Document:

EXHIBIT 10.33

 

DEVELOPMENT,
PURCHASE AND LICENSE AGREEMENT

BETWEEN
INFOCUS CORPORATION AND FUNAI ELECTRIC CO., LTD

 

This DEVELOPMENT; PURCHASE AND LICENSE AGREEMENT (hereinafter referred
to as the “Agreement”) dated September 13, 2002, is entered into between FUNAI
ELECTRIC Co., LTD., a Japanese corporation (“FUNAI”), with its principal place of
business at 7-7-1 Nakagaito, Daito, Osaka, and INFOCUS Corporation (“INFOCUS”),
an Oregon corporation with its principal place of business at 277008 SW Parkway
Avenue, Wilsonville, Oregon 97070, USA.

 

WHEREAS, 1NFOCUS engages in the business of developing, producing,
marketing and selling projection display products.

 

WHEREAS, FUNAI engages in the business of designing and manufacturing
electronic related products.

 

WHEREAS, INFOCUS and FUNAI mutually agree that INFOCUS and FUNAI’s
business expertise may successfully produce a low-cost display projector
(hereinafter referred to as the “Product”).

 

WHEREAS, FUNAI and INFOCUS entered into a Memorandum of Agreement dated
April 3, 2001 (hereinafter referred to as the “Memorandum”). The
Memorandum requires that FUNAI and 1NFOCUS shall enter into a detailed
agreement as to the subject matter of this Agreement.

 

WHEREAS, INFOCUS and FUNAI hereby enter into this Agreement, wherein
INFOCUS and FUNAI shall mutually design and develop the Product, and FUNAI
shall exclusively manufacture the Product on behalf of INFOCUS and INFOCUS
shall exclusively market and sell the Product.

 

THEREFORE, INFOCUS and FUNAI hereby agree as follows:

 

1.                                      DEVELOPMENT
PROVISIONS

 

Definitions

 

The terms used in this Agreement are defined
as follows:

 

1.1.                              “Business
Days” shall mean those days from Monday through Friday, which are not declared
as national holidays in the United States.

 

1.2.                              “Calendar
Days” shall mean all days, Sunday through Saturday, which appear on the
calendar from January 1 through December 31.

 

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1 .3.                           “Defective
Product(s)” shall mean defective Products or Products which are missing components
or accessories.

 

1.4.                              “Delivery
Date” shall mean the date on which the Products shall be delivered to INFOCUS’s
designated F.O.B. Hong Kong delivery point as specified on INFOCUS purchase
orders.

 

1.5.                              “Development
Schedule” shall mean the schedule for the design and development,
manufacturing, testing and qualification of the Products manufactured by FUNAI.
 The Development Schedule shall
include a milestone and payment schedule for each purchase order
separately entered into between FUNAI and INFOCUS, that set forth certain
significant events and the payment to be made upon completion of each event,
and that, allow FUNAI and INFOCUS to evaluate the status of the development of
the Products, and to make payments based on completion and acceptance of key
tasks related to the development of Products.

 

1.6.                              “Engine”
shall mean an optical engine designed based upon the Projector applicable to
front and rear projection application.

 

1.7.                              “FUNAI”
shall include FUNAJ ELECTRIC Co., LTD. and, unless the context otherwise
requires, all of its parent entities and/or its subsidiaries.

 

1.8.                              FUNAI
IP” shall mean all current and future intellectual property right including,
but not limited to, the know-how listed in Exhibit H, which includes world wide
patents and other patent rights, utility models, copyrights, mask work rights,
trade secrets, designs, equipment, technologies, processes and inventions
associated therewith, trademark, and all other intellectual property rights and
the related documentation or other tangible expression of FUNAI.

 

1.9.                              “INFOCUS”
shall include INFOCUS Corporation and, unless the context otherwise requires,
all of its parent entities and/or its subsidiaries.

 

1.10.                        “INFOCUS
IP” shall mean all current and future intellectual property right including the
know how listed in Exhibit C, which includes world wide patents and other
patent rights, utility models, copyrights, mask work rights, trade secrets,
designs, equipment, technologies, processes and inventions associated
therewith, trademark, and all other intellectual property rights and the
related documentation or other tangible expression of INFOCUS.

 

1.11. “IT” shall mean information technology shared by FUNAI and
INFOCUS as an operating model.

 

1.12.                        “Lead
Time” shall mean the term for manufacturing the Long Lead Time Products
including ocean shipping described in Exhibit F.

 

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1.13.                        “Licensed
Product(s)” shall mean a Television or Engine incorporating the Products or any
device under INFOCUS IP.

 

1.14.                        Long
Lead Time Components” shall mean the Components which FUNAI needs to purchase
over forty five (45) days plus purchasing order schedule as listed in
Exhibit F     

 

1.15.                        “Materials”
shall mean the materials for the Products which are prepared by FUNAI in order
to meet INFOCUS’s purchase orders and/or forecasts.

 

1.16.                        “Milestone”
shall mean the Product Development Milestone Schedule listed in Exhibit D
entitled “Development Milestone Schedule” attached to this Agreement.

 

1.17.                        “Net
Selling Price of Licensed Product” shall mean the fair market value of internal
transfers and/or sales of Licensed Products and the total of all prices at
which all customers were billed for Licensed Product in the usual course of
business including all packing materials, boxes, cartons, and crates, thereof
and less returns, discounts, shipping costs, duties and excise, discounts, use
and value added taxes, and similar taxes levied in respect to such sales.

 

1.18.                        “New
Product Introduction Schedules” shall mean support activity by FUNAI for the
Product launch described as a part of Product Specification, incorporated
herein as Exhibit A

 

1.19.                        “OEM
Product” shall mean a Projector and Engine which bear a third party’s logo.

 

1.20.                        “Pilot
Production Samples” shall mean the pilot samples of Products manufactured by
FUNAI after obtaining INFOCUS approval.

 

1.21.                        “Product
and Process Documentation” shall mean documentation provided by INFOCUS, or
developed by FUNAI to be used to manufacture the Products including:  BOM (Bill of materials), AVL (Approved
vendors list), engineering, design, and assembly drawings, line layouts,
process documentation, quality and inspection plans, test processes, packaging
requirements..

 

1.22.                        “Product(s)”
shall mean the Engine and Projector collectively.

 

1.23.                        “Production
Tooling” shall mean tools, dies, jigs, equipment and other tools for
manufacturing the Products paid by INFOCUS and loaned to FUNAI.

 

1.24.                        “Product
Inspection” shall mean the inspection of process controls, test yields,
End-of-Line inspection (EOL) and Out-of-Box inspection (OOB) concerning the
Products as provided in Quality Plan.

 

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1.25.                        “Product
Specification” shall mean the specification for the Products described in
detail in Exhibit A.  Product
Specification shall include, but is not limited to, the Product performances
and requirement specifications, Product quality and agency requirements, New
Product Introduction Schedules and shipping configurations.

 

1.26.                        “Projector”
shall mean a complete projector unit for the market for Front Projector with
the Engine.

 

1.27.                        “Quality
Plan” shall include all documentation, systems, equipment, data collection,
reports, processes and procedures necessary to manufacture, inspect .and verify
the Products’ conformance to Product Specification and to deliver and service
the Products including, but not limited to, IQA (Incoming quality audit)
inspection and ECO (Engineering change order) control of material. Basic
quality criteria shall based on AQL (Acceptance quality level) of >/= 0.64%
per mil standard 105.

 

1.28.                        “Service
Parts” shall mean Products or parts of Products, which FUNAI agrees to use
and/or sell to INFOCUS for the purpose of providing service for the Products as
provided for in Exhibit I.

 

1.29.                        “Supporting
Documents” shall mean the documents which support the development, procurement,
manufacture, testing, packaging, and preparation for shipment of the Products
by FUNAI.  Supporting Documents shall
include, but not limited to, Product and Process Documentation, documentation
and information for Quality Plan that support Product Specifications including,
but not limited to, First Customer Ship checklist and dock-to-stock (DTS)
approval process.

 

1.30.                        “Television”
shall mean a rear screen projection television incorporating an Engine.

