020502 S3A Exhibit 10.3






EXHIBIT 10.3



 

 

DEVELOPMENT AGREEMENT

THIS AGREEMENT is made as of January 24, 2000 (the "Effective
Date") between 8x8, Inc., a corporation organized and existing under
the laws of the State of Delaware (hereafter "8x8"), and ST
Microelectronics, Inc., a corporation organized and existing under the laws
of the State of Delaware (hereafter "ST").

RECITALS

Whereas, ST is a global independent semiconductor company
which designs, develops, manufactures and markets a broad range integrated
circuits and discrete devices based on semiconductors used in a wide variety of
microelectronic applications, including telecommunication systems, computer
systems, consumer products, automotive products and industrial automation and
control systems.

Whereas, 8x8 has expertise in the design, development, manufacturing and
marketing of products and technologies related to internet protocol telephony.


Whereas, ST and 8x8 have entered on January 24, 2000 in a certain equity
investment agreement and a certain license agreement.

Whereas, ST desires to collaborate with 8x8 to design and develop products
that enable voice and other multimedia services over internet protocol
networks.

NOW, THEREFORE, in furtherance of the foregoing Recitals and in consideration
of the mutual covenants and obligations set forth in this Agreement, the Parties
agree as follows:


	Definitions

	Unless the provisions of this Agreement otherwise provide, the following
capitalized terms used in this Agreement shall have the meaning set out
below.


	8x8 DSP shall have the meaning set forth in the License
Agreement.

	Agreement shall mean the present development agreement, together with
all Exhibits hereto, as the same may be hereafter amended, modified or
supplemented from time to time.

	Affiliates shall mean an entity controlling, controlled by, or under
common control as of the Effective Date or thereafter during the term of this
Agreement, with ST or 8x8 as the case may be, provided that such entity shall be
considered an Affiliate only for the time during which such control exists.  For
purposes of this definition "control" shall mean ownership or control,
either directly or indirectly, of greater than 50% of the voting rights of such
entity.
	Audio Code  is described in Exhibit 2 of the
License Agreement.

	Call Code is described in Exhibit 2 of the License Agreement.

	Completion unless otherwise agreed to by the Parties in the SOW,
shall mean the completion of Phase Three as set forth in Section 2.4.3 below or
a date two (2) years after the date of Project Acceptance (in the case of the
MTA-1 Project, the Effective Date) whichever is earlier.

	Confidential Information shall mean the terms of this Agreement as
well as any proprietary information and data of either Party, contained in
written or tangible form which is marked as "Internal Use Only",
"Proprietary", "Confidential", or similar words. One
Party's, including its Affiliates ("Disclosing Party") Confidential
Information shall also include its confidential information and data orally
disclosed to the other Party including its Affiliates ("Receiving
Party") if related to written material marked as confidential or otherwise
identified as such during the course of the discussions.  However, Confidential
Information shall not include any data or information which:

	Is or becomes publicly available through no fault of the Receiving
Party;
	Is already in the rightful possession of the Receiving Party prior to its
receipt of such data or information;
	Is independently developed by the Receiving Party without reference to the
Confidential Information of the Disclosing Party;
	Is rightfully obtained by the Receiving Party from a third party or in the
public domain;
	Is disclosed with the written consent of the Party whose information it is;
or
	Is disclosed pursuant to court order or other legal compulsion, after
providing prior notice to the Disclosing Party of the intended disclosure.



	Closing Date shall mean the Closing Date as defined in the
Common Stock Purchase Agreement between 8x8 and STMicroelectronics NV of even
date herewith.

	Customers shall mean a third party who purchases Products from
Licensee.

	Deliverables shall mean any Project and the results thereof including
but not limited to design and information related thereto, technical
descriptions, comments and related materials, applicable Licensed Technology,
components or other item including the IP Rights herein developed or to be
developed by a Party pursuant to a Project.

	Exclusive Market shall be as described in Exhibit 6 as it relates to
a Project.
	 Exhibits shall mean the exhibits 1 to 6 that are part of the
Agreement.

	Existing Technology shall mean that portion of the Licensed
Technology either currently owned or hereafter developed by of for 8x8
independent of a Project and other 8x8 IP Rights either currently owned or
hereafter developed by 8x8 that are not applicable to this Agreement or the
License Agreement. 

	Fees shall mean the support and maintenance fee set forth in Exhibit
1. 

	MTA-1 Project shall mean that Project described in the agreed upon
Project Plan set forth in Exhibit 2 ("Project Plan for the MTA-1
Project"), which shall be developed by the Parties pursuant to the SOW set
forth in Exhibit 3 ("Statement of Work for the MTA-1
Project").

	IP Rights shall mean all patents, patent applications, including with
respect to patents any patent rights granted upon any reissue, division,
continuation or continuation-in-part applications now or hereafter filed,
utility models issued or pending, registered and un-registered design rights,
copyrights (including the copyright on software in any code), trade secrets and
proprietary know-how, Mask Works and other similar statutory intellectual
property or industrial rights, as well as applications for any such rights.


	License Agreement shall mean that certain license agreement executed
on the same date herewith between the Parties.

	Licensed Technology shall have the meaning set forth in the License
Agreement.

	Mask Works shall have the meanings set forth in section 901(a)(2) of
the Semiconductor Chip Protection Law(s).

