EXHIBIT 10.7.1

 

AGREEMENT

 

THIS AGREEMENT made and entered into on the fourteenth day of September, 1992

 

BY AND BETWEEN

 

NORTHERN TELECOM LIMITED, a corporation duly incorporated under the laws of
Canada, having its executive offices at 3 Robert Speck Parkway, Mississauga,
Ontario, Canada,

 

(hereinafter called “Northern Telecom”)

 

AND:

 

LV SOFTWARE, INC., a California corporation having its principal offices at 755
Page Mill Road, Palo Alto, California, 94304,

 

(hereinafter called “Licensee”)

 

WHEREAS Northern Telecom has developed, and has the right to license, software
programs, known as the Design For Testability tool suite (DFT); and

 

WHEREAS Northern Telecom is prepared to license and to grant the use of the
Design For Testability tool suite (DFT) and the right to sub-license on a
commercial basis under the provisions of this Agreement.

 

NOW, THEREFORE, THIS AGREEMENT WITNESSETH THAT, IN CONSIDERATION OF THE MUTUAL
PROMISES HEREINAFTER SET FORTH, THE PARTIES AGREE AS FOLLOWS:

 

ARTICLE 1

 

DEFINITIONS

 

As used herein, unless otherwise defined:

 

(a) “Affiliate” shall mean a company which a Party hereto, or its parent,
effectively controls, directly or indirectly, other than a Subsidiary, through
the ownership or control of shares in the company;

 

(b) “Associated Utilities” shall mean the software elements, cells, or models
described in Schedule C attached hereto and forming a part hereof;

 

(c) “Derivative Works” shall mean any software produced by Licensee
incorporating all or a portion of the Licensed Product;

 

(d) “Documentation” shall mean those documents and other written materials
related to the Licensed Product, as described in and subject to certain
conditions outlined in Schedule B attached hereto and forming a part hereof;

 

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(e) “Distributor” shall mean any person to whom Licensee provides the Licensed
Product for sublicensing to End-Users;

 

(f) “Effective Date” shall mean the date first above mentioned;

 

(g) “End-Users” shall mean all persons or companies, other than Northern
Telecom, its Affiliates, Subsidiaries and Manufacturing Licensees, which
acquire, directly from Licensee or indirectly through a Distributor, the right
to use a Licensed Product or Derivative Works, as contemplated in this
Agreement;

 

(h) “Licensed Product” shall mean the Design for Testability tool suite (DFT)
and any portion or modification thereof, as described in and subject to certain
conditions identified in Schedule A attached hereto and forming a part hereof;

 

(i) “Manufacturing Licensee” shall mean a third party with whom Northern Telecom
or any of its Affiliates or Subsidiaries has entered into an agreement
permitting such third party to make and sell or lease products based on products
designed by or for and sold or leased by Northern Telecom, its Affiliates, or
Subsidiaries;

 

(j) “Subsidiary” shall mean a company which a Party hereto effectively owns or
controls, and continues to own or control, directly or indirectly, more than
fifty percent (50%) of the voting stock or shares.

 

ARTICLE 2

 

LICENSE

 

Northern Telecom hereby, as of the Effective Date, grants to Licensee subject to
the terms and conditions of this Agreement personal, non-exclusive,
non-transferable, non-assignable, indivisible, worldwide rights and license:

 

(i) to use, copy, translate, improve, enhance, and modify the Licensed Product
object code and source code, to merge or have merged such translations,
modifications, improvements or enhancements into other programming material, to
sub-license and distribute object code versions of Licensed Product or
Derivative Works to End-Users, to copy, translate and modify the Documentation
and to use, sell or distribute copies of such Documentation;

 

(ii) to appoint and to sub-license Distributors to sublicense for use and to
distribute to End-Users object code versions of Licensed Product or Derivative
Works under terms and conditions no less stringent than those set out in this
Agreement; and

 

(iii) to place Licensed Product arid Derivative Works source code in escrow for
the benefit of End-Users and Distributors and grant source code licenses to such
End-Users and Distributors pursuant to which, in the event of a bankruptcy or
similar proceeding against Licensee or in the event of termination of this
Agreement and the refusal of Northern Telecom to assume Licensee’s support
obligations, such End-User or

 

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Distributor would be granted a license to use such source code solely to
maintain and support the Licensed Product or Derivative Works.

 

Northern Telecom also grants to Licensee the right to use Associated Utilities
as models in the development and debugging of software produced by Licensee or
for demonstration purposes, Associated Utilities must not be delivered to
End-Users.

 

No provision or term or condition of this Agreement shall affect the rights of
Northern Telecom or any Subsidiary or Affiliate or Manufacturing Licensee to use
the Licensed Product or Associated Utilities in the normal course of its and
their businesses.

 

Nothing contained herein shall transfer, or be deemed to transfer, or
contemplate the transfer of, any rights in or to the Licensed Product,
Associated Utilities, or Documentation other than those rights specifically
granted herein, and in particular but without restricting the generality of the
foregoing, Northern Telecom does not in any way transfer any right, title, or
interest in or to the Licensed Product, Associated Utilities, or Documentation,
or any element constituting a portion thereof to Licensee or Distributors or
End-Users, other than the limited right granted herein.

