Joint Development and License Agreement - The 3DO Co. and Cirrus Logic Inc.
JOINT DEVELOPMENT AND LICENSE AGREEMENT
The 3DO Company ("3DO") and Cirrus Logic, Inc. ("Cirrus Logic") enter into this
Joint Development and License Agreement (the "Agreement") as of this 29th day of
February, 1996 ("Effective Date").
RECITALS
3DO has developed an existing semiconductor device known as "BDA" ("BDA") that
includes, among other things, a component designated by the parties as the
"3DEngine" (as defined in Section 1.4 below). Cirrus wishes to have 3DO develop
certain modifications to the 3DEngine and to obtain a nonexclusive license of
such 3DEngine to incorporate the 3DEngine in semiconductor devices developed by
Cirrus Logic, and 3DO wishes to make such modifications and grant such license,
on the terms and conditions set forth in this Agreement. Accordingly, in
consideration of the mutual representations, warranties, covenants, and other
terms and conditions contained herein, and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, 3DO and Cirrus
Logic agree as follows:
TERMS AND CONDITIONS
1. Definitions.
1.1. "3DO Deliverable Items" means the specific information and
materials of or concerning the 3DEngine set forth in Exhibit A, attached hereto,
and any other information and materials of or concerning the 3DEngine provided
by 3DO to Cirrus Logic in connection with this Agreement.
1.2. "Development Period" means the period beginning upon commencement
of the Development Program and ending upon the earliest of (i) acceptance by
Cirrus Logic of the last of the 3DO Deliverables set forth in Exhibit A,
attached hereto, (ii) exercise by Cirrus Logic of its right to terminate 3DO
engineering services pursuant to Section 7, below, (iii) exercise by Cirrus
Logic of its right to receive source code in accordance with Section 28, below,
or (iv) termination of this Agreement.
1.3. "Development Program" means the development work to be undertaken
by both parties under the terms and conditions of this Agreement in order to
obtain an initial production version of Magnum in accordance with the Magnum
Specifications.
1.4. "3DEngine" means the memory controller, bus interface, 3D setup
engine and 3D rendering engine components of BDA described in Exhibit B,
attached hereto, as they exist on the Effective Date, together with (i) the
modifications to such components specifically required to be made under this
Agreement and (ii) any other modifications to such components completed by 3DO
during the Development Period (whether or not arising from the Development
Program) as to which 3DO has the right to grant licenses to Cirrus Logic of the
scope contemplated by this Agreement, except that the "3DEngine" expressly
excludes (a) any version or derivative of such components designed for a
product configuration to comply with the MPEG2 or Digital Versatile Disc
("DVD") standard and (b) any modifications designed for any version or
derivative.
1.5. "PCI Bus" means Peripheral Component Interface, the 32/64-bit
local bus architecture developed by Intel, IBM and DEC, among others.
1.6. "Magnum" means a Product to be developed by Cirrus Logic in
accordance with this Agreement that integrates the VGA Logic with the 3DEngine.
The parties anticipate that Magnum will be the first Product developed and
manufactured by Cirrus Logic under this Agreement.
1.7. "Magnum Specifications" means the feature and functionality
requirements set forth in Exhibit B, attached hereto.
1
<PAGE> 2
1.8. "Multi-Purpose Computers" means computers with a multiplicity of
functions and purposes. Without limitation, "Multi-Purpose Computers" expressly
excludes any video game device or other dedicated-purpose system.
1.9. "Net Revenues" means the gross revenues recognized by Cirrus Logic
and its Subsidiaries for the sale or other distribution of Products, but not
including separate related charges for (i) sales and use taxes, excise taxes,
customs duties and other similar taxes (excluding in any event taxes on Cirrus
Logic's net income), (ii) shipping and/or insurance charges, (iii) bad debts,
and (iv) the amount of any refunds and/or credits, but only to the extent that
such refunds and/or credits are actually recognized against such gross revenues.
Net Revenues will be determined in accordance with United States generally
accepted accounting principles consistently applied.
1.10. "NRE Expenses" means nonrecurring engineering expenses incurred
by 3DO. "NRE Expenses" are hereby agreed to be equal to the rate of
$[CONFIDENTIAL TREATMENT REQUESTED] per person year and to the rate of
$[CONFIDENTIAL TREATMENT REQUESTED] per person day for any partial person years
(unless otherwise agreed to in writing for any particular additional engineering
services under section 5.3, below).
1.11. "Product" means a semiconductor device now or hereafter developed
by Cirrus Logic that incorporates all or a portion of the 3DEngine.
1.12. "Royalty Bearing Product" means a Product sold or otherwise
distributed by Cirrus Logic or its Subsidiaries, excluding Products (a)
distributed at no charge solely for demonstration, evaluation, training,
development or promotional purposes or (b) sold to 3DO.
1.13. "Subsidiary" means, with respect to a party, an entity as to
which such party owns and controls at least seventy percent (70%) of the capital
stock and/or other equity (or, in the case of a noncorporate entity, equivalent
interests) representing the right to vote for the election of directors or
another managing authority, but such entity shall be deemed to be a Subsidiary
only so long as such ownership and control exist.
1.14. "VGA Logic" means the video graphics adapter core logic comprised
of components such as the controller, bus interface, buffer, digital to analog
converter, 2D acceleration logic, video functions and other related components
as incorporated into Magnum.
2. Technology License Grant.
2.1. 3DO hereby grants to cirrus Logic, subject to the terms and
conditions of this Agreement, a non-exclusive, non-transferable (except as
provided in Section 31.3, below), worldwide, irrevocable (except as set forth in
Section 27, below) license (i) to design and develop modifications to and
derivatives of the 3DEngine, (ii) to use the 3DEngine, including such
modifications and derivatives, in the design and development of Products, and
(iii) to manufacture, import, use, offer to sell, sell and otherwise distribute
such Products, in each case solely for Multi-Purpose Computers. Such license
shall include (a) the right to use trade secrets, copyrights, mask work rights
and patents, if any, relating to the 3DEngine that are necessary for the design
and development of such modifications and the manufacture, import, use, offer to
sell, sale and other distribution of such Products for Multi-Purpose Computers
and (b) the right to use, reproduce and modify the 3DO Deliverable Items in
connection with the design and development of such modifications and the
manufacture, import, use, offer to sell, sale and other distribution of such
Products for Multi-Purpose Computers.
2.2. Cirrus Logic shall not (and shall have not right to) sublicense
any of its rights or licenses under this Agreement, except that Cirrus Logic may
have sublicense the rights set forth in this Section 2 to one or more of its
Subsidiaries, provided that (i) Cirrus Logic shall be responsible for compliance
by the Subsidiaries with the terms and conditions of this Agreement to the same
extent as Cirrus Logic itself, (ii) any act or omission of the Subsidiaries
shall constitute an act or omission of Cirrus Logic, and (iii) the Subsidiaries
shall agree in writing that they are subject to the terms and conditions of this
Agreement and that 3DO shall have a right of action against the Subsidiaries to
the same extent as Cirrus Logic itself with respect to a breach of any
obligation relating to this Agreement by such Subsidiary.
2
<PAGE> 3
2.3. Cirrus Logic shall not (and shall have no right to) have its
rights or licenses under this Agreement exercised by any third party (and,
without limitation, shall have no "have developed" or "have made" rights) except
as follows:
(a) Cirrus Logic may engage third-party contractors to engage
in design and development of modifications to the 3DEngine, solely for the
benefit of Cirrus Logic, provided that the third parties agree in writing (i)
that the 3DO Deliverables and other Confidential Information of 3DO may be used
only for the design and development of modifications to the 3DEngine for the
sole benefit of Cirrus Logic, (ii) to confidentiality requirements, including,
without limitation, restrictions on disclosure and use of 3DO Deliverable Items
and other Confidential Information of 3DO, no less strict than those required by
Cirrus Logic for its own comparable confidential and proprietary information,
and (iii) that all right, title and interest in and to their work product,
including, without limitation, any design and development related to the
3DEngine and modifications thereto, are assigned to Cirrus Logic;
(b) Cirrus Logic may engage third-party semiconductor
manufacturers (including but not limited to foundry and ASIC manufacturers),
assemblers and test facilities to fabricate, assemble and/or test the Products,
solely for the benefit of Cirrus Logic, provided that (i) the Products are sold
by the manufacturer (and any such assemblers and test facilities) only to Cirrus
Logic, (ii) the manufacturer, assembler or test facility is not provided with
any Confidential Information of 3DO except for materials required for
fabrication, assembly and/or testing of such Products and (iii) the
manufacturer, assembler or test facility agrees in writing (A) that the
Confidential Information, if any, provided to the manufacturers, assembler or
test facility may be used only for fabrication, assembly and/or testing of
Products for the sole benefit of Cirrus Logic, and (B) to confidentiality
requirements, including, without limitation, restrictions on disclosure and use
of 3DO Deliverable Items and other Confidential Information of 3DO, no less
strict than those required by Cirrus Logic for its own comparable confidential
and proprietary information; and
(c) Cirrus Logic may disclose 3DO Deliverable Items and other
Confidential Information to third parties participating with Cirrus Logic in (i)
joint development of a Product or of an interface of third party proprietary
technology into a Product, or (ii) integration of a Product into systems
(including board-level systems) or with other semiconductor devices, but solely
as necessary for such joint development or integration, provided that (A) such
third parties agree in writing (1) that the 3DO Deliverable Items and other
Confidential Information of 3DO may be used only for such joint development
and/or integration for the sole benefit of Cirrus Logic, and (2) to
confidentiality requirements, including, without limitation, restrictions on
disclosure and use of 3DO Deliverable Items and other Confidential Information
of 3DO, no less strict than those required by Cirrus Logic for its own
comparable confidential and proprietary information and (B) any Products which
are the subject of this subsection (c) are sold or distributed only by Cirrus
Logic.
3. Technical Disclosure. For the purposes described above, 3DO shall
deliver to Cirrus Logic the 3DO Deliverable Items set forth in Exhibit A,
attached hereto.
