Exhibit 10.12
Memorandum of Understanding
between
Integrated Network Corporation
and Celerity Systems, Inc.
April 25, 1996
This Memorandum of Understanding (hereinafter referred to as "MOU") by and
between:
INTEGRATED NETWORK CORPORATION, a company incorporated under the laws of the
state of Delaware USA and having its registered office at 000 Xxxxx 000/000,
Xxxxxxxxxxx, X.X. 00000, XXX (hereinafter referred to as INC).
And:
CELERITY SYSTEMS, INC., a company incorporated under the laws of the state of
Tennessee and having its registered office at 0000 Xxxxxxxxx Xxxx Xxxxx, Xxxxx
000, Xxxxxxxxx, XX 00000 XXX (hereinafter referred to as "Celerity").
Is for the Taiwan Corporation (hereinafter referred to as "IBM Taiwan"),
Computer & Communications Research Laboratories/Industrial Technology Research
Institute (hereinafter referred to as "CCL") Video On Demand Trial, to be
deployed in Taiwan during 1996.
1. Supporting Documentation
This memorandum of understanding incorporates by reference the following
sections of "Statement of Work: IBM Taiwan, Computer & Communications Research
Laboratories/Industrial Technology Research Institute Video On Demand Trial"
dated April 11, 1996 (hereinafter referred to as "SOW"). The following
referenced sections of the SOW apply to this MOU:
Section 2.5 Change Control Procedure
Section 3. Acceptance Criteria
2. Deliverable Items
2.1. All Deliverable Items
The following is a list of all Deliverable Items to be supplied by Celerity to
INC:
---------------------------------------------------------------------------------------------------
Qty Deliverable Item Description US$ Unit US$ Price
Price
---------------------------------------------------------------------------------------------------
1 Video Server Includes hardware, software N/A 450,000
license and documentation (see
Note a. below). Services include
system integration support. (see
Note b below)
---------------------------------------------------------------------------------------------------
200 Topper 3000 Set-top Includes hardware, software 1,500 300,000
Box license, and documentation (see
Note a. below). Services include
system integration support. (see
Note b below).
---------------------------------------------------------------------------------------------------
1 Year One Year Warranty Extended one year warranty from N/A 75,000
the date of acceptance for all the
equipment described above.
---------------------------------------------------------------------------------------------------
1 wk Training Training on the video server at 8,000 8,000
Celerity's facilities in Knoxville
(see Note b below)
---------------------------------------------------------------------------------------------------
Table 1: Celerity Deliverables to INC
---------------------------------------------------------------------------------------------------
Qty Deliverable Item Description US$ Unit US$ Price
(Loaned) Price
---------------------------------------------------------------------------------------------------
10 Topper 3000 Set-top Loaned to INC for integration 1,500 (Price 15,000
Box and testing at INC on or prior to if INC (Price if
sixty (60) days after system cut keeps item INC keeps
over. INC must return these beyond 60 item beyond
Topper 3000s in good working days after 60 days
condition or purchase them at the system after system
indicated price. cutover.) cutover.)
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Table 2: Celerity Loaned Items to INC
---------------------------------------------------------------------------------------------------
Qty Deliverable Item Description US$ Unit US$ Price
(Custom) Price
---------------------------------------------------------------------------------------------------
1 C-gate Board Custom engineering to bring C- 60/Man Hr 40,000
Engineering gate hardware to OS/9 boot and (estimated)
provide documentation. (see Note (See Note c.
c. below) Services include system below).
integration support. (see Note b
below).
---------------------------------------------------------------------------------------------------
6 C-gate Board 6 C-gate hardware boards Celerity's 7,000 est.
Hardware (populated and tested) cost
---------------------------------------------------------------------------------------------------
1 ATM Drivers ATM driver source code and N/A 27,000
documentation. Services include
system integration support. (see
Note b. below).
---------------------------------------------------------------------------------------------------
Table 3. Celerity Custom Items Delivered to INC
2.2. Changes to Deliverable Items
INC shall notify Celerity in writing of any changes to Celerity Deliverable
Items required. Changes to material or software include, but are not limited to,
changes in quantity, features, functionality, or deployment. Celerity will
advise INC in writing of any costs to INC required to make these changes before
actually making these changes.
