Technology License & Reseller Agreement

TECHNOLOGY LICENSE AND RESELLER AGREEMENT





This Technology License and Reseller Agreement is entered into by and between 3Com Corporation, a California corporation with a principal place of business at 5400 Bayfront Plaza, Santa Clara, California 95052 ("3Com"), and Com21, Inc., a Delaware corporation with a principal place of business at 1991 Landings Drive, Mountain View, California 94043 ("Com2l"). The effective date of this Agreement shall be the date last executed below ("Effective Date").







A. Com2l and 3Com intend to enable a nd drive deployment of broadband services over Hybrid Fiber Coax (HFC) networks. The companies believe that combining the parties' respective core competencies will enable the faster introduction of HFC communications products to the market. Com2l's HFC e xperience coupled with 3Com networking experience and broad product offering will result in a more robust solution.



B. Com2l or its suppliers are the owners of certain subscriber equipment technology related to broadband services over Hybrid Fiber Coax (HFC) networks, as more particularly described in Exhibit A (Com2l Technology).



C. 3Com wishes to obtain a non-exclusive license for such technology in order to develop, manufacture and market cable modems based on the Com2l Technology. Com2l is willing to grant 3Com a technology license upon the terms and conditions set forth below.



D. Com2l intends to develop a data over cable headend distribution system with assistance from 3Com. The first generation of such headend will comply wit h the Specifications (as defined below) attached to this Agreement as Exhibit B (Specifications). Com2l will permit 3Com to resell such headend on the terms and conditions set forth herein.



E. The parties also envision that 3Com will make an equity investment in Com2l, under terms and conditions to be negotiated and documented in agreements separate from this Agreement.





NOW, THEREFORE, the parties agree as follows:



1. DEFINITIONS



1.1 "Com2l Technology" means the Com2l first generation cable modem technology (known as "P3" and to be defined in the Design Package) (excluding use of the expansion bus for optional plug-in modules) including, without limitation, system design, behavioral code,











ASICs and firmware, know-how, t rade secrets rights, copyright rights, mask work rights and, if any, rights under Com21 Patents owned, acquired, developed by or licensed to Com21 and embodied in a cable modem product meeting the Specifications. Com21 Technology also includes the technol ogy necessary to interface the 3Com Products to the Com21 Headend, and such other technology as described on Exhibit A (Com21 Technology).



1.2 "Com21 Headend" means the headend controller unit to be developed by Com21, and all enhancements, upgrade s and new versions thereof. The first generation Com21 Headend shall implement the Specifications as they exist as of the Effective Date together with such changes to the Specifications as the parties mutually agree in writing.



1.3 "Specifications " means the document entitled "The Com21 Community Protocol for HFC Networks, Revision 1.04 Branch 01 (V1.04.01), attached hereto as Exhibit B (Specifications) and to be included in the Design Package. Updates and revisions to the Specifications will be i dentified by a new branch index. 3Com shall be provided reasonable notice of and be permitted to attend Com21's meetings regarding updates and/or revisions to the Specifications.



1.4 "Com21 Mongoose Product" means Com21's modem ASIC (currently know n as Mongoose) implementing the media access control and other modem functions, but excluding use of the expansion bus for optional plug-in modules, (i) as described in the Com21 modem design specification attached as Exhibit C (Com21 Mongoose Product Spe c ification), which specification may be changed from time to time by Com21, in its sole discretion, with written notice to 3Com and (ii) meeting certain criteria to determine the acceptability of the Com21 Mongoose Product to be agreed to by the parties, w h ich criteria shall be set forth in a description attached to this Agreement as Exhibit D (Com21 Mongoose Product Acceptance Criteria). The Com21 Mongoose Product Specification shall be provided by Com21 within sixty (60) days of the Effective Date. The Co m21 Mongoose Product Acceptance Criteria shall be mutually agreed to by the parties within sixty (60) days of the Effective Date.



1.5 "Com21 P4 Product" means Com21's second generation modem ASIC (currently known as P4) implementing the media access control and other modem functions to be developed with AMD pursuant to a strategic partner relationship.



1.6 "Com21 Patents" means all U.S. patents (and any foreign counterparts), pending patent applications and any reissues, continuations, divi sions or extensions of such patents or applications, as to which Com21 is the patentee or as to which Com21 has the right to grant the license herein and which are necessary to practice the rights to the Com21 Technology, Com21 Mongoose Product and Com21 Headend interfaces which are granted herein.



