Severity Level 3
Defect" or "SL3 Defect"). NCD shall use its best efforts to provide
corrections within 14 days of the earlier of NCD discovering the SL3
Defect or being informed of the possible SL3 Defect, unless the
parties agree that a different time schedule is appropriate in light
of the circumstances of the Defect report.
SEVERITY LEVEL 4 DEFECT REPORTS
Severity Level 4 (SL4) is for reported Defects that are minor which
can easily be avoided or circumvented by the end user ("Severity Level
4 Defect" or "SL4 Defect"). NCD shall use best efforts to provide
corrections within 21 days of the earlier of NCD discovering the SL4
Defect or being informed of the possible SL4 Defect, unless the
parties agree that a different time schedule is appropriate in light
of the circumstances of the Defect report.
Repeated and substantial failure by NCD to provide corrections according to
the deadlines set forth above may be considered by IBM to be a material
breach of the Alliance
- --------------------------------------------------------------------------------
ARTICLE 3-PAGE 3 OF 6
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 3 PRODUCT SUPPORT AND MAINTENANCE
Agreement.
In the event the parties determine that a correction cannot be completed
within the time deadlines set forth above, the parties will mutually agree
to a time frame in which such correction will be completed.
IBM shall be responsible for providing NCD all available Defect
information, including reproduction of Defect symptoms and conditions if
available and feasible.
Once a correction is determined and developed for the Defect, NCD will
ensure that the correction is tested, and that there is no other
additional Defects that are created as a result of the implementation of
the correction. NCD will also ensure that the implementation of this
correction is included in all other Product and Derivative Works on the
current and subsequent releases to prevent recurrence.
NCD shall provide IBM with defect support contacts and phone numbers that
are available 24 hours per day, 7 days per week for Severity Level 1 Defect
reports. IBM will utilize this 24/7 coverage as necessary for problems
that IBM classifies as critical (Severity Level 1 Defects). IBM contact
with NCD for less severe problems (Severity Level 2, 3, and 4 Defects) will
be NCD's normal business hours (8 a.m. to 5 p.m.).
If IBM desires NCD to provide direct customer support for any of it's
segments, this may be negotiated for a separate fee.
NCD is responsible for its own expenses in diagnosing and fixing the
Defects reported to NCD.
3. EDUCATION REQUIREMENTS
During the term of this Alliance Agreement, NCD shall provide education
classes to IBM Personnel in IBM Level 2 and Level 3 support centers
sufficient to provide such Personnel with competence in providing customer
service and support for the Products and Deliverables. Such instruction
shall include one class in the United States, one class in IBM's Europe-
Middle East-Africa sales geography (EMEA), and one class in IBM's
Asia-Pacific geography (AP). Such classes shall be conducted at upon
schedules requested by IBM and agreed to by NCD. Class content shall be
mutually agreed to by NCD and IBM. NCD shall be responsible for payment
for instructor time and all expenses for class materials and preparation
for such classes. IBM will reimburse NCD for
- --------------------------------------------------------------------------------
ARTICLE 3-PAGE 4 OF 6
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 3 PRODUCT SUPPORT AND MAINTENANCE
reasonable travel and lodging expenses incurred by NCD Personnel in
teaching such classes in accordance with IBM's standard travel expense
guidelines to be supplied to NCD by IBM. IBM may request additional
classroom instruction during the term of the Alliance Agreement, but NCD
shall be paid on a reasonable fee basis, and reimbursed for all reasonable
expenses for conducting such classes.
4. MAINTENANCE MODIFICATIONS
Throughout the term of this Article, NCD shall offer to provide to IBM at
no additional charge all Maintenance Modifications. Such Maintenance
Modifications shall be offered to IBM within a reasonable time period prior
to the availability of any such Maintenance Modifications in NCD's own
products to allow IBM to incorporate and make available such Maintenance
Modifications in its Products. Maintenance Modifications developed and
offered by NCD and accepted by IBM shall be deemed Licensed Works.