 

ARTICLE 3

 

GRANTBACK

 

Licensee hereby grants to Northern Telecom, its Subsidiaries, Affiliates and
Manufacturing Licensees, a perpetual, irrevocable, transferable, assignable,
worldwide, paid-up right to use Derivatives Works. Such right includes the right
to modify the Derivative Works and to incorporate them into software or product
for their own internal use in the normal course of their business.

 

Source code for Derivative Works shall be delivered to Northern Telecom at such
times as Licensee initially makes such Derivative Works available to an End-User
and every twelve (12) month period thereafter to the extent that additional
Derivative Works have been made available to an End-User within the immediately
preceding twelve (12) month period.

 

Ownership in and to the Derivative Works (exclusive of any source code of the
Licensed Product contained therein) and in and to any and all ideas, inventions,
discoveries, creations, processes, techniques, designs, methods, improvements or
know-how that Licensee may make, conceive, develop or reduce to practice
(collectively, “Innovations”), regardless of whether such Innovations are
developed as a result of Licensee’s access to the Licensed Product, shall remain
with and be vested in Licensee.

 

ARTICLE 4

 

FURNISHING OF LICENSED PRODUCTS

 

Northern Telecom shall furnish to Licensee Licensed Product, Associated
Utilities, and Documentation as set out in Schedules A, B, and C within thirty
(30) days of the Effective Date.

 

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Northern Telecom shall furnish to Licensee for a period of thirty (30) months
after the Effective Date all new versions and releases of the Licensed Product,
Associated Utilities, and Documentation developed and used in its day to day
operations (hereinafter “Updates”), however Northern Telecom shall not be
obliged to develop or produce any new or unavailable versions or releases of
Licensed Product, Associated Utilities, or Documentation to perform its
obligations under this Agreement. Provided however that Northern Telecom shall
not be obligated to furnish versions or releases co-developed with a third
party.

 

Licensee shall delete, as directed by Northern Telecom, all information,
including reference to applications or interfaces, which is specific to Northern
Telecom’s, its Affiliates, or Subsidiaries development or user environment.
Northern Telecom shall have the right to review and approve such deletions and
modifications.

 

ARTICLE 5

 

ROYALTY

 

In partial consideration of the rights granted hereunder Licensee shall make the
following royalty payments (hereinafter “Royalties”) to Northern Telecom:

 

(i) Twenty-five thousand dollars ($25,000) US for each copy of a complete
Licensed Product including, without limitation, Derivative Works or, if less
than a complete copy, that proportion of such sum as represents the portion of a
complete copy, sub-licensed by Licensee or a Distributor to End-Users during the
first twelve (12) month period after the Effective Date, and

 

(ii) Fifty thousand dollars ($50,000) US for each copy of a complete Licensed
Product including, without limitation, Derivative Works or, if less than a
complete copy, that proportion of such sum as represents the portion of a
complete copy, sub-licensed by Licensee or a Distributor to End-Users during the
subsequent nine (9) year period.

 

Royalties shall become payable to Northern Telecom thirty (30) days following
each sub-license granted by Licensee or by its Distributors.

 

ARTICLE 6

 

MAINTENANCE AND SUPPORT

 

Licensee shall offer technical, product, and other support to Licensee’s
Distributors and End-Users to facilitate the use of the Licensed Product and
Derivative Works. Royalties shall not be paid on support or maintenance services
provided by Licensee, including without limitation, the distribution of
enhancements, updates or improvements.

 

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ARTICLE 7

 

TECHNICAL ASSISTANCE

 

Except as provided in Article 4, Northern Telecom support to Licensee will be
limited to demonstrating Licensed Product capabilities to potential End-Users at
Northern Telecom’s convenience and discretion.

 

ARTICLE 8

 

RECORDS AND REMITTANCES

 

Licensee shall keep, and shall require all Distributors to keep, clear and
accurate records with respect to the Licensed Product. Northern Telecom shall
have the right, through its internal auditing experts, to examine and audit,
during normal hours, annually (or at less frequent intervals upon reasonable
notice to Licensee) all such records and such other records and accounts as may
under recognized accounting practices contain information bearing upon the
amount of Royalties payable to it under this Agreement solely to verify
compliance by Licensee of its obligation to pay Royalties to Northern Telecom.
Prompt adjustment shall be made by the proper Party to compensate for any errors
or omissions disclosed by such examination or audit. Neither such right to
examine and audit, nor the right to receive such adjustments, shall be affected
by statements to the contrary appearing on cheques or otherwise, unless any such
right is expressly waived by the Party having such right. Licensee shall
furnish, and shall require all Distributors to furnish, whatever additional
information Northern Telecom may reasonably prescribe from time to time to
enable Northern Telecom to ascertain amounts payable thereon.

