Exhibit 10.14
TERMS OF SALE AGREEMENT
BETWEEN DPAC TECHNOLOGIES CORP. AND STAKTEK GROUP L.P.
WHEREAS DPAC Technologies Corp. and its affiliates (collectively,
"DPAC"), formerly known as Dense-Pac Microsystems, Inc., has developed certain
technology and has filed certain United States and foreign patents and patent
applications;
WHEREAS Staktek Group L.P. and its affiliates (collectively, "STAKTEK")
desires to obtain ownership of certain of DPAC's United States and foreign
patents and applications;
WHEREAS STAKTEK, in addition to purchasing the patents, desires to be
introduced to DPAC's customers for stacks and stacking products and services;
and
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
I.
ASSET IDENTIFICATION AND ASSIGNMENT
-----------------------------------
The attached and incorporated Exhibit 1 DPAC Assets enumerates the DPAC
patents and patent applications (collectively, the "DPAC Assets" any one of
which is a "DPAC Asset"). Subject to the conditions herein, DPAC agrees to
assign the DPAC Assets to STAKTEK and will do so by executing and delivering on
or before the Closing Date, the attached and incorporated Exhibit A ("Assignment
of DPAC Assets"), which is an assignment of the DPAC Assets to STAKTEK.
Dates: The "Execution Date" shall be the date this Terms of Sale
Agreement is last executed by either DPAC or STAKTEK. The "Closing Date" shall
be three business (3) days after the Execution Date. "Last Order Date" shall be
fifty-five (55) days after the Closing Date. "Last Ship Date" shall be sixty
(60) days after the Closing Date.
Effective upon and subject to the execution and delivery of the
Assignment of DPAC Assets, STAKTEK grants to DPAC a non-transferable,
non-assignable, limited covenant not to sue DPAC for infringement of any patent
enumerated on Exhibit 1 or any patent arising from any patent application
enumerated on Exhibit 1 for any act occurring during the period between the
execution and delivery of the Assignment of DPAC Assets and the Last Ship Date.
DPAC hereby agrees to execute such further documents that may be
reasonable and necessary to further effect and/or perfect or recognize the
transfer of the DPAC Assets to STAKTEK in any jurisdiction (such as the Japanese
Patent Office as an example) at STAKTEK's request and at STAKTEK's expense.
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II.
ASSIGNMENT PRICE TO BE PAID
---------------------------
Subject to and in consideration of the execution and delivery of the
Assignment of DPAC Assets by DPAC, STAKTEK shall pay DPAC Six Hundred Thousand
Dollars ($600,000) by wire transfer, to be received by DPAC on or before the
Closing Date to the following account:
TO: SIL VLY BK SJ
ROUTING & TRANSIT #: XXXXX
FOR CREDIT OF: DPAC TECHNOLOGIES CORP
CREDIT ACCOUNT #: XXXXXX
BY ORDER OF: [NAME OF SENDER]
(NOTE: Explicitly subject to a certain certified notice by DPAC as required in
Section IV, a further payment to DPAC will be made by STAKTEK for certain
materials inventory - see Section IV Inventory.)
III.
CUSTOMER INTRODUCTIONS
----------------------
DPAC represents that there exists only one written license agreement to
any of the DPAC Assets. DPAC further represents that the aforementioned license
states that it will expire by July 31, 2004 and that neither the license nor the
rights granted under the license may be assigned or sublicensed.
Within two (2) days of the Closing Date, DPAC shall send a letter to
all customers to whom it has sold stacks in the last year ("DPAC Stacking
Customers"), that letter to be substantially in the form of the attached Exhibit
Letter as to the conveyance of the DPAC Assets to STAKTEK and anticipated
contact by STAKTEK.
Prior to the Closing Date, DPAC shall provide to STAKTEK with (a)
contact names, addresses and phone numbers for a technical contact and a
purchasing contact for each DPAC Stacking Customer and (b) a compilation showing
by product, the date sold, the volumes delivered and prices paid for each
product delivered to each DPAC Stacking Customer since January 1, 2003 to the
extent known to DPAC.