In the event IBM creates Maintenance Modifications to the Licensed Works
during the term of this Article, IBM shall offer such Maintenance
Modifications to NCD upon, or within a reasonably prompt time period after,
the availability of such Maintenance Modification in IBM's Products. IBM
grants NCD a worldwide, paid up copyright license to use, execute,
reproduce, display, perform, transfer, market, distribute, and to make
Derivative Works of, such Maintenance Modifications offered by IBM and
accepted by NCD.
5. ADDITIONAL IMPLEMENTATION DETAILS
Detailed procedures for implementing the hardware and software service and
support described by this Article, including but not limited to procedures
for on-site and remote Defect determination, testing of Defect corrections,
and delivery of Defect corrections, shall be discussed by the parties prior
to GA, and any such implementation details agreed to shall be considered
attachments to this Article. The parties recognize that their may be a
separate set of detailed procedures for each IBM product division utilizing
NCD for support and maintenance of the Products and Deliverables.
6. TERM AND TERMINATION
Unless otherwise agreed by the parties, NCD's obligations under this
Article shall cease at the earlier of: (1) one year after IBM ceases
marketing all Products, or (2) termination of the Alliance Agreement. If
IBM desires NCD to provide product support and maintenance under this
Article beyond such date, the parties will negotiate in good faith
- --------------------------------------------------------------------------------
ARTICLE 3-PAGE 5 OF 6
<PAGE>
IBM-NCD ALLIANCE AGREEMENT
ARTICLE 3 PRODUCT SUPPORT AND MAINTENANCE
for a fee for such services that is based on NCD's expenditure of time and
materials in providing such services.
IN WITNESS WHEREOF, each party has reviewed this Article and each party has
executed this Article by signature of its authorized representative.
NETWORK COMMUNICATION DEVICES, INC. INTERNATIONAL BUSINESS MACHINES
CORPORATION
Signature /s/ Lorraine hariton Signature /s/ Bhawnesh C. Mathur
-------------------------------- ------------------------
Printed Name Lorraine Hariton Printed Name Bhawnesh C. Mathur
----------------------------- ---------------------
Printed Title V.P. of Strategic Accounts Printed Title Dir. of Procurement,
---------------------------- IBM Server Group
----------------------------------
Date 6/27/96 Date June 27, 1996
------------------------------------- -----------------------------
- --------------------------------------------------------------------------------
ARTICLE 3-PAGE 6 of 6
<PAGE>
EXHIBIT INDEX
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith:
Exhibit 2.2 Asset Purchase Agreement dated June 3, 1996 by and
among the Registrant NCD Software Corporation and
NetManage, Inc.
Exhibits
Exhibit A Certain Definitions
Exhibit B-1 Assignment and Assumption Contract
Exhibit B-2 Assignment and Assumption Contract
Exhibit C NCD Disclosure Schedule(1)
Schedules
Schedule 1.1 Assets(1)
Schedule 1.1(6) Assumed Customer and Other Contracts(1)
Schedule 1.3(6) Assumed Liabilities
Schedule 1.5 Purchase Price Allocation(1)
Exhibit 10.42 Alliance Agreement dated June 27, 1996 by and between the
Registrant and International Business Machines
Corporation.(2)
Attachments
Attachment 1 to Article 2 - Packaging and Handling
Supplies and Interplant Requirements
Attachment 2 to Article 2 - Electrical
Data Interchange/Electronic Funds Transfer Trading
Partner Agreement
*Exhibit 11.1 Statement Regarding Computation of Shares Used in Per Share
Earnings Computations.
*Exhibit 27 Financial Data Schedule.
(1) Exhibit not filed herewith is identified in this agreement.
The Company will furnish supplementally any omitted exhibit to
the Commission upon request.
(2) Confidential treatment has been requested as to a portion of this
exhibit. Confidential portions have been omitted and filed
separately with the Securities and Exchange Commission.
(b) The Company filed no reports on Form 8-K during the three-month period
ended June 30, 1996.
- ---------------
* Previously Filed
