Agreement for ASIC Design and Purchase of Products between IBM Microelectronics 1000 River Street Essex Junction, Vermont and Juniper Networks Agreement Number V1967 Commencement Date: At Signoff IBM Customer Account Representative: Ed Buturla Name and Address of Buyer: Juniper Networks 385 Ravendale Drive Mountain View, CA 94043 This agreement ('Agreement') is entered into by and between International Business Machines Corporation, incorporated under the laws of the State of New York ('IBM') and Juniper Networks, ('Buyer'), incorporated under the laws of the State of California. This Agreement and its attachments ('Attachments') sets forth the terms and conditions pursuant to which semiconductor products will be designed, manufactured, sold and purchased. The terms and conditions by which IBM licenses to Buyer the IBM Design Kits specified in Attachment A are governed by the IBM Design Kit License initially executed by the parties on April 14, 1997. 1.0 DEFINITIONS 1.1 'ASIC(S)' means application specific integrated circuits. 1.2 'ASIC TOOL KITS' means any computer aided design software and data provided by IBM and used by Buyer for the purpose of designing or checking ASIC designs, as updated or enhanced from time to time by IBM. 1.3 'BUYER DELIVERABLE ITEMS' means any information and materials supplied to IBM by Buyer, as set forth in Attachment B, including, without limitation, software, schematics, netlists, microcode, designs or techniques, as accepted by IBM and utilized in the design of or otherwise incorporated into a Product. 1.4 'ENGINEERING CHANGE' means a mechanical or electrical change to the Product which affects form, fit, function or maintainability. 1.5 'IBM DELIVERABLE ITEMS' means the information, materials and tools supplied to Buyer by IBM, as set forth in Attachment B, including, without limitation, IBM Design Kits, ASIC Tool Kits and Prototype devices. Juniper ASIC Agreement Page 1 of 20 IBM Confidential 08/21/97 1.6 'IBM DESIGN KITS' means any IBM computer aided design software and data (including libraries) provided to Buyer for the purpose of designing or testing ASIC designs, as updated and enhanced from time to time. The term 'IBM Design Kits' includes ASIC Tool Kits. 1.7 'INITIAL ASIC DESIGN REVIEW CHECKLIST' ('IDR') means a report in form and content as regularly used by IBM to make a preliminary assessment of the feasibility of Buyer's proposed Product design. 1.8 'MILESTONES' means completion of the (i) initial design review ('IDR Milestone'), (ii) pre-layout and timing analysis ('RTL Milestone'), and (iii) the release to manufacturing ('RTM Milestone') stages of work. 1.9 'NON-RECURRING ENGINEERING CHARGES' ('NRE CHARGES') means the costs for NRE Services. 1.10 'NON-RECURRING ENGINEERING SERVICES' ('NRE SERVICES') means engineering services provided by IBM to develop Products to be manufactured under this Agreement, which shall include delivery of Prototypes as specified in Attachment C. 1.11 'PRODUCT(S)' means production units of the ASIC product(s) to be sold and purchased under this Agreement as specified in Attachment A and as may be amended by the parties to include additional Products. Products shall not include Prototypes. 1.12 'PRODUCT SPECIFICATIONS' means the specifications for each Product including, without limitation, the post-layout electronic data interchange format ('EDIF') and timing requirements (including clock skew requirements), a statement of post-layout test coverage and I/O placement; as documented in the RTM, expressly or by specific incorporation. 1.13 'PROTOTYPE ACCEPTANCE' means Buyer's written approval that Buyer's Prototype evaluation demonstrates Prototype conformance to Product Specifications. 1.14 'PROTOTYPE DEVICE(S)' OR 'PROTOTYPES' means a preliminary version of a Product which may or may not be functional and which is not suitable for production in commercial quantities. 1.15 'PURCHASE ORDER LEAD TIME' means the required minimum amount of time between IBM's receipt of the Purchase Order issued by Buyer and the requested shipment date necessary to accommodate manufacturing cycle time, as specified in Attachment C. 1.16 'RELEASE TO LAYOUT CHECKLIST' ('RTL') means a performance approval report in form and content as regularly used by IBM to document completion of the pre-layout Level Sensitive Scan Design ('LSSD') and timing analysis milestone of the SOW. 1.17 'RELEASE TO MANUFACTURING CHECKLIST' ('RTM') means a performance approval report in form and content as regularly used by IBM to document the design review milestone at the completion of the post-layout timing analysis. 1.18 'SCHEDULED SHIPMENT DATE' means the date for shipment of Product requested by Buyer in a Purchase Order. 1.19 'SHIPMENT DATE' means the date for shipment of Product requested by Buyer in a Purchase Order. 1.20 'STATEMENT OF WORK' or 'SOW' means a statement of work as set forth in Attachment A that identifies the respective design obligations that the parties agree to complete for the development of particular Products. 