	Net sale Price means the actual amounts invoiced by the Licensee to
the Customers or authorized distributors less actual returns, packing charges,
shipping charges, taxes, duties, and price protection adjustments. Provided when
the Customer is a Licensee's authorized distributor, Net Sale Price means
Licensee's price to such distributor net of price protection adjustments and the
items referenced above.

	Ordinary Course Technology shall mean those portions of the Licensed
Technology that 8x8 would have developed in its normal course of business
irrespective of the relevant Project, including but not limited to such efforts
as required to ensure that the Licensed Technology maintains compatibility with
industry standards.

	Parties  shall mean ST and 8x8 together.

	Party shall mean one of the Parties.

	8x8 Based Product shall mean one or more integrated circuits to be
manufactured by or for ST, using in whole or in part the Licensed Technology, to
be designed and developed jointly by the Parties pursuant to a Project.

	 Project shall mean specific joint design and development activities
and an associated Project Plan, provided the Parties have Project
Acceptance.

	Project Plan shall mean the plan under which an associated Project
would proceed and which shall include each of the elements set forth in Section
2.4.1 below.  Each Project Plan will require the drafting and completion of new
Exhibits associated with the Project to be undertaken.

	Semiconductor Chip Protection Law(s) shall mean the semiconductor
Chip Protection Act of 1984 in the United States and any associated regulations
and any amendments or revisions to such law or regulations, or any corresponding
law and regulations in a country other than the United States.

	Statement of Work ("SOW") shall mean with respect to each
Project, the description of work which shall define the responsibilities of the
Parties in the design and development of the 8x8 Based Product including but not
limited to performance and functional goals, cost sharing, milestones and,
without limitation, similar items to those items included in Exhibit 3
("Statement of Work for the MTA-1 Project").

	ST Technology shall mean the technology owned or controlled by ST and
further described in Exhibit 4.

	Exhibits.  The Exhibits hereto shall be taken, read and construed as
essential parts of this Agreement and are incorporated herein by reference.

	Headings.  The headings in this Agreement are inserted for
convenience of reference only and shall not be taken, read or construed as
essential parts of this Agreement.

	Plural.  Words applicable to natural persons include any body of
persons, company, corporation, firm or partnership, corporate or incorporate,
and vice versa. Words importing the masculine gender shall include the feminine
and neuter genders, and vice versa. Words importing the singular number shall
include the plural number, and vice versa.
	Joint Development

	8x8's Responsibilities.  8x8 will undertake those development activities
for which 8x8 is responsible in accordance with the terms of any SOW associated
with a Project and in accordance with the terms hereof.   

	ST's Responsibilities.  ST will undertake those development
activities for which ST is responsible in accordance with the terms of any SOW
associated with a Project and in accordance with the terms hereof.  

	Joint Development Responsibilities.  The Parties will work together
to perform, pursuant to the SOW(s), the engineering tasks required in connection
with development of the 8x8 Based Product(s).  In this regard, each of the
Parties shall use commercially reasonable efforts to meet each milestone set
forth in milestone schedules delineated in the relevant SOW(s) to the
satisfaction of both Parties.  In order to ensure the timely completion of each
Project, the Parties will assign such personnel, facilities and resources as are
necessary to accomplish the development activities according to the terms of the
relevant Project Plan and associated SOW. 

	Project Stages.  Other than the MTA-1 Project and the ST120 Project,
for which the Parties have agreed to proceed in accordance with the Project Plan
set forth in Exhibit 2 ("Project Plan for the MTA-1 Project" and
"Project Plan for the ST120 Project"), the Parties are under no
obligation to initiate any projects.  However, once the Parties have agreement,
in writing, to proceed in accordance with an associated Project Plan
("Project Acceptance"), such project shall be deemed a Project and
shall proceed accordingly. No discussions shall become a "Project" nor a
binding obligation on either Party, until and unless the Parties have agreement,
in writing, to proceed in accordance with an associated Project Plan. Each
Project shall include the following three (3) phases:


	Phase One.  The Project Planning Phase.  During the Project Planning
Phase the Parties shall develop a Project plan which will include the following
items:

	Identification of 8x8 IP and ST IP
	Definition of the 8x8 Based Product to be designed and developed;
	Statement of Work;
	Joint marketing and sales program for the 8x8 Based Product, if applicable;
and



(e) Project specifications.

	Phase Two.  The Design and Development Phase.  During the Design and
Development Phase, the Parties shall commence the design and development of the
8x8 Based Product pursuant to the terms of the associated SOW.  During this
Phase ST will fabricate engineering samples of the 8x8 Based Product in
accordance with the agreed-upon specifications.

	Phase Three.  The Validation Phase.  During the Validation Phase, the
Parties will produce the following Deliverables relative to the 8x8 Based
Product pursuant to the terms of the associated SOW: 

	Perform field test and interoperability tests;
	Develop customer support parameters;
	Qualify the 8x8 Based Product for production;
	Introduce the 8x8 Based Product into ST's manufacturing plant; and
	Production samples of the 8x8 Based Product.




	Costs.  The costs associated with the various development tasks
described in the above three phases will be assumed by the Party responsible for
a given task and shared on a mutually agreeable basis when responsibility is
joint.
	Project Manager.  With respect to each SOW,
the Parties shall each name a project manager. The project managers will be
responsible for the technical management of the SOW and shall make themselves
available for meetings between the Parties on an as-needed basis to ensure the
progress of such Project. The project managers shall have technical expertise
related to the goals of the SOW. The project managers will monitor the overall
progress of each SOW, and make recommendations to the Parties regarding any
proposed additions, deletions or modifications to the Statement of
Work.