IV.
INVENTORY and WARRANTY
----------------------
DPAC represents that as of the Execution Date, it has or has on order,
unallocated materials (not including DRAMs) that may be used to build stacks
("Existing Materials
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Inventory"). DPAC represents that as of the Execution Date, the Existing
Materials Inventory has a carrying cost value of $190,541 (+/- 10%) and could be
used to build, at a maximum, five hundred thousand (500,000) (+/-5%) stacks.
DPAC is allowed to purchase or commit to receive more materials to
satisfy orders for stacks that it receives between the Execution Date and the
Last Ship Date and which can not be built from the Existing Materials Inventory
(the "Last Order Materials"). After DPAC has discontinued its LP Stack
operations and in no event later than the Last Ship Date, DPAC will notify
STAKTEK in writing certified by a DPAC officer of (a) the number of stacks it
built using the Existing Materials Inventory (+/- 10%) and (b) the carrying cost
value of the Existing Materials Inventory remaining in the possession of DPAC.
Within five (5) days of receiving notice, STAKTEK will pay to DPAC by wire
transfer 75% of the carrying cost value of the Existing Materials Inventory that
remained on the date of the notice. DPAC will then destroy the Existing
Materials Inventory that remained on the date of the notice. STAKTEK will not at
any time pay DPAC for any of the Last Order Materials.
DPAC Warranty: To meet reasonable warranty requests made to DPAC by
DPAC Stacking Customers, STAKTEK shall make reasonable efforts to satisfy such
warranty requests if such requests are approved by DPAC and then, if STAKTEK is
not able to satisfy such approved warranty requests, DPAC shall make reasonable
efforts to satisfy such requests. DPAC agrees to compensate STAKTEK for
reasonable costs and expenses incurred in meeting those warranty obligations as
requested by DPAC. In addition, STAKTEK grants DPAC a covenant not-to-sue for
infringement of any patent identified as a DPAC Asset or arising from a DPAC
Asset for acts by DPAC responsive to a request to meet a warranty obligation
should DPAC and not STAKTEK seek to satisfy the warranty request. DPAC agrees to
pay Staktek within thirty (30) days of receiving Staktek's invoice or other
written notice for any STAKTEK stacks delivered to meet the reasonable requests
by DPAC to meet warranty requests as provided herein.
V.
OTHER TERMS
-----------
DPAC represents and warrants that it is the current owner of all right,
title and interest in and to all of the DPAC Assets, but otherwise provides the
property in "as is" condition, and expressly represents to STAKTEK that DPAC has
not been maintaining these patents over the last few months. At least some of
the Assets may have expired or lapsed, require added expense to revive, or
otherwise may be neither enforceable nor revivable.
DPAC represents and warrants that (except as expressly noted above) (i)
it has all rights necessary to make the assignments required herein; (ii) any
and all patents and patent applications enumerated in the DPAC Assets are free
of any liens or encumbrances; (iii) the Assignment of DPAC Assets does not
conflict with any other agreement or other instrument to which DPAC is bound.
After the Closing Date, DPAC has no continuing responsibility to pay
for any legal fees or costs, including filing or maintenance fees, or any other
fee owed to a patent office, and has
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no responsibility for keeping patents or pending applications in force, or
maintenance fees paid on an on-going basis.
DPAC represents and warrants to the best of its knowledge that Exhibit
1 to this Terms of Sale Agreement enumerates each and every patent and patent
application directed to related to stacking that is owned by DPAC. Because it is
the intention of the parties that DPAC shall convey all of its stacking patents
and patent applications to STAKTEK, should it be discovered that at the
Execution Date, DPAC owned any patents or patent applications related to
stacking that are not enumerated on Exhibit 1 to this Terms of Sale Agreement
(the "Discovered Assets"), DPAC hereby agrees to convey the Discovered Assets to
STAKTEK in a reasonable period of time and without any additional consideration.
