Exhibit 10.7
Elite Business Machines Manufacturing Company Limited
MANUFACTURING AGREEMENT
This Manufacturing Agreement ("Agreement") is entered into at ▇▇▇▇ ▇▇▇▇,
Kowloon, Hong Kong, on March 10, 2004, between Elite Business Machines
Manufacturing Company Limited, a Hong Kong incorporated company whose principal
office is at 10th Floor, Elite Industrial Building, 135 - 137 Hoi Bun Road, ▇▇▇▇
▇▇▇▇, Kowloon, Hong Kong ("EBM"), and FreeHand Systems Inc., whose office is at
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇.▇.▇. ("FreeHand").
In consideration of the mutual promises contained herein, the parties agree as
follows:
1. DEFINITIONS
(a) In this Agreement and the Exhibits, each of the following expressions
has the following meaning unless the context otherwise requires:
"Delivery Date" means an anticipated date of delivery of the Products
to FreeHand by EBM as specified by FreeHand in a Purchase Order.
"Equipment" means the tools, machinery and equipment of FreeHand as
referred to in Clause 3.
"Handling Charge" means any handling charge payable by EBM to a Vendor
in respect of an order placed by EBM to the Vendor for Materials under
the terms of such order.
"Improvement" means any development, enhancement, improvement or other
modification or derivative of a Product, its design or manufacturing
process.
"Intellectual Property" means any patent, copyright, trademark,
registered or unregistered design, or any application for any of the
foregoing, any rights in respect of confidential information, or any
other intellectual property rights of FreeHand relating to a Product,
its design or manufacturing process.
"Know-how" means the information, formulae, data and design of FreeHand
relating to the Products or the manufacturing process of the Products
as referred to in Clause 6(a).
"Materials" means the raw materials or components to be purchased by
EBM from a Vendor in accordance with Sub-Clauses 2(e)(ii) and 2(e)(iii)
for the manufacture of the Products under the terms of this Agreement.
"Products" means those products as described in Exhibit A.
"Purchase Price" means the price for each Product as described in
Exhibit A.
"Purchase Order" means any purchase order to be submitted by FreeHand
to EBM for the Products in accordance with the terms of this Agreement.
"Specifications" means the quality requirements, standards and
specifications for the Products as described in Exhibit A."Vendor"
means a third party vendor or supplier of any materials or components
to EBM for the manufacture of the Products under the terms of this
Agreement, who shall be included in FreeHand's approved vendors list as
shall be provided by FreeHand to EBM or other vendors recommended by
EBM and approved by FreeHand.
(b) Any reference in this Agreement to Clauses and Exhibits shall be a
reference to the clauses in, or exhibits to, this Agreement.
(c) Any reference in this Agreement to a "day" shall mean a calendar day
and "days" shall be construed accordingly.
(d) Any reference in this Agreement to a "party" shall mean a party to this
Agreement and "parties" shall be construed accordingly.
(e) The headings or sub-headings of this Agreement are for convenience only
and shall not affect the interpretation of this Agreement.
2. TERMS OF PURCHASE OF PRODUCTS BY CUSTOMER
(a) Terms and Conditions
--------------------
(i) FreeHand hereby engages EBM, subject to the terms and
conditions of this Agreement, to manufacture and deliver the
Products to FreeHand and FreeHand hereby accepts the
engagement.
(ii) All Products supplied by EBM under this Agreement shall
conform to the Specifications in all respects which are set
out in Exhibit A. The Specifications may be amended from time
to time by agreement of the parties by way of amending a
Purchase Order.
(b) Purchase Price
--------------
(i) FreeHand shall pay to EBM the Purchase Price for each Product
manufactured and delivered by EBM. The Purchase Price shall
not include any value added tax, sales tax, or import of
export tax that may be chargeable on each party in relation to
the Products and each party shall be responsible for such tax
as may be chargeable to it.
(ii) The Purchase Price shall be payable by FreeHand to EBM within
30 days after FreeHand's receipt of the relevant invoice from
EBM or commencement of shipment of the relevant Products,
whichever is later.