	Project Delays.  Each Party shall promptly communicate to the other
Party any and all difficulties that might materially affect the timely
completion of any milestone set forth in the relevant SOW and where possible
estimate the probable or actual impact to the aforesaid milestone resulting from
such difficulties, and any actions which might favorably resolve such
difficulties.  To the extent the completion of any activity defined in an SOW
and required to be performed by either Party is delayed by such Party, there
shall be an extension equal to such delay in the target completion dates of all
subsequent dependent activities set forth in the SOW. 

	SOW Change Orders.  The Parties recognize that the design and
development efforts described in a SOW might need to be revised over time.
Absent written approval from the Parties, no change(s) that would substantially
impact costs, functionality, scope of work, or milestone schedules (collectively
"Major Modifications") shall be made to any SOW.  Major Modifications
to any SOW shall be reflected in a new version of the SOW, which will be
appended to this Agreement.  All proposed Major Modifications will be fully
described in a Project change summary for consideration by both Parties,
including any changes affecting the anticipated costs of the Project.  All Major
Modifications will be negotiated and agreed upon in writing prior to
implementation.

	Third party licenses. With respect to Deliverables to be delivered by
a Party under a Project (the "Delivering Party"), the Delivering Party
shall use reasonable commercial efforts to obtain under fair and reasonable
terms and conditions satisfactory to the other Party, any third party license
and support agreement for tools and software that are identified in the SOW as
necessary for efficient completion of a Project.
	Support and Maintenance of the 8x8 Based
Product

	For a period of six (6) months after the Completion of a relevant
Project 8x8 will provide ST the support and maintenance for the 8x8 Based
Product as described in Exhibit 1 of the License Agreement. At the latest within
thirty (30) days after the end of this six (6) months period and upon payment of
the Fees ST shall have the right to extend the support and maintenance for
another twelve (12) months period, thereafter such support and maintenance will
be automatically extended on a year-to-year basis upon payment by ST of the Fees
before the end of the current year.



3.2 Upon ST's request 8x8 agrees to negotiate with Customers reasonable terms
and conditions associated with direct support of the Customers. Such support
shall include, without limitation, training, design-in support, software
maintenance and upgrades.

	Licensing of IP Rights

	License of 8x8 IP Rights. The right for ST and its Affiliates to use the
Deliverables owned or controlled by 8x8 is covered in Section 2 of the License
Agreement.

	License of ST IP Rights. ST grants to 8x8 a non-exclusive, worldwide,
royalty-free license to use and modify, in accordance with the terms and
conditions of a Project, the ST Technology to design and develop 8x8 Based
Products.
	Ownership

	Original Ownership.  All IP Rights owned or
controlled by a Party prior to the Effective Date or prior to any Project
Acceptance shall remain the property of such party throughout the term of this
Agreement and thereafter. 
	8x8 Sole Ownership. Except as set forth in
Section 5.4 below, all IP Rights originated, discovered or developed by or for
8x8, shall be owned by 8x8.  
	ST Sole Ownership. All IP Rights originated,
discovered or developed by or for ST shall be owned by ST. All Mask Work
generated by the Parties, individually or collectively, pursuant to this
Agreement shall be the property of ST. However, ST's ownership of the Mask Works
shall not be deemed to give ST any ownership in any 8x8's IP Rights even though
such 8x8's IP Rights may be fixed in those Mask Works.
	Joint Ownership.  With the exception of any
ownership rights set forth in Sections 5.1 ("Original
Ownership"), 5.2 ("8x8 Sole Ownership"), and 5.3 ("ST Sole
Ownership") above, any IP Rights originated, discovered or developed
jointly by both Parties ("Jointly Owned IP Rights") shall be jointly
owned and each Party shall have the unrestricted right to use such Jointly Owned
IP Rights without accounting to the other Party, including the right to
license the Jointly Owned IP Rights without the prior written approval of the
other Party.


	Patent Prosecution. Patent applications and other means of formal
protection shall be filed in the joint names of the Parties with respect to any
such jointly owned IP Rights which the Parties jointly deem to be worthy of
seeking any such protection. Consistent with the laws of the countries involved,
the Parties shall jointly determine the country of jurisdiction within which the
first patent application or other such protection shall be filed and, which of
the Parties shall be responsible for the preparation and filing of the patent
application or other such application. The Parties shall also jointly determine
which other countries of jurisdictions any such application shall be filed and
which of the Parties shall be responsible for such other filing. If the Parties
cannot agree as to whether a particular jointly owned IP Rights should be the
subject of patent or other formal protection, or cannot agree upon the countries
or jurisdictions within which such application shall be filed, either Party may,
on its own, seek such patent or other protection in any desired country or
jurisdiction, and the other Parties shall cooperate with the Party seeking such
protection. Unless otherwise agreed, all patent applications or other formal
protection, whether pursued by all Parties or by one Party, shall be jointly
owned by all Parties and all Parties shall be responsible for paying one-half
(1/2) of the total cost involved in preparing, filing, prosecuting, issuing and
maintaining any such applications and any resulting patents or other protection.
The Parties shall consult with each other no less than once per calendar year
for the purpose of identifying jointly owned IP Rights for which protection
should be sought, the countries of jurisdictions in which such protection should
be sought and in equalizing the costs involved in such protection. In case a
Party is not or no more interested in participating in a patent or patent
application, it shall notify the other Party thereof, in writing, at the
earliest practicable date, and shall forthwith relinquish to the other Party its
rights to such patent or patent application, then the other Party shall have the
right, at its expenses, to prosecute such application or maintain said patent or
patent application. The relinquishing Party agrees, at the other Party's
expenses, to co-operate fully with the other Party to assist the other Party in
obtaining (by assigning all its rights title and interest in the application),
maintaining, defending and renewing such patent or patent application. For the
purpose of this Section 5.4 "joint" ownership with respect to inventions and
copyrights shall be defined in accordance with the then-current United States
patent law or copyright law, as applicable.
	Derivative IP.  All Improvements,
modifications or derivatives created by either Party to its own IP Rights or the
IP Rights of the other Party (collectively "Derivative IP") during the
course of this Agreement, and in accordance with the licenses granted in
Section 4 ("Licensing of IP Rights") above, shall be owned by the
owner of the original IP Rights, but shall be licensed to the other Party in
accordance with the licenses applicable to the underlying IP Rights as set forth
in Section 4 ("Licensing of IP Rights") above. 