 

Within thirty (30) days following the end of each quarterly period ending on
March 31, June 30, September 30, and December 31 commencing with the period
which ends on December 31, 1992, and continuing thereafter until all Royalties
payable hereunder shall have been reported and paid, Licensee shall furnish to
Northern Telecom a statement, in a form reasonably acceptable to Northern
Telecom, certified by an authorised official of Licensee, recording all Licensed
Product sublicensed to End-Users hereunder and the Royalties payable thereon. If
no Licensed Product has been sublicensed to End-Users, that fact shall be shown
on such statement. In the event of a return of the Licensed Product or
Derivative Works or such other event that shall result in full or partial refund
to the End-User, Licensee may deduct such amount from the next Royalty payment
to Northern Telecom. Within the same period of thirty (30) days, Licensee shall,
irrespective of terms granted or collections made on account of any items
subject to Royalties, remit to Northern Telecom the Royalties payable hereunder
for such quarterly period.

 

All payments to be made by Licensee to Northern Telecom shall be made in U.S.
dollars at Northern Telecom’s address as shown in Article 16 hereof, or at such
other address in Canada or the USA as Northern Telecom shall have specified by
written notice. Payments related to Licensee’s licensing activities in the USA
shall be made to:

 

Northern Telecom Inc.

200 Athens Way,

Nashville, Tennessee,

 

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U.S.A. 37228

 

Attention: Sue Kane, Dept. 8452.

 

Licensee shall pay either to the appropriate taxing authority or to Northern
Telecom upon receipt of an invoice therefor, all taxes or other levies imposed
as a result of the existence or operation of this Agreement including, but not
restricted to, registration fees, stamp taxes, remittance fees, sales, value
added or use taxes, customs duties or other governmental charges of any kind
whatsoever, resulting from the granting or transfer of the License hereunder,
all such taxes or levies, sales, value added, goods and services taxes and/or
withholding taxes, due or imposable with respect to Royalties, shall be borne by
Northern Telecom. Nothing herein contained shall make either party responsible
for any tax on income imposed on the other by the laws of any country or any
political subdivision thereof on the income or profits of such party.

 

To assist either party in obtaining a credit or deduction with respect to
withholding taxes, each party shall furnish the other with such evidence as may
be required by Canadian or USA taxing authorities to establish that such tax has
been paid.

 

Payments when provided for in this Agreement shall, when overdue, bear interest
at a rate of two percent (2%) over the Canadian prime rate as quoted by the
Royal Bank of Canada at Toronto, Canada computed on a daily basis.

 

ARTICLE 9

 

SUBLICENSING

 

In exercising its right to grant sublicenses as set out in Article 2 of this
Agreement, Licensee shall, and shall oblige all Distributors to, enter into
sub-license agreements with End-Users which shall contain substantially the
following provisions:

 

(a) End-User shall acquire no right, title or interest in or to the Licensed
Product or Documentation other than the right to use the Licensed Product and
Documentation and such use shall be limited to specific individual central
processing units bearing a specific serial number and having a specific
location;

 

(b) End-User shall hold the Licensed Product and Documentation in confidence for
Northern Telecom and Licensee and shall not at any time use or reproduce the
Licensed Product or Documentation except as expressly permitted hereunder or
divulge the Licensed Product and Documentation to any person other than
employees of End-User with a need to know, without the prior written consent of
Northern Telecom and Licensee; and

 

(c) the right to use the Licensed Product and Documentation shall be in
accordance with the laws applicable in the countries of the End-Users but so as
not to affect, but to preserve, the proprietary and confidential nature of the
Licensed Product and Documentation and any patent, copyright or other rights of
Northern Telecom, its Subsidiaries and Affiliates applicable to the Licensed
Product and Documentation.

 

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Licensee or its Distributors, as applicable, shall negotiate, execute,
administer and monitor each of the Licensed Product and Documentation sublicense
agreements to ensure compliance with all the relevant provisions of this
Agreement. The form normally used by Northern Telecom for such purposes is
attached, as an example, hereto as Schedule D.

 

Nothing in this Agreement shall be construed as granting the right for any
Distributor, or any End-User to disassemble, decompile, or otherwise reverse
engineer the object code versions of the Licensed Product delivered by Northern
Telecom pursuant to this Agreement.

 

In the event an End-User is in default under its sublicense agreement, Licensee
shall so advise Northern Telecom in writing promptly upon discovery thereof, and
exercise as soon as reasonably possible, such rights and recourses, using
commercially reasonable efforts, as Northern Telecom may have in the
circumstances with particular emphasis on preserving the proprietary and
confidential nature of the Licensed Product and Documentation and any patent,
copyright or other rights of Northern Telecom, its Subsidiaries or Affiliates
applicable to Licensed Product and Documentation.

