Digital Equipment Corporation Oem Agreement

ACCELGRAPHICS, INC.


DIGITAL EQUIPMENT CORPORATION OEM AGREEMENT


This OEM Agreement (the "AGREEMENT") is entered into as of February 21, 1996 by and between AccelGraphics, Inc., a California corporation ("ACCELGRAPHICS"), and Digital Equipment Corporation, ("OEM"). The effective date ("EFFECTIVE DATE") shall be the last date on which an authorized representative of the parties signed below.


THE PARTIES AGREE AS FOLLOWS:


1. DEFINITIONS AND EXHIBITS


1.1 Confidential Information. The term "CONFIDENTIAL INFORMATION" shall mean any information disclosed by one party to the other pursuant to this Agreement which is in written, graphic, machine readable or other tangible form and is marked "Confidential", "Proprietary" or in some other manner to indicate its confidential nature, including, without limitation, technical information not included in the Documentation related to the Products, customer lists, marketing plans, financial information and the terms of this Agreement. Confidential Information may also include oral information disclosed by one party to the other pursuant to this Agreement, provided that such information is designated as confidential at the time of disclosure and is reduced to writing by the disclosing party within a reasonable time (not to exceed thirty (30) days) after its oral disclosure, and such writing is marked in a manner to indicate its confidential nature and delivered to the receiving party. Notwithstanding any failure to so identify it, however, all Software source code shall be AccelGraphics Confidential Information.


1.2 Distributor. The term "DISTRIBUTOR" shall mean a person or entity that sells computer hardware or software directly to End Customers or to resellers who sell directly to End Customers.


1.3 Documentation. The term "DOCUMENTATION" shall mean written materials or graphic files (including, without limitation, to user manuals promotional brochures, and materials useful for design) that are displayed or printed and relate to or support Products.


1.4 End Customer. The term "END CUSTOMER" shall mean any third party which obtains a unit of the Product solely for its own internal business purposes and not for further distribution or resale.


1.5 End Customer License. The term "END CUSTOMER LICENSE" shall mean such End Customer License in the form attached as Exhibit B.


1.6 Initial Term. The term "INITIAL TERM" shall mean the first two-year term of this Agreement commencing on the Effective Date and ending on the first anniversary of the Effective Date.


1.7 Products. The term "PRODUCTS" shall mean those Products manufactured and/or sold by AccelGraphics as described on Exhibit A attached hereto.


1.8 Proprietary Rights. The term "PROPRIETARY RIGHTS" shall mean all rights held by AccelGraphics in the Products and its Confidential Information, including, without limitation, patents, copyrights, author's rights, trademarks, trade names, know-how and trade secrets, irrespective of whether such rights arise under U.S. or international intellectual property, unfair competition or trade secret laws.


1.9 Software. The term "SOFTWARE" shall mean any software, computer program, source code, object code, listing or related material in machine-readable or printed form (including firmware and all types of media), or any updates and modifications thereto, that are included in the Products.


1.10 Specifications. The term "SPECIFICATIONS" shall mean the Product specifications set forth in Exhibit C. 2 1.11 Exhibits. The following attached Exhibits shall be made part of this Agreement:


A - Products and Pricing


B - End Customer License


C - Product Specifications


D - OEM Pricing Forecast


F - Product Warranty


G - OEM Warranty Procedure


H - OEM Tax Exemption Certificate


2. PRODUCTS


2.1 Products. The products covered by this Agreement shall be those products listed in Exhibit A. AccelGraphics shall not be under the obligation to continue the production of any Product which has a replacement product available which is backwards compatible.


3. CERTIFICATION, LICENSES AND LIMITATIONS


3.1 OEM Certification. OEM certifies that each and every Product to be purchased under this Agreement will be purchased on its behalf as an original equipment manufacturer and that each and every Product will be incorporated by OEM into another system or product that OEM assembles or sells as a spare part for such "system", for sale or lease, in the regular course of OEM's business. OEM further certifies that the system or product into which each and every Product is incorporated will include a hardware computer system supplied by OEM unless the Product is sold as a spare part for such system. OEM agrees that Products intended for other purposes shall not be purchased under this Agreement. Upon AccelGraphics' request, OEM shall furnish to AccelGraphics evidence of compliance with the provisions of this Section 3. 1.


