EXHIBIT 10.2
PRODUCT DEVELOPMENT AND TECHNOLOGY TRANSFER AGREEMENT
THIS PRODUCT DEVELOPMENT AND TECHNOLOGY TRANSFER AGREEMENT
("Agreement") is made effective as of the 12th day of May, 2000 (the "Effective
Date") between Artesyn North America Inc., a Delaware corporation with an
address of 0000 Xxxxxx Xxxxx Xxxxx, Xxxx Xxxxxxx, Xxxxxxxxx, XXX ("Artesyn"),
and e-Power Co., Ltd., a company organized and existing under the laws of the
Peoples Republic of China ("e-Power") with an address at Building 3, Software
District, Zhi-Jiang Hi-Tech Industrial Zone, Xxxxxxxx 000000, Xxxxxxxx Xxxxxxxx,
Xxxxxx'x Xxxxxxxx of China.
Background
e-Power owns or controls and has the right to grant licenses under
certain technical information and one or more patents and/or patent applications
relating to power supply products.
Artesyn manufactures and sells external power supply products and
desires to obtain licenses to use such technical information and patents and/or
patent applications in the manufacture and sale of external power supply
products.
e-Power is willing to grant such licenses and to use reasonable efforts
to transfer external power supply technologies under such licenses to Artesyn,
with the sincere objective of enabling Artesyn to manufacture the external power
supply products upon the terms set forth in this Agreement.
e-Power and Artesyn view this Agreement as the first step in the
development of a business relationship between the parties.
Accordingly, the parties intending to be legally bound, agree as
follows:
1. Definitions.
1.1 "Patents" shall mean any patent or patent application of e-Power or
under which e-Power has any rights relating to Products, an invention or
improvement of an invention developed for use in the Products, or the
manufacture or use of the Products.
1.2 "Products" shall mean those external power supplies as set forth on
Schedule A, as such schedule is amended from time to time.
1.3 "Technical Information" means information which (a) is in the
possession of e-Power, and (b) is reasonably useful in the development,
production or use of the Products, or any improvement, modification or upgrade
of the Products, including, without limitation product specifications, quality
control specifications, equipment specifications, general specifications, test
data, performance data, operating manuals, brochures, documentation, and patent
applications, if any.
2. Grant of License.
e-Power hereby grants to Artesyn, and any company which directly or
indirectly controls or is controlled by, or is under common control with Artesyn
("Affiliates"), during the term of this Agreement a license under e-Power's
Technical Information and Patents, copyrights, trade secrets, know-how, and
Confidential Information (as defined in Section 9) to manufacture, have
manufactured, use, offer for sale, sell, import, export or otherwise dispose of
the Products as set forth on Schedule A. Artesyn and its Affiliates have no
right to grant sublicenses under the Patents, except to grant (a) to purchasers
of the Products the right to use, resell, offer to resell or import the same,
and (b) to subcontractors the right to make, use, offer for sale, or import the
Products for the sole benefit of Artesyn and its Affiliates and in accordance
with specifications made by or for Artesyn or its Affiliates.
3. Duties and Obligations of e-Power.
3.1 Products. e-Power shall use its best efforts in good faith to
design, develop, build and test the Products in accordance with the projected
schedule set forth in Schedule A. While e-Power has made a good faith estimate
of the time of completion and set up target material costs and dimensions for
each product series, the parties recognize that the nature of power supply
development is such that unforeseen difficulties could cause deviations from the
targets. e-Power shall undertake to use its best efforts to overcome
difficulties and shall consult with Artesyn and obtain Artesyn's approval on any
deviation from the targets.
3.2 Acceptance Criteria. e-Power shall develop each Product to meet
Artesyn's Product Design Qualification Testing and Manufacturing
Verification/Testing and Process Verification (collectively, the "Acceptance
Testing"), as set forth on Annex 1. Should any Product fail the Acceptance
Testing and e-Power fails to fix the problem(s) in a timely manner, Artesyn may
terminate this Agreement and shall have the right to manufacture or subcontract
to a third party to manufacture the Products, provided that Artesyn shall make
development and royalty payments to e-Power as outlined in 13.5 and 13.6.