(iii) The Purchase Price is specified in Exhibit A and shall be
denominated in U.S. Dollars unless otherwise agreed by the
parties. EBM and FreeHand may review the Purchase Price in the
event of any change in the unit volume of the Products to be
manufacture red, costs for Materials, manufacture process or
other circumstances as may be agreed by the parties. Any
revision to the Purchase Price shall be subject to agreement
of the parties and reflected in a revised Purchase Order.
(c) Purchase Orders and Product Forecasts
-------------------------------------
(i) FreeHand will submit to EBM a "first time" Purchase Order of
500 units of the Products ("First PO") as soon as practicable
after this Agreement is entered into. The first 10 units of
the Products to be manufactured pursuant to the First PO will
constitute pre-production samples ("First Article") and shall
be delivered to FreeHand for its inspection and approval
within six weeks from the date of the First PO.
(ii) EBM shall not commence the manufacture of the balance of 490
units of the Products pursuant to the First PO ("Remaining
Units") until the following conditions ("Conditions") are
satisfied:
(1) FreeHand has approved the First Article in writing
within 6 weeks of the delivery of the First Article
by EBM; and
(2) FreeHand has obtained the approvals as referred to in
Clause 2(c)(v).
(iii) The Remaining Units will be manufactured and delivered to
FreeHand according to the EBM lead-time provided.
(iv) Upon receipt of the First PO,
(1) EBM shall be authorized by FreeHand to utilise all
raw materials or components for the manufacture of
the 500 units of the Products under the First PO,
except for raw cards, sheet metal components, and any
additional items identified within the terms and
conditions of "First PO" which shall not be purchased
and/or utilised except for the purposes of the
manufacture of the First Article or unless the
Conditions are satisfied; and
(2) EBM shall maintain sufficient stocks of liquid
crystal displays and touch screens for the
manufacture of the Remaining Units, but shall not
assemble such liquid crystal displays and touch
screens except for the purposes of the manufacture of
the First Article or unless the Conditions are
satisfied.
(v) FreeHand shall use its reasonable endeavours to obtain the
United States UL or FCC approvals and European CE agency level
approvals with respect of the Products no later than 6 weeks
from FreeHand's approval of the First Article as referred to
in Clause 2(c)(ii).
(vi) Immediately after completion and delivery of the Remaining
Units under the First PO, FreeHand shall submit, on a monthly
basis and at a minimum,
(1) a binding rolling 3 months of Purchase Orders for the
Products in accordance with Clause 2(f); and
(2) a non-binding rolling six (6) months forecast of
orders by FreeHand for the Products.
(d) Long Lead Items
---------------
EBM shall provide a list of "long lead items" as part of the
Products, which shall be delivered to FreeHand with a
lead-time of 8 weeks or more. These items will be listed in
Exhibit B. EBM shall not extend the lead-time for these "long
lead items" without the prior approval of Freehand.
(e) Resources and Materials
-----------------------
(i) EBM shall at all times maintain the capacity and resources,
including but without limitation to, as to plant, machinery
and appropriately trained and experienced personnel together
with all applicable consents, licences and approvals to fulfil
its obligations under this Agreement.
(ii) EBM shall purchase from a Vendor and maintain sufficient stock
of Materials based upon the Purchase Orders received from
FreeHand.
(iii) EBM agrees to purchase the Materials based upon the Purchase
Order's received from Freehand. EBM agrees to purchase
components according to FreeHand's approved vendor list (AVL)
or EBM vendor's previously approved by FreeHand.