2.0 TERM OF AGREEMENT This Agreement shall become effective on the date it is executed by Buyer and IBM (the 'Commencement Date'). The term of this Agreement will begin on the Commencement Date and will be effective for a period of three (3) years after the date of execution (the 'Contract Period'), subject, however, to earlier termination as permitted under Section 13.0. Juniper ASIC Agreement Page 2 of 20 IBM Confidential 08/21/97 3.0 WORK SCOPE 3.1 IBM will provide Buyer with engineering support and assistance and Buyer will provide IBM with the Buyer Deliverable items and cooperate with IBM in the use of IBM Deliverable Items to enable IBM to manufacture Products, in accordance with the SOW. The Products are designed for verification on IBM ASIC tools and to be manufactured by IBM under this Agreement. The terms and conditions by which IBM licenses the IBM Design Kits are exclusively governed by the IBM Design Kit License Agreement, which is hereby incorporated by reference. 3.2 In the event that multiple Products are developed under this Agreement or this Agreement is amended to include other Products, each such Product shall be developed under and subject to a separate SOW, separate development checklist and separate Product pricing. 4.0 ASIC PRODUCT DESIGN 4.1 IBM'S ASIC development checklists shall document the development of each of Buyer's Product design(s). 4.1.1 The IDR will be used to make a preliminary feasibility assessment of each of Buyer's proposed Product design and to advise Buyer of any areas where Buyer's design(s) do not conform to IBM design requirements. 4.1.2 The RTL shall include, expressly or by specific incorporation, the design specifications for each Product required by Buyer to successfully place, route, time and conform to LSSD and provide static timing analysis. The RTL shall also document the fact that such information is available to Buyer and has been communicated to Buyer before each Product netlist is released to layout. Buyer's signature on the RTL shall record Buyer's acknowledgment of satisfactory completion of all work on such Product through such Milestone. 4.1.3 Buyer's signature on the RTM shall record Buyer's acknowledgment of (i) satisfactory completion of all work on such Product through the RTM Milestone and (ii) the specifications to which IBM's warranty obligations, set forth in Section 14.0, apply. To the extent that specifications and test parameters contained in the RTM vary those set forth in the RTL, the specifications contained in the RTM shall govern. 4.1.4 Buyer's signature on the RTL and RTM checklists shall not be unreasonably withheld. 4.2 All Milestone and Prototype delivery schedules are estimates only. 4.3 Any data relating to a Product design that Buyer is to furnish to IBM must be compatible with IBM tools, with which IBM will verify all design and engineering work for conformance to IBM's technology groundrules. 4.4 Buyer may request changes to any Product design during the course of the SOW by submitting a written request to IBM. Upon receipt by IBM of any such request, IBM shall promptly inform Buyer of the effect of the requested change on the SOW including estimated completion of the design work to incorporate any requested changes and applicable price increase(s), if any. IBM may, however, continue work without regard to the requested change until both parties have agreed in writing to adjustment in price and estimated completion date terms, unless Buyer specifically notifies IBM in writing to halt work. 4.5 Buyer may, for the applicable unit price specified in Section 4.0 of Attachment C, order Prototypes in addition to the quantity included in the NRE Charges at any time before five (5) working days prior to RTM signoff. Subject to the RTM signoff and adequate yield from the initial wafer lot, IBM shall use reasonable efforts to deliver such additional Prototypes within two (2) weeks of the estimated delivery date for Prototypes. 4.6 Subject to the terms and conditions of this Agreement, both parties will exercise reasonable diligence in performing the design activities set forth in the SOW for each Product. 4.7 IBM agrees to provide Products to Buyer as requested by Buyer and accepted by IBM subject to the provisions of Section 5.0 and Section 6.0. 4.8 All computer data provided to IBM by Buyer will be free from any virus, worm or other routines that would permit unauthorized access or otherwise harm software, hardware or data. 5.0 PRODUCT DEMAND FORECASTS 5.1 The first Product demand forecast agreed to by Buyer and IBM is set forth in Attachment C. The forecast covers twelve (12) months broken out by Product and month. During the term of this Agreement, Buyer will provide IBM with updated Product demand forecasts on a monthly basis covering a rolling twelve (12) month period (not to extend beyond the Contract Period), which will be reviewed for approval by IBM within ten (10) days of receipt by IBM. Updated forecasts shall be in substantially the same format as the first forecast in Attachment C. Forecasts shall be provided to IBM's Customer Account Representative as identified above. Juniper ASIC Agreement Page 3 of 20 IBM Confidential 08/21/97 Forecasts shall constitute good faith estimates of Buyer's anticipated requirements for Products for the periods indicated based on current market conditions, and IBM's acceptance shall constitute IBM's good faith intention to quote and supply such requirements if requested and ordered by Buyer in accordance with this Section 5.0. Notwithstanding the foregoing, Product demand forecasts accepted by IBM shall not contractually obligate IBM to supply, nor contractually obligate Buyer to purchase, the quantities of units of Product set forth in such forecasts. 5.2 Buyer may request Products that exceed Product demand forecasts previously accepted by IBM. Such requests are subject to rejection by IBM for any reason, including, without limitation, resource availability. 