3.3 Support. During the term of this Agreement, e-Power will dedicate
at least two design engineers in the design and development of high-power
adapters for supporting newly-released Products and the development of
next-generation Products.
3.4 Modified Standard and Custom Products. In the event a sales
opportunity for modified standard products or custom products arises, e-Power
shall provide to Artesyn a quotation (the "Quotation") which shall include
estimates of NREs (as defined in Section 7.3), development costs, unburdened
material costs and labor hours.
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4. Duties and Obligations of Artesyn.
4.1 Assistance. Artesyn shall provide e-Power access to Artesyn's
preferred parts database and support e-Power in sampling, quotation and
procurement of components that are intended for use in the Products. Artesyn
shall also provide support to e-Power in the installation of document processing
and computer-aided design applications compatible with that of Artesyn
("Technical Support"). Artesyn may credit up to $60,000 in expenses for
Technical Support towards its payments for the Products as set forth in
Schedule B.
4.2 Application Support. Artesyn shall provide customer application
support for all Products which it manufactures.
5. Term.
Unless terminated earlier under Sections 3.2 or 13, the term of this
Agreement is seven (7) years, beginning on the Effective Date. This Agreement
will automatically renew for additional successive one (1)-year terms, unless at
least 30 days before the end of the then-current term either party provides
written notice to the other party that it does not want to renew.
6. Development/Marketing/Sales Rights.
6.1 Exclusivity. Artesyn's and its Affiliates' rights under Section 2
shall be exclusive for a period of four years beginning on the Effective Date in
the following territory: North America, Europe, the Caribbean, Hawaii and all
United States territories and protectorates (the "Exclusive Territory").
Artesyn's and its Affiliates' rights under Section 2 shall be nonexclusive for
such four year period in all areas outside of the Exclusive Territory. At the
end of the four year period, all of Artesyn's and its Affiliates' rights under
Section 2 shall be nonexclusive. e-Power shall not sell or license the Products
to other power supply manufacturers or resellers outside the Exclusive Territory
who sell the Products to customers whose end business location is situated in
the Exclusive Territory. e-Power's existing businesses (a 120W, 12V external
switcher developed with Watt Electronics for a US company) before the validity
of this contact are excluded from this right.
6.2 Certain Limitations. Artesyn shall not undertake by itself or in
conjunction with another party to sell goods similar to the Products to compete
with the Products in the Exclusive Territory during the term of this Agreement;
provided, however, that Artesyn may develop, produce and sell the Products or
goods similar to the Products within the Exclusive Territory in the event that
e-Power fails to bring the Products (excluding all next generation Products)
into production within 14 months from the Effective Date. To meet this target
schedule Artesyn will provide timely and diligent support to e-Power in setting
up doc. Process and CAD applications, specification and product review,
manufacturing (including prototype run) support, and component support. Artesyn
reserves the right to invest in developing technologies or goods similar to the
Products for sales outside the Exclusive Territory or for sales to be completed
after the termination of this Agreement.
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6.3 Development. In addition to its rights under Section 2, Artesyn
shall have the right to design modified standard products and custom products
if, in Artesyn's sole discretion, a Quotation from e-Power is unfavorable or
e-Power lacks the resources to support modified standard or custom product
opportunities. In this case, Artesyn shall pay e-Power 70% for modified standard
products and 50% for custom products of the royalty as outlined in Schedule B if
Artesyn's design is based upon e-Power's product platform and/or technology.
6.4 New Opportunities. During the term of this Agreement, Artesyn will
enjoy preferred status with respect to e-Power's new products, technologies and
ownership investment opportunities relating to or arising from the Products.
e-Power will provide Artesyn with reasonable advance notification and
advantageous consideration of such products, technologies and opportunities.
Nothing in this Agreement shall prevent e-Power from accepting business
opportunities in developing external power supplies in other power ranges than
those represented in the Products.
7. Payment for Work.
7.1 Payment Schedules. All payments shall be made in United States
dollars. Payment and royalty fees are as set forth on Schedule B. e-Power shall
not be entitled to any payment or compensation in connection with its engagement
with Artesyn other than as expressly provided herein. Artesyn shall not be
responsible for any charges incurred or time spent as a result of any act or
omission of e-Power which causes testing or manufacturing delays, failures of
Products to meet applicable warranties or specifications, or time spent
correcting errors made in the development of the Products.
