CONFIDENTIAL TREATMENT REQUESTED
LCOS SUPPLY AGREEMENT
("Agreement")
Dated as of: July 1, 2004 (the "Effective Date")
THE SELLER: SPATIALIGHT, INC., a
New York corporation
(hereinafter referred to as "SpatiaLight") [*]
Address: 5 Hamilton Landing, Suite 100, Novato, CA 94949,
U.S.A.
Tel: (415)883-1693 Fax:
(415)883-3363
THE PURCHASER: LG ELECTRONICS
INC., an enterprise of the Republic of Korea
(hereinafter referred to as "LGE")
Address: 20 Youido-Dong Yeongdeungpo-Gu, Seoul, Republic of
Korea
Tel: 82-2-3777-1114 Fax:
82-2-3777-5150
WHEREAS,
SpatiaLight is the
creator, developer and
manufacturer and
the
owner of all right,
title and interest in
and to SpatiaLight's
active matrix
liquid crystal on silicon
("LCoS") microdisplay
device having an
active matrix
of 1920 pixels by 1080 pixels
("LCoS Chip"),
and when three (3)
LCoS Chips are
fitted onto a light
engine, they may be used in display
application
products
such as high definition
televisions and home screen projection systems.
WHEREAS,
LGE is a leading Korean electronics manufacturer that intends
to
enter the global market for LCoS televisions ("LCoS Televisions") using
SpatiaLight LCoS Sets (as hereinafter defined) fitted onto a light engine
of
LGE's design and manufacture
("LG Light Engine").
WHEREAS,
SpatiaLight
specially developed its LCoS Sets for use in
LGE's
LCoS televisions (16 by 9 aspect ratio) pursuant to a Memorandum of
Understanding entered into on May 12, 2003, between the parties hereto,
providing for the parties to
work jointly in developing the LCoS Sets.
WHEREAS,
LGE and SpatiaLight entered into a mutual Non-Disclosure
Agreement dated May 12, 2003
("Non-Disclosure
Agreement") and the parties agree
to continue to be fully bound by the terms and
conditions
set forth in
that
Non-Disclosure
Agreement.
WHEREAS,
LGE desires to
purchase LCoS Sets from SpatiaLight pursuant to
and subject to the terms and
conditions set forth herein.
NOW,
THEREFORE,
in consideration of the mutual
covenants and agreements
contained herein and for
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
[*] Represents redacted
information - confidential treatment requested.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
1.
REPRESENTATIONS
Each of
SpatiaLight and LGE hereby warrants and represents to the other
as
follows:
1.1. That
it is a legal person
validly existing in
its jurisdiction
of
establishment; and
1.2. 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 duly authorized to do so pursuant to a
valid power of
attorney, board of directors' resolution or other valid corporate action
effecting the
same.
2. PRODUCT
PURCHASES
LGE agrees
to purchase from
SpatiaLight, in
accordance with the
prices,
quantities, dates and other
terms and conditions set forth herein, sets of three
(3) SpatiaLight LCoS Chips
combined with necessary SpatiaLight Analog ASICs
and
a Flex and Mount Set (as
hereinafter defined), which form a SpatiaLight LCoS Set
("LCoS Set").
3. DELIVERY DATES OF
PRODUCTS
3.1.
Initial
Deliveries
SpatiaLight shall
deliver a total of one
hundred twenty (120) sets of
three (3) trial production LCoS Chips (which shall not include a SpatiaLight
Analog ASIC) (the "Qualification Sets") to LGE by September 30, 2004 (the
"Qualification Date") and one hundred (100) sets
of three (3) trial
production
LCoS Chips (which shall include a SpatiaLight Analog ASIC) ("Pre-Production
Sets") by November
30, 2004, according to the following delivery schedule;
provided, however, that either party may, in its sole
discretion,
elect to
change any or all of the
delivery dates set forth in this
Section 3.1 by not
greater than thirty (30) days sooner or
later than such
delivery dates as
set
forth in this Section
3.1.
--------------------------------------------------------------------
Month
Quantity
--------------------------------------------------------------------
July 2004
20 Qualification Sets
--------------------------------------------------------------------
September 2004
100 Qualification Sets
--------------------------------------------------------------------
November 2004
100 Pre-Production Sets
--------------------------------------------------------------------
3.2.