4. Development of Magnum. 3DO and Cirrus Logic shall jointly determine the
specifications for the interface between the VGA Logic and the 3DEngine for
Magnum. Thereafter, 3DO shall use reasonable best efforts to modify the design
of the 3DEngine so as to conform to the jointly determined Magnum interface
specifications. Cirrus Logic shall be solely responsible for the fabrication of
units of Magnum, and solely liable for all costs and expenses relating to the
production of Magnum, including, without limitation, the development of all
masks, the production of all test devices, the testing of all prototypes, and
the revision of all masks and designs which may be required as a result of any
testing. 3DO will cooperate with and assist Cirrus Logic with respect to the
process of debugging of the 3DEngine until the first commercial shipment of the
initial production version of Magnum. Any additional engineering services in
excess of those required pursuant to Section 3, above, or this Section 4 shall
be subject to 3DO's reasonable approval prior to 3DO being obligated to perform
such services, and shall be subject to the terms and conditions of Section 5.3,
below.
5. Non-Recurring Engineering Expenses. Cirrus Logic shall pay the NRE
Expenses for engineering services furnished by 3DO in connection with
development and delivery of the 3DO Deliverable Items and
3
<PAGE> 4
performance of its obligations under Section 4, above. The payments will be
nonrefundable. The payments shall be made as follows:
5.1. Within fifteen (15) days following the execution of this
Agreement, Cirrus Logic shall provide 3DO with an initial NRE Expenses payment
in advance in the amount of $[CONFIDENTIAL TREATMENT REQUESTED]. The balance of
the NRE Expenses to be provided by Cirrus Logic shall be paid to 3DO in
accordance with the milestones referenced in Exhibit C, attached hereto, as
amended from time to time by mutual agreement of the parties. Payments based on
milestones consisting of acceptance of 3DO Deliverable Items will be subject to
the acceptance procedure set forth in Section 6, below, and shall be made by
Cirrus Logic within fifteen (15) days after the later of (i) Cirrus Logic's
acceptance of the 3DO Deliverable Items associated with such milestones or (ii)
Cirrus Logic's receipt of an invoice with respect thereto, which invoice will
include a summary of such milestones and the cumulative number of person years
(or portion thereof) spent in completing the milestones. NRE Expenses shall be
calculated based on actual engineering services performed hereunder on a person
year and person day basis. Any NRE expenses that, in the aggregate, exceed the
sum of the estimates referenced in Exhibit C shall be subject to Cirrus Logic'
approval, which approval will not be unreasonably withheld. 3DO will have no
obligation to provide engineering services for which the NRE Expenses will not
be paid.
5.2. The parties acknowledge and agree that Exhibit C, attached hereto,
is intended to set forth the reasonable schedule of desired engineering
services, deliverables and related milestones, and estimates of any required 3DO
resources and related NRE Expenses in order to meet its development and delivery
obligations under Section 3 and 4, above. The parties acknowledge and agree
that, because of uncertainties in the development and testing process, the
estimates of 3DO resources and related NRE Expenses are necessarily preliminary,
and that the parties shall use diligent, good faith efforts to reach agreement
with respect to additions and modifications to Exhibit C. Notwithstanding the
immediately preceding sentence, Cirrus Logic shall not be obligated to pay for
the marginal cost of inefficiencies resulting from 3DO's use of engineers who
are not comparable to those generally used on semiconductor development projects
of this kind. In any event, unless otherwise approved by Cirrus Logic, which
approval will not be unreasonably withheld, the aggregate NRE Expenses for 3DO's
development and delivery obligations under Section 3 and 4, above, will not
exceed $[CONFIDENTIAL TREATMENT REQUESTED] ("NRE Cap").
5.3. In the event that Cirrus Logic desires any additional engineering
services from 3DO in connection with any future engineering task or project that
3DO is not obligated to undertake or perform pursuant to the provisions of
Sections 3 or 4, above, such engineering services shall be the subject of a
separate agreement between e parties and shall require the payment of additional
NRE Expenses by Cirrus Logic, the amount of which shall be negotiated in good
faith and mutually agreed upon by the parties, and which amount shall neither by
subject to nor count towards the NRE Cap. In addition, in the event that Cirrus
Logic desires 3DO to develop any applications software that would demonstrate
the performance characteristics of Magnum, the applicable software development
requirements, schedule and related costs would be negotiated by the parties in
good faith and, if mutually agreed upon, would become the subject of a separate
agreement or an amendment to this Agreement. NRE Expenses for software
development during the first year after the Effective Date will be calculated at
the rate of $[CONFIDENTIAL TREATMENT REQUESTED] per person year, pro-rated at a
rate of $[CONFIDENTIAL TREATMENT REQUESTED] per person hour for any partial
person years.
6. Additional Procedure.
6.1. Upon receipt of a 3DO Deliverable Item, Cirrus Logic will have
twenty (20) days from the date or receipt ("Acceptance Period") in which to test
and evaluate the 3DO Deliverable Item and determine whether it materially
confirms to any applicable Magnum Specifications for such 3DO Deliverable Item.
Before the end of the Acceptance Period, Cirrus Logic will provide 3DO with a
written notice of acceptance of the 3DO Deliverable Item or a notice of
rejection that (i) specifies in reasonable detail the material nonconformance(s)
(to the applicable Magnum Specifications) that are the basis for the rejection
and (ii) is accompanied by test suites and test results, if applicable,
evidencing (and allowing 3DO to replicate) such nonconformance(s). If 3DO does
not receive such a notice of rejection during the Acceptance Period, the 3DO
Deliverable Item will be deemed accepted. If 3DO receives a notice of rejection
during the Acceptance Period, 3DO will, during the period of twenty (20) days
from the date or
4
<PAGE> 5
receipt of the rejection notice, use reasonable best effort to correct any
material nonconformance(s) specified in the rejection notice and to deliver the
corrected 3DO Deliverable Item to Cirrus Logic. The process set forth in this
Section 6.1 will continue until the 3DO Deliverable Item is accepted.
6.2. The parties acknowledge and agree that the acceptance process set
forth in Section 6.1 may not reveal all bugs or defects, and that in the event
any such bugs or defects are subsequently discovered during the Development
Period, 3DO will use reasonable best efforts to correct any bugs or defects upon
Cirrus Logic's request as part of 3DO's development obligations under Section 4,
above, provided that (i) 3DO's obligations will be limited to bugs or defects
that constitute nonconformance(s) with the Magnum Specifications and (ii) any
such bugs or defects will not affect 3DO rights to any milestone payments or any
other rights based on acceptance.
6.3. All references in this Agreement to acceptance of 3DO Deliverable
Items (and, accordingly, any references in this Agreement to the end of the
Development Period) assume that (i) the development, delivery and acceptance of
the 3DO Deliverable Items are not delayed because of an act or omission of
Cirrus Logic (including its contractors, its suppliers or other parties for
which Cirrus Logic is responsible), and (ii) Cirrus Logic does not unreasonably
withhold or delay its acceptance of the 3DO Deliverable Items. In either such
event, 3DO will be entitled to the rights and benefits triggered by acceptance
of the 3DO Deliverable Items (and, accordingly, any rights and benefits
triggered by the end of the Development Period), including, without limitation,
the payment of NRE Expenses, payment of pre-paid royalties and running of the
six (6) month periods described in Sections 20.1 and 20.4, below, as of the day
acceptance would have occurred if such event had not occurred, notwithstanding
failure to achieve the milestone to which the acceptance relates.
7. Termination of3DO Engineering Services. Cirrus Logic may, upon thirty
(30) days' written notice to 3DO, terminate 3DO's engineering services to be
provided pursuant tot his Agreement at any time during he Development Program.
Upon such termination, 3DO shall have no further obligations to perform any
engineering services hereunder. In the event of such a termination, Cirrus Logic
shall, within fifteen (15) days after Cirrus Logic's receipt of an invoice for
NRE Expenses incurred before the effective date of termination for which 3DO has
not previously been paid, pay the greater of (i) such NRE Expenses, subject to
the terms and conditions of Section 5.2, above, with respect to the NRE Cap, or
(ii) an amount equal to $[CONFIDENTIAL TREATMENT REQUESTED] less the NRE
Expenses previously paid by Cirrus Logic to 3DO hereunder. Promptly upon receipt
of such payment, 3DO shall deliver to Cirrus Logic copies of all 3DO Deliverable
Items set forth in Exhibit A, attached hereto, as and in the form existing on
the effective date of termination (whether completed, partially completed or
uncompleted), for Cirrus Logic's use solely in accordance with and subject to
the terms and conditions of, this Agreement. Termination pursuant to this
Section 7 shall affect only the engineering services to be provided by 3DO and
the related NRE Expenses, and shall not result in termination of this Agreement
or affect the rights and obligations of the parties hereunder, including,
without limitation, 3DO's right to receive the license fees, royalty payments
and any other sums due hereunder.
8. Ownership Interests.
8.1. Except as expressly set forth herein, (i) 3DO retains all right,
title and interest in and to the 3DEngine and 3DO Deliverable Items, any
modifications to the 3DEngine or 3DO Deliverable Items that are developed by or
for 3DO, and any subsequently derived and/or successor technologies that are
developed by o for 3DO or any related intellectual property rights, and (ii)
Cirrus Logic retains all right, title and interest in and to the VGA Logic, any
modifications to the VGA Logic that are developed by or for Cirrus Logic, or any
subsequently derived and/or successor technologies that are developed by or for
Cirrus Logic or any related intellectual property rights.
8.2. All of 3DO Rights with respect to the 3DEngine and/or any related
intellectual property rights that are not specifically granted to Cirrus Logic
are expressly reserved by 3DO. No license or rights with respect to the 3D
Engine and/or any related intellectual property rights shall be implied by or
inferred from this Agreement or the activities of the parties in furtherance of
this Agreement.
8.3. Cirrus Logic shall own any modifications to the 3DEngine or 3DO
Deliverable Items made by or for Cirrus Logic (except those made by 3DO),
subject to 3DO's underlying ownership interests in
5
<PAGE> 6
and to the 3DEngine and related intellectual property rights (and provided that,
for purposes of clarification, Cirrus Logic acknowledges it has no rights to use
or to otherwise exploit any modifications that include all or any portion of the
3DEngine, or that use or are subject to any related intellectual property
rights, except as part of Products as expressly authorized by this Agreement).
3DO shall own any implementation or embodiment developed by 3DO based on an
idea, invention or information developed by Cirrus Logic and disclosed or
otherwise provided to 3DO hereunder, provided that either party may use or
otherwise exploit (or sublicense the right to use or otherwise exploit) such
idea, invention or information, whether or not patentable.
