**Exhibit 10.2**

 

**ASIC DESIGN AND PRODUCTION AGREEMENT**

 

**between**

 

**OPEN-SILICON, INC.**

**490 N. McCarthy Blvd., Suite 220**

**Milpitas, CA 95035**

 

**and**

 

**NETLIST, INC.**

**51 Discovery, Suite 150**

Irvine, CA 92618

 
| Customer Contact: |   |   | Telephone No:  |   |
|-------------------|--------|--------|----------------|--------|
|              |   |   |           |   |
| Fax No.:          |   |   | Email Address: |   |

 

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**Effective Date**

 

OPEN-SILICONCONFIDENTIAL               

 

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**OPEN-SILICON ASIC DESIGN AND PRODUCTION AGREEMENT**

 

**THIS ASIC DESIGN AND PRODUCTION AGREEMENT** (this “**Agreement**”) is made and entered as of                    ,2010 (the “**Effective Date**”) by and between **OPEN-SILICON, INC.**, a Delaware corporation with itsprincipal place of business at 490 North McCarthy Boulevard, Suite 220,Milpitas, California 95035 (“**Open-Silicon**”)and **NETLIST, INC.**, a Delaware****corporation with its principal place of business at 51Discovery, Suite 150, Irvine, California 92618 (“**Customer**”),for purposes of setting forth the terms and conditions governing themanufacture and sale by Open-Silicon of one or more ASIC devices for Customer,as further specified in one or more Statements of Work (each, a “**Statement of Work**” or “**SOW**”) attachedhereto as **Exhibit A** and incorporated herein.

 

**1.****                                     ****DEFINITIONS.**  Any capitalized terms that are used hereinshall have the meanings set forth below or, if not set forth below, themeanings ascribed to them in the other exhibits to this Agreement.

 

**1.1****                              ****“DeliveryRelease”** means Customer’s authorization to ship a definitequantity of Products on a specified schedule.

 

**1.2****                              ****“Design Respin”** is a redesign of aProduct due to a deficiency in the initial design of the Product, as evidencedin the Prototypes.

 

**1.3****                              ****“Intellectual Property Rights”** shall mean all intellectualproperty rights, including, without limitation, patents, copyrights, authors’rights, mask work rights, trademarks, trade names, know-how and trade secrets,irrespective of whether such rights arise under U.S. or internationalintellectual property, unfair competition or trade secret laws.

 

**1.4****                              ****“IP Provider”**is a third party providerof intellectual property and/or the embodiments of such intellectual property,by way of license, sale, or otherwise.

 

**1.5****                              ****“Macrocell****”**shall mean the hardware implementation of any functions requested by Customerand furnished by Open-Silicon or its suppliers that Open-Silicon makesavailable for incorporation by Customer into a specified Product.

 

**1.6****                              ****“****Macrofunctions****”**shall mean the software implementation of any functions requested by Customerand furnished by Open-Silicon or its suppliers that Open-Silicon makesavailable for incorporation by Customer into a specified Product.

 

**1.7****                              ****“****Netlist****”**shall mean the list form in Verilog or other format of a structural circuitimplementation describing the basic design building blocks and their logicalconnections.

 

**1.8****                              ****“Product”** means anapplication specific integrated circuit (ASIC) described or referenced in aStatement of Work, and unless otherwise specified, refers to Production Unitsand Prototypes.

 

**1.9****                              ****“ProjectTechnology”** means (i) the [***]and any [***] in the performance of this Agreement and (ii) [***] in theperformance of this Agreement, and [***] (or otherwise in a writing signed byboth parties) or are [***].

 

**1.10****                       ****“Prototypes”** areengineering samples or the preliminary implementations on silicon of aspecified Product, which are intended for internal use, and are not yetqualified and approved for production.

 

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**1.11****                       ****“PrototypeApproval”** occurs when Customer has completed the PrototypeApproval Form attached hereto as **Exhibit B-1**,certifying that the Prototypes meet the agreed to specifications.

 

**1.12****                       ****“ProductionUnits”** means product manufactured after Prototype Approval and Release toProduction.  Production Units do notinclude Prototypes or Risk Product.

 

**1.13****                       ****“Project”** shall mean theASIC project specified in the applicable Statement of Work.

 

**1.14****                       ****“PurchaseOrder”** is Customer’s document setting forth specific Products ordered andincluding Delivery Release information.

 

**1.15****                       ****“Releaseto Production”** occurs when Customer has completed the Release toProduction Form attached hereto as **Exhibit B-2**.

 

**1.16****                       ****“RiskProduct”** is Product (other than Prototypes) ordered byCustomer pursuant to a Delivery Release for a delivery date occurring beforeRelease to Production.  For the avoidanceof doubt, [***].

 

**1.17****                       ****“Services”** shall mean theASIC design and manufacturing services to be performed by Open-Silicon (or by athird party on behalf of Open-Silicon) as set forth in a Statement of Work, andany related consulting services.

 

**1.18****                       ****“Statement of Work” or “SOW”**means a document which setsforth the responsibilities and deliverables of each party within the Project.

 

**1.19****                       ****“Subcontractor”** is a third party(other than an IP Provider) who provides services to a party in furtherance orfulfillment of its obligations to the other party under this Agreement.

 

**1.20****                       **[***] means theoccurrence of any of the following: (i) [***], (ii) [***] of thisAgreement by Open-Silicon [***], (iii) [***] or other similar laws, (iv) [***];or (v) [***].

 

**2.****                                     ****ASICDEVELOPMENT AND PRODUCTION.**

 

**2.1****                              ****DevelopmentServices. **The developmentactivities for Products covered by this Agreement shall be set forth in one ormore SOWs developed and mutually agreed to by the parties.  Each SOW shall set forth the responsibilitiesand deliverables of each party regarding the development of the Products.  Each party will perform its obligations anddeliver its deliverables as set forth in and in accordance with the applicableSOW, and each party will cooperate with the other for the timely achievement ofProject milestones.  In performing theServices, Open-Silicon shall provide its own personnel, equipment, tools andother materials at its own expense. Customer will promptly acknowledge the completion of each milestone (atthe request of Open-Silicon, such acknowledgement shall be in writing insubstantially the form of **Exhibit D**).Customer acknowledges and agrees that Open-Silicon’s ability to perform theServices and to deliver its deliverables may be dependant upon Customer’stimely delivering certain deliverables or information as set forth in theapplicable SOW.  In the event thatOpen-Silicon cannot timely meet its development or delivery obligations duelate delivery of such Customer deliverables and/or information, the partiesshall renegotiate in good faith any affected schedule as reasonably necessaryin light of the extent and nature of the delay.

 

**2.2****                              ****ECOProcess.**  Open-Siliconwill [***] to implement Customer’s requests for changes to the SOW and/or thedesign of the Products (“**Change(s)**”),provided such Changes are technically feasible. Customer will submit requested Changes in writing.  Open-Silicon will promptly evaluate such 

 

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requests and inform Customer in writing of thepotential effects on the SOW [***], including: (i) effect on the originalschedule, (ii) effect on the engineering development charges, (iii) effecton the estimated production unit pricing due to die size, package or otherchanges, and (iv) other relevant factors. Any Changes that are mutually agreed to in writing shall be documentedin accordance with Open-Silicon’s Engineering Change Order process (“**ECO Process**”) described in **Exhibit C**. The parties will discuss in good faith anyrequested Changes and any impacts of pricing and scheduling of suchChanges.  Unless Changes are mutuallyagreed to in writing by the parties, the parties will continue their respectiveactivities under the SOW without making any modifications to the SOW and/or thedesign of the Products.