 

2.                                      PURPOSE
AND EXCLUSIVE RELATIONSHIP

 

2.1.                              Purpose. FUNAI and INFOCUS shall mutually develop the
Products based on certain designs developed by INFOCUS. Upon successful
qualification of Pilot Production Samples, FUNAI shall manufacture the Products
on behalf of INFOCUS, and INFOCUS shall purchase the Products, Service Parts
and related accessories from FUNAI.

 

2.2.                              Exclusivity and Geographical Scope of FUNAI Sales. The terms
of the Exclusivity Agreement, effective June 1, 2001 (hereinafter referred
to as the “Exclusivity Agreement”), are hereby incorporated into and made part
of this Agreement by reference as Exhibit B.  FUNAI shall not sell, directly or indirectly,
any Televisions incorporating Engines to any third party in the People’s
Republic of China.

 

2.3.                              Exclusivity. In the event that FUNAI terminates this
Agreement without cause or INFOCUS terminates this Agreement for breach of this
Agreement by FUNAI pursuant

 

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to this
Agreement, the exclusivity defined in the Exclusivity Agreement shall continue
uninterrupted in accordance with the terms and conditions of Exclusivity
Agreement.

 

3.                                      DEVELOPMENT.

 

3.1.                              INFOCUS IP.  INFOCUS
has delivered INFOCUS IP to FUNAI.  INFOCUS
IP includes the basic optical design for the Product, and FUNAI has delivered
FUNAI IP for purposes of this Agreement.

 

3.2.                              Development.  Using
INFOCUS IP and FUNAI IP, INFOCUS and FUNAI shall jointly develop the Products
in accordance with the Product Specification, which shall be mutually agreed to
by INFOCUS and FUNAI according to Exhibit A.  Each party shall use its good faith effort and
due diligence for the development of the Product.

 

3.3.                              Change of Product Specification.  If INFOCUS proposes in writing a change to the
Product Specification, FUNAI shall attempt in good faith to implement such
change.  In the event the said proposed
change increases FUNAI’S development costs of the Products or requires a
modification to the Development Schedule, INFOCUS and FUNAI shall mutually
agree in good faith for adjustment of the development costs and fees payable by
INFOCUS to FUNAI and of the schedule for development.  Any dispute arising out of this Section shall
be subject to arbitration under Section 28.16 herein.

 

3.4.                              Ownership.

 

(a)                                  Ownership by FUNAI.  FUNAI shall own all right, title, and interest
in the FUNAI IP and any derivatives, improvements or modifications thereof, and
all intellectual property rights therein excluding the INFOCUS IP (hereinafter
referred to as the “FUNAI Property” collectively). INFOCUS shall execute such
documents, render such assistance, and take such other action as FUNAI may
reasonably request, at FUNAI’s expense, to apply for, register, perfect,
confirm, and protect FUNAI’s rights to the FUNAI Property.

 

(b)                                 Ownership by INFOCUS.  INFOCUS shall own all right, title, and
interest in the INFOCUS IP and any derivatives; improvements or modifications
thereof and all intellectual property rights therein, excluding the FUNAI
Property.  FUNAI shall execute such
documents, render such assistance, and take such other action as INFOCUS may
reasonably request, at INFOCUS expense, to apply for, register, perfect,
confirm, and protect INFOCUS’ rights to the INFOCUS IP.

 

4.                                      PILOT
PRODUCTION SAMPLES

 

4.1.                              Pilot Production Samples.  FUNAI shall deliver the Pilot Production
Samples with required inspection data to INFOCUS quality department to test
whether, in INFOCUS’s reasonable opinion, the Pilot Production Samples conforms
to the Product Specification and Product and Process Documentation.  INFOCUS shall provide FUNAI with a written notice
specifying reasonable reasons for rejecting Pilot Production

 

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Samples within twenty (20) days from the date that INFOCUS refuses to
accept the Pilot Product Samples.  Pilot
Production units shall be covered by INFOCUS NRE (defined herein below in Section 7.1)
as agreed herein without further charge from FUNAI.

 

4.2.                              Corrected Pilot Production Samples.  FUNAI shall use commercially reasonable
efforts to promptly redeliver the corrected Pilot Production Samples to INFOCUS
for acceptance testing pursuant to the process described in Section 4.1. above.

 

5.                                      COOPERATION
BETWEEN PARTIES

 

5.1.                              FUNAI’s
Cooperation.  FUNAI shall provide
INFOCUS with incoming inspection and obtain certificate of compliance when it
is appropriate for INFOCUS to ensure that parts strictly, conforming to the
component specification, are used to manufacture Products for INFOCUS.

 

5.2.                              INFOCUS’ Cooperation.  INFOCUS shall sell certain key components
including, but not limited to, Engine components to FUNAI.  Special terms, conditions and responsibilities
for consigned materials, if any, are described in the “Consigned Material
Terms,” of Exhibit E hereof.

 

5.3.                              FUNAI Capacity and Resources.  FUNAI shall secure and maintain sufficient
facility, equipment, qualified assemblers, technicians and management to comply
with all terms and conditions in the Agreement.  FUNAI shall reasonably support INFOCUS’
Product marketing in the areas of technical support on design for
manufacturability, testability, agency documentation, compliance, quality
control, sustaining engineering and project management support according to the
New Product Introduction Schedule as provided in Exhibit D.  If FUNAI provide any Product support
activities not described in the New Product Introduction Schedule pursuant
to INFOCUS’ request, INFOCUS shall pay additional fees and costs charges for such
activity by FUNAI.

 

5.4. Cooperative Operation.  The relationship between INFOCUS and FUNAI
shall be based on good faith cooperation and due diligence.  Both INFOCUS and FUNAI shall appoint one or
more program managers for each project activity to function as a commercial and
technical liaison to the other party.  As
stated in intervals reflected in the Milestones, or more frequently as needed,
INFOCUS and FUNAI shall confer regarding the progress, and each party shall
report to the other regarding technical details and the progress of the
Development Schedule.

 

5.5.                              Process and System Cooperation.  FUNAI and INFOCUS shall develop a shared
operating model including, but not limited to, cross-company processes in the
areas of:  project management, procurement,
order management, manufacturing operations, logistics, quality control, Product
and Process Documentation, ECO control, service operations and information
technology.

 

5.6.                              IT Systems Support.  FUNAI
and INFOCUS shall timely communicate with each other with reasonable frequency
sufficient to meet the requirements of the

 

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relationship
established herein, through English-language, web-enabled system logic links of
specific IT and databases including, but not limited to, quality, shop floor
control systems, Product and Process Documentation, ECO control systems and
inventory and order management systems.  FUNAI
and INFOCUS shall conform to the most productive use of IT to ensure the
security of intellectual property owned by FUNAI and/or INFOCUS and/or
communicated externally to/from FUNAI and/or INFOCUS, and to provide the
service support as agreed herein.

 

5.7.                              Performance Measures.  FUNAI and INFOCUS may track and measure the
overall performance of the other party.  FUNAI and INFOCUS shall discuss mutual
performance and corrective or remedial actions at periodic business reviews.  Key performance indicators and targets
include, but not limited to, measures of quality, flexibility, delivery and
costs.

 

5.8.                              Development and Manufacturing Deliverables.  Deliverable items in the Product and Process
Development phase for each Product shall include all items necessary for
INFOCUS to evaluate the process of the Product Specification including, but not
limited to, feasibility reports and design studies, analysis of specifications
and creation of designs or modification to existing designs, creation of CAD
design files, drawings, assembly and test Product and Process Documentation and
bills of materials, fabrication and procurement of tooling, equipment and
assembly and test fixtures, and delivery of engineering Prototypes and Pilot
Production Samples.  FUNAI shall maintain
all manufacturing processes, Product inspection and test documentation and
software and make available to INFOCUS as requested for all times during this
Agreement and one year from the date of termination of this Agreement.

 

6.                                      FUNAI’S
PERFORMANCE

 

6.1.                              Development Schedule.  FUNAI shall, in a competent and professional manner;
satisfactorily complete performance of all tasks listed in each Development Schedule and
shall adhere to the development deadlines and delivery dates set forth in the
attached Development Schedule.  INFOCUS
shall fully cooperate with FUNAI to support FUNAI’s compliance with Development
Schedule.

