EXHIBIT 10.33
DEVELOPMENT, PURCHASE AND
LICENSE AGREEMENT
BETWEEN INFOCUS CORPORATION
AND FUNAI ELECTRIC CO., LTD
This DEVELOPMENT; PURCHASE AND LICENSE AGREEMENT
(hereinafter referred to as the “Agreement”) dated
September 13, 2002, is entered into between FUNAI ELECTRIC
Co., LTD., a Japanese corporation (“FUNAI”), with its
principal place of business at 7-7-1 Nakagaito, Daito, Osaka, and
INFOCUS Corporation (“INFOCUS”), an Oregon corporation
with its principal place of business at 277008 SW Parkway Avenue,
Wilsonville, Oregon 97070, USA.
WHEREAS, 1NFOCUS engages in the business of
developing, producing, marketing and selling projection display
products.
WHEREAS, FUNAI engages in the business of
designing and manufacturing electronic related products.
WHEREAS, INFOCUS and FUNAI mutually agree that
INFOCUS and FUNAI’s business expertise may successfully
produce a low-cost display projector (hereinafter referred to as
the “Product”).
WHEREAS, FUNAI and INFOCUS entered into a
Memorandum of Agreement dated April 3, 2001 (hereinafter
referred to as the “Memorandum”). The Memorandum
requires that FUNAI and 1NFOCUS shall enter into a detailed
agreement as to the subject matter of this Agreement.
WHEREAS, INFOCUS and FUNAI hereby enter into
this Agreement, wherein INFOCUS and FUNAI shall mutually design and
develop the Product, and FUNAI shall exclusively manufacture the
Product on behalf of INFOCUS and INFOCUS shall exclusively market
and sell the Product.
THEREFORE, INFOCUS and FUNAI hereby agree as
follows:
1.
DEVELOPMENT
PROVISIONS
Definitions
The terms used in this Agreement are
defined as follows:
1.1.
“Business Days” shall
mean those days from Monday through Friday, which are not declared
as national holidays in the United States.
1.2.
“Calendar Days” shall
mean all days, Sunday through Saturday, which appear on the
calendar from January 1 through December 31.
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1 .3.
“Defective Product(s)”
shall mean defective Products or Products which are missing
components or accessories.
1.4.
“Delivery Date” shall
mean the date on which the Products shall be delivered to
INFOCUS’s designated F.O.B. Hong Kong delivery point as
specified on INFOCUS purchase orders.
1.5.
“Development Schedule”
shall mean the schedule for the design and development,
manufacturing, testing and qualification of the Products
manufactured by FUNAI. The Development Schedule shall
include a milestone and payment schedule for each purchase
order separately entered into between FUNAI and INFOCUS, that set
forth certain significant events and the payment to be made upon
completion of each event, and that, allow FUNAI and INFOCUS to
evaluate the status of the development of the Products, and to make
payments based on completion and acceptance of key tasks related to
the development of Products.
1.6.
“Engine” shall mean an
optical engine designed based upon the Projector applicable to
front and rear projection application.
1.7.
“FUNAI” shall include
FUNAJ ELECTRIC Co., LTD. and, unless the context otherwise
requires, all of its parent entities and/or its
subsidiaries.
1.8.
FUNAI IP” shall mean all
current and future intellectual property right including, but not
limited to, the know-how listed in Exhibit H, which includes world
wide patents and other patent rights, utility models, copyrights,
mask work rights, trade secrets, designs, equipment, technologies,
processes and inventions associated therewith, trademark, and all
other intellectual property rights and the related documentation or
other tangible expression of FUNAI.
1.9.
“INFOCUS” shall include
INFOCUS Corporation and, unless the context otherwise requires, all
of its parent entities and/or its subsidiaries.
1.10.
“INFOCUS IP” shall mean
all current and future intellectual property right including the
know how listed in Exhibit C, which includes world wide patents and
other patent rights, utility models, copyrights, mask work rights,
trade secrets, designs, equipment, technologies, processes and
inventions associated therewith, trademark, and all other
intellectual property rights and the related documentation or other
tangible expression of INFOCUS.