1.7 "Confidential Information" means that information of either party ("Disclosing Party") which is disclosed to the other party ("Receiving Party") pursuant to this Agreement,











in written form and m arked "Confidential" or if disclosed orally, the Disclosing Party shall indicate that such information is confidential at the time of disclosure and send a written summary of such information to the Receiving Party within thirty (30) days of disclosure an d mark such summary "Confidential." 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 informat ion, sales and marketing plans and business information. References to 3Com as a Receiving Party or a Disclosing Party shall also include all present and future subsidiary and parent companies of 3Com.



1.8 "Design Package" means the information and materials necessary to develop cable modem products compatible with the Com21 Headend and the Specifications. As set forth in detail in Section 5 (Design Package), the description of the Design Package shall be attached to this Agreement as Exhibit E (De sign Package) when it is completed.



1.9 "3Com Patents" means all U.S. patents (and any foreign counterparts), pending patent applications and any reissues, continuations, divisions or extensions of such patents or applications, as to which 3Com is the patentee or as to which 3Com has the right to grant the license herein and which are necessary to practice the rights to the 3Com Technology which are granted herein.



1.10 "3Com Product" means the cable modem products developed by 3Com under t he terms of this Agreement. "First Generation 3Com Product" means the first version of the [ * ] by 3Com as described in Section 2.3(a)(iii), "Derivative 3Com Products" means all 3Com Products other than the First Generation 3Com Product.



1.11 "3Com Technology" shall mean the technology, including know-how, trade secrets, copyrights and, if any, 3Com Patents, owned, acquired or developed by or licensed to 3Com and embodied in the First Generation 3Com Product.



2. LICENSES



2.1 Develop ment and Manufacturing License. Subject to the terms and conditions of this Agreement, Com21 hereby grants to 3Com a non-exclusive, non-transferable, worldwide, royalty bearing license under the Com21 Technology and Com21 Mongoose Product to (a) design, d e velop, make or have made, use, market, sell, modify, lease and support 3Com Products, (b) design, develop, make or have made, use, market, sell, modify, lease and support derivative cable modem products based upon the 3Com Products, (c) sublicense its rig h ts in the Com21 Technology embodied in the Com21 Mongoose Product only granted in (a) above, subject to the restrictions set forth in Section 2.3 (3Com Restrictions) below and (d) reproduce and translate the materials in the Design Package pursuant to the terms hereof as necessary for the exercise of the rights granted in clauses (a) and (b) of this Section 2.1 (Development and Manufacturing License).









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2.2 Trademark License. Com21 hereby grants to 3Com a worldwide, nonexclusive, limited license to use the Com21 trademarks, and the respective stylis tic marks, listed on Exhibit F (Com21 Trademarks) and such other mutually agreeable Com21 marks (collectively, the "Com21 Trademarks") in conjunction with the distribution of the 3Com Products and in 3Com advertising, promotional and printed materials for the 3Com Products. 3Com has provided to Com21 a copy of the 3Com Trademark Guidelines. 3Com shall use the Com21 Trademarks in the manner specified in the 3Com Trademark Guidelines for proper usage of 3Com trademarks. The 3Com Trademark Guidelines may be m o dified from time to time by 3Com, in its sole discretion, with written notice of such modification to Com21. in the event Com21 implements its own trademark guidelines or policies, 3Com agrees to comply with such guidelines or policies. If compliance with a Com21 policy or guideline is not reasonably feasible, 3Com shall notify Com21 in writing and propose an alternative procedure for Com21's approval, which will not be unreasonably denied. Upon Com21's request, 3Com shall provide Com21 with free samples o f the 3Com advertising and promotional materials and reasonable numbers of the 3Com Product manufactured and distributed by 3Com on which such trademarks are used to ensure that Com21's quality standards are maintained.



2.3 3Com Restrictions.



(a) Notwithstanding the foregoing licenses granted to 3Com in this Section 2 (Licenses), (i) 3Com shall not have the right to [*] provided, however, Com21 agrees to support 3Com's discussions with third party manufacturers or vendors of phys i cal layer semiconductors regarding the inclusion of the Com21 Technology, or any portion thereof, into such third party's products, (ii) [*] 3Com shall not sell or make available for sale as stand-alone products (i.e., not integrated into a card or system level product) semiconductor chips designed by or on behalf of 3Com based on the Com21 Technology and (iii) 3Com [*]



(b) As of the Effective Date, 3Com currently does not intend to enter the market for Headend Controller Units [*]. 3Com agr ees to notify Com21 in writing within a reasonable time in the event 3Com decides (which decision shall be in 3Com's sole discretion) to begin development of a Headend Controller Unit.



