EXHIBIT 10.23
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS
EXHIBIT. THE COPY
FILED HEREWITH OMITS THE INFORMATION SUBJECT TO THE CONFIDENTIALITY
REQUEST.
OMISSIONS ARE DESIGNATED AS *. A COMPLETE VERSION OF THIS EXHIBIT
HAS BEEN FILED
SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION.
SILICON PRODUCT DEVELOPMENT
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AND
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PRODUCTION COLLABORATION AGREEMENT
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Silicon Product Development and Production Collaboration Agreement
(this
"Agreement"), dated as of July 28, 2004 (the "Effective Date"), is
by and
between GDA Technologies, Inc., a California corporation having
principal place
of business at 1010 Rincon Circle, San Jose, CA , 95131 ("GDA"),
and Arkados,
Inc., a Delaware Corporation having its principal place of business
at 948 US
Highway 22, North Plainfield, NJ 07060 ("Arkados"). GDA and Arkados
are referred
to individually hereinafter as a "Party" and collectively as the
"Parties".
RECITALS
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WHEREAS, Arkados has created and markets a power line based
technology that
permits data transmission over active "in-building" power networks
and also
developed technology for data transmission over powerline
distribution networks;
WHEREAS, Arkados has designed a semiconductor component for
in-building
power networks and owns certain technology related thereto and GDA
possesses
know-how relating to the development, fabrication, and testing of
semiconductor
products;
WHEREAS, GDA and Arkados desire to collaborate in the production of
a
semiconductor component product for in-building power networks that
will be sold
by Arkados in the open market;
WHEREAS, the parties will explore future cooperation related to
other
semiconductor products of Arkados. The Parties may enter into one
or more
separate agreements with respect to such future cooperation if they
see fit for
their business.
AGREEMENT
NOW,
THEREFORE, in consideration of the above recitals and the
mutual
promises and covenants contained herein, the Parties hereby agree
as follows:
ARTICLE I. DEFINITIONS
For
purposes of this Agreement, the terms defined in this Article
shall
have the meanings specified below:
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1.1
"AFFILIATE" shall mean any corporation or other entity, which
controls, is controlled by, or is under common control with, a
Party
to this Agreement. A corporation or other entity shall be regarded
as
in control of another corporation or entity if it owns or directly
or
indirectly controls at least fifty-one (51) percent of the
voting
stock or other voting equity interest of the other corporation
or
entity.
1.2 "GDA
SERVICES" shall mean the services to be provided by GDA
pursuant
to this Agreement and as outlined in Annex-A. Details of the
GDA
Services shall be as described in Task Orders to be entered into
by
the Parties. GDA shall perform the GDA Services in a
professional
manner using qualified personnel.
1.3
"BUSINESS DAY" shall mean all days other than Saturdays, Sundays,
and
other days on which United States banks are closed.
1.4
"DESIGN LICENSE" shall have the meaning set forth in Section
3.1.
1.5
"EFFECTIVE DATE" shall have the meaning set forth in the preamble
this
Agreement.
1.6
"FOUNDRY" shall mean a third party foundry selected by Arkados, in
its
discretion after consultation with GDA, to provide silicon
foundry
services with respect to the Product.
1.7
"INTELLECTUAL PROPERTY RIGHTS" shall mean any and all (i)
Letters
Patent and all pending applications for Letters Patent, including
any
reissue, reexamination, division, continuation, or
continuation-in-part applications throughout the world; (ii)
trade
secret rights and equivalent rights arising under the common
law,
state law, federal law, and laws of foreign countries; (iii)
copyrights, mask works, other literary property or authors
rights,
whether or not protected by copyright or as a mask work, under
common
law, state law, federal law, and laws of foreign countries; and
(iv)
proprietary indicia, trademarks, service marks, trade names,
symbols,
logos, and/or brand names under common law, state law, federal
law,
and laws of foreign countries.
1.8
"NECESSARY CLAIMS" shall mean those claims of all patents, other
than
design patents and design registrations, which are necessarily
infringed by an implementation of standards based technologies
incorporated into the Product which cannot be avoided by
another
commercially reasonable non-infringing implementation of such
standards based technologies.
1.9
"PRELIMINARY SPECIFICATIONS" means the preliminary functional
specifications for the Product that set forth in Annex-B.
