<PAGE>
EXHIBIT 10.99
Date of Agreement:
March 27, 2006
PMC Sierra Corporation
Mission Tower One
3975 Freedom Circle, #300
Santa Clara, CA 95054
Re:
Development Agreement ("Agreement")
The
purpose of this Agreement is to set forth certain binding
agreements
with respect to a development project wherein Peerless Systems
Corporation
("Peerless") will assist PMC-Sierra Corporation ("PMC-Sierra") in
developing
"Bluestone", a certain Application Specific Standard Product
("ASSP") device
(the "Development"). Terms used in this Agreement which are
capitalized are
defined where first used or as set forth in Annex A this
Agreement.
1.
The Development.
1.1.
PMC-Sierra
hereby retains Peerless for the Development, and
Peerless hereby accepts retention for the Development, in
accordance with the terms and conditions of this Agreement.
1.2.
PMC-Sierra and
Peerless will agree to the product specifications,
statements of work, deliverables, schedules, acceptance
criteria
and other details of the Development in one or more addendums
to
this Agreement (each a "Project Addendum").
1.3.
PMC-Sierra and
Peerless will enter into one or more license
agreements for software and hardware to be used in the
Development
and/or to be included in or with the ASSP upon commercial sale
of
the ASSP.
2.
Engineering Services for the Development
2.1.
Peerless has
applied (beginning in January 2006) and will continue
to apply technical personnel to the Development, with the
make-up
of personnel being a mix of Hardware and Software Architects,
ASIC
Engineers, Software/Firmware Engineers, Hardware Engineers, and
a
Peerless Project Manager, as dictated by the needs of the
Development at a particular time.
1
Confidential treatment has been requested for portions of this
document. This
copy of the document filed as an Exhibit omits the confidential
information
subject to the confidentiality request. Omissions are designated by
three
asterisks (***). A complete version of this document has been filed
separately
with the Securities and Exchange Commission
<PAGE>
2.2.
Overall
coordination of the Development shall be performed by a
PMC-Sierra program manager. This program manager will be
responsible for determining and providing staffing requirements
for the Development to Peerless, and Peerless will use its best
efforts to meet the staffing requirements. Peerless shall not
be
required to provide more than *** personnel at any time without
Peerless' further consent. The PMC-Sierra program manager will
provide a rolling six-week staffing forecast to allow Peerless
time to plan for project staffing increases and reductions. If,
at
any time, in the judgment of the PMC-Sierra program manager that
a
Peerless employee or contractor is not performing to expected
levels, the program manager will have the right to elevate the
employee performance issue to a Peerless Vice President with
the
expectation of immediate corrective action to address the
issue.
3.
Consideration for the Development
3.1.
PMC-Sierra will
pay Peerless *** per hour for each hour of time
expended by Peerless personnel in connection with the
Development,
up to a maximum charge of 40 hours per week per employee or
contractor.
3.2.
Peerless will
invoice PMC-Sierra on a monthly basis. Invoices must
be paid not later than thirty (30) days after the date of the
invoice. Peerless may suspend work if payments are not made
when
due.
3.3.
All payments
made by PMC-Sierra to Peerless for work performed on
the Development, shall be non-refundable upon payment except as
expressly provided herein.
4.
Licensing and Royalty Rates
4.1.
No licenses are
granted by Peerless to PMC-Sierra or by PMC-Sierra
to Peerless in this Agreement. All licenses must be negotiated
as
addendums to this agreement.
4.2.
The parties
shall negotiate one or more separate license
agreements whereby Peerless will grant PMC-Sierra a license to
use, modify and reproduce Peerless Hardware Intellectual
Property
specified in Annex B and to combine the specified Peerless
Hardware Intellectual Property with PMC-Sierra materials as
necessary or appropriate to complete the Development and to
manufacture, support and maintain the Bluestone ASSP product.
The
license agreements shall provide that the Bluestone ASSP
product
shall not be transferred, sold, offered for sale, or
distributed
without the inclusion and appropriate licensing of the Peerless
PDS product. PMC-Sierra will pay Peerless a Recurring License
Fee
(royalty) on each Bluestone ASSP product sold that contains a
Peerless proprietary hardware product and is inclusive of
Peerless
PDS ( the total of which shall be referred to as the "Bundled
Product"). PMC-Sierra and Peerless will collaborate to create a
single Bundled Product pricing schedule. PMC-Sierra will be
responsible for selling the Bundled Product in the market. The
purchase order, shipment and revenue flow will be through
PMC-Sierra with PDS royalties paid back to Peerless on a
monthly
basis. *** The Recurring License
2
Confidential treatment has been requested for portions of this
document. This
copy of the document filed as an Exhibit omits the confidential
information
subject to the confidentiality request. Omissions are designated by
three
asterisks (***). A complete version of this document has been filed
separately
with the Securities and Exchange Commission
<PAGE>
Fee of the Bundled Product shall be determined by Peerless in
consultation with PMC-Sierra ***. There will be no license fees
charged to PMC-Sierra for the use of Peerless Hardware
Intellectual Property in the development, support, and
maintenance
of the Bluestone ASSP product.
4.3.