	Assignment.  Each Party agrees to assign to the other as necessary
all right title and interest in and to any IP Rights made or developed by such
Party which is to be owned by the other Party pursuant to
Sections 5.5 above, and further agrees to assist the other Party
with any application for patent rights and any other means of formal protection
and to do all commercially reasonable acts that may be required by the other
Party in connection with such assignment or assistance. The Party entitled to
the assignment and assistance will reimburse the other Party the reasonable cost
incurred by such other Party in providing such assignment and
assistance.

	Exclusivity

	Exclusive Market. 8x8 acknowledges and agrees that the 8x8 Based
Products will be exclusively commercialized, sold or otherwise disposed,
directly or indirectly by ST and/or its Affiliates in the Exclusive Market.
Consequently, 8x8 agrees not to develop (solely or jointly) or have developed,
except under this Agreement, manufacture, have manufactured, sell, commercialize
or otherwise dispose of 8x8 Based Product in the Exclusive Market.

	Development activity. Unless otherwise agreed to by the Parties in
writing, 8x8 agrees that for a period of one year (12 months) after the date of
Project Acceptance it will not engage in any development activity (by itself or
with or for a third party) the result of which will be a product, with features
substantially similar to the Product subject matter of the Project Acceptance,
to be marketed in the Exclusive Market, as defined for a Project, in competition
with the Product.  The definition of substantially similar as it relates to a
Product features is to be defined in each SOW.  Nothing herein shall limit 8x8's
rights to develop products (solely or for a third party) that are not to be
marketed in the Exclusive Market.
	. Licensing. Unless otherwise agreed to by the Parties in writing,
8x8 agrees that for a period of six (6) months after Completion of a Project as
defined hereunder, it will not license the Deliverables to a third party.
However, nothing herein shall limit 8x8's rights to (a) use, dispose of and
license to any third party the Ordinary Course Technology and the IP Rights in
the Deliverables owned by 8x8 pursuant to Section 5.2 hereto, and (b) provide
reasonable technical support to the licensed third party similar to that
described in the License Agreement Exhibit 1 so long as such support does not
consist of joint development activities, that would violate the disposition of
Section 6.2 above.
	Nothing herein shall limit 8x8's rights to license the Existing Technology
to any third party and to provide such third party maintenance and support
similar to that described in the License Agreement Exhibit 1 so long as such
support does not consist of joint development activities that would violate the
disposition of Section 6.2 above.

	Marketing and Sales

	Marketing.  8x8 agrees to reasonably assist ST in the marketing of 8x8
Based Products, which assistance could include developing joint marketing
materials, participating in trade shows, referring clients, and similar
activities. 8x8 shall reasonably assist ST in field trials and other
demonstrations of the 8x8 Based Products.  

	Press Releases.  The Parties shall issue common press releases
related to the execution of this Agreement, with regard to the Parties'
relationship, and as the 8x8 Based Products subject matter of a Project are
developed.  The Parties may also issue their own separate announcements and
press releases regarding this Agreement.  Each such press release shall be
subject to the review and approval of the other Party, such approval not to be
unreasonably withheld or delayed.  No pre-approval shall be required regarding
press releases by either Party which relate solely to 8x8 Based Products, and
not to the other Party nor to this Agreement. Otherwise, neither Party shall
make any announcement or press release regarding this Agreement or any terms
thereof without the other Party's prior written consent.
However, either party is free to file with the SEC or other relevant government
agencies any document required to be filed thereon advice of counsel (redacted
in a form advised by counsel).

	Sales of 8x8 Based Products. In accordance with the then current ST
terms and conditions of sale or certain other terms and conditions as
specifically agreed to in writing by an authorized representative of the
Parties, 8x8 will have the rights to purchase 8x8 Based Products from ST and (a)
sell such 8x8 Based Products in an 8x8 board system, subsystem, or similar
applications in which case the 8x8 Based Products will not carry 8x8 trademark
or logo or (b) resell such 8x8 Based Products in which case the 8x8 Based
Products to be purchased will carry the 8x8 trademark or logo. 8x8 cannot resell
the 8x8 Based Products on the Exclusive Market without ST prior written
approval.
	Under substantially the same terms as described in 7.3, and for the same
quantities of 8x8 Based Products fabricated under the same manufacturing
process, ST will grant to 8x8 the best price it makes available to its customers
with respect to the 8x8 Based Products.

