Development & Supply Agreement

CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED

SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.





DEVELOPMENT AND SUPPLY AGREEMENT



BY AND BETWEEN



JETFAX, INC.



SAMSUNG ELECTRONICS CORPORATION



JUNE 30, 1995





DEVELOPMENT AND SUPPLY AGREEMENT





THIS DEVELOPMENT AND SUPPLY AGREEMENT (the "Agreement") is entered into and is effective as of June 30, 1995 (the "Effective Date"), by and between JetFax, Inc., a corporation duly organized and e xisting under the laws of Delaware, U.S.A. with its principal place of business at 1376 Willow Road, Menlo Park, California 94025 ("JetFax"), and Samsung Electronics Corporation, a corporation duly organized and existing under the laws of the Republic of Korea, having its principal place of business at 20th Floor, Severance Building, 84-11, 5-Ka, Namdaemoon-Ro, Chung-Ku, Seoul, Korea ("Samsung").





A. Samsung is in the business of manufacturing and selling a variety of electronic products including facsimile machines;



B. Samsung is currently developing a new product (the "Product" as hereinafter defined) which will require certain controller electronics and associated software;



C. JetFax is willing, subject to the terms and conditions set forth in th is Agreement, to develop the controller electronics and associated software to be incorporated as part of the Product, supply the custom computer chips required by JetFax's design and license to Samsung the intellectual property on the terms and condition s herein; and



D. Samsung desires to have JetFax design and develop the necessary electronics and software, procure from JetFax the custom computer chips required by JetFax's design and to acquire a license to make, use and sell such electronics, software and computer chips on the terms and conditions herein-,



IN CONSIDERATION of the foregoing and the mutual promises and covenants contained in this Agreement, the parties hereto agree as follows:





1. DEFINITIONS



1.1 "Acceptance Date" shall mean the date of acceptance of a "JetFax Deliverable" or "Samsung Deliverable," as hereinafter defined, pursuant to Section 4.2(c) hereof.



1.2 "Affiliate" shall mean all entities and persons controlled by, controlling or under common control with a party.



1.3 "ASIC Set" shall mean a single set of Application Specific Integrated Circuit chips developed by JetFax for use in a single Product.



1.4 "Bill of Materials and Source List" shall mean the identification by manufacturer and model of certain components and the source from which such components may be obtained. A preliminary Bill of Materials is attached hereto as Exhibit F.



1.5 "Deliverable" shall mean a JetFax Deliverable or Samsung Deliverable.



1.6 "Electronic" shall mean those controller electronics and "Software," as hereinafter defined, to be developed by JetFax and incorporated as part of the Product.



1.7 "Errors" shall mean: (i) reproducible defects in any Deliverable which causes it not to function in conformance with the Specifications, and (ii ) Software miscoding which results in the Software failing to function in conformance with the Specifications, if such failure is reproducible.



1.8 "Hardware Designs" shall mean those designs for circuit boards, including information for in-circuit testers, to be developed by JetFax in accordance with the Specifications.



1.9 "JetFax Deliverables" shall mean, collectively or individually, JetFax developed Electronics, Software, Hardware Designs and the Bill of Materials and Source List. A more detailed description of the JetFax Deliverables is set forth in Exhibit A to this Agreement.



1.10 "Product" shall mean the new Samsung combined laser printer, telecopier, scanner and copier with features and "Specifications," as hereinafter defined, as provided in Exhibit B.



1.11 "Project Schedule" shall mean the schedule of events for the parties' performance under this Agreement, as set forth in Exhibit C.



1.12 "Services" shall mean the work and labor necessary for the performance of the respective obligations of the parties.



1.13 "Software" shall mean software object code designed in accordance with the Specifications.



1.14 "Specifications" shall mean the engineering, operational and/or functional descriptions, details and requirements for the Product and the Software and the Hardware Designs, as set forth in Exhibit B and mutually agreed to between the parties as the same may be modified as provided herein.



1.15 "Samsung Deliverables" shall mean the sample Product units (minus motherboard), list of connectors and connector pinouts, mechanical drawings and power supply specifications as more fully set forth in Exhibit D.





[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED

SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.