(iv) FreeHand acknowledges its financial responsibility for the
Materials purchased by EBM on behalf of FreeHand in accordance
with Sub-Clauses 2(e)(ii) and 2(e)(iii). In the event of a
cancellation of a Purchase Order, or discontinuance of
manufacturing process of the Products, or excess Materials are
created in each of the above circumstances due to a change of
the engineering requirements for the manufacture of the
Products, or a change is made to a Purchase Order in respect
of Product combinations or quantities, FreeHand agrees to
compensate EBM to the extent of the following amounts:
(1) the Purchase Price of all finished Products in EBM's
possession, which shall thereafter be delivered to
FreeHand;
(2) the cost of the Materials in the possession of EBM
and not returnable to the relevant Vendor, such costs
including any Handling Charges and any value added to
such Materials due to any manufacturing process
performed by EBM, whether or not such Materials are
raw materials or have been processed by EBM, [,
including materials which are less than the FreeHand
agreed upon minimum order quantity];
(3) the cost of the Materials in respect of which EBM has
placed an order to a Vendor but not already received
by EBM, including any Handling Charges, provided that
the relevant order cannot be cancelled; and
(4) any cancellation charges payable to a Vendor with
respect to orders placed for the Materials being
cancelled or Materials being returned to the Vendor,
provided that EBM shall not be compensated if (i) such
Materials can be utilized for the manufacture of any Product
pursuant to the other Purchase Orders received by EBM or for
other purposes or (ii) if the occurrence of any of the above
events is resulted from an act or omission by EBM.
(v) EBM shall submit to FreeHand an invoice for the amount(s) as
mentioned in Sub-Clause 2(e)(iv) and FreeHand shall pay for
the amount as stated in such invoice within 30 days of the
date of receipt of the invoice.
(f) Order and Acceptance
--------------------
(i) All Purchase Orders for the Products submitted by FreeHand to
EBM shall be in writing and with a Delivery Date. To
facilitate scheduling of EBM's production, FreeHand shall
submit a Purchase Order to EBM at least ninety (90) days prior
to the first day of the month of the relevant Delivery Date.
(ii) EBM shall use its reasonable efforts to notify FreeHand
promptly and within 5 working days of receipt of a Purchase
Order of the acceptance or rejection of a Purchase Order and
whether or not the Delivery Date is agreed by EBM for the
Purchase Order. EBM shall not unreasonably reject a Purchase
Order or withhold its agreement to a Delivery Date if the
Purchase Order is submitted by FreeHand in accordance with
Clause 2(f)(i).
(iii) As soon as EBM is aware of any potential delivery delay (which
shall not be later than [o] days of the Delivery Date or other
agreed date of delivery), EBM will notify FreeHand as to the
cause and extent of such delay.
(g) Preferred B Shares
------------------
FreeHand agrees to issue certain shares in the share capital of
FreeHand to EBM in accordance with the terms and conditions as set out
in Exhibit C, and EBM agrees to accept such shares in lieu of any
letter of credit or any other form of security to be issued in favour
of EBM during the term of this Agreement or such other period as
determined by ▇▇▇▇▇▇▇▇.
(h) Shipment, Title and Risks
-------------------------
(i) All Products delivered pursuant to the terms of this Agreement
shall be suitably packed for air or sea freight shipment in
EBM's or, if requested by FreeHand, FreeHand's shipping
cartons, marked for shipment at FreeHand's address set forth
above, or such other address as may be supplied by FreeHand,
and delivered to FreeHand or its carrier agent in Hong Kong or
China. Subject to the foregoing, details of the delivery
address and other requirements for shipment shall be specified
by FreeHand in the Purchase Order.
(ii) The title to the Products manufactured by EBM shall pass to
FreeHand upon shipment irrespective of whether delivery has
taken place.
(iii) The risks in relation to the Products shall pass to FreeHand
upon shipment. EBM shall give such reasonable notice to
FreeHand to enable FreeHand to insure at its own costs against
the risks in relation to the Products during shipment and if
EBM fails to do so, the Products are deemed to be at EBM's
risk during shipment.
(i) Kickoff and Review Meetings
---------------------------
(i) An initial kickoff meeting will take place at EBM's premises
as soon as practicable after the signing of this Agreement by
the Parties whereby the Products and its Specifications,
production flow, documents relating to this Agreement such as
the Purchase Orders and invoices, and all business issues
relating to the manufacture and supply of the Products under
the terms of this Agreement will be discussed by the parties.