9. Scope of Agreement. This Agreement and the rights and obligations of
the parties hereunder are limited to the 3DEngine, as specifically defined in
Section 1.4, above, and the 3DO Deliverable Items set forth in Exhibit A,
attached hereto. Nothing herein shall be construed as granting Cirrus Logic any
rights with respect to, or requiring 3DO to offer to Cirrus Logic, any
modification or addition to the current version of the 3DEngine, or any new
version of the 3DEngine, except for modifications specifically included within
the definition of "3DEngine."
10. License Fee. In partial consideration for 3DO's grant of the various
licensed rights regarding the 3DEngine referenced hereinabove, and in addition
to me NRE Expenses, Cirrus Logic shall pay 3DO the sum of $[CONFIDENTIAL
TREATMENT REQUESTED] as a non-refundable, non-recoupable license fee (the
"License Fee"). The License Fee shall be paid to 3DO in accordance with the
following schedule: (i) $[CONFIDENTIAL TREATMENT REQUESTED] within fifteen (15)
days following the Effective Date, or March 31, 1996, whichever is earlier, (ii)
$[CONFIDENTIAL TREATMENT REQUESTED] no later that March 31, 1996, and (iii)
$[CONFIDENTIAL TREATMENT REQUESTED] within ninety (90) days following the
Effective Date, or June 1, 1996, whichever is earlier.
11. Pre-Paid Royalties. In partial consideration for 3DO's grant of the
various licensed rights regarding the 3DEngine referenced hereinabove, and in
addition to the License Fee and the NRE Expenses, Cirrus Logic shall pay 3DO the
non-refundable sum of $[CONFIDENTIAL TREATMENT REQUESTED] (the "Advance"), which
sum shall be recoupable by Cirrus Logic as an advance payment of the first
royalties otherwise due and payable to 3DO pursuant to Section 12, below, with
respect to Cirrus Logic's exercise of the licensed rights. The Advance shall be
paid to 3DO in accordance with the following schedule: (i) $[CONFIDENTIAL
TREATMENT REQUESTED] within fifteen (15) days following the Effective Date, or
March 31, 1996, whichever is earlier, (ii) $[CONFIDENTIAL TREATMENT REQUESTED]
no later that March 31, 1996, and (iii) $[CONFIDENTIAL TREATMENT REQUESTED] no
later than June 30, 1996, and (iv) $[CONFIDENTIAL TREATMENT REQUESTED] within
fifteen (15) days after the end of the Development Period.
12. Ongoing Royalties.
12.1. Cirrus Logic shall pay royalties to 3DO calculated as a
percentage of the Net Revenues. The applicable royalty rates shall be as
follows:
Months after First
Commercial Shipment Percentage of
(in volume production quantities) Net Revenues
--------------------------------- --------------
1-12 [CONFIDENTIAL
TREATMENT REQUESTED]%
13-24 [CONFIDENTIAL
TREATMENT REQUESTED]%
25 (and beyond) [CONFIDENTIAL
TREATMENT REQUESTED]%
In accordance with the foregoing formula, the parties contemplate, subject to
the provisions of Section 13, below, that the applicable royalty rates for all
Royalty Bearing Products shall decline annually (down to, but not below,
[CONFIDENTIAL TREATMENT REQUESTED] percent ([CONFIDENTIAL TREATMENT
6
<PAGE> 7
REQUESTED]%), except as otherwise expressly set forth in Section 12.3, below),
commencing twelve (12) months after first commercial shipment of volume
production quantities of such Royalty Bearing Product. As used herein, the term
"volume production quantities" refers to the shipment to customers by or for
Cirrus Logic of units of a Product that are not prototypes, engineering samples,
or other such units that are not purchased in quantities for commercial resale.
12.2. All royalties due 3DO shall accrue upon recognition by Cirrus
Logic or a Subsidiary of Net Revenues, regardless of the time of collection by
Cirrus Logic or the Subsidiary. Cirrus Logic and its Subsidiaries will recognize
Net Revenue in accordance with United States generally accepted accounting
principles, consistently applied. No costs incurred in the manufacture,
marketing, sale, distribution or exploitation of the Royalty Bearing Products,
other than as expressly set forth herein, shall be deducted from any royalties
payable to 3DO. If any Royalty Bearing Products are sold or otherwise
distributed in an arrangement that is not an arm's-length merchant market
transaction, and the price of the Royalty Bearing Products is less than the
price in an average arm's-length merchant market transaction, the price in such
an average arm's-length merchant market transaction shall be substituted
therefor in determining Net Revenues. For the sale or distribution of Royalty
Bearing Products bundled with other products, the Net Revenues attributable to
such Royalty Bearing Products shall be based upon the ratio of the average list
prices for the applicable Royalty Bearing Product during the immediately
preceding three (3) fiscal month period to the average list prices of the other
products in the bundle during the immediately preceding three (3) fiscal month
period, provided that where there is no list price for a component, the average
list price for such component shall be mutually agreed upon by the parties in
good faith.
12.3. In the event that Cirrus Logic elects to integrate any additional
circuit designs into any successor to Magnum or any other new Product at some
future date, the parties acknowledge and agree that the royalty rates applicable
to any such derivative Product shall be calculated in accordance with the
following formula, rounded to the next higher tenth of a percent (and applied
only to derivative Product which constitute Royalty Bearing Product):
Royalty rate = A X B/C
where, A = the then-current royalty rate (i.e., [CONFIDENTIAL
TREATMENT REQUESTED]% / [CONFIDENTIAL TREATMENT REQUESTED]% / [CONFIDENTIAL
TREATMENT REQUESTED]%), and
B = the total number of 3DO-developed transistors in the new
Product (with the number of 3DO-developed transistors
deemed never to be less than [CONFIDENTIAL TREATMENT
REQUESTED]), and
C = total transistors in the new Product (with the number of
3DO-developed transistors deemed never to be less than
[CONFIDENTIAL TREATMENT REQUESTED])
By way of example, if a new Product has [CONFIDENTIAL TREATMENT
REQUESTED] total transistors, there are [CONFIDENTIAL TREATMENT REQUESTED]
3DO-developed transistors, and the current royalty rate is [CONFIDENTIAL
TREATMENT REQUESTED]%, the equation would be as follows:
A = [CONFIDENTIAL TREATMENT REQUESTED]%
B = [CONFIDENTIAL TREATMENT REQUESTED]
C = [CONFIDENTIAL TREATMENT REQUESTED]
* [CONFIDENTIAL TREATMENT REQUESTED] total transistors - [CONFIDENTIAL TREATMENT
REQUESTED] 3DO-developed transistors = [CONFIDENTIAL TREATMENT REQUESTED]
non-3DO developed transistors, therefore C = [CONFIDENTIAL TREATMENT REQUESTED]
non-3DO developed transistors + [CONFIDENTIAL TREATMENT REQUESTED] 3DO-developed
transistors (the minimum permissible for calculating total transistors) =
[CONFIDENTIAL TREATMENT REQUESTED] total transistors
7
<PAGE> 8
Royalty rate = [CONFIDENTIAL TREATMENT REQUESTED] X
([CONFIDENTIAL TREATMENT REQUESTED]/[CONFIDENTIAL TREATMENT REQUESTED])
= [CONFIDENTIAL TREATMENT REQUESTED] = [CONFIDENTIAL TREATMENT REQUESTED]
13. Potential Royalty Reset. The parties acknowledge and agree that,
notwithstanding the referenced royalty rate reductions set forth in Section
12.1, above, the then-current royalty rate (which, for purposes of Section 12.3,
above, is that rate designated by "A" in the formula therein) shall reset to
[CONFIDENTIAL TREATMENT REQUESTED] percent ([CONFIDENTIAL TREATMENT REQUESTED]%)
with respect to, and only with respect to, a Royalty Bearing Product (i) for
which 3DO provides any additional technology or intellectual property rights in
accordance with a new agreement between the parties or an amendment to this
Agreement and/or (ii) developed by Cirrus Logic that involves a modification in
3DEngine architecture, including, without limitation, a modification involving
re-pipelining, performance enhancements, bandwith enhancements, and/or other
material feature additions, but specifically excluding modifications in the
3DEngine (a) to the memory controller or (b) intended only to accommodate
changed or different manufacturing process technology and/or a change in cell
libraries. No reset shall be required for modifications in VGA Logic or other
non-3DEngine components of a Product.
14. Shipment Estimates. Within thirty (30) days after the end of each
fiscal month during the term of the licensed rights commencing with the first
commercial shipment of Royalty Bearing Product, Cirrus Logic shall provide 3DO
with a written estimate of the net number of units of each Royalty Bearing
Product sold and/or otherwise distributed by or for Cirrus Logic and its
Subsidiaries during such fiscal month. 3DO acknowledges that each such estimate
will be based on information reasonably available to Cirrus Logic at the time
and that no special effort will be required in order to generate the estimate.
15. Royalty Reports. Within fifteen (15) days after the end of each fiscal
quarter during the term of the licensed rights commencing with the first
commercial shipment of Royalty Bearing Products, Cirrus Logic shall provide 3DO
with a written royalty report, certified to be accurate by an officer of Cirrus
Logic, specifying: (i) the gross number of units of the Royalty Bearing Products
sold and/or otherwise distributed by or for Cirrus Logic and its Subsidiaries
during such fiscal quarter (itemized on a Product-by-Product basis); (ii) the
applicable average selling prices of the Royalty Bearing Products sold and/or
otherwise distributed by or for Cirrus Logic and its Subsidiaries during such
fiscal quarter (itemized on a Product-by-Product basis); and (iii) the total
royalties determined to be due to 3DO with respect to such fiscal quarter. With
respect to Net Revenues generated in foreign currency, the exchange rate used to
determine royalties shall be the monthly average exchange rate as calculated by
Cirrus Logic using the daily closing exchange rate set forth in the final
edition of The Wall Street Journal (version distributed in Northern California).
16. Royalty Payments. Within thirty (30) days after the end of each fiscal
quarter, Cirrus Logic shall wire-transfer to 3DO's designated bank account the
royalty payment determined to be due from Cirrus Logic with respect to such
fiscal quarter.
17. Audit Rights. Cirrus Logic shall retain at its principal place of
business, for a period of three (3) years after making any royalty report, all
of the files, records and books of accounts prepared in the normal course of
business which contain data reasonably required for the computation and
verification of the information to be provided to 3DO and of the amounts to be
paid by Cirrus Logic with respect to any royalty report required hereunder.