 

7. PAYMENT FOR DEVELOPMENT COSTS

 

7.1.                              Non-Recurring Engineering Fees and Capital Equipment spending. In consideration for FUNAI’s timely and
complete performance pursuant to the Product Specification, this Agreement and
other written requirements in the Development Schedule (hereinafter
referred to as the “Development Tasks”),*

 

*Certain information on this page has been omitted and filed separately
with the Commission.  Confidential
treatment has been requested with respect to the omitted portions.

 

7

 

7.2.                              Scope of INFOCUS Support.  INFOCUS
shall, at its expense, support FUNAI’s development and production of Product by
performing the following tasks:

 

a.                                       Reasonable
support of FUNAI in developing supplier relationships for the

Products.

b.                                      Reasonable
technical support

c.                                       Minimal
sustaining support.

FUNAI shall pay INFOCUS a reasonable fee for any support beyond the
specific foregoing support, if requested by FUNAI in writing and with the
amount of the fee for such support determined by prior written agreement.

 

7.3.                              Expenses.  Each party
shall bear their own expenses necessary to comply with the Agreement except
those expressly provided in this Agreement or Milestone and expressly agreed in
writing.

 

8.                                      MILESTONE

 

8.1.                              Fulfillment of Milestone.  In the event that FUNAI fails to meet all
requirements in Milestone Exhibit D, INFOCUS may fulfill such requirements.  INFOCUS and FUNAI shall agree regarding the
projected costs for such fulfillment.  NRE
may be reduced by reasonable amounts corresponding to the costs incurred by
INFOCUS in assuming FUNAI’s obligations.  Any dispute arising out of this Section shall
be subject to arbitration under Section 28.16 herein.

 

8.2.                              Change of Schedule.  In the event that FUNAI is unable to
satisfactorily complete any of the tasks listed in the Milestone or Development
Schedule, INFOCUS and FUNAI shall discuss the task completion problem in good
faith with the intent of correcting the problem and proceeding with
development. If FUNAI still is unable to fulfill the task and INFOCUS is not
reasonably able to perform the task on FUNAI’s behalf, then INFOCUS shall have
the right to terminate the Product project associated with the missed task
without further payment to FUNAI.

 

9. CAPITAL EQUIPMENT

 

9.1.                              Capital Equipment.  FUNAI
shall pay for and maintain its facilities, upgrades, and common materials,
common hardware, common tooling, and common equipment including, but not
limited to, jigs and dies, and software. *

 

9.2                                 Production Tooling.  * INFOCUS may request to return, or transfer to a third
party the foregoing Production Tooling and items at INFOCUS’ expense.  In the event that such return or transfer is
not requested by INFOCUS as a result of FUNAI’s breach of this Agreement, and
such return or transfer prevents FUNAI from delivering Products ordered by
INFOCUS under this Agreement, then INFOCUS shall compensate FUNAI as provided
in Sections 12.8 and 12.9 hereof.  FUNAI
shall not lease, sell or transfer Production Tooling to a third party without a
written consent of INFOCUS.

 

*Certain information on this page has been omitted and filed separately
with the Commission.  Confidential
treatment has been requested with respect to the omitted portions.

 

8

 

9.3.                              Maintenance.  FUNAI
shall provide maintenance, calibration, and repair of all Production Tooling
scheduled by a separate agreement between FUNAI and INFOCUS, with detailed
description of costs.

 

9.4. Location.  FUNAI shall reasonably notify INFOCUS
regarding the storage location of Production Tooling.  FUNAI shall not change location without a
prior consent of INFOCUS.

 

9.5.                              Export/Import.  FUNAI
shall obtain any and all export/import licenses and duty and sales tax
exemptions to import/export the Production Tooling into and from the People’s
Republic of China during the term of and after termination of this Agreement.

 

10.                               PRODUCTION

 

10.1.                        Product Conformance.  All Products and Projector delivered by FUNAI to
INFOCUS pursuant to this Agreement shall be in conformance in all material ways
with the Product Specifications and Product and Process Documentation.  The Products shall be tested and processed in
accordance with the Quality Plan.

 

10.2.                        Design Verification.  INFOCUS shall verify that all phases and
aspects of the Product design and development meet Product Specification and
Milestone in writing within [  ] days from
the date that INFOCUS receives the Product.

 

10.3.                        Supplier Relationships and Responsibilities.  FUNAI shall be responsible for all aspects of
supplier management of the Products including DLPTM chip sets and
software.  INFOCUS shall provide
reasonable support for development of FUNAI’s supplier relationships.

 

10.4                           INFOCUS Rights to Procure Components for INFOCUS’ Assembly of Product.
 Upon INFOCUS’ request and FUNAI’s
consent, which shall not be unreasonably withheld, INFOCUS shall have the right
to assemble the Product in other locations, either by itself or using third
parties, including the right for, INFOCUS or INFOCUS’ designee to source
Product components directly from FUNAI or FUNAI’s suppliers for Product
assembly and sale. Pricing for such components shall include any actual cost
paid by FUNAI for obtaining, preparing and delivering such components to INFOCUS
or the designee.  At this time, FUNAI
agrees that INFOCUS has the foregoing rights for manufacturing in Brazil and
for Products sold to the United States Government through GSA.

 

11.                               SUPPORTING
DOCUMENTS

 

11.1.                        Supporting Documents.  INFOCUS shall provide FUNAI with Supporting
Documents and supporting documents for Supporting Documents in the form of hard
copy and/or electric format on or before the schedule described in Exhibit
D.

 

9

 

11.2.                        Manufacturing Process.  INFOCUS and FUNAI shall mutually agree
regarding FUNAI’s manufacturing process relevant to this Agreement.

 

11.3.                        Access to FUNAI’s Data.  INFOCUS and FUNAI shall agree in a separate
writing that INFOCUS may have access to FUNAI’s process and quality data via an
English-language web site, enabled electronic access and communications such as
the internet concerning the Product, as well as other records pertaining to the
Product as mutually agreed by INFOCUS and FUNAI.  1NFOCUS and FUNAI shall further agree that the
process and quality data format and content of materials set forth in this Section in
a separate writing.

 

11.4.                        Quality Plan.  FUNAI
shall prepare a Quality Plan for each Product according to a mutual agreement
with INFOCUS prior to an initial shipment of the Product.

 

11.5.                        Maintenance of Supporting Documents.  FUNAI and INFOCUS shall
maintain and revise Supporting Documents and Quality Plan according to
procedures that conform to ISO9000 requirements at both FUNAI and INFOCUS
facilities.

 

12.                                 PURCHASE PROVISIONS

 

12.1.                        Purchase.  INFOCUS
shall purchase the Projector from FUNAI pursuant to the schedule mutually
agreed by both parties.

 

12.2.                        Exclusivity.  FUNAI
shall manufacture INFOCUS’s product, commonly known as “Tsunami” for INFOCUS on
an exclusive basis. Specifications and description of “Tsunami” are attached
herewith as Exhibit J.  From time to
time, on or after the date of this Agreement, FUNAI and INFOCUS may agree in
writing regarding additional Products that FUNAI shall exclusively manufacture
on behalf of INFOCUS.  INFOCUS shall have
exclusive worldwide marketing and sales rights for the Products manufactured by
FUNAI.

 

12.3.                        OEM Products.  INFOCUS
shall have the right to sell OEM Products. 
INFOCUS shall notify FUNAI of reasonable modifications concerning
indication of the third party’s logo required for any OEM Product.  FUNAI shall make the best effort to implement
such modifications and manufacture OEM Products under the terms of and
conditions of this Agreement. INFOCUS shall bear any increase in direct
material and/or manufacturing costs, related to OEM Products.

 

12.4.                        Purchase Order.  INFOCUS
shall submit purchase orders for Products, three (3) months prior to the
requested delivery date at destination (“Delivery Date”).  The Purchase Order shall include the following
information concerning Products: (a) description of the Products; (b) quantity;
(c) prices of the Products; d) Delivery Date; and (e) delivery point.  No purchase order is binding before it is
confirmed in writing by FUNAI; however, FUNAI shall confirm all INFOCUS
Purchase Orders issued in compliance with this Agreement.

