EXHIBIT 10.17
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Dated the 16th day of November 1999
CDKNET, LLC
and
ASIA PIONEER LIMITED
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TECHNOLOGY AND LICENCE AGREEMENT
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AGGARWAL & ASSOCIATES
Rooms 1905-7, 19th Floor
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Ref.: 0203-0295/99/NA/RKW/KAL
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CONTENTS
Page
1. Definitions.........................................................1
2. Products and Services to be provided................................5
3. Conduct of the Work.................................................5
4. Implementation Plan.................................................6
5. Location Preparation................................................6
6. Provision of Hardware...............................................6
7. Delivery of Hardware................................................9
8. Installation of Hardware............................................9
9. Delivery and Installation of the Software...........................9
10. Installation Tests.................................................10
11. Delays.............................................................11
12. Licence............................................................12
13. Duration of the Licence............................................17
14. Documentation......................................................17
15. Warranties.........................................................17
16. Other Matters giving cause for Damages and/or Termination..........18
17. Terms of Payment...................................................20
18. Training...........................................................22
19. Maintenance Services...............................................23
20. Maintenance of the Hardware........................................23
21. Maintenance of the Software........................................24
22. Title to and Risk in the System....................................25
23. Proprietary Rights.................................................26
24. Copying............................................................26
25. Confidentiality....................................................26
26. Use of Data........................................................27
27. Independent Contractor.............................................27
28. Assignment.........................................................28
29. Indemnities........................................................28
30. Publicity..........................................................30
31. Sub-contracts......................................................30
32. Termination of the Agreement.......................................30
33. Effect of Termination..............................................31
34. Severability.......................................................31
35. Other Terms, Matters, and Conditions to be Fulfillied..............31
36. Duration of the Contract...........................................33
37. Hire Equipment.....................................................33
38. Entire Agreement...................................................34
39. Law and Jurisdiction...............................................34
40. Service of Notice..................................................34
41. Waiver.............................................................35
42. Force majeure......................................................35
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43. Extent of Liability................................................35
44. Provision of Other Software........................................35
45. Warranties as to APL Shares........................................36
Schedule 1 (Hardware).......................................................39
Schedule 2 (System).........................................................41
Schedule 3 (Implementation Plan)............................................43
Schedule 4 (Training Plan)..................................................44
Schedule 5 (Documentation)..................................................45
Schedule 6 (Location).......................................................46
Schedule 7 (Installation Tests).............................................48
Schedule 8 (Other Software).................................................49
Schedule 9 (Asia Pioneer Limited)...........................................50
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THIS AGREEMENT is made on the day of , 1999
BETWEEN :-
(1) CDKNet, LLC, a New York limited liability company with offices at ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
("CDKX"); and
(2) Asia Pioneer Limited, a company incorporated in the Cayman Islands
whose registered office is situate at Hurtlaw Building, P.O. Box 2804,
▇▇▇▇▇▇ Town, Grand Cayman, Cayman Islands and whose place of business
is located at Shop ▇▇. ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇, ▇▇▇▇▇▇▇ Garden, ▇▇▇▇
▇▇▇, Kowloon, Hong Kong ("APL").
WHEREAS :-
(1) APL has decided to exclusively license (on the terms and conditions set
forth below), the CDK Technology(TM) (as defined in Clause 1) for the
use, marketing and business of its website and any other business of
APL; and
(2) APL has elected to exclusively license, hire, use, obtain (as the case
may be) from CDKX and CDKX has agreed to grant the right of use of the
Hardware, the Other Software and the Software (as hereinbelow defined)
and supply all relevant services necessary for the maintenance and
operation of CDK Technology(TM) used by APL (on the terms and
conditions set forth below).
NOW IT IS HEREBY AGREED that in consideration of the payments to be made by APL
in the time and manner set out in Clause 17 of this Agreement, CDKX shall grant
the right of use of the Hardware and Software (as hereinbelow defined) and
supply all services necessary for the operation of the System in accordance with
the terms and conditions and other matter hereinafter set out.
1. Definitions
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1.1 In this Agreement, unless the context otherwise requires, the following
expressions have the following meanings :-
"this Agreement" Means this agreement as amended, modified or
supplemented from time to time.
"Artistic Work" Means a graphic work, photograph, sculpture or
collage irrespective of artistic quality ("graphic
work" includes any painting, drawing, diagram,
map, chart or plan; "photograph" means a recording
of light of other radiation on any medium on which
an image is produced or from which an image may by
means be produced; "sculpture" includes a cast or
model made for the purpose of sculpture).
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"CDK
Technology(TM)" Means the engineering and technology specially
developed by CDKX whereby such technology and
engineering combines CD (compact disc) digital
audio, full motion, fullscreen video and web
linking through a browser interface. In
combination with such technology an HTML
authorizing system is used to produce custom HTML
interface pages for specific clients within a
certain time period. The technology includes all
the proprietary rights and techniques of CDKX
along with such technique and engineering for
creating full motion, fullscreen video playback
from CD Rom.
"Completion Date" Means the date specified in the Implementation
Plan by which CDKX is to provide the System Ready
for Use.
"Consideration Means US$ 243.80 per Consideration Share.
Share Price"
"Consideration Means 4,890 shares of par value US$ 0.01 each in
Shares" the capital of APL, constituting approximately
four and eighty-nine one hundredths per cent
(4.89%) of the issued share capital of APL as at
the date of the Share Completion. One of such
shares shall be known as "Consideration Share".
"Data" Means all information, submission, correspondence,
copyright contents on APL's website, data and
updates generated and collected on APL's website.
"Documentation" Means the operating manuals, user instructions,
technical literature and all other related
materials in human-readable form (i.e. English)
supplied to APL by CDKX for aiding the use,
application and maintenance of the System as
specified in Schedule 5.
"Exchange Act" Means the U.S. Securities Exchange Act of 1934, as
amended.
"Films" Means a recording on any media from which a moving
image may by any means be produced. The soundtrack
accompanying a film is to be treated as part of
the film.
"Hardware" Means the equipment specified in Schedule 1 and
any other additional or replacement equipment
provided by CDKX under the provisions of this
Agreement.
"Hardware Means the delivery date specified in the
Delivery Date" Implementation Plan by which CDKX is to deliver
the Hardware.
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"Hardware
Installation Date" Means the delivery date specified in the
Implementation Plan by which CDKX is to install
the Hardware.
"Implementation Means the time schedule and sequence of events for
Plan" the performance of this Agreement (the details of
which are set out in Schedule 3) or such other
implementation plan as may be agreed by the
parties of this Agreement.
"Installation Means the installation tests specified in Schedule
Tests" 7 and any other installation tests as may be
agreed between the parties pursuant to Clause 10.
"Licence" Means the licence granted to APL by CDKX pursuant
to Clause 12.
"Licence Fee" Means the fee for the licence as specified in
Clause 17.2.
"Licence Period" Means the period as specified in Clause 13.
"Location" Means the location at which the Hardware is to be
installed as specified in Schedule 6.
"Maintenance Means the maintenance services to be provided by
Services" CDKX pursuant to Clauses 19, 20 and 21
respectively.
"Musical Works" Means a work consisting of music exclusive of any
words or action intended to be sung, spoken or
performed with the music.
"Other Software" Means the programs specified in Schedule 8 and any
additional or replacement programs thereto.
"Price" Means the aggregate price for the System and the
Work to be carried out by CDKX hereunder as
specified in Clause 17.1.
"Ready for Use" Means fully installed and tested and successfully
completed so as to make the System both functional
and operational within the standards as agreed by
both parties but in any event as reasonably
expected by a reasonable person taking into
account CDKX's current version of the Software,
CDK Technology(TM)and existing Hardware set up to
run its business of "MixFactory(TM)".
"SEC" Means the U.S. Securities and Exchange Commission.
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"Shares" Means shares of common stock, par value US$0.0001
per share of ▇▇▇▇▇▇.▇▇▇, Inc
"Share Completion" Means completion of the issue and allotment of
Consideration Shares under this Agreement.
"Software" Means the application programs developed for the
System and any other additional or replacement
programs from time to time provided and developed
by CDKX under the provisions of this Agreement and
which also includes the CDK Technology(TM).
"Software Delivery means the delivery date specified in the
Date" Implementation Plan by which CDKX is to deliver
and install the CDK 2.0 Software(C).
"System" means the Hardware and Software in one combination
with the other based on the CDK Technology(TM) in
order to make functional and operational those
processes and services described in Schedule 2.
"Training Plan" means the training to be provided by CDKX for
APL's staff the details of which are set out in
Schedule 4.
"Upgrade and means those upgrades, modifications, enhancement
Enhancements" and development of the Software and Hardware by
CDKX more particularly set out in Clause 21.3.
"US$" means the lawful currency of the United States of
America.
"Work" means all works, duties and obligations to be
carried out by CDKX pursuant to the provisions of
this Agreement.
1.2 Except where the context otherwise requires, words denoting the
singular include the plural and vice versa; words denoting persons
include firms and corporations and vice versa; words denoting any
gender include all genders.
1.3 Reference to any enactment, order, regulation or other similar
instrument shall be construed as a reference, order, regulation or
instrument as amended by any subsequent enactment, order, regulation or
instrument.
1.4 The heading to the clauses of this Agreement is for ease of reference
only and shall not affect the interpretation or construction of this
Agreement.
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2. Products and Services to be provided
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CDKX hereby agrees to :-
2.1.1 grant the right to use the Hardware to APL free from
encumbrances as per Clause 29;
2.1.2 grant to APL an exclusive licence to use the software specially
developed for or used in relation to the CDK Technology(TM) as
set out in Clause 12;
2.1.3 deliver, install and maintain the System in accordance with the
terms hereof;
2.1.4 provide the System Ready for Use by the Completion Date;
2.1.5 provide training in accordance with the Training Plan and the
Documentation;
2.1.6 provide the Maintenance Services;
2.1.7 provide assistance in developing and to develop or further
develop and customize Software for additional or change of
functions of the CDK Technology(TM) in relation to the System
as from time to time agreed with APL;
2.1.8 provide any other services hereinafter described and on the
terms and conditions hereinafter contained;
2.1.9 provide the Hardware, Software and Other Software for the
System;
2.1.10 upgrade and enhance the Software and adopt new data technology
to improve the System's performance in fulfillment of the
changes in the user requirements and market needs;
2.1.11 provide free usage to APL of those products, premises,
equipment and services set out in Clause 35.
3. Conduct of the Work
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3.1 CDKX shall carry out the Work with all due and reasonable diligence and
despatch.
3.2 CDKX shall keep APL informed on all matters related to the Work within
the knowledge of CDKX and shall answer all reasonable enquiries
received from APL.
3.3 The parties shall procure that their respective representatives will
meet at the interval specified in the Implementation Plan and after
live running of the System to discuss and minute the progress of the
System's development.