Cirrus Logic shall permit any internationally recognized certified public
accounting firm retained by 3DO (or any other certified public accounting firm
designated by 3DO and approved by Cirrus Logic, which approval will not be
unreasonably withheld) ("CPA"), on reasonable notice, to inspect and/or audit at
any reasonable times (but not more often than once per year) all such files,
records and books of accounts and to take extracts therefrom or make copies
thereof for the purpose of verifying the correctness of the royalty reports and
payments provided by Cirrus Logic hereunder. The CPA shall agree in writing (i)
not to disclose information obtained in connection with the inspection and/or
audit to third parties, (ii) not to disclose customer identities or Product
prices on a customer-by-customer basis, and (iii) to disclose to 3DO only the
total number of Royalty Bearing Products (itemized on a Product-by-Product
basis) sold or otherwise distributed by Cirrus Logic and its Subsidiaries and
the amount of royalties determined to be due with respect thereto, but provided
that nothing shall prevent the CPA or 3DO from using such information in
connection with any legal claim by 3DO arising
8
<PAGE> 9
under or related to this Agreement. In the event any such inspection and/or
audit reveals that Cirrus Logic has underpaid 3DO, Cirrus Logic shall promptly
pay 3DO the underpaid amount (together with interest from the date such amount
would have been due, as required by Section 18, below). In the event any such
inspection and/or audit reveals that Cirrus Logic has overpaid 3DO, 3DO shall
promptly grant to Cirrus Logic a credit (usable against future royalty payments
due to Cirrus Logic hereunder) in the amount of the overpayment. In the event of
an underpayment by Cirrus Logic of [CONFIDENTIAL TREATMENT REQUESTED] percent
([CONFIDENTIAL TREATMENT REQUESTED]%) or more with respect to the period which
is the subject of such inspection and/or audit, Cirrus Logic shall promptly
reimburse 3DO for the reasonable fees charged to 3DO by the CPA with respect to
such inspection and/or audit.
18. Late Payments. All sums owed or payable to 3DO hereunder that are not
paid when due shall bear interest at the rate of one and a half percent (1.5%)
per month, or such lower rate as may be the maximum rate permitted under
applicable law, provided that 3DO's right to receive interest (i) shall not
constitute a forbearance or waiver by 3DO and (ii) shall not affect 3DO's other
rights and remedies (whether under this Agreement or otherwise) with respect to
any lateness in payment or failure to pay.
19. Use of Documentation.
19.1. 3DO acknowledges and agrees that Cirrus Logic wishes to provide
to its customers, as an integral part of Cirrus Logic's own technical reference
manuals for customers ("Cirrus Logic Documentation"), certain information and
materials regarding the 3DEngine to assist customers with the use of, and
development of products designed to incorporate, the Products. Accordingly 3DO
will deliver to Cirrus Logic such customer documentation as 3DO has in its
possession which the parties mutually agree is suitable for incorporation into
Cirrus Logic Documentation (as specifically so identified in writing by the
parties, the "3DO User Documentation"). 3DO hereby grants to Cirrus Logic,
subject to the terms and conditions of this Agreement, a non-exclusive,
non-transferable, irrevocable, fully paid, worldwide license, for so long as
Cirrus Logic has the right to sell or otherwise distribute the Products, (i) to
modify the 3DO User Documentation to the extent necessary for incorporation in
the Cirrus Logic Documentation, (ii) to reproduce the original or modified 3DO
User Documentation as part of such Cirrus Logic Documentation, and (iii) to
distribute copies of the Cirrus Logic Documentation incorporating the 3DO User
Documentation.
19.2. Any use or distribution of the 3DO User Documentation shall be
subject to the same terms and conditions as other comparable Cirrus Logic
Documentation.
19.3. Cirrus Logic shall be responsible for and shall own any
modifications to the 3DO User Documentation made by or for Cirrus Logic. At
3DO's request, Cirrus Logic shall provide 3DO with copies of any Cirrus Logic
Documentation that includes original or modified 3DO User Documentation. Cirrus
Logic shall as soon as practicable make any corrections or clarifications
therein reasonably requested by 3DO.
20. 3DO Obligations and Covenants.
20.1. For a period of [CONFIDENTIAL TREATMENT REQUESTED] ([CONFIDENTIAL
TREATMENT REQUESTED]) months after the end of the Development Period (or, if the
Development Period ended because of Cirrus Logic's exercise of its right to
terminate 3DO engineering services pursuant to Section 7, above, until
[CONFIDENTIAL TREATMENT REQUESTED] ([CONFIDENTIAL TREATMENT REQUESTED]) months
after acceptance of the last of the 3DO Deliverable Items set forth in Exhibit A
would have occurred if 3DO had continued to provide engineering services), 3DO
shall not (i) grant (and shall not have granted prior to the Effective Date)
licenses to the existing version of the 3DEngine to more than [CONFIDENTIAL
TREATMENT REQUESTED] ([CONFIDENTIAL TREATMENT REQUESTED]) companies (in addition
to Cirrus Logic) for use in semiconductors designed for Multi-Purpose Computers,
or (ii) itself commence the merchant market sale or other distribution of a
product, for use in a consumer 3D graphics card and/or components thereof
designed for Multi-Purpose Computers, that would be directly competitive with
Cirrus Logic's Magnum, except that the foregoing limitation shall apply only to
licenses for the manufacture, sale or other distribution of semiconductors for
the semiconductor merchant market. As examples of exceptions to the foregoing
limitation, and without limiting the generality of the foregoing, 3DO is
entitled to license the existing version of the 3DEngine (or
9
<PAGE> 10
any portion thereof) to any such companies for use in connection with the
development of any multimedia authoring systems or non-linear video editing
systems.
20.2. In addition, 3DO agrees that 3DO shall not, during the term of
this Agreement, license the existing version of the 3DEngine (i) to
[CONFIDENTIAL TREATMENT REQUESTED] for use as an integral part of any 3D
graphics cards and/or components thereof that are designed and intended for use
in Multi-Purpose Computers or (ii) to [CONFIDENTIAL TREATMENT REQUESTED] or
[CONFIDENTIAL TREATMENT REQUESTED]; provided, however, that 3DO may elect to
grant licenses with respect to any of such items to [CONFIDENTIAL TREATMENT
REQUESTED] (subject to the provisions of Section 20.1, above) for use in
connection with the development of 3D graphics cards and/or components thereof
that are intended to provide (and are limited by such licenses to providing)
enhanced performance or functionality to only the Macintosh-compatible portion
of any computer systems.
20.3. For the purposes of Sections 20.1 and 20.2, the term "existing
version of the 3DEngine" means any 3DEngine version prior to the development by
or for 3DO of a version of the 3DEngine designed for a product configuration to
comply with the MPEG2 or DVD standard.
20.4. For a period of [CONFIDENTIAL TREATMENT REQUESTED] ([CONFIDENTIAL
TREATMENT REQUESTED]) months after the end of the Development Period (or, if the
Development Period ended because of Cirrus Logic's exercise of its right to
terminate 3DO engineering services pursuant to Section 7, above, until
[CONFIDENTIAL TREATMENT REQUESTED] ([CONFIDENTIAL TREATMENT REQUESTED]) months
after acceptance of the last of the 3DO Deliverable Items set forth in Exhibit A
would have occurred if 3DO had continued to provide engineering services), 3DO
shall not license to any third party all or a portion of the modifications to
the 3DEngine developed by or for 3DO that are required by the Development
Program and specifically identified in Exhibit B, attached hereto, as being
specific to Cirrus Logic (the "Cirrus Logic-Specific Modifications"), provided
that this Section 20.4 will not prevent 3DO from developing and licensing a
different implementation of any such modifications, whether or not the
modifications provide the same functionality as the Cirrus Logic-Specific
Modifications.
20.5. 3DO agrees that it shall not, directly or indirectly, during the
term of this Agreement, solicit for employment or otherwise engage in recruiting
of any of the Cirrus Logic employees that are members of Cirrus Logic's VSys
division.
20.6. 3DO agrees that, during the term of this Agreement, 3DO shall not
make any separate agreement with any third party that is inconsistent with any
of the provisions of this Agreement.
21. Cirrus Logic Obligations and Covenants.
21.1. While no representations have been made to 3DO that Cirrus Logic
shall achieve any specific results or level of sales of any of the Products,
Cirrus Logic acknowledges and agrees that it shall use reasonable best efforts
to develop Magnum and shall use commercially reasonable efforts to bring to
market and to effectively market each of the Products. In the event that Cirrus
Logic does not undertake first commercial shipment of volume production
quantities of Magnum within [CONFIDENTIAL TREATMENT REQUESTED] ([CONFIDENTIAL
TREATMENT REQUESTED]) months after the end of the Development Period, 3DO shall
be released from the restrictions set forth in Sections 20.1, 20.2 and 20.4,
above, provided that, without limitation of the generality of Section 6.3,
above, in the event additional engineering services are requested by Cirrus
Logic not required by Section 3 or 4, above, as of the Effective Date, any
delays in delivery or acceptance of the 3DO Deliverable Items arising out of
such additional services shall be subtracted from such [CONFIDENTIAL TREATMENT
REQUESTED] ([CONFIDENTIAL TREATMENT REQUESTED]) month period on a day for day
basis. Subject to the foregoing, Cirrus Logic shall have the discretion to
determine when and how to market the Products.
21.2. Cirrus Logic will provide to 3DO, at no charge to 3DO (other than
reimbursement of actual shipping and insurance expenses), (i) five hundred (500)
units of the initial production version of Magnum and (ii) fifteen (15) units of
each subsequent Product (including subsequent production versions of Magnum). In
addition, Cirrus Logic agrees that 3DO shall be entitled to purchase production
units of any and all Products directly from Cirrus Logic at a price that is no
less favorable to 3DO than the price offered by Cirrus Logic to any third party
for similar quantities. In the event demand for the Products necessitates
10
<PAGE> 11
allocation, Products will be made available to 3DO in the same quantities as are
made available to other customers purchasing similar quantities. 3DO may not
resell as a stand-alone product such Products to any third party.