Subsequent Deliveries
of LCoS Sets
Subsequent
deliveries of SpatiaLight LCoS Sets shall be made in
accordance
with the rolling commitment schedule set forth in Section 6 of
this
Agreement
for each month of January
2005 through December 2006.
-2-
[*] Represents redacted
information - confidential treatment requested.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
3.3.
Trial Light Engine
Deliveries
LGE shall
deliver to SpatiaLight
twenty-five (25) trial
Fitted LGE Light
Engines (as hereinafter defined) in November 2004. The LCoS Sets to be
incorporated into such trial Fitted LGE Light Engines shall be delivered by
SpatiaLight to LGE in October
2004 and shall be in addition to the Qualification
Sets and Pre-Production Sets.
The purchase price for each trial Fitted LGE Light
Engine shall be determined by the parties at a
later date; provided,
however,
that such purchase
price shall not exceed
$3,000 (not including the cost of the
LCoS Sets). It is hereby agreed that such twenty-five (25) trial Fitted LGE
Light Engines [*] and
therefore [*] that SpatiaLight [*].
4. TERM
The
term of this
Agreement shall commence on the Effective Date and
terminate on December
31, 2006, subject to LGE's right to cancel
set forth in
Section 5 hereof and
subject further to early termination by mutual written
consent and agreement as set
forth in Section 11.1 hereof.
5. QUALIFICATION AND
RIGHT OF CANCELLATION
5.1. LGE's
obligations to purchase LCoS Sets under this Agreement shall
be
expressly conditioned upon the Qualification Sets meeting LGE's Final
Specifications set forth in Exhibit 1 hereto.
LGE shall have until
October 31,
2004 (the "Determination
Date"; and the Effective Date through the Determination
Date, the "Qualification
Period") to perform
final qualification
tests on
the
Qualification Sets. In the event that the Qualification Sets meet the Final
Specifications, LGE shall give written notice
thereof to
SpatiaLight
and LGE
shall be required to purchase
from SpatiaLight the
LCoS Sets in accordance with
all of the provisions of this Agreement. In the event that the Qualification
Sets do not meet the agreed
upon Final Specifications, LGE may cancel this
Agreement by providing
written notice to
SpatiaLight not later than October 31,
2004 ("Notice of Cancellation"). If LGE does not provide a Notice of
Cancellation, the Qualification Sets shall be considered to meet the Final
Specifications and LGE shall be required to
purchase and
SpatiaLight shall
be
required to sell the LCoS
Sets in accordance
with all of the provisions of this
Agreement. SpatiaLight and LGE agree to work together to
the extent
necessary
during the Qualification
Period to assure that the Qualification Sets meet LGE's
Final Specifications. LGE may elect, in its sole discretion, to change the
Determination Date by not
greater than thirty (30) days sooner or later than the
Determination Date set forth
in this Section 5.1.
5.2. LGE
shall remain fully
responsible
for all of its
obligations
to
SpatiaLight under this Agreement through the end of the
Qualification
Period
regardless of whether it
gives Notice of Cancellation.