 

ARTICLE 10

 

CONFIDENTIAL INFORMATION

 

Licensee or its Distributors, as applicable, acknowledges that the Licensed
Product and any information communicated to or acquired by Licensee as a result
of the provision of technical assistance pursuant hereto (hereinafter
collectively “Northern Telecom Confidential Information”) is and shall continue
to be the exclusive property of Northern Telecom, and is proprietary and
constitutes a trade secret of Northern Telecom. Licensee shall hold the Northern
Telecom Confidential Information in confidence for Northern Telecom and only
make use of, or disclose, it as permitted by this Agreement.

 

Northern Telecom acknowledges that the Derivative works (exclusive of any
Licensed Product source code contained therein) and any information communicated
to or acquired by Northern Telecom as a result of the provision of technical
assistance pursuant hereto (herein collectively “Licensee Confidential
Information”) is and shall continue to be the exclusive property of Licensee.
and is proprietary and constitutes a trade secret of Licensee. Northern Telecom
shall hold the Licensee Confidential Information in confidence for Licensee and
only make use of, or disclose it as permitted by this Agreement.

 

The Northern Telecom Confidential Information and the Licensee Confidential
Information is herein collectively referred to as “Confidential Information”.

 

Each party shall, during the full term of this Agreement and for five (5) years
thereafter hold secret arid not disclose, to any person (except to such of its
employees as are required to use the Confidential information of the other
party. and then only under an obligation of non-disclosure and non-use binding
upon such employee) any of the Confidential Information of the other party
except as follows:

 

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(a) to Distributors and End-Users pursuant to Article 2 of this Agreement,
provided such persons agree to be bound by the confidentiality provisions of
this Article 10;

 

(b) to Northern Telecom’s Affiliates, Subsidiaries, and Manufacturing Licensees
pursuant to Article 3 of this Agreement, provided however that such Affiliates,
Subsidiaries, and Manufacturing Licensees have been bound by the confidentiality
provisions of this Article 10; and

 

(c) to the extent the Confidential Information of the other party:

 

(i) becomes available to the public from a source other than the recipient of
such Confidential Information before or during the period of this Agreement;

 

(ii) is lawfully obtained by the recipient of such Confidential Information from
a third party or parties without breach of confidentiality obligations; or

 

(iii) is documented as being known to the recipient of such Confidential
Information prior to its disclosure.

 

Neither party shall make or have made or permit to be made. any copies of the
Confidential Information of the other party except those copies which are
expressly permitted hereunder, and all such copies shall, upon reproduction and
whether or not in the same form or format as the Confidential Information of the
other party, contain the same proprietary and confidentiality notices or legends
which appear on such Confidential Information provided pursuant hereto.

 

ARTICLE 11

 

MARKETING AND SUBLICENSING

 

Licensee shall use reasonable efforts to, as soon as possible after the
Effective Date, begin the marketing and sublicensing of the Licensed Products as
contemplated by this Agreement.

 

Licensee shall for the duration of this Agreement use its best efforts to
develop, supply and service as extensive a market as possible for the Licensed
Product throughout the world.

 

ARTICLE 12

 

LIABILITY

 

Northern Telecom has developed the Licensed Product and Associated Utilities
independently and to the best of Northern Telecom’s knowledge they constitute
original concepts and ideas not derived from the unauthorised use of any party’s
proprietary information. Other than the preceding, Northern Telecom makes no
other representations in respect to and does not warrant the Licensed Products
or Associated Utilities furnished pursuant hereto, but shall furnish same in
good faith to the best of its knowledge and ability to perform in accordance
with the Documentation. Northern Telecom shall not be liable for any claims,
injuries, or damages, direct, indirect, or consequential, arising from the use
of, or the inability to use, the Licensed Product or Associated Utilities.
Without restricting the generality of the foregoing, Northern

 

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Telecom makes no representations or warranties as to the merchantability or
fitness for a particular purpose, or as to whether or not the use of the
Licensed Product or Associated Utilities supplied hereunder may infringe any
patent or other rights of any other person.

 

Licensee shall indemnify and hold Northern Telecom harmless from any and all
claims for damages, losses, expenses or costs (including counsel fees and
expenses) arising out of Licensee’s distribution and sublicensing, directly or
indirectly, of the Licensed Products and Derivative Works.

 

Northern Telecom shall indemnify and hold Licensee harmless from any and all
claims for damages, losses, expenses or costs (including counsel fees and
expenses) arising out of the use of the Derivative Works by Northern Telecom,
its Affiliates, Subsidiaries or Manufacturing Licensees.

 

ARTICLE 13

 

FORCE MAJEURE

 

Neither Party shall be in default or liable for any loss or damage resulting
from delays in performance or from failure to perform or comply with terms of
this Agreement due to any causes beyond its reasonable control, which causes
include but are not limited to Acts of God or the public enemy, riots and
insurrections, war, accidents, fire, strikes and other labor difficulties
(whether or not the Party is in a position to concede to such demands),
embargoes, judicial action, lack of or inability to obtain export permits or
approvals, necessary labor, materials, energy, components, or machinery, acts of
civil or military authorities.