However, it is not intended by the parties that the
discussions at such kickoff meeting will modify the terms of
this Agreement.
(ii) EBM and FreeHand shall meet once in every four months from the
date of this Agreement to review any matters likely to be
relevant to the manufacturing of the Products, such as any
production issues, quality issues, Improvements on the
Products, business environment and cost reduction plans.
(j) Reschedule of Delivery Date
---------------------------
Except for the First PO, FreeHand may reschedule the Delivery Date in
respect of all or part of the Products pursuant a Purchase Order,
provided written notice is given to EBM at least 30 days prior to the
anticipated date of shipment (which EBM shall give FreeHand reasonable
notice) and the rescheduled delivery date is not later than 90 days of
the Delivery Date. If the rescheduled delivery date goes beyond 90 days
of the Delivery Date, EBM may in its sole discretion consider such
Purchase Order as being cancelled if both parties agree to material
exposure and compensation of such material.
(k) Inspection and Defective Products
---------------------------------
(i) EBM authorizes FreeHand to send its officers or agents to
visit the premises where the Products are manufactured or
stored by EBM during normal working hours and with reasonable
notice to inspect whether the Products manufactured or being
manufactured meet the Specifications and/or whether the
Equipment as referred to in Clause 3 are in good condition and
properly maintained.
(ii) If as a result of the inspection pursuant to Clause (2)(k)(i),
FreeHand is not satisfied that the Products being manufactured
or stored comply with the Specifications, FreeHand shall
inform EBM in writing accordingly and EBM shall take such
steps as necessary to ensure compliance.
(iii) Upon receipt of a delivery of the Products, FreeHand shall
perform an initial inspection of such Products to verify
whether the Products meet the relevant Specifications. Without
prejudice to the warranties given under Clause 4, FreeHand
shall be entitled to reject and return to EBM based on agreed
upon returns, any Products which do not meet any Specification
upon such initial inspection. Upon receipt of Products, EBM
shall repair or replace within a 30 day period.
(l) Insurance
---------
EBM shall at its own costs, maintain insurance in respect of all
quantities of Equipment in its possession, such insurance to be in such
amounts and against such risks as FreeHand may reasonably require, and
shall procure that FreeHand's interest in the Equipment is noted on the
policy documents.
3. FREEHAND'S EQUIPMENT
(a) Ownership and Usage
-------------------
All Equipment furnished by FreeHand to EBM or purchased by EBM on
behalf of FreeHand and paid by FreeHand in connection with the
manufacture of the Products under this Agreement shall:
i) be clearly marked and remain the personal Equipment of
FreeHand;
ii) be kept free of any liens and encumbrances; and
iii) not be used for any purpose other than for the manufacturing
of the Products in accordance with the terms of this
Agreement.
(b) Risks and Insurance
-------------------
Notwithstanding Clause 3(a), EBM shall hold FreeHand's Equipment at its
own risk and shall maintain at its own costs insurance in respect of
the Equipment, and shall procure that FreeHand's interest in the
Equipment is noted on the policy documents.
(c) Maintenance
-----------
EBM shall ensure that FreeHand's Equipment are in good condition and
properly maintained and shall not modify the Equipment without the
written permission of FreeHand. Upon FreeHand's request, EBM shall
return the Equipment to FreeHand in the same condition as initially
received by EBM with the exception of reasonable and fair wear and
tear.
(d) Indemnity
---------
In the event the Equipment is lost, damaged or destroyed due to EBM's
entire fault, EBM shall indemnify FreeHand for such loss, damage or
destruction of the Equipment, subject to a maximum amount which shall
equal to the book value of the relevant Equipment as at the date of the
lost, damage or destruction.
