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EXHIBIT 10.12
AGREEMENT
REDACTED
THIS AGREEMENT is made the 11th day of October, 0000
X X X X X X X:
1. MSU (UK) Limited, a United Kingdom Company having its registered
office at Elder House, 525 to 000 Xxxxx Xxxx, Xxxxxxx Xxxxxx Xxxxxx,
XX0 0XX, Xxxxxxx ("MSU") and
2. Mitac Inc., a Republic of China Corporation, having its principal
place of business at 0X, Xx 00, Xxx 0, Xxxx Xxxxx Xxxx, Xxxxxx,
Xxxxxx, Xxxxxxxx of China ("Mitac").
RECITALS
(a) MSU is the owner of the Intellectual Property Rights in the ISP Chip
Set and the Product.
(b) MSU desires to purchase in a fully manufactured form the Product from
Mitac.
(c) Mitac desires to license and MSU agrees to grant a license on a
non-exclusive basis to;
(i) manufacture the Product whether by itself or authorised agents
or on behalf of MSU and to
(ii) distribute the Product on a non-exclusive basis whether by
itself or authorised agents or OEM customers.
(d) The Parties agree to share net revenue from sales of the Product
whether by MSU or its OEM customers or by Mitac or its authorised
agents or OEM customers upon the basis set out in this Agreement.
(e) To facilitate early production of the product by Mitac both parties
agree to complete the further actions contemplated by this Agreement
without delay.
(f) The Parties have agreed to enter into the commitments of this
Agreement and regulate their rights in the manner appearing below.
IT IS AGREED as follows:
1. Interpretation
1.1 "Base Cost" shall mean the cost of manufacture of the Product
according to the xxxx of materials and direct labours and the
overhead direct related to the Product mutually agreed by both
Parties hereto as may be varied from time to time by the Sub
Group. Save for the Royalty set out below neither party shall
attribute any share of its own over head costs to the Base
Cost.
1.2 "Intellectual Property Rights" (IPR's) shall mean industrial
and other rights in the Product and ISP Chip Set including but
not limited to copyright, confidential
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information, patents and the right to apply for patents,
protected designs (whether registered or not) semi conductor
and topography rights and technical know-how.
1.3 "ISP Chip Set" shall mean the MSU proprietary Internet
Services Processor as described in the ISP Chip Set reference
manual.
1.4 "Know-how" shall mean:
1.4.1 Pre-production drawings for the Product;
1.4.2 Layout and other documents for manufacturing
assembling and testing the product
1.4.3 Purchasing specifications for components of the
Product;
1.4.4 Test specifications for manufactured items;
1.4.5 Documents relating to installation, maintenance,
factory operations, data testing and training;
1.4.6 Drawing specifications and information for the
manufacture or procurement of all production tools,
gauges, inspection equipment and accessories required
for the manufacture of the Product;
1.4.7 Specifications of machine tools and accessories
required for the manufacture of the Product together
with written advice on their ordering selection and
procurement;
1.4.8 Technical assistance and training in the
implementation of all of the foregoing in accordance
with an agreed detailed program.
1.5 "Product" shall mean the MSU proprietary Internet Access
Device incorporating the ISP Chip Set and Software.
1.6 "Selling Price" shall mean the notional Selling Price of the
Product mutually agreed by both Parties, after review by the
Sub Group.
1.7 "Software" shall mean MSU proprietary Internet Access Device
software including, Browser, E-Mail, printer driver and
enhancements.
1.8 "The Sub Group" shall mean a Group which unless otherwise
agreed by the parties shall consist of three number
representatives of each Party. The Parties agree that the Sub
Group shall meet at least four number times a year during the
term of this Agreement at a venue to be agreed between the
Parties.
1.8.1 The Sub Group's responsibilities shall be in relation
to:
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*CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
1.8.1.1 The review and determination on an Open Book
manufacturing basis of the Base Cost from
time to time to be determined in the light of
then existing component costs and global
market conditions;
1.8.1.2 The review and determination of the Selling
Price from time to time to be determined in
the light of then existing component costs
and global market conditions.
