Development, Manufacturing and Supply Agreement

DEVELOPMENT, MANUFACTURING

AND SUPPLY AGREEMENT



THIS DEVELOPMENT, MANUFACTURING AND SUPPLY AGREEMENT, dated this 19th day of May, 1998 (the "Effective Date"), is made by and between NETOPIA, I NC, a Delaware corporation ("Netopia"), and COPPER MOUNTAIN NETWORKS, INC., a California corporation ("CMN").





1. Netopia and CMN wish to have Netopia develop a Digital Subscriber Line

("SDSL") Router to be sold under different product names by both Netopia

and CMN; and



2. CMN desires to sell to Netopia, and Netopia desires to purchase from CMN

and resell under Netopia's name, CMN's CopperRocket 201, an SDSL access

device on the terms and subject to the conditions set forth herein.



ACCORDINGLY, CMN and Netopia hereby agree as follows:



ARTICLE 1



DEFINITIONS; APPOINTMENT OF NETOPIA AND CMN;

DEVELOPMENT OBLIGATIONS



1.1 DEFINITIONS. The following definitions shall apply to this Agreement:



(A) "CARRIER" shall mean any Regional Bell Operating Company, incumbent local exchange carrier or competitive local exchange carrier.



(B) "CONFIDENTIAL INFORMATION" means any conf idential or proprietary information of either party, including information related to the Intellectual Property of either party, and any other information relating to any composite, research project, work in process, future development, scientific, engine e ring, manufacturing, marketing, business plan, financial or personnel matter relating to either party, its present or future products, sales, suppliers, Customers, employees, investors or business, whether in oral, written, graphic or electronic form. Con fidential Information shall not include any information which the receiving party can prove by competent evidence:



(I) is now, or hereafter becomes, through no act or failure to act on the part of the receiving party, generally known or available;



(II) is known by the receiving party at the time of receiving such information, as evidenced by its records;



(III) is hereafter furnished to the receiving party by a Third Party, as a matter of right and without restriction on disclosure;





Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.





(IV) is independently developed by the receiving party without the aid, application or use of information of the other party; or



(V) is the subject of a written permission to disclose provided by the disclosing party.



(C) "COPPERROCKET 201" shall mean the customized CMN SDSL access device which CMN manufactures and markets under the "Copper Mountain CopperRocke t 201" product name, consistent with the specifications set forth in Exhibit A, and which Netopia shall market under the "SDSL LAN Modem" product name. The CMN part number for this product is 700-030-20.



(D) "CUSTOMERS" of (i) Netopia shall include Carriers, Resellers and End Users, and (ii) CMN shall include Carriers and Resellers.



(E) "END USERS" shall mean final retail purchasers or licensees who have acquired Products for their own use and not for resale, remarketing or redistribution.



(F) "INTELLECTUAL PROPERTY" shall mean means all copyrights, trademarks, service marks, trade secrets, patents, patent applications, moral rights, contract rights, technology, know-how and other proprietary rights now known or hereafter recognized.



(G) "PRODUCTS" shall mean the "SDSL Router" and "CopperRocket 201."



(H) "RESELLER" shall mean any value added reseller, distributor, dealer or Internet Service Provider ("ISP") which, in the regular course of business, resells or redistributes Products pursuant to an agreement with Netopia or CMN.



(I) "SDSL NETWORK EQUIPMENT" shall refer collectively to SDSL access devices (such as the CopperRocket 201) used in conjunction with central office SDSL Multiplexor equipment developed by CMN and purchased by Carriers.



(J) "SDSL ROUTER" shall mean the product which Netopia develops and manufactures pursuant to this Agreement, consistent with the specifications set forth in Exhibit B, and which Netopia will market under the "Netopia SDSL Router" product name and CMN will market under the "Copper Mountain CopperRocket 301" product name.



(K) "UPGRADE TO UNLIMITED VERSION" shall mean firmware and software supplied by Netopia to End Users to upgrade from the 12-user version of the SDSL Router to the unlimited user version of the SDSL Router. This upgrade can only be installed by End Users on a post-sales basis.