21.3. In recognition of the pre-existing relationship between 3DO and
Matsushita Electric Industrial Co., Ltd. ("MEI") regarding 3DO's Opera and M2
technologies, Cirrus Logic agrees that it shall not (i) engage in any
development with or for MEI or any subsidiaries or affiliates of MEI, or any
sublicensees of MEI in their capacity as sublicensees of any Opera or M2
technology ("MEI Group"), or (ii) provide, or enter into an agreement to
provide, to MEI Group, any products or services that involve the 3DEngine or the
3DO Deliverable Items, or any intellectual property rights relating thereto,
unless the written consent of 3DO shall first have been obtained, provided that
this restriction shall not prevent Cirrus Logic from (a) selling to the MEI
Group any standard, off-the-shelf Products, or other products of Cirrus Logic,
that it generally sells in the semiconductor merchant market or (b) using the
MEI Group as a foundry for the fabrication of Products pursuant to Section
2.3(b), above, or other products of Cirrus Logic. Notwithstanding the foregoing
reference to sublicensees of MEI, this Section 21.3 shall not restrict Cirrus
Logic from engaging in development with or for any such sublicensees, or
providing or entering into an agreement to provide, any products or services to
any such licensees, if the development, products and/or services, respectively,
do not relate to the 3DEngine or the 3DO Deliverable Items or any intellectual
property rights relating thereto.
21.4. Cirrus Logic agrees that the VSys division of Cirrus Logic shall
not, directly or indirectly, during the term of this Agreement, solicit for
employment or otherwise engage in recruiting of any 3DO employees.
21.5. Cirrus Logic agrees that it shall be solely responsible for the
development and testing of all software drivers which are required with respect
to any of the Products. Cirrus Logic shall make any such software drivers
(including bug fixes and other modifications) in binary code form only available
to 3DO, at no charge to 3DO, for its subsequent royalty-free use, licensing and
exploitation, subject to the terms and conditions generally applied by Cirrus
Logic to licensees of such drivers, for use only in conjunction with Products
purchased by 3DO from Cirrus Logic.
21.6. Cirrus Logic agrees that it shall be solely responsible for all
product and compatibility testing and product support with respect to each of
the Products. Cirrus Logic further agrees that 3DO shall not be responsible for
providing any engineering support or any other form of technical support to any
of Cirrus Logic's customers or to any end users of any of the Products.
21.7. Cirrus Logic agrees that it shall not make any separate agreement
with any third party that is inconsistent with any of the provisions of this
Agreement.
21.8. Cirrus Logic agrees that it shall not make use of the 3DEngine or
3DO Deliverable Items (or any portion thereof) except in strict compliance with
the provisions of this Agreement or as may be otherwise expressly authorized in
writing by 3DO. Cirrus Logic agrees that it shall not use or exploit any of the
intellectual property rights relating to the 3DEngine, including, without
limitation, the 3DO Deliverable Items and other Confidential Information of 3DO,
in connection with the development, use, manufacture, sale or other distribution
of any product or material other than the Products as expressly authorized
herein.
21.9. Cirrus Logic agrees that it shall not knowingly manufacture,
market, sell and otherwise distribute Products in violation of any and all laws,
regulations and ordinances that are applicable in the countries and territories
within which the Products are to be manufactured, marketed, sold or otherwise
distributed by Cirrus Logic hereunder.
22. 3DO's Limited Representations and Warranties.
22.1. 3DO represents and warrants solely for the benefit of Cirrus
Logic that, as of the Effective Date, 3DO has not received actual notice of a
claim that the 3DEngine infringes a copyright, mask work right or patent, or
misappropriates a trade secret, of any third party.
11
<PAGE> 12
22.2. 3DO represents and warrants solely for the benefit of Cirrus
Logic that:
(a) 3DO has the right, power and authority to enter into this
Agreement and to fully perform its obligations hereunder;
(b) 3DO owns the rights with respect to the 3DEngine licensed
to Cirrus Logic, provided that Cirrus Logic acknowledges that the 3DEngine was
developed using (and incorporates technology from) commercially licensed
development tools and that 3DO does not own the technology provided by such
tools (and provided, further, that the representation and warranty set forth in
this subsection (b) shall not constitute or imply any representation or warranty
with respect to noninfringement of third-party intellectual property rights);
and
(c) 3DO has not previously granted to a third party any rights
with respect to the 3DEngine that are inconsistent with the rights granted to
Cirrus Logic hereunder, including, without limitation, any rights which, if such
rights had been granted to a third party subsequent to the Effective Date, would
breach 3DO's obligations under Sections 20.1 or 20.2, above.
22.3. 3DO MAKES, AND CIRRUS LOGIC RECEIVES, NO REPRESENTATIONS,
WARRANTIES OR CONDITIONS (EXPRESSED, IMPLIED, STATUTORY OR OTHERWISE), OTHER
THAN AS EXPRESSLY SET FORTH IN THIS SECTION 22, INCLUDING, WITHOUT LIMITATION,
THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE
AND NONINFRINGEMENT OF THIRD-PARTY RIGHTS, AND THEIR EQUIVALENTS UNDER THE LAWS
OF ANY JURISDICTION.
23. Cirrus Logic's Representations and Warranties.
23.1. Cirrus Logic represents and warrants solely for the benefit of
3DO that, as of the Effective Date, Cirrus Logic has not received actual notice
of a claim that the VGA Logic or the modifications to the 3DEngine contemplated
to be made by or for Cirrus Logic (other than those made by or for 3DO) infringe
any copyright, mask work right or patent, or misappropriate any trade secret, of
any third party.
23.2. Cirrus Logic represents and warrants solely for the benefit of
3DO that:
(a) Cirrus Logic has the right, power and authority to enter
into this Agreement and to fully perform its obligations hereunder; and
(b) Cirrus Logic has not previously granted to a third party
any rights that are inconsistent with the rights granted to 3DO hereunder.
24. 3DO's Indemnity.
24.1. 3DO agrees to indemnify and hold Cirrus Logic harmless from and
against any legal costs and expenses (including reasonable attorneys' fees and
court costs), as well as monetary damages awarded or agreed to be paid as part
of a settlement, incurred by Cirrus Logic based upon, arising out of or in
respect of (i) any third-party claim asserting that 3DO does not have the right
to grant the license granted by 3DO to Cirrus Logic under this Agreement; (ii)
any third-party claim arising as a result of any breach by 3DO of its limited
warranties set forth in Sections 22.1 and 22.2, above; and/or (iii) any
third-party claim asserting that Cirrus Logic's use of the 3DEngine or the other
3DO Deliverable Items in accordance with the licensed rights granted by 3DO to
Cirrus Logic under this Agreement infringes the copyrights or misappropriates
the trade secrets owned by any third party, provided, in any case, that Cirrus
Logic (a) provides 3DO with prompt notice of the claim, (b) allows 3DO to
control the defense and any settlement of the claim, and (c) provides
cooperation as reasonably requested by 3DO. 3DO's obligations under this Section
24.1 (and 3DO's related obligations under Section 24.2, below) will not apply to
any modifications to the 3DEngine or the other 3DO Deliverables made by Cirrus
Logic or a third party.
24.2. If the manufacture, sale or other distribution of a Product by
Cirrus Logic is enjoined based on a claim relating to the 3DEngine or any of the
other 3DO Deliverable Items covered by Section 24.1(iii), above, 3DO shall, at
3DO's option and expense: (i) procure for Cirrus Logic the past
12
<PAGE> 13
and future rights granted to Cirrus Logic hereunder with respect to the
allegedly infringing portion of the 3DEngine or other 3DO Deliverable Item; or
(ii) replace or modify the allegedly infringing portion to make such portion
non-infringing, provided that the replacement or modified portion provides
substantially the same functionality as the replaced or original portion, or
(iii) if the past and future rights to continue to manufacture, sell and
otherwise distribute cannot be procured, or the portion cannot be replaced or
modified, at reasonable expense, reimburse Cirrus Logic for the total amount of
unrecouped pre-paid royalties, but not license fees or NRE Expenses, paid
hereunder. In addition, if a claim relating to the 3DEngine or any of the other
3DO Deliverable Items covered by Section 24.1(iii) is made or becomes likely,
3DO may, at its option and expense, undertake any of the actions described in
clauses (i), (ii) and (iii) of this Section 24.2. If, because of a claim
relating to the 3DEngine or any of the other 3DO Deliverable Items covered by
Section 24.1(iii), 3DO replaces or modifies an allegedly infringing portion to
make such portion non-infringing in accordance with this Section 24.2, Cirrus
Logic will receive a credit, against future on-going royalties payable under
Section 12, above, equal to the costs incurred by Cirrus Logic in making any
changes required by the replacement or modification provided pursuant to this
Section 24.2. If, because of a claim relating to the 3DEngine or any of the
other 3DO Deliverable Items covered by Section 24.1(iii), the use in a Product
of a portion of the 3DEngine is enjoined, Cirrus Logic will have the right to
use the other, unaffected portions of the 3DEngine in accordance with, and
subject to the terms and conditions of, this Agreement.
24.3. THIS SECTION 24 (TOGETHER WITH SECTION 22.1, ABOVE) STATES 3DO'S
ENTIRE OBLIGATION AND LIABILITY TO CIRRUS LOGIC WITH RESPECT TO ANY CLAIM
REGARDING ALLEGED INFRINGEMENT OR MISAPPROPRIATION OF THE INTELLECTUAL PROPERTY
RIGHTS OF ANY THIRD PARTY.
25. Cirrus Logic's Indemnity.
25.1. Cirrus Logic agrees to indemnify and hold harmless 3DO from and
against any legal costs and expenses (including reasonable attorneys' fees and
court costs), as well as monetary damages awarded or agreed to be paid as part
of a settlement, incurred by 3DO based upon, arising out of or in respect of:
(i) any third-party claim asserting that the rights granted by Cirrus Logic to
3DO hereunder are invalid or unenforceable; (ii) any third-party claim arising
as a result of any breach by Cirrus Logic of its limited warranties set forth in
Sections 23.1 and 23.2, above; (iii) any third-party claim asserting that 3DO's
use of any modifications and/or additions to the 3DEngine made by or for Cirrus
Logic (other than by 3DO) in accordance with this Agreement infringes the
copyrights, mask work rights, trade secrets and/or trademark rights owned by any
third party; (iv) any third-party claim asserting that any modifications and/or
additions to the 3DEngine made by or for Cirrus Logic (other than by 3DO), or
that a Product (other than the 3DEngine component thereof in the form provided
by 3DO to Cirrus Logic), infringes the copyrights, mask work rights, trade
secrets and/or trademark rights owned by any third party; and/or (v) any
third-party claim with respect to the development, manufacture, marketing,
sales, distribution and/or use of any of the Products by Cirrus Logic or any of
its affiliates or subsidiaries, such as a product liability claim or a claim for
breach of any warranty or support obligations (but expressly excluding (A) any
third-party claim for infringement of intellectual property rights other than as
set forth in the foregoing clauses (ii), (iii) and (iv) and (B) any third-party
claim to the extent that the 3DEngine, or a 3DO Deliverable Item, provided by
3DO to Cirrus Logic is the basis for the claim), provided, in any case, that 3DO
(a) provides Cirrus Logic with prompt notice of the claim, (b) allows Cirrus
Logic to control the defense and any settlement of the claim, and (c) provides
cooperation as reasonably requested by Cirrus Logic. Cirrus Logic's obligations
under this Section 25.1 will not apply to any claim for which 3DO is obligated
to indemnify Cirrus Logic pursuant to Section 24.1, above.