18.2 The Sub Group shall have a right of access to all
information concerning sourcing and cost of
components used in the manufacture of the Product,
and alternative quotations or quotes regarding
alternative sourcing of components and this decision
shall be made in the light of the then existing
component costs and global market conditions.
1.9 "Open Book Manufacturing" shall mean the manufacture of the
product by Mitac at the Base Cost giving full access to MSU
and/or the Sub Group to all component sourcing quotation and
pricing details.
*CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
1.10 "The Royalty" shall mean the sum of US $ * per unit to be
incorporated into the Base Cost. The Royalty shall be in
relation to software and shall be paid to MSU at the end of
the month in which a unit of the Product is shipped.
1.11 "Technical Information" shall mean technical knowledge and
data specifications of materials and the manufacturing
techniques and other information of a secret and confidential
nature in existence at the date of this Agreement which are
necessary to enable Mitac to manufacture the Product properly
and efficiently in reasonable quantities of a standard and
quality required by this Agreement.
2. Commencement Date and Term
2.1 This Agreement shall be effective upon execution by the
authorised representative of both Parties on the date first
above shown.
2.2 The term of this Agreement shall be for an initial period of
eighteen months from the commencement date and shall renew for
further periods of one year unless three months prior notice
in writing of termination is given by either Party.
3. Grant of License
3.1 MSU hereby grants Mitac a non-exclusive license to make and
have made and/or distribute and sell the Product during the
continuance of this Agreement using for this purpose (but not
further or otherwise) the ISP Chip Set the Software the
Intellectual Property Rights and the Know-How.
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3.2 Engagement by Mitac of component suppliers, manufacturing
sub-contractors and agents who will have access to Technical
Information shall be subject to the prior approval of MSU.
Such approval shall not be unreasonably withheld provided the
provisions of Clause 3.3 herein are complied with.
3.3 Mitac shall ensure that all component suppliers, manufacturing
sub-contractors and agents who will have access to Technical
Information shall enter into direct covenants of
confidentiality with MSU in the form of the Confidentiality
and Trust Agreement set out in Schedule A hereto.
4. Improvements
4.1 It is anticipated that MSU will continue to develop the
Product. Improvements arising from the developments carried
on by MSU shall remain it's exclusive property.
4.2 MSU shall forthwith disclose to Mitac in confidence and in
sufficient detail to allow evaluation, all improvements that
it might develop during the term of this agreement that may
materially enhance the commercial value or potential of the
Product.
4.3 In the event of any MSU improvements being adopted by Mitac in
the manufacture of the Product where royalties or license fees
are payable to third parties, such additional payments shall
be reimbursed to MSU or added to the Base Cost as appropriate.
5. Manufacture (General)
5.1 It is the intention of the Parties that the Product will be
manufactured to the agreed specification by Mitac for the
supply to both Parties and their OEM customers.
5.2 Mitac may sub-contract the whole or any part of the
manufacturing process but always subject to Clause 3.2 and
3.3.
5.3 Suppliers and Subcontractors.
5.3.1 Mitac shall use all necessary efforts to ensure that
any component supplier, sub-contractor or
manufacturing agent with access to the Product, the
ISP Chip Set, the Software, IPR's or Technical
Information will not modify, reverse, engineer,
decompile, and or disassemble the Product.
5.3.2 Mitac shall not mask, modify or suppress any
copyright notices or any other proprietary right
notices. Furthermore Mitac shall not unload, decode,
password any part of the Product or render any part
of the Product to any third party for unauthorised
use or reverse engineering.
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*CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
5.4 Technical Support
5.4.1 MSU shall support Mitac. MSU shall provide technical
support in relation to the Technical Information
* provided that Mitac shall treat such
information as trade secrets and shall not disclose
such information to any third party without prior
written consent of MSU or pursuant to the terms of
clause 3.3 above.