6.0 PURCHASE ORDERS 6.1 Buyer shall order NRE Services by issuing written purchase orders. Purchase orders for NRE Services will be deemed accepted by IBM unless rejected in writing by IBM, specifying the reasons for rejection, within fourteen (14) calendar days after IBM's receipt of such purchase order. 6.2 Buyer shall order Products by issuing written purchase orders. Purchase orders for Products must be received by IBM in advance, with at least the Purchase Order Lead Time specified in Attachment C, to allow IBM to meet Buyer's requested Shipment Date. Requested Shipment Dates will be deemed accepted (subject to the Purchase Order Lead Time) by IBM if the purchase order requesting such Shipment Date is accepted by IBM. If so accepted, a requested Shipment Date shall constitute a Scheduled Shipment Date. Subject to IBM's written acceptance, Buyer may request an improved Scheduled Shipment Date. Such acceptance shall not be unreasonably withheld by IBM. 6.3 Purchase orders for Products will be deemed accepted by IBM unless rejected in writing by IBM, specifying the reasons for rejection, within fourteen (14) calendar days after IBM's receipt of such purchase order. Purchase orders for Products may be rejected by IBM if such purchase order requests a quantity of Products that (i) exceeds the most recent Product demand forecast accepted by IBM or (ii) a Shipment Date IBM deems unacceptable, or (iii) does not comply with the terms and conditions of this Agreement, or if Buyer is in breach of this Agreement. 6.4 Purchase orders issued to IBM shall include the following: 6.4.1 NRE Services and/or Product(s) being ordered; 6.4.2 quantity of units of Product requested (in increments of the minimum ship pack quantity ('SPQ') only); 6.4.3 NRE charges and/or unit price per Attachment C; 6.4.4 billing address; 6.4.5 shipping instructions, including carrier, destination address and requested shipment dates; 6.4.6 reference to this Agreement and Agreement Number. 6.5 This Agreement shall take precedence over and govern in case of any additional, different or conflicting terms and conditions in any purchase order(s) or any other form of either party. Purchase orders and other forms of either party may not vary the terms of this Agreement. Additional, different or conflicting terms and conditions on a purchase order or other form shall be of no effect. 6.6 Notwithstanding any other provision of this Agreement, in the event that IBM's ability to supply the Product is constrained (except as caused by Buyer) for reasons which include, but are not limited to, component availability, and the Scheduled Shipment Date cannot be met, IBM will reduce the quantities of Products to be supplied to Buyer in proportion to the reduction in quantities of products of the same technology or utilizing the same manufacturing process to be supplied to satisfy others. Receipt of such allocated supply and later delivery of all undelivered ordered quantities after the constraint ends shall constitute Buyer's exclusive remedy in the event of such supply constraint. 7.0 PRICING 7.1 Buyer shall pay IBM the NRE Charge applicable to such Product as set forth in Attachment C, as well as other sums for special services as are separately listed or referenced in Attachment C. Juniper ASIC Agreement Page 4 of 20 IBM Confidential 08/21/97 7.2 The unit price for each unit of Product ordered shall be calculated at the time the applicable purchase order is accepted using the Product's Price Quantity Matrix set forth in Attachment C. The quantity used as an input into such Price Quantity Matrix shall be the yearly cumulative quantity of units of a Products determined by the purchase orders accepted by IBM within such calendar year after the Commencement Date, including the units of Product requested in the purchase order that is the subject of such price calculation. 8.0 TITLE AND SHIPMENT 8.1 Title and risk of loss for a Product pass to Buyer when IBM delivers the Product to the carrier. 8.2 Products shall be shipped from the manufacturing location FOB for domestic U.S. destinations and ExWorks (as defined in the 1990 INCO Terms) for international shipments. 8.3 In no event shall IBM be deemed to assume any liability in connection with any shipment, nor shall the carrier be construed as an agent of IBM. 9.0 INVOICING, PAYMENT TERMS, TAXES 9.1 NRE Charges shall accrue and be invoiced on the schedule set forth in Section 2.0 of Attachment C. IBM shall invoice Buyer for all units of Product upon shipment. All payments under this Agreement shall be due [***]. If Buyer's account becomes in arrears or if Buyer exceeds its credit limit with IBM, in addition to any other right under this Agreement, [***] IBM reserves the right to cease development work or stop shipment to Buyer or ship to Buyer on a cash-in-advance basis until Buyer's account is again current. 9.2 IBM reserves a purchase money security interest in Products purchased under this Agreement in the amount of the price and in Buyer's proceeds from the same, including, without limitation, accounts receivable. Purchase money security interests will be satisfied by payment in full. Buyer agrees to execute UCC-1 financing statements or other appropriate documents to be filed in order to perfect IBM's security interest. 9.3 Buyer is responsible for all taxes related to Products except for taxes based on IBM's net income. 