2.3. Notes to Section 2 Deliverable Items
a. The software referred to in Table 1. above includes MIX, NAV APP, NAV VOD,
and the supporting software platforms for which Celerity owns source code or is
authorized to transfer license to INC. Celerity assumes responsibility for any
Microware software licenses required for any Celerity Deliverable item.
b. INC agrees to reimburse Celerity for all travel, lodging and per diem
expenses for integration, installation, and /or training services conducted
outside of the United States.
c. The rights and ownership of the C-gate hardware and software are owned free
and clear by both INC and Celerity. No warranty is provided by Celerity for
C-gate hardware and software. As of April 22, 1996 Celerity has devoted 448
hours to C-gate engineering. The estimated April 30, 1996 billing for
engineering time will be 488 hours @ $60/hr = $29,280. The estimated C-gate
hardware cost is $7000. See Section 3. Payment Schedule below.
d. INC assumes full responsibility for payment of any penalties assessed or owed
to any party due to failure of INC or Celerity to meet schedule or delivery
dates. Celerity is in no way responsible
for any penalties due to the failure by Celerity or INC to meet schedule or
delivery dates for this project.
3. Payment Terms
INC will pay Celerity US$ for the Deliverable Items according to the schedule
listed below. For the Topper 3000 Payment listed below, Celerity will be paid
through the documentary transferable irrevocable letter of credit issued by IBM
Taiwan to INC. For the final project payment Celerity will be paid immediately
upon receipt of payment by IBM Taiwan to INC.**
Item Description US$ Amount Due Date
Project 15% of the total of Deliverable $151,950 Net due immediately after
Prepayment Items listed in Table 1. above INC is paid by IBM Taiwan
plus $27,000 for ATM driver
source code.
Topper 3000 200 Topper 3000 Set-top boxes. $300,000 Net due immediately after
Payment Shipment of these set-top boxes INC is paid by IBM Taiwan
to INC is to occur 30 days after
INC issues an INC certificate of
acceptance.
Final Project Balance of the total of $408,050 Net due immediately after
Payment Deliverable items listed in INC is paid by IBM Taiwan
Table 1. above.
In addition to the above listed Deliverable Items, the following Custom
Deliverable Items will be delivered to INC under the terms and conditions listed
below:
Item Description US$ Amount Due Date
3rd Party ATM driver source code $27,000 Included in Project
Software prepayment above.
Custom C-gate Board Engineering $60 per Man Billed to INC monthly as
Engineering Hr. $40,000 service is rendered. (Net due
Services estimated within 30 days of monthly
total invoice to INC).
Custom C-gate Hardware (6 populated Celerity's cost Prepayment of $6,000 when
Hardware and tested boards) (Approximately boards are ordered on or
$7000) about April 30, 1996, balance
due within 30 days of
shipment of $7000) boards
from Celerity to INC.
**INC will provide Celerity with an acceptable "Assignment of Funds" instrument
drawn on INC's bank (responsible for collections under the letter of credit from
IBM/Taiwan relating to this contract).
4. Delivery Schedule
Deliverable Item and/or Milestone Delivery Date
NAV APP, NAV VOD Training April 25-26, 1996
Ship Development Station to CCL April 30, 1996
Receive ATM Driver Source Code May 1, 1996 (Assumes payment
by INC no later than April 27,
1996. Any delay in payment
will result in a day-for-day
delay in delivery of the Video
Server).
Ship OS/9 bootable C-gate hardware to INC May 31, 1996 (Assumes receipt of
ATM Driver Source Code -- see
above)
Ship Video Server to INC May 31, 1996 - July 15, 1996 **
Stream data cells from C850 ATM emulator May 31, 1996
memory
Provide 2 loaner Topper 3000 STB hardware May 31, 1996 (See Note 1 below)
only platforms to INC for development
Stream video from C850 ATM emulator memory June 15, 1996
Deliver Site Verification checklist to INC June 18, 1996
Stream video through C850 ATM Module from June 30, 1996
disk
Provide 8 loaner Topper 3000 STBs to INC for June 30, 1996 (See Note 2 below)
integration
Implement alpha VCR control on C850 ATM July 31, 1996
Module
Verify MPEG2 Transport Stream content Estimated date is August 15,
encoding from CCL (see Note 3 below) 1996. (See Note 3 below)
Ship 10 Topper 3000 STBs to INC for testing August 15, 1996 (See Note 2
below)
Ship 180 Topper 3000 STBs to INC No later than 20 weeks from
receipt of Project Prepayment
** Celerity will stage shipments of the Video Server to INC beginning with one
shelf subsystem for integration and the remaining components for integraton by
July 15, 1996.