6. CONTRACTUAL
OBLIGATIONS
Following
the Qualification Period and in the event that there is no
Notice of Cancellation,
LGE hereby covenants
and agrees to purchase SpatiaLight
LCoS Sets pursuant to this
Agreement as follows:
6.1. From
January 2005 through June 2005, LGE shall purchase SpatiaLight
LCoS Sets according to the
following schedule (the "Commitment Schedule"), and
such Commitment Schedule shall be updated for each of the
months of July 2005
through December 2006 according to the terms and
conditions of Section 6.3 and
Section 6.4 (if applicable)
below:
-3-
[*] Represents redacted
information - confidential treatment requested.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Minimum Monthly
Monthly Purchase
Commitment
Price Per
LCoS Set
Price Commitment
Month
(Quantity of LCoS Sets)
(United States Dollars) (United States
Dollars)
------------------------------------------------------------------------------------------------------------
<S>
<C>
<C>
<C>
January 2005
2,000
[*]
[*]
------------------------------------------------------------------------------------------------------------
February 2005
2,000
[*]
[*]
------------------------------------------------------------------------------------------------------------
March 2005
2,000
[*]
[*]
------------------------------------------------------------------------------------------------------------
April 2005
5,000
[*]
[*]
------------------------------------------------------------------------------------------------------------
May 2005
5,000
[*]
[*]
------------------------------------------------------------------------------------------------------------
June 2005
5,000
[*]
[*]
------------------------------------------------------------------------------------------------------------
</TABLE>
6.2. From
July 2005 through
December 2005,
LGE forecasts that it will
purchase SpatiaLight LCoS Sets at the
agreed upon purchase price and quantities
set forth in the following
schedule (the "Forecast Schedule"). LGE is not bound
to purchase and SpatiaLight
is not bound to sell the quantities of LCoS Sets set
forth in the Forecast
Schedule:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Monthly Forecast
Monthly Forecast
Price Per LCoS Set
Purchase Price
Month
(Quantity of LCoS Sets)
(United States Dollars) (United States
Dollars)
------------------------------------------------------------------------------------------------------------
<S>
<C>
<C>
<C>
July 2005
10,000
[*]
[*]
------------------------------------------------------------------------------------------------------------
August 2005
10,000
[*]
[*]
------------------------------------------------------------------------------------------------------------
September 2005
10,000
[*]
[*]
------------------------------------------------------------------------------------------------------------
October 2005
10,000
[*]
[*]
------------------------------------------------------------------------------------------------------------
November 2005
10,000
[*]
[*]
------------------------------------------------------------------------------------------------------------
December 2005
10,000
[*]
[*]
------------------------------------------------------------------------------------------------------------
</TABLE>
6.3.
Commencing
on January
1, 2005, on the first day of each month
of
delivery set forth in this Section 6, LGE shall be required to update the
Commitment Schedule for the calendar
month six months in
advance of such month
and LGE shall be required to
update the non-binding
Forecast Schedule for the
calendar month twelve months
in advance of such month (i.e., on January 1, 2005,
LGE shall provide its monthly LCoS Set quantity commitment for July 2005 and
shall provide its monthly
non-binding
demand forecast for January 2006).
All
such updated commitments
required under this
Section 6.3 shall be fully binding
upon LGE. All updated
commitments
required under this Section 6.3 and
Section
6.4 (if applicable)
hereof shall be sent
by LGE to SpatiaLight via facsimile or
email.
6.4.
Commencing on June 20,
2005, the parties shall use their mutual best
efforts and cooperation to negotiate and agree
upon the purchase
prices of the
LCoS Sets scheduled for
delivery pursuant to this Agreement between January 2006
and December 2006. In the event that the parties shall not have agreed in
writing with respect to the
second delivery year
purchase prices for
LCoS Sets
by September 20, 2005, by the
terms of this
Agreement the terms and conditions
of Section 11 hereof
shall then take effect. In such event, commencing on
October 1, 2005, on the first day of each month of
delivery set forth in this
Section 6, LGE shall continue
to be required to update the Commitment Schedule
for the calendar month six
(6) months in advance of such month (i.e., on October
1, 2005, LGE shall provide its monthly LCoS
Set quantity
commitment for
April
2006); provided, that LGE's commitment for each
such delivery month shall be in
accordance with the terms and conditions of Section 11 and the
other terms and
conditions of this Agreement.
All such updated
commitments required
under this
Section 6.4 shall be fully
binding upon LGE.
-4-
[*] Represents redacted
information - confidential treatment requested.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
7. PRICE PER SPATIALIGHT
LCOS SET
7.1. LGE
agrees to pay
SpatiaLight the
purchase price of $[*] for each
Qualification Set and Pre-Production Set sold prior to LGE commencing to
manufacture LCoS Televisions for the quantities as set forth in Section
3.1
hereof.
7.2.
Following the Qualification Period, for the months of January 2005
to
June 2005, LGE agrees to
purchase and
SpatiaLight agrees to
sell LCoS Sets for
manufacturing LCoS Televisions at the purchase prices
set forth in Section 6.1
hereof.
7.3. For
the months of July 2005 to December 2005, LGE agrees to
purchase
and SpatiaLight agrees to sell LCoS Sets for
manufacturing LCoS
Televisions at
the purchase price set forth in Section 6.2
hereof; provided,
however, it is
expressly agreed that in the event that LGE
purchases a quantity
of LCoS Sets