 

**2.3****                              ****Deliveryof Prototypes.**  Uponcompletion of the engineering milestones specified in the SOW, Open-Siliconwill manufacture and deliver the Prototype units to Customer in accordance withthe SOW. Open-Silicon shall test each Prototype with the test program asspecified in the SOW prior to delivery and shall provide all test results toCustomer together with the Prototypes (provided, however, that such testresults shall not be binding on Customer). The parties’ activities in such regard will be further defined withinthe SOW. Customer acknowledges the Prototypes are delivered and intended forevaluation purposes only and are not intended for other use or resale for usein any system or application.

 

**2.4****                              ****PrototypeEvaluation. **Customer willpromptly evaluate the Prototypes and advise Open-Silicon in writing whether thePrototypes conform to agreed upon specifications for the Product, as set forthin the SOW.  The prototype evaluationperiod shall not exceed [***] after shipment of initial prototypes (the “**Prototype Evaluation Period**”).  If Customer concludes during the PrototypeEvaluation Period, that the Prototypes are not conforming, then Customer willsubmit a written notice of rejection (“**Noticeof Prototype Rejection**”) to Open-Silicon describing in reasonabledetail the perceived deficiency or nonconformance of the prototype.  [***]. Customer may accept the Prototypes prior to the expiration of thePrototype Evaluation Period by signing and submitting to Open-Silicon aPrototype Approval Form attached hereto as **Exhibit B-1**.

 

**2.5****                              ****Effectof Notice of Prototype Rejection. **If Customersubmits a Notice of Prototype Rejection, the Parties will mutually cooperate todetermine the source of any Prototypes nonconformance stated in the Notice ofPrototype Rejection. Further, Customer and Open-Silicon will cooperate toresolve and, as appropriate, to develop and implement a corrective action plan,to remedy all reported defects. Open-Silicon shall deliver a corrected version of such Prototype withina reasonable period of time given engineering time and manufacturing leadtimes.  The process detailed in Sections2.3, 2.4 and 2.5 shall be repeated until the Prototypes successfully passCustomer’s evaluation in accordance with Section 2.4 (“**Conforming Prototypes**”), and the cost forsuch repeated procedure shall be borne by Open-Silicon; provided, however, thatif a Design Respin is required for any reason other than an error or deficiencyresulting from the design services provided by Open-Silicon or itsSubcontractors, Customer will be liable for the costs associated with theDesign Respin. If Open-Silicon fails to deliver Conforming Prototypes after theforegoing procedure is [***] shall [***] of this Agreement and [***] may, inits [***] either (i) [***], or (ii) [***] and [***].

 

**2.6****                              ****Changesto Functionality or Performance.**In the event that Customerdesires to change the functionality or performance of the Product (eitherbefore or after delivery of Prototypes) and receive new Prototypes prior toRelease to Production, Customer and Open-Silicon will develop a new mutuallyagreed upon SOW or will amend the existing SOW, in accordance with the ECOProcess set forth in Section 2.2.

 

**2.7****                              ****RiskProduct. **Prior to Release to Production,Customer may request the delivery of Risk Product.  The provision by Open-Silicon of Risk Productto Customer will be subject to the terms of this Section 2.7, as well assuch other terms and conditions separately agreed to by the parties.  [***]**.**  Customer assumes full responsibility andliability for Risk Product, including but not limited to all work in process(WIP) without regard to issues of design or performance.

 

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**2.8****                              ****AcceptancePrior to Manufacturing. **Open-Siliconwill not commence production of Production Units until Customer confirms theRelease to Production of the Product by signing and submitting a Release toProduction Form attached hereto as **Exhibit B-2**,and submitting a purchase order for the units as set forth in Section 4.2.

 

**2.9****                              ****Escrow. **Within [***]after the Effective Date, Open-Silicon and Customer will enter into atechnology escrow agreement (the “**EscrowAgreement**”), with terms reasonably satisfactory to both parties,with [***] or another escrow agent designated by Customer (“**Escrow Agent**”).  Thereafter, Open-Silicon will deposit withthe Escrow Agent the following items on a regular basis (*i.e.*, as soon as they are developed orcreated) during the term of this Agreement: (a) all [***] developed,created or obtained by or for Open-Silicon, and (b) such [***] in [***]possession necessary or useful to enable a [***] or other relevant vendors to[***] and collectively with the [***] will [***] to ensure that the EscrowMaterials deposited with the Escrow Agent are kept current.  Customer shall be responsible for any and allpayments to the Escrow Agent associated with such Escrow Agreement; providedthat in the event of [***].  The partiesagree, and the Escrow Agreement will specify, that upon receipt by the EscrowAgent of a written notice from [***] has occurred, [***] will immediately [***](i) [***] and (ii) [***] hereby covenants that it will [***] untilthe [***] further agrees that [***]created or developed [***] hereunder will [***] to perform the Services on[***] to [***] unless and until [***] or a [***].

 

**3.****                                     ****COMPENSATIONFOR DESIGN SERVICES.**

 

**3.1****                              ****NREFees. **Design engineering chargesfor Product development are set forth in the applicable SOW and are based onthe specifications and assumptions therein (“**NREFees**”).  Customer will pay theNRE Fees in accordance with the milestone schedule set forth in the applicableSOW.  Unless otherwise specified in theSOW, Open-Silicon will invoice Customer upon successful completion of each suchmilestone (which shall be determined in accordance with the acceptance criteriaand procedure set forth in this Agreement and the applicable SOW).  Payments relating to a milestone, thecompletion of which has been acknowledged by Customer, [***].  Payment of NRE Fees will be payable within[***] after Customer’s receipt of the invoice. If Customer requests changes to the specifications or the SOW thatincrease the cost of the development, Open-Silicon will evaluate the requestedchanges and notify Customer in writing of the increased costs that Customerwill be required to pay, in accordance with Section 2.2.

 

**3.2****                              ****Taxes. **Eachparty shall bear and be responsible to pay any tax (and any relatedinterest or penalty), however designated, legally imposed upon it with respectto the design and development activities contemplated by this Agreement.

 

**4.****                                     ****FORECASTINGAND ORDERS FOR PRODUCTION UNITS.**

 

**4.1****                              ****Forecasts. **Following Release toProduction, Customer shall provide Open-Silicon, on a monthly basis,good-faith, non-binding rolling forecasts of its purchase requirements for theProduction Units, [***] following the month in which the forecast is submitted(each, a “**Forecast**”). AnyForecasts provided by Customer are for planning purposes only and do notconstitute a Delivery Release or other commitment by Customer. Customer shallhave no obligation with respect to the purchase of Products under thisAgreement until such Products are specified in an issued Purchase Order thatcontains specific Delivery Release dates for specific Products.

 

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**4.2****                              ****PurchaseOrders. **Customer may orderProduction Units from time to time by issuing a purchase order to Open-Siliconfor such units.  Open-Silicon shallconfirm its receipt of such purchase order within [***] in a writtenacknowledgment to Customer.  Suchpurchase order shall not request delivery inconsistent with the applicable leadtime (as set forth in the applicable SOW) without a line item for theappropriate expedite fees. Customer’s purchase orders and Forecasts may [***]for Production Units set forth in the applicable SOW.  Open-Silicon will not be obligated to makeshipments [***]. Any Customer purchase order received by Open-Silicon that complieswith the foregoing (a “**Purchase Order**”)shall be binding on Customer and Open-Silicon. All Purchase Orders and Open-Silicon’s acknowledgements shall be subject to and expressly limited to theterms and conditions of this Agreement and the applicable SOW and any terms orconditions contained in Purchase Orders or acknowledgements (or in otherdocuments issued by either party) that are inconsistent with or in addition tothe terms and conditions contained in this Agreement or the applicable SOWshall be of no force or effect, regardless of any failureof Open-Silicon or Customer to object to such terms or conditions, unless expressly accepted in writing by both parties.

 

**4.3****                              ****Supply Commitment**. During the term of this Agreement, Open-Silicon agrees tosupply to Customer [***] of Customer’s requirements for the Production Units,as specified in Purchase Orders that are [***] of the then-currentForecast.  Notwithstanding the foregoing,Customer understands that yields for Production Units are subject tofluctuations; therefore, Customer will accept delivery of and accept as fullperformance: (a) [***] or (b) [***] of the total quantity ordered,with price adjusted for the quantity actually delivered.