4.1. Notes to Section 4. Delivery Schedule:
Note 1: These Topper 3000 are hardware only platforms loaned to INC for
development purposes. The Topper 3000 as required for the Taiwan project
requires the ability to connect to the communications gateway C-Gate via
Ethernet and receive 1 process application and program streams. INC will provide
development of the additional below specified items by an INC assigned
developer:
o Ethernet driver instead of E1 for MPEG streaming
o Serial back channel set-top command protocol (SCP) (See Section 6, Note 4)
o Virtual serial port and SCP-Mon for encapsulating XXXXX UpLink protocols
to tunnel through Allendale switch.
o Port Graphics APIs to Topper
Note 2: Early release Topper 3000 hardware platform will support program stream
decode function only.
Note 3: Expected content is MPEG-2 Transport encapsulated Program Stream.
Celerity recommends that content be verified by streaming through the entire
system from Server to STB. Though it is possible to demonstrate decoding at the
component level, such as by decoding MPEG program stream out of memory, Celerity
does not recommend this procedure nor can Celerity guarantee the validity of
content tested with this procedure.
5. Project Management and Quality Assurance
Celerity will designate an individual who will be the contact point for this
project. This designated individual will participate in project review and
reporting.
INC will designate an individual who will be the contact point for this project
and will have the authority to enter into agreements that effect the project.
This designated individual will participate in project review and reporting.
6. Special Notes and Changes to SOW of April 11, 1996
Note 1: Delete reference to "Content Loading Device" in Section 1.3.2.1 Video
Server because the 8mm Tape Drive is included in the System Controller.
Note 2: In Section 1.3.2.1 Video Server change "System Controller...SCO UNIX..."
to "System Controller...Solaris."
Note 3: In Section 1.3.2.1 Video Server change CSB Cable quantities from "3" to
"4" and SCSI
Cable quantities from "3" to "9."
Note 4: In Section 3.5.3 Level 1 Gateway, add that the Xxxxx 0 Xxxxxxx will be
duplicated from Korea Telecom Phase II. All messages will comply with INC
Compatibility Bulletin AL94-003 Issue 2 dated March 29, 1995.
7. Representation/Indemnity
a. Celerity hereby warrants that to its knowledge, after no inquiry, no
Deliverable Items violate or infringe upon any United States or Taiwan Patents,
Copyright or trade secret or any person.
b. INC shall notify Celerity promptly of any claim, action, or suit
against INC arising out of the manufacture, sale, or sublicensing of the
Deliverable items or the alleged infringement by Deliverable Items of any Taiwan
or United States Patents, Copyright, or trade secrets or Copyright of any third
party.
c. Celerity will indemnify INC against and hold INC harmless from any and
all loss, costs damage or liability assessed against INC, or incurred by INC,
arising out of or in connection with any claim that:
(1) Celerity has breached its warrant under section 5 or
(2) Celerity's products incorporate one or more material elements that
constitutes misappropriation of a trade secret from a third party within the
United States or Taiwan provided however, in any event that as a condition of
such indemnity:
(i) that INC notifies Celerity promptly and in writing that any such claim
is threatened or has been brought and in no event more than twenty-one (21) days
after INC receives notice that such claim has been brought,
(ii) that Celerity has the right to assume the defense of such claim, with
counsel selected by Celerity,
(iii) that Celerity shall have the right to settle such claim and/or
procure the right to continue to manufacture and sublicensing of the Deliverable
Items as contemplated hereunder, and/or modify the Deliverable Items in such a
fashion as to eliminate any infringement and misappropriation (without affecting
the capability or performance) and thereby discharge it's obligations hereunder,
(iv) Celerity shall have no obligation hereunder with respect to any
proceeding or claim of infringement based on IBM Taiwan's or INC's modification
of the Deliverable Items provided by Celerity hereunder or the combination,
operation, or use of such Deliverable Items with program(s) and procedures not
furnished by Celerity.
8. Warranty
8.1. Limited Warranty of CELERITY
CELERITY warrants that, after the Acceptance Date and during the Warranty Period
as to each Celerity Deliverable Item, such Celerity Deliverable Item will
conform to the specifications and the documentation in all material respects.