9.4 Buyer shall provide IBM with a copy of a valid reseller's exemption certificate for Products purchased for resale for each applicable taxing jurisdiction. Based on such certificate, and where the law permits, IBM will treat Buyer as exempt from applicable state and local sales tax for Products purchased hereunder. Buyer shall notify IBM promptly in writing of any modification or revocation of its exempt status. Buyer shall reimburse IBM for any and all assessments resulting from a refusal by a taxing jurisdiction to recognize any Buyer reseller's exemption certificate, or from Buyer's failure to have a valid reseller's exemption certificate. If Buyer purchases Product under this Agreement for internal use, Buyer agrees to notify IBM and pay applicable sales tax. 10.0 INTEREST ON OVERDUE PAYMENTS Buyer will be liable for interest on any overdue payment under this Agreement, [***] commencing on the date such payment becomes due at an annual rate equal to the maximum legal rate in the jurisdiction where the claim is asserted [***]. 11.0 CANCELLATION CHARGES, RESCHEDULING AND ORDER CHANGE PROVISIONS 11.1 Buyer may cancel a purchase order or any portion thereof upon written notice to IBM. If Buyer cancels a purchase order for NRE Services or Prototypes, or if Buyer unreasonably withholds its signature from the RTL or RTM, IBM will cease further work in connection with the Product and invoice Buyer for the total of all unpaid NRE Charges applicable to the next development Milestone (Section 2.0 of Attachment C), an NRE cancellation charge pursuant to Section 3.0 of Attachment C and the applicable unit price for any canceled Prototype devices that were ordered pursuant to Section 4.5 of this Agreement. For purchase orders for units of Product, if the written notice is less than the Purchase Order Lead Time then a cancellation charge, as specified in Section 9.0 of Attachment C will immediately become due for each canceled unit. *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. Juniper ASIC Agreement Page 5 of 20 IBM Confidential 08/21/97 11.2 For a purchase order for production units which is more than thirty (30) days, but less than the Purchase Order Lead Time, from its Scheduled Shipment Date, Buyer may request in writing a one-time deferral of the Scheduled Shipment Date for not more than ninety (90) days, with no cancellation charge imposed. However, if this purchase order is subsequently deferred or canceled, then the cancellation charge specified in Section 9.0 of Attachment C will be due. 12.0 ENGINEERING CHANGES 12.1 IBM may implement Engineering Changes required to satisfy governmental standards, protect Product, system or data integrity, or for environmental, health or safety reasons ('Mandatory Engineering Changes'). 12.2 For all previously shipped Product not incorporating Mandatory Engineering Changes, IBM may provide replacement Products (including parts, materials and documentation) at the expense of the party at fault. Buyer must use reasonable effort to install Mandatory Engineering Changes on all Buyer installed Products and Products in its inventory. If IBM requests the return of Products displaced by installation of replacement Products, Buyer will promptly return any displaced Products to IBM after installation of such replacement Products, at IBM's expense. 12.3 In addition to Mandatory Engineering Changes, IBM may implement Engineering Changes that result in cost reductions to the Product ('Elective Engineering Changes') with prior approval from Buyer. Such approval shall not be unreasonably withheld. IBM shall give Buyer prompt notice of Elective Engineering Changes. 12.4 IBM may make available other Engineering Changes ('Optional Engineering Changes'). The cost of any Optional Engineering Changes that Buyer desires to implement will be borne by Buyer and will be determined through a request for quote process. 13.0 TERMINATION OF AGREEMENT 13.1 If either party is in material default of a provision of this Agreement and such default is not corrected within (30) days of receipt of written notice, this Agreement may be terminated by the party not in default. 13.1.1 If Buyer terminates due to IBM default, all previously accepted purchase orders shall be automatically without charge to Buyer, except for any specific purchase order(s) that the parties mutually agree not to cancel. 13.1.2 If IBM terminates due to Buyer default at IBM's discretion, all previously accepted purchase orders shall be automatically canceled and adjustment changes and cancellation charges will apply in addition to any other amounts then due. 13.2 Notwithstanding the provisions of Section 13.1, either party shall have the right to terminate this Agreement immediately if: 13.2.1 The other party flies a petition in bankruptcy, undergoes a reorganization pursuant to a petition in bankruptcy, is adjudicated a bankrupt, becomes insolvent, becomes dissolved or liquidated, files a petition for dissolution or liquidation, makes an assignment for benefit of creditors, or has a receiver appointed for its business; or 13.2.2 The other party is subject to property attachment or court injunction or court order which has a substantial negative effect on its ability to fulfill its obligations under this Agreement. 