 

**5.****                                     ****CANCELLATIONAND RESCHEDULING OF ORDERS.**

 

**5.1****                              ****Cancellation. **Uponnotice to Open-Silicon, Customer may cancel any Purchase Order or portionthereof at any time, subject only to the applicable cancellation fees set forthbelow:

 
| **Time of cancellation**             | ** ** | **Cancellation fee (percentage of  sales price of cancelled units)** |
|------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------|
| [***] weeks or more prior to the delivery date |       | [***]                                                                                                   |
| [***] weeks prior to the delivery date         |       | [***]                                                                                                   |
| [***] weeks prior to the delivery date         |       | [***]                                                                                                   |
| [***] weeks prior to the delivery date         |       | [***]                                                                                                   |

 

Notwithstandingthe above, Open-Silicon shall use commercially reasonableefforts to mitigate any damages or expenses it may incur due to Customer’scancellation of a Purchase Order (or a portion thereof) by redeploying theProduction Units ordered in such Purchase Order to other Purchase Orders ofCustomer, and Customer’s payment obligation under this Section shall bereduced accordingly.  For purposes ofthis Section 5.1, “delivery date” with respect of any Purchase Order orportion thereof which has been rescheduled under Section 5.2 shall bedeemed to mean the delivery date prior to any rescheduling; provided, however,that any rescheduling of more than thirteen (13) weeks prior to the deliverydate shall be deemed a new Purchase Order with a new delivery date.

 

**5.2****                              ****Rescheduling.**Each Purchase Order may be deferred by Customer no more than [***] timeand by no more [***], subject to the terms of this Section 5.2.  Customer acknowledges and agrees that theright to defer or reschedule an order will be subject to the schedulingflexibility of the foundry.  Moreover,Customer agrees that, in the event that Customer requests to reschedule anorder as permitted by this Section 5.2, Customer shall be responsible forreimbursing any costs incurred by Open-Silicon as a result of suchrescheduling.  Notwithstanding theforegoing, any Purchase Orders with scheduled delivery dates beyond theapplicable lead time may be rescheduled by Customer at any time upon written noticeto Open-Silicon, provided that [***] incurred by Open-Silicon as a result ofaccommodating Customer’s request.

 

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**5.3****                              ****ProcessDiscontinuance by Foundry. **If for anyreason, Open-Silicon’s third party foundry supplier discontinues a process,Open-Silicon shall give Customer written notice thereof [***] prior to the last date on which Customer can place an order for Production Unit(s) tobe affected by such process discontinuance, and will use its diligentefforts to provide Customer with longer than [***] notice of same.  If such foundry discontinues or is expected todiscontinue a process, Open-Silicon shall [***] to a [***] and shall provide[***] to effect a smooth and seamless transition.

 

**6.****                                     ****TITLEAND DELIVERY.**

 

**6.1****                              ****Deliveries. **All shipments to deliverydestinations are made [***] at the [***]. All Products shall be deemed acceptedby Customer upon delivery at point of shipment, subject to the Limited ProductWarranty set forth in Section 10. Title to Production Units and risk of loss pass to Customer, or in thecase of a Drop Shipment (as defined below), to the receiving party of theshipment (unless such receiving party is serving as Customer’s agent, in whichevent, title and risk of loss will pass to Customer), upon [***]. In theabsence of written instructions from Customer, all Products shall be packed andprepared for shipment in a manner that: (i) follows good commercialpractice; (ii) is acceptable to common carriers for shipment at the lowestrate; and (iii) is adequate to ensure safe arrival.  Open-Silicon shall mark all containers withPurchase Order number, lot tracking information, date of shipment, and Customer’sand Open-Silicon’s names, provided in the event that any shipments are made toCustomer’s customers (“**Drop Shipments**”),upon Customer’s request, Open-Silicon’s name will be omitted from thecontainers.  Shipment of Production Unitsmay originate from either Open-Silicon or its Subcontractors or authorizeddistributors.

 

**6.2****                              ****DeliveryTimeframes. **Open-Siliconwill deliver Products in accordance with the delivery dates set forth inCustomer’s Purchase Order.  In the eventthat Production Units ordered in a Purchase Order are delivered late solely dueto Open-Silicon’s (excluding its Subcontractors’) delay, Customer will beentitled to deduct from the payments otherwise due to Open-Silicon for suchPurchase Order an amount equal to [***] of the total amount of such paymentsfor each week the shipment is late, [***] provided, however, that if thedelayed Production Units are delivered to Customer within [***] of thescheduled delivery date, such deduction will be waived.  Without limiting the generality of theforegoing, Open-Silicon will give Customer prompt notice if it reasonablyexpects a delay in meeting a delivery date or that only a portion of the Productswill be available for shipment to meet a delivery date, and Open-Silicon willspecify the reasons therefor.  Forpartial shipments, Open-Silicon will ship the available Products unlessdirected by Customer to reschedule a shipment. Customer may specify a deliverydestination other than its own premises (e.g., Drop Shipment) in order tofacilitate delivery directly to its customers. Open-Silicon does not requirethat delivery be made directly to Customer. For the avoidance of doubt,Customer will be responsible for all costs relating to shipment.

 

**6.3****                              ****EarlyDeliveries.**  If Productsare delivered more than [***] in advance of the Delivery Dates, Customer may,at its option, either return the Products at Open-Silicon’s expense or keep theProducts with payment due as provided in this Agreement.

 

**6.4****                              ****Die Banking. **Open-Siliconwill provide die banking services to Customer in accordance with the terms andconditions of **Exhibit E** (“**Die Banking**”). Customer shall ordersufficient material be held in die bank to assure continued supply of productwithin its Forecast.

 

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**7.****                                     ****PRODUCTIONUNITS PRICING AND PAYMENT.**

 

**7.1****                              ****Pricing. **Product pricing is set forthin the SOW.  Both parties acknowledge andagree that pricing will not be known until die size is fixed and actualperformance frequency and yield of the design is established.  If die size increases or performance/yield ismarginal, then Open -Silicon may in good-faith increase pricing in accordancewith such changes and to the extent that such price increase shall bereasonable

 

**7.2****                              ****Payment. **Unless otherwise agreed,payment terms are [***] from receipt of invoice by Customer. For overdueinvoices that are not reasonably disputed by Customer, Customer will payOpen-Silicon interest on the overdue amount at a rate of [***] for each monthor part of a month (or the maximum rate allowed by law, whichever is less) thatthe payment is overdue.  For theavoidance of doubt, for Product invoices, Open-Silicon will invoice Customerupon Product shipment, unless shipment is not made (at Customer’s request), inwhich event, Open-Silicon will invoice Customer when such Product is ready forshipment.  Unless otherwise instructed byOpen-Silicon in writing, all amounts payable to Open-Silicon shall be paid bycompany check, tendered to such address as Open-Silicon shall designate in aninvoice or other notice. Should the parties agree that payments will be made bywire transfer, then Customer shall instruct the paying financial institution toroute all domestic wire transfers via FEDWIRE).

 

**7.3****                              ****Taxes. **Customer is responsible forand will pay any tax on Production Units. The prices specified in each applicable quote and/or SOW excludes allduties, taxes and excises and specifically excludes value-added tax (VAT) relatingto Production Units.  Open-Silicon shallseparately state such taxes if it is required by law to collect such taxes, andCustomer agrees to pay such amounts.  Theparties will reasonably cooperate to take advantage of benefits provided by anytax treaties.

 

**8.****                                     ****TERM.**

 

ThisAgreement shall commence as of the Effective Date and, subject to Section 9.4below and unless earlier terminated in accordance with Section 9 (“Termination”),shall remain in force for a period of [***], except that [***] will [***] afterthe Effective Date.