 

ARTICLE 14

 

DURATION AND CONTINUING RIGHTS

 

This Agreement shall continue until the earlier of ten (10) years after the
Effective Date and the full and final payment of all sums due Northern Telecom
hereunder, or, until terminated pursuant to Article 15 hereof.

 

Provided this Agreement is not terminated prior to ten (10) years after the
Effective Date, Licensee shall on that date, possess a fully paid up license to
exercise the rights granted in Article 2 without, however, having the obligation
of providing statements and making payments as prescribed in Articles 5 and 8
hereof.

 

ARTICLE 15

 

TERMINATION

 

In the event either Party shall be in material breach of this Agreement or fail
to perform one or more of its material obligations under this Agreement, the
other Party may, by written notice to the party in default, require the remedy
of the breach or the performance of the obligation and, if the Party so notified
fails to remedy such breach or to perform such obligation within one

 

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hundred and twenty (120) days of the forwarding of a notice so to do, the first
such Party may, by written notice, terminate this Agreement.

 

Any termination of this Agreement by or against one Party shall be termination
of this Agreement by or against the other Party hereto.

 

In the event of an enforceable decision or directive declaring invalid an
essential part of this Agreement, without which this Agreement would not have
been entered into, this Agreement may, at the option of either Party, be
terminated upon the giving of notice to the other Party. Save as before set
forth, in the event that any term, clause, provision or condition of this
Agreement shall be similarly adjudged invalid for any reason whatsoever, such
invalidity shall not affect the validity or operation of any other term, clause,
provision or condition and such invalid term, clause, provision or condition
shall be deemed to have been deleted from this Agreement.

 

In the event Licensee becomes insolvent or is the object of bankruptcy or
insolvency proceedings, or makes an assignment for the benefit of its creditors,
or is placed in receivership or liquidation, or fails to satisfy any final
judgement rendered against it within the period so permitted, then, Northern
Telecom may, without any delay, by written notice, terminate this Agreement.

 

In the event that a producer of products similar or related to Northern
Telecom’s products acquires a controlling interest (controlling not necessarily
requiring greater than 50%) or a major equity participation in Licensee, without
first having obtained the written consent of Northern Telecom, Northern Telecom
may, without any delay, by written notice, terminate this Agreement.

 

In the event of termination prior to the expiration of this Agreement Licensee
shall discontinue the exercise of the rights granted hereunder. and shall render
an immediate accounting and make payment of all royalties and other sums due
hereunder or to become due upon the sublicensing of the Licensed Products.
Licensee shall promptly deliver to Northern Telecom all the Licensed Products,
Associated Utilities, and Documentation supplied pursuant hereto, and shall
erase all electronically stored copies thereof, and shall certify, in writing to
Northern Telecom, that such destruction has taken place.

 

Notwithstanding anything else contained herein, in the event this Agreement is
terminated, End-Users shall continue to have the right to use such software
provided:

 

(a) such End-User is not in default under its written End-User sublicense
agreement with Licensee;

 

(b) such End-User sublicense is not inconsistent with the terms of this
Agreement;

 

(c) the rights of Licensee as sublicensor are assigned to Northern Telecom if
Northern Telecom so requests; and

 

(d) the rights and obligations of Licensee as sublicensor to End-Users pursuant
to maintenance agreements as contemplated in Article 6 herein which are in full
force and effect

 

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without default are assigned to Northern Telecom if Northern Telecom so
requests; provided, however, notwithstanding anything to the contrary contained
in this Agreement, in the event that Northern Telecom shall not assume all
rights and obligations of Licensee as sublicensor to End Users pursuant to
maintenance agreements which are in full force and effect, Licensee shall be
permitted to retain the Licensed Product source code and to distribute object
code versions of such improvements, modifications and enhancements pursuant to
Licensee’s maintenance obligations.

 

Notwithstanding the expiry or termination of this Agreement, the provisions of
Article 10 related to confidentiality and non-use. the provisions of Article 12
related to liability and indemnification, and the provisions of Article 14
related to the grant of a perpetual license shall survive as though this
Agreement had continued.

 

ARTICLE 16

 

NOTICES

 

Any and all notices or other information to be given by one of the Parties to
any other shall be deemed sufficiently given when forwarded by mail, cable,
telegram, telex, facsimile or hand delivery to such other Party at the following
addresses:

 

If to Licensee:

 

LV Software, Inc.

1175 Senecal,

Brossard, Quebec,

Canada, J4X 1L3

 

Attention: Chief Executive Officer (Dr. V.K. Agarwal)

Facsimile Number: 514-923-9993

 

If to Northern Telecom:

 

Northern Telecom Limited

P.O. Box 458, Station A,

Mississauga, Ontario

Canada

L5A 3A2

Attention: Secretary

 

with a copy to:

 

Bell-Northern Research Ltd

3500 Car4ing Avenue,

NepeZri, Ontario, Canada

K2H 8E9

 

Attention: Secretary

 

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Facsimile Number: 613-763-5920

 

and such notice shall be deemed to have been received five (5) business days
after mailing it forwarded by mail, and the following business day if forwarded
by cable, telegram, telex, facsimile or hand.