1.11. “IT” shall mean information
technology shared by FUNAI and INFOCUS as an operating
model.
1.12.
“Lead Time” shall mean
the term for manufacturing the Long Lead Time Products including
ocean shipping described in Exhibit F.
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1.13.
“Licensed Product(s)”
shall mean a Television or Engine incorporating the Products or any
device under INFOCUS IP.
1.14.
Long Lead Time Components”
shall mean the Components which FUNAI needs to purchase over forty
five (45) days plus purchasing order schedule as listed in
Exhibit F
1.15.
“Materials” shall mean
the materials for the Products which are prepared by FUNAI in order
to meet INFOCUS’s purchase orders and/or
forecasts.
1.16.
“Milestone” shall mean
the Product Development Milestone Schedule listed in Exhibit D
entitled “Development Milestone Schedule” attached to
this Agreement.
1.17.
“Net Selling Price of Licensed
Product” shall mean the fair market value of internal
transfers and/or sales of Licensed Products and the total of all
prices at which all customers were billed for Licensed Product in
the usual course of business including all packing materials,
boxes, cartons, and crates, thereof and less returns, discounts,
shipping costs, duties and excise, discounts, use and value added
taxes, and similar taxes levied in respect to such
sales.
1.18.
“New Product Introduction
Schedules” shall mean support activity by FUNAI for the
Product launch described as a part of Product Specification,
incorporated herein as Exhibit A
1.19.
“OEM Product” shall mean
a Projector and Engine which bear a third party’s
logo.
1.20.
“Pilot Production
Samples” shall mean the pilot samples of Products
manufactured by FUNAI after obtaining INFOCUS approval.
1.21.
“Product and Process
Documentation” shall mean documentation provided by INFOCUS,
or developed by FUNAI to be used to manufacture the Products
including: BOM (Bill of materials), AVL (Approved vendors
list), engineering, design, and assembly drawings, line layouts,
process documentation, quality and inspection plans, test
processes, packaging requirements..
1.22.
“Product(s)” shall mean
the Engine and Projector collectively.
1.23.
“Production Tooling”
shall mean tools, dies, jigs, equipment and other tools for
manufacturing the Products paid by INFOCUS and loaned to
FUNAI.
1.24.
“Product Inspection”
shall mean the inspection of process controls, test yields,
End-of-Line inspection (EOL) and Out-of-Box inspection (OOB)
concerning the Products as provided in Quality Plan.
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1.25.
“Product Specification”
shall mean the specification for the Products described in detail
in Exhibit A. Product Specification shall include, but is not
limited to, the Product performances and requirement
specifications, Product quality and agency requirements, New
Product Introduction Schedules and shipping
configurations.
1.26.
“Projector” shall mean a
complete projector unit for the market for Front Projector with the
Engine.
1.27.
“Quality Plan” shall
include all documentation, systems, equipment, data collection,
reports, processes and procedures necessary to manufacture, inspect
.and verify the Products’ conformance to Product
Specification and to deliver and service the Products including,
but not limited to, IQA (Incoming quality audit) inspection and ECO
(Engineering change order) control of material. Basic quality
criteria shall based on AQL (Acceptance quality level) of >/=
0.64% per mil standard 105.
1.28.
“Service Parts” shall
mean Products or parts of Products, which FUNAI agrees to use
and/or sell to INFOCUS for the purpose of providing service for the
Products as provided for in Exhibit I.
1.29.
“Supporting Documents”
shall mean the documents which support the development,
procurement, manufacture, testing, packaging, and preparation for
shipment of the Products by FUNAI. Supporting Documents shall
include, but not limited to, Product and Process Documentation,
documentation and information for Quality Plan that support Product
Specifications including, but not limited to, First Customer Ship
checklist and dock-to-stock (DTS) approval process.
1.30.
“Television” shall mean
a rear screen projection television incorporating an
Engine.
2.
PURPOSE AND EXCLUSIVE
RELATIONSHIP
2.1.
