EXHIBIT 10.28
Strategic Alliance Agreement
TurboChef/Maytag
Schedule No. 2
FIRST EXTENSION of the XXXXXXXXXXX XXXXXXX XXXXXXXX PROJECT RESEARCH AGREEMENT
This First Extension of the XXXXXXXXXXX XXXXXXX XXXXXXXX Project
Research Agreement (XXXX XXXXXXXXXX or the "Agreement") is made and entered into
this 4th day of March 1998, by and between MAYTAG CORPORATION, a Delaware
corporation ("Maytag") and TURBOCHEF, INC. a Delaware corporation ("TurboChef").
WITNESSETH:
WHEREAS, Maytag and TurboChef have entered into that certain Strategic
Alliance Agreement dated September 26th, 1997 (the ""Alliance Agreement"),
pursuant to which the parties agreed to work together in the development and
commercialization of highly innovative products based on leading edge
technologies with respect to heat transfer, thermodynamics and controls; and
WHEREAS, the parties entered into that certain XXXXXXXXXXX XXXXXXX
XXXXXXXX Research Agreement dated September 26, 1997 (XXXXXX) and expiring on
March 26, 1998, pursuant to which the parties conducted research with respect to
a XXXXXXXXXXX XXXXXXX XXXXXXXX for North America; and
WHEREAS, the parties now desire to continue the research and to evaluate
the commercialization of a XXXXXXXXXXX XXXXXXX XXXXXXXX for North America; and
WHEREAS, the parties now desire to set forth this understanding as to the
manner in which the XXXXXXX phase of such XXXXXXXXXXX XXXXXXX XXXXXXXX project
(the "Project") shall be implemented.
NOW, THEREFORE, in consideration of the premises and of the undertakings of
the parties herein contained, the sufficiency whereof being acknowledged by each
of them, the parties hereto hereby agree as follows:
ARTICLE I
FRAMEWORK FOR PROJECT
1.1 Personnel. Maytag and Turbo Chef shall each maintain the team
comprised of qualified persons to participate in the Project on behalf of such
party. Each team will continue to be managed by a project leader appointed by
the respective party. The project leaders shall be responsible for, among other
things, insuring that their respective team members devote sufficient time to
the Project such that the assigned tasks can be accompanied in a timely manner.
During the term of this
Agreement, the two project leaders shall communicate with each other on a
regular basis with respect to the Project and shall meet in person not less than
once per month to evaluate the progress of the Project and to establish Project
milestones.
1.2 Costs. Each party shall be solely responsible for the costs and
expenses incurred by such party in participating in the Project, including,
without limitation, personnel costs and out-of-pocket costs such as travel and
lodging expenses.
ARTICLE II
DUTIES OF THE PARTIES
2.1 Maytag Duties. During the term of this Agreement, Maytag shall
perform the following duties in connection with the Project:
(a) Conduct market research in the United States for the purpose of
determining the most effective methods to commercialize TurboChef's
proprietary cooking technologies for XXXXXXXXXXX customers;
(b) Provide industrial design expertise in connection with the
development of prototypes of products for the XXXXXXXXXXX XXXXXXX market;
(c) Revise the business plan (prepared in connection with the
initial XXXXX agreement dated September 26, 1997), as appropriate to
reflect market research findings with respect to the commercialization of
TurboChef's proprietary cooking technologies in the XXXXXXXXXXX XXXXXXXXX
market;
(d) Maintain a project team comprised of qualified persons, as
determined by Maytag, with the particular expertise required to perform the
tasks contemplated by subparagraphs (a) - (c) hereinabove.
2.2 TurboChef Duties. During the term of this Agreement, TurboChef shall
perform the following duties in connection with the Project:
(a) Provide Maytag with access to all relevant proprietary data with
respect to TurboChef's cooking technologies, including, without limitation,
copies of all current drawings, specifications and patents utilized by
TurboChef in designing and manufacturing its commercial cooking systems;
(b) Design and construct one or more XXXXXXXXXXX XXXXXXX XXXXXXXXX
prototype(s), which accommodate XXXXXXX XXX, XXXX XXXX XXX XXXXXXXXXXXXX
XXXX, design platforms;
(c) Make reasonable best efforts to refine and modify the
prototype(s) of XXXXXXXXXXX XXXXXXX XXXXXXX developed by TurboChef to
respond to the requirements of the XXXXXXXXXXX market as determined by
Maytag's market research;
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(d) Maintain a project team comprised of qualified persons, as
determined by TurboChef, with the particular expertise required to perform
the tasks contemplated by subparagraphs (a) - (c) hereinabove and make
reasonable best efforts to make resources available to meet the objectives
of the Agreement and the milestones established by the project leaders.