	Royalties and Non-Recurring Engineering Charges ("NRE")

	ST shall pay to 8x8 the royalties described and defined for each Project
in Exhibit 5 and amendments thereof. The royalties to be paid shall be in
accordance with the terms and conditions defined in Section 4 of the License
Agreement and any other terms and conditions specified in Exhibit 5 relative to
a specific Project.
	In the event the Parties agree that NRE will apply to a Project, the amount
and payment schedule of such NRE will be described in the relevant SOW. Unless
otherwise agreed, NRE will be paid by ST within thirty (30) days from receipt of
the relevant invoice.




	Indemnification

	The terms and conditions of the indemnification provided by 8x8 to ST
and its Affiliates in the event the Deliverables licensed to ST under to this
Agreement infringe the rights of a third party are set forth in Section 6
"Indemnification" of the License Agreement.



	Term and Termination

	Term.  The Term of this Agreement shall begin on
the Closing Date, and unless earlier terminated as hereinafter set forth, shall
remain in force for an initial period of five (5) years, and shall automatically
extend for additional one (1) year periods unless either Party gives
notification of its intention not to renew within sixty (60) days of the
expiration of the initial term or any renewal period.
	Termination. Each Party may, in its
discretion, upon written notice to the other Party, and in addition to its
rights and remedies provided under this Agreement and at law, terminate this
Agreement in the event of any of the following:

	Termination for Breach. Upon a breach by the
other Party of any material provision in this Agreement and failure of the breaching Party to cure such material
breach within thirty (30) days of written notice of such breach.

	Termination for Bankruptcy. In the event a Party becomes the subject
of any voluntary or involuntary proceeding under the applicable national or
state bankruptcy or insolvency laws and such proceeding is not terminated within
sixty (60) days of its commencement.

	Effect of Termination on joint development
obligations. In the event that this Agreement is terminated for any reason,
neither Party shall be required to engage in any further joint development under
any Project.  Any discussions in effect for which the Parties do not have
Project Acceptance, will immediately cease and any Project(s) for which
production samples have not been developed pursuant to Phase 3 at the time of
the termination, shall terminate immediately unless the Parties otherwise agree,
provided, however, that each Party shall deliver to the other within thirty (30)
days of termination all Deliverables developed pursuant to such Project(s) as
the of the date of termination.
	Notwithstanding anything to the contrary herein, no expiration or
termination of this Agreement shall relieve ST of its obligation to pay any sum
due hereunder.

	Survival. The provisions of Sections 1
("Definitions"), 4 ("Licensing of IP Rights") except for
ST's right to design, develop and have developed new Product if the termination
is caused by ST's material breach, 5 ("Ownership"),  8
("Royalties"),  9 ("Indemnification"), 10 ("Term and
Termination"), 11 ("Confidentiality"), 12 ("Limitation of
Liability") and 13 ("General Provisions") shall survive any
termination of this Agreement.
	Confidentiality

	Obligation of Confidentiality. The Receiving Party shall, during the
term of the Agreement, and for a period of five (5) years thereafter, subject to
the exclusions set forth in Section 1.1.7 ("Confidential
Information"), hold all Confidential Information of the Disclosing Party in
confidence, not disclose such Confidential Information to any third parties
except those with a need to know in connection with or during the performance of
this Agreement (including, as necessary, subcontractors) who have executed a
confidentiality agreement with terms at least as restrictive with regard to the
Disclosing Party's information as those set forth herein, and in general use the
same degree of care to protect the confidentiality of the Disclosing Party's
Confidential Information as it uses with respect to its own information of a
similar nature.

	Non-Use. Neither 8x8 nor Licensee shall use the other Party's
Confidential Information for another or other purpose than for the purposes set
forth in this Agreement and the License Agreement.

	Expiration. Except as otherwise provided in Section 7.3 of the
License Agreement, upon termination of this Agreement all of the Disclosing
Party's Confidential Information and all copies thereof in the Receiving Party's
possession or control shall be immediately returned to the Disclosing Party or
destroyed by the Receiving Party at the Disclosing Party's instruction. The
Receiving Party shall then certify the same in writing and that no copies have
been retained by the Receiving Party, its employees, Affiliates, contractors, or
other parties to whom such information is provided.

	Injunctive Relief. The Receiving Party acknowledges that the
unauthorized disclosure of the Disclosing Party Confidential Information will
cause irreparable harm and significant injury, the scope of which is difficult
to ascertain. Accordingly, the Receiving Party agrees that the Disclosing Party
shall have the right to an immediate injunction enjoining any such unauthorized
disclosure.
	Limitation of Liability..

	EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, IN NO EVENT SHALL EITHER
PARTY BE LIABLE TO THE OTHER OR TO ANY THIRD PARTY FOR ANY SPECIAL, INDIRECT,
PUNITIVE, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION,
LOSS OF PROFITS), CAUSED BY ANY BREACH OF ITS OBLIGATIONS TO THE OTHER ARISING
OUT OF OR RELATING TO THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION, WHETHER
IN CONTRACT OR IN TORT (INCLUDING NEGLIGENCE), EVEN IF THE BREACHING PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
	EXCEPT AS SET FORTH IN SECTION 9.2 OF THE LICENSE AGREEMENT, IN NO EVENT
SHALL THE TOTAL LIABILITY OF EITHER PARTY TO THE OTHER PARTY FOR ANY LOSS,
DAMAGE OR LIABILITY ARISING FROM A BREACH OF EITHER THIS AGREEMENT, THE LICENSE
AGREEMENT OR BOTH EXCEED A SUM OF TWO MILLION DOLLARS ($2,000,000), PROVIDED
THAT SUCH LIMIT SHALL NOT APPLY IN THE EVENT OF A WILLFUL MISUSE OR WILLFULLY
UNLAWFUL DISTRIBUTION OF THE LICENSED TECHNOLOGY, AND PROVIDED THAT FOR ST SUCH
LIMITATION SHALL NOT APPLY IN THE EVENT ST FAILS TO PAY THE ROYALTIES AND THE
NRE EARNED BY 8X8 AND DUE BY ST AS SET FORTH IN SECTION 8 HERETO.