Purpose . FUNAI and INFOCUS shall mutually develop the
Products based on certain designs developed by INFOCUS. Upon
successful qualification of Pilot Production Samples, FUNAI shall
manufacture the Products on behalf of INFOCUS, and INFOCUS shall
purchase the Products, Service Parts and related accessories from
FUNAI.
2.2.
Exclusivity and Geographical
Scope of FUNAI Sales .
The terms of the Exclusivity Agreement, effective June 1, 2001
(hereinafter referred to as the “Exclusivity
Agreement”), are hereby incorporated into and made part of
this Agreement by reference as Exhibit B. FUNAI shall not
sell, directly or indirectly, any Televisions incorporating Engines
to any third party in the People’s Republic of
China.
2.3.
Exclusivity
. In the event that FUNAI terminates
this Agreement without cause or INFOCUS terminates this Agreement
for breach of this Agreement by FUNAI pursuant
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to this Agreement, the exclusivity defined in
the Exclusivity Agreement shall continue uninterrupted in
accordance with the terms and conditions of Exclusivity
Agreement.
3.
DEVELOPMENT.
3.1.
INFOCUS IP.
INFOCUS has delivered INFOCUS
IP to FUNAI. INFOCUS IP includes the basic optical design for
the Product, and FUNAI has delivered FUNAI IP for purposes of this
Agreement.
3.2.
Development
. Using INFOCUS IP and FUNAI
IP, INFOCUS and FUNAI shall jointly develop the Products in
accordance with the Product Specification, which shall be mutually
agreed to by INFOCUS and FUNAI according to Exhibit A. Each
party shall use its good faith effort and due diligence for the
development of the Product.
3.3.
Change of Product
Specification. If
INFOCUS proposes in writing a change to the Product Specification,
FUNAI shall attempt in good faith to implement such change.
In the event the said proposed change increases FUNAI’S
development costs of the Products or requires a modification to the
Development Schedule, INFOCUS and FUNAI shall mutually agree in
good faith for adjustment of the development costs and fees payable
by INFOCUS to FUNAI and of the schedule for development.
Any dispute arising out of this Section shall be subject
to arbitration under Section 28.16 herein.
3.4.
Ownership.
(a)
Ownership by FUNAI.
FUNAI shall own all right,
title, and interest in the FUNAI IP and any derivatives,
improvements or modifications thereof, and all intellectual
property rights therein excluding the INFOCUS IP (hereinafter
referred to as the “FUNAI Property” collectively).
INFOCUS shall execute such documents, render such assistance, and
take such other action as FUNAI may reasonably request, at
FUNAI’s expense, to apply for, register, perfect, confirm,
and protect FUNAI’s rights to the FUNAI Property.
(b)
Ownership by INFOCUS.
INFOCUS shall own all right,
title, and interest in the INFOCUS IP and any derivatives;
improvements or modifications thereof and all intellectual property
rights therein, excluding the FUNAI Property. FUNAI shall
execute such documents, render such assistance, and take such other
action as INFOCUS may reasonably request, at INFOCUS expense, to
apply for, register, perfect, confirm, and protect INFOCUS’
rights to the INFOCUS IP.
4.
PILOT PRODUCTION
SAMPLES
4.1.
Pilot Production
Samples. FUNAI
shall deliver the Pilot Production Samples with required inspection
data to INFOCUS quality department to test whether, in
INFOCUS’s reasonable opinion, the Pilot Production Samples
conforms to the Product Specification and Product and Process
Documentation. INFOCUS shall provide FUNAI with a written
notice specifying reasonable reasons for rejecting Pilot
Production
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Samples within twenty (20) days from the date
that INFOCUS refuses to accept the Pilot Product Samples.
Pilot Production units shall be covered by INFOCUS NRE
(defined herein below in Section 7.1) as agreed herein without
further charge from FUNAI.
4.2.
Corrected Pilot Production
Samples. FUNAI
shall use commercially reasonable efforts to promptly redeliver the
corrected Pilot Production Samples to INFOCUS for acceptance
testing pursuant to the process described in Section 4.1.
above.
5.
COOPERATION BETWEEN
PARTIES
5.1.