CELERITY does not warrant that use of the Software will be error-free or
uninterrupted or that the Software will meet the needs of INC's Customers. This
warranty does not extend to Deliverable Items or any portion thereof which (i)
has been subject to misuse, accidental or improper installation, maintenance or
application, or (ii) has been modified by persons other than CELERITY. THE
LIMITED WARRANTY SET FORTH IN THIS PARAGRAPH IS IN LIEU OF ALL OTHER WARRANTIES,
WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO THE DELIVERABLE ITEMS, INCLUDING ANY
IMPLIED WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE.
8.2. Limited Remedy
Upon INC's determination that a Deliverable item is not performing in accordance
with the specifications (a "Defect" or "Defects"), INC will provide CELERITY
with an Engineering Notification ("EN") that defines the Defect and contains
sufficient data in a mutually-agreeable form to demonstrate that Defect. Upon
receipt of an EN, CELERITY will at its sole discretion, repair the Deliverable
Item or replace it provided that all such obligation shall terminate at the
earlier of twelve (12) months after Acceptance Date of CELERITY's product or
eighteen (18) months after the date of delivery of Deliverable Items to carrier;
and further provided that INC gives CELERITY prompt written notice of any such
defect and cooperates with CELERITY's investigation and handling of the matter.
In the event CELERITY elects to provide replacement, CELERITY shall not be
obligated to make such replacement prior to the time the defective product has
been returned to its Knoxville manufacturing plant, suitably packed and sent by
reputable carrier. No other returns will be permitted, allowed or credited
without the prior written consent of CELERITY. THE REMEDY DESCRIBED IN THIS
SECTION SHALL BE INC'S SOLE REMEDY FOR ANY PERFORMANCE FAILURE OF THE
DELIVERABLE ITEM. NEITHER CELERITY NOR ITS SUPPLIERS SHALL BE LIABLE FOR ANY
LOSS OF PROFITS, LOSS OF BUSINESS OR GOODWILL, LOSS OF DATA OR USE OF DATA,
INTERRUPTION OF BUSINESS NOR FOR ANY OTHER INDIRECT, SPECIAL, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES OF ANY KIND UNDER OR ARISING OUT OF, OR IN ANY WAY RELATED
TO THIS AGREEMENT, HOWEVER CAUSED, WHETHER FOR BREACH OF WARRANTY, BREACH OR
REPUDIATION OF CONTRACT, TORT, NEGLIGENCE, OR OTHERWISE, EVEN IF CELERITY OR ITS
REPRESENTATIVES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS. NO ACTION,
REGARDLESS OF FORM, ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT MAY BE BROUGHT BY EITHER PARTY MORE THAN TWO (2) YEARS AFTER SUCH
PARTY KNEW OR SHOULD HAVE KNOWN OF THE OCCURRENCE OF THE EVENT(S) WHICH GAVE
RISE TO SUCH ACTION.
9. Warranty Maintenance Service
During installation of the Celerity Deliverable Items and until successful
official cut over of the system, Celerity will provide, at Celerity's cost and
expense, all necessary and appropriate co-active technical support of these
aforementioned Celerity Deliverable Items via telephone as needed to ensure
successful installation. INC agrees to cooperate with all reasonable requests of
Celerity for all on-site support including personnel who can provide on-site
assembly, installation
and service.
Celerity agrees to make available through INC, maintenance service for Celerity
Deliverable Items excluding C-gate Deliverable Items for a total of twelve (12)
months from the date of final acceptance. During such period, Celerity shall
provide maintenance service for Celerity Deliverable Items consisting of
telephone support and dispatching of qualified technical staff upon a reasonable
request by INC as often as reasonably necessary.
In no way will Celerity warrant or provide maintenance service for non-Celerity
Deliverable Items or for C-Gate Deliverable Items.
Following expiration of the Warranty period described in Section 8 of this MOU,
Celerity will make available to IBM Taiwan or INC a Maintenance Service program
consisting of unlimited telephone support during Celerity's normal business
hours and the dispatching of qualified technical staff to customer's site upon a
reasonable request by IBM Taiwan or INC as often as reasonably necessary. For
this maintenance service IBM Taiwan or INC agrees to pay Celerity's reasonable
and customary charges for such service and reasonable out of pocket expenses as
incurred including travel and hotel accommodation for the trips to the
customer's site. The services offered and the charges for this Maintenance
Service program will be determined by Celerity at a later date.
