EXHIBIT 10.17
AGREEMENT OF PRINCIPAL TERMS
This Agreement of Principal Terms is entered into this 6th day of
February 2002 between Panda Electronics Group Co. Ltd. ("Panda"), a Chinese
corporation whose registered address is 000 Xxxx Xxxxx Xxxxx Xxxx, Xxxxxxx,
Xxxxx 000000 and SpatiaLight Inc. ("SpatiaLight"), a New York corporation having
its principal place of business at 0 Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxx
Xxxxxxxxxx 00000, Xxxxxx Xxxxxx of America (Panda and SpatiaLight are sometimes
referred to individually as a "party" and jointly as the "parties".)
WHEREAS
(a) SpatiaLight is the creator, developer and manufacturer of an active
matrix liquid crystal on silicon microdisplay device having an active matrix of
1280 pixels by 1024 pixels (or 5 by 4 format) or 1280 pixels by 720 pixels (or
16 by 9 format) ("LCOS chip"). When the LCOS chips are fitted onto a light
engine, it may be utilized in display application products such as high
definition televisions and home screen projection systems. As used elsewhere in
this Agreement, the term "Display Unit(s)" refers to three (3) SpatiaLight LCOS
chips fitted onto a light engine designed by SpatiaLight and Fuji Photo Optical
Company ("Fuji") and manufactured by Fuji.
(b) Panda is a leading Chinese electronics manufacturer who intends to
enter the market of LCOS television sets using SpatiaLight's proprietary LCOS
Display Units.
(c) Panda has entered into a full Non-disclosure Agreement with
SpatiaLight dated June 21, 2001 ("Non-disclosure Agreement"), and is fully bound
by the terms and conditions set forth in that Agreement.
(d) SpatiaLight wishes to enter into this Agreement and assist Panda in
developing the Chinese market for LCOS televisions using SpatiaLight's
proprietary technology.
(e) The parties recently had friendly and constructive meetings between
their representatives in China and have recognized that each could benefit in
important ways by working together.
(f) To help further discussions and co-operation, the parties have
agreed to the following principal terms.
NOW, THEREFORE, the parties hereto agree, as follows:
1. Representations: Each of Panda and SpatiaLight, hereby warrants and
represents to the other, as follows:
(a) that it is a legal person validly existing in its jurisdiction of
establishment;
(b) that it has the full power and authority to enter into this
Agreement and perform its contractual obligations; that its representative who
is signing this Agreement has been authorized to do so pursuant to a valid power
of attorney or board of directors' resolution;
2. SpatiaLight will furnish Panda with two (2) prototype Display Units
within 30 days of signing this agreement. Panda will have the use of the
prototype Display Units for a period of 30 days ("Test Period") from the
acknowledged receipt of the Display Units. During the Test Period, Panda will
use its best efforts to develop prototype projection television sets using the
Display Units.
(a) During the Test Period, SpatiaLight will provide technical
assistance to Panda to make and test prototype LCOS televisions using the
Display Units to meet the technical criteria established by Panda and
SpatiaLight, jointly.
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(b) If the prototype LCOS televisions meet the specified technical
criteria at the end of the Test Period, Panda shall enter into a definitive
Purchase Order Agreement with SpatiaLight on mutually agreeable form for an
agreed number of Display Units and negotiated price per unit. The parties
understand that Panda has expressed its intention to manufacture 10,000 LCOS
television sets in calendar 2002. The terms of payment shall be internationally
acceptable methods of payment acceptable to SpatiaLight. The Purchase Order
Agreement shall also provide that Display Units will be delivered to Panda
within 150 days of the receipt of Panda" irrevocable order.
(c) If the prototype LCOS televisions do not meet the specified
technical criteria at the end of the Test Period, Panda shall return the two (2)
prototype Display Units and all confidential technology, data and know-how shall
either be destroyed or kept confidential in accordance with the terms of the
Non-disclosure Agreement.
OTHER ISSUES
In relation to the desire of both Panda and SpatiaLight to develop
their commercial relationship beyond the foregoing the following is also agreed.
3. During the period that SpatiaLight is working with Panda and
providing it with trade secrets, technical and other assistance for the
development of LCOS TVs, Panda, its officers, directors, principals, owners,
employees and agents shall not, directly or indirectly, work with any competitor
of SpatiaLight.
4. The Governing law for this Agreement of Principal Terms shall be
that of the People's Republic of China.
Signed on behalf of Panda Signed on behalf of SpatiaLight
Name: \s\ XXXXX XX NING Name: \s\XXXXXX X. XXXXX
--------------------------- -----------------------------
Xxxxx Xx Ning Xxxxxx X. Xxxxx
Title: Deputy Chief Engineer Title: Chief Executive Officer
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