5.4.2 Mitac shall return to MSU all of the Technical
Information provided with all copies or duplicate
documentation on the expiry or termination date of
this Agreement.
*CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
5.4.3 MSU agrees to provide the ISP Chip Set to Mitac
* during the contract period.
6. Manufacture for MSU / OEM customers
6.1 Mitac shall undertake MSU and/or MSU customers reasonable
obligations in relation to quality control.
6.2 Payment and Price.
6.2.1 Mitac shall supply the product to MSU and its OEM
customers finished and packaged FOB Taiwan as defined
by Incoterms 1990 Edition, issued by the
International Chamber of Commerce at the Selling
Price.
6.2.2 Payment. MSU shall make payment for supply of
Product to MSU or its OEM customers by either:
(I) irrevocable letter of credit in favour of
Mitac. Payment shall be made in an amount
for each purchase order which shall be net of
the Royalty and the share of profit referred
to in clause 9.1.1, or;
(ii) where ISP Chip Sets or other components used
in the manufacture of the Product are
supplied by MSU to Mitac, MSU may at it's
option add the costs of the Royalty and MSU's
share of profit referred to in clause 9.1.1
to the invoice for such component supply.
6.2.3 MSU shall pay all taxes relating to Royalty. Mitac
may deduct such taxes from the amount owed to MSU and
pay them to the appropriate tax authority, provided,
however, that Mitac shall promptly secure and deliver
to MSU an official receipt for such taxes withheld or
other documents necessary.
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*CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
7. Confidentiality
7.1 Each Party will enter into a Trust and Confidence Agreement in
the form set out in Schedule A regulating to the fullest
extent allowed by the law the respective responsibilities and
duties of confidentiality governing the ISP Chip Set, the
Software, IPR's, Know-How and Technical Information, the
subject of this Agreement.
7.2 Mitac undertakes to ensure that all employees, suppliers,
sub-contractors, sub-licensees and any other persons or
organizations who it is reasonable to contemplate having
access to the IPR's, Know-How or Technical Information will
covenant directly with MSU in the same terms as the Trust and
Confidence Agreement.
8. Royalty
8.1 MSU shall be paid by Mitac a Royalty of $ * (US) for each
unit of the Product manufactured and shipped.
*CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
8.2 For the avoidance of doubt:
8.2.1 The Royalty shall remain at $* (US) throughout the
term of this Agreement and any extension thereof and
shall be included as one of the costs to be taken
account of by the Sub Group in the calculation of the
Base Cost.
8.2.2 As the Royalty will be included in the Base Cost the
Royalty shall also be payable in relation to orders
of product from MSU and/or its OEM customers.
8.3 Mitac agrees to keep true and accurate records and books of
account containing all the data necessary for the
determination of the Royalty payable under Clause 8.1 which
records and books of account shall upon reasonable notice of
MSU be open at all reasonable times during business hours for
inspection by MSU or an independent accountant selected by MSU
and acceptable to Mitac (which acceptance should not be
unreasonably withheld) for the purpose of verifying the
accuracy of Mitac's report hereunder. MSU shall be solely
responsible for the costs of the accountant unless the
accountant certifies that any reports are inaccurate in any
material respect in which even Mitac shall reimburse MSU for
its costs.
8.4 Mitac shall submit to MSU within fourteen days of the end of
each calendar month a statement setting forth with respect to
its operations hereunder during that period setting out in
particular:
8.4.1 The quantity of Product made;
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*CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION
8.4.2 The quantity of Product shipped;
8.4.3 The sequential serial numbers of all items made or
shipped.
8.5 Mitac agrees to maintain confidential all financial
information received with respect to MSU's operations pursuant
to this Agreement and in particular the sub clauses of this
Clause 8.
9. Division of Profit
9.1 Profit shall be calculated after the deduction of the Base
Cost from the Selling Price. The profit shall be divided as
to MSU * % ( * per cent) Mitac * % ( * per
cent)
*CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
9.2 Inter Parte accounts will be prepared upon a monthly basis by
an international firm of accountants to be nominated and
agreed between the Parties. The calculations shall be
monitored by the Sub-Group.