 

10

 

12.5.                        Forecast of Purchase.  INFOCUS shall provide FUNAI with non-binding forecasts
of expected purchases for future three months on a rolling basis and by the end
of each month.  However, any and all Long
Lead Time components listed in Exhibit F, purchased or ordered to be purchased
by FUNAI based on the non-binding forecasts described in this Section (the
“Key Components”) shall be binding between INFOCUS and FUNAI, subjecting INFOCUS
to be liable for payments related to Key Components. As clarification, such Key
Components shall be prudently procured by FUNAI only as necessitated by lead
times to meet INFOCUS forecasts.

 

12.6.                        [intentionally left blank]

 

12.7.                        Flexibility Model - Change of Delivery Date and Quantity.  INFOCUS shall have the right to change
quantity set forth on any purchase orders without penalty as follows:

Upside:

a)              Within 30 calendar days before Delivery
Date - Change shall not be allowed;

b)             31 - 60 calendar days before Delivery Date
— Up to 25% increase;

c)              61 and beyond calendar days before
Delivery Date — Up to 50% increase;

and

Downside:

a)              Within 30 calendar days of Delivery Date
— Change not allowed.

b)             Within 31- 60 calendar days before
Delivery Date — Up to 50% decrease; and

c)              Within 61 or more calendar clays before
Delivery Date —Up to 100% decrease.

 

12.8.                        [Intentionally
left blank]

 

12.9.                        Unpurchased Product and Material Liability for Cancellation of Orders.
 For final cancellations according to Section 12.7,
INFOCUS shall be liable to FUNAI for the Product and any Materials which are
prudently procured by FUNAI as necessitated by component lead-times to fulfill
INFOCUS orders and forecasts, but which are not purchased by INFOCUS for any
reason other than FUNAI’s default under this Agreement.

 

The amount of the liability of INFOCUS shall be as follows:

a)              Finished Products in FUNAI’s possession
or in transit - 100% of the price described in purchase orders;

b)             Inventory of Materials in FUNAI’s
possession whether in raw form or work in process - 105% of the amount for such
Inventory of Materials which FUNAI pays;

c)              Materials on order and not cancelable -
102.5% of the amount for such Materials which FUNAI pays;

d)             Any reasonable vendor cancellation,
charges incurred with respect to Materials accepted for cancellation or return
by the vendor; and

e)              Difference between original price paid by
FUNAI and price realized by FUNAI on sale of non-proprietary material to a
third party.

 

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12.10.                  Reduction of Amount.  FUNAI shall make best commercial efforts to
reduce the amount of INFOCUS’s liability under this Section at INFOCUS’s
expense as follows: (1) re-allocating Material for use by other FUNAI customers,
(2) returning Material to suppliers, or (3) selling excess non-proprietary
material to third party for highest possible price.

 

13. PRICES AND PAYMENT TERMS

 

13.1 Determination of Prices. Prices for the Products shall be set
forth in the pricing schedule described in Exhibit G.  Future Prices shall be determined by a written
agreement negotiated between FUNAI and INFOCUS at least once every three (3)
months at mutually convenient time and location.  Prices for the Products shall include costs of
retail packing, labeling, part marking, cartage and carriage to a port for
export (Hong Kong) where INFOCUS purchases the Product, and reverse logistics.  Quantity of the Product which INFOCUS
purchases described in Exhibit G shall be taken into consideration in order to
determine the Price of the Product.  Furthermore,
it is understood by both parties that the volume to be purchased is dependent
on the cost of the Product and market conditions.  It is therefore the responsibility of each
party hereto to reduce their respective costs.  INFOCUS may request a price decrease based on
market conditions, manufacturing economies of scale, lower material costs, currency
rate fluctuations, or any other reasonable factors at any time with formal
price negotiations to be conducted no more frequent than once per month at a
mutually agreeable time and location.  Upon
INFOCUS’ request FUNAI will consider the proposal and negotiate a mutually
agreeable resolution in good faith.  With
respect to the initial Product, the parties expect, and FUNAI will use its
reasonable commercial efforts to achieve *.  If INFOCUS identifies such savings, then
INFOCUS shall receive the full reduction in cost.  FUNAI agrees to implement an aggressive cost
reduction program, including manufacturing efficiency and quality improvements
and material cost savings for the Product *

 

13.2                           Payment — Standby Letter of Credit.  Subject to INFOCUS’s inspection and acceptance
of Product *

 

13.3                           Dispute Resolution.  INFOCUS and FUNAI shall independently review
all payments in a timely manner and work to resolve any dispute arising out of
payments described in this Section in a mutually satisfactory manner.

 

13.4                           Most Favored Pricing

* Any dispute
arising out of this Section shall be subject to an
arbitration under Section 28.16 herein.

 

*Certain information on this page ha been omitted and filed separately
with the Commission.  Confidential
treatment has been requested with respect to the omitted portions. 

 

12

 

13.5                           Allocation of shortage materials and factory capacity.  FUNAI agrees to fulfill all conforming INFOCUS
purchase orders according to the terms of this Agreement.  In the event suppliers place certain
components on allocation, FUNAI agrees to notify INFOCUS immediately and work
diligently to assure full delivery on INFOCUS purchase orders.

 

14.                               PACKAGING

 

14.1.                        Packaging.  All
Products packaging (retail or bulk) shall comply with requirements provided in
the retail packaging specification described in Exhibit A.  FUNAI shall submit drawings or samples of
packaging to INFOCUS upon INFOCUS’ request.  FUNAI shall use its best effort to ensure that
all items delivered hereunder are packed to prevent damages during shipment
using ocean and air commercial carriers and shall be liable for the Product
damages caused by failure to comply with the packaging specifications.

 

15.                               DELIVERY
AND PRODUCT ACCEPTANCE

 

15.1.                        FOB. Destination. Delivery of the
Product(s), spare parts and accessories sold by FUNAI to INFOCUS shall be
according to F.O.B. Hong Kong.  Title
shall be transferred to INFOCUS upon delivery at Hong Kong destination.  FUNAI shall contract at its own expenses for
the carriage of the Products from a port of export.  FUNAI shall be responsible for all export
taxes, providing supporting documentation for export clearance, required to
deliver the Products to the port of export.

 

15.2.                        Early Delivery.  If
the Product is delivered more than five (5) business days in advance of the
Delivery Date, INFOCUS need not take delivery of and has the right not to pay
for such Product until the due date based on scheduled Delivery Date.

 

15.3.                        Critically Late Products.  If delivery of the Products is delayed more
than seven (7) days from the Delivery Date, INFOCUS has the right to accelerate
the delivery of the Product by receiving from FUNAI the differences in costs
between the standard freight and premium air freight and any reasonable
expedite charges for acceleration of the delivery of critically late Product if
the delay of delivery is caused by FUNAI’s fault.

 

15.4.                        Delivery Delays.  FUNAI shall notify INFOCUS immediately of any
issues that prevent timely deliver of the Products to INFOCUS and work
diligently to remedy those issues immediately.  FUNAI shall make good faith effort to avoid
delinquent shipments and to review shipment on a quarterly basis.

 

16. INSPECTION.

 

16.1.                        Inspection and Process Verification.  FUNAI shall complete the Product Inspection
prior to shipping to INFOCUS at FUNAI facility according to Quality Plan.

 

13

 

16.2.                        On-Site Quality Audits.  INFOCUS or its authorized agent may inspect FUNAI’s
facility at business hours to verify FUNAI’s manufacture and delivery of
Products in accordance with this Agreement.  FUNAI shall provide a suitable office space in
the FUNAI manufacturing facility with telephone and IT network capabilities for
two INFOCUS employees or INFOCUS designated representatives.

 

16.3.                        Inspection by INFOCUS.  INFOCUS may perform the Product Inspection at INFOCUS
facility within forty (40) calendar days from the date of receipt of the
Product.  If INFOCUS finds any Defective
Product under its Product Inspection, INFOCUS shall give FUNAI a written notice
of sufficient details of such failure.  In such event, INFOCUS shall send a reasonable
number of samples or photographs of Defective Product to FUNAI to enable FUNAI
to make its own inspection at its own expense.  FUNAI shall provide Return Material
Authorizations (‘RMA”) and shipping instructions within three (3) business days
of an INFOCUS request.  INFOCUS may
reject the Defective Products if FUNAI agrees to the defect.  In the event that FUNAI disagrees with an
INFOCUS rejection, the parties shall meet immediately (in person or
telephonically) to, in good faith, reasonably discuss and resolve the
disagreement.