10. Confidential Non-Disclosure Agreement
INC agrees to abide by any previous Non-Disclosure Agreements made with or on
the behalf of Celerity, and in addition agrees to disclose no confidential or
proprietary information pertaining to Celerity and its hardware, software, and
services, including but not limited to customer lists, business relationships,
hardware configurations, architectures, and designs, software and firmware
functions and source code, etc. IBM Taiwan, CCL, or other individual or
organization without prior written permission. All communications from Celerity
to INC by whatever means will be regarded as confidential and proprietary unless
expressly designated non-confidential or non-proprietary by Celerity. INC agrees
to compensate Celerity for any damages, lost revenue, or other injury or
liabilities to Celerity, other companies, organizations, or individuals due to
the transfer by whatever means and for whatever reason to IBM Taiwan or CCL of
any confidential or proprietary information pertaining to Celerity and its
hardware, software, and services.
IN WITNESS WHEREOF, the parties have executed this Memorandum of Understanding
as of the date first above written.
Celerity Systems, Inc. Integrated Network Corporation
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxxxx X. More
-------------------------------- --------------------------------
Xxxxx Xxxxxx 5/2/96 Xxxxxxx X. More 26 April 1996
Vice President, Sales and Marketing Director, Product Line Management
Addendum to the DRAFT
Memorandum of Understanding
between
Integrated Network Corporation
and Celerity Systems, Inc.
April 25, 1996
11. Performance by Celerity
Celerity agrees to provide all Deliverables Items listed in Section 2 of the MOU
no later than April 1, 1997 with exception of Training. These Items will
function as described below:
11.1 Functionality of Deliverable Items
These Deliverable Items will function as described in the table below:
--------------------------------------------------------------------------------
Deliverable Item Functionality
--------------------------------------------------------------------------------
Video Server A) Band width: support for 50 streams @ 3 Mb/s per
stream.
B) Data Transport: ATM virtual channel transport with
single MPEG1 System Stream or MPEG2 Program
Stream.
C) Data Storage: support a hierarchical file system
with network accessibility implemented using RAID
technology.
D) Network interface: ATM-based switch network.
E) Scalability: ability to increase the number of
clients or to change the number of servers.
F) Support virtual VCR functions such as fast
forward, rewind, pause, and play.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Topper 3000 Set-top A) The basic format of the audio presented to the
Boxes set-top box is to be MPEG 1 or MPEG 2 level 1 or
2, no free format or level 3 support.
B) The set-top box must accept and correctly process
MPEG 2 (ISO/IEC 13818-2) Program Stream video
stream data.
C) Synchronization of the audio and video should be
done through MPEG2 Program Stream syntax as
specified in (ISO/IEC 13818-1).
D) There should be at least one graphics plane,
supporting a minimum display resolution of 720
horizontal and 480 vertical (for NTSC). Simple
on/off transparency control must be provided to
allow the combination of graphics data with motion
video (MPEG) data. There should be at least 4
bits/pixel depth (16 colors).
--------------------------------------------------------------------------------
C-gate Board Hardware A) The C-gate hardware board will be OS/9000
bootable.
--------------------------------------------------------------------------------
11.2 Penalties for Failure to Deliver
11.2.1. Penalty Conditions
If Celerity fails to deliver the above listed Deliverable Items functioning as
described above by April 1, 1997, Celerity will pay to INC the Penalty Fee
described in Section 11.2.2 Penalty Fee below. However, Celerity will not be
obligated to pay any Penalty Fees for any delays due to changes in the MOU or
this Addendum to the MOU imposed by INC including, but not limited to,
Deliverable Items, Delivery Schedule, or Functionality of Deliverable Items. In
addition, Celerity will not be obligated to pay any Penalty Fees for any delays
due to weather, acts of God, fire or arson, war or civil disturbance.
11.2.2. Penalty Fee
The penalty fee will equal one hundred twenty-four thousand nine hundred and
fifty US dollars ($124,950), equal to the Project Prepayment less the ATM Driver
source code and documentation.
