Development And Product Supply Agreement

DEVELOPMENT AND PRODUCT SUPPLY AGREEMENT


THIS DEVELOPMENT AND PRODUCT SUPPLY AGREEMENT ("Agreement") is made as of July 19, 2000 (the "Effective Date") by and between S3 Incorporated, a Delaware corporation having offices at 2841 Mission College Boulevard, Santa Clara, California 95054 ("S3"), and Intellon Corporation, a Florida corporation having offices at 5100 West Silver Springs Boulevard, Ocala, Florida 34482 ("Intellon").


RECITALS


A. S3 and Intellon desire to enter into a collaborative technical
and commercial relationship pursuant to which Intellon will
develop and manufacture powerline networking chipsets which
may be used with S3's products; and


B. In furtherance of this effort, S3 will purchase from Intellon
certain Chipsets as more particularly set forth herein.


NOW, THEREFORE, the parties agree as follows:


1. Definitions and Interpretation. As used in this Agreement, the following terms shall have the following meanings:


1.1 "Chipsets" means the INT5130 powerline networking chipset developed under this Agreement that includes the INT5130 MII Integrated Powerline MAC/PHY Transceiver IC, INT1000 Integrated Analog Conversion (ADC/DAC) IC, and which complies with the HomePlug V1.0 specification.


1.2 "Development" means any development work undertaken according to the Development Plan and in accordance with this Agreement.


1.3 "Development Plan" means a mutually agreed writing setting forth, among other things: (i) the Specifications for the Chipset, and (ii) project timelines for the Development effort. Once mutually agreed and reduced to writing, a Development Plan may be modified only by the parties' written, mutual agreement. A copy of the Development Plan is attached hereto as Exhibit A.


1.4 "First Production Date" means the date on which any such Product is made available commercially to any third party (not including samples provided for pre-market testing).


1.5 "HPA" means the HomePlug Powerline Alliance, a not for profit organization incorporated in California.


1.6 "Home Plug 1.X Specification" means the specification adopted by the HPA for the purpose of offering home powerline products. Copies of the Home Plug 1.X Specifications are available from HomePlug.


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Portions of this agreement have been omitted and filed separately with the Commission pursuant to an application for confidential treatment under Rule 406.


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CONFIDENTIAL TREATMENT REQUESTED


1.7 "Intellectual Property" shall mean any and all confidential or proprietary technologies, procedures, processes, designs, inventions, discoveries, know-how, methods, show-how, works of authorship and other information and materials, including without limitation, documentation, and all patents and patent applications, copyrights, trade secrets, mask work rights and other proprietary rights therein or relating thereto.


1.8 "Intellon Technology" means the Intellectual Property owned or licensed by, or conceived, developed or invented by or for Intellon, including without limitation Intellectual Property developed by Intellon pursuant to this Agreement.


1.9 "Product" means production version of the Chipset and meeting the Specifications developed by the parties.


1.10 "Purchase Order" or "P.O." shall mean an offer from S3 received by Intellon, whether in written or other form, or in electronic form, to purchase or schedule delivery of a specified amount of Products that complies with the requirements set forth in this Agreement.


1.11 "S3 Technology" means any and all Intellectual Property owned or licensed by, or conceived, developed or invented, by or for S3, other than Intellon Technology, including, without limitation, those items listed on Exhibit A.


1.12 "S3 Mark" means a trademark, tradename, service name, service mark or logo of S3.


1.13 "S3 Products" means any product, process or Intellectual Property that carries an S3 Mark.


1.14 "Specifications" means the mutually agreed upon manufacturing, performance and functional requirements for the Chipset as more fully specified in the Development Plan, which may be modified from time to time by the mutual consent of both parties, and which shall be modified at the completion of the Development to more specifically describe the then current Chipset that is approved by S3. The Specifications shall be defined in terms of (i) the Chipset's manufacturing and performance specifications and (ii) such other criteria or specifics as may be agreed upon in the Development Plan.