	General Provisions

	Assignment. This Agreement may not be assigned by either Party, nor any
of such Party's rights or obligations hereunder, to any third party including
without limitation through a U.S. Bankruptcy Code Chapter 11 reorganization,
without prior written consent of the other Party (which shall not be
unreasonably withheld). In the event that this Agreement is assigned effectively
to a third party, this Agreement shall bind upon successors and assigns of the
Parties hereto. Notwithstanding the foregoing, either Party may assign this
Agreement to an Affiliate provided that the assigning Party so notifies the non-
assigning Party in writing and the assignee agrees to assume all of the
obligations of the assigning Party under this Agreement.  In the event that the
assignee ceases to be an Affiliate, this Agreement will immediately be re-
assigned to ST and ST will assume all obligations under this Agreement.

	Affiliates. Both Parties acknowledge that the other party may or does
conduct its business in whole or in part through Affiliates. Accordingly, both
Parties agrees that the rights and benefits granted to the other Party through
this Agreement shall inure to the other Party and its Affiliates.

	Force Majeure. Neither Party shall be liable to the other Party for
failure of or delay in performance of any obligation under this Agreement,
directly or indirectly, owing to acts of God, war, war-like condition,
embargoes, riots, strike and other events beyond its reasonable control. In the
event that such failure or delay occurs, the affected Party shall notify the
other Party of the occurrence thereof as soon as possible and the Parties shall
discuss the best way to resolve the event of force majeure.

	Notices.  All notices provided for in connection with this Agreement
shall be given in writing and shall be effective (i) upon receipt, when
served by personal delivery; or (ii) the next day following the date of
transmittal when transmitted by facsimile; or (iii) on the third day
following the date of  transmittal when transmitted by express mail; or
(iv) on the 7th day following the date of mailing when sent by registered
airmail of the sender's country with postage prepaid, addressed to the Party as
follows, or to a changed address as the Party shall have specified by prior
written notice:

ST:  ST Microelectronics, Inc. at 1310 Electronics Drive Carrolton, TX 75006
USA. Attention: General Counsel; and

8x8:   8x8, Inc. 2445 Mission College Blvd. Santa Clara, California 95054
Attention: Chief Financial Officer.

	Waiver.  The waiver by either Party of the remedy for the other
Party's breach of or its right under this Agreement will not constitute a waiver
of the remedy for any other similar or subsequent breach or right.

	Severability.  If any provision of this Agreement is or becomes, at
any time or for any reason, unenforceable or invalid, no other provision of this
Agreement shall be affected thereby, and the remaining provisions of this
Agreement shall continue with the same force and effect as if such unenforceable
or invalid provisions had not been inserted in this Agreement.
	Amendment.  No changes, modifications or
alterations to this Agreement shall be valid unless reduced to writing and duly
signed by the respective authorized representative of each Party.

	Governing Law.  This Agreement shall be interpreted, construed and
enforced in accordance with the laws of the State of California without respect
to its conflict of law provisions.

	No Partnership. In giving effect to this Agreement, no Party shall be
or be deemed to be an agent or employee of another Party for any purpose, and
that their relationship to each other shall be that of independent contractors.
Nothing in this Agreement shall constitute a partnership or a joint venture
between the Parties. No Party shall have the right to enter into contracts or
pledge the credit of or incur expenses or liability on behalf of the other
Party.

	Entire Agreement.  This Agreement and the License Agreement
constitute the entire agreement between the Parties and supersede all prior
proposal(s) and discussions relative to the subject matter of this Agreement and
neither of the Parties shall be bound by any conditions, definitions,
warranties, understandings or representations with respect to the subject matter
other than as expressly provided herein. The terms and conditions contained
herein and the appendixes attached hereto constitute the entire agreement
between the parties and shall supersede all previous communications either oral
or written between the parties with respect to the subject matter hereof. No
oral explanation or oral information by either party hereto shall alter the
meaning or interpretation of this Agreement.

	IN WITNESS THEREOF, the Parties hereto have executed this Agreement
on the Effective Date.

	
For ST Microelectronics, Inc.:
	
For 8x8, Inc.

	
Name:    A.McK. Malone
	
	
Name:    Paul Voois
	

	
Title:    Executive Vice President and CFO
	
	
Title:    Chairman and CEO
	

	
Signature: /s/    A. McK. Malone
	
	
Signature: /s/    Paul Voois
	





 

MTA-1 PROJECT EXHIBIT 1



Fees



The Fee for extended maintenance and support of the MTA-1 Project is
$200,000 per twelve (12) months of which $100,000 is to represent non-refundable
pre-paid royalties.  $150,000 is due within 30 days of the start of the extended
maintenance period for which the Fee is due as specified in Section 3.1.  The
balance, representing the last $50,000 of the pre-paid royalties, are due within
six months of the start of the extended maintenance period for which the Fee is
due.