FUNAI’s
Cooperation . FUNAI
shall provide INFOCUS with incoming inspection and obtain
certificate of compliance when it is appropriate for INFOCUS to
ensure that parts strictly, conforming to the component
specification, are used to manufacture Products for
INFOCUS.
5.2.
INFOCUS’
Cooperation .
INFOCUS shall sell certain key components including, but not
limited to, Engine components to FUNAI. Special terms,
conditions and responsibilities for consigned materials, if any,
are described in the “Consigned Material Terms,” of
Exhibit E hereof.
5.3.
FUNAI Capacity and
Resources . FUNAI
shall secure and maintain sufficient facility, equipment, qualified
assemblers, technicians and management to comply with all terms and
conditions in the Agreement. FUNAI shall reasonably support
INFOCUS’ Product marketing in the areas of technical support
on design for manufacturability, testability, agency documentation,
compliance, quality control, sustaining engineering and project
management support according to the New Product Introduction
Schedule as provided in Exhibit D. If FUNAI provide any
Product support activities not described in the New Product
Introduction Schedule pursuant to INFOCUS’ request,
INFOCUS shall pay additional fees and costs charges for such
activity by FUNAI.
5.4. Cooperative Operation. The
relationship between INFOCUS and FUNAI shall be based on good faith
cooperation and due diligence. Both INFOCUS and FUNAI shall
appoint one or more program managers for each project activity to
function as a commercial and technical liaison to the other party.
As stated in intervals reflected in the Milestones, or more
frequently as needed, INFOCUS and FUNAI shall confer regarding the
progress, and each party shall report to the other regarding
technical details and the progress of the Development
Schedule.
5.5.
Process and System
Cooperation. FUNAI
and INFOCUS shall develop a shared operating model including, but
not limited to, cross-company processes in the areas of:
project management, procurement, order management,
manufacturing operations, logistics, quality control, Product and
Process Documentation, ECO control, service operations and
information technology.
5.6.
IT Systems Support.
FUNAI and INFOCUS shall timely
communicate with each other with reasonable frequency sufficient to
meet the requirements of the
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relationship established herein, through
English-language, web-enabled system logic links of specific IT and
databases including, but not limited to, quality, shop floor
control systems, Product and Process Documentation, ECO control
systems and inventory and order management systems. FUNAI and
INFOCUS shall conform to the most productive use of IT to ensure
the security of intellectual property owned by FUNAI and/or INFOCUS
and/or communicated externally to/from FUNAI and/or INFOCUS, and to
provide the service support as agreed herein.
5.7.
Performance Measures.
FUNAI and INFOCUS may track
and measure the overall performance of the other party. FUNAI
and INFOCUS shall discuss mutual performance and corrective or
remedial actions at periodic business reviews. Key
performance indicators and targets include, but not limited to,
measures of quality, flexibility, delivery and costs.
5.8.
Development and Manufacturing
Deliverables. Deliverable items in the Product and
Process Development phase for each Product shall include all items
necessary for INFOCUS to evaluate the process of the Product
Specification including, but not limited to, feasibility reports
and design studies, analysis of specifications and creation of
designs or modification to existing designs, creation of CAD design
files, drawings, assembly and test Product and Process
Documentation and bills of materials, fabrication and procurement
of tooling, equipment and assembly and test fixtures, and delivery
of engineering Prototypes and Pilot Production Samples. FUNAI
shall maintain all manufacturing processes, Product inspection and
test documentation and software and make available to INFOCUS as
requested for all times during this Agreement and one year from the
date of termination of this Agreement.
6.
FUNAI’S
PERFORMANCE
6.1.
Development Schedule.
FUNAI shall, in a competent
and professional manner; satisfactorily complete performance of all
tasks listed in each Development Schedule and shall adhere to
the development deadlines and delivery dates set forth in the
attached Development Schedule. INFOCUS shall fully cooperate
with FUNAI to support FUNAI’s compliance with Development
Schedule.
7. PAYMENT FOR DEVELOPMENT COSTS
7.1.