DPAC agrees to transfer the files related to the prosecution or
maintenance of the patents and patent applications comprising the DPAC Assets,
and provide reasonable assistance to STAKTEK (if STAKTEK so requests) for the
prosecution of those applications, for which reasonable assistance it will be
compensated at a reasonable rate for time and expenses. This transfer will occur
within ten (10) days of the Closing Date.
DPAC agrees to provide reasonable assistance to STAKTEK for the
enforcement of the Assets for which DPAC will be compensated at a reasonable
rate for time and expenses.
As between STAKTEK and DPAC, STAKTEK shall not assume or be responsible
for, and DPAC shall retain and have sole responsibility for, all claims against,
or liabilities, commitments, contracts, agreements or obligations of any nature
whatsoever of DPAC arising from DPAC's sales of stacks.
As between DPAC and STAKTEK, DPAC shall not assume or be responsible
for, and STAKTEK shall have sole responsibility for, all claims against or
liabilities, commitments, contracts, agreements or obligations of any nature
whatsoever of STAKTEK arising from STAKTEK's sales of stacks.
Both STAKTEK and DPAC will maintain in confidence, for a period of
three (3) years beyond the execution date hereof any financial information
received from the other related to this Terms of Sale Agreement unless (a) such
information is already publicly known or known to others not bound by a duty of
confidentiality or such information becomes publicly available through no fault
of either party, (b) the use of such information is necessary or appropriate in
making any filing or obtaining any consent or approval required for the
consummation of the purchase of the DPAC Assets, or (c) the furnishing or use of
such information is required by or necessary or appropriate in connection with
legal proceedings or filings pursuant to the rules and regulations of the
Securities and Exchange Commission or any other governmental agency.
Upon execution of the Terms of Sale Agreement, either party may issue a
press release announcing the Terms of Sale Agreement, so long as the financial
terms are not disclosed, except as may be required by applicable laws or the
applicable rules and regulations of any governmental agency.
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The parties hereto shall each pay their own costs and expenses
(including attorneys' and accountants' fees) incurred or to be incurred by them
in negotiating and preparing this Terms of Sale Agreement and carrying out the
transactions contemplated hereby.
All representations, warranties and agreements of the parties contained
in this Terms of Sale Agreement shall survive the closing.
DPAC total liability for breaches of representations, warranties, or
indemnities implied or express resulting from this Terms of Sale Agreement shall
be limited to $600,000.
All notices, requests, demands and other communications made under,
pursuant to or in accordance with this Terms of Sale Agreement (except for
normal day-to-day business communications that may be made orally or in a
writing, sent by fax, regular mail or hand delivered without need for a
receipt), shall be in writing and shall either be delivered personally, by a
reputable overnight delivery service, by fax (as long as a fax confirmation is
received and retained by the sender), or deposited in the United States mails
and sent by first-class mail, certified, return receipt requested, postage
prepaid and properly addressed as follows:
If to DPAC to:
DPAC Technologies Corp.
7321 Lincoln Way
Garden Grove, CA 92841
Attention: Chief Executive Officer
Fax: (714) 897-1772
With a copy to:
Lester J. Savit
Jones Day
3 Park Plaza, Suite 1100
Irvine, California 92614-8505
Fax: (949) 553-7539
If to STAKTEK, to:
Staktek Group L.P.
8900 Shoal Creek Blvd.
Suite 125
Austin, TX 78757
Attention: Chief Executive Officer
Fax: (512) 454-2598
With a copy to:
Staktek Group L.P.
8900 Shoal Creek Blvd.
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Suite 125
Austin, TX 78757
Attention: General Counsel
Fax: (512) 454-2598
or to such other address or addresses as a party hereto may indicate to the
other party in the manner provided for by this section. Notices given by mail
shall be deemed effective and complete three (3) business days following the
time of posting and mailing thereof in accordance herewith, and notices
delivered personally shall be deemed effective and complete at the time of the
delivery thereof and the obtaining of a signed receipt therefor.