MTA-1 PROJECT EXHIBIT 2



Project Plan for the MTA-1 Project 



To implement a Multimedia Terminal Adapter ("MTA-1") design (including an
integrated DOCSIS cable modem module) as defined by the CableLabs' PacketCable
specification which is to include, without limitation, the following ("MTA-
1 Project").


	Development of a platform that demonstrates PacketCable version 1.0 and
version 1.1 (when finalized) telephony and that incorporates mutually agreed to
8x8 and ST standard semiconductor and modified firmware products ("Demonstration
Platform").
	Development of one or more, as mutually agreed to,  MTA-1 reference designs
that incorporate mutually agreed to and/or jointly developed chips and firmware
("Reference Design").
	Development of a new voice over Internet protocol ("VOIP") chip to be
incorporated into the Reference Design ("VOIP Chip").  The architecture of the
VOIP Chip is to be mutually agreed to but is assumed to include, without
limitation, the ST SH4 RISC core or another version of ST's SH RISC core ("SH
Core"), a suitably modified version of the 8x8 VP7 DSP core, a DOCSIS cable
modem module and other circuitry.
	ST will be responsible for development and validation of the DOCSIS v1.1
compliant cable modem subsystem hardware and software for the Demonstration
Platform and the Reference Design.
	8x8 will be responsible for the development of software, firmware and a
hardware design of a VOIP subsystem for the Demonstration Platform; the VOIP
firmware (including the Call Code running under a POSIX compliant operating
system and the Audio Code) for the VOIP chip as incorporated in the Reference
Design; and, implementation of a VOIP Chip compatible version of the 8x8 DSP
core.
	ST will be responsible for implementation and fabrication of an 8x8 DSP chip
that is to be used for firmware development and in an initial Reference Design
("DSP Chip"), the VOIP Chip, and certain other components of the
Demonstration Platform and the Reference Design.  8x8 will provide reasonable
technical support sufficient to assist in the DSP Chip and VOIP Chip development
effort.
	Assuming an Effective Date prior to January 24, 2000 the schedule for the
implementation of the MTA-1 design is to include, without limitation and subject
to change:

	A target date of one month after the Effective Date for completion of the
SOW
	A target date of 2Q2000 for shipment to ST of the VOIP subsystem for the
Demonstration Platform
	A target date of 1Q2000 for shipment to ST of the 8x8 DSP Design Kit as
defined herein.
	A target date of 3Q2000 for shipment by ST to 8x8 of the DSP Chip.
	A target date of 4Q2000 for shipment to ST of the initial VOIP Chip
firmware.
	A target date of 4Q2000 for initial shipment to ST's customers of a
Reference Design based on the DSP Chip and other components.
	A target date of 2Q2001 for initial shipment to ST's customers of the VOIP
Chip and a Reference Design based on the VOIP Chip.



	Each party will participate in mutually agreed to industry sponsored
interoperability and certification events (e. g. CableLabs) to ensure that the
products are compatible with solutions from other vendors and with applicable
standards.
	The costs associated with the various development tasks will be assumed by
the party responsible for a given task and shared on a mutually agreeable basis
when responsibility is joint.
	 Neither party is obligated to make any efforts beyond the Completion date
for the Project, provided that, in the event the MTA-1 Project is not completed
as of the Completion date, the parties shall meet and will decide in good faith
future actions related to the MTA-1 Project.



 

MTA-1 PROJECT EXHIBIT 3



Statement of Work for the MTA-1 Project



The SOW for the MTA-1 Project is to be executed and mutually agreed to
within one (1) month of the Effective Date



 

MTA-1 PROJECT EXHIBIT 4



ST Technology



	ST will provide 8x8 the appropriate SH Core (as of the Effective Date SH
Core refers to SH4 core) based development platform, any ST specific firmware
and technical support that will enable the efficient implementation of the Call
Code and the Audio Code on the Demonstration platform, Reference Design, DSP
Chip and VOIP chip.
	ST will provide technical specifications of the ST Bus and other ST
proprietary interfaces required for development of the VOIP Chip compatible
version of the 8x8 DSP core;
	ST will provide 8x8 the ST standard cell libraries, memory models/compilers,
timing models, synthesis scripts and other tools sufficient for 8x8 to perform
gate level synthesis, simulation and verification of a DSP Chip and VOIP Chip
compatible version of the 8x8 DSP core.
	ST will provide 8x8 the appropriate ST design tools and gate level
implementation of the 8x8 DSP sufficient to enable verification and an early
development simulation environment with which to begin development of the Audio
Code.




 

 

MTA-1 PROJECT EXHIBIT 5



Engineer Charges and Royalties



There is no NRE relative to the MTA-1 Project.  The royalty schedule for
the MTA-1 Project is described below.  The payment terms are as described in the
License Agreement


MTA-1 Project Royalty Schedule



 


	
8x8 Intellectual Property
	
Per unit of 8x8 Based Products for the first 1 million
units of the 8x8 Based Products Licensee ships to Customers
	
Per unit of 8x8 Based Products for the next 1 million units
after the initial 1million units of the 8x8 Based Products Licensee ships to
Customers.
	