4. WARRANTY
(a) Warranties
----------
EBM warrants to FreeHand that for a period of one year from the date of
delivery of a Product to FreeHand, that,
(i) such Product will conform in all respects to the
Specifications and has satisfied such testing and inspection
by EBM to ensure that they are in accordance with
Specifications;
(ii) such Product will be of satisfactory quality and free from
defects in workmanship or materials except that the defects
are due to any defect in the Know-how or the Equipment
provided by FreeHand to EBM, or Materials supplied by a Vendor
and not modified by EBM; and
(iii) such Product will be free and clear of all liens and
encumbrances and that EBM will convey to FreeHand good and
marketable title to such Products.
(b) Remedies for Breach
-------------------
Subject to Clause 4(d), in the event that any Product delivered to
FreeHand does not comply with the foregoing warranties, EBM shall, at
EBM's option, either:
(i) pay to FreeHand and hold FreeHand harmless for any damages due
to such non-compliance of the warranties, subject to a maximum
amount of the Purchase Price paid by FreeHand for such
Product; or,
(ii) at EBM's expense, replace or repair such Product. If mutually
agreed by the parties, FreeHand may repair the Products and
the costs or expenses for the repair shall be reimbursed by
EBM.
(c) Entire Remedies
---------------
Subject to Sub-Clauses 2(c)(ii) and 2(k)(iii), the remedies as referred
to in Clause 4(b) constitutes FreeHand's entire remedies against EBM
for any breach of warranties.
(d) Exception
---------
EBM shall have no responsibility or obligation to FreeHand under any
warranty claims with respect to the Products that have been subject to
abuse, misuse, accident, alteration, neglect or unauthorized repair by
any party except EBM.
(e) Waiver
------
EXCEPT FOR THE WARRANTIES CONTAINED IN THIS CLAUSE, EBM EXPRESSLY
DISCLAIMS ANY OBLIGATIONS, AND FREEHAND WAIVES ALL OTHER RIGHTS, IN
RESPECT OF ANY REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED,
STATUTORY OR ARISING BY THE COURSE OF DEALING OR PERFORMANCE, CUSTOM,
USAGE IN THE TRADE OR OTHERWISE, REGARDING THE PRODUCTS, INCLUDING BUT
WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE AND
FITNESS FOR A PARTICULAR USE.
5. TERM AND TERMINATION
--------------------
(a) Term
----
This Agreement shall continue in force for an initial term of one (1)
year from the date hereof ("Initial Term") unless terminated earlier in
accordance with this Clause 5. At the expiration of the Initial Term,
this Agreement shall automatically be renewed for every successive
period of one (1) year ("Successive Term"), unless either party
notifies the other party in writing at least one hundred eighty (180)
days prior to the expiration of any Successive Term that this Agreement
shall not be so renewed.
(b) Termination
-----------
(i) This Agreement may be terminated, without penalty on either
party and with or without any reason, by giving the other
party one hundred eighty (180) days prior written notice.
(ii) Either party may also terminate this Agreement forthwith by
written notice to the other party if:
(1) the other party becomes insolvent, or insolvency or
winding-up proceedings have been commenced against
the other party;
(2) a receiver, administrative receiver, manager or
officer being appointed by any person in respect of
all or part of the other party's property, assets or
undertaking;
(3) the other party ceases, or threatens to cease, to
carry on business;
(4) the other party commits a material breach of this
Agreement and such breach remains unremedied after
the expiry of 30 days following the receipt by the
other party a written notice requiring such breach to
be remedied; or
(5) in accordance with Clause 12 of this Agreement.
(c) Return of Equipment and Materials
---------------------------------
Upon the termination of this Agreement, either party shall cease to use
all property of the other party which are in its possession or control,
including all equipment, know-how, intellectual property rights,
designs, drawings, photographs, samples and literature of every kind, ,
and shall within thirty (30) days after the termination of this
Agreement, return at its own costs such property to the other party by
shipment. Neither party shall make, use, or retain any copies of any
confidential information of the other party after the termination of
the Agreement.