7.2 Royalties. All royalties payable as set forth in Schedule B shall
be payable as a percentage of Artesyn's Average Sales Price based on Annual
Volume. For purposes hereof, (a) "Average Sales Price" shall mean the selling
price F.O.B. factory to customers, recognizing that some products are F.O.B.
designation for the applicable royalty period received in respect of each
Product divided by the number of Products invoiced during such period, and (b)
"Annual Volume" shall mean all units of Products invoiced.
7.3 Expenses. Each party shall be responsible for all costs and
expenses incurred by it in the performance of its obligations hereunder except
as otherwise set forth in this Section 7.3. All non-recurring engineering
expenses for modified standard and custom Products ("NREs") received from
customers by Artesyn shall be paid to e-Power by Artesyn. In the event e-Power
incurs NREs that are not reimbursed by customers to Artesyn, Artesyn and e-Power
shall equally share the cost of the NREs. Such costs will be accounted on a
six-month period. Artesyn shall pay for all agency approval fees and regulatory
test costs associated with the design by e-Power and manufacture by Artesyn of a
single-output (18V) non-PFC, 65W external power supply.
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8. Audit Rights.
Each of Artesyn and e-Power shall keep for the duration of this
Agreement and for two years thereafter proper records and books of account
relating to the manufacture and sale of the Products. Once every 6 months, each
party or its designee may inspect the records of the other party to verify
reports and payments. Any such inspection will be conducted, at the inspecting
party's expense, in a manner that does not unreasonably interfere with the
business activities of the other party. After any such audit, Artesyn or
e-Power, as the case may be, shall immediately pay any amount due disclosed by
the audit plus applicable interest. If any such audit reveals overdue payments
or overpayments in excess of 10% of all payments accrued to date, the party
owing such amount shall immediately reimburse the other party for the reasonable
cost of such audit and the party that was owed such amount may conduct another
audit during the same 6-month period.
9. Confidential and Proprietary Information.
(a) Definition. For purposes of this Agreement, "Confidential
Information" means all information, regardless of the format in which it is
provided, of either party, which is provided, disclosed, or developed in
connection with the parties' obligations pursuant to this Agreement, whether or
not such information is marked "Confidential". Confidential Information shall
include, without limitation (i) trade secrets, methodologies, business plans,
supplier lists, customer lists, customer data, cost and price data, marketing
information, software, computer and telecommunications systems, memoranda,
papers, letters, e-mail, notes, plans, documentation, records, and all copies
thereof, relating to the existing or planned business or technology of either
party, and (ii) any Product processes, specifications, or data developed by
e-Power, any personnel, or any subcontractor in connection with this Agreement.
Confidential Information shall not include information that: (a) is, as of the
time of this disclosure or thereafter becomes, available to the public through a
source other than the party receiving such information hereunder (the "Receiving
Party"); (b) was rightfully known to the Receiving Party as of the time of its
disclosure by the party disclosing such information hereunder (the "Disclosing
Party"); (c) is independently developed by the Receiving Party without reference
to the Confidential Information; (d) is subsequently learned from a third party
not under a confidentiality obligation to the Disclosing Party; or, (e) is
required to be disclosed pursuant to subpoena, court order, or government
authority.
(b) Confidentiality Obligations. During the term of this
Agreement, either party may be exposed to Confidential Information of the other
party. Each party agrees not to sell, license, transfer, publish, disclose,
display or otherwise make available to others, or to use any Confidential
Information of the other party except in furtherance of the terms and conditions
of this Agreement and shall only disclose Confidential Information to its
officers, employees, directors, subcontractors or consultants having a need to
know in connection with this Agreement; unless such party first obtains the
prior written consent of the other party, or, as applicable, the owner of such
Confidential Information. Neither party shall make, or permit to be made, any
copies of the other party's Confidential Information, except in connection with
this Agreement. Neither party shall, or shall permit, the removal of any
Confidential Information (or any copy or summary thereof) from such party's
offices or any other location at which the Products are designed, developed or
manufactured. Upon written request by either party, the other party shall
provide a list of its officers, employees, directors, subcontractors or
consultants (if any) that have had or will have access to any Confidential
Information. Each party shall be
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fully responsible for compliance with the confidentiality obligations set forth
herein by each party's officers, employees, directors, subcontractors (if any),
and any breach thereof.
