Exhibit 10.4
PRODUCT DESIGN CONTRACT
THIS CONTRACT made on January 1, 2002, between TSANN KUEN USA INC., a
corporation organized and existing under the laws of the state of Illinois with
its principal place of business at 89 N. San Gabriel Blvd., Pasadena, CA 91107
(hereinafter referred to as "Contractor"), and TSANN KUEN ENTERPRISE CO., LTD.,
a corporation organized and existing under the laws of the Republic of China
with its principal office located at No. 29 Li Der 4th Road, Tainan, Taiwan, ROC
(hereinafter referred to as "Company").
RECITAL
WHEREAS, Company is engaged in the business of manufacture and
distribution of home appliance and Contractor is engaged in the business of
product development and design.
WHEREAS, Company desires to engage Contractor and Contractor is willing
to conduct market research, product design and engineering of certain home
appliance product on a continuous basis.
Now, therefore, Contractor and Company mutually agree as follows:
ARTICLE 1
SCOPE OF WORK AND WORK ORDER
1.1 Contractor, under the direction and pursuant to each work
order of the Company, shall perform the following services in connection with
certain items of home appliance designated by the Company in the work order
(hereinafter the "Product").
(a) Market Research. Contractor shall conduct market
research on the proposed Product, including but not limited to product
analysis, consumer preference, and market survey and generate report on
the result of the market research.
(b) Product Appearance Design. Contractor shall provide
conceptual sketch, detailed rendering, appearance specifications
drawing, virtual model pertaining to the Product. Contractor shall
transfer the design results to any party designated by the Company.
(c) Product Engineering. Contractor shall provide
engineering design, assembly drawing, parts drawing, working sample,
revised layouts and construction drawing pertaining to the Product.
1.2 The Company may communicate with Contractor its ideas and
proposed project regarding certain items of products from time to time.
Contractor shall reject or accept the ideas by notifying the Company before the
Company's formal execution of the project in carrying out the ideas. The
compensation to the Contractor shall be determined under separate agreement if
Contractor fails to give such notice in a timely manner.
1.3 In the event that Contractor decides to take on a particular
project, a written work order describing the Product, scope of work, time of
completion of work, compensation payment schedule shall be prepared and executed
by both parties. Any change to content work order proposed by one party shall be
notified to the other party and agreed to by both parties in writing. Each work
order executed following the date of Contract shall be governed by and is deemed
to include the provisions of this Contract. In the event of any inconsistency
between the terms and conditions of this Contract and the terms of a work order,
the terms and conditions of the work order shall prevail.
ARTICLE 2
COMPLETION OF WORK
2.1 Contractor shall complete all authorized work according to the
time schedule specified in the work order or in a minimum of time consistent
with good engineering and professional practices. Contractor shall be liable for
damages including loss of business arising from delay in completion of
authorized work that is contributable to Contractor's fault.
ARTICLE 3
SUBCONTRACTORS
3.1 This Contract may not be assigned or encumbered nor may
Contractor subcontract work in whole or in part, unless written permission is
first obtained from Company. Company shall have the right to direct Contractor
to subcontract such portions of the work as Company may deem advisable.
3.2 In case of subcontracting, Contractor shall bind every
subcontractor by written contract providing that the intellectual property
rights regarding the design work including without limitation any intervention
or improvement conceived, made or discovered during the course or as a result of
the work shall be the Company. Contractor shall be responsible supervising the
subcontractor's work and the design fees of the subcontractor.
3.3 The Company may transfer its own research and design on a
product to Contracted mold making. The transfer of molds from the Company to
Contractor shall be governed by agreement entered into between the parties
entitled "Purchase and Sale Agreement for Final Product, Raw Material, Mold and
Equipment." Contractor shall not be entitled to any [illegible] fees under this
Contract in case of such transfer.
ARTICLE 4
FEES AND PAYMENT
4.1 The design fees provided for in each work order shall not
become payable until the Company approves the design work, finish making the
molds, and confirms the production of the Product. If the Company fails to make
the payment on the 15th day after the payment is due, Contractor has the right
to suspend its performance under this Contract and is entitled to be compensated
by the Company for any damages arising from the non-payment.
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4.2 Contractor shall invoice Company for design fees at monthly
intervals. The Company shall pay Contractor all design fees incurred during the
current calendar year no later than the end of April of the following year.
ARTICLE 5
REPORTS AND RECORDS
5.1 Contractor shall provide, at intervals prescribed by the
Company, schedules, chart estimates, reports and other data which will keep the
Company fully informed of the progress of the work. The Company shall not be
obligated to pay design fees to Contractor if the work is not satisfactory and
if the Company has evidence showing that Contractor fails to inform [illegible]
progress to the Company or otherwise not cooperative in communication with the
Company.
5.2 The Company shall give full cooperation in providing comments
and feedback regarding the design work in progress.
5.3 Contractor shall keep full and detailed records and accounts
in a manner approved by Company. Contractor shall afford Company's authorized
employee or agent full access to work and to all of Contractor's books, records,
correspondence, instructions, drawings, receipt vouchers and other documents
relating to work under this Contract. The Company shall afford Contractor's
authorized employee or agent full access to the contracts entered into by
Company and tooling maker and other documents necessary to calculate
Contractor's compensation
ARTICLE 6
INTELLECTUAL PROPERTIES AND OWNERSHIP
6.1 All reports, drawings, prints and specifications of the
Products and all copies then supplied to the Company by Contractor or prepared
by Contractor as part of the design [illegible] and any invention or improvement
conceived, made or discovered during the course of or as a result of the work
shall be the property of the Company. Contractor shall not use the design work
to the benefit of itself or others. Contractor agrees that it will keep all
design related materials in custody and acknowledges that they are the sole and
exclusive property of Company. Contractor further agrees that it will return all
design related materials to Company upon request of the Company.