For purposes of this Section 2.3(b) only, "Headend Controller Unit" shall mean that piece of equipment that physically connects the cable modem to the Headend via a hybrid fiber/coax or all coax network and is comprised of the following: Upstream and downstream physical layer connections, Media Access Controller (MA C), management interface that manages the MAC and physical layers and provides application management and traffic scheduling and interface to other equipment in the Headend.





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For purposes of this Section 2.3(b) onl y, a "Headend" shall mean the office/wiring equipment that is directly connected to the cable modem via a hybrid fiber/coax or all coax network. A Headend that is capable of offering data services can be comprised of the following equipment: Headend Contr o ller Unit, switches, routers, network management, servers and other equipment that may be necessary or desirable to offer data services (such as hubs, adapters, and CSU/DSUs). The equipment outlined above may be in the form of separate systems connected t ogether via standard or proprietary interfaces. Alternatively the functions may be contained in a single system or chassis comprised of cards or plug-in-modules.



2.4 Com21 Restriction. Com21 currently intends for 3Com [*] Com21 decides (which decision shall be in Com21's sole discretion) to enter into such an agreement.



2.5 3Com License to Com21. If Com21 desires, 3Com will grant to Com21 a non-exclusive, non-transferable, worldwide, royalty-bearing license under the 3Com Technology to (a) make or have made, use, market, sell, modify, lease and support the First Generation 3Com Products and (b) design, develop, make or have made use, market, sell, modify, lease and support derivative cable modem products based upon the First Generation 3Com Products. Com21 shall pay to 3Com a reasonable royalty to be negotiated, and Sections 3.4 (Reports) and 4 (Payment Terms) shall apply to Com21 on a reciprocal basis. If Com21 desires, 3Com agrees to negotiate in good faith terms and conditions favorable t o Com21 for Com21 to OEM the First Generation 3Com Product. Upon Com21's election of the license granted under this Section 2.5 (3Com License to Com21) and finalization of the terms of such license, 3Com shall provide to Com21 a design package comprising t h e information and materials necessary to develop the First Generation 3Com Product (the "3Com Design Package") and the parties shall work together in good faith to develop criteria to determine if such materials and information shall be deemed acceptable.



2.6 No Other Licenses. Except as specifically and unambiguously set forth in this Agreement, no other licenses are granted by Com21 or 3Com to the other party.



3. LICENSE FEES, ROYALTIES AND REPORTS



3.1 License Fee and Royalties. 3Com shall pay to Com21 the license fees and royalties as set forth in this Section 3.1 (License Fee and Royalties).



(a) Provided Com21 delivers to 3Com the existing portions of the Design Package pursuant to Section 5.2 (Delivery) below, [*] days of the Effective Date, 3Com shall pay to Com21 [*].





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( b) Concurrent with the payment described in Section 3.1(a), 3Com shall also pay to Com21 a pre-paid, non-refundable (except in the event of a refund pursuant to Section 5.4 (Remedies for Rejection and Termination) below) [*] of the 3Com Products to be sol d by 3Com.



(c) Until the earlier to occur of (i) the public availability of the Com21 P4 Product in production quantities or (ii) December 31, 1998, 3Com shall pay to Com21 a per unit royalty of [*] for units of 3Com Products for which royal ties are due in excess of [*] sold by 3Com. Thereafter, no further royalties on 3Com Products shall be owed by 3Com to Com21.



(d) Notwithstanding clauses (b) and (c) above, no royalty shall be due with respect to units of the 3Com Products for 3Com internal use, alpha or beta units, demonstration units, consigned units, repair or replacement of any 3Com Products, or the sale of spare parts on the performance of warranty work for any 3Com Products.