 

**9.****                                     ****TERMINATION.**

 

**9.1****                              ****Terminationfor Cause. **Either partymay terminate this Agreement and/or any or all SOWs upon at least [***] priorwritten notice if the other party materially breaches any term or conditionhereof and fails to cure the breach within the notice period.  The parties acknowledge that any breach ofSections 4.3 or 7.1 shall be deemed a material breach of this Agreement.

 

**9.2****                              ****Terminationfor Infringement. **Open-Siliconmay, upon written notice to Customer, suspend its obligations under an SOW inrespect of certain Products where Open-Silicon reasonably believes, after goodfaith discussions with Customer, that a third party suit or action broughtagainst Open-Silicon and/or Customer alleging that the design, manufacture, orsale of such Products violates the intellectual property rights of the thirdparty has merits.  A suspension underthis Section 9.2 that continues for more than [***] shall be deemed atermination of the SOW for such Products.

 

**9.3****                              ****Terminationfor Business Discontinuity. **Either partymay terminate this Agreement and/or any or all SOWs in the event that the otherparty (a) becomes insolvent, otherwise unable to pay its debts as theymature, makes an assignment for the benefit of creditors, or files, or hasfiled against it (which is not dismissed in [***]), any claim for an action inbankruptcy or under any other debtor, insolvency, liquidation, or other similarlaws, or (b) dissolves, or otherwise ceases doing business in the ordinarycourse.

 

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**9.4****                              ****Effectof Termination. **Upontermination, each party will return to the other, or at the other party’srequest, destroy (and certify in writing as to such destruction), allConfidential Information in such party’s possession provided by the otherparty, provided that (i) in the event that there is any dispute arisingout of or relating to this Agreement or the termination thereof, each partywill be permitted to retain such information as may be relevant to resolutionof that dispute but use such information solely in the resolution of thedispute and not for any other purpose, including but not limited to, anycommercial use, and when such dispute is resolved, each party will return theretained Confidential Information to the other party; (ii) Open-Siliconwill be permitted to retain such information as is necessary for Open-Siliconto perform its surviving obligations under this Agreement; and (iii) Customerwill be permitted to retain such information as is necessary for Customer toperform its surviving obligations or exercise surviving rights under thisAgreement. Customer remains liable to pay Open-Silicon for Products andServices received (and accepted, if applicable) through the respective date oftermination, and any applicable cancellation charges hereunder. [***]. Thefollowing sections will survive any expiration or termination of thisAgreement: Section 1 (“Definitions”); Section 2.7 (“Risk Product”)(solely with respect to the warranty disclaimer), Section 2.9 (“Escrow”); Section 3(“Compensation for Design Services”) (solely with respect to amounts incurredupon or prior to expiration or termination); Section 7 (“Production UnitsPricing and Payment”); Section 9.4 (“Effect of Termination”); Section 10(“Limited Product Warranty; Disclaimer”) (solely with respect to the warrantydisclaimers); Section 11 (“Limitation of Liability”); Section 12 (“Confidentialityand Publicity”); Section 13 (“Intellectual Property Ownership; Licensing”)(except for Section 13.4); Section 14 (“Indemnification”); Section 17(“Governing Law”); and Section 18 (“Miscellaneous”).  Notwithstanding anything to the contrary,upon any termination or expiration of this Agreement, Customer shall bepermitted to sell all remaining inventory of Products in Customer’s possession,and to retain all Prototypes and related design information to permit providingmaintenance and support services to its customers.

 

**10.****                              ****LIMITEDPRODUCT WARRANTY; DISCLAIMER.**

 

**10.1****                       ****LimitedProduct Warranty. **Open-Siliconwarrants solely to Customer that Production Units delivered hereunder will[***] approved by Customer and, if properly used, will be [***] for [***]following the date of receipt of the Production Units by Customer. Except asexpressly set forth in this Agreement (or an SOW), Open-Silicon makes nowarranty with respect to any Services, Prototypes, or Risk Product.  [***].

 

**10.2****                       ****Remedy. **If any Production Unitfurnished by or for Open-Silicon fails to conform to the warranty provided in Section 10.1(“**Limited Product Warranty**”),Open-Silicon’s sole and exclusive liability and Customer’s sole and exclusiveremedy will be, at Open-Silicon’s option and expense, to promptly repair orreplace the Production Unit, or if repair or replacement is not technicallyfeasible, refund to Customer an amount equal to the price paid for any suchProduction Unit which fails during the applicable warranty period, providedthat: (a) Customer notifies Open-Silicon in writing during the warrantyperiod indicated above that such Production Unit is defective and furnishes anexplanation of the deficiency; (b) upon Open-Silicon’s request, suchProduction Unit is returned, either to Open-Silicon’s service facility or tosuch other facility designated by Open-Silicon, at Open-Silicon’s risk andexpense; and (c) the claimed deficiencies exist and were not caused byaccident, misuse, neglect, improper installation, improper testing orunauthorized alteration or repair (all of which will operate to void thewarranty provided herein).  If suchProduction Unit is defective, and Open-Silicon elects to repair or replace it,the transportation charges for the repaired or replaced Production Unit fromOpen-Silicon to Customer within the USA will be paid by Open-Silicon.  For all other locations, the Limited ProductWarranty excludes all costs of shipping, duty, customs clearance, and otherrelated charges.  A repaired or replacedProduction Unit will continue to be warranted for the longer of [***] from theoriginal shipment date of the defective Production Unit or [***] after Customerreceives the replacement or repaired Production Unit.  All Production Units returned to Open-Siliconshall be returned in accordance with Open-Silicon’s return materialauthorization procedure. [***]**.**

 

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**10.3****                       ****Disclaimer.[***].**

 

**10.4****                       ****ThirdParty Technology. **Customer willbe responsible for all third party technology provided or requested by Customerto be included in the Product to ensure that such technology is compatiblewith, and suitable for, Customer’s intended purposes and applications.

 

**11.****                              ****LIMITATIONOF LIABILITY.**

 

**11.1****                       ****ConsequentialDamages Disclaimer. [***], IN NO EVENT WILL EITHER PARTY OR ITS SUPPLIERSBE LIABLE FOR ANY INCIDENTAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGESWITH RESPECT TO PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT, INCLUDINGWITHOUT LIMITATION LOST PROFITS, INTERRUPTION OF BUSINESS, OR COST OFPROCUREMENT OF ANY SUBSTITUTE GOODS OR SERVICES, REGARDLESS OF WHETHER SUCHPARTY HAS ADVANCE NOTICE OF THE POSSIBILITY OF SUCH DAMAGES.**

 

**11.2****                       ****DamagesLimitation.** [***]**, IN NO EVENT WILLEITHER PARTY’S TOTAL CUMULATIVE LIABILITY TO THE OTHER PARTY ARISING OUT OF ORRELATED TO THIS AGREEMENT EXCEED THE HIGHER OF (A) THE AMOUNTS PAID OR PAYABLEBY CUSTOMER TO OPEN-SILICON UNDER THIS AGREEMENT, AND (B) AN AMOUNT EQUALTO THE NRE FEES PAID OR TO BE PAID BY CUSTOMER UNDER THIS AGREEMENT.**

 

**11.3****                       ****Indemnity.  [***] WILL OPEN-SILICON BE OBLIGATED TOINDEMNIFY CUSTOMER OR ANY THIRD PARTY WITH RESPECT TO ANY CLAIM ARISING OUT OFOR RELATED TO THIS AGREEMENT.**

 

**11.4****                       ****LimitationsEssential.  THE PARTIES ACKNOWLEDGE THATTHESE LIMITATIONS ON POTENTIAL LIABILITIES WERE AN ESSENTIAL ELEMENT IN SETTINGCONSIDERATION UNDER THIS AGREEMENT AND THAT, IN THE ABSENCE OF SUCHLIMITATIONS, THE ECONOMIC TERMS OF THIS AGREEMENT WOULD BE SUBSTANTIALLYDIFFERENT.  LIABILITY FOR DAMAGES SHALLBE LIMITED AND EXCLUDED, EVEN IF ANY EXCLUSIVE REMEDY PROVIDED FOR IN THISAGREEMENT FAILS OF ITS ESSENTIAL PURPOSE.**