(d) Effect of termination
---------------------
Termination by either party for any reason under this Clause:
(i) shall not prejudice the other party of its rights or
obligations accrued or become due prior to the date of such
termination;
(ii) shall not prejudice the rights or remedies which any party may
have in respect of any breach of the terms of this Agreement
prior to the date of the termination; or
(iii) this Clause or Clauses 4 (Warranties), 8 (Confidentiality), 9
(Limitation of Liability), 10 (Governing Law and
Jurisdiction), 11 (Assignment), 15 (Entire Agreement), 16
(Severability) and 18 (Notice) which shall continue in force
after such termination.
6. KNOW-HOW AND INTELLECTUAL PROPERTY
(a) FreeHand authorises EBM to use the Know-how and the Intellectual
Property as may be disclosed by FreeHand to EBM for the purposes of
performing its obligations under this Agreement. Any disclosure of such
Know-how or Intellectual Property shall be subject to the
confidentiality provisions in Clause 8.
(b) Subject to Clause 6(a), EBM shall have no rights in respect of any of
the Know-how and the Intellectual Property disclosed to it, and EBM
shall not use any of such Know-how or Intellectual Property except for
the purposes specified in Clause 6(a).
(c) EBM shall at the request and expense of FreeHand take all such steps as
FreeHand may reasonably require to assist FreeHand in maintaining the
validity and enforceability of any rights of the Intellectual Property
disclosed to it, and shall enter into such formal licences as FreeHand
may reasonably request for this purpose.
(d) EBM shall promptly and fully notify FreeHand of any actual or
threatened infringement of any Intellectual Property which comes to
EBM's notice, or which EBM suspects has taken or may take place.
7. IMPROVEMENTS
(a) FreeHand shall provide EBM with details of any Improvement which it
wishes to be incorporated into the Product which it wishes to be made
to the Product from time to time. EBM shall not unreasonably withhold
its consent to the incorporation into the Product of any Improvement.
(b) Where the incorporation of any Improvement to the Product requires any
amendment to the Specifications, the EBM shall, as soon as practicable,
submit to FreeHand for approval pre-production samples of the Product
in accordance with the amended Specifications.
(c) EBM shall provide FreeHand with details of any Improvement which is
made, developed or acquired by EBM from time to time.
(d) The title to all intellectual property rights in respect of any
Improvement made, developed or acquired independently by either party
shall belong to that party, provided that Freehand shall be entitled to
use any Improvement which is made, developed or acquired by EBM, and
any intellectual property of EBM relating to such Improvement, for
FreeHand's own purposes, by way of a non-exclusive, royalty-free
licence without limit of time.
(e) Any Improvement which is jointly made, developed or acquired by the
parties shall constitute FreeHand's property and EBM shall assign all
rights therein to FreeHand.
8. CONFIDENTIALITY
(a) Either party shall not disclose to any third party any know-how, data,
information or knowledge or other confidential information disclosed to
it by the other party (such disclosure shall be made by delivery of a
written document containing or recording it), or developed by either
party during the term of this Agreement relating to the Products, its
design or manufacturing process. Either party shall use its best
endeavours to keep such information confidential, including but without
limitation, to ensure that such employees or officers within its
organisation who need to know the confidential information to carry out
the purpose of this Agreement are under the same confidentiality
obligations of such party.
(b) Any confidential information as referred in Clause 8(a) may be used by
either party for any purpose, or disclosed by any third party, if such
party is authorised by the other party in writing or to the extent only
that any part of the information hereafter becomes public knowledge
through no fault of such party in question.