 

The aforementioned address of any Party may be changed at any time by giving
five (5) business days prior notice to the other Parties in accordance with the
foregoing.

 

In the event of a generally prevailing labor dispute or other situation which
will either delay or impede the giving of notice by any such means, the notice
shall be given by such specified mode as will be most reliable and expeditious
and least affected by such dispute or situation.

 

ARTICLE 17

 

GENERAL PROVISIONS

 

This Agreement shall not be assigned or transferred by either Party except with
the written consent of the other. Notwithstanding the foregoing, this Agreement
may be assigned by Northern Telecom to any of its Subsidiaries or Affiliates
upon notification to Licensee.

 

The Parties recognize that the transfer of Licensed Product or Associated
Utilities to certain countries may be subject to the prior specific approval of
the Government of Canada, or various agencies thereof, and international control
organizations in which the Government of Canada participates, including in
particular the Free World Co-ordinating Committee (sometimes known as “CoCom”).
Accordingly, Licensee shall not sublicense, use, or otherwise communicate or
transfer Licensed Products or any technical information to such countries
without receiving the necessary prior specific approvals.

 

Nothing in this Agreement shall be construed as requiring Northern Telecom to
disclose technical information, or to grant rights under licenses, or to render
any technical assistance, which would violate any confidentiality undertakings
which it has towards third persons or which would violate any present or future
law or decree of any government or governmental officer or agency, and nothing
contained herein shall require the disclosure of technical information which
would increase or impose any obligations on Northern Telecom with respect to
third parties.

 

Nothing in this Agreement shall be construed as

 

(a) requiring Northern Telecom to file any patent application, to secure any
patent or to maintain any patent in force;

 

(b) constituting a warranty that or representation by Northern Telecom as to the
validity or scope of any patent licensed hereunder;

 

(c) constituting a warranty or representation that any sublicensing by Licensee
hereunder will be free from infringement of patents other than those under which
and to the extent to which licenses are granted hereunder;

 

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(d) constituting an agreement to bring or prosecute actions or suits against
third parties for infringements;

 

(e) conferring upon Licensee any right to use, in advertising or publicity, any
name, trade name or trademark. or any contraction, abbreviation or simulation
thereof without the prior written approval of Northern Telecom. Licensee may,
however, disclose to potential End-Users and Distributors the fact that the
original Licensed Product was developed by Bell-Northern Research Ltd., an
affiliate of Northern Telecom; or

 

(f) conferring by implication. estoppel. or otherwise upon Licensee any license
or other right under any patent, except the licenses and rights expressly
granted hereunder to Licensee.

 

Nothing contained in this Agreement shall limit, in any manner, Northern
Telecom’s right to discontinue or change the design or characteristics of the
Licensed Product at any time without notice and liability.

 

The failure of any Party to give notice to any other Party of the breach or
non-fulfillment of any term, clause, provision or condition of this Agreement
shall not constitute a waiver thereof, nor shall the waiver of any breach or
non-fulfillment of any term. clause, provision or condition of this Agreement
constitute a waiver of any other breach or non-fulfillment of any term, clause,
provision of condition of this Agreement.

 

This Agreement sets forth the entire agreement and understanding between the
Parties with respect to the licensing of Licensed Products and Associated
Utilities and supersedes and cancels all previous negotiations, agreements,
commitments and writings in respect of the subject matter hereof, and no Party
hereto shall be bound by any term, clause, provision or condition save as
expressly provided in this Agreement or as duly set forth on or subsequent to
the date hereof in writing, signed by duly authorised officers of the Parties.
The Parties may, however, modify Schedules A, B, and C hereto, from time to
time, by written instrument signed by representatives of both Parties, provided
any such modification does not materially change the scope and substance of this
Agreement.

 

Nothing in this Agreement shall be construed as establishing or implying any
partnership between the Parties hereto, and nothing in this Agreement shall be
deemed to constitute any of the Parties hereto as the agent of any other Party
or authorize any Party to incur any expenses on behalf of any other Party or to
commit any other Party in any way whatsoever, without obtaining the other
Parties’ prior written consent.

 

Terms, conditions and general terms of this Agreement shall be held in
confidence by all Parties and only disclosed as may be agreed to by all Parties
or as may be required to meet securities disclosure or export permit
requirements. Neither Party shall make public statements or issue publicity or
media releases with regard to this Agreement or the relationship between the
Parties without the prior written approval of the other Party.

 

If any action at law or in equity is brought relating to this Agreement or the
breach hereof, the prevailing Party in any final judgment or arbitration award,
or the non-dismissing Party in the event of a dismissal without prejudice, shall
be entitled to the full amount of all reasonable

 

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expenses, including all court costs, arbitration fees and actual attorney’s fees
paid or incurred in good faith.

 

This Agreement shall be construed in accordance with and governed by the laws of
the Province of Ontario, Canada.

 

IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement.

 

LV SOFTWARE, INC.