13.3 IBM may terminate this Agreement, or its obligation with respect to specifically affected Products, immediately if: 13.3.1 Buyer unreasonably withholder its consent of IBM to make Elective Engineering Changes under Section 12.0; or 13.3.2 IBM receives a claim or charge, and [***] otherwise has a reasonable basis to believe any time during the term of this Agreement, that any of the Buyer Deliverable items infringe third party intellectual property rights. [***] 13.4 In the event this Agreement is terminated pursuant to Section 13.1.2, 13.2 or 13.3, all amounts due and payable to the non-terminating party as of the date of such termination shall become immediately due and payable. 13.5 Either party may terminate this Agreement without cause upon one (1) year's prior written notice to the other. If Buyer is the terminating party, all previously accepted *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. Juniper ASIC Agreement Page 6 of 20 IBM Confidential 8/21/97 purchase orders will be filed, but IBM shall not be obligated to accept further purchase orders after receiving notice. If IBM is the terminating party, IBM will continue to accept new purchase orders pursuant to Section 6.0 during the notice period. 13.6 All Products shipped against accepted purchase orders will be subject to the terms and conditions of this Agreement notwithstanding any termination or expiration of the term of this Agreement. 14.0 WARRANTIES 14.1 IBM warrants that each unit of Product after delivery will be free from defects in material and workmanship and will conform to the Product Specifications as set forth in the RTM for the applicable period set forth in Attachment C. Delivery to Buyer of each unit of Product is deemed to occur five (5) days after shipment from IBM. Buyer acknowledges that the functionality of Products is contingent upon Buyer's designs and, therefore, the warranty of this Section 14.1 does not apply to the functionality of Products fabricated hereunder. This warranty does not include repair of damage resulting from failure to provide a suitable installation environment, or any use for other than the intended purpose, accident, disaster, neglect, misuse, transportation, alterations, or non-IBM repairs or activities. 14.2 Any unit of Product that fails to conform to the warranty of Section 14.1, while under warranty, may be returned, transportation prepaid by Buyer, to the location IBM designates for repair, replacement or credit, at IBM's discretion. [***] IBM will repair or replace such units or provide a credit to Buyer for the purchase price paid for such units by Buyer. IBM will ship replacement units back to Buyer, transportation prepaid by IBM, and such units of Product will be considered newly delivered for warranty purposes. 14.3 Should any unit of Product returned to IBM hereunder be found by IBM to be free from defects or non-conformities, IBM will return such unit of Product to Buyer transportation prepaid by IBM. Payment for such unit of Product will be due and payable by Buyer upon receipt of the invoice. [***] 14.4 Prototypes provided by IBM under this Agreement are provided on an 'AS IS' basis, without warranty of any kind. 14.5 No course of dealing, course of performance, usage of trade, Product or Prototype description shall be deemed to establish a warranty, express or implied. 14.6 THE FOREGOING WARRANTIES MADE BY IBM ARE EXCLUSIVE AND IN LIEU OF ANY OTHER WARRANTIES FROM IBM, EXPRESS OR IMPLIED INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ANY IMPLIED WARRANTIES OF NON-INFRINGEMENT. 15.0 CONFIDENTIAL INFORMATION All information exchanged under this Agreement will be deemed to be non-confidential. If a party wishes to exchange confidential information, the exchange will be made under the terms of the separate agreement for exchange of confidential information (Agreement Number V0903) as executed between the parties on 4/27/96. 16.0 TRADEMARKS AND TRADE NAMES 16.1 Neither this Agreement, nor the sale of Products hereunder, shall be deemed to give either party any right to use the other party's trademarks or any of the other party's trade names without specific, prior written consent. 17.0 INTELLECTUAL PROPERTY RIGHTS 17.1 Buyer represents, and IBM acknowledges Buyer's representation, that all Buyer Deliverable items for the Products are the property of Buyer. Buyer represents and warrants it is the rightful owner, or authorized licensee (with all requisite rights to sublicense) of the Buyer Deliverable Items and all other designs, information, and materials supplied to IBM hereunder, and that no part of such materials knowingly incorporate or infringe the intellectual property of any third party. 17.2 IBM or its licensors shall retain and have all intellectual property right (including, without limitation, mask work rights) associated with any intellectual property furnished by IBM *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. Juniper ASIC Agreement Page 7 of 20 IBM Confidential in connection with this Agreement, including without limitation, (i) all base array layers, (ii) all IBM-licensed library elements (including, without limitation, any megafunctions or cores), (iii) all design methodologies and tools [***]. To the extent Buyer has access to such intellectual property, Buyer shall use such intellectual property solely for the purpose of designing Prototypes and Products for manufacture pursuant to this Agreement. Buyer hereby conveys to IBM any intellectual property rights it may acquire therein. 17.3 IBM shall own any masks made by IBM using logic data provided by Buyer. IBM will use any tangible netlist tape(s), and tangible GDS II tape(s) received from Buyer or generated exclusively for Buyer hereunder, and any masks made from such GDS II tape(s), only to manufacture Products for sale to Buyer. 