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3.4 CDKX shall, if reasonably practicable, attend any other meetings (by
telephone if necessary) convened by APL and shall advise and assist APL
on all matters relating to the duties and obligations it has assumed
under this Agreement at a time reasonably convenient to both parties.
4. Implementation Plan
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CDKX shall perform its obligations under this Agreement in accordance
with the Implementation Plan and shall complete each stage by the date
specified in the Implementation Plan.
5. Location Preparation
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5.1 CDKX shall supply APL in a reasonable time before delivery such
information and assistance as may be necessary to enable APL to plan to
prepare the Location for the installation of the Hardware to be
installed at APL's premises. In the event the Location is not prepared
by APL or suitable as promised by APL then APL shall procure or find an
alternate premises which is reasonably suitable for installation of the
Hardware.
5.2 APL shall, at its own expense and in a timely manner prepare the
Location and provide such reasonable equipment and reasonable
environmental and operational conditions for the Hardware which is to
be installed as per the diagram in Schedule 1, prior to installation.
APL shall provide CDKX with a list of equipment and details of the
Location to CDKX for CDKX's approval prior to delivery of the Hardware.
CDKX shall either approve the list of APL or inform APL of any
modifications or amendments thereto. Thereafter, APL shall carry out
such modifications or provide the modifications prior to delivery of
the Hardware. Shall CDKX fail to approve or make any amendments or
modifications to APL's list, the Location shall be deemed to have been
approved by CDKX and APL shall not be liable for any damages to the
Hardware as a result of the Location (if any) even if later discovered
[CDKX shall assist APL both by maintenance and replacement of any of
the defective or damaged Hardware (if any) as a result of the
Location].
6. Provision of Hardware
---------------------
6.1 CDKX shall provide as part of provision of the required service, all
Hardware and related facilities as specified in Schedule 1 for the
operation of the System.
6.2 CDKX shall be responsible to install at the Location all Hardware and
connect them to the existing hardware or equipment provided by APL (if
any) for operation and/or connection to the System. In order for CDKX
to install the Hardware to APL's existing equipment and hardware, APL
shall provide to CDKX a list of specifications of the Location and
APL's hardware and equipment (if any) prior to delivery of the Hardware
as per Clause 5.2.
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6.3 Upon delivery and installation of all the Hardware, APL shall have the
right to use and keep such Hardware throughout the continuing period of
eight (8) months from the Completion Date or such date when the System
is Ready for Use ("Ready for Use Date") (whichever is later) without
any costs or expenses to APL. At the expiry of the eight (8) month
period from the Completion Date or the Ready for Use Date (whichever is
later), APL shall have the option to either :-
(a) purchase all the Hardware or only certain of the units
comprising the Hardware as set out in Schedule 1 ("Units") .
Shall APL wish to exercise its option to purchase all the
Hardware or Units of the Hardware then APL shall serve notice
to CDKX not less than 30 days prior to the expiration of the
eight (8) months period of its intention to purchase such of
the Hardware (which notice shall include a list of the Hardware
it shall purchase); or
(b) lease either all the Hardware or only certain of the Units
comprising one (1) Robot Station, one (1) Database System, one
(1) Printing System and one (1) Web System as set out in
Schedule 1 ("One Set Unit") or one (1) Robot Station to CDKX.
Shall APL wish to exercise its option to lease all the Hardware
or One Set Unit of the Hardware then APL shall serve written
notice to CDKX and less than 30 days prior to the expiration of
the eight (8) months period of its intention to lease such of
the Hardware (which notice shall include a list of the Hardware
(which notice shall include a list of the Hardware it shall
lease); or
(c) purchase One (1) Robot Station and lease One Set Unit of the
Hardware. Shall APL wish to exercise its option to purchase and
lease the Hardware then APL shall serve written notice of not
less than 30 days prior to the expiration of the eight (8)
months period of its intention of purchase and lease the
Hardware; or
(d) return all of the Hardware to CDKX.
Shall APL exercise its option to purchase any Units or all the Hardware
as described in Clause 6.3(a) then APL shall pay to CDKX the relevant
amount for each Units of the Hardware being purchased as set out in
Schedule 1. Payment for the Hardware being purchased shall be payable
in six equal monthly installments per relevant Units from the date of
the expiration of the eight (8) month period described above.
Shall APL exercise its option to lease One Set Unit of the Hardware as
described in Clause 6.3(b) above then APL shall pay to CDKX US$5,000.00
per month Shall APL exercise its option to lease all the Hardware as
described in Clause 6.3 (b)
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above then APL shall pay to CDKX US$10,000.00 per month. The leasing
fee payable in respect of Clause 6.3(b) shall commence and become due
and payable from the expiry of the initial eight (8) month period
described above. During the lease term, the rights of APL set out in
Clause 6.3 (a), (b) and (c) shall continue to subsist. Should APL
exercise any of its rights to lease One Set Unit of the Hardware or all
the Hardware, the lease term shall commence from the expiry date of the
initial eight month period described above and continue for a further
eight months period which period shall automatically renew for eight
month periods thereafter upon the same lease amount of US$5,000.00 or
US$10,000.00 per month (as the case may be) until either APL purchases
the relevant one (1) Robot Station and/or One Set Unit of the Hardware
being leased or serves at least 30 days prior written notice of CDKX of
its intention not to renew the lease or unless earlier terminated under
the provisions of this Agreement.
Shall APL exercise its option under Clause 6.3 (c) then APL shall :-
(i) pay US$60,000.00 to CDKX for the one (1) Robot System, which
shall be payable in six equal monthly installments from the
date of the expiration of the eight (8) month period described
above; and
(ii) pay to CDKX US$5,000.00 per month commence from the expiry of
the initial eight (8) month period described above. The lease
term shall commence from the expiry date of the initial eight
month period described above and continue for a further eight
months period which period shall automatically renew for eight
month periods thereafter upon the same lease amount of
US$5,000.00 per month (as the case may be) until APL purchases
the either the relevant one (1) Robot Station and/or One Set
Unit of the Hardware being leased or serves at least 30 days
prior written notice of CDKX of its intention not to renew the
lease or unless earlier terminated under the provisions of this
Agreement. During the lease term, the rights of APL set out in
Clause 6.3 (a), (b) and (c) shall continue to subsist
Such of the Hardware not being purchased or leased shall be returned to
CDKX in good condition (fair wear and tear save and excepted) at APL's
own costs and expenses and shall be delivered within a reasonable time
and by such means of delivery and packaging as reasonably required to
ensure the safe and timely delivery of the returned Hardware. APL shall
ensure that proper and sufficient insurance in respect of the delivery
of the returned Hardware is taken out.
Shall APL wish to replace any of the Hardware after the expiry of eight
(8) months from the Date of Completion or Ready for Use Date (whichever
is later) then the replaced type of Hardware, delivery date thereof and
all costs to be incurred or related thereto shall be mutually agreed by
both parties failing which such costs shall be that stipulated by CDKX
provided the same are reasonable and of the same market value in the
U.S.A.
6.4 CDKX shall not remove, replace or repossess any of the Hardware during
any of the eight (8) month period mentioned in Clause 6.3 and unless
purchased by APL after the said eight (8) month period or any parts
thereof for any reason unless otherwise provided for in this Agreement.
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6.5 APL shall not remove or relocate any of the Hardware (save where and
when purchased by APL) once the Hardware has been installed by CDKX and
APL shall not allow any other party to operate such Hardware (unless
purchased by APL) without CDKX's prior written consent.
7. Delivery of Hardware
--------------------
On the Hardware Delivery Date, CDKX shall deliver the Hardware by any
appropriate method of transport selected by CDKX and APL shall use its
best endeavours to assist CDKX in the importation of the Hardware into
Hong Kong SAR including compliance with the Customs and Excise
Department's rules and regulation and any other regulation concerning
the importation of the Hardware. Shall there be any taxes or duties
levied by the Customs and Excise Department of the Government of the
Hong Kong Special Administrative Region ("HKSAR") or any charges of the
like levied by any government authority of HKSAR (save as to such
export taxes and duties which may be imposed and payable to any
relevant government authority of the United States of America) the said
taxes, duties and charges levied by the relevant government authority
of HKSAR shall be borne and paid by APL.
8. Installation of Hardware
------------------------
8.1 On the Hardware Installation Date, CDKX shall install the Hardware and
if applicable, install the Hardware to APL's hardware and equipment at
the Location.
8.2 If in the reasonable opinion of CDKX it is necessary to remove or
otherwise disconnect any of APL's equipment at the Location in order to
carry out the installation of the Hardware, then APL shall permit and
obtain all necessary consents for such removal or disconnection and
shall give CDKX all necessary assistance.
8.3 CDKX shall install the relevant Hardware at the Location without
unreasonably interrupting the existing computer system of APL (if any).
APL shall give to CDKX all necessary assistance to enable the
installation work to be carried out.
9. Delivery and Installation of the Software
-----------------------------------------
On the Software Delivery Date, CDKX shall deliver the CDK 2.0
Software(C) to APL and shall use reasonable endeavours to install the
same on the Hardware and the hardware provided by APL as soon as
possible after the Software Delivery Date.
CDKX shall also, in accordance with the Implementation Plan deliver the
Software and Other Software to APL and shall use reasonable endeavours
to install the same on the Hardware and hardware provided by APL by and
in accordance with such dates set out in the Implementation Plan.
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10. Installation Tests
------------------
10.1 APL reserves the right to conduct the Installation Tests on the
Hardware, Software and the Other Software provided CDKX has supervised
the same. Shall CDKX fail to supervise APL's Installation Tests due to
wilful or unreasonable absence or refusal to attend supervision then
APL may conduct Installation Tests on its own.
10.2 CDKX shall within a reasonable time submit the specification of such
Installation Tests including its connection to the Hardware provided by
APL for the reasonable approval of APL. If such specification does not
provide reasonably sufficient detail to test all the functions and
facilities of the Hardware, Other Software and the Software, CDKX shall
make any reasonable amendments to such specifications as is necessary
to conduct proper and reasonable testing upon request. APL shall make
ready such of its Hardware at the Location for connection to the System
and shall ensure that its Hardware is operating in full and proper
working order.
10.3 CDKX shall on the date specified in the Implementation Plan, submit the
Hardware, the Software and the Other Software to the Installation Tests
to prove to APL that the Hardware, Other Software and the Software and
every part thereof are operating in full and proper working order. CDKX
shall within a reasonable time supply to APL the results of the
Installation Tests and certify in writing whether the Hardware, Other
Software and the Software have passed the same.