2. Development.


2.1 Intellon will develop the Chipset, test boards, device drivers, evaluation test software, and other mutually agreed upon items. The Chipset will comply with the HomePlug V1.0 specification.


2.2 Intellon will develop a Chipset meeting the Specifications in accordance with the Development Plan set forth on Exhibit A attached hereto.


2.3 Intellon shall be responsible for the development, testing and manufacture of the Chipsets, including all costs and expenses related thereto.


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Portions of this agreement have been omitted and filed separately with the Commission pursuant to an application for confidential treatment under Rule 406. 3
CONFIDENTIAL TREATMENT REQUESTED


2.4 S3 will provide S3 Technology and assistance with the Development, at S3's sole discretion, and conditioned on the parties entering into an appropriate licensing and non-disclosure agreement.


2.5 Intellon will provide S3 with updated system and data sheets, reference schematics and engineering samples (ES5130 chipset) at or before agreed upon development milestones,********** and in any event, promptly upon S3's request, to the extent it is available.


2.6 Intellon will provide S3 with information relating to the development of the Specifications and/or Chipset from time to time during the Development, **********and in any event, promptly upon S3's request to the extent available.


2.7 Each month Intellon will deliver to S3 progress reports (orally, followed up promptly with a written summary) describing actual project status with respect to the Development to be performed under this Agreement, including progress on the project plan, test results from simulations or physical devices, and significant achievements or risks. These reports will be initiated from the first month of the Development and will continue until the completion of the Development


2.8 Intellon shall maintain records, in sufficient detail and in good scientific manner appropriate for patent purposes, which shall be complete and accurate and shall fully and properly reflect all work done and results achieved in the performance of the Development (including all data in the form required under all applicable laws and regulations). Such records shall include books, records, reports, notes, charts, graphs, comments, computations, analyses, recordings, photographs, computer programs and documentation thereof, computer information storage means, and other graphic or written data generated in connection with the Development including any data required to be maintained pursuant to all requirements of applicable laws and regulations.


2.9 Intellon agrees to maintain all its facilities and equipment in good working condition and in compliance with any or all regulatory requirements.


2.10 Intellon agrees to comply with all applicable laws in its performance of this Agreement.


3. Test/Acceptance.


3.1 Intellon will provide S3 with a number of samples of the Chipset as reasonably needed by S3 (or its contractors) for Development purposes at the Prices set forth in Exhibit B.


3.2 Upon receipt of the samples, S3 shall evaluate and test whether the Product conforms to the Specification pursuant to the Development Plan.


3.3 If, as a result of any of the tests performed pursuant to Section 3.2, any part of the Product fails to conform to its Specification, Intellon shall modify the Product or provide an


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Portions of this agreement have been omitted and filed separately with the Commission pursuant to an application for confidential treatment under Rule 406.


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CONFIDENTIAL TREATMENT REQUESTED


alternative remedy to ensure compliance so that it meets its Specifications within a reasonable amount of time not to exceed two months after receiving notice from S3 of such failure.


4. S3 Obligations. S3 will designate S3 employees to develop an S3 product (or product family) using the Chipset.


5. **********


6. License Royalties.


6.1 At S3's discretion, S3 may license Intellon's patent claims that are necessary to implement chipsets complying with the HomePlug 1.X Specifications **********. In addition, S3 may license Intellon's Technology embodied in the Chipset that is licensable at no additional cost to Intellon for a specific field of use **********. Nothing in this Agreement will limit S3 from developing, licensing or manufacturing its own chipsets.