 

16.4.                        No Failure Products.  If FUNAI is unable to find any defect, or
repair a malfunction, in a component or material returned by INFOCUS according
to Product Inspection under this Section, the parties shall cooperate in good
faith to find a cause of the defects and take remedial measures.

 

16.5.                        Technical Assistance.  FUNAI shall provide reasonable technical
assistance to INFOCUS in connection with effecting resolution to Product
quality problems including, but not limited to, building appropriate test and
inspection fixtures.

 

17. INSPECTION FOR ACCEPTING PRODUCTS

 

17.1.                        Inspection at FUNAI’s Manufacturing Facility.  INFOCUS may perform its inspection of
Products (hereinafter referred to as “inspection for acceptance”), at FUNAI’s
manufacturing facility, pursuant to the Warranty Agreement and Quality Plan
Inspection Policy executed between the both parties.

 

17.2                           Inspection
at another Place.  If INFOCUS
does not perform inspection for acceptance at FUNAI’s manufacturing facility
according to Section 17.1 above, INFOCUS may perform inspection for
acceptance at another place according to Quality Plan, within forty (40) days
of the delivery of Products, pursuant to the Warranty Agreement and Inspection
Policy.

 

17.3                           Notice.
 When INFOCUS performs inspection for
acceptance described in Section 17.1 and 17.2 above, INFOCUS shall notify
FUNAI whether Products are acceptable. When INFOCUS determines Products to be
defective, INFOCUS shall inform FUNAI of the cause of its determination in
writing.  Then FUNAI and INFOCUS shall
mutually discuss whether the subject determination was reasonable.  When both parties agree that INFOCUS’s
rejection of acceptance is reasonable, one of the following

 

14

 

actions
shall be implemented by obtaining FUNAI’s prior consent.  FUNAI shall not unreasonably withhold said
consent.

 

a)              INFOCUS
may reject all Products existing in a supply lot, and may ship them back to
FUNAI, at FUNAI’s expense.  FUNAI shall
repair or exchange the subject merchandise, and then re-ship the subject
merchandise to INFOCUS, at FUNAI’s expense; 

b)             FUNAI
may examine all Products in a supply lot, and may repair or exchange them, at
INFOCUS’s facility at FUNAI’s expense; or 

c)              INFOCUS
may examine all Products in the supply lot, and may designate defective
Products at FUNAI’s expense.  INFOCUS may
send such designated Defective Products to FUNAI, at FUNAI’s expense.  FUNAI shall provide INFOCUS with the replaced
and/or refurbished Products at its own expense; or 

d)             FUNAI
may promptly send the required parts to repair the Products free of charge.  FUNAI shall be responsible for any cost
arising out of examination for all Products, and any cost for said repair.

 

17.4                           Omission of
Inspection.  Regardless of Section 17.1
and 17.2 above, INFOCUS can omit inspection for acceptance by its sole discretion.
 When INFOCUS omits inspection for
acceptance, or, if INFOCUS does not notify the result of inspection for
acceptance, within a reasonable period of time, Products shall be deemed to be
accepted by INFOCUS.

 

17.5                           Sustaining
Support.  A Sustaining Engineering
Plan shall be entered into by both parties, such Plan to include without
limitation FUNAI responsibility for all:

 

a)              Supplier
quality engineering including data reporting to supplier and INFOCUS. 

b)             Data,
analysis and corrective action associated with FUNAI manufacturing. 

c)              Root
cause analysis of failed Product and associated CLCA and change activity
(process and/or part).

 

18. WARRANTY FOR QUALITY OF PRODUCTS

 

18.1                           Scope of
Warranty.  FUNAI warrants that
Products and related parts, which are delivered to INFOCUS; shall be managed
pursuant to the Warranty Agreement between the both parties; shall be met with
the Inspection Policy and Product Specification entered into between the both
parties; and shall have no material or manufacturing defects regarding quality
of Products and related parts.

 

18.2 Products Qualified or
without Inspection. FUNAI shall warrant quality of Products against
any existing or apparent defect regardless of the fact that (1) INFOCUS
accepted the Products upon its inspection pursuant to this Agreement, and (2)
INFOCUS did not conduct any inspection pursuant to Section 18.1 above, for
the period of fifteen (15) months from the delivery date of the Products.  The both parties sincerely confer and
determine an appropriate remedy, including one of the following actions below;

 

15

 

a)              INFOCUS
may send Defective Products to FUNAI at FUNAI’s expense, and FUNAI shall
promptly deliver repaired Defective Products or substitutes; or 

b)             FUNAI
may promptly provide INFOCUS with certain required parts to repair Defective Products
without any costs to INFOCUS, and shall pay any applicable expenses for the
subject repair and inspection incurred by INFOCUS.

 

18.3                           Repeat and
Catastrophic Defect.  If
Products have significant quality defects, more than twice within 12 months of
the delivery date, arising out of a defect caused by a same part and same
cause, or if an overall defect rate for a particular Product model exceed more
than 2% of Product, then INFOCUS may notify FUNAI that said series of defects
have a catastrophic defect, in addition to remedies available under Section 18.2
above.  When the both parties agree that
such catastrophic defect exists, FUNAI shall take expedited correctional measures
at its own expense and remove such catastrophic defect to prevent any further
harm on behalf of INFOCUS to the fullest extent.  When INFOCUS exchanges or repairs Defective
Products caused by the catastrophic defects, FUNAI shall pay for INFOCUS’s
reasonable expense for inspection, exchange and/or repair
of refurbished or replaced Products.

 

18.4                           Defect
Caused by INFOCUS’s Fault.  Section 18.1,
18.2, and 18.3 in this Agreement shall not be applicable to both parties when
defect of Products is caused by INFOCUS’s fault including, but not limited to,
the defect caused solely by INFOCUS’s design of Products; the defective
specification provided by INFOCUS; and/or the defect caused by certain
mechanical parts provided by INFOCUS.  When
it is
not certain which party’s fault causes defect of Products, the both parties
faithfully confer and determine whether Section 18.1, 18.2, and 18.3 in
this Agreement are applied or not.

 

19. QUALITY ISSUES

 

19.1                           Quality
Issues.  Should FUNAI become
aware of any quality issues, design or manufacturing defect, or other issues,
whether FUNAI or supplier-related, which may impact FUNAI compliance with the
Product Specifications hereunder, FUNAI shall promptly notify INFOCUS prior to
the next scheduled shipment of the nature of such issues and provide then-known
technical details.

 

19.2                           Supplier
Changes.  All FUNAI changes in
suppliers for the Products must adhere to the Product Change Notice (“PCN”)
process set forth in Section 21.1 hereof.

 

20.                                 WARRANTY.
 In addition to the procedures described
in Sections 16 -19, FUNAI hereby warrants that the Product, Service Parts,
accessories and lamps supplied hereunder are free from all liens, encumbrances,
security interests and other claims.

 

21.                                 SERVICE.  FUNAI shall supply INFOCUS with Service as
provided in Exhibit I hereof (to be agreed by the parties).

 

16

 

22.                               PRODUCTS
CHANGES

 

22.1.                        Change of
Products.  Form, Fit or
function of Products may be changed by FUNAI only through the process provided
in this section and with the written pre-approval of INFOCUS.  Such changes shall be documented and
incorporated into the Product Specifications and Product and Process
Documentation.  FUNAI shall provide
INFOCUS with documentation detailing the changes of the Product, including
price changes and justifications of such price changes, whether increases or
decrease, and any delivery date or lead-time changes.  FUNAI shall provide INFOCUS with model number
and unit serial number when change takes effect.  INFOCUS shall use reasonable efforts to
evaluate said requests and shall not unreasonably withhold approval for such
changes.  For changes required by
INFOCUS, INFOCUS shall pay for all materials rendered excess or obsolete, due
to any change of Product Specifications or new Products made pursuant to
INFOCUS request, to the extent such materials were prudently procured by FUNAI
as provided in Section 12.9 hereof.