 

**12.****                              ****CONFIDENTIALITYAND PUBLICITY.**

 

**12.1****                       ****ConfidentialInformation. **“ConfidentialInformation” means all information, trade secrets, technology and othermaterials disclosed or otherwise made available by one party (the “**Discloser**”) to the other party (the “**Recipient**”), whether before, on or afterthe Effective Date, (i) in a tangible form marked “Confidential”, “Proprietary”(or with similar legend), (ii) in intangible form or orally and expressedas being confidential at the time of disclosure and confirmed as being confidentialin a writing delivered to Recipient within thirty (30) days after initialdisclosure, or (iii) under circumstances indicating it is confidential orproprietary.  Confidential Informationmay be owned by a third party, including a Subcontractor or IP Provider.  Neither party will disclose this Agreementany SOW or their terms, to any third party without the specific, writtenconsent of the other.  Without limitingthe foregoing, Project Technology shall be deemed Confidential Information ofCustomer.  Customer acknowledges thatProject Technology may include Confidential Information of Open-Silicon.

 

10

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**12.2****                       ****Dutiesin Respect of Confidential Information.**

 

**(a)****                                 **Recipientagrees not to use Confidential Information or disclose such ConfidentialInformation except as expressly permitted under this Agreement or as expresslyagreed in writing by the Discloser.  Eachparty shall use Confidential Information disclosed to it solely as permittedunder this Agreement.  Subject to thefollowing, Recipient agrees to not disclose Confidential Information except tothose employees and contractors of Recipient who have agreed to be bound byconfidentiality obligations not less protective than that contained in thisAgreement. Recipient has the right to use and disclose Confidential Informationreasonably in connection with the exercise of its rights or performance of itsobligations under this Agreement, subject to confidentiality obligations noless protective of such Confidential Information as the terms and conditionscontained in this Agreement.  Recipientshall exercise the same degree of care to prevent unauthorized use ordisclosure of Confidential Information as it takes to preserve and safeguardits own confidential information of similar importance, but in any event, noless than a reasonable degree of care. Notwithstanding any other provision of this Agreement or any SOW,Open-Silicon’s provision to Customer of anything which contains confidentialinformation or materials of third parties is conditioned on Open-Silicon’sreceipt of documentation showing that such third parties permit Customer toreceive such confidential information or materials.

 

**(b)****                                 **Open-Siliconagrees not to, directly or indirectly (including, without limitation, throughSubcontractors), [***].  Notwithstandingthe provisions of Section 12.2(b), licensing of software and/or technologythat Open-Silicon makes generally available shall not be deemed a violation ofthis provision even if such software and/or technology is used by one of theenumerated companies or their affiliates in products Similar to the Products.As used in this Section 12.2(b), “Similar” means identical to,substantially similar to, or comprising the same form, fit and function as, theProducts.

 

**12.3****                       ****CompelledDisclosure.**  Ifdisclosure of Confidential Information is required by applicable law: (i) theParties shall use all legal means available to minimize the disclosure to thirdparties of the Confidential Information; (ii) the Recipient compelled tomake disclosure shall inform the Discloser at least ten (10) business daysin advance of the disclosure or, if such notice is impossible, as soon aspossible; and (iii) the Recipient compelled to make disclosure shall makereasonable efforts to give the Disclosure a reasonable opportunity to reviewand comment upon the disclosure, and any request for confidential treatment ora protective order pertaining thereto, prior to making such disclosure,provided that it is not impracticable to do so.

 

**12.4****                       ****Exceptions.**  The Recipient shall be relieved of its dutiesin respect of specific Confidential Information to the extent that any such information:(a) falls into the public domain or becomes publicly known through nofault of Recipient (or its personnel or Subcontractors); (b) becomes knownto Recipient, without restriction, from a third party through no breach oftrust or an obligation of confidentiality; and/or (c) was independentlydeveloped by Recipient without use of the Confidential Information and byemployees or contractors of Recipient who had no access to any ConfidentialInformation of Discloser and have not been involved in performance of thisAgreement.  The burden of proof of theexistence of an exception shall be on Recipient. The Parties may disclose thisAgreement and SOWs in confidence to their respective legal counsel,accountants, bankers, and other similar advisors, and financing sources,including potential acquirers or merger partners, as necessary in connectionwith obtaining services from such third parties or the negotiating of anacquisition or merger.

 

**12.5****                       ****Publicity.**  Neither party may use the other party’s nameor trademarks in any type of advertisement materials, web sites, pressreleases, interviews, articles, brochures, business cards, project reference orclient listings without the other’s prior written consent except as may berequired by law.

 

11

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**13.****                              ****INTELLECTUALPROPERTY OWNERSHIP; LICENSING.**

 

**13.1****                       ****Ownershipof Pre-Existing Technology.**  Other than the rights expressly granted orassigned in this Section 13, Open-Silicon or its licensors will own andretain all [***] to the Effective Date, or [***] of performing any Services forCustomer, including, without limitation: [***] and (iii) [***].  Customer or its licensors shall own andretain all [***], including, without limitation, [***].

 

**13.2****                       ****[***]**.  Customer shall solely andexclusively own all [***] and Open-Silicon hereby irrevocably assigns, andagrees to assign, to Customer all right, title and interest, including all[***], that Open-Silicon may have in and to any [***].  Customer agrees that [***] created ordeveloped by Open-Silicon hereunder will not be used by Customer to [***] to a[***] unless and until [***].

 

**13.3****                       ****MaskOwnership. [***]** shall own the masks produced in connection with theperformance of this Agreement (including any SOW) and all [***], subject to[***] of any [***] agrees that such masks shall not be used for any purposeother than [***] unless otherwise agreed [***] shall destroy such [***] andcertify to [***] thereof.  Effective upona [***] hereby (a) [***] and (b) [***].

 

**13.4****                       ****DevelopmentLicense**. [***] hereby grants to [***], for the termof this Agreement, a [***] in the [***] and [***] to [***] the [***] and [***] solely to [***] under the Agreement.

 

**13.5****                       ****Licenseto Customer**.  If Open-Silicon incorporates any [***] (including any technology provided by IPProviders) in any [***], Open-Silicon hereby grants, under any ofOpen-Silicon’s [***] therein (including rights licensed to Open-Silicon from IPProviders), to Customer [***] to (a) [***], and to [***] any products orservices; and (b) [***] such [***].

 

**13.6****                       ****NoImplied Licenses. **Except asexpressly set forth in this Agreement or any separate license agreement, theparties do not, directly or by implication, by estoppel or otherwise, grant toeach other any rights or licenses, and neither party shall have any ownershiprights in any intellectual or tangible property of the other.  Any rights not expressly granted hereunderare retained by their respective owner(s).

 

**14.****                              ****INDEMNIFICATION.**

 

**14.1****                       ****Indemnificationby Open-Silicon.**[***], Open-Silicon will defend or settle any thirdparty claim, action, suit or proceeding brought against Customer based upon aclaim that the Services or Production Units, alone and not in combination withany other product or service, constitute a direct infringement of any patent(in effect as of the Effective Date) or copyright issued under the laws of[***], and will pay all damages and costs finally awarded against Customer inconnection with such claim. Customer will: (i) promptly notify Open-Siliconin writing of any such suit or proceeding, (ii) provide Open-Silicon withsole control over the defense or settlement of any such claim or action; and (iii) providereasonable information and assistance in the defense or settlement of any suchclaim or action. [***]. Open-Silicon shall obtain Customer’s prior writtenconsent, which consent shall not be unreasonably withheld, to any settlement ofany third party claim, action, suit or proceeding, except if the settlement isonly for monetary damages and contains a full release of Customer from theclaim.