(c) Injunctive Relief. Each party acknowledges that
unauthorized disclosure of any Confidential Information by a Receiving Party
will cause irreparable injury to the Disclosing Party, which injury shall be
inadequately compensable in damages. Accordingly, such Disclosing Party may seek
injunctive relief against the breach or threatened breach of confidentiality
obligations hereunder, in addition to any other legal remedies which may be
available.
10. Product Information, Inventions, Patents.
10.1 Product Information. All information, data and procedures such as
proprietary technical information, know-how, trade secrets, test data and
evaluation results developed, discovered or generated by e-Power during
development, relating to or resulting from the Products shall be owned by
e-Power.
10.2 Product Inventions and Patents. Any patentable or unpatentable
invention, discovery and/or improvement made by e-Power and relating to and
arising from the Products shall be owned by e-Power. e-Power shall have the
right to file patent applications in any country covering such invention and
shall have the exclusive right, title and interest in and to all patents issuing
thereon.
11. Representations and Warranties.
11.1 e-Power Representations and Warranties. e-Power represents and
warrants that:
(a) Authority. e-Power has full authority to execute and to
perform this Agreement in accordance with its terms; the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
do not and will not result in a breach, violation or default or give rise to an
event which, with the giving of notice or the passage of time, or both, would
result in a breach, violation or default of any term or provision of any
judgment or decree or of any other agreement, or other instrument or restriction
to which e-Power is a party or by which e-Power may be bound or affected; and
this Agreement constitutes a valid and binding obligation enforceable against
e-Power in accordance with its terms.
(b) Litigation. There are no actions, suits, proceedings or
investigations (including, without limitation, any purportedly on behalf of
e-Power) pending or, to e-Power's knowledge, threatened against e-Power which
affect or could be expected to affect Artesyn's rights hereunder, whether at law
or in equity or admiralty or before or by any federal, state, municipal
provincial or other governmental department, commission, board, agency, court or
instrumentality, domestic or foreign. There is no basis known to e-Power for any
such action, suit, proceeding or investigation the outcome of which would have a
material adverse effect upon Artesyn's rights hereunder, nor have any inquiries
been made by any governmental agency which might form the basis of any such
action, suit, proceeding or investigation, or which might require e-Power to
undertake a course of action which would involve a material expense.
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(c) Compliance with Law; No Breach of Material Agreements.
e-Power is not in violation of any laws, material governmental orders, rules or
regulations, whether federal, state, provincial or local, to which it is subject
which would adversely affect Artesyn's interests under this Agreement.
(d) Compliance with Specifications. The Products shall meet
and perform in accordance with the Acceptance Testing set forth in Annex 1.
11.2 Artesyn Representations and Warranties. Artesyn represents and
warrants that:
(a) Artesyn has full rights and authority to execute, deliver
and perform its obligations under this Agreement, and that its obligations
hereunder are not in conflict with any obligations of Artesyn to any third
party; and
(b) Artesyn shall comply fully with any regulatory
requirements imposed by any statute, rule, regulation, order or applicable law.
12. Indemnity.
e-Power agrees to indemnify, defend and hold harmless Artesyn and its
officers, directors, employees, agents, successors, and assigns, from any and
all losses and threatened losses arising from, in connection with, or based on
allegations of, any of the following:
(a) e-Power's breach of any representation, warranty or
covenant set forth in this Agreement;
(b) e-Power's breach of its obligations with respect to
Artesyn Confidential Information;
(c) Any claim, demand, charge, action, cause of action, or
other proceeding asserted against Artesyn but resulting from e-Power's
withholding or failure to withhold taxes with respect to e-Power's agents.