Page 2
IN WITNESS WHEREOF, the parties have executed this Addendum to the Memorandum of
Understanding as of May 17, 1996,
Celerity Systems, Inc. Integrated Network Corporation
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxxxx X. More
-------------------------------- ------------------------------
Xxxxx Xxxxxx Xxxxxxx X. More
Vice President, Sales and Marketing Director, Product Line Management
Page 3
Addendum to the
Memorandum of Understanding
between
Integrated Network Corporation
and Celerity Systems, Inc.
Amendment Date: December 12, 1996
1. Deliverable Items
1.1 All Deliverable Items
The following is a list of all Deliverable Items to be supplied by Celerity to
INC for the IBM Taiwan/CCL Project:
-----------------------------------------------------------------------------------------------------
Qty Deliverable Item Description US$ Unit US$ Price
Price
-----------------------------------------------------------------------------------------------------
1 Video Server Includes hardware, software license N/A 455,025
and documentation (see Note a.
below). Services include system
integration support. (see Note b below)
-----------------------------------------------------------------------------------------------------
200 Topper 3000 Set-top Box This Deliverable Item will no longer be N/A -0-
provided by Celerity.
-----------------------------------------------------------------------------------------------------
1 Year One Year Warranty Extended one year warranty from the N/A 62,445
date of acceptance for all the equipment
described above.
-----------------------------------------------------------------------------------------------------
1 wk Training Training on the video server at 8,000 8,000
Celerity's facilities in Knoxville
(see Note b below)
-----------------------------------------------------------------------------------------------------
Table 1: Celerity Deliverables to INC
-----------------------------------------------------------------------------------------------------
Qty Deliverable Item Description US$ Unit US$ Price
(Loaned) Price
-----------------------------------------------------------------------------------------------------
10 Topper 3000 Set-top Box This Deliverable Item will no longer be N/A -0-
provided by Celerity.
-----------------------------------------------------------------------------------------------------
Table 2: Celerity Loaned Items to INC
Page 4
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Qty Deliverable Item Description US$ Unit US$ Price
(Custom) Price
------------------------------------------------------------------------------------------------------------
1 NAV-RT Development Environment and Port to 22,000 22,000
------------------------------------------------------------------------------------------------------------
1 C-gate Board Custom engineering to bring C-gate 60/Man Hr 66,500 [40,000
Engineering hardware to OS/9 boot and provide (See Note c. Est + 26,500.]
documentation. (see Note c. below). Below).
Services include system integration
support (see Note b below).
------------------------------------------------------------------------------------------------------------
6 C-gate Board Hardware 6 C-gate hardware boards (populated and Celerity's 7,000 est.
tested) [Note: Ethernet problems to be cost
fixed. INC now requires only four C-gate
hardware boards.]
------------------------------------------------------------------------------------------------------------
1 ATM Drivers ATM driver source code and N/A 27,000 [Paid
documentation. Services include system with
integration support. (see Note b. below). prepayment]
------------------------------------------------------------------------------------------------------------
Table 3. Celerity Custom Items Delivered to INC
1.2. Notes to Section 2 Delivered Items
a. The software referred to in Table 1. above includes MIX, NAV, APP, NAV VOD,
and the supporting software platforms for which Celerity owns source code or it
authorized to transfer license to INC Celerity assumes responsibility for any
Microwave software licenses required for any Celerity Deliverable item.
b. INC agrees to reimburse Celerity for all travel, lodging and per diem
expenses for integration, installation, and/or training services conducted
outside of the United States.
c. The rights and ownership of the C-gate hardware and software are owned free
and clear by both INC and Celerity. No warranty is provided by Celerity for
C-gate hardware and software. The estimated C-gate hardware cost is $7000. See
Section 3. Payment Schedule below.
d. INC assumes full responsibility for payment of any penalties assessed or
owned to any party due to failure of INC or Celerity to meet schedule or
delivery dates. Celerity is in no way responsible for any penalties due to the
failure by Celerity or INC to meet schedule or delivery dates for this project.
Page 5
2. Payment Terms
INC will pay Celerity US$525,470 for the Deliverable Items according to the
schedule listed below. The Topper3000 Payment will no longer apply. Celerity
agrees to cooperate with INC to revise the documentary transferable irrevocable
letter of credit issued by IBM Taiwan to INC to reflect the fact that Celerity
will not be supplying nor will Celerity be paid for Topper3000 set-top boxes.