 

**14.2****                       ****Exclusionsfrom Indemnification by Open-Silicon**.   Open-Silicon will not be liable for anyexpenses, damages, costs or losses arising out of or resulting from any suit orproceeding based upon a claim of intellectual property infringement to theextent arising from: (a) [***], or any [***], or (b) any alleged[***].

 

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**14.3****                       ****Indemnificationby Customer.  [*****], Customerwill defend or settle any third party claim, action, suit or proceeding broughtagainst Open-Silicon based upon a claim of direct infringement of any patent(in effect as of the Effective Date) or copyright issued under the laws of[***], arising from: (a) [***], or (b) any [***], and will pay alldamages and costs finally awarded against Open-Silicon in connection with suchclaim.  Open-Silicon will: (i) promptlynotify Customer in writing of any such suit or proceeding, (ii) provideCustomer with sole control over the defense or settlement of any such claim oraction; and (iii) provide reasonable information and assistance in thedefense or settlement of any such claim or action. [***].  Customer shall obtain Open-Silicon’s priorwritten consent, which consent shall not be unreasonably withheld, to anysettlement of any third party claim, action, suit or proceeding, except if thesettlement is only for monetary damages and contains a full release ofOpen-Silicon from the claim. Notwithstanding the foregoing, Customer reserves the right (but shallhave no obligation) to cancel the Project giving rise to a third party claim(or a threat thereof), which may be subject to an indemnity obligation underthis Section 14.3.

 

**14.4****                       ****Exclusionsfrom Indemnification by Customer**.  Customer will not be liable for any expenses,damages, costs or losses to the extent arising out of or resulting from anysuit or proceeding based upon a claim of intellectual property infringementthat (a) [***] and not in combination with any other product or serviceconstitute [***] (in effect as of the Effective Date) or [***] as such underthe [***].

 

**14.5****                       ****EntireObligation; Exclusive Remedy. **The foregoingstates the entire obligation and exclusive remedy of each of the parties heretowith respect to any alleged intellectual property infringement regarding anyProduct, Intellectual Property Right, or Service furnished hereunder.

 

**15.****                              ****EXPORT.**

 

Customer will not export, either directly or indirectly, anyOpen-Silicon-furnished Technology or any Product or system incorporating suchProduct without first obtaining any required license or other approval from theGovernment of the country into which the technology or product is imported (“HostGovernment”) or the U.S. Department of Commerce or any other agency ordepartment of the Host Government or the United States Government.

 

**16.****                              ****ELECTRONICTRANSACTIONS.**

 

**16.1****                       ****General.**  Subject to the terms and conditions of this Section 16.1,the parties agree to receive electronic documents and accept electronicsignatures relating to transactions contemplated by this Agreement, includingdelivery releases, purchase orders, purchase order acknowledgments, invoicesand other transactions as may be agreed by the parties from time to time.  Electronic documents and electronicsignatures shall be a substitute for paper-based documents and signatures, andthe legal validity of a transaction will not be denied on the ground that it isnot in writing.  This Agreement may notbe amended or terminated by these means.

 

**16.2****                       ****Transmissionof Electronic Documents. **All electronicdocuments shall be transmitted through the use of EDI, XML or other web-basedtransmission formats.  Electronicdocuments may be transmitted or received electronically directly by the partiesor through designated third party communication network service providers withwhich either party may contract.  Eachparty agrees to designate all transmissions as confidential and protect allelectronic documents from improper or unauthorized access in accordance with Section 12(“Confidentiality and Publicity”). Information contained in any electronic document or otherwise exchangedelectronically between the parties shall be considered the confidentialinformation of the disclosing party and shall be maintained in accordance with Section 12(“Confidentiality and Publicity”).

 

13

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**16.3****                       ****“ElectronicSignature” Defined. **For purposes ofthis Agreement, an electronic signature shall mean information or data inelectronic form that is attached to or logically associated with an electronicdocument and executed or adopted with the intent to sign the electronicdocument.  An oral communication or arecording of an oral communication shall not qualify as an electronicsignature.  Nothing in this Section 16.3shall be construed to limit or otherwise affect the rights of either party toassert that an electronic signature is a forgery, is used without authority, orotherwise is invalid for reasons that would invalidate the effect of asignature in written form.

 

**17.****                              ****GOVERNINGLAW.**

 

ThisAgreement is to be construed and interpreted according to the laws of the Stateof Delaware, excluding its conflict of laws provisions that would require theapplication of the laws of another state. **THE PROVISIONS OF THE UNITEDNATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS AND THE UNIFORM COMPUTERINFORMATION TRANSACTIONS ACT (UCITA) SHALL NOT APPLY TO THIS AGREEMENT.**

 

**18.****                              ****MISCELLANEOUS.**

 

**18.1****                       ****RestrictedUse. **Customer acknowledges andagrees that the Products are not designed, intended, or certified for use incomponents of systems intended for, or in relation to the operation of [***],or for any other application in which the failure of the Product could create asituation where [***] may occur, and Customer shall not use, sell, or otherwisedistribute the Products for said uses.

 

**18.2****                       ****Notices.**  Unless otherwise stated herein, writtennotices shall be delivered by hand, mail, fax, or email (with contemporaneousdelivery by one of the foregoing means) to the persons and at the addresses asset forth below (in the case of Open-Silicon), or as set forth on the signaturepage of the Agreement (in the case of Customer).  Either party may change its address forreceipt of notice to the other party by delivering written notice of suchchange pursuant to this Section 18.2.

 

Open-Silicon, Inc.

490 N. McCarthy Blvd., Suite 220

Milpitas, CA 95035

Attn: Contract Management

 

**18.3****                       ****Force Majeure. **Except for the obligation topay any amounts when due, neither party will be liable for any failure toperform acts due to unforeseen circumstances or causes beyond the parties’reasonable control. If any such circumstances occur, the affected party’s timefor delivery or other performance will be extended for a period equal to theduration of the delay caused thereby, provided that the party affected by suchcircumstances or causes uses commercially reasonable efforts to mitigate theeffect of such delay.  Either party mayterminate this Agreement upon written notice if such circumstances or causesdelay any party’s performance under this Agreement by a period of more thanthirty (30) days.

 

**18.4****                       ****Assignment. **This Agreement will bebinding upon and inure to the benefit of the parties hereto and their permittedsuccessors and assigns.  Notwithstandingthe foregoing, neither this Agreement, nor any rights or obligations hereunder,may be assigned or otherwise transferred by either party without the priorwritten consent of the other party, provided, however, that either party mayassign, without prior written consent all or any of its rights or delegate allor any of its obligations under this Agreement to a majority owned subsidiaryof such party or to a third party in connection with merger or the sale of allor substantially all of the assets or business to which this Agreementrelates.  Any other attempted assignmentor transfer without prior written consent will be voidable at the option of thenon-consenting party.

 

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**18.5****                       ****Subcontractors.** Customer acknowledges that in performing the Services Open-Silicon mayuse Subcontractors to design, manufacture and/or ship Products without Customer’sprior approval; provided that Open-Silicon  shallremain fully responsible and liable for the performance of the Services and itsother obligations under this Agreement, and any act or omission of Open-Silicon’sSubcontractors (other than Subcontractors designated by Customer in writing)shall constitute an act or omission of Open-Silicon, and any act or omission by an such Subcontractors (other thanSubcontractors designated by Customer in writing) that would constitute a breach of the terms and conditions of thisAgreement if it were an act or omission by Open-Silicon shall constitute a breach of this Agreement by Open-Silicon.  Notwithstanding the foregoing, in the eventthat the SOW identifies a specific Subcontractor to perform certain functionshereunder or requires that the Subcontractor for certain functions will be mutuallyagreed upon by the parties, Open-Silicon may not use another Subcontractor toperform such functions without obtaining Customer’s prior written approvaltherefor.