3.2 License Grants. Subject to the terms, conditions, and restrictions of this Agreement, AccelGraphics hereby grants to OEM, under AccelGraphics' Proprietary Rights in the Products, a nonexclusive license, without right to sublicense except as set forth in Section 4. 1, to (i) use and distribute the Products obtained from AccelGraphics hereunder, in the form in which such units are delivered to OEM; (ii) copy the Documentation, solely in order to produce collateral and technical manuals for the Products, and (iii) reproduce or have reproduced in object code form only, the Software distributed by AccelGraphics as necessary for use and distribution of the Products.


3.3 Purchase of Products Subject to Software License and Other Restrictions. The sale of each Product to OEM and the transfer of title for each purchased Product to OEM shall not include a sale of any Software or a transfer of any Software title to OEM. Instead, subject to the terms, conditions and restrictions of this Agreement, the sale of each Product shall include a fully paid license for OEM to use and distribute the Software directly to End Customers or to Distributors. AccelGraphics shall retain full title to the Software and all copies thereof, and OEM and End Customers may use the Software only in accordance with the provisions of the End Customer License. Neither OEM, its Distributors nor the End Customers shall have any access to or rights in the Software source codes, and OEM agrees that it shall not decompile, reverse engineer or otherwise attempt to gain access to the Software source code. Except as specifically provided in this Agreement, neither OEM, its Distributors nor the End Customers shall have the right to copy, modify or remanufacture any Product or part thereof.


3 3.4 License to Manufacture Under Certain Conditions. If, during the term of this agreement, AccelGraphics is unable to supply OEM with the quantity of Products required by OEM pursuant to the terms of OEM's Purchase Orders in accordance with the provisions of this Agreement for a period of sixty (60) days or more after the scheduled delivery date, Seller shall grant to OEM, solely for the purposes of manufacturing the Products, a license under all of Seller's Intellectual Property Rights, with the right to sublicense, required by OEM to manufacture the Products. Upon OEM's demand, AccelGraphics will forthwith forward to OEM all required technology, including, without limitation, source code for all software. Seller will also make available to OEM all necessary technical assistance required by OEM to manufacture or have manufactured AccelGraphics' Products hereunder and will ensure that OEM has ready access to all required tooling and sources of material supply. If OEM does not use AccelGraphics' current licensed manufacturers to manufacture the Products, OEM shall be responsible for all out of pocket expenses incurred by AccelGraphics' over $5,000, which have been previously authorized in writing by OEM. In the event AccelGraphics demonstrates its ability and readiness to resume its obligations under this Agreement, then OEM or its third-party designee shall return within 90 days to AccelGraphics all information provided by AccelGraphics under this paragraph and at that point all licenses to OEM of AccelGraphics' Intellectual Property Rights pursuant to this paragraph shall immediately terminate. Notwithstanding the above, OEM is not prohibited from manufacturing or procuring any product providing AccelGraphics' intellectual property rights are not infringed.


4. PRODUCT DISTRIBUTION


4.1 End Customer Licensing. Subject to the terms, conditions, and restrictions of this Agreement, OEM and its Distributors shall distribute the Products to End Customers with all related Product Documentation and the End Customer License.


4.2 Distribution Channels. Subject to the terms, conditions, and restrictions of this Agreement, OEM shall be entitled to distribute the Products directly to End Customers or to Distributors; provided, that OEM shall ensure that each Distributor adheres to, and does not perform any act inconsistent with, the terms and conditions of this Agreement.


4.3 Marketing. OEM shall use reasonable efforts to market, and distribute the Products.


5. PRICING


5.1 Pricing. AccelGraphics' Product pricing is set forth in Exhibit A. Subject to Section 7.4 and provided OEM complies with all terms, conditions and restrictions of this Agreement, AccelGraphics agrees to grant OEM the discounts as specified in Exhibit A.