1.2 APPOINTMENT OF NETOPIA AND CMN; SALE AND DISTRIBUTION.



(A) Netopia hereby grants to CMN the non-exclusive right to sell and distribute worldwide the SDSL Router to its Customers during the term of this



Agreement. CMN hereby grants to Netopia the non-exclusive right to sell and distribute worldwide the CopperRocket 201 to its Customers during the term of this Agreement.



(B) Any Customer of either party may not reproduce or modify any of the Products and shall abide by all the terms and conditions set forth herein relating to the Products. Each party will take r easonable steps necessary to insure that its Customers abide by such terms and conditions.



1.3 DEVELOPMENT AND MANUFACTURING OBLIGATIONS.



(A) In connection with the development of the SDSL Router, CMN will provide Netopia all technical and product marketing documents required to allow Netopia to develop, design, and manufacture the SDSL Router. In developing the SDSL Router, Netopia will have access to CMN's Intellectual Property which may be incorporated in the SDSL Router. CMN and Netopi a will work cooperatively on the development of the SDSL Router, and Netopia will consult with CMN on future product development and enhancements. It is the intent of the parties that each of Netopia and CMN will continue to own exclusively and maintain th e ir respective Intellectual Property, and that no transfer of ownership of any Intellectual Property is intended by virtue of this Agreement. In the case of software transferred by Netopia back to CMN for maintenance, in its core CopperRocket 201 software c ode base, CMN shall retain full rights to these modifications to its core software code base. During the course of manufacturing, both companies will notify the other of any changes in the form, fit, or function of the SDSL Router hardware or firmware or CopperRocket 201 hardware or firmware.



(B) In consideration of CMN granting Netopia access to and the right to use certain CMN Intellectual Property in connection with development of the SDSL Router, Netopia agrees that it will pay CMN royalties , as set forth in Exhibit C, for all sales of the SDSL Router made by Netopia, excluding sales to CMN of the version of the SDSL Router to be marketed by CMN under the CopperRocket 301 product name. The obligation of Netopia to pay royalties to CMN shall e xpire at such time as the parties agree in writing that CMN's SDSL Network Equipment has become an industry standard. For example, CMN's SDSL Network Equipment shall be considered an industry standard if a mutually recognized standards body adopts CMN's S D SL Network Equipment as an industry standard. If CMN provides substantially the same Intellectual Property to a third party that CMN provides to Netopia pursuant to the terms of this Agreement on more favorable pricing terms or free of charge, then Netopi a's obligation to pay royalties to CMN hereunder shall expire upon such transfer of Intellectual Property to such third party.



(C) Netopia will be the sole manufacturer of the SDSL Router. CMN will be the sole manufacturer of the CopperRocket 20 1. CMN agrees that it will reimburse Netopia for all non-recurring manufacturing expenditures associated with CMN's unique manufacturing requirements for the SDSL Router, including, but not limited to, producing the user's guide and packaging materials, a s well as any additional system or manufacturing testing that CMN requires. Netopia agrees that it will reimburse CMN for all non-recurring manufacturing expenditures associated with Netopia's unique manufacturing requirements for the CopperRocket 201, inc luding, but not limited to, producing the user's guide and packaging materials, as well as any additional system or



manufacturing testing that Netopia requires. It is the intent of the parties that the SDSL Router as marketed and sold by Netopia and CMN shall be functionally identical, and that the CopperRocket 201 as sold by Netopia and CMN shall be functionally identical.