 

**18.6****                       ****Counterparts.**  This Agreement may be executed in multiplecounterparts, each of which will be deemed to be an original and all of whichwill be deemed a single agreement.

 

**18.7****                       ****Construction. **The headings provided inthis Agreement are for convenience only and shall not be used in interpretingor construing this Agreement.  Forpurposes of this Agreement, the term, “including” means “including but notlimited to”.

 

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**18.8****                       ****IndependentContractors.**  The partieshereto are independent contractors. Nothing in this Agreement will be construed to make the parties partnersor joint venture or to make either party liable for the obligations, acts, oractivities of the other.

 

**18.9****                       ****ThirdParty Rights. **The provisionsof this Agreement are intended solely for the benefit of Customer andOpen-Silicon, and shall create no rights or obligations enforceable by anyother party. Notwithstanding the foregoing, to the extent that a third party islicensed hereunder, such third party is a beneficiary of the provisions hereofthat related to such licensed rights.

 

**18.10****                ****Rightsand Remedies Cumulative. **Except asprovided in Section 10 (“Limited Product Warranty; Disclaimer”), theparties’ rights and remedies under this Agreement are cumulative.  Each party acknowledges and agrees that anactual or threatened breach of any of the provisions contained in thisAgreement may result in immediate, irreparable and continuing damage to thenon-breaching party for which there may be no adequate remedy at law, and thenon-breaching party may apply to any court of competent jurisdiction forspecific performance or injunctive relief to enforce or prevent any breach ofthe provisions of this Agreement.

 

**18.11****                ****Severability;Limitations Period. **If anyprovision of this Agreement becomes or is declared by a court of competentjurisdiction to be illegal, invalid or unenforceable for any reason, then suchprovision will be enforced to the maximum extent permissible under thecircumstances so as to effect the intent of the parties and the economic effectof the Agreement.  Neither the legality,validity or enforceability of the remaining provisions hereof nor the legality,validity, or enforceability of the provision at issue in other circumstanceswill otherwise be affected or impaired thereby, and the remainder of theprovisions of this Agreement will remain in full force and effect.  The parties will replace any unenforceableprovision with a valid, legal and enforceable provision that most earlyachieves the economic effect of the unenforceable provision.  Without limiting the generality of the foregoing,the parties agree that Section 11 (“Limitation of Liability”) will remainin effect notwithstanding the illegality, invalidity, unenforceability, orfailure of the essential purpose of any provision in Section 10 (“LimitedProduct Warranty; Disclaimer”). 

 

**18.12****                ****EntireAgreement.**  ThisAgreement, including the exhibits hereto and each SOW, contains the entireunderstanding between Customer and Open-Silicon with respect to the subjectmatter hereof and merges and supersedes all prior and contemporaneousagreements, dealings and negotiations. Any modification, alteration, or amendment to this Agreement will not beeffective unless made in writing, dated and signed by duly authorizedrepresentatives of both parties. All rights and remedies, whether conferredhereunder, or by operation of law, will be cumulative and may be exercisedsingularly or concurrently.   Failure byeither party to enforce a term will not be deemed a waiver of futureenforcement of that or any other term. The following Exhibits are hereby incorporated herein by thisreference:  **Exhibit A**(“Statement of Work”), **Exhibit B-1**(“PrototypeApproval Form”), **Exhibit B-2** (“Release toProduction Form”), **Exhibit C**(“Engineering Change Order Process”), **Exhibit D**(“Milestone Acknowledgement Letter”), and **Exhibit E** (“Die Banking”). In the event of aconflict between the terms of this Agreement and any exhibit, the terms of thisAgreement will govern.  In the event of aconflict between **Exhibit A** and a change orderexecuted by parties, the change order****will govern.

 

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**IN WITNESS WHEREOF,** the parties have causedtheir duly authorized representatives to enter into this Agreement, effectiveas of the Effective Date.

 
| **OPEN-SILICON, INC.**    | ** ** | **NETLIST, INC.**     |
|--------------------------------|------------|----------------------------|
| **(“OPEN-SILICON”)** | ** ** | **(“CUSTOMER”)** |
|                           |       |                       |   |   |
| By:                            |       |                       |   | By: |   |   |
|                           |       |                       |   |   |
| Print  Name:                   |       |                       | Print  Name: |   |
|                           |       |                       |   |   |   |   |
| Title:                         |       |                       |   | Title: |   |   |
|                           |       |                       |   |   |   |   |
| Date:                          |       |                       |   | Date: |   |   |
|                                |            |                            |  |  |  |  |  |  |

 

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**EXHIBIT A**

**OPEN-SILICON, INC.**

**[***]**

 

18

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**EXHIBIT B-1**

**OPEN-SILICON, INC.**

**PROTOTYPE APPROVAL**

 
| **Customer:**                                                   |   |
|-----------------------------------------------------------------|--------|
| **Address:**                                                    |   |
|                                                            |   |
| **Customer Agreement Number/Date (incorporated by reference):** |   |

 
| **Customer Part Number:** |
|--------------------------------|
| **Project Code Name:**         |

 

We have completed our evaluation of the prototypesfor the above-referenced part.  The partmeets our requirements, and the part complies with the test vectors to which wemutually agreed.

 

We formally approve the prototypes for theabove-referenced part.

 

**Approval:**
| ACKNOWLEDGED  AND AGREED:      |        |
|--------------------------------|-------------|
| (Print  or Type Customer Name) |        |
|                           |        |
|                           |        |
| By:                            |        |   |   |
|                           | (Signature) |
|                           |        |   |
| Print  Name:                   |        |   |
|                           |        |   |
| Title:                         |        |   |
|                           |        |   |
| Date:                          |        |   |
|                                |             |  |  |  |

 

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**EXHIBIT B-2**

**OPEN-SILICON, INC.**

**RELEASE TO PRODUCTION**

 
| **Customer:**                                                   |
|-----------------------------------------------------------------|
| **Address:**                                                    |
|                                                            |
| **Customer Agreement Number/Date (incorporated by reference):** |

 
| **Customer Part Number:** |
|--------------------------------|
| **Project Code Name:**         |

 

We formally request that the part be released toproduction.

 

**Approval:**

ACKNOWLEDGED AND AGREED:

(Print or Type Customer Name)

 

 
| By:          |        |   |   |
|--------------|-------------|--------|--------|
|         | (Signature) |
|         |        |   |
| Print  Name: |        |   |
|         |        |   |
| Title:       |        |   |
|         |        |   |
| Date:        |        |   |
|              |             |        |        |  |

 

20

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**EXHIBIT C**

**OPEN-SILICON, INC.**

**ENGINEERING CHANGE ORDER PROCESS**

 

**PURPOSE**

 

To describe method to be used in acceptingEngineering Change Orders from Customers

 

**SCOPE**

 

This procedure applies to all designs that are inactive execution phase.

 

**PROCESS OWNER**

 

The process is owned by the ASIC Program Manager(APM).   The release and any subsequentchanges to this procedure must have the approvals of the Director of APM andEngineering.

 

**APPLICABLE / REFERENCEDOCUMENTS**

 

1.1                         OS-0027, Listof Customer ECOs

 

**DEFINITIONS**

 
| **Customer:** | That with whom a Statement of Work has been  signed.      |
|---------------|-----------------------------------------------------------|
| **Project:**  | Work to be performed by Open-Silicon for such a  customer |

 

**GENERAL POLICY PROCEDURE**

 

**ECO Description**

 

Scope of work to be performed by Open-Silicon isdictated by the Statement of Work document signed between Open-Siliconrepresentative and Customer. Any change to this scope of work which couldresult in change in effort and cost shall be deemed as an Engineering ChangeOrder (ECO) from the customer. Such additional tasks shall only be undertakenby Open-Silicon after customer has submitted a signed ECO Form provided byOpen-Silicon.