5.2 Price Changes. AccelGraphics shall have the right to revise the prices set forth in Exhibit A upon [* * * *] written notice to OEM. Price increases shall apply to all purchase orders received after the effective date of such price increases. Price decreases shall apply to all accepted but unshipped orders existing on the effective date of such decrease, and to all purchase orders received after the effective date of such decreases.


5.3 Promotional Pricing and Marketing. AccelGraphics may, from time to time, offer special "Promotional Pricing" and/or "Promotional Marketing Programs" which will be effective for specified time periods in which OEM may be asked to participate. Promotional Pricing is not considered a price decrease for purposes of Section 5.2.


6. FORECAST


6.1 Forecasts. During the term of this Agreement, OEM shall provide AccelGraphics with a good faith non binding rolling [* * *] forecast, updated [* * *] by [* * *], for units of the Products to be provided by AccelGraphics to OEM hereunder during each [* * *]. 4 7. PRICING REVIEW PERIOD


7.1 Pricing Review Period. Every [* * *] starting from the start date of the contract, AccelGraphics and OEM will review products purchased versus the contract pricing. If the quantities purchased do not meet or exceed the agreed upon levels in Exhibit D the contract pricing will be renegotiated. if contract pricing is not agreed upon, AccelGraphics may cancel the contract with 30 days notice.


8. ORDER, ACCEPTANCE AND PAYMENT


8.1 Orders. OEM shall initiate purchases under this Agreement by submitting written purchase orders to AccelGraphics. Such orders shall state unit quantities, unit descriptions, required delivery dates, and shipping instructions. AccelGraphics may accept or reject any order in its sole discretion. AccelGraphics' acceptance of a OEM order will be evidenced by AccelGraphics' issuance of a sales order acknowledgment form. Such sales order acknowledgment form will be issued within ten (10) days after AccelGraphics' receipt of OEM's order. All orders for Products shipped to OEM by AccelGraphics shall be subject to the terms and conditions of this Agreement. Any purchase order which purports to supersede or otherwise modify this Agreement shall be of no force or effect.


8.2 Lead Times and Delivery Dates. OEM shall submit purchase orders to AccelGraphics in accordance with a lead time of (i) [* * *], if such purchase orders are for quantities of Products forecasted by OEM pursuant to Section 6. 1, or (ii) such other lead times to OEM, if such purchase orders are for quantities of Products not forecasted by OEM pursuant to Section 6.1 are:


Percent above Forecast Lead Time
---------------------- ---------
[* * * * *] [* * *]
[* * * * *] [* * *]
[* * * * *] [* * *]
[* * * * *] [* * *]
[* * * * *] [* * *]


AccelGraphics shall use commercially reasonable efforts to deliver the Product at the times set forth in AccelGraphics' written acceptances of OEM's purchase orders. AccelGraphics shall notify OEM in a timely manner if a Product delivery schedule previously accepted by both parties cannot be met by AccelGraphics, and shall provide, in such instances, a new delivery date on which AccelGraphics shall be able to deliver such Products.


8.3 Shipping. Unless otherwise specified by OEM and agreed to by AccelGraphics, such Products shall be shipped by AccelGraphics in conformance with AccelGraphics' standard shipping procedures. All Products delivered by AccelGraphics shall be F.O.B. AccelGraphics' manufacturing plant (the "SHIPPING POINT"), at which time risk of loss shall pass to OEM. All customs, duties, freight, insurance and other shipping expenses from Shipping Point, as well as other special packaging expenses requested by OEM, shall be borne by OEM. OEM agrees to satisfy all import formalities pertaining to shipment of units of the Product to destinations outside the United States.