Per unit of the 8x8 Based Product for the next 1 million
units after the initial 2 million units of the 8x8 Based Products Licensee ships
to Customers
	
Per unit of 8x8 Based Products after Licensee has shipped 3
million units of 8x8 Based Products to Customers (As a percentage of the Net
Sale Price)

	
Call Code
	
$0.85
	
$0.55
	
$0.45
	
2.0%

	
Audio Code
	
$0.85
	
$0.55
	
$0.45
	
2.0%

	
8x8 DSP
	
$0.65
	
$0.40
	
$0.30
	
1.0%







The royalty schedule will reset for each Product


Notes:


	The royalty amounts above in the rightmost column that are based on a
percentage of the Net Sale Price are subject to a minimum royalty of $0.44 for
the Call Code, $0.44 for the Audio code and $0.22 for the 8x8 DSP applicable per
unit of 8x8 Based Product that Licensee ships to Customers.
	The royalty amounts above in the rightmost column that are based on a
percentage of the Net Sale Price are subject to a maximum royalty of $0.60 for
the Call Code, $0.60 for the Audio code and $0.30 for the 8x8 DSP applicable per
unit of 8x8 Based Product that Licensee ships to Customers.

 

	8x8 DSP royalty applies per 8X8 Based Product regardless of the number of
8x8 DSP cores per 8X8 Based Product.

 

 

MTA-1 PROJECT EXHIBIT 6



Exclusive Market


The MTA-1 Project Exclusive Market shall mean the market relative to
voice over IP applications for consumer terminals over hybrid fiber coax cable
television networks.



ST120 PROJECT EXHIBIT 1



Fees



The Fee for extended maintenance and support of the ST120 Project is
$200,000 per twelve (12) months of which $100,000 is to represent non-refundable
pre-paid royalties.  $150,000 is due within 30 days of the start of the extended
maintenance period for which the Fee is due as specified in Section 3.1.  The
balance, representing the last $50,000 of the pre-paid royalties, are due within
six months of the start of the extended maintenance period for which the Fee is
due.


ST120 PROJECT EXHIBIT 2



Project Plan for the ST120 Project 



To implement a ST DSP and ARM based voice over IP design ("ST120
Project") including a reference design based on the ST950 and the ARM7
("ST950 Design") and a reference design based on the ST120 and the
ARM7, or another mutually agreed to RISC processor ("ST120
Design").


	8x8 will provide technical assistance, as defined in the License Agreement
Exhibit 1, sufficient to enable ST to modify or have modified on its behalf the
Call Code for execution on the ST ARM7 core or another mutually agreed to RISC
processor and the ST120 if and when appropriate.
	8x8 will provide sufficient technical support to enable the integration and
verification of the ARM7 based Call Code with the ST950 DSP based audio
subsystem for the ST950 Design and with the ST120 DSP for the ST120 Design.
	ST will be responsible for implementation of the appropriate modifications
to the ST950 DSP core firmware necessary for efficient integration with the ARM7
based Call Code for the ST950 Design.
	8x8 will be responsible for implementation of modifications to the Audio
Code for execution on the ST120 DSP core.
	ST will be responsible for implementation and fabrication of the board level
ST950 Design.
	8x8 and ST will jointly design the board level ST120 Design.
	ST will be responsible for implementation and fabrication of the board level
ST120 Design.
	8x8 will provide sufficient technical support to enable the implementation
and verification of the board level ST120 Design.
	Assuming a Project Acceptance date prior to January 24, 2000 the schedule
for the implementation of the ST120 Project design is to include, without
limitation and subject to change:

	A target date of one week after the Project Acceptance date for 8x8 to send
to ST the Call Code as it exists on the Effective Date.
	A target date of one month after the Project Acceptance date for completion
of the initial SOW
	A target date of 1Q2000 for ST's delivery of the ST120 and ST950 development
tools including, but not limited to, the VLIW and other applicable compilers,
debuggers, linkers and utilities.
	A target date of 2Q2000 for ST's delivery to 8x8 of the ST120 development
system.
	A target date of 2Q2000 for initial Customer shipment of the ST950
Design.
	A target date of 3Q2000 for shipment to ST of the initial implementation and
of the ST120 compatible Audio Code consisting of some mutually agreed to subset
thereof with additional functions, as agreed to, to be delivered in 4Q2000.
	A target date of 4Q2000 for initial Customer shipment of the initial ST120
Design.



	Each party will participate in mutually agreed to industry sponsored and
other interoperability and certification events to ensure that the products are
compatible with solutions from other vendors and with applicable standards.
	Neither party is obligated to make any efforts beyond the Completion date
for the Project, provided that, in the event the ST120 Project is not completed
as of the Completion date, the parties shall meet and will decide in good faith
future actions related to the ST120 Project.



 

ST120 PROJECT EXHIBIT 3



Statement of Work for the ST120 Project



The SOW for the ST120 Project is to be executed and mutually agreed to
within one (1) month of the Project Acceptance date.




 

ST120 PROJECT EXHIBIT 4



ST Technology



	ST will provide 8x8 the appropriate ARM, ST950 and ST120 based
development systems and tools including any ST specific firmware and technical
support that will enable the efficient implementation of the ST120
Project.




 

 

ST120 PROJECT EXHIBIT 5



Engineering Charges and Royalties



	The Engineering Charges payable by ST to 8x8 for the ST120 Project is to
be $500,000 plus $500,000 of non-refundable prepaid royalties that are to be
credited toward future royalties otherwise due for shipment of the 8x8 Based
Products that are the result of the ST120 Project.  Both amounts are payable by
ST to 8x8 prior to the start of development work.
	The royalty schedule and payment terms for the ST120 Project is as described
in the License Agreement



 

 

ST120 PROJECT EXHIBIT 6



Exclusive Market


There is no applicable Exclusive Market relative to the ST120
Project.