3.2 Mongoose Availability. If, on o r before [*] the Com21 Mongoose Product meeting the criteria to be agreed to by the parties and described in Exhibit C (Com21 Mongoose Product Specification) and Exhibit D (Com21 Mongoose Product Acceptance Criteria) is delivered by Com21 and which meets o r is later found to meet the Com21 Mongoose Product Acceptance Criteria described in Exhibit D (Com21 Mongoose Product Acceptance Criteria), 3Com shall pay to Com21 within thirty (30) days of acceptance by 3Com an additional extended license fee of [*]. I f , after [*] but on or before [*], the Com21 Mongoose Product meeting the criteria to be agreed to by the parties and described in Exhibit C (Com21 Mongoose Product Specification) and Exhibit D (Com21 Mongoose Product Acceptance Criteria) is delivered by C o m21 and which meets or is later found to meet the Com21 Mongoose Product Acceptance Criteria described in Exhibit D (Com21 Mongoose Product Acceptance Criteria), said license fee shall be [*]. If said Com21 Mongoose Product meeting said criteria is not de l ivered by Com21 until [*] or later, 3Com shall not be obligated to make any license fee pursuant to this Section 3.2 (Mongoose Availability); however, Com21 shall remain obligated to provide the Com21 Mongoose Product as provided this Agreement. Com21 sha l l provide 3Com a reasonable number of samples of the Com21 Mongoose Product (including but not limited to behavioral code) as it exists as of [*] (regardless of whether the Com21 Mongoose Product meets said criteria) and as it exists as of the other dates set forth in this Section 3.2 (Mongoose Availability) until it meets said criteria. 3Com agrees that COM 21 shall have no obligation to make any modification or enhancement to the Com21 Mongoose Product to accommodate any change in the 3Com Product.



3.3 Most Favored Customer. Com21 represents and warrants that at the date of this Agreement the license fees set forth herein do not exceed those charged to any other customer of Com21 licensing the Com21 Technology or technology similar or equivalent thereto. If at any time, Com21 offers lower prices to any other customer for such similar or equivalent technology on similar terms or on terms less favorable to Com21, taken as whole, Com21 shall immediately











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notify 3Com and offer such more favorable license fees to 3Com effective as of the date such prices were offered to such other customer.



3.4 Reports. 3Com shall keep adequate records to verify all reports and payments to be made to Com21 pursuant to this Agreement for a period of three (3) years following the date of such reports and payments. Com21 shall hav e the right to select an independent certified public accountant mutually agreeable to the parties, whose fees are not contingent on the results of the inspection and who agrees in writing to maintain the confidentiality of the information provided to it, to inspect no more frequently than annually the records of 3Com on reasonable notice and during regular business hours to verify the reports and payments required hereunder. If such inspection should disclose any underpayment, 3Com shall promptly pay Com2 1 such amount. The entire cost of such inspection shall be borne by Com21; provided, however, that if 3Com is determined by such audit to have underpaid royalties by five percent (5%) or more, then the reasonable cost of such audit shall be home by 3Com.



4. PAYMENT TERMS



4.1 Payment. Per-unit royalties under Section 3.1(c) above shall accrue upon shipment to a customer of 3Com Products by 3Com and shall be payable quarterly, within thirty (30) days af ter the first day of the month following the 3Com fiscal quarter in which royalties accrued. Each royalty payment shall be accompanied by a statement of all units shipped during the relevant period for which a royalty is due. Payments and statements shall be sent to Com21 at the address set forth at the beginning of this Agreement or such other address as Com21 may designate in writing.



4.2 Taxes. In addition to any other payments due under this Agreement, 3Com agrees to pay, indemnify and hold Com 21 harmless from any sales, use, excise, import or export, value added or similar tax or duty, any other tax not based on Com21's net income, and all governmental permit fees, license fees, customs fees and similar fees which Com21 may incur in respect of this Agreement.



5. DESIGN PACKAGE



5.1 Definition of Design Package. Promptly following the Effective Date, the parties shall work together to determine and describe the materials and information necessary to develop cable modem products comp atible with the Com21 Headend and the Specifications, and the criteria to determine if such materials and information shall be deemed acceptable. The description of the Design Package shall be attached to this Agreement as Exhibit E (Design Package) when it is completed. Com21 shall provide 3Com with updated versions of the Design Package as it evolves during the course of design reviews by the parties.



5.2 Delivery. On the Effective Date, Com21 shall deliver to 3Com all then existing portions of t he Design Package. In addition, Com21 shall use commercially reasonable efforts to provide 3Com with the deliverables described in the Design Package in accordance with the











milestone schedule set forth therein. Because Com21's performance is dependent in part on 3Com's performance, any dates or time periods relevant to performance by Com21 hereunder shall be appropriately and equitably extended to account for any delays due to 3Com.