9.3 The accountants appointed pursuant to Clause 9.2 above shall
certify the payment due by one Party to the other. Such
payments shall be made within fourteen days of the date of the
certificate of the accountants.
9.4 Sales to third parties will be made at a minimum of the
Selling Price. In the event that either party agrees to sales
being made at less than the Selling Price the whole of the
difference between the Selling Price and the lower sale price
then agreed shall be a charge against the share of profit of
the Party that has agreed sales at less than the Selling Price
and its share of profits shall be reduced accordingly unless
otherwise agreed by the other Party in writing.
9.5 Each Party shall use its best endeavours to promote sales of
the Product and to make sure that its OEM customers will have
the Product manufactured in the manner contemplated by this
Agreement.
9.6 MSU contemplate that Mitac may introduce the Product to other
third party companies who may wish to OEM manufacture subject
to license from MSU. Where a license to manufacture is
granted by MSU to such third party company, MSU shall pay to
Mitac a commission calculated at the rate of * % ( * per
cent) of the selling amount for each ISP Chip Set supplied to
such third party.
*CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
10. Marks
10.1 It is anticipated that from time to time the Product will
carry a distinctive xxxx or logo together with an
acknowledgement of MSU design and ownership of rights. Such
marks will be carried on the packaging of the Product.
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*CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
10.2 Mitac shall leave in position and not cover or erase any
notices or other marks (including without limitation details
of patents or trademark or copyright relating to the Product
or its ownership by MSU which MSU may reasonably insist are
placed or fixed to the Product or their packaging supplied
pursuant to this Agreement).
11. MSU Obligations
11.1 MSU shall forthwith supply * :
11.1.1 One engineering prototype sample;
*CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
11.1.2 * samples of its proprietary ISP Chip
Set * for the purposes of the development of
prototypes by Mitac pursuant to Clause 12.1.1 herein.
11.2 MSU will supply at * , assistance in design and supplying
services of one engineer to assist in the setting up of the
manufacturing process.
12. Obligations of Mitac
12.1 Mitac shall:
12.1.1 Develop * prototypes of the product free of
charge as soon as commercially possible.
*CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
12.1.2 Make * of the prototypes available to MSU.
12.2 In consideration of the premises of this Agreement Mitac will
set up at its own cost production of the Product including all
tooling production facilities, packaging and art work.
12.3 Prior to setting up for volume production Mitac will entertain
a commitment to orders from MSU for the first production units
for delivery after two months of receipt of an irrevocable
letter of credit.
12.4 Priority shall be given to the manufacture of MSU orders over
manufacture of Mitac or Mitac's OEM customer orders.
13. Interest
13.1 All sums due from either of the Parties to the other which are
not paid on the due date shall bear interest from day to day
at the annual rate of 1.5% (three per cent) over the current
National Westminster Bank Plc daily base rate with a minimum
of 8% (ten per cent) per annum.
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*CONFIDENTIAL PORTION HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
14. Warranty
14.1 Mitac warrants that the Product hardware will conform to the
agreed specification and will be free from all defects in
material and workmanship for a period of 14 months commencing
from the date of manufacture.
14.2 Provided MSU notifies Mitac promptly in writing of any defect
or nonconformity. Mitac shall, at Mitac's expense, promptly
repair or replace such defective Product in Mitac facilities.
14.3 MSU warrants that the Product's software conform to the
specification contained in the Product's documentation. If
the Product software fails to conform to the specification,
Mitac may report such deviations to MSU in writing, then MSU
shall correct such deviation within thirty (30) days and
update the software for customer at * .
*CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
15. Indemnities
15.1 MSU shall indemnify and hold harmless Mitac against claims,
costs and expenses that Mitac or its OEM customers may incur
in connection with any claim of infringement of the third
party IPR's caused by or arising out of the manufacture,
importation, possession, sale or use of the Product.