7. Product Purchases.


7.1 General. During the term of this Agreement, Intellon agrees to supply and S3 agrees to purchase minimum quantities of the Product under the terms and conditions of this Agreement. Notwithstanding anything in this Agreement to the contrary, there shall be no limitations, whatsoever, on S3's use of Products purchased from Intellon. All Purchase Orders are subject to Intellon's acceptance, however, so long as such Purchase Orders are in compliance with this Agreement, Intellon agrees to accept the Purchase Order. The purchase and supply of Products between Intellon and S3 shall be governed solely and exclusively by this Agreement, which shall supersede the terms and conditions contained in any Purchase Order, acknowledgment or other document related to the purchase and supply of Products, all of which terms and conditions are hereby expressly waived. This Agreement shall not be modified, supplemented or interpreted by any trade usage or prior course of dealing not made a part of this Agreement by its express terms.


7.2 **********. Intellon agrees to provide S3 with ********** Product quantities during the term of this Agreement **********.


7.3 Minimum Quantity. S3 hereby will order ********** of Product under this Agreement to be delivered during the first 24 months from the First Production Date. A **********units of Product ********** will be scheduled for delivery during the **********after the First Production Date. S3's purchase obligations for the Minimum Quantity are as follows: (a) The **********of the units or Product ordered by S3 during the **********after the First Production Date will be non-cancelable; and (b) the **********of Product ordered by S3 during the ********** after the First Production Date may be canceled, subject to a cancellation fee equal ********** the purchase price, upon written notice to Intellon at least **********. Unless otherwise specified, unit orders beyond the Minimum Quantity will be cancelable without penalty, if written notice is provided to Intellon at least **********


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Portions of this agreement have been omitted and filed separately with the Commission pursuant to an application for confidential treatment under Rule 406.


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CONFIDENTIAL TREATMENT REQUESTED


7.4 Alternate Supplier: If Intellon misses delivery of ********** as defined in Exhibit A by at least **********, S3 can apply all HomePlug chipset purchased from Alternate Suppliers from that date until *********** after Intellon's **********of Qualified Production Chipsets, **********, against the ********** in Section 7.3.


7.5 Forecasts. Commencing six (6) months prior to the First Production Date, and thereafter on a monthly basis on or before the 15th day of each month, S3 (or S3's third party manufacturer) will submit to Intellon a Purchase Order covering the next three (3) calendar months and a non-binding rolling forecast of its requirement for the Product to be shipped for the nine (9) months after the last period covered by the PO.


7.6 Purchase Orders. The following requirements shall apply to all purchase orders:


- All Purchase Orders will be **********.


- Intellon shall accept (subject to the PO complying with
this Agreement and not exceeding the forecast) and
acknowledge in writing each Purchase Order submitted by S3
within fourteen (14) business days after receipt thereof,
and will deliver the ordered Products on the delivery date
set forth in the Purchase Order.


- S3 reserves the right to refuse delivery and return freight
collect any quantity of Products in excess of that
specified in the Purchase Order and/or any delivery made
more than fifteen (15) days in advance of, or after, the
delivery date designated by S3 in the applicable Purchase
Order.


- Intellon shall only be obligated to use reasonable
commercial efforts under the current then current
circumstances to fill Purchase Orders for Product in excess
of the applicable forecast.


- All Purchase Orders will identify the quantity of Product
required, the part number, the price per unit of completed
Product and the revision number for the Specifications that
are to be used for the Product ordered.


When acknowledgement of receipt and acceptance of the Purchase Order is made by Intellon (either by written Notice or as otherwise stated in this Agreement), the Purchase Order shall be deemed a commitment to purchase and sell the Products pursuant to the terms of this Agreement.


7.7 Shipment Rescheduling. Except as provided in Section 7.3 of this Agreement, S3 may reschedule shipments of Product in accordance with the following table by providing Intellon a written order ("Order") for such reschedule. The time periods specified in the following table are the number of days after receipt by Intellon of the Order for rescheduling that the Products were originally scheduled to be shipped. Intellon shall ship and invoice for Product on the delivery dates specified by S3, in accordance with the forecast, unless cancelled or rescheduled as permitted herein.


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Portions of this agreement have been omitted and filed separately with the Commission pursuant to an application for confidential treatment under Rule 406. 6
CONFIDENTIAL TREATMENT REQUESTED


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