EXHIBIT 10.5
RESEARCH AND DEVELOPMENT SERVICES AGREEMENT
BY AND BETWEEN
XXXXX XXXX ENTERPRISE CO., LTD.
AND
TSAUN KUEN USA, INC.
This RESEARCH AND DEVELOPMENT SERVICES AGREEMENT ("Agreement") is made and
entered into as of 22 December, 2003, by and between Xxxxx Xxxx Enterprise Co.,
Ltd. ("TKE"), a corporation organized and existing under the laws of the
Republic of China, whose registered office is at 0X, Xx. 000, Xxx 0, XxXxxx
Xxxx., Xxx xx, Xxxxxx, Xxxxxx, and Xxxxx Xxxx USA, Inc. ("TK USA"), a
corporation organized and existing under the laws of the State of Illinois,
whose registered office is at 0000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx
00000, X.X.X.
RECITALS
WHEREAS, TKIE desires TK USA to perform certain services at the request of TKE;
and WHEREAS, TK USA is capable of and is willing to perform such services.
NOW THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto hereby agree as follows:
ARTICLE 1
SERVICES TO BE PROVIDED
1.1 During the term of this Agreement, and upon request through meetings,
letters, or other oral or written requests as may be appropriate from time to
time, TK USA agrees to provide specialized research and development services
("R&D Services") on a project-by-project basis.
1.2 All services rendered under this Agreement shall be provided in the
manner requested by TKE.
1.3 In addition to the foregoing, TK USA will furnish to TRE such other
assistance as is specifically and reasonably requested orally or in writing from
time to time, provided such other requested services are within the fields of
expertise of TK USA.
ARTICLE 2
EXPENSE RESPONSIBILITIES
2.1 TK USA will provide the services mentioned in Article 1 above through
the assignment of its own personnel and the personnel of its affiliated
companies, if applicable. TK USA shall bear the costs of all of its personnel
and affiliates, if applicable, and all related operating expenses, including,
but not limited to, salaries, benefits, facilities, and travel.
2.2 TKE agrees that TK USA may dispatch a reasonable number of its
employees to TKE facilities for consultation on improvement of job performance
and job skills with the number and length of such visits to be mutually agreed
by the parties. TK USA shall pay the reasonable salaries, travel, living and
incidental expenses of any of its personnel who travel to TKE's facilities to
receive consultation.
ARTICLE 3
COMPENSATION
3.1 As compensation for the services to be provided by TK USA hereunder,
TKE shall pay to TK USA a service fee commensurate to the value of the
services--provided.
3.2 The parties agree that value is to be calculated as being equal to the
fully burdened costs incurred by TK USA in providing such services to TKE, plus
a markup.
3.3 For purposes of section 3.2, TK USA's fully burdened costs shall mean
all costs incurred by TK USA related to its services under this agreement
including but not limited to: salaries and other personnel expenses, including
contributions to pension schemes and other social security costs; rent;
depreciation of equipment; materials; travel, lodging and communications costs;
and, all other costs incurred by TK USA in connection with the rendering of
services under this Agreement and allocable to the provision of services
pursuant to a reasonable cost allocation method. Costs shall not include any
reimbursement for services rendered by TKE to support the operations of TK USA,
nor shall it include interest expense.
3.4 Within a commercially reasonable time after the execution of this
Agreement, the parties will mutually agree upon the markup to be applied against
the cost base set forth in section 3.3.
3.5 The parties agree that the service fee called for under section 3.1
shall at all times satisfy the arm's length requirements prescribed by section
482 of the United States' Internal Revenue Code of 1986, as amended, and the
regulations thereunder. To that end, the parties agree to periodically review,
and if necessary revise, the methodology used to determine TK USA's compensation
as set forth in section 3.2, the cost base set forth in section 3.3, and the
markup determined under section 3.4.
ARTICLE 4
GENERAL PAYMENT TERMS
4.1 Within ninety (90) days following the end of each fiscal quarter, TK
USA will issue an invoice to TKE.
4.2 TKE shall pay TK USA all such invoices due either:
a. Within ninety (90) days following the date of receipt of the
invoice, or
b. By offsetting such invoice amount due against any outstanding
receivables from TK USA.
ARTICLE 5
DOCUMENTATION
TK USA shall maintain records, in commercially reasonable detail, as to the type
and nature of services provided and on the costs of providing said services. On
the request of TKE, TK USA shall provide reasonable documentation of the costs
taken into account in calculating the service fee. In addition to the foregoing,
TKE shall have the right to request the opinion of a qualified certified public
accountant that the costs incurred and fees paid hereunder were rendered solely
for the purposes specified herein, that the costs were allocated in conformity
with the agreement of the parties herein, and that the allocation of costs was
in conformity with the standards of independent parties dealing at arm's length
from each other.