ARTICLE 2



PURCHASE ORDERS



2.1 ISSUANCE AND ACCEPTANCE OF PURCHASE ORDERS. The parties may purchase Products as described below:



(A) CMN shall place orders for the SDSL Router, and Netopia shall place orders for the CopperRocket 201, pursuant to written purchase orders ("Purchase Order(s)"). Each Purch ase Order shall specify: (i) Product model and part number; (ii) price; (iii) quantity requested; (iv) requested shipment dates; and (v) exact "ship-to" and "invoice-to" addresses. To the extent that any such Purchase Order contains terms or conditions in c onsistent with the terms of this Agreement, such inconsistent terms and conditions are hereby deemed rejected without further action by the selling party. Purchase orders may be placed by fax or electronically transferred provided that it is followed by a written confirmation within five (5) working days. Such written confirmation shall be clearly marked "Confirmation of Prior Order". It is the intent of the parties that a Purchase Order will be placed by each party at least once every ninety (90) days to reflect such party's expected purchases during the succeeding ninety (90) day period.



(B) All Purchase Orders are subject to written acceptance by the selling party at its principal place of business.



(C) Minimum Purchase Order amoun t is three hundred (300) units of a Product. Each Purchase Order may request delivery over a six month period; provided, however, that the minimum shipment quantity is fifty (50) units of a Product. The Purchase Order can mix and match any product defined in Exhibit C so long as the total order is equal to or greater than 300 units.



(D) CMN acknowledges that Netopia's current standard lead time to fulfill a Purchase Order for SDSL Routers is twelve (12) weeks, and Netopia acknowledges that CMN's current standard lead time to fulfill a Purchase Order for CopperRocket 201s is ten (10) weeks. Notwithstanding the foregoing, the parties will exercise their best efforts to fulfill Purchase Orders in an expeditious manner.



2.2 PARTIAL SHIPMENTS. U nless the purchasing party clearly advises the selling party to the contrary in writing, and subject to the provisions of Section 2.1(c), the selling party may make partial shipments on account of the purchasing party's Purchase Orders, which shipments sh a ll be separately invoiced and paid for when due, without regard to subsequent deliveries. Delay in delivery of any partial installment shall not relieve the purchasing party of its obligation to accept the remaining installments. Accepted Purchase Orders for any Product not shipped during the month for which delivery was



scheduled will remain in effect, unless canceled in whole or in part by either party upon written notice to the other party.



ARTICLE 3



DELIVERY AND ACCEPTANCE OF PRODUCTS



3.1 DEFECTIVE PRODUCTS. In the event any Products are rejected because they have been received in a defective condition, the purchasing party may return the Products for full credit or exchange, at the s elling party's option, consistent with the selling party's standard return procedures.



3.2 TRANSPORTATION OF PRODUCTS. The selling party shall deliver the Products to the purchasing party at the location shown and on the delivery date set forth in the applicable Purchase Order or as otherwise agreed upon by the parties. Charges for transportation of the Products shall be paid by the purchasing party. The selling party shall use only those common carriers pre- approved by the purchasing party or lis t ed in the purchasing party's published routing instructions, unless prior written approval of the purchasing party is received. In the absence of specific instructions, the selling party will select the common carrier, but such common carrier shall not be the agent of the selling party, nor shall the selling party assume any liability with regard to any shipment. The selling party shall not be liable for any damages or penalty for delay in delivery by the common carrier.



3.3 TITLE AND RISK OF LOSS. Title (subject to Section 9.3) and risk of loss or damage to Products shall pass to the purchasing party at the time that the Products are delivered to a common carrier for delivery to the purchasing party.



ARTICLE 4



REPRESENTATIONS, WARRANTIES,

INDEMNITIES AND LIABILITIES



4.1 USE OF INTELLECTUAL PROPERTY. Each party hereby represents and warrants that it shall use the other party's Intellectual Property only to the extent required to accomplish the purposes of this Agreement, and not for any other purpose whatsoever.



4.2 WARRANTY.



(A) For a period of one (1) year after delivery, Netopia warrants to CMN that the SDSL Routers shall be free from material defects in workmanship and materials under normal use and service and shall operate substantially in accordance with the specifications set forth in Exhibit B and in the documentation provided to CMN. This warranty does not apply to any SDSL Rout e r that (a) has been altered, modified, or improperly repaired by anyone other than Netopia, (b) has been the subject of misuse, negligence, accident, or improper storage or installation, or (c) has been used or maintained in any manner other than in accor dance with documentation provided by Netopia. Netopia shall repair or replace any defective SDSL Router returned by CMN during such one (1) year period.