In addition, e-Power warrants that to e-Power's best knowledge,
e-Power's design will not infringe any patent, trade secret, copyright, trade
secret, license or other intellectual property or proprietary rights. In the
event of patent infringement litigation, e-Power will work diligently with and
support Artesyn in resolution of said litigation. However, Artesyn will be
responsible for all the legal costs (lawyer fees). If it becomes evident that
e-Power's design does violate certain patents, e-Power will be willing to bear
all the associated legal costs including violation penalties. In the event of
patent infringement litigation, royalty payment to e-Power for all products will
be withheld until resolution of said litigation. If the court judges that
e-Power's design does violate certain patents, the associated legal costs and
penalties will be deducted from the withheld or paid royalty payment upon
resolution of said litigation.
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13. Termination.
13.1 Termination for Breach. In the event of any material breach of
this Agreement by either party and such breach has not been cured within 30 days
after written notice to the defaulting party, or in the event that bankruptcy or
similar proceedings are instituted against a party and have not been withdrawn
within 30 days, the other party has the right at its option (a) to suspend
providing information, Products or performance, if any, called for hereunder to
the defaulting party at any time after the end of such 30 day period for so long
as the defaulting party fails to perform subject to the other party resuming its
performance upon the curing by the defaulting party of its breach, (b) to
terminate this Agreement by giving written notice of termination to the
defaulting party, or (c) to seek a combination of (a) and (b) and also those
remedies available at law or equity as a result of such failure.
13.2 Termination By Mutual Consent. The Parties may mutually terminate
this Agreement at any time by written consent. In reaching mutual consent to
terminate, the Parties shall determine their respective obligations and
liabilities.
13.3 Other Termination Rights. Without limitation of this Article 13,
Artesyn shall have the right to terminate this Agreement pursuant to Section 3.2
(Acceptance Criteria).
13.4 Actions Upon Termination. Upon termination of this Agreement for
any reason, or upon Artesyn's earlier request, e-Power will promptly deliver to
Artesyn and cause any subcontractor to deliver to Artesyn, all papers,
documents, software programs, and other tangible items (including all copies)
constituting Confidential Information in e-Power's possession or under its
control or in the possession or under the control of any subcontractor.
13.5 Payment Upon Termination. Except in the event of Artesyn's
termination for breach pursuant to Section 13.1 above, if Artesyn terminates
this Agreement before final acceptance of all Products, e-Power shall be paid
according to the payment terms set forth on Schedule B for all milestones
completed and accepted by Artesyn up to the date of termination plus the
development expenses prorated in each incomplete milestone.
13.6 Product Right Upon Termination. Upon termination of this Agreement
pursuant to Section 3.2, Artesyn shall pay e-Power 60% of the royalty as
outlined in Schedule B if Artesyn's design is based upon e-Power's product
platform and/or technology.
14. Export Control Laws.
Each of Artesyn and e-Power acknowledge that the license, manufacture
and sale of the Products may be subject to export control laws, regulations
and/or other directives of various countries (collectively, the "Export Control
Laws"). To the extent such Export Control Laws are applicable, each of Artesyn
and e-Power represents and warrants that it will comply fully with all such
applicable Export Control Laws, including any provisions relating to licensing,
reporting or disclosure requirements.
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15. General.
15.1 Force Majeure. Neither e-Power nor Artesyn will be considered in
default of this Agreement to the extent that any delay or failure in the
performance of its obligations results, without its fault or negligence, from
any cause beyond its reasonable control, such as Acts of God, acts of civil or
military authority, embargoes, epidemics, war, riots, insurrections, fires,
explosions, earthquakes, floods, adverse weather conditions, strikes or
lockouts.
15.2 Enforcement of Agreement. If either e-Power or Artesyn is
successful in any suit for damages for breach of this Agreement, or to enforce
this Agreement or to enjoin the other party from violating this Agreement, the
prevailing party will be entitled to recover as part of its damages its
reasonable legal costs and expenses of bringing and maintaining any such suit.
15.3 Assignment. This Agreement shall be binding upon the parties'
respective successors and permitted assigns. Neither party may assign this
Agreement or any of its rights or obligations hereunder without the prior
written consent of the other party, and any such attempted assignment shall be
void; provided, however, either party may assign this Agreement to a successor
to such party's entire business relating to this Agreement without the consent
of the other party. Any assignment of this Agreement by either party shall not
relieve such party of its obligations hereunder.