Non-Recurring Engineering Fees
and Capital Equipment spending. In consideration for FUNAI’s timely
and complete performance pursuant to the Product Specification,
this Agreement and other written requirements in the Development
Schedule (hereinafter referred to as the “Development
Tasks”), *
*Certain information on this page has been
omitted and filed separately with the Commission.
Confidential treatment has been requested with respect to the
omitted portions.
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7.2.
Scope of INFOCUS Support.
INFOCUS shall, at
its expense, support FUNAI’s development and production of
Product by performing the following tasks:
a.
Reasonable support of FUNAI in
developing supplier relationships for the
Products.
b.
Reasonable technical
support
c.
Minimal sustaining
support.
FUNAI shall pay INFOCUS a reasonable fee for any
support beyond the specific foregoing support, if requested by
FUNAI in writing and with the amount of the fee for such support
determined by prior written agreement.
7.3.
Expenses . Each party shall bear their own expenses
necessary to comply with the Agreement except those expressly
provided in this Agreement or Milestone and expressly agreed in
writing.
8.
MILESTONE
8.1.
Fulfillment of
Milestone . In the
event that FUNAI fails to meet all requirements in Milestone
Exhibit D, INFOCUS may fulfill such requirements. INFOCUS and
FUNAI shall agree regarding the projected costs for such
fulfillment. NRE may be reduced by reasonable amounts
corresponding to the costs incurred by INFOCUS in assuming
FUNAI’s obligations. Any dispute arising out of this
Section shall be subject to arbitration under
Section 28.16 herein.
8.2.
Change of Schedule
. In the event that FUNAI is
unable to satisfactorily complete any of the tasks listed in the
Milestone or Development Schedule, INFOCUS and FUNAI shall discuss
the task completion problem in good faith with the intent of
correcting the problem and proceeding with development. If FUNAI
still is unable to fulfill the task and INFOCUS is not reasonably
able to perform the task on FUNAI’s behalf, then INFOCUS
shall have the right to terminate the Product project associated
with the missed task without further payment to FUNAI.
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CAPITAL EQUIPMENT
9.1.
Capital Equipment
. FUNAI shall pay for and
maintain its facilities, upgrades, and common materials, common
hardware, common tooling, and common equipment including, but not
limited to, jigs and dies, and software. *
9.2
Production Tooling
. * INFOCUS may
request to return, or transfer to a third party the foregoing
Production Tooling and items at INFOCUS’ expense. In
the event that such return or transfer is not requested by INFOCUS
as a result of FUNAI’s breach of this Agreement, and such
return or transfer prevents FUNAI from delivering Products ordered
by INFOCUS under this Agreement, then INFOCUS shall compensate
FUNAI as provided in Sections 12.8 and 12.9 hereof. FUNAI
shall not lease, sell or transfer Production Tooling to a third
party without a written consent of INFOCUS.
* Certain information on this page has been
omitted and filed separately with the Commission.
Confidential treatment has been requested with respect to the
omitted portions.
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9.3.
Maintenance.
FUNAI shall provide
maintenance, calibration, and repair of all Production Tooling
scheduled by a separate agreement between FUNAI and INFOCUS, with
detailed description of costs.
9.4. Location . FUNAI shall
reasonably notify INFOCUS regarding the storage location of
Production Tooling. FUNAI shall not change location without a
prior consent of INFOCUS.
9.5.
Export/Import
. FUNAI shall obtain any and
all export/import licenses and duty and sales tax exemptions to
import/export the Production Tooling into and from the
People’s Republic of China during the term of and after
termination of this Agreement.
10.
PRODUCTION
10.1.
Product Conformance
. All Products and Projector
delivered by FUNAI to INFOCUS pursuant to this Agreement shall be
in conformance in all material ways with the Product Specifications
and Product and Process Documentation. The Products shall be
tested and processed in accordance with the Quality
Plan.
10.2.
Design Verification.
INFOCUS shall verify that all
phases and aspects of the Product design and development meet
Product Specification and Milestone in writing within [ ]
days from the date that INFOCUS receives the Product.
10.3.
Supplier Relationships and
Responsibilities .