15.2 Mitac shall fully indemnify and hold harmless MSU against any
claims or actions brought by third parties against MSU due to
defects in the Product. This indemnity shall include all
costs and expenses of refuting defending or setting any claims
as well as any damage or compensation ordered to any third
party by any Court.
15.3 Mitac shall have no liability for any claim or suit where:
(i) Infringement is primarily attributable to Mitac's
incorporation of MSU supplied designs into the
Product;
(ii) such claim or suit would have been avoided but for
the combination, operation or use of the Product with
devices, parts or software not supplied by Mitac or
its subcontractors;
(iii) such claim or suit would have been avoided but for
the modification or alteration of the Product by MSU
or a third party.
16. Termination
16.1 Notwithstanding the provisions of clause 2, either party may
by notice in writing to the other terminate this Agreement
immediately upon the happening of any one of the following
events:
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If either party shall become bankrupt or be wound up or make
any arrangement or composition with its creditors.
16.2 If Mitac attempts or purports to assign or transfer this
Agreement without MSU's prior written consent.
16.3 If either Party's ability to carry out its obligations
hereunder is prevented or substantially interfered with for
any reason whatsoever (whether or not within the control of
that Party) including without limitation by reason of any
regulation, law, decree or any act of state or other action of
a government.
17. Limitation of Liabilities
17.1 Force Majeure. Neither party shall be liable to the other for
any delay, loss, damage or injury caused by acts of God,
governmental order or regulation, restraining imposed by
governmental action, national strikes, commotion, riots, war,
war like situations, hostilities, governmental disposal,
mobilisation, blockage, embargo, custody, revolution, fire,
earthquake, tornado, explosion, storm, flood or for any other
cause beyond its reasonable control (hereinafter referred to
as Force Majeure).
17.1.1 Notification of such delay arising solely from
circumstances attributable to the Force Majeure shall
be given as soon as possible and followed in writing
to the other party within seven days of the
occurrence of such an event.
17.1.2 Should any failure of performance persist for more
than forty-five days MSU may by written notice to
Mitac forthwith cancel the particular order or part
thereof of effected and such cancellation shall be
without any liability on the part of MSU to pay for
any costs or cancellation charge arising from such
cancellation.
17.2 If any section or sub section of this Agreement is found by
competent authority to be void, voidable, illegal or otherwise
unenforceable, the remaining provisions of this Agreement
shall remain in full force and effect.
17.3 No agency or Partnership. The Parties are not partners or
joint venturers nor is one Party entitled to act as the agent
of the other (unless specifically authorised in writing) nor
shall either Party be liable in respect of any representation,
act or omission of the other Party of whatever nature.
17.4 Whole Agreement. This Agreement contains the whole agreement
between the Parties and supersedes any prior written or oral
agreements between them in relation to its subject matter and
the Parties confirm that they have not entered into this
Agreement on the basis of any representations that are not
expressly incorporated into this Agreement.
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17.5 No Modification. This Agreement may not be modified except by
an instrument in writing signed by both of the Parties or
their duly authorised representatives.
17.6 Survival of Terms. The warranties and indemnities and
obligations of confidentiality contained in this Agreement and
the provision for payment of and accounting in respect of
continuing fees and other sums due to either party under this
Agreement shall survive the termination or expiry of this
Agreement.
17.7 Governing Law. Where either Party has any complaint of the
other under this Agreement it may at it's option commence
proceedings in any Court of competent jurisdiction in either
London or Taipei.
SIGNED /S/ SIGNED /S/
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AUTHORISED REPRESENTATIVE AUTHORISED REPRESENTATIVE
OF MSU (UK) LIMITED OF MITAC INC
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SCHEDULE A
TRUST AND CONFIDENCE AGREEMENT
This Trust and Confidence Agreement is made the Day of 199
BETWEEN
(1) MSU (UK) Limited whose registered office is at Elder House, 526 to 000
Xxxxx Xxxx, Xxxxxxx Xxxxxx Xxxxxx, Xxxxxx Xxxxxxx ("MSU").