8.4 Acceptance and Rejection. OEM shall inspect all Products promptly upon receipt thereof and may reject any Product that fails in any material way to meet the Specifications. Any Product not properly rejected within ten (10) days after receipt of that Product by OEM (the "REJECTION PERIOD") shall be deemed accepted. To reject a Product, OEM shall, within the Rejection Period, notify AccelGraphics in writing or by facsimile of its rejection and request a Returned Material Authorization ("RMA") number. AccelGraphics shall use its best efforts to provide the RMA number in writing or by facsimile to OEM within five (5) days after receipt of the request. Within ten (10) days after receipt of the RMA number, OEM shall return to AccelGraphics the rejected Product, freight prepaid, in its original shipping carton with the RMA number displayed on the outside of the carton. Provided that AccelGraphics has complied with its obligations in this Section 8.4, AccelGraphics reserves the right to refuse to accept any rejected Product that does not bear an RMA number on the outside of its carton. As 5 promptly as possible, but no later than thirty (30) days after receipt by AccelGraphics of properly rejected Products, AccelGraphics shall, at its option and expense, either repair or replace the Products. AccelGraphics shall pay the shipping charges back to OEM for properly rejected Products; otherwise, OEM shall be responsible for the shipping charges.


8.5 Return of Products after Rejection Period. Unless a Product is returned in accordance with the provisions of AccelGraphics' standard warranty for the Product described in Section 13.1 below, after the Rejection Period, OEM may not return a Product to AccelGraphics for any reason without AccelGraphics' prior written consent. For any Product for which AccelGraphics gives such consent, AccelGraphics shall charge OEM a restocking fee equal to [* * *] of OEM's purchase price for that Product and shall credit the balance of the purchase price to OEM's account. OEM shall be responsible for all shipping charges.


8.6 Payment Terms. AccelGraphics shall submit an invoice to OEM upon shipment of each Product ordered by OEM. The invoice shall cover OEM's purchase price for the Products in a given shipment plus any freight, taxes or other applicable costs initially paid by AccelGraphics but to be borne by OEM. The full invoiced amount for each shipment of Products shall be paid thirty (30) days from the date of invoice if OEM's credit standing is approved by AccelGraphics. AccelGraphics reserves the right to change the credit terms provided herein if, in AccelGraphics' sole discretion, such a change is warranted by OEM's financial condition and payment history. All payments shall be made in U.S. Dollars.


8.7 Taxes. All prices are exclusive of any export, federal, state and local taxes, duties or excises other than taxes based on AccelGraphics' net income. If AccelGraphics pays any taxes, duties or excises which are not included in prices charged for the Product, AccelGraphics shall itemize such taxes, duties or excises as a separate item on its invoices to OEM, and OEM shall reimburse AccelGraphics for such taxes, duties or excises; provided, that OEM shall not be required to make any such reimbursement if it provides a then-current and valid tax exemption certificate to AccelGraphics. Such certificate may be attached as Exhibit G. OEM shall immediately notify AccelGraphics if any tax exemption certificate which OEM has supplied to AccelGraphics becomes invalid.


8.8 Security Interest. AccelGraphics hereby reserves, and OEM hereby grants to AccelGraphics, a purchase money security interest in each Product sold under this Agreement. If OEM sells or leases such Product to another party prior to OEM's paying the full amount of OEM's purchase price for such Product, then the security interest shall cover the proceeds from such sale or lease. A security interest in a Product will be satisfied by payment in full of OEM's purchase price for such Product. OEM hereby appoints AccelGraphics as its attorney-in-fact to execute, on OEM's behalf and in OEM's name, financing statements and other instruments to perfect AccelGraphics' security interest in each Product for the amount of OEM's purchase price for such Product. A copy of this Agreement may be filed with the appropriate authorities at any time after its execution as a financing statement or chattel mortgage to perfect AccelGraphics' security interest.


9. RESCHEDULE AND CANCELLATION


9.1 Reschedule. Except for the Initial Purchase Order, OEM may reschedule any order without a cancellation fee by delivering written notice to AccelGraphics at least [* * *] before the scheduled shipment date, provided that (i) the rescheduled delivery date is not more than [* * *] after the original delivery date and (ii) [* * *].


9.2 Cancellation Fee. Except for the Initial Purchase Order, OEM may cancel any order without a cancellation fee by delivering written notice to AccelGraphics at least [* * *] before the scheduled shipment date. OEM agrees to pay AccelGraphics a cancellation charge of [* * *] of the net price of each Product canceled, for any order canceled with less than [* * *] notice to AccelGraphics.