     

NORTHERN TELECOM LIMITED

Per:

 

/s/ V. K. Agarwal

     

Per:

 

/s/ G. C. Smyth

Name:

 

V. K. Agarwal

     

Name:

 

G. C. Smyth

Title:

 

Chief Executive Officer

     

Title:

 

Executive Vice-President

           

Per:

 

/s/ D. J. DeGrandis

           

Name:

 

D. J. DeGrandis

           

Title

 

Secretary

 

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SCHEDULE A

 

LICENSED PRODUCT

 

Licensed Product consists of a Design for Testability tool suite which includes
the following tools delivered in source code form:

 

  (1)   SCANCHEK, Version 5 Release 3 (5.03):

 

SCANCHEK compiles a circuit description from Verilog structural netlists and
checks the logic for compliance to a set of Scan rules. It also extracts the
combinational logic driven by the scan chain as well as a description of the
Scan chain connections and pin types.

 

  (2)   ATPG. Version 5 Release 3 (5.03):

 

Automatic Test Pattern Generator (ATPG) generates and/or evaluates a set of test
vectors for the faults in the combinational part of the logic of a circuit. ATPG
applies random patterns to detect most faults and switches to deterministic
algorithms to find the remaining one. Optionally, the random patterns can be
generated by a Linear-Feedback Shift-Register (LFSR) and the expected responses
for the circuit are compressed and expressed in terms of a 32-bit signature.

 

  (3)   SEQUENCE, Version 5 Release 3 (5.03):

 

SEQUENCE populates a test pattern data base with the test patterns generated by
ATPG for the combinational portion of the circuit. SEQUENCE automatically adds
generic test patterns for the scan chain itself and asynchronous set/reset pins,
if applicable.

 

  (4)   TPI, Version 5 Release 2 Maintenance Release 1 (5.02.01): A Test Point
Insertion tool.

 

  (5)   RamBist, Version 5 Release 2 (5.02): A tool to perform built-in self
test for memories.

 

  (6)   ScanBist, as available for Versi,)n5 (5.00): A tool to perform built-in
self test for Scan-based designs

 

  (7)   IATPG, as available for Version 5 (5.00): A tool to perform interconnect
ATPG.

 

NOTE:   Included in the above are software elements or modules which must be
modified by Licensee. Such modification must be approved by Northern Telecom or
its agent, Bell-Northern Research Ltd. (BNR), before Licensee delivers such
modifications or Derivative Works to End Users. The software elements or modules
are known as:

 

 

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  a.   In SCANCHEK;

- Cadence menus

- ScanBist support

- BNR specific options

 

  b.   In ATPG:

- Cadence menus

- ScanBist support

- BNR specific options

 

  c.   In SEQUENCE

- Cadence menus

- “Fast simulation”

- BNR specific options

 

Licensed Product also includes the following utility delivered in object code
form only and may be delivered to End-Users in object code form:

 

  i.   dh2tif, Version 5 Release 2 (5.02):

A utility to extract test patterns from a DATAHUB file and convert into a TIF
(Tool Interchange Format).

 

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SCHEDULE B

 

DOCUMENTATION

 

Documentation associated with Licensed Product consists of the following:

 

  (1)   Scan Reference Guide, Version 5 Release 3 (5.03):               CCP
143.1

 

  (2)   DFT Application Notes, Version 5 Release 2 (5.02):              CCP
146.1

 

  (3)   DFT Guidelines, Version 5 Release 1 (5.01):                         CCP
146.2

 

  (4)   Memory Bist guidelines, as available for Version 5 (5.00):

 

  (5)   ScanBist documentation, as available for Version 5 (5.00):

 

  (6)   TIF format description, as available for Version 5 (5.00):

 

NOTE:   The above documentation must be modified by Licensee. Such modification
must be approved by Northern Telecom or its agent, Bell-Northern Research Ltd.,
before Licensee delivers such modifications to End-Users.

 

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SCHEDULE C

 

ASSOCIATED UTILITIES

 

Associated Utilities include the following software elements, cells, or models
which are delivered to Licensee in object code form or as ASCII files. They can
be used by Licensee as models for developing and debugging new software or for
demonstration purposes but must not be delivered to End-Users.

 

  (1)   mx (Version 5, Release 2)

A general purpose macro preprocessor.

 

  (2)   syntran (As available for Version 5)

A utility to convert a FML2 file to a Verilog HDL file.

 

  (3)   cells

A subset of simple BATMOS gates including Verilog nominal and SCAN models only.

 

  (4)   BSCAN macros

A collection of cells for implementing Boundary Scans

 

  (5)   TAP macros

A collection of cells for implementing Test Access Port

 

  (6)   memory macros

 

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SCHEDULE D

SOFTWARE USE AGREEMENT

 

Subject to the provisions contained herein _________ (“Grantor”) grants a non
exclusive license to use the proprietary Software defined below to the “User”
whose duly authorized signature appears below.