2. SCOPE OF WORK



2.1 Services. Upon the terms and conditions set forth in this Agreement, JetFax and Samsung agree to perform the Services required to p rovide their respective Deliverables in accordance with the terms and conditions herein. Each party will be responsible for obtaining all the technology, labor, material, tooling and facilities necessary for the completion of its portion of the Services, except as otherwise set forth in this Agreement.



2.2 Progress Reports. Each party hereto shall provide the other party with progress reports, as reasonably requested by the other party, starting after the Effective Date and ending on the final Acceptance Date. Each report shall be in such form and contain such information as may be mutually agreed upon by the parties, including but not limited to, progress to current scheduled milestones, description of any problems in meeting milestones, and if any pro blems are encountered, proposed recovery methods.



2.3 Agency Approvals.



(a) The parties agree that JetFax shall make all engineering changes with respect to the Electronics necessary for obtaining any required governmental or private agency approvals or certifications for the Product in the countries fisted in Exhibit E. All costs of certification (except fees for FCC and IC telecom approvals in the U.S. and Canada which shall be paid by JetFax), including, but not limited to, testing fees, filing fees a n d rework charges required in connection with applying for such approvals in such countries shall be paid by Samsung. Alternatively, at Samsung's written election, JetFax shall make such engineering changes and complete all necessary filings and certificat ions for Samsung at a price of [*] per country, based on Samsung's making such election for a minimum of three (3) countries. Such payment shall be made at the time of Samsung's election to have JetFax provide such services.



(b) The parties agree that Sam sung has the responsibility for and shall bear the expense of obtaining any necessary Republic of Korea government (the "Korean Government") or private agency approvals or certifications which are required in connection with this Agreement. Samsung shall m ake no commitment to the Korean Government or any agency thereof regarding this Agreement without the express written consent of JetFax. If any approval or certification is conditioned upon changes in the terms and conditions of this Agreement, such chang e s shall be effective only if a formal amendment is executed by both parties. Samsung shall advise Jetfax immediately of the receipt of such approvals and certifications and shall provide JetFax a copy of the documents received by Samsung related to such a pprovals and certifications.



3. DESIGN REVIEW AND SPECIFICATION CHANGES



3.1 Design Review. The parties agree to promptly confer at the request of either party with respect to any material issues a party may have with the performance of the other party of its obligations under this Agreement and to review design and engineering issues. JetFax shall pay all travel related costs for up to four (4) trips to Samsung's laboratory for two (2) of its employees in providing the Services required hereunder up until the final Acceptance Date. Airfare, transportation, housing and meal expenses associated with any trips by JetFax employees in excess of the foregoing shall be paid for by Samsung.



3.2 Changes to the Specifications. JetFax shall make reasonable eff orts to ensure that the Hardware Designs are cost-effective. Each party is entitled to request modifications in the form of changes or additions to the Specifications at any time during the term of this Agreement. Such requests shall be submitted in wri t ing, and shall not be deemed or considered binding unless accepted by the other party in writing. If any such modification of the Specifications is agreed upon, the parties will negotiate an equitable adjustment to the Agreement, including the apportionm e nt of any additional development, testing or tooling costs. Upon mutual agreement to any change to the Specifications, both parties will proceed with the implementation of the prescribed changes, and the Specifications and other Exhibits to this Agreemen t shall be modified accordingly to reflect such agreed upon changes.



3.3 Modification to Specifications Upon Acceptance. Jetfax and Samsung agree that upon acceptance of each Deliverable pursuant to Section 4.2, the Specifications shall be modified as n ecessary to conform to the Deliverables, as accepted, except as to material deviations from the Specifications noted in a writing signed by both parties. The party responsible for such Deliverable shall perform further work to correct such deviations. A fter acceptance of each Deliverable pursuant to Section 4.2, the term "Specifications" as used herein shall refer in all cases to the Specifications as so modified.



4. DELIVERABLES AND DELIVERY; ACCEPTANCE, AND REJECTION



4.1 Deliverables. Samsung and JetFax agree to use reasonable efforts to perform their respective obligations hereunder and deliver their respective Deliverables, which conform to the Specifications, in accordance with the Project Schedule. Each party's obligation shall be contingent upon the other party successfully providing any prerequisite Deliverable (as specified in the Project Schedule) in a timely fashion. AU Deliverables shall be delivered by the times set forth in the Project Schedule, The parties shall use such Deliverable s for testing and acceptance and marketing purposes only and shall not sell, lease or transfer the same to any third party.