 

**ECO Types**

 

ECOs can be filed for a variety of reasons. Some ofthe most common reasons for filing an ECO are listed below:

 

·                                          Customer may want to changethe scope of work being performed. For example, a customer may decide to retainOpen-Silicon to undertake Part Qualification which may not be included inthe current SOW.

·                                          Customer may decide tochange the package of the device.

·                                          Customer may have a need tochange the IP being used in the design.

·                                          Customer maywant to move out the schedule due to their internal project delays.

·                                          Customer maywant to change the architecture of their device. This includes changes todevice interfaces

·                                          Customer may wantto change the design center and/or design team working on the design

** **

**ECO parameters**

 

All ECOs must be measurable. The ECO form shall havethe following measurable parameters (among other parameters):

 

·                                          Number of lines of codechanged

 

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·                                          Number of gates modified

·                                          Number of nets touched

·                                          Number of memory elements(including registers) impacted

·                                          Levels of Netlist hierarchytraversed for the ECO

·                                          Time to implement changes

·                                          Cost in dollars to implementand verify

·                                          Impact to schedule toimplement

·                                          List of IPs whoseperformance/characterization could be impacted

·                                          Die size impact to implement

·                                          Impact to package size andperformance

·                                          Expected design performanceimpact to implement

·                                          ECO approval

 

ECO Forms shall be approved by Engineering and APMoffice for execution. APM shall update schedule based on ECO impact and publishnew date as POR to all.

 

**Standard ECO Form**

 
| **Project  Name:** |   |   |
|--------------------|--------|--------|
| **Dated:**         |   |   |
| **ECO  Number:**   |   |   |

 

**ECO Description**

 

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**Table 1: Type of ECO**

 
| **Type**                       | ** ** | **Description** | ** ** | **Items Impacted**                      |
|--------------------------------|------------|-----------------|------------|----------------------------------------------|
| Change  in scope of work       |       |            |       | {SOW,  Ts&Cs, Cost, etc.}           |
| Change  in design center       |       |            |       | {Schedule,  Cost, etc.}                 |
| Change  in design team         |       |            |       | {Schedule,  Cost, etc.}                 |
| Change  in design schedule     |       |            |       | {Schedule,  Cost, etc.}                 |
| Change  in IP agreements       |       |            |       | {SOW,  Schedule, Cost, Ts&Cs, etc.} |
| Change  in design architecture |       |            |       | {SOW,  Schedule, Cost, etc.}            |
| Change  in package             |       |            |       | {SOW,  Schedule, Cost, etc.}            |

 

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**Table 2: Design Change Details**

** **
| **Object**                                                    | ** ** | **Details** | ** ** | **Items Impacted**                                       |
|---------------------------------------------------------------|------------|-------------|------------|---------------------------------------------------------------|
| Additional  Tasks being requested                             |       |        |       | {Characterization,  Qual, SHL, etc.}                     |
| Lines  of Code modified                                       |       |        |       | {rtl,  tests, test-benches, scripts etc.}                     |
| Gates  modified/added/removed                                 |       |        |       | {netlists,  modules, verification scripts, etc.}         |
| Nets  touched                                                 |       |        |       | {netlists,  modules, verification scripts, etc.}         |
| Memory Elements (including registers)  modified/added/removed |       |        |       | {netlists,  modules, verification scripts, etc.}         |
| Levels  of netlist hierarchy traversed                        |       |        |       | {netlists,  modules, verification scripts, etc.}         |
| IPs whose performance/characterization could be  impacted     |       |        |       | {instance names, modes in which impact is  observed, netlist} |
| Design  performance impact                                    |       |        |       | {timing,  area, power, IR drop, EM etc.}                 |

 

**Table 3: Design ECO related Tasks**

** **
| **Task**                                           | ** ** | **Owner** | ** ** | **Completed** | ** ** | **Comments** |
|----------------------------------------------------|------------|-----------|------------|---------------|------------|--------------|
| Modified  RTL Functionally Verified                |       |      |       |          |       |         |
| RTL  to Netlist Formally Verified                  |       |      |       |          |       |         |
| Modified  design checked for performance deviation |       |      |       |          |       |         |
| Verified  impact of modified design on IP          |       |      |       |          |       |         |
| Verified  impact of modified design on die size    |       |      |       |          |       |         |
| Verified  impact of modified design on package     |       |      |       |          |       |         |

 

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**Table 4: Cost of ECO**

** **
| **Function**                            | ** ** | **Cost** | ** ** | **Comments** |
|-----------------------------------------|------------|----------|------------|--------------|
| Man  Days required to Implement the ECO |       |     |       |         |
| Monetary  Impact to existing agreement  |       |     |       |         |
| Schedule  Impact                        |       |     |       |         |

 

ThisECO is being approved for execution by the following representatives ofOpen-Silicon and its Customer:

 
| **OPEN-SILICON, INC.**    |       |                       |
|--------------------------------|------------|----------------------------|
| **(“OPEN-SILICON”)** | ** ** | **(“CUSTOMER”)** |
|                           |       |                       |
| By:                            |       |                       |   | By: |   |   |
|                           |       |                       |   |   |   |   |
| Print Name:                    |       |                       | Print  Name: |   |
|                           |       |                       |   |   |   |   |
| Title:                         |       |                       |   | Title: |   |   |
|                           |       |                       |   |   |   |   |
| Date:                          |       |                       |   | Date: |   |   |

 

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**EXHIBIT D**

**MILESTONE ACKNOWLEDGEMENT LETTER**

 

**[[CUSTOMER LETTERHEAD]]**

 

ChiefFinancial Officer

Open-Silicon, Inc.

490N. McCarthy Blvd., Suite 220

Milpitas,CA 95035

 

DearSir or Madam:

 

Weacknowledge completion of milestone XX and all prior milestones.

 

Sincerely,

 

 
| /s/                  |   |
|----------------------|--------|
|                 |   |
| Officer  of Customer |   |

 

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**Exhibit E**

(“**Die Banking**”)

 

Open-Siliconwill build and hold Product in a die bank for Customer under the followingadditional terms and conditions:

 

1.               Open-Silicon will holdProducts in a die bank in a quantity equal to the greater of (a) the then-currentForecast, and (b) the cumulative volume of wafers ordered that areproduced into Production Units in the preceding three (3) months.

 

2.               Customer will payOpen-Silicon for wafers to be held in die bank (but not delivered to Customer),and for the completion of production of die bank wafers (for delivery toCustomer) according to the table set forth below:

 
| ** ** | ** ** | **Per wafer deposited to die bank**                                                                                                                           | ** ** | **Per Production Unit from die banked wafer**                                                                                                                                                                                                                                                                                                                    |
|------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |       | 1/2  of part price as specified in SOW or any subsequent amendment that modifies  the part price stated therein times the number of expected yielded parts from  such deposited wafers |       | 1/2  of part price as specified in SOW or any subsequent amendment that modifies  the part price stated therein; when all die banked wafers from a deposit have  been built out and shipped, any difference between the amounts invoiced and  the value of the part price times Production Units shipped shall be either  invoiced, or (if the invoices are in excess of such value) refunded. |

 

3.               Open-Silicon will invoiceCustomer for die banked material at the time such material is deposited intodie bank, and for the completion of production of die bank wafers at the sametime that Production Units would be invoiced under the Agreement.

 

4.               **[***].**

 

5.               After completion, ProductionUnits made from die banked material are not treated differently under theAgreement.

 

6.               No material shall remain indie bank longer than [***] without the parties’ express agreement.  In the event that the parties make suchagreement, Customer acknowledges that [***] and extended warranty [***].

 

7.               Die bank inventory shall behandled on [***] basis, and to facilitate this Open-Silicon may completeproduction of any and all wafers in die bank to fulfill any Purchase Order forProduction Units and deposit any and all newly-fabricated wafers in die bank.

 

8.               Purchase Orders specificallyfor die bank material [***].

 

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