15.4 Notices. Any notice that may be given, or is required to be given,
under this Agreement, will be in writing and will be delivered personally or
sent by registered first-class mail, telecopier, or courier guaranteeing
overnight delivery, and addressed:
If to Artesyn: Artesyn Technologies, Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
XXX
Attention: Vice President-Standard Engineering
If to e-Power: e-Power Co., Ltd.
Building 3, Software District
Zhi-Jiang Hi-Tech Industrial Zone
Xxxxxxxx 000000, Xxxxxxxx
Xxxxx
Attention: President
All notices shall be deemed to have been duly given: at the time
delivered personally, if personally delivered, five business days after being
deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if
telecopied on a business day, or on the next business day, if telecopied on a
non-business day; and on the next business day if timely delivered to a courier
guaranteeing overnight delivery; provided, however, that the inability to
deliver any notice because of a changed address of which no notice was given, or
rejection or refusal to accept any notice or other communication offered for
delivery, shall be deemed to be receipt of such notice or other communication as
of the date of such inability to deliver or rejection or refusal to accept
delivery.
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15.5 Dispute Resolution Process. The parties to this Agreement will
attempt to settle any dispute, controversy or difference which may arise between
them in connection with this Agreement, or the breach thereof, by friendly
discussions. If and when such dispute, controversy or difference is not settled
by such means, then such disputes, controversies, or differences shall be
finally settled by (a) alternative dispute resolution mechanisms agreed upon by
the parties, or failing such agreement, by (b) arbitration pursuant to the
International Commercial Arbitration Rules of the American Arbitration
Association. The parties agree to be bound by any award issued as a result of
such arbitration and that such award may be enforced by any court of competent
jurisdiction. The place of arbitration shall be New York City, New York and the
arbitration shall be conducted in the English language.
15.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without reference to the
conflicts of law provisions thereof. The sole jurisdiction and venue for any
litigation arising out of this Agreement shall be an appropriate federal or
state court in the State of New York in the city of New York, and the parties
irrevocably consent to the personal jurisdiction of such courts.
15.7 Modifications. No modification, amendment, supplement to or waiver
of this Agreement or any Statement of Work hereunder, or any of their provisions
shall be binding upon the parties hereto unless made in writing and duly signed
by both parties.
15.8 Waiver. A failure of either party to exercise any right provided
for herein, shall not be deemed to be a waiver of any right hereunder.
15.9 Complete Agreement. This Agreement, including all Statements of
Work attached hereto, sets forth the entire understanding of the parties as to
the subject matter therein and may not be modified except in a writing executed
by both parties.
15.10 Severability. In the event any provision of this Agreement or of
any Statement of Work is held to be invalid or otherwise unenforceable, it shall
be adjusted rather than voided, if possible, in order to achieve the intent of
the parties to the extent possible, and the enforceability of remaining
provisions shall be unimpaired.
15.11 Independent Contractor. The relationship of Artesyn and e-Power
is and shall at all times be that of independent contractors, and no agency,
partnership or joint venture is intended or created by this Agreement.
15.12 Language. This Agreement is in the English language only, which
language shall be controlling in all respects. All communications and technical
documentation to be furnished, made or given pursuant to this Agreement or any
Statement of Works shall be in the English language only.
15.13 Remedies. The rights and remedies of the parties as set forth in
this Agreement are not exclusive and are in addition to any other rights and
remedies available to them in law or in equity.
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15.14 Surviving Sections. The following shall survive the termination
of this Agreement: Section 2 Grant of License (subject to royalty payment as
outlined in Section 13.5); Section 8 Audit Rights; Section 9 Confidential and
Proprietary Information, Section 11 Representations and Warranties; Section 12
Indemnity; Section 13.4 Actions Upon Termination; and this Section 15.
15.15 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date written above.
ARTESYN NORTH AMERICA INC. e-POWER CO., LTD.
By: By:
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Xxxxxxx Xxxxxx
Director, Business Development Title:
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