 

SOFTWARE

 

“Software” furnished under this Agreement shall mean each set of programs in
machine-readable code, provided on magnetic tape or other storage media, which
provides basic logic, operating instructions and user related application
instructions (as well as associated software documentation) that is incorporated
in or furnished for use with the system designated below (“System”).

 

LICENSE TERM AND CHARGES

 

The User shall pay the sum of $_________ or separate payments of $_________
payable monthly/quarterly/annually for a period of             year(s) to
Grantor giving the User the right to use the Software for             years from
the date hereof, under the conditions set out herein and the reverse side
hereof.

 

Thereafter, provided the User has paid the sum or sums specified above and
observes all other provisions of this Agreement, the User shall have the option
to renew this Agreement for successive one year periods in consideration of the
payment of $             per annum. Notwithstanding the foregoing, this
Agreement shall not extend beyond the discontinuance by the User or its assignee
of the use of the System or the Software, whichever comes first.

 

The User shall limit the use of the Software to itself, for installation,
operation and maintenance of the specific individual processing unit(s) forming
part of the System designated as follows:

 

System (including Serial No.):  _________________________            

Software:                                     _________________________

Location:                                     _________________________

 

This Agreement, including the attached Conditions, represents the sole and
entire agreement between the parties in regard to the Software supplied for the
above single System, and supersedes all prior agreements and representations
between them. This Agreement is binding upon the parties upon execution by
Grantor and User.

 

Executed this ____ day of _________, 19__ at ______________:

 

_________________________________    ____________________________

    (“Grantor”)                                                             
(“User”)

 

Per:    ____________________________    Per:    _______________________
                         

 

           ____________________________               _______________________

    (Title of Signatory)                                                 (Title
of Signatory)

 

 

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CONDITIONS

 

  (1)   Title

 

Title and ownership rights to the Software shall remain in Grantor’s licensors
and shall in no circumstances be acquired by User.

 

  (2)   Assignment

 

In the event of the bona fide lease or sale of the System by the User to any
third party, the User shall have the right to assign this Agreement to such
third party, provided that the third party agrees in writing to abide by the
terms and conditions of this Agreement and that Grantor is furnished with a
signed copy of the assignment including the undertaking of the third party
required under this Section.

 

  (3)   Confidentiality and Security

 

The User shall hold the Software in confidence for Grantor and Grantor’s
licensors and shall not, during the course of this Agreement or at any time
thereafter, use, modify or reproduce the Software except as expressly permitted
in this Agreement, or divulge the Software to any person other than employees of
the User with a need to know, without the prior written consent of Grantor. This
obligation shall continue if the Software is removed from service or this
Agreement is terminated for any reason.

 

The obligation to the User hereunder shall not extend to that portion of the
Software which has become part of the public domain by acts not attributable to
the User.

 

The User shall not reproduce the Software in whole or in part, without the prior
written consent of Grantor, which consent will not be unreasonable withheld. The
User shall not modify the Software except as authorized in writing by Grantor.

 

The User shall issue appropriate instructions to its employees to satisfy it
obligations hereunder.

 

  (4)   Payment

 

The User shall make payment(s) as required herein and/or by the sales agreement
related to the System (“Sales Agreement”).

 

  (5)   Warranty and Limits of Liability

 

Grantor warrants that, as of the date of delivery of Software to User, the
Software shall conform to the relevant System documentation. This warranty shall
cease upon the date when the System incorporating the Software is first

 

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placed in service by User. With the view of supporting Software operation after
that date, Grantor’s sole obligation shall be to provide or cause to be
provided, without charge to User during the period of one (1) year from the
System in-service date, or of fourteen (14) months from the date of delivery of
the Software to User, whichever period first expires, technical assistance
service upon the conditions stated in the relevant System documentation, with
the objective of diagnosing and correcting errors in Software.

 

Neither Grantor nor Grantor’s licensor shall be liable for any claims, injuries
or damages, direct. indirect or consequential, arising from the use of, or the
inability to use, the Software. Grantor disclaims all warranties including those
of merchantability or fitness for use except as specifically set forth herein.

 

  (6)   Support Service Agreement

 

Within six months from the date of this Agreement, User shall enter into a
support service agreement with Grantor, in accordance with Grantor’s standard
terms and conditions and at its then prevailing rates, providing for support
services, in relation to the Software licensed for use hereunder, during the
period when Grantor ceases to be obligated to provide technical assistance
services under section 5 above.

 

  (7)   Assignment

 

The rights and obligations of Grantor under this Agreement may be assigned to
such firm or corporation as may be specified in written notice given to User by
Grantor or by Grantor’s licensor.

 

  (8)   Termination

 

In the event the User shall be in breach of this Agreement or fail to perform
one of more of its material obligations under this Agreement, and in the event
such breach is not remedied by the User within sixty (60) days of the giving of
notice of such breach, in addition to any remedies permitted by law or
otherwise, Grantor shall have the right to terminate this Agreement. In the
event of such termination the User shall, unless Grantor approved otherwise,
return the Software to Grantor (including all permitted reproductions).

 

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