----------------------------------------------------------------------------------------------------------------------
Item Description US$ Amount Date Due
----------------------------------------------------------------------------------------------------------------------
Project 15% of $833,000 (prior total of $151,950 Previously paid by INC. [Note: 24% of
Prepayment Deliverable Items) plus $27,000 for $525,470, new Deliverable Items total.]
ATM driver source code.
----------------------------------------------------------------------------------------------------------------------
Topper 3000 This Deliverable Item will no longer be -0- N/A
Payment provided by Celerity.
----------------------------------------------------------------------------------------------------------------------
Final Project Balance of the total of Deliverable $373,520 Net due immediately after INC is paid
Payment Items listed in table 1. above. by IBM Taiwan.
----------------------------------------------------------------------------------------------------------------------
In addition to the above listed Deliverable Items, the following Custom
Deliverable Items will be delivered to INC under the terms and conditions listed
below:
----------------------------------------------------------------------------------------------------------------------
Item Description US$ Amount Date Due
----------------------------------------------------------------------------------------------------------------------
3rd Party ATM driver source code. $27,000 Included in Project prepayment above.
Software
-------------------------------------------------------------------------------------------------------
Ethernet Driver: INC did not request or -0- N/A
authorize this engineering. Celerity will
provide to INC as is.
-------------------------------------------------------------------------------------------------------
C-gate Engineering $66,500 INC paid $48,840. Add'l $9,010
payable upon receipt of 4 functional
boards, $9,010 payable after integration.
----------------------------------------------------------------------------------------------------------------------
NAV-RT $22,000 Paid Within 30 Days of INC receiving
final IBM Taiwan payment.
----------------------------------------------------------------------------------------------------------------------
C-gate Hardware $7,000 INC paid $3,478 for 2 boards, bal of
$3,522 upon receipt of 4 functional
boards. Boards currently in INC's
possession will be returned.
----------------------------------------------------------------------------------------------------------------------
Page 6
3. Delivery Schedule
--------------------------------------------------------------------------------
Deliverable Item and/or Milestone Delivery Date
--------------------------------------------------------------------------------
NAVRT development environment for CCL December 13, 1996
--------------------------------------------------------------------------------
Celerity server to arrive at INC November 18, 1996
--------------------------------------------------------------------------------
Celerity to port NAVRT to Tatung a STB December 31, 1996
--------------------------------------------------------------------------------
Celerity to provide sample of menu application December 31, 1996
--------------------------------------------------------------------------------
Celerity server with full VCR functionality December 16, 1996
--------------------------------------------------------------------------------
Freeze hardware and software December 16, 1996
--------------------------------------------------------------------------------
End-to-end system integration at INC November 29 - December 22, 1996
--------------------------------------------------------------------------------
In-house acceptance test (20 STBs, Server) December 20, 1996
--------------------------------------------------------------------------------
Pack and ship 200 STBs and server December 23 - 24, 1996
--------------------------------------------------------------------------------
Installation and integration at NCHC (Taiwan) January 4 - 31, 1997
--------------------------------------------------------------------------------
System acceptance and inspection February 1 - 20, 1997
--------------------------------------------------------------------------------
3.1. Notes to Delivery Schedule:
The delivery schedule and related technical commitments will be amended to
reflect the various interfaces and processes each party will support. These
commitments, taken as a whole, will provide an end to end solution which meets
the requirements described in "Statement of Work: IBM Taiwan, Computer &
Communication Research Laboratories/Industrial Technology Research Institute
Video on Demand Trial" dated April 26, 1996.
Note 3: Expected content is MPEG-2 Transport encapsulated Program Stream.
Celerity recommends that content be verified by streaming through the entire
system from Server to STB. Though it is possible to demonstrate decoding at the
component level, such as by decoding MPEG program stream out of memory, Celerity
does not recommend this procedure nor can Celerity guarantee the validity of
content tested with this procedure.
IN WITNESS WHEREOF, the parties have executed this Memorandum of Understanding
as of the date first above written.
Celerity Systems, Inc. Integrated Network Corporation
By: /s/ Xxxxxxx Xxxxxxxx Date: By: /s/ Authorized Officer Date:
--------------------- -------- ---------------------- --------
Xxxxxxx Xxxxxxxx [Xxx Xxxxx]
Page 7