10.4 If the Hardware, Other Software or the Software or any part thereof
substantially fail as a whole to pass the Installation Tests within [3
weeks] from the date of its first submission to the Installation Tests
such that the System is not Ready for Use, then :-
(a) CDKX shall use its best endeavours at its own costs and
expenses to fix the System such that the System is Ready for
Use within one month from the date of failure of the
Installation Tests. If the System is not Ready for Use within
the said one month period then Sub-Clause (b) or (c) shall
apply; and
(b) APL shall have the option to fix the System using its best
endeavours (either by themselves, their agents, contractors,
etc.) at CDKX's costs and expenses which shall be reimbursed to
APL on demand. If APL is unable to fix the System such that it
is Ready for Use within one month from the date when CDKX had
failed to fix the System (as described in Sub-Clause (a) above)
then APL shall have the right to forthwith terminate this
Agreement and upon termination CDKX shall (i) forthwith refund
to APL all sums paid to CDKX under this Agreement (if any); and
(ii) pay to APL such amount of damages which APL has suffered
as a result of the failure of the System up to a total maximum
of US$100,000.00 (save as for the events of indemnity pursuant
to Clause 29); or
(c) APL shall have the right to forthwith terminate this Agreement
and upon
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termination CDKX shall forthwith refund to APL all sums paid to
CDKX under this Agreement (if any) together with interest
calculated at 8% per annum on such amounts paid by APL to CDKX
from the time such amounts were paid.
Provided always the failure of the Installation Tests are not the cause
or fault of CDKX, its agents, employees, contractors or authorized
persons. CDKX shall in no event or circumstances be liable for the
acts, faults or negligence of APL, its staff, employees, personnel or
agents.
10.5 CDKX may request for individual unit test to be performed in the
presence APL on the hardware provided by APL to prove the failure of
the Installation Tests are not caused by the Hardware, Other Software
or the Software. APL shall ensure that the hardware provided by APL
shall confirm to the specification given in Schedule 1 and be
responsible for the rectification of such hardware fault proved by CDKX
during the Installation Tests.
10.6 Within 1 week after the Ready for Use Date, APL shall if the System has
not in the meantime failed or broken down, certify in writing to CDKX
that the System is Ready for Use and satisfactorily installed upon
which certification CDKX shall not be liable for any failure of the
System's operation other than as expressly provided for in Software
Maintenance as set forth in Clause 21 below, and for training and
pass-through warranty services (if any) as set forth in Clause 20
below. At least one representative of CDKX will remain at the Location
of APL during such 1 week for training and transition purposes,
pursuant to Clause 17.3 below.
11. Delays
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11.1 CDKX shall ensure that the System is Ready for Use on or before the
Completion Date.
11.2 If CDKX shall fail to provide the System Ready for Use by the
Completion Date then CDKX shall pay to APL as and by way of liquidated
damages for any loss or damages sustained by APL resulting from delay
during the period from the Completion Date to the date on which CDKX
provides the System Ready for Use the sum of [US$1,000.00] or 0.1% of
the aggregate payment installments of the Price set out in Clause 17
(whichever the higher) for each day or part of the day of such delay up
to a total maximum of [US$100,000.00]. Subject to the provisions of
Sub-Clause 11.3 below the payment of such sums shall be in full
satisfaction of CDKX's liability for such delay only. The payment of
liquidated damages shall not relieve CDKX from its obligation to
provide the System Ready for Use or from any other liability or
obligation under this Agreement. APL reserves the right to deduct from
any payment installments of the Price due to CDKX by APL such
liquidated damages.
11.3 If CDKX shall fail to provide the System Ready for Use within [60] days
after the Completion Date then notwithstanding anything else contained
in this Agreement APL
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shall be entitled to terminate this Agreement forthwith on giving
written notice to CDKX and to recover from CDKX the amount of all
damages and loss suffered by APL resulting from such failure up to a
total maximum of US$100,000.00. Upon such termination CDKX shall
(without prejudice to APL's right to recover the amount of such damages
and loss as aforesaid) forthwith refund to APL all moneys previously
paid to CDKX under this Agreement.
11.4 CDKX shall not be held liable for delay due to the fault of the
hardware provided by APL as described in Clause 10.5 above or the
facilities provided by APL.
12. Licence
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12.1 CDKX hereby grants to APL an exclusive licence to use the Software and
CDK Technology(TM) in accordance with the terms set out hereafter
throughout the duration of this Agreement.
12.2 CDKX shall grant an exclusive license to APL to use the Software and
CDK Technology(TM) for the business, operation, development, trade,
activities, marketing or promotion of APL's system and websites or
business or projects which is solely in the Chinese language including
but not limited to all forms of Chinese media, literature, audio-visual
content and all other materials and/or data that can be presented
electronically or digitally using primarily the Chinese language ("the
Chinese Content") within any place, community, territory, country, area
or venue.
12.2.1 APL'S Other Rights
12.2.1.1 Notwithstanding Clause 12.2, APL shall have the right
to use the Software and CDK Technology(TM) to provide
or allow others to provide contents in any language
other than Chinese ("Other Languages") when the
content is :-
(a) Not primarily or solely in Other Languages or
which use of Other Languages is ancillary to or
incidental to the main contents, compilation of
music, film, music artist's work or theme being
marketed, promoted or used by APL or other
parties authorized by APL; and
(b) Not considered to be in competition with CDKX's
business or activities or affect the business,
promotion, advertising or other uses of CDKX
which relate to Artistic Works or Films or
Musical Works containing or using Other Languages
(save as to Musical Works containing Other
Languages and which Other Languages being used is
incidental to or ancillary to the entire
compilation of songs or Musical Works using Other
Languages of a
-12-
relevant music artist(s) or group which is
primarily in the Chinese language or of Chinese
Content).
12.2.1.2 APL shall have the right (if necessary) to use the
Software and CDK Technology(TM) to provide or allow
others to provide content in Other Languages whereby
use of Other Languages is part of an entire business
package, agreement, arrangement or deal for the
marketing, promotion or sale of a product,
merchandise or film in various different languages
and countries, venues, territories, places or areas
("Business Package") and where use of Other Languages
is only ancillary to or incidental to the entire
Business Package and where use of Other Languages is
not the primary part or objective of the entire
Business Package.
12.2.1.3 Where APL wishes to use the Software and CDK
Technology(TM)to provide or wish to allow others to
provide content in Other Languages or any content
which is not primarily of Chinese Content and where
APL is not authorized to use the Software and CDK
Technology(TM)as set out in the terms of this License
then APL may in writing request the consent of CDKX
to use the Software and CDK Technology(TM)to provide
or allow others to provide content in Other Languages
or any content which is not primarily of Chinese
Content. Should CDKX, in writing and at its sole
discretion, consent to such use or arrangement then
such use or arrangement will not be deemed as a
breach of this Agreement or License provided always
that consent shall only apply on a case by case basis
for each specific matter or request.
12.2.2 CDKX'S Reserved Rights
12.2.2.1 Save and provided always, CDKX may (if necessary) use
the Software and CDK Technology(TM) to provide or
allow others to provide Chinese Content which are:-
(a) Not primarily or solely in the Chinese language
or which use of Chinese Content is ancillary to
or incidental to the main contents compilation of
music, film, music, artist's work or theme being
marketed, promoted or used by CDKX or other
parties authorized by CDKX; and
(b) Not considered to be in competition with APL's
business or activities or affect the business,
promotion, advertising or other uses of APL which
relate to Artistic Works or Films or Musical
Works containing or using Chinese Contents (save
as to Artistic Works or Films containing
-13-
Chinese Content and which Chinese Content is
incidental to or ancillary to the Other Languages
being spoken or sung, the Artistic Work being
presented or the actions being performed.
12.2.2.2 CDKX shall have the right (if necessary) to use the
Software and CDK Technology(TM) to provide or allow
others to provide Chinese Content whereby use of
Chinese Content is part of a Business Package and
where use of Chinese Content is only ancillary to or
incidental to the entire Business Package and where
use of Chinese Content is not the primary part or
objective of the entire Business Package.
Shall Chinese Content be used in any Business Package
then it is hereby agreed that CDKX shall pay to APL a
fee equivalent to 2% of the gross revenue of CDKX
which relate to Chinese Content (i.e. derived form
and attributed to the Chinese Content only and not
the entire Business Package as a whole) and which
said sum shall be paid bi-annually at the same time
as APL is required to pay a license fee as set out in
Clause 17.2 and based on the same terms of estimation
and reconciliation of accounts as APL and as set out
in Clause 17.2 of this Agreement.
12.2.2.3 Where CDKX wish to use the Software and CDK
Technology(TM)to provide or wish to allow others to
provide Chinese Content or any content which is not
primarily Other Languages and where CDKX is not
authorized to use the Software and CDK
Technology(TM)as set out in the terms of this License
then CDKX may in writing request the consent of APL
to use the Software and CDK Technology(TM) to provide
or allow others to provide Chinese Content or any
content which is not primarily in Other Languages.
Should APL, in writing and in its sole discretion,
consent to such use or arrangement then such use or
arrangement will not be deemed as a breach of this
Agreement or License provided always that consent
shall only apply on a case by case basis for each
specific matter or request.
In considering whether a party's use of the Software
or CDK Technology(TM) to provide or authorization for
another party to provide Chinese Content or content
in Other Languages (as the case may be) is in
competition with such party's business, the type of
Chinese Contents or content in Other Languages (as
the case may be), the target recipients of the
Chinese Content or content in Other Languages (as the
case may be), the likeness or similarity in business,
the intention of such relevant party, the
-14-
effect or impact on business of the relevant party
shall among other things be taken into account and
which factors must substantially in part or whole
affect such party's business or operations.
When assessing whether or not Chinese Content or
content in Other Languages (as the case may be) is
ancillary to or incidental to the main contents being
promoted, marketed or used by either party and or
such other persons authorized, the overall contents,
the amount of Chinese Content or content in Other
Languages (as the case may be) in comparison to the
amount of the Chinese Content or content in Other
Languages (as the case may be) being used, whether or
not the Chinese Content or content in Other Languages
(as the case may be) is the primary feature, whether
or not the Chinese Content or content in Other
Languages (as the case mat be ) is being used to
target recipients interested in the contents being
used promoted or marketed due primarily to or for
such Chinese Content or content in Other Languages
(as the case may be) shall among other things be
taken into account.
In considering whether or not Chinese Content or
content in Other Languages (as the case may be) is
ancillary to or incidental to the entire Business
Package and not the primary part or objective of the
Business Package, the number of different countries
(areas, venues, territories and places included), the
number of different languages, whether the Business
Package is of one agreement or several shall among
other things be taken into account.
By way of illustration only and not by way of
limitation, if for example CDKX or such other party
authorized by CDKX market, promote or use a Compact
Disc which contents contain Chinese art work of say a
picture or photograph that happens to have Chinese
language in the background or display in a small
portion of such picture or photograph then this would
not be deemed as primarily in the Chinese language
but rather incidental to the picture or photograph.
If, however, CDKX or such other party authorized by
CDKX market, promote or use the Chinese
language/Content which for example relates to music
or movies in the Chinese language and the English
language is used as subtitles or transliterations in
conjunction with the Chinese language being used then
this would be deemed as primary use of the Chinese
language and not incidental thereto.