9. LIMITATION OF LIABILITY
WITHOUT PREJUDICE TO THE WARRANTIES GIVEN UNDER CLAUSE 4, EBM'S LIABILITY
ARISING OUT OF THIS AGREEMENT OR THE TERMINATION HEREOF SHALL BE LIMITED TO THE
AMOUNT OF DIRECT DAMAGES ACTUALLY INCURRED BY FREEHAND AS A RESULT OF EBM'S
BREACH HEREUNDER. IN NO EVENT WILL EBM BE LIABLE FOR COSTS OF PROCUREMENT OF
SUBSTITUTE PRODUCTS, SERVICES OR LOSS OF PROFITS. IN NO EVENT SHALL EBM BE
LIABLE TO FREEHAND OR ANY OTHER ENTITY FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL,
INCIDENTAL OR OTHER DAMAGES EXCEPT FOR DIRECT DAMAGES, HOWSOEVER CAUSED AND
BASED ON ANY THEORY OF LIABILITY, ARISING OUT OF THIS AGREEMENT OR THE
TERMINATION HEREOF. THESE LIMITATIONS SHALL APPLY EVEN IF EBM HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES BEING RESULTED, AND NOTWITHSTANDING ANY
LIMITED REMEDY PROVIDED IN THIS CLAUSE OR ANY WARRANTY INDICATED IN THE
PRODUCTS.
10. GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by, and construed under, the laws of Hong Kong
Special Administrative Region. The parties agree that the courts of Hong Kong,
shall have exclusive jurisdiction to adjudicate any dispute arising out of this
Agreement. Either Party hereby expressly consents to service of process being
effected upon it by registered mail sent to the address set forth at the
beginning of this Agreement or other address as such party may notify the other
party from time to time.
11. ASSIGNMENT
This Agreement or any rights or obligations under it or any Purchaser Order may
not be assigned or otherwise disposed by either party without the prior written
consent of the other party. Neither party may sub-contract or otherwise delegate
any of its obligations under this Agreement to a third party without the prior
written consent of the other party.
12. FORCE MAJEURE
Neither party shall be liable to the other party for any delays or failures in
the performance of its obligations under this Agreement to the extent that any
such delays or failures are resulted from any Act of God, war, strike, lock-out,
drought, tempest or any other cause beyond the reasonable control of such party
(a "force majeure event"). If any force majeure event exists for more than
ninety (90) days, either party shall have a right to terminate this Agreement
upon written notice to the other party.
13. NO LICENSES CREATED
Unless otherwise agreed between the parties, nothing contained in this Agreement
shall be construed as creating any license, right to use or other right for the
benefit of any party with respect to any patents, patent applications, trade
secrets, or other confidential or proprietary information, trademark, trade
names or other intellectual property rights of the other party.
14. PARTNERSHIP
Nothing in this Agreement shall create or be deemed to be a partnership between
the parties.
15. ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties with respect to
its subject matter and supersedes all previous agreements and understandings
between the parties.
16. SEVERABILITY
Each of the Clauses is and shall be construed as separate and severable and in
the event of any Clause being determined as being unenforceable in whole or in
part for any reason, such unenforceability shall not affect or impair the
enforceability of the other Clauses or other parts thereof.
17. VARIATION
No variation of this Agreement shall be effective unless it is in writing signed
by all parties.
18. NOTICE
(a) All notice, approval, or other communication in writing to be given by
either party under or in connection with this Agreement (excluding the
service of process as referred to in Clause 10) ("Notice") must be left
at or sent by pre-paid registered post to the address of the other
party, or sent by facsimile or email to the other party, and marked for
the attention of the person so specified. The relevant details of each
party, which can be amended by written notice to the other party from
time to time, are as follows:
EBM
Address: 10th Floor, Elite Industrial Building, 135 - ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Facsimile: (▇▇-▇▇▇) ▇▇▇▇ ▇▇▇▇
Email: ▇▇▇.▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
Attention: Max S. Y. Loong
FreeHand
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇.▇.▇.
Facsimile: [▇-▇▇▇-▇▇▇-▇▇▇▇]
Email: [▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇]
Attention: [▇▇. ▇▇▇ ▇▇▇▇]
(b) In the absence of earlier receipt, a Notice is deemed to be received:
(i) in the case of a notice left at the address of the addressee,
upon delivery at that address;
(ii) in the case of a posted letter, on the seventh day after
posting;
(iii) in the case of a facsimile, on production of a transmission
report from the machine from which the facsimile was sent
which indicates that the entire facsimile was sent to the
facsimile number of the recipient; and
(iv) in the case of an email, on acknowledgement of the recipient's
email receiving equipment.