17.4 If in the course of performance under this Agreement either party discovers or invents any process, pattern, device or other invention, that party shall be deemed the owner of such discovery or invention. In the event any such invention is jointly discovered or invented by the parties, the parties shall be deemed joint owners of such discovery or invention without any duty of accounting. 17.5 The parties understand and agree that no license or other right is granted herein to either party, directly or by implication, estoppel or otherwise, with respect to any know-how, inventions, patents, trade secrets, copyrights, mask works or other intellectual property rights, except as may be required by IBM to manufacture the Product(s). No additional license or other right, express or implied, shall arise from the consummation of this Agreement, or from any acts, statements or dealings leading to such consummation. 18.0 INTELLECTUAL PROPERTY INDEMNIFICATION 18.1 IBM shall indemnify Buyer from and against any damages finally settled or awarded by a court of competent jurisdiction resulting from any direct infringement of any patents or copyrights of a third party in any country in which IBM sells similar products that expose IBM to similar liabilities as the Product, arising as a result of any of IBM's manufacturing process, equipment or testing, that is not specifically required by Buyer's designs, specifications or instructions. IBM shall defend at its own expense, including attorney's fees, any suit brought against Buyer alleging such infringement. In the event that Buyer becomes enjoined from using Product in its inventory due to such infringement, IBM at its option and expense, will secure for Buyer the right to continue to use and market the Product, or modify or replace the Product with a non-infringing product. If IBM determines that neither of the foregoing alternatives is reasonably available, Buyer may return the Product in Buyer's inventory to IBM for a credit equal to the price paid for the units of Product affected. IBM shall have no obligation regarding any claim based upon modification of the Product by Buyer or its customers, use of the Product in other than its intended operating environment or the combination, operation or use of the product with non-IBM products or equipment. 18.2 Buyer shall indemnify IBM from and against any damages finally settled or awarded by a court of competent jurisdiction resulting from any direct infringement of any patents or copyrights of a third party in any country where Buyer uses or distributes the Product, arising as a result of IBM's compliance with any of Buyer's design, specifications, instructions or modifications of the Product by Buyer and shall defend at its own expense, including attorney's fees, any suit brought against IBM alleging any such infringement. 18.3 The rights provided in Sections 18.1 and 18.2 are contingent upon the parties seeking to enforce indemnification by giving prompt written notice to the indemnifying party regarding any claim, demand or action for which the indemnified party seeks indemnification. The indemnified party is required to fully cooperate with the indemnifying party at the indemnifying party's expense and shall allow the indemnifying party to control the defense or settlement of any such claim, demand or action, including obtaining the written consent of the indemnifying party prior to any settlement proposal or settlement. IBM shall have the right to waive Buyer's obligations under Section 18.2 and provide for its own defense, at IBM's sole discretion and expense, which shall not significantly impact Buyer financially. 18.4 The purchase, receipt or possession of the Product from or through IBM carries no license or immunity, express or implied, under any patent of IBM covering the combination of the Product with other products or the use of any such combination, or under any patent or other intellectual property right of any third party relating to the Product or its combinations with any other products. *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. Juniper ASIC Agreement Page 8 of 20 IBM Confidential 8/21/97 18.5 Except as expressly stated in this Agreement, this Section 18.0 states the entire liability of the parties and their exclusive remedies with respect to infringement and all other warranties against infringement of any intellectual property rights, statutory, express or implied are hereby disclaimed. 19.0 INDEPENDENT PARTIES Each party hereto is an independent contractor and is not an agent of the other party for any purpose whatsoever. Neither party shall make any warranties or representations on the other party's behalf, nor shall it assume or create any other obligations on the other party's behalf. IBM and Buyer agree to indemnify from and against any damages finally awarded by a court of competent jurisdiction resulting from any violation of this Section 19.0. 20.0 LIMITATION OF REMEDIES 20.1 IBM's entire liability and Buyer's exclusive remedy are set forth in this Section: 20.1.1 In all situations involving non-conforming or defective Products furnished under this Agreement as set forth in Section 14.1, Buyer's exclusive remedy is the replacement of the Products or a credit to Buyer of the purchase price paid for such units by Buyer, at IBM's sole discretion. 