By way of illustration only and not by way of
limitation, if for
-15-
example, in relation to a Business Package CDKX enter
into agreement with a third party to market promote
or sell a "Pokemon" CD and which agreement is for the
distribution of Pokemon multimedia in US, Brazil,
France, England and Hong Kong in different languages
of say French, English, Portugese, and Chinese then
CDKX will not be in breach of this agreement but
shall be authorized to use the Software and CDK
Technology(TM) to provide or authorize others to
provide such Pokemon product in the Chinese language
provided CDKX pay a fee equivalent to 2% of the gross
revenue received by CDKX (or any of its subsidiaries,
holding company, associates, affiliates, etc.) and
derived from the Pokemon product in the Chinese
language.
12.2.3 Events of Default in lieu of License
Shall either party blatantly, willfully or unreasonably intend
to use or allow others to use the Software which are deemed in
breach of clause 12.2 (save where written consent has been
given per Clauses 12.2.1.3 and 12.2.2.3) or fail to cease and
desist, prevent or remedy its acts or others acts deemed as
breach (save where written consent has been given per Clauses
12.2.1.3 and 12.2.2.3) then the non-breaching party be entitled
to terminate this Agreement forthwith on giving written notice
to defaulting party and to recover from the defaulting party
the amount of all damages and loss suffered by the
non-breaching party resulting from such breach or default. Upon
termination of this Agreement the defaulting party shall pay
the non-breaching party (without prejudice to any other rights)
such amount of damages and losses as the non-defaulting party
has incurred or suffered as a result of termination and the
breach.
APL shall not use any other technology or software which is
related to or similar to the CDK Technology(TM) or the Software
throughout the Licence Period (save as otherwise agreed in
writing by CDKX).
12.3 APL shall not transfer or distribute (whether licence, loan, rental,
sale or otherwise) all or any part of the Software or the CDK
Technology(TM) to any other person or party without CDKX's express
written consent in each case. APL shall however have the right to and
be permitted to non-exclusively licence without the consent of CDKX the
Software or any part thereof or the CDK Technology(TM) to any other
party if such license is in relation to Chinese Contents and consistent
with the License granted by CDKX to APL and in relation to :-
(a) such business or operation whereby APL is a part of such other
person's business, operation or activity and is in control,
acting jointly, has an interest, is a part of such other
party's business, activity or operation or has done so in
-16-
the capacity of a business partner, a sponsor or a participant
and such business, activity or operation with such other person
is in connection with or incidental to the operation of APL's
business; or
(b) its holding company, subsidiary, associates, affiliates or
members of its group of companies ("APL's Group of Companies").
Provided always such other party shall not be entitled to or have the
right to sub-licence or licence the Software and/or CDK Technology(TM)
to any other person or party. APL shall promptly notify CDKX of each
such sub-licence.
13. Duration of the Licence
-----------------------
The Licence shall commence on the Completion Date or on Ready for Use
Date (whichever is later) and continue until the termination of this
Agreement, at which time the License will terminate. This Licence shall
not be terminated by either party unless in accordance with the terms
of this Agreement.
14. Documentation
-------------
On the date specified in the Implementation Plan, CDKX shall provide to
APL (at no additional costs of the Price) such copies of the
Documentation in the English language and text containing sufficient
information as mutually agreed by both parties for the proper use and
maintenance of the System as specified in Schedule 5. All
Documentation, and any summaries, analyses and/or syntheses, and any
and all copies thereof, shall be returned to CDKX at the termination of
this Agreement.
15. Warranties
----------
15.1 CDKX warrants that Software will be free from defects in design,
material, workmanship and installation during the Licence Period. CDKX
shall maintain the Software in full working order at no additional cost
of the Price to APL.
15.2 CDKX warrants that the Software will be of merchantable quality or will
be fit for the purpose for which it is intended.
15.3 CDKX warrants that the Software will after acceptance by APL conform
fully to its specification and purpose as set forth in this Agreement
and Schedules hereto, and that the Documentation will provide adequate
instructions to enable APL to make proper use of such facilities and
functions.
15.4 CDKX further warrants that the Software will conform fully to the
standards, reliability and performance as set forth in this Agreement
and the Schedules hereto.
15.5 If CDKX receives written notice from APL of any breach of the said
warranties then
-17-
CDKX shall, without prejudice to any other rights or remedies APL may
have, at its own costs and expenses and as soon as possible after
receiving such notice, repair or, at its option, replace the Software
or such parts of it as are defective or otherwise remedy such defect.
16. Other Matters giving cause for Damages and/or Termination
---------------------------------------------------------
16.1 In the event that CDKX's parent or holding company ▇▇▇▇▇▇.▇▇▇, Inc., a
company incorporated in the state of Delaware, the United States of
America and whose registered office is situate at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, New York 11530 ("CDKX Parent") :-
(a) fail to or not have the Shares (i) registered with the SEC
pursuant to Section 12(g) of the Exchange Act and (ii) eligible
for trading on the National Association of Securities Dealers
Over-the-Counter Bulletin Board ("OTCBB") or any nationally
recognized stock exchange or electronic trading system (a
"National Exchange") on or before 28 February 2000 for whatever
reasons; or
(b) (in respect of the Shares) fail to maintain a listed company
status or otherwise become ineligible for trading on the OTCBB
or on any other National Exchange on or prior to 1 July 2000,
save and except in the following circumstances :-
(i) the Shares cease to be so listed due to CDK ceasing to
have a class of equity securities registered under the
Exchange ▇▇▇ ▇▇▇▇ ; and
(ii) the termination of such listing was as a result of a
voluntary act or decision of CDK and its shareholders and
whereby such voluntary act or decision leads to a general
offer being made to all shareholders of CDK for all the
Shares being held by such shareholders; or
(c) on or before 1 July 2000 :-
(i) be subject to any proceedings relating to bankruptcy,
winding up or insolvency in any courts of competent
jurisdiction; or
(ii) shall cease, or shall threaten to cease, to carry on its
business; or
(iii) APL shall terminate the Subscription Agreement (in
accordance with the terms therein) as mentioned in Clause
16.2 below.
(Sub-Clauses 16.1 (a), (b) and (c) are collectively hereinafter
called "Events of Default")
-18-
APL shall have the following rights and option to EITHER :-
(A) terminate this Agreement forthwith on giving written notice to
CDKX and to recover from CDKX the amount of all damages and
loss suffered by APL as a result of the Events of Default by
CDKX. Upon such termination (if applicable) shall also be
entitled to by notice in writing to CDKX Parent within a period
of [twenty-eight (28)] days upon APL becoming aware of the
happening of any of such events (whichever is later) to
terminate the Subscription Agreement hereinafter mentioned in
Clause 16.2 below between APL and the CDKX Parent;
OR
(B) elect to treat this Agreement as continuing and continue to
retain and use the Hardware, the Other Software and Software
and CDK Technology(TM) of the System so long as this Agreement
is in existence or is continued. Shall APL elect to treat this
Agreement as continuing APL shall (if applicable) also be
entitled to (at its discretion) to by notice in writing to CDKX
Parent within a period of [twenty-eight (28)] days upon APL
becoming aware of the happening of any of such events
(whichever is later) to terminate the Subscription Agreement
hereinafter mentioned in Clause 16.2 below between APL and the
CDKX Parent.
16.2 Whereas APL and CDK Parent have agreed to enter into a Subscription
Agreement for the subscription by APL of 1,800,000 common shares of CDK
Parent's Shares s ("the Subscription Shares") upon the following terms
(but not limited to such other terms as may be agreed by both parties)
:-
(a) Upon the signing by APL and CDK Parent of the Subscription
Agreement, APL shall pay to CDK Parent US$100,000.00 for the
issue and allotment by CDK Parent of 200,000 common shares of
CDK Parent's Shares to APL;
(b) On or before 30 December 1999, APL shall pay to CDK Parent
US$150,000.00 for the issue and allotment of 300,000 common
shares of CDK Parent's Shares to APL;
(c) On or before 28 January 2000 APL shall pay to CDK Parent
US$150,000.00 for the issue and allotment by CDK Parent of
300,000 common shares of CDK Parent's Shares to APL;
(d) On or before 29 January 2000 APL shall pay to CDK Parent
US$150,000.00 for the issue and allotment by CDK Parent of
300,000 common shares of CDK Parent's Shares to APL;
(e) On or before 30 March 2000 APL shall pay to CDK Parent
US$150,000.00 for the issue and allotment by CDK Parent of
300,000 common shares of CDK Parent's Shares to APL;
-19-
(f) On or before 28 April 2000 APL shall pay to CDK Parent
US$150,000.00 for the issue and allotment by CDK Parent of
300,000 common shares of CDK Parent's Shares to APL;
(g) On or before 30 May 2000 APL shall pay to CDK Parent
US$50,000.00 for the issue and allotment by CDK Parent of
100,000 common shares of CDKX Parent's Shares to APL;
In the event that APL shall either (i) fail to make any of the payments
described in this Clause 16.2 above on their respective due dates or
(ii) CDKX Parent shall terminate the Subscription Agreement (in
accordance with the terms therein) on or before 1 July 2000 or (iii)
CDKX shall terminate this Agreement in accordance with the terms of
this Agreement , then (without prejudice to any other rights and
remedies of CDKX) :-
(a) CDKX shall have the right to forthwith terminate this
Agreement; and/or
(b) (if applicable) CDKX shall be entitled by notice in writing to
APL within a period of [twenty-eight (28)] days upon CDKX
becoming aware of the happening of any of such events
(whichever is later) (for and on behalf of the CDKX Parent) to
terminate the said Subscription Agreement between the CDKX
Parent and APL.
17. Terms of Payment
----------------
17.1 The costs and expenses in relation to the provision of the Maintenance
Services, supply of and installation of the Other Software, Software
and the Hardware, Training, Documentation, Upgrade and Enhancement and
other provisions within the scope of this Agreement (save as to the
Licence Fee) shall be :-
(a) US$100,000.00 payable by APL to CDKX on the 30th day of May
2000 provided the System is Ready for Use by the Ready for Use
Date and provided further that this Agreement is not terminated
by APL in the meantime; and
(b.1) APL shall issue and allot to CDKX the Consideration Shares and
credited as fully paid and on the terms that they rank pari
passu in all respects with the other shares of APL in issue as
at the date of allotment.
Share Completion shall take place on the Completion Date or on
the Ready for Use Date (whichever is later). Shall this
Agreement be terminated due to the System not being Ready for
Use as per Clause 10 then no Consideration Shares shall be
allotted and issued by APL to CDKX mentioned herein this
Clause.
-20-
At the Share Completion APL shall procure that :-
(i) APL shall allot and issue credited as fully paid the
Consideration Shares to CDKX in the register of member of
APL as registered holder of the Consideration Shares; and
(ii) APL shall issue and deliver to CDKX appropriate share
certificates for the Consideration Shares duly executed
by APL.