In furtherance
of Section 4.2, Peerless will make the following
Peerless proprietary products available to PMC-Sierra for
internal
use in the Development and to manufacture, sell, support and
maintain the Bluestone Product under a separate license
agreement
to be negotiated by the parties:
- Build
environments
- Software
tools
-
PeerlessPage imaging environment
-
PeerlessPrint7 (PCL-XL emulation) language
interpreter
- Peerless'
implementation of ***
- Peerless
connectivity solutions for networking
-
PeerlessPage Drawing Services
4.4.
In furtherance
of Section 4.2, PMC-Sierra will make PMC-Sierra
proprietary products available to Peerless for internal use
only
in the Development under a separate agreement to be determined
by
the parties. These proprietary products will be specified as
necessary during the Development. Peerless will have no right
to
sublicense PMC-Sierra Intellectual Property or proprietary
products.
4.5.
The parties
shall also negotiate a royalty bearing agreement for
PMC-Sierra to distribute to its customers the Peerless software
designated in Section 9.
4.6.
Peerless shall
not charge PMC-Sierra any fee or royalty for using
the Peerless Intellectual Property referred to in Section 4.3
for
the development, support and maintenance of the Bluestone ASSP
product.
4.7.
PMC-Sierra will
have no right to modify or create Derivative Works
from Peerless Intellectual Property elements other than those
elements identified in
Annex B. Modifications may be made to Annex
B by mutual consent of both parties.
4.8.
In the event
that PMC-Sierra utilizes Peerless Hardware
Intellectual Property in future products then the parties agree
that such future products will be marketed and sold by
PMC-Sierra
using the Bundled Product business model specified in section
4.2.
Otherwise, the parties mutually agree to negotiate a royalty
fee
for the use of the Hardware Intellectual Property in those
future
products.
4.9.
During the Term,
PMC Sierra shall not directly or indirectly
develop or commercialize a product with competing functionality
to
the functionality as Peerless Intellectual Property.
5.
Ownership and Restrictions of Intellectual Property Rights
3
Confidential treatment has been requested for portions of this
document. This
copy of the document filed as an Exhibit omits the confidential
information
subject to the confidentiality request. Omissions are designated by
three
asterisks (***). A complete version of this document has been filed
separately
with the Securities and Exchange Commission
<PAGE>
5.1.
Nothing in this
Agreement transfers ownership of any pre-existing
Intellectual Property from one party to the other.
5.1.1. The intent of this clause is to preserve original
ownership
rights to a body of Intellectual Property in the event that
modifications or improvements are made to such Intellectual
Property. It is also the intent of this clause to allow
PMC-Sierra
the rights to create new products using Peerless
native Intellectual Property in such a way as to keep the
Peerless native Intellectual Property intact. With respect
to any Intellectual Property to which rights to make
improvements, modifications, or revisions have been
granted, any improvements, modifications, or revisions of
any pre-existing Intellectual Property, or any other form
in which such pre-existing may be recast, transformed, or
adapted, (each a "Derivative Work") shall be the sole
property of the owner of the pre-existing Intellectual
Property. If the party making the Derivative Work can by
law or otherwise retain any rights to such Derivative Work,
such party agrees to assign (and upon creation thereof
hereby automatically assigns), without further
consideration, all worldwide right, title and interest,
including without limitation all Intellectual Property
rights of any kind, in and to such Derivative Works to the
party that owns the underlying or pre-existing Intellectual
Property. However, should either party develop Intellectual
Property which can be reduced in practice to operate
without the use of the other party's existing Intellectual
Property, the developer of the new Intellectual Property
shall be the sole owner of such new Intellectual Property.
5.1.2. Notwithstanding Section 5.1.1, in the event that
PMC-Sierra
creates additions or modifications resulting in a
Derivative Work based upon Peerless pre-existing
Intellectual Property, Peerless shall grant to PMC-Sierra
an exclusive license, with no right to sublicense, to the
Derivative Work in conjunction with any license grant to
the pre-existing Intellectual Property. Peerless shall be
prohibited from using any Derivative Work or distributing
any Derivative Work to any other party for the purposes of
developing any new products or devices without the express
written
permission of PMC-Sierra. Additionally, PMC-Sierra
will have the right to use any Derivative Work in
subsequent or future devices under the terms of the license
agreements to be negotiated as addendums to this agreement.
The grant of such a license shall in no way change the
ownership of the modification, or the preexisting
Intellectual Property underlying the modification, or any
Derivative Works thereof made prior to the grant of the
specific exclusive license.
4
Confidential treatment has been requested for portions of this
document. This
copy of the document filed as an Exhibit omits the confidential
information
subject to the confidentiality request. Omissions are designated by
three
asterisks (***). A complete version of this document has been filed
separately
with the Securities and Exchange Commission
<PAGE>
5.2.
Any Intellectual
Property developed or created during the course
of the Development, other than Derivative Works, ("New IP")
will
be owned in accordance with the as follows:
5.2.1. New IP jointly developed by PMC-Sierra and Peerless will
be
jointly and equally owned by PMC-Sierra and Peerless. Each
party will have the right to exploit such jointly owned New
IP without accounting or incurring any other obligations to
the other party. When a filing shall be made to register
such New IP, such as a patent or copyright, the filing
party shall inform the other party in advance and the other
party given the opportunity to share the expenses equally
and with its participation sh