20.1.2 IBM's liability for actual damages for any cause whatsoever (other than as set forth in Section 20.1.1), shall be limited to the greater of fifty thousand dollars ($50,000) or the applicable unit price for the specific units of Product that caused the damages or that are the subject matter of, or are directly related to, the cause of action. This limitation will apply, except as otherwise stated in this Section, regardless of the form of action, whether in contract or in tort, including negligence. This limitation will not apply to the payment of costs, damages and attorney's fees referred to in Section 18.0. This limitation will also not apply to claims by Buyer for bodily injury or damage to real property or tangible personal property caused by IBM's negligence. [***] 20.1.3 In no event will either party be liable to the other party for any lost profits, lost savings, incidental damages or other consequential damages, even if advised of the possibility of such damages, except as provided in Section 18.0. In addition IBM will not be liable for any claim based on any third-party claim, except as provided in Section 18.0. In no event will IBM be liable for any damages caused by Buyer's failure to perform Buyer's responsibilities. 20.1.4 In addition, IBM shall have no liability when the Products are used in conjunction with (a) any medical implantation or other direct life support applications where malfunction may result in direct physical harm or injury to persons or (b) commercial aviation, nuclear materials, or other ultra-hazardous activities. 21.0 SUBCONTRACT AND ASSIGNMENT 21.1 IBM has the right to subcontract its responsibilities under this Agreement, provided that any subcontractor retained by IBM is obligated in writing to the same obligations as set forth herein with respect to IBM. In the event that IBM does subcontract certain portions of its responsibilities, the term 'employee' as used herein shall be deemed to include such subcontractor and/or its employees. 21.2 Neither party to this Agreement may assign its rights or delegate its duties, in whole or in part, without the prior written consent of the other party, which shall not be unreasonably withheld, except that IBM may assign its rights to payment. Additionally, if the assets or stock of that portion of IBM to which this Agreement pertains hereafter becomes owned or controlled, directly or indirectly, by a third party, IBM may assign its entire right, title and interest in this Agreement to such third party. Any act in derogation of the foregoing will be null and void. 21.3 During the term of this Agreement and for one (1) year thereafter, Buyer shall not solicit any IBM employee who is directly engaged in performing activities under this Agreement to fill out an application for employment; nor shall Buyer solicit the employees of any third party engaged on behalf of IBM in performing activities that are related to this Agreement. *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. Juniper ASIC Agreement Page 9 of 20 IBM Confidential 08/21/97 22.0 COMPETITIVE PRODUCTS AND SERVICES Neither this Agreement nor any activities hereunder will impair any right of IBM or Buyer to design, develop, manufacture, market, service, or otherwise deal in, directly or indirectly, other products or services including those which are competitive with those offered by IBM or Buyer. 23.0 PROMOTIONAL ACTIVITY Press releases and other like publicity, advertising or promotional material which mention the other party by name, this Agreement or any term hereof shall be agreed upon by both parties in writing prior to any release. 24.0 FORCE MAJEURE Except for payments due IBM, neither party shall be in default or liable for any delay or failure of compliance with this Agreement due to an act of nature, public enemy, freight embargo, or other cause if such act of nature, public enemy, freight embargo, or other cause is beyond the control of the non-performing party. A non-performing party shall cure as soon as practicable. 25.0 NOTICES 25.1 All notices shall be in writing and shall be deemed delivered when sent by certified mail return receipt requested. IBM JUNIPER Address Address 1055 Joaquin Road 385 Ravendale Drive Mountain View, CA 94043 Mountain View, CA 94043 Attn: Attn: Archna Nigam/Brian McDonnell Marcel Gani 25.2 Day to day activities under this Agreement will be directed by the Technical Coordinators identified in Attachment A, who will be responsible for maintaining technical liaison between the parties. Either party may change its respective representative designated for receipt of notices, or its Technical Coordinator and their addresses designated for notices by notifying the other party in the same manner as any other notice. 26.0 GENERAL PROVISIONS 26.1 This Agreement may be executed in any number of identical counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument when each party has signed one such counterpart. 26.2 The activities of each party and its employees, agents or representatives while on the other party's premises (including any design center) shall comply with the host company's policies and procedures for such facilities, including security procedures and visitation guidelines. 