 

22.2.                        New Product.
 New product may be added to
the Product by a written amendment to this Agreement between FUNAI and INFOCUS.
 In such case, FUNAI shall provide
INFOCUS with documentation for any price, delivery date and lead-time changes.

 

23. TERMINATION

 

23.1.                        Termination
for Cause.  a) In the event
either party: (i) becomes insolvent; (ii) voluntarily files or has filed
against it a petition under applicable bankruptcy or insolvency laws which such
party fails to have released within thirty (30) days after filing; (iii)
proposes any dissolution, composition or financial reorganization with creditors
or if a receiver, trustee, custodian or similar agent is appointed or takes
possession with respect to all or substantially all property or business of
such party; or (iv) such party makes a general assignment for the benefit of
creditors, the other party may terminate this Agreement by giving a termination
notice, which termination shall become effective ten (10) days after the date
of mailing.

 

b) Either party shall have the right to
terminate this Agreement if the other party is in material breach of any term
or condition of this Agreement and fails to remedy such breach within thirty
(30) days after receipt of written notice of such breach given by the
nonbreaching party.

 

23.2.                        Termination
without Cause.  Either party may terminate
this Agreement at any time without cause upon one hundred eighty (180) days
written notice to the other party. If INFOCUS terminates this Agreement,
INFOCUS has the right to issue purchase orders with delivery dates up to the
date of termination.  If INFOCUS requests
earlier termination, a) FUNAI shall (1) stop work pursuant to this Agreement to
the extent specified in INFOCUS notice which may specify date on or after the
date of said notice, (2) terminate all subcontracts with INFOCUS and orders of
INFOCUS that relate to terminated work, (3) place no further orders for
Materials, and (4) complete the work in progress for non-terminated work as
specified in the INFOCUS notice in accordance with the provisions of this
Agreement and b) INFOCUS shall be liable for all Materials which

 

17

 

FUNAI has prudently procured as necessitated
by component lead-times to fulfill INFOCUS purchase orders and forecasts.  If FUNAI terminates this Agreement, FUNAI
shall deliver the Product on INFOCUS purchase orders through the date of
written notice of termination.  The term
of this Agreement is two years from the date of this Agreement. This Agreement
shall automatically renew unless terminated by either party by providing the
other party with 60 days advanced written notice.

 

23.3.                        Return of
Production Tooling.  Upon
expiration or termination of this Agreement, FUNAI shall, at INFOCUS request,
promptly deliver to INFOCUS Production Tooling, procedures, software programs
and other relevant information owned by INFOCUS.  INFOCUS shall be responsible for reasonable
freight costs from FUNAI facilities to destination as specified by INFOCUS.  FUNAI shall be responsible, at its sole
expense, for packaging such tooling and equipment for shipment and delivery in
good order.

 

23.4.                        Return of
FUNAI’s tooling.  Upon
expiration or termination of this Agreement, INFOCUS shall, at FUNAI request,
promptly deliver to FUNAI all tooling and equipment at INFOCUS premises owned
by FUNAI hereunder, and procedures, software programs and other relevant
information owned by FUNAI, if any. FUNAI shall be responsible for reasonable
freight costs from INFOCUS facilities. INFOCUS shall be responsible, at its
sole expense, for packaging such tooling and equipment for shipment and
delivery in good order.

 

23.5.                        Survival.
 Neither the termination nor expiration
of this Agreement shall relieve either party from its obligations to pay the
other any sums accrued hereunder.  Either party’s respective rights, obligations and duties
under Sections 3.3.  (Ownership),
7.1.  (Non-Recurring Engineering fees and Capital
Equipment Spending), 25.  (Joint Liability and Indemnification), 26.1.  Confidentiality Agreement), as well as any
rights, obligations and duties which by their nature extend beyond the
termination or expiration of this Agreement shall survive any termination or
expiration and remain in effect for a period of three (3) years thereafter or
the period specified in this Agreement, if longer.

 

24.                               INFOCUS
MANUFACTURING RIGHTS

 

24.1.                        Manufacturing
Rights OF INFOCUS.  Notwithstanding
anything to the contrary provided herein, INFOCUS shall have the sole rights to
make, have made, use, sell, and license all aspects of the Products in all
worldwide markets during the term and after the termination of this Agreement
subject to the terms and conditions in this Agreement.  Except for FUNAI’s sole inventions and
improvement arising out of the utilization of FUNAI’s own intellectual property
relating to process technology, INFOCUS shall own all rights in the
intellectual property associated with the Products including, without
limitation, Product Specifications, Product and Process Documentation, Product
Tooling and test/manufacturing equipment furnished or paid for by INFOCUS, and
all technology, trade secrets, and know how attending the Products and the
manufacturing and testing thereof.

 

18

 

24.2.                        Joint
Intellectual Property Right.  Each party shall retain sole right, title and
interest to intellectual property solely developed by such party prior to,
during or after the term of this Agreement. 
Any intellectual property developed jointly must be identified by the
parties as joint intellectual property in writing, prior to filing for patent protection
or other registration.  A separate
written agreement shall be entered between FUNAI and INFOCUS regarding the
ownership, license, loyalty, and use of joint intellectual property on or
before the termination of this Agreement.

 

24.3.                        Protection. FUNAI and INFOCUS shall take appropriate
measures to protect FUNAI IP and INFOCUS IP in the Products, component parts
and designs and the other party’s trademarks, copyrights, patents, trade
secrets and know-how relating to the Products.

 

25. JOINT LIABILITY AND INDEMNIFICATION

 

25.1.                        Except as set forth in Section 25.2
of this Agreement, each party shall be jointly liable for any suit, claim, or
proceeding, alleging that the Products infringe third parties’ patent,
copyright, intellectual property or other proprietary right.  Except as set forth in Section 25.2 of
this Agreement, each party shall defend and indemnify the other party against
which any suit, claim, or proceeding that concerns infringement of the Products
on any third parties’ patent, copyright, intellectual property or other
proprietary right may be brought.

 

25.2.                     Patent Indemnity.  To
the extent that any suit, claim or proceeding arises due to each party’s
supplied technology, designs, parts, processes or know how that themselves
infringe any third parties’ patent, copyright, intellectual property or other
proprietary right, each party, at its own expense, shall defend and indemnify
the other party and its customers in any suit, claim or proceeding brought
against the other party or both parties jointly, alleging that the Products
infringe the third parties’ patent, copyright, intellectual property or other
proprietary right, provided each party is promptly notified within ten (10)
business days, given assistance required, and permitted to control the defense
and/or negotiation for settlement.  Each
party shall pay any judgment in such suit claim or proceeding, including
reasonable attorneys’ fees, but each party shall have no liability for settlement
or costs incurred without its consent.  In
the event the other party or any of its customers is enjoined from using,
leasing or selling any Product, each party shall, at its option and expense (a)
obtain the right to enable such use, lease or sale, or (b) modify the design of
the Product so that it no longer infringes, but remains substantially
equivalent, or as a last resort (c) substitute substantially equivalent
non-infringing Products.  If none of the
foregoing can be accomplished within a reasonable time, each party shall accept
a return from the other party of the infringing Products and fully refund to
the other party the original purchase price paid therefore by the other party.

 

25.3.                        Process
Indemnity.  Each party shall,
at its expense, defend and indemnify the other party and its customers in any
suit, claim or proceeding brought against either alleging that each party
design or manufacture of any Product was the cause of any damage or injury to
the person or tangible property of any third party, provided each

 

19

 

party
is promptly notified, given assistance required, and permitted to direct the defense.
 Each party shall pay any judgment in
such suit, claim or proceeding, including reasonable attorney’s fees, but
neither party shall have liability for settlement or costs incurred without its
consent.

 

26. NDA, INTELLECTUAL PROPERTY AND SECRECY

 

26.1.                        Confidentiality
Agreement.  While the terms of
this Agreement shall take precedence in the event of conflicting terms, the
Confidentiality Agreement between INFOCUS and FUNAI dated January 29, 2001
shall continue to be effective and be incorporated herein by reference.