(b.2) Subject to Clause 17.1 (b.3), APL hereby agrees and undertakes
with CDKX that it will not for a period of one (1) year after
the Share Completion or before the shares in any members of
APL's Group of Companies shall become listed on any recognized
stock exchange (whichever is earlier) ("the Restricted
Period") :-
(i) allot and issue any shares in APL; or
(ii) issue securities or any instrument convertible into
shares or debentures, or share warrants or options in
respect of shares in APL;
at a price less than the Consideration Share Price to any
other persons without the prior consent in writing of CDKX
Provided that the restrictions herein contained shall not
apply to :-
(i) the issue and allotment of approximately [10,000] common
shares of par value US$0.01 of APL by APL to Fairyoung
Holdings Limited or any of its subsidiaries and which
number of shares were contemplated in calculating the
percentage of Consideration Shares to CDKX; or
(ii) the issue and allotment of shares in any party hereto
pursuant to the exercise of any rights under the share
option plan in force from time to time for the benefits
of the executives and employees of APL.
(b.3) Notwithstanding the restrictions contained in Clause 17.1
(b.2), APL shall be entitled to do any of the matters
restricted pursuant to Clause 17.1 (b.2) without the prior
consent in writing of CDKX during the Restricted Period
Provided that it shall simultaneously upon the happening of
such event issue and allot such number of additional shares in
itself (excluding fraction of a share if any) to CDKX as shall
be necessary to ensure that no dilution shall take place in
relation to the share ownership and in the value of its shares
held by CDKX contemplated by this Agreement by reason of its
doing such matters but not otherwise.
17.2 The consideration and fees in respect of the Licence payable by APL to
CDKX in respect of the Software shall be a sum equivalent to 2% of the
gross revenue of APL
-21-
and APL's Group of Companies (whether or not such revenue is directly
or indirectly related to the CDK Technology(TM)) and which said sum
shall be paid bi-annually within 15 days after the end of each 6
calendar months beginning with the 6 calendar months ending 31 December
1999. Such bi-annual payments will be based on the estimated gross
revenue, which estimate will be made by APL in good faith and which
shall be reconciled annually within 45 days of the end of each of APL's
relevant financial or accounting year which is [31 March] by a
reputable auditor or accounting firms. Such reconciliation shall be in
writing and delivered to CDKX. In the event the estimated payments are
less or more than the reconciled financial statements/accounts of APL
then the relevant party shall pay the difference between the estimated
payments made and the reconciled amount that was due, which payment
along together with interest calculated 8% per annum of any under
payment (if any) (i.e. 8% per annum on the aggregate difference between
the estimated payments made and the reconciled amount due and which
have been under paid to CDKX). The amount of the difference shall be
delivered with the reconciliation or within 7 days thereafter.
17.3 It is expressly agreed that (save as provided in this Clause 17.3)
where any installation, training or maintenance is to be provided by
CDKX within this Agreement APL shall be responsible for CDKX's
accommodation and food costs and expenses incurred (but not otherwise)
due to CDKX's staff, employee, agent or contractor travel to the
Location during such period of installations, maintenance or training.
APL shall arrange for and provide reasonably acceptable accommodations
and will promptly reimburse CDKX for such food and accommodation costs
and expenses incurred by CDKX but not otherwise and provided such
accommodation, food and costs are reasonable and reasonably and
normally expected of such person in such capacity to conduct the
Training, Installation and Maintenance Services and in any event the
total cost or expense per installation, training or maintenance (as the
case may be) do not exceed [US$3,500.00] per person, per week and such
persons do not exceed two per given period or time of training,
maintenance or installation (as the case may be).
18. Training
--------
18.1 Upon request of APL, CDKX shall provide the staff of APL with the
training as specified in the Training Plan set out in Schedule 4, if
any, provided therein.
18.2 Any additional training required by APL shall be provided by the CDKX
if requested by APL. Such additional training and support (including
that of Section 18.3) shall be by way of telecommunication or other
suitable media of communication with APL and not at the Location of APL
and at a time reasonably convenient to both parties.
18.3 Upon the request of APL, CDKX agrees to provide all necessary training,
the Other Software and Software, and technical support in order to
assist APL to support its own websites, hardware and software
applications which are related to CDK enabled products and websites.
CDKX hereby agrees to make available within a reasonable time after
request by APL such training staff, hardware and software from time to
time.
-22-
19. Maintenance Services
--------------------
CDKX shall, during the continuance of this Agreement, provide training
(if possible and within CDKX's ability to) on an ongoing basis to APL
to assist APL to (i) conduct such maintenance services and (ii) to
procure such other relevant parties to carry out such maintenance
services (as applicable) as necessary to maintain the System (except
the Hardware) in its full and proper working order and (iii) to remedy
any defaults, breakdown, or System (except the Hardware) failure within
a reasonable time, all as set forth in Clause 21 below.
20. Maintenance of the Hardware
---------------------------
20.1 Within the period of eight (8) months specified in Clause 6.3 of this
Agreement and provided APL have not purchased or returned the relevant
One Set Unit or Hardware, CDKX shall provide the following :-
Where any of the Hardware is under warranty, guarantee or service
agreement by a third party to CDKX or CDKX is able to benefit in any
way or manner from such Hardware warranty, guarantee or service
agreement (as the case may be) then CDKX shall use reasonable
commercial efforts to procure the relevant party to perform such
relevant preventative maintenance or remedial maintenance which such
party is obligated to perform in respect of the Hardware (at no
additional costs, expenses or charges to APL), provided however that
CDKX shall not be obligated to incur any costs in connection therewith.
Where the Hardware is under no such warranty, guarantee or service
agreement as above or APL have in the meantime returned or purchased
the One Set Unit or Hardware then CDKX shall provide training (if
possible and can be done by CDKX) to APL within the eight (8) months
period described in Clause 6.3 of this Agreement as to how to conduct
and perform remedial or preventative maintenance of the Hardware at no
unreasonable costs, expenses or charges to APL. Training shall be given
by CDKX and at a such appropriate times and reasonable manner and at
the request of APL. The training shall be carried out at the Location
during the period of installation of the Hardware and afterwards if
possible or through some appropriate form or media of communication
with APL ("Training").
20.2 Where applicable APL shall make the Hardware at the Location accessible
to such person CDKX is able and under obligation to procure for
maintenance at regular intervals or at scheduled times to be mutually
agreed between APL and CDKX.
20.3 Unless otherwise provided for in any of the Hardware's warranty,
guarantee or service agreement (if any) APL shall at its own expense
provide all necessary replacement parts to effect all maintenance
services including the consumable parts for the Hardware.
-23-
20.4 In the event that CDKX or such relevant person obligated under
warranty, guarantee or service agreement of the relevant Hardware
removes any part or parts of the Hardware away from the Location for
overhaul or repair, unless otherwise agreed by both parties APL shall
bear all the costs, including but not limited to packing, carriage and
insurance incurred in the dismantling, removal, overhaul, repair,
return and re-installation of the said part or parts.
20.5 Parts removed shall become the property of CDKX provided always that
APL shall be entitled to retain any part which is to be replaced if
CDKX is unable to erase all the data stored in any form in such parts
of the Hardware. CDKX shall, before removal of any such part, certify
to APL in writing that all information stored in such part has been
completely erased and shall be liable for any loss or damage caused by
the possession or use of any information remaining in any part of the
Hardware so removed.
20.6 Any of the Hardware not under a warranty, guarantee or service
agreement and which do not cover repair, parts, overhaul, etc. (as the
case may be) and which require repair, replacement, overhaul, etc. the
cost of such repair, part, replacement, etc. shall be borne by APL.
21. Maintenance of the Software
---------------------------
21.1 CDKX shall provide the following maintenance services in respect of the
Software on the terms and conditions as set out hereunder.
21.2 Error Correction
21.2.1 Upon receipt of notification from APL that there is any defect
or error in the Software that affect the operation of the
System, CDKX shall correct such defect or error as soon as
reasonably practicable at its own expenses.
21.2.2 Forthwith upon such correction being completed CDKX shall
deliver to APL appropriate amendments to the Documentation
specifying the nature of the correction and providing
instructions for the proper use of the corrected version of the
Software.
21.3 Upgrades and Enhancements
21.3.1 CDKX shall deliver to APL any improved version of the Software
when and as they become available.
21.3.2 In reasonable time prior to the delivery of a new release CDKX
shall make available to APL all amendments to the Software's
specification which shall be necessary to describe the
facilities and functions of the new release.
-24-
21.3.3 Notwithstanding anything else contained herein, APL shall not
be obliged to accept or use the new release if its use would
result in any of the facilities and functions of the System
being diminished or curtailed or if its use would unduly
interrupt the use of the Software in which event CDKX shall
continue to perform its obligations in respect of the Software.
CDKX's obligations under this Agreement with regard to the
Software shall also apply to any such new version or
replacement thereof.
21.3.4 It is an essential term of this Agreement that CDKX shall (and
CDKX hereby agrees to) make modifications, enhancements
upgrades or further development from time to time of and on the
Software at the request in writing by APL (which request must
not be unreasonable and be within the scope of current and
available technology and software on the market and relate to
CDKX's development plan). CDKX undertakes to make complete,
available and install the same on the Hardware such upgrade,
modification, enhancement and development to the Software upon
such reasonable request by APL within a reasonable time and as
soon as possible.
21.4 CDKX shall provide and perform the Software support services in a
reasonable and timely manner.
21.5 CDKX undertakes to perform its obligations with respect to the
maintenance of the Software or any new version or replacement thereof
in accordance with the terms of this Agreement for as long as its
obligations under this Agreement to maintain the Software remain in
existence.
22. Title to and Risk in the System
-------------------------------
22.1 All copyright or other proprietary rights in the Software and Other
Software and material and Hardware hired from CDKX pursuant to the
provisions of this Agreement (except those otherwise specified and
except for the relevant Hardware purchased by APL) shall vest in and
remain the property of CDKX notwithstanding that APL has acquired the
right of use of them by this Agreement. All software and hardware
purchased and owned by APL and Data (save such Data that was collected
on or through the "Com Module" or messaging system of CDKX) collected
or used, from, in or by the System pursuant to the provisions of this
Agreement shall vest in and remain the property of the APL.
22.2 APL shall be liable for the Hardware which are hired by APL from CDKX,
except to the extent of fair wear and tear in the ordinary course of
its use.
22.3 APL shall be liable for damages to the Hardware which are hired by APL
from CDKX save for damages as a result of the Hardware itself which was
defective or the Hardware's design, workmanship, material,
installation, configuration or manufacture
-25-
or caused by or as a result of CDKX's act (whether intentionally or not
or whether by CDKX's agent, employee, authorized person or contractor).
23. Proprietary Rights
------------------
The copyright and other intellectual property rights of whatever nature
in the Software (save as provided in this Agreement) are and shall
remain the property of the CDKX and CDKX reserves the right to grant a
licence to use the Software (save as provided in Clause 12 of this
Agreement) to any other party or parties.
24. Copying
-------
APL may make so many copies of the Software as are reasonably necessary
for the operational, security and use of the System and for its
reasonable course of business, all of which copies shall be returned to
CDKX upon the termination of the Licence. APL will notify CDKX in
writing of each such copy.