10. OBSOLESCENCE AND ENGINEERING MODIFICATIONS


10.1 Obsolescence. AccelGraphics reserves the right to modify, alter, improve, change or discontinue any or all of Products covered by this Agreement upon written notice to OEM. 6 10.2 Engineering Modifications. AccelGraphics will give OEM [* * *] advance notice of all engineering modifications that will affect Products in OEM's inventory if such changes affect form, fit or function. If these modifications make it difficult for OEM to sell this inventory, AccelGraphics will work with OEM to move the affected inventory through resale channels. OEM may cancel with out charge any of the affected product on order after notification, up to [* * *] days before scheduled delivery date.


11. SUPPORT AND TRAINING


11.1 End Customer Support. OEM shall be responsible for supporting all Product that it distributes, or causes to be distributed, to End Customers, and for otherwise interfacing with End Customers. OEM shall have no right, without certification and written approval by AccelGraphics, to conduct warranty repairs on Products. OEM shall not represent to any third party that AccelGraphics is available to answer questions from such third party regarding the Product.


11.2 AccelGraphics Support to OEM. AccelGraphics will provide reasonable consultation via telephone, facsimile and electronic mail to OEM during AccelGraphics' normal business hours with respect to any Distributor or End Customer questions that OEM cannot adequately answer.


12. LIMITED WARRANTIES


12.1 Limited Warranties. AccelGraphics' Standard Graphics Accelerator Board Warranty and Standard Software Warranty are set forth in Exhibit E. The warranty return procedure is outlined in Exhibit F ACCELGRAPHICS' WARRANTIES STATED IN EXHIBIT E ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.


13. OWNERSHIP OF PROPRIETARY RIGHTS


13.1 Ownership of Proprietary Rights. OEM acknowledges that the Products are proprietary to AccelGraphics and that AccelGraphics retains exclusive ownership of Products and all Proprietary Rights associated with Products. OEM shall take all reasonable measures to protect AccelGraphics' Proprietary Rights in the Products. Except as expressly provided in this Agreement, OEM is not granted any other rights or licenses to patents, copyrights, trade secrets or trademarks concerning Products. OEM shall promptly notify AccelGraphics in writing upon its discovery of any unauthorized use of the Products or infringement of the Products or AccelGraphics' Proprietary Rights. OEM shall not sell to any End Customer if OEM has notified AccelGraphics that such Customer may be involved in potential unauthorized use of Products or other infringement of AccelGraphics' Proprietary Rights.


14. CONFIDENTIALITY


14.1 Confidentiality. Each party shall treat as confidential all Confidential Information of the other party, shall not use such Confidential Information except as set forth herein, and shall use reasonable efforts not to disclose such Confidential Information to any third party. Without limiting the foregoing, each of the parties shall use at least the same degree of care which it uses to prevent the disclosure of its own confidential information of like importance to prevent the disclosure of Confidential Information disclosed to it by the other party under this Agreement. Each party shall promptly notify the other party of any actual or suspected misuse or unauthorized disclosure of the other party's Confidential Information. OEM shall not publish any technical description of Products beyond the description published by AccelGraphics.


14.2 Exceptions. Notwithstanding the above, neither party shall have liability to the other with regard to any Confidential Information of the other which the receiving party can prove: (i) was publicly available through no fault of the receiving party; (ii) was known to the receiving party, without restriction, at the time of disclosure, as demonstrated by files in existence at the time of disclosure; (iii) was known to the receiving party, without restriction, from a source other than the disclosing party without breach of this Agreement by the receiving party 7 and otherwise not in violation of the disclosing party's rights; or (iv) was independently developed by the receiving party without any use of the Confidential Information, as demonstrated by files created at the time of such independent development.