4.2 Acceptance.



(a) Each party will examine and test each Deliverable (and/or part thereof of the other party upon receipt. Each receiving party shall, as soon as reasonably practicable following the receipt of same, but in no event later than fifteen (15) business days after receipt, (i) accept the Deliverable (or part thereof) and so inform the other party in writing or (ii) if t h e Deliverable (or part thereof) contains material Errors, reject the Deliverable (or part thereof and provide the other party with a written statement of such material Errors. The failure of a party to respond within the specified fifteen (15) day period s hall be deemed acceptance of the Deliverable (or part thereof, but shall not limit the provisions of Section 4.4 hereof. Either party may request a reasonable extension of time to complete such testing if required under the circumstances, and both parties shall reasonably consider such requests, provided that no such extension shall be effective unless in writing and signed by a duly authorized representative of the party granting such extension.



(b) The developing party will promptly correct the material Errors set forth in the statement of material Errors with respect to any Deliverable (or part thereof) and redeliver the Deliverable (or part thereof to the receiving party within such reasonable period of time as may be agreed upon by JetFax and Samsung . The receiving party shall, as soon as reasonably practicable after such redelivery, but in no event later than fifteen (15) business days thereafter, accept or reject the redelivered Deliverable in accordance with the procedure set forth in Section 4.2(a ). Such procedure shall be repeated until the Deliverables are accepted or the receiving party invokes the provisions of Section 4.2(d) hereof.



(c) "Acceptance" shall be deemed to occur upon the earlier of (i) acceptance, pursuant to this section, of all JetFax and Samsung Deliverables or (ii) the first sale, lease, license or other distribution or transfer of a Product by Samsung to a customer or other third party other than solely for test purposes.



(d) The parties further agree that if a dispute arise s as to whether any Deliverable (or part thereof) is acceptable under the foregoing procedure, and the parties are unable after good faith negotiation to resolve such dispute, the parties agree to submit the acceptability of any such Deliverable (or part t hereof to a mutually acceptable independent third party mutually acceptable to the parties. Such third party shall test the Deliverable (or part thereof and determine if the Deliverable (or part thereof meets the Specifications for the Deliverable and thu s is acceptable. The determination of such independent third party as to the acceptability of any Deliverable (or part thereof shall be deemed final. The cost, if any, of employing such independent third party shall be borne by the losing party.



4.3 Rejection. If any Deliverable is determined under Section 4.2(d) to not be acceptable, such feature may be deemed a breach of this Agreement by such delivering party, and the non-breaching party may elect to



terminate this Agreement pursuant to Section 12.2(a) hereof or may elect to accept further resubmission of the applicable Deliverable.



4.4 JetFax Support. For a period of one (1) year after JetFax's release of the final production Software, JetFax shall provide Samsung with reasonable engineering supp ort as required to incorporate the Hardware Designs and Software in the manufacture of the Product. All related airfare, transportation, housing and meal expenses incurred by JetFax during visits requested by Samsung shall be paid by Samsung. After the i nitial one (1) year period, JetFax shall make its engineering support reasonably available to Samsung at JetFax's customary rates. For two (2) years after the first date of production of the Product, JetFax shall use reasonable efforts to correct all mate r ial, documented and reproducible Errors in the Software at no additional charge. Samsung shall provide such assistance as JetFax may reasonably request in making such corrections. All such corrections to the Software and Hardware Designs shall be deemed to be included in the licenses granted under Section 5.3 hereof JetFax will have no obligation under this section with respect to any Error in the Software or Hardware Designs caused by any person or entity other than JetFax, and JetFax is not obligated t o correct any Errors in the Software unless such Error or defect causes the Software to fail to function in conformance with the Specifications.



5. SUPPLY AND OWNERSHIP RIGHTS



5.1 ASIC Set Procurement. Samsung shall purchase all the ASIC Sets Samsung or its Affiliates require from JetFax under the terms and conditions co ...