6.2 All products manufactured according to the design under this
Contract shall be the sole and exclusive property of the Company.
6.3 Contractor shall indemnify and save the Company harmless from
all liability alleged or actual infringement of any patent resulting from the
use of the work designed by Contractor or from the use of any process designed
by Contractor, and Contractor shall indemnify and save Company harmless from and
against all costs, counsel fees, expenses, liabilities incurred in or about any
claim of or action for such infringement; provided however that Company shall
promptly transmit to Contractor all papers served on Company in any [illegible]
involving such claim of infringement, and provided further, that Company permits
Contractor to have entire charge and control of the defense of any such suit.
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6.4 The rights and obligations set forth in this Article 6 shall
survive the performance of this Contract, or any termination, discharge or
cancellation thereof.
ARTICLE 7
CONFIDENTIAL INFORMATION
7.1 Contractor and the Company shall not disclose to any person,
for any reason or at any time, any information relating to the ideas, design
work, market research result or Products or trade secrets of Contractor or the
Company or of any subsidiary or affiliated company, or any other confidential
information given to a party by the other party's officers, employees, or
representatives or acquired by any party during the term of or as a result of
this contract. Any information not generally available to the public shall be
considered secret and confidential for the foregoing purposes. Both parties
shall, however, inform each of their employees who receive such information of
these restrictions and shall take all reasonable precautions and exert all
reasonable efforts to assure conformance with such restrictions by all of their
officers, employees, and agents, obtaining from them if necessary, agreements
effectuating the purposes of this paragraph.
ARTICLE 8
WARRANTIES AND NONCOMPETITION
8.1 Contractor warrants that engineering design work performed by
it hereunder shall be in accordance with good engineering design practices and
in conformance with applicable codes and standards established for such work.
8.2 In connection with Subcontractor's performance of the design
work, Contractor shall use its best efforts to obtain from all subcontractors
fullest possible warranties against defective materials and workmanship for the
benefit of the Company.
8.3 During the term of this Contract, Contractor shall not
directly or indirectly provide any design work in connection wit the Product or
other items similar to or in competition with the Product to others. During the
term of this Contract, the Company shall not engage other product designer for
the same or similar design work.
ARTICLE 9
TERM AND TERMINATION
9.1 This Contract shall come into force on January 1, 2002 shall
remain in force until December 31, 2004. If not otherwise terminated by a 30
days' prior written notice by one Party to the other Party, this Contract shall
be automatically renewed annually.
9.2 In the event of a material breach of this Contract by either
party, this Contract may be terminated by the other non-breaching party on
thirty (30) days' prior written notice specifying the nature of the breach and
said termination shall become effective at the end of said thirty (30) period
unless prior to the expiration thereof, the breach is cured.
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ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 This Contract together with each respective work order
constitutes the entire agreement between Contractor and the Company with respect
to such work.
10.2 Except as specifically provided herein, no modification,
waiver, termination, rescission, discharge, or cancellation of this Contract or
of any terms thereof shall be binding on the Company unless in writing and
executed by an officer of the Company specifically authorized to do so.
10.3 No waiver of any provision of or a default under this Contract
shall affect the right of the Company thereafter to enforce said provision or to
exercise any right or remedy in the event of any other default, whether or not
similar.
10.4 No modification, waiver, termination, discharge or
cancellation of this Contract or of any terms thereof shall impair the Company's
rights with respect to any liabilities, whether or not liquidated, of Contractor
to Company theretofore accrued.
10.5 All rights and remedies of the Company specified in this
Contract are in addition to the Company's other rights and remedies.
10.6 Contractor shall remain an independent Contractor and shall
have no power, nor shall Contractor represent that Contractor has any power, to
bind the Company or to assume or to create any obligation express or implied on
behalf of Company except as specifically authorized in advance by the Company.
10.7 Force Majeure. Both parties shall be absolved from liability
for any act, omission, or circumstance occasioned by any cause whatsoever not
within the control of the party affected thereby and which such party could not,
by reasonable diligence, have avoided. Such acts, omissions or circumstances,
however, shall not relieve such party of liability in the event of its failure
to use reasonable diligence to remedy the situation and remove the cause in an
adequate manner and with all reasonable dispatch and to give notice and full
particulars of the same in writing to the other party as soon as possible after
the occurrence of the cause relied on. The requirement that any force majeure be
remedied with all reasonable dispatch shall not require the settlement of
strikes or labor controversies by acceding to the demands of the opposing party
or parties.
10.8 Counterparts. This Contract shall be executed in two
counterparts, each of which is deemed an original, but all of which together
constitute one and the same instrument.
IN WITNESS, the Contractor and the Company have caused this contract to
be executed as of the day and year first above written.
TSANN KUEN USA INC. TSANN KUEN ENTERPRISE CO., LTD.
____________________________________ ____________________________________
By: By:
Its: Its:
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WORK ORDER
No.:______
PARTIES: TSANN KUEN USA INC. ("CONTRACTOR")
TSANN KUEN ENTERPRISE CO., LTD. (THE "COMPANY")
1. DESCRIPTION OF DESIGN WORK.
2. TIME OF PERFORMANCE OF WORK.
Starting from __________________ and completing on _________________.
3. DESIGN FEES.
Total of US $_____________.
4. PAYMENT SCHEDULE.
5. The terms and conditions of the Product Design Contract between the
parties date ________________ are incorporated hereto.
6. This WORK ORDER is executed in two counterparts, each of which kept by
one [illegible] is deemed an original.
TSANN KUEN USA INC. TSANN KUEN ENTERPRISE CO., LTD.
__________________________________ ____________________________________
By: By:
Its: Its:
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