Elite Business Machines Manufacturing FreeHand Systems, Inc.
Company Limited
By: /s/ Max Loong By: /s/ ▇▇▇ ▇▇▇▇
-------------------------------- --------------------------------
Written Name: Max Loong Written Name: ▇▇▇ ▇. ▇▇▇▇
---------------------- -----------------------
Title: General Manager Title: CEO
----------------------------- ------------------------------
Date: 3/12/ 2004 Date: 3/12/2004
----------------------------- ------------------------------
Exhibit A
---------
Product Part Number Unit Price
------- ----------- ----------
FOB HK or China port(s)
Music Pad Pro Plus FH021019-1-02 Rev C To Be Determined
Music Pad Pro FH021019-1-01 Rev C To Be Determined
All Documents:
Plastics:
FH9000-0012-00 Front Bezel Rev 5
FH9000-0003-00 Power Button Rev 3
FH9000-0030-00 Pad print, Front Bezel
(2 color)
FH9000-0004-00 Switch Holder Rev 3
FH9000-0002-00 Rear Cover (inc 4 inserts) Rev 5
FH9000-0013-00 Stylus (FreeHand Rev 1
Custom Mold)
Sheet Metal
FH9000-0005-00 Chassis Rev 5
FH9000-0006-00 Motherboard Shield Rev 4
FH9000-0028-00 I/O Panel Rev 4
Silkscreen for I/O Panel Rev 3
FH9000-0060-00 Hydis 12.1" Display Hydis Spec
FH9000-0016-00 12.1" Resistive Touchscreen 3M/Dynapro Spec
FH9000-0008-00 Cable Assembly, Power 5
FH9000-0061-00 Cable Assembly, LCD 1
FH9000-0010-00 Cable Assembly, Inverter 5
FH9000-0011-00 Battery Assembly, NiMH 5
3 cell
FH9000-0062-00 Backlight Inverter Linfinity Spec
FH9000-0023-00 Power Supply, ▇▇▇ ▇▇▇ Spec
FH9000-0036-00 Cable Assembly, USB CUI Spec
EXHIBIT B
LONG LEAD ITEMS
PART NUMBER LEAD TIME PRICE STATUS
[Please insert the details]
EXHIBIT C
TERMS AND CONDITIONS
RELATING TO ISSUE OF SHARES BY FREE HAND TO EMB
UNDER CLAUSE 2 (G)
1. FreeHand shall issue to EBM on the date of the Agreement [250,000]
preferred "B" shares of "stock" ("Shares"), valued currently at US$1.00
per Share and each in the US$20 million total share capital of
FreeHand.
2. If the total [market] value of the Shares issued to EBM falls below
[US$250,000 or the Purchase Price for the First PO] as considered and
determined by FreeHand before they are sold or otherwise disposed of by
EBM whether for value or not, additional preferred "B" shares of
FreeHand ("Additional Shares") shall be issued by FreeHand to EBM so
that the total [market] value of the Shares and the Additional Shares
to be issued shall not be less than [US$250,000 or the Purchase Price
for the First PO] at any time before they are sold or otherwise
disposed of by EBM.
3. The shares are void of any strike price. Subject to any applicable law
and regulation, EBM shall be entitled to the right to sell the Shares
in a stock exchange if any "stock" of FreeHand shall be listed and
traded in such stock exchange. However, EBM shall have no right to
offer, sell, assign, charge, mortgage, pledge, encumber, or otherwise
dispose of any Share, or transfer the interests in any Share by way of
creation of trust before the shares of FreeHand are listed or traded in
a stock exchange or offered in accordance with Rule 144A of the US
Securities Act.
4. The stock certificate in respect of the Shares (and any Additional
Shares) to be issued by FreeHand shall bear the name of "Elite Business
Machines Manufacturing Company Limited" as the owner of the Shares (and
any Additional Shares). The certificate in respect of the Shares shall
be issued at the same time when the Agreement is entered into.