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1.10 "PRODUCT"
shall mean the semiconductor component product that Arkados
has code-named "PowerWave" and the specification of which
conforms
substantially to the Specification.
1.11 "PRODUCT
TECHNOLOGY" shall mean any Intellectual Property Rights in
and to any technology that is developed or improved by a Party
in
connection with the development activities relating to the
Product
that are carried out under this Agreement, Using Arkados' or
Arkados'
licensors intellectual property.
1.12
"PRODUCT-RELATED
MATERIALS" shall mean drawings, documents,
specifications, designs and other materials, whether in tangible
or
electronic form, that comprise or incorporate Product
Technology.
Except for PG-tape, mask set, CP testing program and FT testing
program.
1.13
"PRODUCTION COST" shall mean the sum of the following: Foundry
die
cost, assembly and package cost, component test cost, and any
royalties payable by Arkados directly or indirectly through GDA to
any
third party by reason of the incorporation of any IP blocks of
such
third party in the Product or otherwise by reason of the making
or
selling of the Product. Production Cost shall be denominated in
US
dollars. (Royalties related to licensing of Necessary Claims shall
not
be included in Production Cost. Production Cost shall be determined
by
Arkados within fifteen (15) days after the end of each fiscal
quarter.)
1.14 "SIGNOFF"
shall mean the iteration of data In and Physical Layout will
be repeated until the results of netlist, timing and post
simulation
satisfies both Parties by signing a sign-off document
1.15
"SPECIFICATIONS" means the Preliminary Specifications, as
modified
from time to time by Arkados in its sole discretion.
1.16 "STEERING
COMMITTEE" shall mean a committee consisting of
representatives of each of Arkados and GDA that are designated
from
time to time by the respective Party. The Steering Committee will
meet
at least once a month pursuant to an agreed schedule. The members
of
the Steering Committee are specified in Annex D. The Parties
agree
that either party may change its designated representatives
provided
the other Party is notified in writing in advance and approves
such
change, such approval shall not to be unreasonably withheld or
delayed. The Steering Committee shall act only by unanimous
agreement
of its members; provided that if the Steering Committee is
deadlocked
on any issue that the it is assigned responsibility under this
Agreement to determine or resolve, the issue shall be determined
or
resolved by the Presidents of each of the Parties, who shall
determine
or resolve the issue by mutual agreement.
1.17 "THIRD
PARTIES" shall mean any person or entity other than Arkados and
GDA or their respective Affiliates.
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1.18 "TASK
ORDER" shall mean a separate addendum to this Agreement setting
forth the specific GDA Services to be performed by GDA pursuant
to
this Agreement. Task Orders entered into by the parties shall:
(i)
refer expressly to this Agreement; (ii) designate the date as of
which
the provisions of the Task Order will be effective and, if
applicable,
the term or period of time during which GDA will perform
services,
provide resources or otherwise discharge its obligations as
specified
in the Task Order; (iii) describe the services to be performed,
resources to be provided or obligations to be discharged by GDA
pursuant to the Task Order and any applicable development
milestones
and acceptance requirements; (iv) describe the obligations of
Arkados
related to the Task Order, including any facilities, equipment,
personnel and tasks or other support to be provided or performed
by
Arkados; and (v) specify any other terms and conditions appropriate
to
the services to be performed and the obligations of the
Parties.
1.19 "GDA
DELIVERABLES" shall mean materials resulted from performance of
GDA services by GDA pursuant to this agreement and as outlined
in
Annex-A.
ARTICLE II.
GENERAL STRUCTURE OF RELATIONSHIP
2.1 ROLE
OF ARKADOS. The Parties agree and acknowledge that, subject to
the performance by GDA of the GDA Services, Arkados is responsible
for
completion of the design and development of the Product, including
the
design and development of (i) powerline MAC layer, Powerline PHY
layer
and related hardware blocks, which will be the core of the
Product;
(ii) overall Product architecture; and (iii) relevant firmware
and
software drivers for the Product. In connection with such design
and
development, Arkados shall be responsible for preparing the
deliverables listed in Annex-A (marked as Arkados deliverables
ARK-DE)
hereto (the "Arkados Deliverables").