25.2. THIS SECTION 25 (TOGETHER WITH SECTION 23.1, ABOVE) STATES CIRRUS
LOGIC'S ENTIRE OBLIGATION AND LIABILITY TO 3DO WITH RESPECT TO ANY CLAIM
REGARDING ALLEGED INFRINGEMENT OR MISAPPROPRIATION OF THE INTELLECTUAL PROPERTY
RIGHTS OF ANY THIRD PARTY.
26. Third-Party Claims. In addition to the parties' respective obligations
under Sections 24 and 25, above, in the event that any third party claims that
either party's use of the 3DEngine (or any portion or derivative thereof ) or
any related intellectual property rights of either party infringes any patent,
mask work right, copyright or other intellectual property right of such third
party, or in the event that either party
13
<PAGE> 14
undertakes a review of third-party patents or other intellectual property rights
relating to any versions of any of the Products, then, upon request by the other
party, each party shall reasonably cooperate and consult with the other party,
in a manner consistent with such party's confidentiality obligations and
preservation of attorney-client, work product and other privileges, regarding
the other party's review of such claim and/or efforts to resolve such matter.
27. Term; Termination.
27.1. This Agreement, and the licensed rights granted by 3DO to Cirrus
Logic pursuant to this Agreement, shall commence on the Effective Date and,
unless earlier terminated as provided in this Section 27, shall continue in full
force and effect until the later of (i) seven (7) years after the Effective Date
or (ii) one (1) year after the last commercial sale, in production quantities,
of a Product.
27.2. If either party defaults in its performance of any material
provision of this Agreement (other than with respect to any payment obligation),
then the non-defaulting party may elect to terminate this Agreement if the
defaulting party fails to cure its default within forty-five (45) days of
receipt of written notice referencing such default, provided that if the default
is not subject to correction within such period but the defaulting party
submits, within such period, a detailed and specific plan for correction of the
default and such plan is accepted by the non-defaulting party, the defaulting
party will have the additional time for correction set forth in the accepted
plan. If the default is not corrected in accordance with the schedule set forth
in the accepted plan, the non-defaulting party may elect, upon notice to the
defaulting party, to terminate this Agreement.
27.3. In the event Cirrus Logic defaults in the timely performance of
any of its payment obligations under this Agreement, 3DO may elect to terminate
this Agreement if Cirrus Logic fails to cure such default within fifteen (15)
days after receipt of notice that the required payment is due and, after such
fifteen (15) day period, 3DO notifies Cirrus Logic that it intends to terminate
this Agreement and Cirrus Logic fails to cure such default with ten (10) days
after receipt of such subsequent notice.
27.4. This Agreement shall terminate automatically and without notice
upon: (i) the institution by or against Cirrus Logic of insolvency, receivership
or bankruptcy proceedings or any other proceedings for the settlement of Cirrus
Logic's debts, provided that termination shall not be effective in the event of
an involuntary proceeding against Cirrus Logic if such proceeding is dismissed
within one hundred twenty (120) days after the filing thereof, (ii) Cirrus
Logic's making a general assignment for the benefit of its creditors, (iii)
Cirrus Logic's dissolution or (iv) Cirrus Logic's cessation of business for a
period of ninety (90) days or more.
27.5. Upon the expiration of this Agreement as set forth in Section
27.1 above (or upon mutual agreement of the parties to terminate this
Agreement), all rights and licenses granted to Cirrus Logic hereunder will
terminate, and each party will be released from all obligations and liabilities
to the other occurring or arising after the date of such termination, except
that Sections 1, 5.1 (only to the extent of engineering services already
performed by 3DO), 7 (only the obligation of Cirrus Logic to make the payment
described therein), 8, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19 (except for any
obligations of 3DO to deliver further documentation to Cirrus Logic), 21.3, 21.5
(except for any obligations of Cirrus Logic to make available further drivers to
3DO), 21.6, 21.8, 24, 25, 27, 28.5 (but only for so long as Cirrus Logic has the
right to Source Code in accordance with Section 28.6(d)), 28.6, 29 and 31 shall
survive.
27.6. Upon termination of this Agreement for any reason (except for
expiration as set forth in Section 27.1, above, or termination upon mutual
agreement of the parties), (i) all rights and licenses granted to Cirrus Logic
hereunder will terminate, and each party will be released from all obligations
and liabilities to the other occurring or arising after the date of such
termination, except that Sections 1, 5.1 (only to the extent of engineering
services already performed by 3DO), 7 (only the obligation of Cirrus Logic to
make the payment described therein), 8, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19
(except for any obligations of 3DO to deliver further documentation to Cirrus
Logic), 21.3, 21.5 (except for any obligations of Cirrus Logic to make available
further drivers to 3DO), 21.6, 21.8, 24, 25, 27, 28.5 (but only for so long as
Cirrus Logic has the right to Source Code in accordance with Section 28.6(d)),
28.6, 29 and 31 shall survive, and (ii) Section 2 shall survive for so long as
this Agreement would otherwise continue in effect in accordance with Section
27.1.
14
<PAGE> 15
28. Source Code Matters.
28.1. If, during the Development Period, one or more of the conditions
described in clause (a) or (b) of this Section 28.1 occurs, then, upon Cirrus
Logic's written request, 3DO will promptly deliver to Cirrus Logic the "C" level
source code and related documentation and commentary for the 3DEngine ("Source
Code") described in Section 28.2, below. Such conditions are as follows:
(a) Cirrus Logic rejects a 3DO Deliverable Item in accordance
with the procedures set forth in Section 6, above, due to a material failure of
the 3DO Deliverable Item to conform to the applicable Magnum Specifications and
3DO does not substantially cure the material failure within sixty (60) days
after Cirrus Logic's notice of the material failure and of its intent to
exercise its rights under this Section 28.1; or
(b) 3DO materially fails to deliver the 3DO Deliverable Items
that are specifically identified in Exhibit A, attached hereto, as "critical
path items" on or before the applicable delivery dates set forth in such Exhibit
A and 3DO does not substantially cure the material failure within sixty (60)
days after Cirrus Logic's notice of the material failure and of its intent to
exercise its rights under this Section 28.1.
28.3. If, in accordance with Section 28.1, Cirrus Logic has the right
to Source Code, 3DO will promptly deliver to Cirrus Logic the Source Code for
the rejected 3DO Deliverable Item (or portion thereof) that is the basis for
such Cirrus Logic right to Source Code. 3DO will have no obligation to provide
any Source Code other than as reasonably necessary for Cirrus Logic to cure a
material failure of 3DO to correct nonconformances with the Magnum
Specifications.
28.4. The remedies set forth in Sections 28.1 and 28.2, above, shall be
in addition to, and not in lieu of, any remedies for breach of this Agreement,
provided, however, that Cirrus Logic must allow, with respect to any other
remedies, the applicable cure periods set forth in Section 27, above, to the
extent applicable.
28.5. Upon execution hereof, the parties agree to enter into an escrow
agreement in the form attached hereto as Exhibit D (the "Escrow Agreement") for
an escrow of the "Deposit Materials" (as defined in the Escrow Agreement) during
the Development Period. The escrow agent shall be SourceFile ("Escrow Agent").
The cost to open such escrow shall be paid by Cirrus Logic. The annual
maintenance fees shall be paid by Cirrus Logic. 3DO will deposit promptly with
the Escrow Agent the Deposit Materials as soon as practicable after the
Effective Date and all revisions to all such Deposit Materials at such times as
they are made, but no more often than every ninety (90) days. Prior to each such
deposit, 3DO will, in the presence of a Cirrus Logic representative, at Cirrus
Logic's request, compile any Source Code portions of the Deposit Materials,
without revealing the Source Code to the Cirrus Logic representative, and, upon
Cirrus Logic's request, permit the Cirrus Logic representative to accompany the
delivery of such Source Code to a representative of the Escrow Agent. Release
conditions for the Deposit Materials are as follows: One or more of the
conditions described in clause (a) or (b) of Section 28.1, above, occurs during
the Development Period, and 3DO fails to promptly deliver the Source Code as
required in Sections 28.1 and 28.2, above. The Escrow Agreement and 3DO's
obligations under this Section 28 will terminate upon termination of the
Development Period.
28.6. Upon delivery of the Source Code to Cirrus Logic pursuant to this
Section 28, Cirrus Logic is hereby granted a license to (i) use such Source Code
solely to correct nonconformances of the 3DO Deliverable Items with the Magnum
Specifications, (ii) compile the Source Code, as so modified, into modified
object code, and (iii) use the modified object code in accordance with, and
subject to, the terms and conditions set forth for the 3DEngine under Section 2,
above.
28.7. The Source Code shall constitute Confidential Information of 3DO
and shall be subject to all of the obligations of Section 29, below. Without
limitation of the generality of Section 29, Cirrus Logic will comply with the
following additional requirements:
(a) Cirrus Logic will allow use of or access to the Source
Code only by employees of Cirrus Logic who have a need to use the Source Code
for exercise of Cirrus Logic's rights
15
<PAGE> 16
with respect to the Source Code set forth in this Section 28. Cirrus Logic will
not allow use of or access to the Source Code by any other persons, and will
maintain and use the Source Code only in secure locked facilities to which
access is limited to such employees. For Source Code that is usable or stored on
any computer equipment (whether a multi-user system, network, stand-alone
computer or otherwise), the equipment must have password-based access control,
with each user having a unique user identification and associated password.
Cirrus Logic will use, and will allow use of and access to, the Source Code only
at its Fremont, California, facilities.