ARTICLE III
PROJECT INVESTMENTS
3.1 Maytag Research and Development Fee. In addition to performing the
duties described in Section 2.1 hereof, Maytag hereby agrees to pay to
TurboChef a non-refundable research and development fee in the aggregate amount
of Three Million Six Hundred Thousand Dollars ($3,600,000.00), to underwrite
certain research and development costs associated with the Project. Maytag shall
pay such amount in twelve (12) equal monthly installments of Three Hundred
thousand Dollars ($300,000.00) each. The initial installment shall be due on
April 1, 1998 and each subsequent installment shall be due no later than the
first (1st) day of each month thereafter during the term of this Agreement.
3.2 As contemplated in Section 1.4 of the Alliance Agreement, the parties
intend to negotiate in good faith one or more Commercialization Agreements that
will include the licensing of TurboChef's proprietary cooking technology, and
which will include royalties. In their royalty negotiations, the parties will
take into consideration the factors referenced in Section 1.4 of the Alliance
Agreement, the value of TurboChef's proprietary cooking technologies, and
whether the royalty is for an exclusive or nonexclusive license. While it is
acknowledged that the parties have not yet agreed upon a royalty rate, both
parties do acknowledge that a royalty rate of XX to XXX of the wholesale price
has been discussed as a reasonable target range, subject to the determination of
certain costs, targeted selling prices and projected unit sales volumes. With
regard to minimum annual royalty referenced in Section 3.3 below, the parties
will also take into consideration the projected annual sales volumes of the
products to be commercialized.
3.3 In consideration for Maytag's agreement to pay the non-refundable
research fee set forth in Section 3.1 above, TurboChef hereby grants to Maytag
the exclusive right throughout North America to market, distribute and sell
XXXXXXXXXXX XXXXXXX XXXXXXXXXX which utilize TurboChef proprietary cooking
technologies, subject, however to Maytag meeting minimum annual royalty payments
as mutually agreed, but if Maytag fails to meet the agreed minimum annual
royalty payments, the right shall become nonexclusive. However, in the event the
parties are not able to agree on minimum annual royalty payments, Maytag's
exclusive right throughout North America to market, distribute and sell
XXXXXXXXXXX XXXXXXX XXXXXXXXXX which utilize TurboChef proprietary cooking
technologies shall be limited to a period of two years after the term of this
Agreement at which time it shall become nonexclusive, subject, however, solely
at TurboChef's option, to being converted to a nonexclusive right at any time
during said two-year period by the payment of Five Million One Hundred Thousand
Dollars ($5,100,000.00) to Maytag by TurboChef.
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ARTICLE IV
TERM
The initial term of this Agreement shall be twelve (12) months commencing
on March 27, 1998, unless terminated sooner pursuant to the terms of the
Alliance Agreement or by mutual agreement. At the end of the initial term of
this Agreement the parties may mutually agree to extend this Agreement for any
period. All rights granted under this Agreement shall survive termination of the
Alliance Agreement as provided in Section 3.8 of the Alliance Agreement.
ARTICLE V
EXCLUSIVITY
Except as set forth in this Agreement, during the term of this Agreement,
neither party, nor any of their respective affiliates, whether alone or in
conjunction with any other person, shall in any manner, without the written
consent of the other party, directly, directly or indirectly participate in,
propose or in any other way support, or agree to participate in, propose or
support the development and/or commercialization of a XXXXXXXXXXX XXXXXXX
XXXXXXXXX for sale in North America utilizing TurboChef's technologies and
similar high speed cooking technologies. This excludes any desire Maytag may
have to further develop XXXXXXXXX with a third party, provided the further
development does not include TurboChef technologies without the consent of
TurboChef.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day first above written.
TURBOCHEF: TURBOCHEF:
/s/ Xxxxxx X. XxXxx
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Name: Xxxxxx X. XxXxx
Title: President, CEO
MAYTAG: MAYTAG CORPORATION:
/s/ Xxxx X. Xxxxx
---------------------------------
Name: Xxxx X. Xxxxx
Title: V.P. Strategic Planning
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