FUNAI shall be responsible for all aspects of supplier
management of the Products including DLP TM chip sets
and software. INFOCUS shall provide reasonable support for
development of FUNAI’s supplier relationships.
10.4
INFOCUS Rights to Procure
Components for INFOCUS’ Assembly of Product
. Upon INFOCUS’ request
and FUNAI’s consent, which shall not be unreasonably
withheld, INFOCUS shall have the right to assemble the Product in
other locations, either by itself or using third parties, including
the right for, INFOCUS or INFOCUS’ designee to source Product
components directly from FUNAI or FUNAI’s suppliers for
Product assembly and sale. Pricing for such components shall
include any actual cost paid by FUNAI for obtaining, preparing and
delivering such components to INFOCUS or the designee. At
this time, FUNAI agrees that INFOCUS has the foregoing rights for
manufacturing in Brazil and for Products sold to the United States
Government through GSA.
11.
SUPPORTING
DOCUMENTS
11.1.
Supporting Documents
. INFOCUS shall provide FUNAI
with Supporting Documents and supporting documents for Supporting
Documents in the form of hard copy and/or electric format on or
before the schedule described in Exhibit D.
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11.2.
Manufacturing Process.
INFOCUS and FUNAI shall
mutually agree regarding FUNAI’s manufacturing process
relevant to this Agreement.
11.3.
Access to FUNAI’s
Data. INFOCUS and
FUNAI shall agree in a separate writing that INFOCUS may have
access to FUNAI’s process and quality data via an
English-language web site, enabled electronic access and
communications such as the internet concerning the Product, as well
as other records pertaining to the Product as mutually agreed by
INFOCUS and FUNAI. 1NFOCUS and FUNAI shall further agree that
the process and quality data format and content of materials set
forth in this Section in a separate writing.
11.4.
Quality Plan.
FUNAI shall prepare a Quality
Plan for each Product according to a mutual agreement with INFOCUS
prior to an initial shipment of the Product.
11.5.
Maintenance of Supporting
Documents. FUNAI
and INFOCUS shall maintain and revise Supporting Documents and
Quality Plan according to procedures that conform to ISO9000
requirements at both FUNAI and INFOCUS facilities.
12.
PURCHASE
PROVISIONS
12.1.
Purchase . INFOCUS shall purchase the Projector
from FUNAI pursuant to the schedule mutually agreed by both
parties.
12.2.
Exclusivity
. FUNAI shall manufacture
INFOCUS’s product, commonly known as “Tsunami”
for INFOCUS on an exclusive basis. Specifications and description
of “Tsunami” are attached herewith as Exhibit J.
From time to time, on or after the date of this Agreement,
FUNAI and INFOCUS may agree in writing regarding additional
Products that FUNAI shall exclusively manufacture on behalf of
INFOCUS. INFOCUS shall have exclusive worldwide marketing and
sales rights for the Products manufactured by FUNAI.
12.3.
OEM Products
. INFOCUS shall have the right
to sell OEM Products. INFOCUS shall notify FUNAI of
reasonable modifications concerning indication of the third
party’s logo required for any OEM Product. FUNAI shall
make the best effort to implement such modifications and
manufacture OEM Products under the terms of and conditions of this
Agreement. INFOCUS shall bear any increase in direct material
and/or manufacturing costs, related to OEM Products.
12.4.
Purchase Order
. INFOCUS shall submit
purchase orders for Products, three (3) months prior to the
requested delivery date at destination (“Delivery
Date”). The Purchase Order shall include the following
information concerning Products: (a) description of the Products;
(b) quantity; (c) prices of the Products; d) Delivery Date; and (e)
delivery point. No purchase order is binding before it is
confirmed in writing by FUNAI; however, FUNAI shall confirm all
INFOCUS Purchase Orders issued in compliance with this
Agreement.
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12.5.
Forecast of Purchase.
INFOCUS shall provide FUNAI
with non-binding forecasts of expected purchases for future three
months on a rolling basis and by the end of each month.
However, any and all Long Lead Time components listed in
Exhibit F, purchased or ordered to be purchased