25. Confidentiality
---------------
25.1 APL's Confidential Information
Each party shall treat as confidential all information (hereinafter
referred to as ("the Information")) supplied by one party to the other
under this Agreement which is designated as confidential by such party
or which is by its nature clearly confidential (including without
limitation the Documentation) provided that this Clause shall not
extend to any information which was rightfully in the possession of the
relevant party prior to the commencement of the negotiations leading to
this Agreement or which is already public knowledge or becomes so at a
future date (otherwise than as a result of a breach of this Clause).
Neither party shall divulge any confidential information to any person
except to its own employees and then only to those employees who need
to know the same. Both parties shall ensure that its employees are
aware of and comply with the provisions of this Clause. The foregoing
obligations shall survive any termination of the Licence or this
Agreement.
25.2 Confidentiality of Software :-
25.2.1 APL undertakes to treat as confidential (and not use or allow
any third party to use except as set forth in this Agreement)
all information (including those related to the CDK
Technology(TM) and the Software) contained or embodied in the
Software (hereinafter collectively referred to as ("the
Information") provided that this Clause shall not extend to any
information which was rightfully in the possession of APL prior
to the commencement of the negotiations leading to this
Agreement or which is already public knowledge or becomes so at
a future date (otherwise than as a result of a breach of this
Clause).
-26-
25.2.2 Neither party shall without the prior written consent of the
other party divulge any part of the Information to any person
except :-
(a) the person is the relevant parties own employee and then
only to those employees who need to know the same;
(b) any government authorities and any other persons or
bodies having a right, duty or obligation to know the
business of the relevant party and then only in pursuant
of such right, duty or obligation; and
(c) any person for the time being appointed by the relevant
party to maintain any Hardware on which the Software is
for the time being used (in accordance with the terms of
the Licence) and then only to the extent necessary to
enable such person to properly maintain such Hardware.
25.2.3 Both parties undertake to ensure that the persons and bodies
mentioned in Sub-Clauses 25.2.2(a), (b) and (c) are made aware
prior to the disclosure of any part of the Information that the
same is confidential and that they owe a duty of confidence to
each other.
25.2.4 The foregoing obligations as to confidentiality shall remain in
full force and effect notwithstanding any termination of the
Licence or this Agreement.
26. Use of Data
-----------
26.1 The Data (save as for the Data collected through the Com Module or
messaging system of CDKX) shall remain the property of APL and CDKX
shall not distribute the Data to any person or party without the prior
written consent of APL.
26.2 CDKX shall not by any means distribute or alter the Data replicated
from APL for any purpose, unless it is authorized by APL to do so for
any reason whatsoever.
26.3 The Data must be returned (if in CDKX's possession) to APL when this
Agreement is terminated.
27. Independent Contractor
----------------------
27.1 For the purpose of the Work to be performed under the Agreement, CDKX
is an independent contractor. CDKX is not an agent, partner or employee
of APL and shall not hold out as such and it has no authority to bind
APL to any other obligations.
27.2 CDKX shall have complete control of the Work and it shall efficiently
direct and supervise the Work to the full extent of its ability and
with its full attention.
-27-
28. Assignment
----------
Neither party shall assign or otherwise transfer the Agreement or any
of its rights and obligations hereunder whether in whole or in part
without the prior written consent of the other. Provided however either
party may sell all or substantially all its assets or business
(including this Agreement) without consent in which event the other
party (i.e. non disposing party) shall have the right to terminate this
Agreement forthwith without any damages, claims, legal proceedings, or
action being taken or claimed by either party against each other.
29. Indemnities
-----------
29.1 CDKX warrants and undertakes :-
29.1.1 that it has good and sufficient title in the Hardware and
Software and in every part thereof to enable it to supply the
System and the Maintenance Services to APL as set out in this
Agreement; and
29.1.2 that where CDKX supplies a third party software to APL, it has
or shall have, prior to the delivery of the Software and Other
Software, a valid and continuing licence under which it is
entitled to sub-license without further payment and
intellectual property rights (including without limitation any
patent, copyright, registered design or trademark) to APL under
this Agreement; and
29.1.3 that the Other Software were properly and validly licensed to
CDKX and that CDKX is not in breach of any licence terms of
such Other Software.
29.2 CDKX shall indemnify APL and keep APL fully and effectively indemnified
against all costs, claims, demands, expenses and liabilities of
whatsoever nature arising out of or in connection with any claim that
the use or possession (in compliance with this Agreement) of the System
or any part thereof infringes the intellectual property rights
(including without limitation any patent, copyright, registered design
or trademark) of any third party, subject to the following conditions
:-
29.2.1 APL shall promptly notify CDKX in writing of any allegations of
infringement of which it has been notified and will not make
any admissions without CDKX's prior written consent provided
such consent is not unreasonably withheld so as to cause any
damages, liability, prosecution, claims, etc. by any person,
company, business, firms, entity, authority, government or body
whatsoever in addition to or in conjunction with any such
allegations;
29.2.2 APL, at the request and expense of CDKX, shall allow CDKX to
conduct
-28-
and/or settle all negotiations and litigation resulting from
any such claim provided APL are informed as to the terms of
settlement and/or litigation merits prior to any such
settlement negotiations and/or litigation action by CDKX and
provided also that APL is kept informed of all matters
throughout the duration and course of settlement and/or
litigation. Shall the terms of settlement and/or litigation
proceedings as proposed by CDKX affect or possibly affect APL
or APL's Group of Companies and/or its business in any way
either in conjunction with or in addition to any
allegations/claims/ demands/proceedings etc. against APL then
APL shall have the right to revoke its consent (if given) and
to conduct such litigation/settlement/ negotiations on its own
without consent from CDKX; and
29.2.3 APL shall, at the request of CDKX, afford all reasonable
assistance with such negotiations or litigation, and shall be
reimbursed by CDKX for any expenses incurred in so doing.
29.3 If APL's use or possession of the Hardware, Other Software or Software
or any part thereof is held by a court to constitute an infringement
then the CDKX shall, without prejudice to any other rights or remedies
APL may have, promptly and at its own expense :-
29.3.1 procure (so far as is commercially viable and possible within
CDKX's ability) for APL the right to continue using and
possessing the Hardware, Other Software and Software in
relation to the System; or
29.3.2 (so far as commercially viable and possible within CDKX's
ability) modify or replace the Hardware or Software or Other
Software (without detracting from its overall performance) so
as to avoid the infringement (in which event CDKX shall
compensate APL for the amount of any loss and/or damage
sustained or incurred by APL during such modification or
replacement); or
29.3.3 if neither Sub-Clause 29.3.1 nor 29.3.2 can be accomplished,
remove the infringing Hardware, Other Software and/or Software
from APL at CDKX's own costs and expenses (and without
prejudice to any rights or remedies of APL against CDKX).
29.4 APL warrants and undertakes :-
29.4.1 that it has good and sufficient title in any software,
hardware, material, content or data and in every part thereof
which is being used by APL in respect of the System and not
derived from CDKX;
29.4.2 where APL installs, stores, or uses a third party software,
data, content or material, it has or shall have prior to such
installation, storage, or usage a valid and continuing licence
under which it is entitled to install, use or store
-29-
and has all such intellectual property rights (including
without limitation patent, copyright, registered, design or
trademark).
29.5 Any and such indemnities, rights, or actions which APL have under
Clauses 29.2 and 29.3 in respect of an undertaking or breach of
warranty by CDKX in Clause 29.1 then the same such indemnities, rights
and actions shall be afforded and given to CDKX by APL in respect of
any such undertaking or breach of warranty by APL in Clause 29.4 and
which may affect CDKX.
30. Publicity
---------
Both parties shall submit to each other all advertising or other
publicity material relating to this Agreement or any hardware or
software supplied or other work done in connection with this Agreement
wherein the name of either of the respective parties is mentioned or
language used from which a connection with each other can reasonably be
inferred or implied. Both parties shall have the right to publish or
use any such reasonable advertising or other reasonable publicity
material without the prior written consent either party provided such
advertising or publicity material does not and is not capable of
damaging either parties reputation or business.
31. Sub-contracts
-------------
31.1 CDKX may, without the prior written consent of APL, enter into any
sub-contract with any person for the performance of any part of this
Agreement provided that this provision shall not apply to the purchase
by CDKX of equipment and materials.
31.2 Neither parties shall be relieved from any of its obligations hereunder
by entering into any sub-contract for the performance of any part of
this Agreement.
32. Termination of the Agreement
----------------------------
This Agreement may be terminated under the following circumstances :-
32.1 This Agreement may be terminated forthwith by either on giving notice
in writing to the other party if the other party, being a company,
shall have a receiver or liquidator appointed or shall pass a
resolution for winding-up (otherwise than for the purpose of
amalgamation or reconstruction) or a court shall make an order to that
effect or being a partnership shall be dissolved or being an individual
shall commit any act of bankruptcy or shall die or either party
(whether a company or not) shall enter into any composition or
arrangement with its creditors or shall become insolvent.
32.2 Any termination of this Agreement under Sub-Clause 32.1 shall discharge
the parties from any liability for further performance of this
Agreement and shall entitle such notifying party to recover from the
other party the amount of any loss or damage sustained or incurred by
the notifying part as a consequence of such termination.
-30-
32.3 Subject to any other express provisions of this Agreement, either party
shall have the right to terminate this Agreement if the other party
commits any fundamental breach of any material term of this Agreement
and (in the case of a breach capable of being remedied) shall have
failed, within 30 days (save in the circumstances where APL is under an
obligation to pay money to CDKX then such period shall be within 7
days) after the receipt of a request in writing from the innocent party
so to do, to remedy the breach, such request to contain a warning of
the innocent party's intention to terminate.
33. Effect of Termination
---------------------
33.1 Any termination of this Agreement (however occasioned) shall not affect
any accrued rights or liabilities of either party nor shall it affect
the coming into force or the continuance in force of any provision
hereof which is expressly or by implication intended to come into or
continue in force on or after such termination. Any termination of this
Agreement (however occasioned) shall terminate the Licence.
33.2 Upon termination of this Agreement, (howsoever occasioned) CDKX shall
forthwith deliver up to APL all copies of any information and Data
supplied to CDKX by APL for the purposes of this Agreement and shall
certify to the APL that no copies of such information or data have been
retained. The Hardware not purchased and paid for by APL shall be
returned to CDKX (fair wear and tear save and except) at APL's own
costs and expenses along with any Documentation.
33.3 Upon termination of this Agreement (howsoever occasioned) APL shall
forthwith deliver to CDKX all copies of any of the Documents Software
and Other Software (including those of the CDK Technology(TM)) and any
copies or reproductions thereof (whether in writing or in any format or
medium whatsoever and whether in whole or part), and if requested by
CDKX, shall destroy the same and certify to CDKX such destruction.