(b) Cirrus Logic will not make any copies of the Source Code
except as necessary for exercise by Cirrus Logic of the rights set forth in this
Section 28. All copies will be marked with a restrictive legend identifying the
Source Code as confidential and proprietary to 3DO and prohibiting any
unauthorized use or reproduction.
(c) Cirrus Logic will maintain a record of (i) all personnel
who use or have access to the Source Code, (ii) the number of copies, if any, of
the Source Code, and (iii) the computer equipment and storage media on which the
Source Code is used or stored.
(d) Upon correction of the material nonconformance(s) that
triggered Cirrus Logic's right to any Source Code, Cirrus Logic will immediately
return the Source Code (together with all copies thereof) to 3DO.
29. Confidentiality.
29.1 For purposes of this Agreement, "Confidential Information" of a
party means information or materials disclosed or otherwise provided by such
party ("Disclosing Party") to the other party ("Receiving Party") that are
marked or otherwise identified as confidential or proprietary. "Confidential
Information" does not include that which (i) is already in the Receiving Party's
possession at the time of disclosure to the Receiving Party, (ii) is or becomes
part of public knowledge other than as a result of any action or inaction of the
Receiving Party, (iii) is obtained by the Receiving Party from an unrelated
third party without a duty of confidentiality, or (iv) is independently
developed by the Receiving Party. Without limitation of the generality of, and
notwithstanding the exclusions described in, the foregoing, (a) "Confidential
Information" of 3DO includes the 3DEngine and 3DO Deliverable Items, including
any portion thereof, modifications and derivatives thereof, and information or
materials derived therefrom (except for the 3DO User Documentation identified in
writing by 3DO in accordance with Section 19.1, above), and (b) "Confidential
Information" of Cirrus Logic includes the materials relating to the VGA Logic
delivered by Cirrus Logic to 3DO, including any portion thereof, modifications
and derivatives thereof, and information or materials derived therefrom.
29.2 The Receiving Party shall not use Confidential Information of the
Disclosing Party for any purpose other than in furtherance of this Agreement and
the activities described herein. The Receiving Party shall not disclose
Confidential Information of the Disclosing Party to any third parties except as
otherwise permitted hereunder. The Receiving Party may disclose Confidential
Information of the Disclosing Party only to those employees (or consultants,
subject to compliance with Section 2.3(a), above) who have a need to know such
Confidential Information and who are bound to retain the confidentiality thereof
under provisions (including, without limitation, provisions relating to nonuse
and nondisclosure) no less strict than those required by the Receiving Party for
its own comparable Confidential Information. The Receiving Party shall maintain
Confidential Information of the Disclosing Party with at least the same degree
of care it uses to protect its own proprietary information of a similar nature
or sensitivity, but no less than reasonable care under the circumstances. Any
copies of the Disclosing Party's Confidential Information shall be identified as
belonging to the Disclosing Party and prominently marked "Confidential."
29.3 This Agreement will not prevent the Receiving Party from
disclosing Confidential Information of the Disclosing Party to the extent
required by a judicial order or other legal obligation, provided that, in such
event, the Receiving Party shall promptly notify the Disclosing Party to allow
intervention (and shall cooperate with the Disclosing Party) to contest or
minimize the scope of the disclosure (including application for a protective
order). Each party shall advise the other party in writing of
16
<PAGE> 17
any misappropriation or misuse of Confidential Information of the other party of
which the notifying party becomes aware.
29.4 Each party (as Receiving Party) acknowledges that the Disclosing
Party considers its Confidential Information to contain trade secrets of the
Disclosing Party and that any unauthorized use or disclosure of such information
would cause the Disclosing Party irreparable harm for which its remedies at law
would be inadequate. Accordingly, each party (as Receiving Party) acknowledges
and agrees that the Disclosing Party shall be entitled, in addition to any other
remedies available to it at law or in equity, to the issuance of injunctive
relief, without bond, enjoining any breach or threatened breach of the Receiving
Party's obligations hereunder with respect to the Confidential Information of
the Disclosing Party, and such further relief as any court of competent
jurisdiction may deem just and proper.
29.5 Upon (i) the expiration of this Agreement pursuant to Section
27.1, above, or termination of this Agreement by mutual agreement of the
parties, or (ii) termination of Cirrus Logic's rights under Section 2, above, in
accordance with Section 27.6, above, each party (as Receiving Party) shall
immediately return to the Disclosing Party all Confidential Information of the
Disclosing Party embodied in tangible (including electronic) form, or, at the
option of the Disclosing Party, certify in writing to the Disclosing Party that
all such Confidential Information has been destroyed.
29.6 Each party agrees that the terms and conditions of this Agreement
shall be treated as Confidential Information of the other party; provided that
each party may disclose the terms and conditions of this Agreement: (i) as
required by judicial order or other legal obligation, provided that, in such
event, the party subject to such obligation shall promptly notify the other
party to allow intervention (and shall cooperate with the other party) to
contest or minimize the scope of the disclosure (including application for a
protective order); (ii) as required by the applicable securities laws,
including, without limitation, requirements to file a copy of this Agreement
(redacted to the extent reasonably permitted by applicable law) or to disclose
information regarding the provisions hereof or performance hereunder; (iii) in
confidence, to legal counsel; (iv) in confidence, to accountants, banks, and
financing sources and their advisors; and (v) in confidence, in connection with
the enforcement of this Agreement or any rights hereunder; and (vi) in
confidence (on a counsel-only basis), to outside counsel for a third party which
plans to acquire all or substantially all the equity or assets of, or to merge
with, such party, in connection with a "due diligence" investigation for such a
transaction.
29.7 3DO acknowledges that Cirrus Logic, in providing technical support
to customers and prospective customers of the Products, will need to disclose
information with respect to the 3DEngine and VGA Logic of the type customarily
included with respect to other products in the Cirrus Logic Documentation.
Notwithstanding the requirements of this Section 29, Cirrus Logic may disclose
such information, such as programming model information, in providing technical
support to customers and prospective customers of the Products.
29.8 Cirrus Logic shall not disassemble, decompile or otherwise reverse
engineer the pixel-accurate "C" simulator and other 3DO materials in object code
form.
30. Announcement. Following the execution of this Agreement, each of the
parties shall be entitled to issue one or more press releases regarding the
existence of their relationship as described in this Agreement. Each party shall
have the right to approve the press releases of the other party, provided such
approval shall not be unreasonably withheld. The parties have previously agreed
in writing on the outline of a press release, and each party agrees that it will
promptly approve a press release of the other party consistent with such
outline. The review and approval of the initial press releases shall be
completed promptly so that each party may issue its initial press release within
ten (10) working days after the Effective Date. In addition, each of the parties
acknowledges and agrees, respectively, that it shall cause appropriate
executive(s) responsible for the parties' relationship to attend and participate
at its expense in any scheduled press conferences or Product introduction
events.
31. Miscellaneous Provisions.
31.1 All notices required hereunder shall be in writing and shall be
sent by U.S. mail (first class) or nationally-recognized courier service (e.g.,
DHL, Federal Express), with all postage or delivery charges
17
<PAGE> 18
prepaid, or may be sent via facsimile or telex, subject to confirmation via U.S.
mail or nationally-recognized courier service, and shall be addressed to the
parties at their addresses set forth below or to such other address(es) as may
be furnished by written notice in the manner set forth herein. Notices shall be
deemed to have been served when delivered or, if delivery is not performed as a
result of the addressee's fault, when tendered.
Notices to 3DO: Notices to Cirrus Logic:
The 3DO Company Cirrus Logic, Inc.
600 Galveston Drive 3100 West Warren Drive
Redwood City, CA 94063 Fremont, CA 94538
Att'n: General Counsel Att'n: Corporate Counsel
31.2 This Agreement shall not be construed as creating an agency,
partnership or any other form of legal association between the parties other
than as expressly set forth herein. Neither party shall have any right or
authority to assume or create any obligation of any kind or to make any
representation or warranty on behalf of the other party, whether express or
implied, or to bind the other party in any respect whatsoever.;
31.3 Cirrus Logic shall not be entitled to assign, sublicense, transfer
or otherwise convey this Agreement or any of its rights hereunder to any third
party, nor delegate any of its obligations hereunder to any third party, unless
the written consent of 3DO shall first have been obtained, provided that no such
consent shall be required for an assignment of this Agreement, together with all
of Cirrus Logic's rights and obligations hereunder, to a successor corporation
of Cirrus Logic as part of a merger, consolidation or sale of all or
substantially all of Cirrus Logic's business and assets. Until the end of the
Development Period, 3DO shall not be entitled to assign, transfer or otherwise
convey this Agreement or any of its rights hereunder to any third party, nor
delegate any of its obligations hereunder to any third party, unless the written
consent of Cirrus Logic shall first have been obtained, provided that no such
consent shall be required for an assignment of this Agreement, together with all
of 3DO's rights and obligations hereunder, to a successor corporation of 3DO as
part of a merger, consolidation or sale of all or substantially all of 3DO's
business and assets. After the end of the Development Period, 3DO shall have the
right to assign, transfer or otherwise convey this Agreement or any of its
rights hereunder to any third party and delegate its obligations hereunder to
such third party. Any attempted or purported assignment, sublicense, transfer,
conveyance or delegation without such prior consent (where required hereunder)
having been obtained shall be void and a breach of this Agreement. Subject to
the foregoing, this Agreement shall bind and inure to the benefit of the parties
and their respective successors and permitted assigns.;
31.4 Except for the obligation to pay money, neither party shall be
liable to the other party for any failure or delay in performance caused by any
acts of God or other natural disasters or by other reasons beyond such party's
reasonable control.
31.5 This Agreement shall be governed by and construed in accordance
with the laws of the State of California, U.S.A., without reference to conflicts
of law principles except to the extent that United States federal law preempts
California law, in which case United States federal law (including, without
limitation, copyright, patent and federal trademark law) shall apply, without
reference to conflicts of law principles.
31.6 If either party commences any action or proceeding against the
other party to enforce this Agreement or any of its rights hereunder, the
prevailing party in such action or proceeding shall be entitled to recover from
the other party the reasonable attorneys' fees and all related costs and
expenses incurred by such prevailing party in connection with such action or
proceeding and in connection with enforcing any judgment or order thereby
obtained.