14.3 Confidentiality of this Agreement. Each party shall be entitled to disclose the existence of this Agreement, but agrees that the terms and conditions of this Agreement shall be treated as Confidential Information and shall not be disclosed to any third party; provided, however, that each party may disclose the terms and conditions of this Agreement: (i) as required by any court or other governmental body; (ii) as otherwise required by law; (iii) to legal counsel of the parties; (iv) in confidence, to accountants, banks, and financing sources and their advisors; (v) in connection with the enforcement of this Agreement or rights under this Agreement; or (vi) in confidence, in connection with an actual or proposed merger, acquisition, or similar transaction.


14.4 Return of Confidential Information. Upon expiration or termination of this Agreement, each party shall return all Confidential Information received from the other party. Moreover, each party shall return Confidential Information upon the written request from such other party.


15. TRADEMARKS


15.1 Trademarks. During the term of this Agreement, OEM shall have a non-exclusive, non-transferable right to indicate to the public that its systems and/or products contain AccelGraphics' Products and to designate such Products under the trademarks, marks, and tradenames that AccelGraphics may adopt from time to time ("Trademarks"). OEM shall not remove or alter any Trademark that is applied to the Products upon receipt of Products from AccelGraphics. Except as set forth in this Section 15. 1, OEM shall have no right, title or interest in the Trademarks. At no time during or after the term of this Agreement shall OEM challenge or assist others to challenge the Trademarks or the registration thereof or attempt to register any trademarks, marks or trade names confusingly similar to the Trademarks. All representations of the Trademarks that OEM intends to use shall be exact copies of those used by AccelGraphics, or shall first be submitted to the appropriate AccelGraphics personnel for approval of design, color, and other details; and such approval shall not be unreasonably withheld. If any of the Trademarks are to be used in conjunction with another party's trademark on or in relation to Products, then the AccelGraphics Trademarks shall be presented equally legibly, equally prominently, but nevertheless separated from the other so that each appears to be a trademark in its own right, distinct from the other mark.


15.2 Termination of Agreement. Upon termination of this Agreement for any reason, OEM will immediately cease all use of Trademarks and, at OEM's election, destroy or deliver to AccelGraphics all materials in control or possession which bear such Trademarks.


16. INDEMNITY


16.1 By AccelGraphics. OEM agrees that AccelGraphics has the right to defend, or at its option to settle, and AccelGraphics agrees, at its own expense, to defend or at its option to settle, any claim, suit or proceeding brought against OEM or its customer on the issue of infringement of any patent, copyright or trademark by the Products sold hereunder or the use thereof, subject to the limitations hereinafter set forth. AccelGraphics shall have sole control of any such action or settlement negotiations, and AccelGraphics agrees to pay, subject to the limitations hereinafter set forth, any final judgment entered against OEM or its customer on such issue in any such suit or proceeding defended by AccelGraphics. OEM agrees that AccelGraphics at its sole option shall be relieved of the foregoing obligations unless OEM or its customer notifies AccelGraphics promptly in writing of such claim, suit or proceeding and gives AccelGraphics authority to proceed as contemplated herein, and, at AccelGraphics' expense, gives AccelGraphics proper and full information and assistance to settle and/or defend any such claim, suit or proceeding.


16.2 AccelGraphics Options. If the Products, or any part thereof, are, or in the opinion of AccelGraphics may become, the subject of any claim, suit or proceeding for infringement of any patent, copyright or trademark, or if it is adjudicatively determined that the Products, or any part thereof, infringe any patent, copyright or trademark, or if the sale or use of the Products, or any part thereof, is, as a result, enjoined, then AccelGraphics may, at its option 8 and expense either: (i) procure for OEM and its customers the right under such patent, copyright or trademark to sell or use, as appropriate, the Products or such part thereof; or (ii) replace the Products, or part thereof, with other suitable Products or parts; or (iii) suitably modify the Products, or part thereof, or (iv) if the use of the Products, or part thereof, is prevented by injunction, remove the Products, or part thereof, and refund the aggregate payments paid therefor by OEM, less a reasonable sum for use and damage. AccelGraphics shall not be liable for any costs or expenses incurred without its prior written authorization.


16.3 Limitation, Notwithstanding the provisions of Section 16.1 above, AccelGraphics assumes no liability for (i) infringements covering completed equipment or any assembly, circuit, combination, method or ...