Further, APL shall not use, and is prohibited from any further use of
the Documentation, Software, Other Software or CDK Technology(TM)
thereafter. Furthermore, APL shall certify to CDKX that it has no
copies of such Software or information related thereto or information
related thereto and APL shall certify that it has no copies of such
Software or information related thereto.
34. Severability
------------
In the event that any condition or clause of the contract not being of
a fundamental nature is held to be illegal or unenforceable, the
validity or enforceability of the remainder of this Agreement shall not
be affected thereby.
35. Other Terms, Matters, and Conditions to be Fulfillied
-----------------------------------------------------
35.1 It is hereby expressly agreed by CDKX that APL shall be granted a
licence and shall have the right to use CDKX's proprietary right
including all the intellectual property
-31-
rights in the following trademarks and designs :-
(a) "MixFactory(TM)";
(b) the "MixFactory(TM)" device;
(c) "CDKnet(TM)"; and
(d) the "CDKnet(TM)" device
(collectively referred to as "CDK's Trademarks")
Provided always that the use of the above trademarks and designs by APL
only to be placed, copied, used or reproduced on CDs, brochures,
business cards or business advertisement or signboards, websites,
coverings and any other advertising, promotional or product material of
APL which is in relation to or connected to the CDK Technology(TM) in
conjunction with APL's business, APL's Group of Companies or
proprietary trademarks and designs thereon and provided further APL
shall pay a licence fee of US$10.00 per annum to CDKX payable on the
31st December of each calendar year until the termination of this
Agreement.
The licence and right to use the trademarks or designs described above
by APL shall commence on the date of the signing of this Agreement by
both parties and continue until the termination of this Agreement, at
which time such trademark licence shall terminate. The licence of CDK's
Trademarks shall not be terminated by either party unless in accordance
with the terms of this Agreement.
Upon the termination of this Agreement shall APL have any product,
merchandize, goods or material which contain any of CDK's Trademarks
and which is still in APL's possession, then APL shall have a period of
two (2) months from the date of termination to dispose of, sell or
transfer such merchandize, products, goods or material to any person or
party, whether or not for monetary gain or consideration and thereafter
APL shall cease and desist from using any of CDK's Trademarks or sell,
dispose, transfer or handle any goods, materials, products or
merchandize with CDK's Trademarks.
35.2 It is expressly agreed that CDKX shall use its best commercially
reasonable efforts to provide, procure, grant, allow and permit (as the
case may be) the following rights, products and facilities to APL
throughout the duration of this Agreement if requested by APL to :-
(a) procure or provide (as the case may be) hosting of a North
American mirror website to and for APL's System at suitable
site in the United States of America (the equipment for which
site will be purchased and maintained by APL); and
(b) allow APL to share the use of the existing "Real Player" video
streaming licence as CDKX may have or has licenced for its own
use; and
-32-
(c) procure or provide (as the case may be) free usage and
accommodation of one office room or premises at such location
in the United States of America where CDKX shall maintain or
have an office for APL's employee or staff; and
(d) provide (at cost) usage and equipment of a "CDK robot system"
at the said premises described in Sub-Clause (c) above.
It is hereby agreed by CDKX that it shall procure, allow and make
available all of the above rights, products, facilities and software to
APL within 30 days from the date of execution of this Agreement by both
parties or by the Ready for Use Date (whichever is later). It is
further agreed that shall the cost and expenses to CDKX in procuring or
providing items (a), (b), (c) and/or (d) above exceed US$2,000.00 then
APL shall bear any and such of the excess amount above US$2,000.00.
35.3 It is also agreed that such of the rights APL shall have in Clause 35.2
to be procured or provided by CDKX, CDKX shall have the same rights
procured or provided by APL to CDKX save that the premises or location
shall be in Hong Kong where APL maintains an office or premises.
36. Duration of the Contract
------------------------
This Agreement shall commence from the date of this Agreement and
continue for an initial period of 5 years and after that for a further
period of 5 years unless terminated by either party or giving not less
than 3 months' prior written notice before the expiration of the
initial 5 year period (and which notice shall not be served more than 6
months prior to the expiry of the initial period) or unless terminated
in accordance with the provisions of this Agreement.
37. Hire Equipment
--------------
37.1 Risk in any hired equipment supplied by CDKX shall remain with APL
until returned to CDKX.
37.2 Upon the expiry of eight months after the Completion Date or earlier
termination of this Agreement, and unless APL have exercised its option
to lease or purchased the One Set Unit or the Hardware, APL shall
deliver the hired equipment not purchased or lease to CDKX as described
in Clause 6.3 of this Agreement.
37.3 CDKX shall accept hired equipment returned by APL in reasonable
condition with fair wear and tear expected without further payment
being required. CDKX shall provide an acknowledgement to APL of receipt
of hired equipment in accepted condition upon delivery and testing.
37.4 APL shall properly and sufficiently take out proper insurance for the
Hardware against any foreseeable damages or loss thereto save for such
events under Clause 42 and
-33-
whereby such insured amount is adequate to cover the value of the
Hardware of not less than US$94,400.00 per One Set Unit unless APL has
purchased the relevant Hardware in the meantime.
38. Entire Agreement
----------------
This Agreement supersedes all prior agreements, arrangements and
undertakings between the parties and constitutes the entire agreement
between the parties relating to the subject matter hereof. No addition
to or modification of any provision of this Agreement shall be binding
upon the parties unless made by a written instrument signed by a duly
authorized representative of each of the parties.
39. Law and Jurisdiction
--------------------
39.1 This Agreement shall be governed by and construed in all respects in
accordance with the laws of the state of New York in the United States
of America ("New York") and the parties hereby irrevocably submit to
the non-exclusive jurisdiction of the Courts of New York.
39.2 Each of the following parties hereby irrevocably appoints (subject to
written notie of substitution) the person set opposite its name below
as its agent to acknowledge and accept service of legal process on
behalf of such party in :-
PARTIES NAMES OF ADDRESSES OF AGENTS
------- ----------------------------
CDKNet, LLC ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America 11530
Asia Pioneer Limited ▇▇▇▇▇ ▇.▇. ▇▇▇▇
▇▇▇▇ ▇▇.▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇, ▇▇▇▇▇▇▇ Garden,
▇▇▇▇ ▇▇▇, Kowloon,
Hong Kong
40. Service of Notice
-----------------
40.1 Any notice required to be given under this Agreement shall be
sufficiently given if delivered personally or forwarded by
internationally recognized overnight couriers or sent by facsimile
transmission to the relevant party at its address or fax number set out
below (or such other address as the addressee has by five days prior
written notice specified to the other parties) :-
To CDKX : ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America 11530
-34-
Fax Number : (▇▇▇) ▇▇▇ ▇▇▇▇
Attention : ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
To APL : ▇▇▇▇ ▇▇.▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇, ▇▇▇▇▇▇▇ Garden,
▇▇▇▇ ▇▇▇, Kowloon,
Hong Kong
Fax Number : (▇▇▇) ▇▇▇▇ ▇▇▇▇
Attention : ▇▇▇▇▇ ▇.▇. ▇▇▇▇
40.2 Any notice delivered personally shall be deemed to have been served at
the time of delivery. Any notice sent by internationally recognized
overnight couriers shall be deemed to have been served 3 business days
after the time at which it was delivered to the courier, the tracking
receipt shall be sufficient to prove such service and notices sent by
facsimile transmission shall be deemed to have been served one business
day after transmission.
41. Waiver
------
No forbearance, delay or indulgence by either party in enforcing the
provisions of this Agreement shall prejudice or restrict the rights of
that party nor shall any waiver of its rights operate as a waiver of
any subsequent breach and no right, power or remedy herein conferred
upon or reserved for either party is exclusive of any other right,
power or remedy available to that party and each such right, power or
remedy shall be cumulative.
42. Force majeure
-------------
Neither party will be liable for any delay in performing or failure to
perform any of its obligations (other than a payment obligation) under
this Agreement due to any cause outside its reasonable control. Such
delay or failure will not constitute a breach of this Agreement and the
time for performance of the affected obligation will be extended by
such period as is reasonable.
43. Extent of Liability
-------------------
Notwithstanding any other terms of this Agreement, CDKX's liability to
APL (if any) arising under or out of this Agreement (save as to the
indemnities given under Clause 29 by CDKX) shall be limited to not more
than US$100,000.00 in aggregate total.
44. Provision of Other Software
---------------------------
CDKX shall provide to APL the Other Software at no additional costs and
expenses to
-35-
APL. CDKX shall install the Other Software on the Hardware by the Ready
for Use Date.
Upon receipt of notification from APL that there is any error or defect
in the Other Software that affect the operation of the System, CDKX
shall use its best endeavours to procure such software manufacturer or
provider to correct such defect or error as soon as reasonably
practicable at its own expense and provided the Other Software is under
such warranty, guarantee or service agreement to be maintained or
replaced in such event of defect or error.
CDKX shall deliver to APL any improved or enhanced version of the Other
Software when and as they become available and which CDKX may have in
its possession at the request of APL at no additional cost.
45. Warranties as to APL Shares
---------------------------
45.1 In consideration of CDKX agreeing to enter into this Agreement APL
warrants and represents to CDKX as at the date of this Agreement that
:-
45.1.1 the particulars of APL contained in Schedule 9 are true and
accurate in all respects;
45.1.2 all returns particulars resolutions and other documents
required to be filed with the relevant authorities in the
Cayman Islands by APL have been duly filed and APL has complied
with all legal requirements in connection with its formation
and with all isues of its shares;
45.1.3 following the implementation Clause 17 in relation to the
Consideration Shares CDKX will be the beneficial owner of
approximately four and eighty-nine one hundredths per cent
(4.89%) of the equity share capital of APL as at the date of
allotment of the Consideration Shares to CDKX;
45.1.4 the Consideration Shares shall be allotted and issued credited
as fully paid and on terms that they will rank pari passu in
all respects with the [common] shares in APL in issue as at the
date of allotment of the Consideration Shares;
45.1.5 since the date of incorporation of APL :-
(a) each of APL and APL's Group of Companies has carried on
its business in the ordinary and usual course;
(b) no distribution of capital or income has been declared
made or paid in respect of any share capital of each of
APL and APL's Group of Companies;
-36-
(c) each of APL and APL's Group of Companies has not assumed
or incurred any liabilities or expenditure otherwise than
in the ordinary course of carrying on its day-to-day
business;
(d) there has been no material adverse change in the
financial position of each of APL and APL's Group of
Companies;
45.1.6 the assets and equipment acquired by each of the APL and APL's
Group of Companies since the date of incorporation of APL are
the property of and owned by APL and/or APL's Group of
Companies (as the case may be) and are not subject to any
debenture, mortgage, encumbrance or charge or any other third
party interest;
45.1.7 all debts owed to each of APL and APL's Group of Companies will
be good and collectable in the ordinary course of business;
45.1.8 (a) all necessary licences consents permits and authorities
have been obtained by each of APL and APL's Group of
Companies to enable each of them to carry on its business
lawfully and effectively in the places and in the manner
in which such business is now carried on;
(b) each of APL and APL's Group of Companies has not done or
omitted to do anything in contravention or breach of any
statute order or regulation or the like in Cayman
Islands, Hong Kong or elsewhere applicable to it or its
business and giving rise to any fine, penalty, default
proceedings or other liability on its part;
(c) each of APL and APL's Group of Companies has conducted
and is conducting its business in accordance with
applicable laws and regulations in Cayman Islands, Hong
Kong or elsewhere applicable to it;
45.1.9 there are no agreements or arrangements entered into by each of
APL and APL's Group of Companies otherwise than by way of
bargain at arm's length and all contracts are entered into in
the normal course of business;
45.1.10 each of APL and APL's Group of Companies is not engaged either
on its own account or vicariously in any material litigation or
arbitration or tribunal proceedings and no litigation
arbitration or tribunal proceedings are pending or threatened
by or against each of APL and APL's Group of Companies;
45.1.11 (a) there are not in existence any contracts of service with
directors or employees of each of APL and APL's Group of
Companies which cannot be terminated by notice without
giving rise to any claim for damages or compensation
(other than under any relevant employment
-37-
legislation);
(b) each of APL and APL's Group of Companies and their
respective employees are not involved in any industrial
dispute;
45.1.12 (a) each of APL and APL's Group of Companies has properly
made all returns and provided all other information
required for the purposes of taxation and none of such
returns is disputed by the Inland Revenue Department,
Hong Kong or any other authority concerned;
(b) all payments by each of APL and APL's Group of Companies
to any person which ought to have been made under
deduction or withholding of tax have been so made and
each of APL and APL's Group of Companies has (where
required by law to do so) accounted to the Inland Revenue
Department, Hong Kong for the tax deducted or withheld.