2.2
INTELLECTUAL PROPERTY OWNERSHIP. Arkados is and shall remain the
sole
owner of all Intellectual Property Rights associated with the
Product
and related technologies, including without limitation all
Product
Technology and Product-Related Materials and any derivative
works
based on any of the foregoing, subject to any grant by Arkados of
the
Design License pursuant to Section 3.1.
2.3
PERFORMANCE OF SERVICES BY GDA. GDA will provide to Arkados the
GDA
Services in accordance with the terms of Task Orders enter into by
and
between Arkados and GDA. GDA and Arkados agree to negotiate in
good
faith the terms of, and to use reasonable efforts to enter into,
the
initial Task Order providing for the performance by GDA of the
GDA
Services
outlined in Annex-A hereto within 30days of the Effective
Date. GDA shall perform the GDA Services in accordance with the
terms
of the relevant Task Order and will use its best efforts to
comply
with the project schedule set out in Annex-C, as it may be amended
by
mutual agreement in writing from time to time. If GDA determines
that
it is unable or unwilling to continue with the development of
the
Product pursuant to this Agreement (including by reason of
cessation
of business or the bankruptcy of
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GDA) GDA agrees to negotiate in good faith with Arkados the terms
of
mutually acceptable alternative arrangements for continuing with
the
development and manufacture of the Product, which would include
providing Arkados with a license to use the GDA Deliverables and
other
information owned by GDA, data and information including
business
relationships needed to complete the development and production of
the
Product.
2.4
DELIVERY. GDA shall use commercially reasonable efforts to deliver
GDA
Deliverables specified in Annex A and Annex C for testing
and/or
acceptance. At each delivery, GDA shall memorialize such delivery
in a
signed delivery confirmation sheet that sets forth the nature
and
condition of the GDA Deliverables, the medium in which GDA
Deliverables reside, and the date of the delivery. Arkados
shall
countersign such delivery confirmation sheet so as to indicate
the
receipt of the contents described therein.
2.5
TESTING AND ACCEPTANCE. Upon receipt of GDA Deliverables,
Arkados
shall immediately commence, and conclude as promptly as
practical,
acceptance testing of such deliverable items in accordance with
acceptance criteria mutually agreeable to both parties. Upon
completion of such acceptance testing, Arkados shall issue to GDA
a
notice of acceptance or a notice of rejection. In the event of
rejection, Arkados shall give its reasons for rejection in
reasonable
detail, and GDA shall use its reasonable effort to correct the
deficiency or nonconformity and redeliver the GDA Deliverables
as
promptly as practical. In the event Arkados has not delivered a
notice
of acceptance or a notice of rejection within 15 business days
of
receipt of GDA Deliverables, Arkados will be deemed to have
accepted
such GDA Deliverables.
2.4
MANUFACTURING OF PRODUCT. Arkados will be responsible for the
manufacturing of the Product; provided, that GDA, acting on behalf
of
Arkados, will be responsible for (i) negotiating (subject to
Arkados'
approval) the terms of a foundry agreement with the Foundry
under
which the Product would be manufactured, including without
limitation
any pricing terms, (ii) monitoring and managing the Foundry's
performance under the foundry agreement; and (iii) accepting,
packaging and testing Product delivered by the Foundry.
2.5
BRANDING Product will be sold under the Arkados logo as a brand
name
or such other names as Arkados, in its sole discretion, shall
select.
The size and location of any placement of the Arkados logo on
the
Product or any packaging will be determined by Arkados.
ARTICLE III. LICENSE GRANT
3.1
Subject to the terms and conditions of this Agreement, Arkados
hereby
grants to GDA, a personal, nonexclusive, and nontransferable
internal
use license to use (the "Design License") Arkados' Intellectual
Property Rights in and to the Product solely for the purpose of
performing GDA Services and its obligations
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pursuant to this Agreement, including without limitation in
connection
with the design and development of Product Technology or
Product-Related Materials. No right to sublicense is granted to
GDA
hereunder.
3.2
Arkados and its licensors retain sole and exclusive title to
and
ownership of the Intellectual Property Rights in and to the
Product
and the technologies incorporated therein and any derivative
works
based thereon, including all copies, whether made by Arkados or
GDA
and regardless of the form or media in or on which the original
and
copies may exist Arkados and its licensors retain sole and
exclusive
title to and ownership of any and all modifications and updates to
or
of such Intellectual Property Rights made by Arkados and its
licensors. Arkados shall have sole and exclusive title to and
ownership of the Product Technology, the Product-Related
Materials.