5.3 Acceptance. 3Com shall have twenty (20) days after receip t of each deliverable in the Design Package (the "Acceptance Period") to examine such deliverable to determine that it substantially conforms with the Specifications in Exhibit B (Specifications) and as described in Exhibit A (Com21 Technology). 3Com may r eject a deliverable only if the deliverable fails in some material respect to meet the Specifications in Exhibit B (Specifications) and as described in Exhibit A (Com21 Technology). 3Com shall promptly notify Com21 if it rejects such deliverable with a wr i tten summary of the reason for rejection. If no written rejection is received by Com21 within the Acceptance Period, such deliverable shall be deemed accepted. Should the delivery of the deliverable be rejected by 3Com, Com21 shall use commercially reason a ble efforts to correct the deliverable to conform with the associated specifications and redeliver such corrected deliverable to 3Com within twenty (20) days of receipt of rejection. 3Com will have twenty (20) days after receipt of the redelivered deliver a ble to accept the deliverable. The foregoing acceptance/rejection/correction provisions shall apply to a redelivered deliverable, provided, however, that upon the third or any subsequent rejection, either party may terminate this Agreement by thirty (30) days notice unless the deliverable is accepted during the notice period. Com21 shall not be obligated to correct any failure caused by something other than the deliverable.



5.4 Remedies for Rejection and Termination. If this Agreement is terminated pursuant to Section 5.3 (Acceptance) above, the parties agree to negotiate in good faith the effect of such termination with respect to the refund by Com21 of any amounts already paid by 3Com under Section 3 (License Fees, Royalties and Reports) above, t h e portions of the Design Package, if any, to be retained by 3Com and 3Com's right, if any, in such Design Package portions and license fees in connection therewith. If the parties fail to agree on such terms within thirty (30) days of the effective date o f termination, Com21 shall refund all amounts already paid by 3Com under Section 3 (License Fees, Royalties and Reports) and 3Com shall have no rights in the Com21 Technology, the Com21 Mongoose Product or the Design Package.



6. SUPPORT



6.1 D esign Support. Com21 will provide 3Com with a reasonable number of man-hours of Com21 R&D, manufacturing and quality assurance engineers for support by telephone, fax or if requested by 3Com, at 3Com Santa Clara site, provided Com21's current timetable fo r commercialization is not adversely impacted. Com21 and 3Com shall designate representatives to serve as contacts for such support. If additional support is requested by 3Com, Com21 shall provide, at Com21's sole discretion, such service at reasonable tim e s and places and at a rate equal to Com21's then current standard fee therefor [*] at Com21 facilities). Com21 shall provide 3Com with reasonable advance notice of Com21 design reviews relating to Com21 cable modem products and permit a 3Com representativ e to attend.











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6.2 Customer Support. The parties agree to work together to develop and facilitate the call handling processes to provide seamless customer support and technical service to end users and service prov iders. Each party shall be solely responsible for support of its products.



6.3 3Com Support.



3Com shall provide Com21 with a reasonable number of man-hours of the following types of assistance:



(a) Chip design expertise;



(b) DVT facilities;



(c) Physical layer certification assistance;



(d) ATM switching technology;



(e) Network management;



(f) Low-cost volume manufacturing expertise; and



(g) Other consulting advice.



Com21 shall provide to 3Com all the necessary technology to interface the 3Com Products to the Com21 Headend.



7. MARKETING



3Com and Com21 intend to jointly develop a marketing campaign to successfully promote communication over HFC and remove adoption barriers for both MSOs and end users. 3Com and Com21 shall jointly promote the Specifications to drive industry standards. The parties envision that they initially would both market the 3Com Product. The parties will work together to leverage their respective relationships with MSOs to establish the superiority of the system solution they jointly develop. The parties will wor k together to include each other products, as appropriate and applicable, in their respective advertising, public relations activities, tradeshows, product literature and manuals, and World Wide Web sites.



8. STANDARDS



The parties acknowledge and agr ee that it is in their mutual interests to promote the "The UPSTREAMS Protocol for HFC Networks" proposal, based on IEEE 802 contribution IEEE P802.14/95-152R1 (the "Proposal") including subsequent revisions, generated as required to promote acceptance in the standards bodies, and ATM Forum contribution ATMF/95-1435R1, for acceptance in industry standards with relevant standards bodies. The parties shall use















reasonable efforts to collaborate on such promotion.



The parties further agree that other companies or consort ...