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SCHEDULE 1
----------
(Hardware)
CDKX shall provide the following minimum Hardware configuration to APL as set
out herein to make the System functional and operational :-
Description Quantity Value (US$)
----------- -------- -----------
1. MixFactory(TM) CD Robot Station 2 $60,000.00
- One (1) Main robot [total 2] (each)
- Four (4) 4X CD burners [total 8]
- Four (4) 12X CD readers [total 8]
- One (1) Rimage B&W printer [total 2]
- One (1) Workstation [total 2]
2. MixFactory(TM) Database System 1 $18,500.00
- One (1) main database server
- Two (2) raid systems
- One (1) gadzoox hub
3. Jewel Box Insert Printing System 1 $12,900.00
- One (1) printing workstation
- One (1) color printer
4. MixFactory(TM) Web System 1 $3,000.00
- One (1) main web server
- One (1) basic workstation (admin.)
- One (1) real audio server* (not including license)\
NB - All of the above described equipment together comprise the Hardware.
- One (1) MixFactory(TM) Robot Station, One (1) MixFactory(TM) Database
System, One (1) Jewel Box Insert Printing System; and One (1)
MixFactory(TM) Web System together comprise One Set Unit of the
Hardware and is valued at US$94,400.00.
- Each individual item of the Hardware as listed above shall be known as
"Units" with a value as set out beside such Units.
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The Hardware shall be installed and have the minimum equipment and configuration
as per diagram below.
[DIAGRAM]
-40-
SCHEDULE 2
----------
(System)
Background
----------
Whereby CDKX has developed the software and the applications necessary and known
as CDK Technology(TM) which combines CD digital audio, fullmotion, fullscreen
video and weblinking through a browser interface. And whereas the said
technology is combined with a HTML authorizing system which is currently used by
CDKX to produce custom interface pages for specific clients within a period of
time. And whereas CDKX has the proprietary techniques and rights for creating
fullmotion, fullscreen video playback from CD Rom with such relevant hardware
system requirements. The technology employed, designed and engineered by CDKX is
engineered for mass production whereby the integration of the complete file
structure of the technology used by CDKX is automated. (Audio, video and HTML
assets can be placed in the production template for processing within a
reasonably efficient and quick development turn-around time.)
Currently CDKX has a "MixFactory(TM)" which is a custom, multi-session CD
manufacturing system built upon the CDK Technology(TM). The entire system is
automated so that minimum human intervention is required for the custom
manufacturing process. In order to create a custom CD, a user visits a website
and selects a compilation of audio, video, or other content titles. Titles are
browsed and/or searched and audio/video clips are previewed through an
interface. After selecting the compilation, the user personalizes the disc by
selecting art work for the disc label, cover and HTML interface. The
MixFactory(TM) system also allows multimedia content providers to offer their
assets on a customized basis via the website.
CDKX's MixFactory(TM) operation is designed to be a complete end-to-end
e-commerce solution, including production, payment processing and fulfillment.
Once the user confirms the content selections and completes a credit card
transaction, the selected titles are queued from storage to a Compact Disc
Recordable ("CD-R") burning workstation. The customer's tracks are formatted
into a Red Book audio session along with an iso9660 session and transferred
together to the CD-R (disc). The automated workstation transfers the complete
CD-R to the CD printer where the user-selected label is printed onto the surface
of the CD-R.
In parallel with the transfer of the tracks to the CD-R, the custom packaging
materials are printed. That is, as soon as the job is queued for burning, the
printed job is also queued to the printer. Packing and shipping of the finished
product is currently the only manually operated step in the process.
APL's System and Use
--------------------
It is APL's intention (and CDKX has hereby agreed) to employ and use the CDK
Technology(TM) and CDKX's system as described above for the development,
marketing and operation of APL's websites and other businesses which shall be
similar in nature, operation and business as CDKX's MixFactory(TM) website and
business operations save that the contents shown offered
-41-
and displayed on APL's websites and other businesses shall be for the primary
usage, business, services, marketing and promotion to persons who are interested
in Chinese content including, but not limited to all forms of Chinese media,
literature, audio-visual content and all other materials and/or data that can be
presented electronically or digitally. CDKX shall provide, install and maintain
the Hardware and Software and grant the exclusive use of the CDK Technology(TM)
in order that APL may develop its websites and other businesses for the purposes
described above in addition to being able to support the following (but not
limited to) :-
(a) Chinese contents (text, sounds, images or other type of data,
information or material);
(b) digital entertainment contents;
(c) distribution for independent music artists and labels with links to
APL's websites and other businesses;
(d) support and provide the manufacturing process for the custom CDs and CD
contents to be distributed or manufactured;
(e) website services to be provided by APL such as trading, information
content, , services, communication to or by the customers with APL and
all other foreseeable website services as similar to CDKX's
MixFactory(TM) or CDKNet websites;
(f) support content providers' contents;
(g) e-commerce including production, payment processing and fullment either
by credit card or other method;
(h) a method whereby the consumer will be able to view the information on
the CD via his or her personal computer and link back to related Web
pages through targeted links included on the CD;
(i) the ability for consumers to receive high-quality, high-bandwidth
digital assets within a quick relay time without waiting hours for the
files to download;
-42-
SCHEDULE 3
----------
(Implementation Plan)
------------------------------------------------------------------------------
Stage Description Date
------------------------------------------------------------------------------
Not later than
------------------------------------------------------------------------------
1 CDK 2.0 Software(c) & Training 6 December 1999
------------------------------------------------------------------------------
2 MixFactory(TM) Database System Delivery 6 December 1999
------------------------------------------------------------------------------
3 Documentation Delivery 6 December 1999
------------------------------------------------------------------------------
4 MixFactory(TM) CD Robot Systems Delivery 15 December 1999
------------------------------------------------------------------------------
5 MixFactory(TM) Hardware Installation & Testing 10 January 2000
------------------------------------------------------------------------------
6 MixFactory(TM) Hardware Training 10 January 2000
------------------------------------------------------------------------------
7 Pilot Run Completed 15 January 2000
------------------------------------------------------------------------------
8 System Live Run 20 February 2000
------------------------------------------------------------------------------
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SCHEDULE 4
----------
(Training Plan)
The following courses are provided for the staff of APL :-
Course Title Appx. Training Date Duration
------------ ------------------- --------
CDKMastering(TM) Software 2 December 1999 2 days
MixFactory(TM) software and hardware 10 January 2000 5 days
usage and maintenance
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SCHEDULE 5
----------
(Documentation)
(a) Hardware
--------
Description No. of copies
----------- -------------
"Not Applicable"
(b) Software
--------
Description No. of copies
----------- -------------
"Not Applicable"
(c) Other
-----
Description No. of copies
----------- -------------
1. System Manual One (1)
2. Operation Manual One (1)
3. Data Manual One (1)
4. User Manual One (1)
5. User Guide One (1)
-45-
SCHEDULE 6
----------
(Location)
Address: ▇▇▇▇ ▇▇.▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇, ▇▇▇▇▇▇▇ Garden,
▇▇▇▇ ▇▇▇, Kowloon
Hong Kong
-46-
The following is a floor plan of the above premises where the Hardware is to be
delivered and installed :-
[FLOOR PLAN]
-47-
SCHEDULE 7
----------
(Installation Tests)
CDKX shall provide a test plan for the acceptance of Hardware, Software and
related facilities to be installed under this Agreement.
-48-
SCHEDULE 8
----------
(Other Software)
Item Ref. No. Description Quantity Remarks
---- -------- ----------- -------- -------
RealPlayer G2
Windows NT Version 4.0
-49-
SCHEDULE 9
----------
NAME : ASIA PIONEER LIMITED
PLACE OF INCORPORATION : Cayman Islands
COMPANY NO. : CR-93228
AUTHORIZED SHARE CAPITAL : US$50,000.00 divided into 5,000,000 [common]
shares of par value US$ 0.01each
ISSUED SHARE CAPITAL : US$1.00 comprising of one hundred (100) common
shares of par value US$0.01 as at the date of
this Agreement and to be increased to
US$1,000.00 comprising of 100,000 common shares
of par value US$0.01 at the date of the
completion of the issue and allotment of
Consideration Shares to CDKX
REGISTERED OFFICE : ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
DIRECTORS : Keith Tak ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇
-50-
AS WITNESS the parties hereto have duly executed this Agreement the day and year
first above written in its counterpart as an Agreement.
SIGNED by )
)
for and on behalf of CDKNET, LLC. )
in the presence of :- )
)
)
SIGNED by ▇▇▇▇▇ ▇.▇. ▇▇▇▇ and )
▇▇▇▇▇ S.S. Hui )
for and on behalf of ASIA PIONEER LIMITED in the )
presence of :- )
)
/s/ ▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇▇ ▇. ▇▇▇
Solicitor
Aggarwal & Associates
Hong Kong SAR
-51-
AS WITNESS the parties hereto have duly executed this Agreement the day and year
first above written in its counterpart as an Agreement.
SIGNED by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ )
President of Managing Member )
for and on behalf of CDKNET, LLC. ) /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
in the presence of :- ▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇ )
)
)
SIGNED by )
)
for and on behalf of ASIA PIONEER LIMITED in the )
presence of :- )
)
-51-