ARTICLE 6
CONFIDENTIALITY AND INTELLECTUAL PROPERTY RIGHTS
6.1 During the term of this Agreement and thereafter, each party hereto
shall keep strictly secret and confidential any and all information acquired
from any other party and take reasonable precautions to prevent unauthorized
disclosure of such information and shall require all of its officers, employees
and designated representatives to whom it is necessary to disclose the same or
to whom the same has been disclosed, to keep such information strictly
confidential. All proprietary information disclosed by one party to the other
party shall remain solely the property of the disclosing party. The obligations
imposed by this Article shall not apply with respect to any information
furnished by any one party to the other when such information is, or becomes,
published or otherwise generally available to the public.
6.2 TKE shall retain all title, copyright and other proprietary rights in
any and all materials supplied to TK USA. All work produced as a result of
services performed for TKE shall be owned exclusively by TKE. TK USA hereby
assigns (and agrees to assign) to TKE or its designee all copyright, patent,
trade secret, trademark and other intellectual property rights ("Intellectual
Property"), and all other right, title and interest, in an to any information,
inventions, works of authorship or other work product arising out of the
research and development services performed by TK USA at the request of TKE. TK
USA agrees to cooperate with TKIE or its designee and to execute any further
assignment requested by TKE and all documents reasonably necessary for TKE or
its designee to effect, record or perfect such assignment and to secure
Intellectual Property protection in the appropriate countries for such work
product. To the extent TK USA shall cause its employees and any third parties
engaged in the services to agree in writing to the terms contained herein and to
not exercise any moral rights with respect to any such work product.
ARTICLE 7
DURATION AND TERMINATION
7.1 This Agreement is effective on January 1, 2003, and shall remain
effective for an initial term of one (1) year and thereafter shall be
automatically renewed for successive terms of one (1) year each unless written
notice of an intention to terminate is given by either party hereto at least
thirty (30) days prior to the end of the initial term or any one (1) year
renewal thereof.
7.2 Either party may at its own option, with or without cause, terminate
this Agreement upon thirty (30) days prior written notice to the other party. In
the event of a breach of any material obligation hereunder by either party, the
non-defaulting party will notify the defaulting party of the breach in writing.
If the breach is irreversible and cannot be cured, or if the defaulting party
fails to cure the conditions leading to the breach within thirty (30) days, the
non-defaulting party may terminate this Agreement immediately by written notice
to the defaulting party.
7.3 The provisions of Articles 6 and 8 shall survive any termination or
expiration of this Agreement.
ARTICLE 8
MISCELLANEOUS
8.1 Force Majeure: No failure or omission by either of the parties hereto
in the performance of any of its obligations under this Agreement shall be
deemed a breach of this Agreement or create any liability, if such failure or
omission is the result of acts of God, war, terror, riot, accidents, compliance
with any action or restriction of any government or agency thereof, strikes or
labor disputes, inability to obtain suitable raw materials, fuel, power or
transportation, or similar circumstances beyond the control of the party hereto,
and where not attributable to the negligence of the party hereto.
8.2 Assignment: This Agreement and any rights and obligations hereunder
shall not be assignable, transferable or otherwise disposable by either party
hereto without mutual consent.
8.3 Amendment: No amendment or changes hereof or addition hereto shall be
effective or binding on either of the parties hereto unless set forth in writing
and executed by the respective duly authorized representatives of each of the
parties hereto.
8.4 Notices: Except as otherwise provided in this Agreement, all notices
required or permitted to be given pursuant or in reference to this Agreement
shall be in writing and shall be valid and sufficient if dispatched by
registered airmail, postage prepaid, addressed as follows:
Tsaun Kuen Enterprise Co., Ltd.
5F,No. 000, Xxx 0, XxXxxx Xxxx.
Xxx xx, Xxxxxx
Xxxxxx
Xxxxx Xxxx USA, Inc.
0000 Xxxx xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
X.X.X.
8.5 Independent Contractor and Limitation on Authority: his Agreement does
not create a partnership, agency or joint venture, nor does it constitute either
party the agent or principal of the other nor does it confer any authority on
either party to bind the other party in any way.
8.6 Entire Agreement: This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the matters
contemplated hereunder. All prior agreements and representations are null and
void.
8.7 Language: This Agreement is in the English language only, which
language shall be controlling in all respects. No translation, if any, of this
Agreement into any other language shall be of any force or effect in the
interpretation of this Agreement or in the determination of the intent of either
of the parties hereto.
8.8 Governing Laws: This Agreement shall be governed by the laws of the
State of California, U.S.A., excluding its conflict of laws provision. Any legal
action or proceeding relating to this Agreement shall be instituted in either
the California Superior Court in and for the County of Los Angeles or United
States District Court for the Central District of California.
IN WITNESS WHEREOF, the parties have caused their respective duly authorized
representatives to execute this Agreement as of the day and year first above
written.
Xxxxx Xxxx Enterprise Co., Ltd. Xxxxx Xxxx USA, Inc.
By: _______________________________ By: _________________________________
Title: ____________________________ Title: ______________________________
Date: _____________________________ Date: _______________________________