(2) a corporation organized under the laws of
whose principal place of business is at
(the "Recipient").
RECITALS
(a) MSU has developed a product for accessing the Internet incorporating
its Proprietary Internet Services Processor, Chip Set, and software
(the "Product") and is the owner of confidential information relating
to the product and of intellectual property rights therein.
(b) To enable the Recipient to evaluate the product with a view to taking
a license to either:
(i) component supply, or;
(ii) manufacture, and/or;
(iii) sell the same
MSU is willing to disclose information relating to the product to the
Recipient under conditions of confidentiality.
OPERATIVE PROVISIONS
1. INTERPRETATION
1.1 For the purposes of this Agreement Proprietary Information
means any and all information which is now or at any time
hereafter in the possession of MSU and which relates to the
Product, including without limitation data, know-how, formula,
processes, designs, photographs, drawings, specifications,
software programs and samples and any other material bearing
or incorporating any information relating to the Product.
2. UNDERTAKINGS OF THE RECIPIENT
2.1 In consideration of MSU disclosing information relating to the
Product to the Recipient, the Recipient hereby undertakes
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2.1.1 to use all Proprietary Information so disclosed
exclusively for the purpose of evaluation or any
license granted in respect of the Product, and;
2.1.2 to maintain confidential or Proprietary Information
that it may require in any manner;
and it will accordingly not directly or indirectly use or
disclose any of the Proprietary Information in whole or in
part save for the purposes of and in accordance with this
Agreement.
3. EXCEPTIONS
3.1 The foregoing restrictions on the Recipient shall not apply to
any Proprietary Information which:
3.1.1 the Recipient can prove by documentary evidence
produced to MSU within 28 days of disclosure that
such Proprietary Information was already in the
possession of the Recipient and at its free disposal
before the disclosure to the Recipient;
3.1.2 is hereafter disclosed to the Recipient without any
obligations of confidence by a third party who has
not derived it directly or indirectly from MSU;
3.1.3 is or becomes generally available to the public in
printed publications in general circulation through
no act or default on the part of the Recipient or the
Recipient's agents or employees.
4. INCLUSIONS
4.1 Without prejudice to the generality of clause 3.1.3
information shall not be deemed to be generally available to
the public by reason only that it is known to only a few of
those people to whom it might be of commercial interest, and a
combination of two or more portions of the Proprietary
Information shall not be deemed to be generally available to
the public by reason only of each separation being so
available.
5. CONFIDENTIALITY MEASURES
5.1 To secure the confidentiality attaching to the Proprietary
Information the Recipient shall:
5.1.1 keep separate all Proprietary Information and all
information generated by the Recipient based thereon
from all documents and other records of the
Recipient;
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5.1.2 keep all documents and other materials bearing or
incorporating any of the Proprietary Information at
the usual place of business of the Recipient, namely
5.1.3 not use, reproduce, transform, or store any of the
Proprietary Information in any externally accessible
computer or electronic information retrieval system
or transmit it in any form or by any means whatsoever
outside of its usual place of business;
5.1.4 allow access to the proprietary exclusively to those
employees of the Recipient who have reasonable need
to see and use it for the purposes of its evaluation
by the Recipient and shall inform each of the said
employees of the confidential nature of the
Proprietary Information and of the obligations on the
Recipient in respect thereof;
5.1.5 wherever reasonably practicable obtain a written
statement from each of its employees having access to
the Proprietary Information undertaking to maintain
the same confidential and shall take such steps as
may be reasonably desirable to enforce such
obligations.
5.1.6 make copies of the Proprietary Information only to
the extent that the same is strictly required for the
purposes of any license granted to the Recipient;
5.1.7 on request of MSU made at any time shall deliver up
to MSU all documents and other material in the
possession custody or control of the Recipient that
bear or incorporate any part of the Proprietary
Information.
6. GOVERNING LAW
6.1 The construction validity and performance of this Agreement
shall be governed by English law.
SIGNED
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SIGNED
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MSU (UK) LIMITED