26.3 Each party will comply with all applicable federal, state and local laws, regulations and ordinances including, without limitation, the regulations of the U.S. Government relating to the export of commodities and technical data insofar as they relate to the activities under this Agreement. Buyer agrees that machines, commodities, and technical data provided under this Agreement are subject to restrictions under the export control laws and regulations of the United States of America, including, without limitation, the U.S. Export Administration Act and the U.S. Export Administration Regulations. Buyer hereby gives its written assurance that neither machines, commodities or technical data provided by IBM under this Agreement, nor the direct product thereof, will be exported, or re-exported, directly or indirectly, to prohibited countries or nationals thereof without first obtaining applicable government approval. Buyer agrees it is responsible for obtaining required government documents and approvals prior to export of any machine, commodity, or technical data. 26.4 This Agreement shall be construed, and the legal relations between the parties hereto shall be determined, in accordance with the substantive laws of the State of New York, without regard to the conflict of laws principles thereof. The parties hereto expressly Juniper ASIC Agreement Page 10 of 20 IBM Confidential waive any right they may have to a jury trial and agree that any proceeding under this Agreement shall be tried by a judge without a jury. 26.5 If any section or subsection of this Agreement is found by competent judicial authority to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of any such section or subsection in every other respect and the remainder of this Agreement shall continue in effect so long as the redacted Agreement still expresses the intent of the parties. If the intent of the parties cannot be preserved, this Agreement shall be either renegotiated or terminated. 26.6 Irrespective of nonpayment, no actions, regardless of form, arising out of this Agreement, may be brought by either party more than two (2) years after the cause of action has arisen 26.7 This Agreement may be modified only by a written amendment signed by persons authorized to do so bind Buyer and IBM. This Agreement shall not be supplemented or modified by any course of dealing, course of performance or trade usage. The term 'this Agreement' as used herein includes any applicable Attachments or future written amendment(s) made in accordance with this Section. 26.8 Failure by either party to insist in any instance on strict conformance by the other to any term of this Agreement or failure by either party to act in the event of a breach will not be construed as a consent to or waiver of any subsequent breach of the same or of any other term contained in this Agreement. 26.9 All obligations and duties which by their nature survive the expiration or termination of this Agreement shall remain in effect beyond any expiration or termination, including, without limitation, Sections 8.0, 9.0, 10.0, 13.6, 14.0, 15.0, 16.0, 17.0, 18.0, 19.0 and 20.0. 26.10 The headings in this Agreement are for convenience only and are not intended to affect the meaning or interpretation of this Agreement. 27.0 SOLE AGREEMENT The parties acknowledge that each has read this Agreement and its Attachments, understands them, and agrees to be bound by their terms and conditions. Further, the parties agree that this Agreement and its Attachments and the IBM Design Kit License Agreement, are the complete and exclusive statement of the agreement between the parties, which supersedes all proposals and all prior agreements, oral or written, and all other communications between the parties relating to the subject matter hereof. Agreed to: Agreed to: INTERNATIONAL BUSINESS JUNIPER NETWORKS MACHINES CORPORATION By: [Illegible] By: /s/ Marcel Gani ------------------------- ------------------------- Authorized Signature Authorized Signature Name Name: Marcel Gani Title Title: Chief Financial Officer Dated: Dated: 8/26/97 -------------------- -------------------- ----------------------------------------------------------------------------- This agreement shall not bind either party to any obligations unless and until it is executed in writing by both parties. Juniper ASIC Agreement Page 11 of 20 IBM Confidential 08/21/97 ATTACHMENT A [***] Juniper ASIC Agreement Page 12 of 20 IBM Confidential] *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 08/21/97 [***] Juniper ASIC Agreement Page 13 of 20 IBM Confidential *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. ATTACHMENT B Deliverable Items [to be customized to the transaction] [***] Juniper ASIC Agreement Page 14 of 20 IBM Confidential *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. ATTACHMENT C [***] Juniper ASIC Agreement Page 15 of 20 IBM Confidential *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. [***] Juniper ASIC Agreement Page 16 of 20 IBM Confidential *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 08/21/97 [***] Juniper ASIC Agreements Page 17 of 20 IBM Confidential *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 08/21/97 [***] *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. Juniper ASIC Agreement Page 18 of 20 IBM Confidential 08/21/97 [***] Juniper ASIC Agreement Page 19 of 20 IBM Confidential *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 8/21/97 [***] Juniper ASIC Agreement Page 20 of 20 IBM Confidential *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.
Agreement for ASIC Design and Purchase of Products - IBM Microelectronics and Juniper Networks
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