(B) For a period of one (1) year after delivery, CMN warrants to Netopia that the Coppe rRocket 201s shall be free from material defects in workmanship and materials under normal use and service and shall operate substantially in accordance with the specifications set forth in Exhibit A and in the documentation provided to Netopia. This warr a nty does not apply to any CopperRocket 201 that (a) has been altered, modified, or improperly repaired by anyone other than CMN, (b) has been the subject of misuse, negligence, accident, or improper storage or installation, or (c) has been used or maintai ned in any manner other than in accordance with documentation provided by CMN. CMN will repair or replace any defective CopperRocket 201 returned by Netopia during such one (1) year period.



(C) Each party's sole obligation under the warranties set forth herein shall be to repair or replace defective Products, or, at the selling party's sole option, to refund the applicable purchase price paid for a defective Product.



(D) THE WARRANTIES DESCRIBED OR REFERRED TO HEREIN ARE THE FUL L AND COMPLETE STATEMENTS OF WARRANTY ASSOCIATED WITH THE SDSL ROUTER AND NETOPIA HEREBY SPECIFICALLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, WITH REGARD TO THE SDSL ROUTER. NETOPIA SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF NONINFRING E MENT, MERCHANTABILITY OR FITNESS OF THE SDSL ROUTER FOR A PARTICULAR PURPOSE OR USE BY CMN OR CUSTOMERS OF CMN. THE LIABILITY OF NETOPIA, ITS AGENTS, REPRESENTATIVES AND EMPLOYEES TO CMN FOR DAMAGES OR ALLEGED DAMAGES WHETHER IN CONTRACT (INCLUDING BREACH OF WARRANTY) OR TORT (INCLUDING STRICT LIABILITY AND NEGLIGENCE) WITH RESPECT TO THE SDSL ROUTER IS LIMITED TO AND SHALL NOT EXCEED THE AMOUNT PAID BY CMN FOR THE PARTICULAR PRODUCT GIVING RISE TO THE DAMAGES.



(E) THE WARRANTIES DESCRIBED OR REFERRED TO HEREIN ARE THE FULL AND COMPLETE STATEMENTS OF WARRANTY ASSOCIATED WITH THE COPPERROCKET 201 AND CMN HEREBY SPECIFICALLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, WITH REGARD TO THE COPPERROCKET 201. CMN SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF NONINFRINGEMENT, MERCHANTABILITY OR FITNESS OF THE COPPERROCKET 201 FOR A PARTICULAR PURPOSE OR USE BY CMN OR CUSTOMERS OF NETOPIA. THE LIABILITY OF CMN, ITS AGENTS, REPRESENTATIVES AND EMPLOYEES TO CMN FOR DAMAGES OR ALLEGED DAMAGES WHETHER IN CONTRACT (INCLUDING BREACH OF WARRANTY) OR TORT (INCLUDING STRICT LIABILITY AND NEGLIGENCE) WITH RESPECT TO THE COPPERROCKET 201 IS LIMITED TO AND SHALL NOT EXCEED THE AMOUNT PAID BY NETOPIA FOR THE PARTICULAR PRODUCT GIVING RISE TO THE DAMAGES .





4.3 PROPRIETARY RIGHTS INDEMNIFICATION.



(A) Subject to CMN's compliance with Section 4.3(b), Netopia hereby represents and warrants that the SDSL Router and its sale and use hereunder do not infringe upon any copyright or trade sec ret of any third party. Netopia shall defend, indemnify and hold CMN and its directors, officers, employees and agents harmless from and against any suit, claim, action, demand, liability, loss, cost or expense (including reasonable legal expenses and att o rney's fees) finally awarded by a court or tribunal of competent jurisdiction resulting from or arising directly or indirectly out of any breach of the foregoing warranties; provided that Netopia is promptly informed and furnished a copy of each communica tion, notice or other action relating to the alleged breach and is given authority, information and assistance necessary to defend or settle said suit or proceeding. ...