 

26.2.                        INFOCUS IP.
 INFOCUS shall provide FUNAI with INFOCUS
IP for the sole purpose of’ allowing FUNAI to perform its obligations under
this Agreement.  Except
as specifically provided in this Agreement, FUNAI shall have no right to use or
deal with the INFOCUS IP in any way.  Nothing in this Agreement shall be interpreted
or construed as granting FUNAI any ownership interest in or rights to the
INFOCUS IP and FUNAI hereby acknowledges that the INFOCUS IP constitute the sole
and exclusive property of INFOCUS.  FUNAI
shall not transfer or sub-license INFOCUS IP to any third party without a prior
written consent of INFOCUS.

 

26.3.                        FUNAI IP.
 Except as specifically
provided in this Agreement, INFOCUS shall have no right to use or deal with the
FUNAI IP in any way.  Except as
specifically provided in this Agreement, nothing in this Agreement shall be
interpreted or construed as granting INFOCUS any ownership interest in or
rights to the FUNAI IP and INFOCUS hereby acknowledges that the FUNAI IP
constitute the sole and exclusive property of FUNAI, and INFOCUS shall not
transfer or sublicense FUNAI IP to any third party without a prior written
consent of FUNAL

 

26.4.                        No Implied
Licenses.  Except as is
expressly provided in this Agreement, nothing contained in this Agreement
grants or confers any license or right, impliedly, or otherwise, for any
innovation, improvement or feature, whether or not patentable or registrable.

 

26.5.                        Protections
against Improper Disclosure.  INFOCUS represents and warrants that it has
appropriate agreements in place with all its employees, consultants,
contractors and suppliers, providing for non-disclosure and non-use of FUNAI
IP, and that INFOCUS shall enforce such agreements to the fullest extent in
order to protects FUNAI IP from misuse, including without limitation bringing
legal action against suppliers or ex-employees who misuse the FUNAI IP.

 

26.6.                        Protections
against Improper Disclosure.  FUNAI
represents and warrants that they have appropriate agreements in place with all
their own employees, consultants, contractors and suppliers, providing for
non-disclosure and non-use of INFOCUS IP, and that FUNAI shall enforce such
agreements to the fullest extent in order to protect

 

20

 

INFOCUS IP
from misuse, including without limitation bringing legal action against
suppliers or ex-employees who misuse the INFOCUS IP.

 

27. LICENSE PROVISIONS FOR FUNAI SALES

 

27.1.                        Royalty.
 In consideration for the rights and
license granted by INFOCUS for the Licensed Product *
At INFOCUS’ sole discretion, INFOCUS may allow FUNAI to sell front projectors
into specific markets at terms and royalty rates to be determined by the
parties.

 

27.2.                        Penalty for
Delay.  Any payment in this
Agreement which shall be delayed beyond the due date shall be subject to an
interest charge at a rate equal to the prime rate (as quoted by Citibank, N.A.,
New York) plus two percent (2%), compounded annually, on the unpaid balance
payable in United States currency until paid.

 

27.3.                        Payment.
 Payments by FUNAI shall be made by wire
transfer to: Wells Fargo Bank, Portland Commercial Banking, ABA Routing #
121-000-248, for the account of INFOCUS Corporation, Account No. 4l59626738 or
by check mailed to: INFOCUS Corporation, 27700B SW Parkway Avenue, Wilsonville,
OR 97070-9215, Attention: Corporate Counsel.  FUNAI shall send Notice of payments to INFOCUS
when FUNAI finish process of transfer.

 

27.4.                        Report.
 A responsible official of FUNAI shall certify
Net Selling Price of Licensed Product, every sixth months, in a written report
and send it to INFOCUS.

 

27.5.                        Records.  With respect to the royalty and reporting set
forth in this Article 26, FUNAI shall keep full, clear and accurate
records with respect to sales of Licensed Product.  These records shall be retained for a period
of three (3) years from the date of payment.

 

27.6.                        Audit of
Records.  INFOCUS shall have the
right a) to appoint an independent certified public accountant with a prior
written consent of FUNAI and b) at its expense, to examine and audit, not more
than once a year, and during normal business hours, all such records and
accounts as may under recognized accounting practices.  FUNAI shall make adjustment of compensation
for any errors and/or omissions of such records disclosed by such examination
or audit.  Such right to examine and
audit shall be affected by any statement to the contrary appearing on checks or
otherwise, unless INFOCUS expressly waives in writing such right to examine and
audit.

 

*Certain information on this page has been omitted and filed separately
with the Commission.  Confidential
treatment has been requested with respect to the omitted portions.

 

21

 

28. GENERAL PROVISIONS

 

28.1.                        Responsibilities
of the Parties.  Except as provided in this Agreement, each party shall perform the
work in this Agreement as an independent contractor and not as an agent or
employee of partner of the other party hereto.

 

28.2.                        Assignment. Each party shall not assign any of its
rights or obligations under this Agreement to any person without a prior
written consent of the other party.  Any
purported assignment in violation of this provision shall be void.

 

28.3.                        Release of
Information.  Both parties
shall keep the relationship made by this Agreement strictly confidential and
shall not disclose the same to any third parties, other than their attorneys and
accountants, without the prior consent of the other.  Neither FUNAI nor INFOCUS shall issue or
approve a press release or other announcement concerning the proposed
relationship without prior consent of the other as to the contents of the
announcement and its manner of release.

 

28.4.                        Notices.  Any notice required or permitted to be given
under this Agreement shall be in writing and shall be deemed valid and
sufficient if delivered in person, dispatched by regular mail or delivered by
fax (provided the original is thereafter promptly dispatched by regular mail)
to the following:

 

To INFOCUS:    InFocus Corporation 
     27700 SW Parkway Avenue 
     Wilsonville, Oregon 97070 U.S.A. 
     Attention: Legal Department 
     Fax Number :(503)
685-8838

 

To FUNAI:      FUNAI

 

Attention:

Fax Number:

 

28.5.                        Force
Majeure.  With the exception
of payment for the Products delivered in conformance with this Agreement, each
party shall have no obligation or liability whatsoever arising out of or in
connection with any delay or failure to perform any of its covenants or
obligations under this Agreement, or any loss or damage incurred by the other
party as a result thereof, to the extent such delay or failure is caused,
either directly or indirectly, by act of God, fire, war, riot, civil, insurrection,
accident, embargo, governmental priority, strikes or other labor trouble, order
of any court or government, or any other occurrence, act, cause or thing beyond
the control of that party.

 

28.6.                        Disaster
Recovery Plan.  FUNAI shall
maintain a disaster recovery plan for INFOCUS which shall include all
reasonable procedures needed to minimize disruption to INFOCUS’s business at
the current monthly shipping rates, including use of another FUNAI facility if
production is delayed for more than thirty (30) days.  INFOCUS shall

 

22

 

cooperate
with such FUNAI disaster recovery plan.  In
the event that such FUNAI delay continues for more than thirty (30) days,
INFOCUS may, at its sole option, either (a) terminate this Agreement under Section 22.1
hereof, (b) suspend its obligations under this Agreement during the period of
delay and cancel outstanding delinquent purchase orders without liability,
and/or (c) invoke INFOCUS’ manufacturing rights under section 23 hereof
and FUNAI agrees to cooperate in same.

 

28.7.                        DISCLAIMER
OF DAMAGES, WARRANTIES, AND LIABILITIES. NOTWITHSTANDING ANYTHING
HEREIN TO THE CONTRARY, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (INCLUDING,
BUT NOT LIMITED TO, LOST REVENUES OR PROFITS) ARISING OUT OF ANY BREACH OF THIS
AGREEMENT, OTHER THAN SUCH DAMAGES ARISING OUT OF ANY BREACH RELATING TO
CONFIDENTIAL INFORMATION, INVENTIONS OR INTELLECTUAL PROPERTY RIGHTS.