31.7 Neither party shall be liable to the other party for any
incidental, consequential, special or punitive damages arising out of or
relating to this Agreement, whether liability is based on breach of contract,
breach of warranty (express, implied or otherwise) or otherwise, and whether
asserted in contract, tort (including negligence and strict product liability)
or otherwise, and irrespective of whether the parties have advised or been
advised of the possibility of any such damages, except that the foregoing
18
<PAGE> 19
limitation shall not apply to the respective indemnification obligations of the
parties under Sections 24 and 25, above.
31.8 Unless expressly set forth herein to the contrary, either party's
election of any remedies provided for in this Agreement shall not be exclusive
of any other remedies available hereunder or otherwise at law or in equity, and
all such remedies shall be deemed to be cumulative. The use of the term
"non-refundable" with respect to certain fees to be paid by Cirrus Logic to 3DO
hereunder shall not preclude Cirrus Logic from obtaining any damages due Cirrus
Logic for a breach by 3DO of this Agreement.
31.9 No failure or delay by either party in exercising any right,
power, or remedy under this Agreement shall operate as a waiver of any such
right, power, or remedy. No waiver of any provision of this Agreement shall be
effective unless in writing and signed by the party against whom such waiver is
sought to be enforced.
31.10 No amendment to or modification of this Agreement shall be
binding unless in writing and signed by a duly authorized representative of each
of the parties.
31.11 In the event that any provision of this Agreement (or any portion
hereof) is determined by a court of competent jurisdiction to be illegal,
invalid or otherwise unenforceable, such provision (or part thereof) shall be
enforced to the extent possible consistent with the stated intention of the
parties, or, if incapable of such enforcement, shall be deemed to be deleted
from this Agreement, while the remainder of this Agreement shall continue in
full force and remain in effect according to its stated terms and conditions.
31.12 No provisions of this Agreement, whether expressed or implied,
are intended or shall be construed to confer upon or give to any person or
entity other than the specific parties hereto any rights, remedies or other
benefits under or by reason of this Agreement unless expressly provided
otherwise herein.
31.13 All amounts due under this Agreement are quoted and are to be
paid in United States Dollars.
31.14 Cirrus Logic will have no implied obligations resulting from the
covenants of 3DO set forth in Sections 20.1, 20.2 and 20.4, above, provided that
this provision will not affect any obligations of Cirrus Logic expressly set
forth in this Agreement.
31.15 The section headings used in this Agreement are intended
primarily for reference and shall not by themselves determine the construction
or interpretation of this Agreement or any portion hereof.
31.16 This Agreement, including all Exhibits hereto, constitutes the
entire agreement and understanding of the parties with respect to the subject
matter hereof, and supersedes all prior and contemporaneous correspondence,
negotiations, agreements and understandings between the parties, both oral and
written, regarding such subject matter.
31.17 This Agreement shall be fairly interpreted in accordance with its
terms and without any strict construction in favor of or against either of the
parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
CIRRUS LOGIC, INC. THE 3DO COMPANY
By: By:
--------------------------------- ---------------------------------
19
<PAGE> 20
Name: Name:
--------------------------------- ---------------------------------
Title: Title:
--------------------------------- ---------------------------------
20
<PAGE> 21
Exhibit A
3DO DELIVERABLE ITEMS
1. Gate count estimate of [CONFIDENTIAL INFORMATION REQUESTED] in IBM's 5L
process. Soft copy in Microsoft Excel 4.0 for the Macintosh format.
2. Stand alone [CONFIDENTIAL INFORMATION REQUESTED] verification suite.
3. [CONFIDENTIAL INFORMATION REQUESTED] and memory control unit
[CONFIDENTIAL INFORMATION REQUESTED] RTL source code.
4. Synopsys scripts used to translate [CONFIDENTIAL INFORMATION REQUESTED]
and memory control unit [CONFIDENTIAL INFORMATION REQUESTED] RTL source
into Cirrus's 5S2 process and library.
5. The prelayout [CONFIDENTIAL INFORMATION REQUESTED] timing database for
the [CONFIDENTIAL INFORMATION REQUESTED] and memory control unit.
6. List and specification of the macrocells used in the [CONFIDENTIAL
INFORMATION REQUESTED] and memory control unit.
7. I/O cell specification for the memory controller interface to
[CONFIDENTIAL INFORMATION REQUESTED] and documentation on board level
clocking strategy used in BDA.
8. Board level [CONFIDENTIAL INFORMATION REQUESTED] timing files for the
BDA chip to what extent they exist.
9. Pixel accurate C-simulator executable in Sun and SGI binary format.
Source code will be provided for the vertex and destination
[CONFIDENTIAL TREATMENT REQUESTED] modules. Object code with interface
descriptions will be provided for the rest of the modules in the
simulator.
10. Delivery of the Command List Toolkit specification which describes the
program interface model of the [CONFIDENTIAL INFORMATION REQUESTED] and
Memory Controller.
11. [CONFIDENTIAL INFORMATION REQUESTED] and Memory Controller internal
implementation specification.
12. As is C source code for the Framework pipeline.
13. Floorplan of the [CONFIDENTIAL INFORMATION REQUESTED] and memory
controller as implemented in BDA 2.0.
14. Two days of training on both the design and simulation environments.
15. All necessary 3DO developed tools necessary to run the [CONFIDENTIAL
INFORMATION REQUESTED] simulation environment. Tools include the PLI
interfaces for [CONFIDENTIAL INFORMATION REQUESTED], and miscellaneous
scripts.
16. Forth bringup diagnostics for the [CONFIDENTIAL INFORMATION REQUESTED]
and memory controller to what extent they exist.
17. Documentation on production test procedure (BIST and scan) used in BDA
2.0.
18. Public Domain bug tracking "GNATs" source code and executable for Sun
workstation.
19. Public domain revision control software "CVS" source code and
executable for Sun workstation.
20. Source code and tutorial for demo [CONFIDENTIAL INFORMATION REQUESTED]
software for Nubus based BDA 2.0 development system. Demo software
includes: Mercury demo, and [CONFIDENTIAL INFORMATION REQUESTED]
benchmark code.
21. [CONFIDENTIAL INFORMATION REQUESTED] models of the [CONFIDENTIAL
INFORMATION REQUESTED] used in the verification environment.
21
<PAGE> 22
Exhibit B
DESCRIPTION OF 3D ENGINE
AND
SPECIFICATIONS FOR MAGNUM
Product Functional Requirements
The product must support the Full Laguna (5462) functional capabilities with the
following 3D Features supported.
Magnum will be optimized to accelerate Microsoft's Direct3D APL
(1) VGA Compatible [CONFIDENTIAL TREATMENT REQUESTED] with support for 3D
Modes
- 8-bit in 332 RGB (may not be required if video style scheme is
used)
- 16-Bit in 555 RGB
A R4 R3 R2 R1 R0 G4 G3 G2 G1 G0 B4 B3 B2 B1 B0
SSB
15 0
- 16-Bit in 565 RGB
R4 R3 R2 R1 R0 G5 G4 G3 G2 G1 G0 B4 B3 B2 B1 B0
15 0
- 32-Bit in 8888 RGBA
- CGL support:
RGBA5551 (16 bits)
RGB332 (8 bits)
Texturemap formats supported
- D3D, CGL, OpenGL support:
RGBA8888 (32 bits)
RGBA4444 (16 bits) (D3D specific)
RGBA5551 (16 bits)
RGB332 (8 bits)
I8 (8 bits)
- Video support:
YUV422
(2) Hardware Double Buffering
(3) Hardware Z-Buffer
- 2 bits exponent/14 bits mantissa
(4) Hardware support for [CONFIDENTIAL INFORMATION REQUESTED]
(5) Hardware [CONFIDENTIAL TREATMENT REQUESTED] Processor
- Standard [CONFIDENTIAL TREATMENT REQUESTED] - [CONFIDENTIAL
INFORMATION REQUESTED]
22
<PAGE> 23
- [CONFIDENTIAL INFORMATION REQUESTED] - [CONFIDENTIAL
INFORMATION REQUESTED]
- [CONFIDENTIAL INFORMATION REQUESTED] - [CONFIDENTIAL
INFORMATION REQUESTED]
(6) Perspective Correct Hardware Texturing with support for the Following
Texture Modes Supported
- [CONFIDENTIAL INFORMATION REQUESTED]
- [CONFIDENTIAL INFORMATION REQUESTED]
- [CONFIDENTIAL INFORMATION REQUESTED]
- [CONFIDENTIAL INFORMATION REQUESTED]
- [CONFIDENTIAL INFORMATION REQUESTED]
- [CONFIDENTIAL INFORMATION REQUESTED]
(7) [CONFIDENTIAL INFORMATION REQUESTED]
(8) Support for [CONFIDENTIAL INFORMATION REQUESTED] - this requires for the
ability to [CONFIDENTIAL INFORMATION REQUESTED] to support the use of
[CONFIDENTIAL INFORMATION REQUESTED]
23
<PAGE> 24
Exhibit C
MILESTONES AND RELATED NRE CHARGES
<TABLE>
<CAPTION>
% of Project
Milestone Target Date Payment Due Complete
--------- ----------- ----------- ------------
<S> <C> <C> <C>
1. Final Design Review. 3/15/96 $[CONFIDENTIAL 10%
INFORMATION
REQUESTED]
2. Initial Database [CONFIDENTIAL $[CONFIDENTIAL 30%
Integration. INFORMATION INFORMATION
REQUESTED] REQUESTED]
3. Functionally [CONFIDENTIAL $[CONFIDENTIAL 30%
complete netlist to Cirrus. INFORMATION INFORMATION
REQUESTED] REQUESTED]
4. Functional
simulation and post timing layout complete [CONFIDENTIAL $[CONFIDENTIAL 30%
INFORMATION INFORMATION
REQUESTED] REQUESTED]
----------- ------------
$[CONFIDENTIAL 100%
INFORMATION
REQUESTED]
</TABLE>
Note 1: Software demo and software drivers are not included as part of this
Agreement.
Note 2: Included target dates are not committed dates, only estimates, and
are subject to change.
Note 3: The advance NRE Expenses payment of $[CONFIDENTIAL INFORMATION
REQUESTED] (set forth in Section 5.1 of the Agreement) will be
offset against and will accordingly reduce the payment of NRE
Expenses specified hereinabove with respect to Milestones 1 and 2,
as incurred.
24
<PAGE> 25
Exhibit D
ESCROW AGREEMENT
[to be attached]
25