Any controversy or dispute arising out of or relating to this Terms
of Sale Agreement or its subject matter that the parties are unable to resolve
within twenty (20) days after written notice by one party to the other party of
the existence of such controversy or dispute, may be submitted to binding
arbitration by either party. If so submitted to arbitration, the matter shall be
finally settled by binding arbitration conducted in accordance with the current
rules and procedures of the American Arbitration Association. Such arbitration
shall take place in Austin, Texas. The decision by the arbitrator on any matter
submitted to arbitration shall be binding and conclusive upon the parties, their
heirs, successors and assigns, as the case may be and they shall comply with
such decision in good faith. Each party hereby submits itself to the
jurisdiction of the state and federal courts within the State of California for
the entry of judgment with respect to the decision of the arbitrator hereunder.
Judgment upon the award may be entered in any state or federal court within the
State of California and/or any other court having jurisdiction.
If any provision of this Terms of Sale Agreement shall be adjudged by
any court of competent jurisdiction to be unenforceable or invalid, that
provision shall be limited or eliminated to the minimum extent necessary so that
this Terms of Sale Agreement shall otherwise remain in full force and effect and
enforceable. This Terms of Sale Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to conflicts
of laws provisions. The parties agree that this Terms of Sale Agreement is the
complete and exclusive statement of the mutual understanding of the parties and
supersedes and cancels all previous written and oral agreements and
communications, if any, relating to the subject matter of this Terms of Sale
Agreement. This Terms of Sale Agreement may be executed in one or more
counterpart copies, and each of which so executed, irrespective of the date of
execution and delivery, shall be deemed to be an original, and all such
counterparts, together, shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Terms of Sale
Agreement as of the execution date set forth below.
DPAC Technologies Corp.
By: /s/ Creighton K. Early
Name: Creighton K. Early
Title: Chief Executive Officer
Date: June 8, 2004
STAKTEK GROUP L.P.
By STAKTEK GP LLC, its general partner
By: /s/ James W. Cady
Name: James Cady
Title: President & CEO
Date: June 8, 2004
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EXHIBIT A
ASSIGNMENT OF DPAC ASSETS
WHEREAS, DPAC Technologies Corp. (formerly known as Dense-Pac
Microsystems, Inc.) ("DPAC") owns certain intellectual properties consisting of
inventions, patents, and patent applications (enumerated on attached and
incorporated Exhibit 1) (the "DPAC Assets");
WHEREAS, Staktek Group L.P., a Texas limited partnership, desires to
acquire and DPAC desires to assign to Staktek Group L.P., all of DPAC's rights
in the DPAC Assets;
NOW, THEREFORE, DPAC, for itself and its predecessors in interest for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, does hereby ASSIGN to Staktek Group L.P., all right, title and
interest in the DPAC Assets, this assignment including, but not being limited
to:
1. The ASSIGNED INVENTIONS enumerated on Exhibit 1 whether created by DPAC,
its predecessors, its legal representatives or its assigns in the United States
or any other country or place anywhere in the world;
2. The ASSIGNED PATENTS enumerated on Exhibit 1;
3. The ASSIGNED PATENT APPLICATIONS enumerated on Exhibit 1;
4. All rights of action on account of past, present, and future
unauthorized use or infringement of said DPAC Assets including, but not limited
to all rights to damages so accrued;
5. The right, where allowed by law, to file in the name of Staktek Group
L.P. applications for patent and like protection for any one or more of the DPAC
Assets in any country or countries foreign to the United States;
6. All international and domestic rights or priorities associated with any
one of the DPAC Assets; and
This Assignment shall be binding upon and shall inure to the benefit of
the successors, assigns, and legal representatives of the parties.