 

28.8.                        Insurance.
 Both parties shall maintain adequate
casualty and loss insurance with a reputable insurance company reasonably
acceptable to each other for all risks at replacement cost of Production
Tooling and FUNAI tooling, fixtures and equipment at each party’s facilities.
The insurance amount shall cover the actual value of all inventories including
Material, work-in-process and finished Product, tooling and fixtures currently
in use. Each party shall provide the other party with copies of documentation
of its insurance coverage. Each party shall exercise due diligent to renew the
insurance policy upon its expiry. Each party shall pay cost of liability
insurance at any facilities owned and operated by each party

 

28.9.                        Compliance
with Laws.  Each party agrees
to comply with, at its expense, all applicable Federal, State and local laws,
including without limitation the Foreign Corrupt Practices Act and the Patriot
Act, and all regulations and Ordinances necessary to permit the manufacture,
sale and distribution of the Products, the importation of components from
INFOCUS, and the exportation of finished Products to INFOCUS.

 

28.10.                  Readings.  The headings and titles of each Section of
this Agreement are inserted for convenience only and shall not affect the
construction or interpretation of any provision.

 

28.11.                  Governing Version.
 The English-language version of this
Agreement shall be the governing version.

 

28.12.                  Modification.  Neither party shall be bound by any
modification of this Agreement unless such modification is in writing and
signed by both party’s authorized representative.

 

28.13.                  Severability.  If any provision of this Agreement is held
invalid by any law, rule, order or regulation of any government or by the final
determination of any state or federal

 

23

 

court,
such invalidity shall not affect the enforceability of any other provision not
held to be invalid.

 

28.14.                  Omissions.  Any delay or omission by either party to exercise
any right or remedy under this Agreement shall not be construed to be a waiver
of any such right or remedy or any other right or remedy hereunder.  All of the rights of either party under this
Agreement shall be cumulative and may be exercised separately or concurrently.

 

28.15.                  Governing Law and Forum.  This Agreement shall be governed and
construed in all respects in accordance with the laws of the State of
California.  Any settlement between the
parties or judgment issued in arbitration may be enforced in any California
court having appropriate jurisdiction.

 

28.16.                  Arbitration.  All differences and disputes arising
hereunder shall be settled amicably between the parties in good faith.  If however, such disputes cannot be resolved
to the full satisfaction of the both parties not later than thirty (30) days
from the time written notice of dispute from one party to the other, either
party may seek arbitration.

 

Any
controversy, claim or dispute between the parties arising out of this Agreement
shall be settled exclusively and finally by arbitration in California in
accordance with the Commercial Arbitration Rules (“Rules”) of the American
Arbitration Association (“AAA”) except to the extent that the Rules conflict
with the provisions of the Agreement and excluding the 1980 United Nation Convention
of contracts governing the International Sale of Goods.  The arbitration awards may be enforced through
any court having appropriate jurisdiction.  The Arbitration pursuant to this Section shall
be held by a three-arbitrator-panel.  INFOCUS
shall select one arbitrator.  Funai shall
select one arbitrator.  Said two
arbitrators shall choose the third arbitrator to the panel.

 

28.17.                  Entire Agreement.  This
Agreement and all Exhibits hereto constitute the entire understanding between
INFOCUS and FUNAI for the sale, purchase and manufacturing of the Products
hereunder and supersede any prior communications, oral or written, relating to
the subject matter hereunder.

 

24

 

28.18.                  Exhibits.  All
Exhibits A through I of this Agreement are hereby incorporated and made a part
of this Agreement.

 

Exhibit A — Product
Specifications

Exhibit B — Exclusivity Agreement

Exhibit C — INFOCUS IP

Exhibit D — Milestone H Product Development Schedule

Exhibit E — Consigned Materials (if any)

Exhibit F — Long Lead Time Components

Exhibit G — *

Exhibit H — FUNAI IP

Exhibit I — Service and Service Parts

Exhibit J — Specification of Tsunami, Product
of INFOCUS

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by a duly authorized representative thereof.

 

	
  “FUNAI”

  	
  “INFOCUS”

  
	
   

  	
   

  
	
  FUNAI Electric Co., Ltd.

  	
  INFOCUS Corporation

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  

 

*Certain information on this page has been omitted and filed separately
with the Commission.  Confidential
treatment has been requested with respect to the omitted portions.

 

25EXHIBIT 10.34

 

SECOND
AMENDMENT TO DEVELOPMENT, PURCHASE AND LICENSE AGREEMENT

 

This SECOND AMENDMENT TO DEVELOPMENT, PURCHASE AND LICENSE AGREEMENT (“Second
Amendment Agreement”) is entered into on the 13th day of January, 2005.

 

	
  BETWEEN:

  	
   

  	
  FUNAI ELECTRIC CO., LTD., a corporation duly organized and existing
  under the laws of Japan and having 

  
	
   

  	
   

  	
  its offices at 7-1, 7-Chome, Nakagaito, Daito, Osaka 574-0013, Japan.

  	
   

  
	
  (“FUNAI”)

  
	
   

  	
   

  	
   

  
	
  AND:

  	
   

  	
  INFOCUS CORPORATION, a corporation duly organized and existing
  under the laws of the State of Oregon, and having its principal place of
  business at 27700B SW Parkway Avenue, Wilsonville, Oregon 97070, USA.

  
	
  (“INFOCUS”)

  

 

RECITALS:

 

(A)                                       FUNAI and INFOCUS entered into a Development,
Purchase and License Agreement dated September 13, 2002 (the “Original
Agreement”), as amended by an Amendment Agreement between the parties dated November 22,
2002;

 

(B)                                         Under Article 28.12 of the Original
Agreement, any amendment to the Original Agreement is to be in writing and
signed by an authorized representative of FUNAI and INFOCUS; and

 

(C)                                         FUNAI and INFOCUS wish to amend the payment and
delivery terms under the Original Agreement, and have agreed to do so on the
terms and conditions set out in this Second Amendment Agreement.

 

IT
IS AGREED:

 

1.                                      Amendment of Article 13.2
of Original Agreement

 

Article 13.2 of the Original Agreement shall be
deleted and replaced with the following:

 

“Payment – Standby Letter of Credit.  Subject to INFOCUS’ inspection and acceptance
of Product, payment shall be 65 days from delivery at destination INFOCUS
Logistics Center 

 

 

(LC)
in U.S.A., Europe or Asia, but no later than 105 days from delivery at FOB Hong
Kong.  An
irrevocable standby Letter of Credit with the effective period of 65 days in
favor of Funai Electric Co., Ltd. Japan shall be instituted by INFOCUS
Corporation on or before the expiration of 30 day period prior to delivery at
FOB Hong Kong unless otherwise agreed in writing between INFOCUS and FUNAI. The
parties shall share equally the cost of such letters of credit 50-50% with
FUNAI reducing the price of products sold to INFOCUS to account for FUNAI’s 50%
share.”

 

2.                                      Amendment of Article 15.1
of Original Agreement

 

Article 15.1 of the Original Agreement shall be
deleted and replaced with the following:

 

“F.O.B. Destination.   Delivery of the Product(s), spare parts and
accessories sold by FUNAI to INFOCUS shall be according to F.O.B. Hong
Kong.  Risk shall be transferred
to INFOCUS upon delivery at Hong Kong destination.  Title shall be
transferred to INFOCUS upon delivery at destination INFOCUS Logistics Center
(LC) in U.S.A., Europe or Asia.  FUNAI shall contract at its own
expense for the carriage of the Products from a port of export.  Funai
shall be responsible for all export taxes, providing supporting documentation
for export clearance, required to deliver the Products to the port of export.”

 

3.                                      Effective Date

 

This Second Amendment Agreement shall take effect as
of the date first written above.

 

4.                                      No Other Changes

 

Except as expressly amended
in this Second Amendment Agreement, the Original Agreement shall remain
unchanged and in full force and effect.

 

2

 

IN
WITNESS WHEREOF the parties have signed this Agreement on the date first
written above.

 

 

FUNAI ELECTRIC CO., LTD.

 

By its authorized representative

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  /s/Yasuhito Ebine

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Position:

  	
  General Manager, Sales & Marketing

  	
   

  
						

 

 

INFOCUS CORPORATION

 

By its authorized representative

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  /s/ Margaret M. Cassidy

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Position:

  	
  Director of Supply Chain Management

  	
   

  
						

 

3

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