3.3
Arkados, as the sole and exclusive owner of the Intellectual
Property
Rights in the Product, shall have full responsibility, in its
sole
discretion, for filing, prosecuting and maintaining of patents
and/or
other applications or registrations worldwide with respect to
any
patentable or registerable inventions associated with the
Product.
3.4
Except as expressly provided in this Agreement, GDA shall not,
and
shall not permit any third party to, use, copy, modify,
sublicense,
distribute or otherwise transfer to any third party, the
Intellectual
Property Rights, the Product Technology or the Product-Related
Materials or any other product or technology incorporating or
utilizing any Intellectual Property Rights of Arkados.
3.5 GDA
will promptly disclose to Arkados all inventions relating to or
based upon Product Technology, Product-Related Materials and
Intellectual Property Rights developed by GDA during the Term and
will
execute such assignment, and other documents reasonably requested
by
Arkados, to perfect and record Arkados' rights as set forth in
paragraph 3.3 above.
ARTICLE IV. PAYMENTS
4.1 In
consideration of the work performed under the paragraph 1 of
the
Initial Task Order (a) Arkados will pay GDA $* (*). Arkados will
pay
$* as advance at the start of the project and the remaining
($*)
payments to be made in equal monthly installments of $* (*) for
the
first * months of the project. Parties further agree that above
described payments could be made in a form of * if mutually agreed
by
the parties at the time when a specific payment is due. If no
agreement is reached then payment will occur in cash. Should GDA
fails
to adhere to mutually agreed upon schedule Arkados has the right
to
stop payments and parties shall resolve the issue as provided for
in
2.3. If the project is terminated for any reason, all payments owed
up
to and including the termination date shall be due and payable in
full
immediately upon termination; and
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(b) CDKnet.Com, Inc., Arkados' corporate parent and a Delaware
corporation, ("CDK") shall issue an aggregate of 150,000 shares of
its
common stock to GDA pursuant to a Restricted Stock Purchase
Agreement.
4.2 In
consideration of the work performed under the paragraph 2 of
the
Initial Task Order Arkados will pay GDA the fee that shall be
calculated as ** GDA shall provide all necessary information to
allow
Arkados to determine Production Cost and Product quantities.
4.3 GDA
will be solely responsible for payment to the Foundry and other
Third Parties for the following: Foundry NRE, mask charges,
engineering (sample) lot production fee, packaging NRE, testing
NRE
and other tooling related fees, but will be promptly reimbursed
by
Arkados upon written request of GDA. Such written request shall
be
accompanied with all necessary supporting information that would
allow
Arkados to confirm such costs. If re-spins of the Product are
necessary, the responsibility for the cost of such re-spins shall
be
determined as provided in Section 4.4. GDA will need advance
payment
from Arkados for making such payments.
4.4 If a
new production run is needed due to a logic design flaw or
other
defects for which Arkados is responsible, Arkados will be
solely
responsible for the incremental fees and costs associated with the
new
production run. If a new production run is needed due to
problems,
which relate to an aspect of the GDA Services for which GDA is
responsible GDA will redo the required services free of charge to
get
to the new production but the incremental fees and costs
associated
with the new production run will be equally split between GDA
and
Arkados.
ARTICLE V.
CONFIDENTIALITY
5.1
Nondisclosure Obligations. During the term of this Agreement and
for a
period of three (3) years thereafter, each Party shall maintain
in
confidence and use only for purposes of this Agreement any
information
supplied by the other Party (whether or not designated at the time
of
disclosure as "confidential" or the like) either in writing or
verbally in connection with this Agreement, including
information
exchanged pursuant to the Mutual Confidentiality Agreement. For
purpose of this Article V, such information and data that has been
so
supplied by a Party shall be referred to herein as
"Information."
Notwithstanding the foregoing, to the extent it is reasonably
necessary or appropriate to fulfill its obligations under this
Agreement, a Party may disclose Information to its Affiliates,
consultants, and outside contractors, strictly on
