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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from ______________to___________________
Commission File Number: 33-2822-A
MSU Corporation
(Exact name of registrant as specified in its charter)
Florida 22-274288
(State or other jurisdiction of (I R S Employer ID No)
incorporation or organisation)
Elder House, 526-528 Elder Gate, Central Milton Keynes, MK9 1LR, England
(Address of principal executive offices)
011 44 1908 232100
(Registrant's telephone number, including area code)
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period as the Registrant was
required to file such report(s), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
The number of shares of common stock of the Registrant outstanding as of
February 9, 2000 was 25,455,452 according to the Company's transfer agent.
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Form 10-Q INDEX
PART 1 - FINANCIAL INFORMATION
Page No.
Item 1 Condensed Consolidated Financial Statements
Condensed Consolidated Balance sheets as of December 31,
1999 and June 30, 1999 3
Condensed Consolidated Statements of Operations for the
three and six months ended December 31, 1999 and the
three and six months ended December 31, 1998 4
Condensed Consolidated statements of Cash Flows for the
six months ended December 31, 1999 and 1998 5
Notes to Condensed Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 7-11
PART 11 - OTHER INFORMATION
Item 1 Legal Proceedings 12
Item 2 Change in Securities 12
Item 3 Defaults upon Senior Securities 12
Item 4 Submission of Matters to a Vote of Security Holders 12
Item 5 Other Information 12
Item 6 Exhibits and Reports on Form 8-K 12
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PART I - FINANCIAL INFORMATION
Item 1 Condensed Consolidated Financial Statements
MSU Corporation
Condensed Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
ASSETS
December 31 June 30
1999 1999
----------- --------
<S> <C> <C>
CURRENT ASSETS $ $
Cash and cash equivalents 620,254 2,604,504
Accounts receivable 566
Inventory 201,543 39,500
Prepaid expenses and other 152,993 170,457
---------- ----------
TOTAL CURRENT ASSETS 974,790 2,815,027
EQUIPMENT, net of accumulated depreciation of $201,733 and
$152,279 at December 31, 1999 and June 30, 1999 respectively 170,763 134,959
INVESTMENTS 390,625 390,625
---------- -----------
TOTAL ASSETS $1,536,178 $3,340,611
========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Current portion of debt 75,000 75,000
Accounts payable and accrued liabilities 1,037,477 1,032,947
Related-party notes, advances and payables 99,788 185,811
---------- -----------
TOTAL CURRENT LIABILITIES 1,212,265 1,293,758
LONG TERM DEBT 505,000 505,000
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' FUNDS
Common stock, $0.01 par value; 50,000,000 shares authorized 25,455,452
and 25,364,262 shares issued and outstanding at December 31, 1999
and June 30 1999 respectively 254,554 253,642
Additional paid-in capital 18,185,263 17,854,174
Stock subscriptions receivable (148,750) (148,750)
Accumulated other comprehensive income 114,241 108,820
Accumulated deficit (18,586,395) (16,526,033)
----------- -----------
TOTAL SHAREHOLDERS' FUNDS (DEFICIT) (181,087) 1,541,853
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' FUNDS $ 1,536,178 $ 3,340,611
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements
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MSU Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
December 31 December 31,
------------------ ------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES $ - $ 7,250 $ 505 $ 9,808
EXPENSES
Cost of revenues - 2,628 300 4,308
Selling, general and
administrative and other 513,592 263,141 869,113 504,000
Depreciation 25,447 25,003 46,658 37,711
Interest expense 12,200 38,333 56,401 95,833
Research and development 462,292 411,112 970,575 689,371
--------- --------- --------- ---------
TOTAL EXPENSES 1,013,531 740,217 1,943,047 1,331,223
--------- --------- --------- ---------
OPERATING LOSS (1,013,531) (732,967) (1,942,542) (1,321,415)
NON OPERATING INCOME
Interest income 11,981 2,122 32,180 2,661
Amorization of discount on convertible notes (150,000) - (150,000) -
--------- --------- --------- ---------
TOTAL NON-OPERATING
INCOME (EXPENSE) (138,019) 2,122 (117,820) 2,661
--------- --------- --------- ---------
NET LOSS $(1,151,550) $(730,845) $(2,060,362) $(1,318,754)
--------- --------- --------- ---------
LOSS PER COMMON SHARE $(0.05) $(0.04) $(0.08) $(0.08)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 25,413,876 18,429,233 25,395,251 17,509,735
</TABLE>
See notes to condensed consolidated financial statements
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MSU Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
December 31 December 31
1999 1998
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (2,060,362) $ (1,318,754)
Adjustments to reconcile net loss to net
cash used in operating activities 3,152 424,014
------------ ------------
NET CASH USED IN OPERATING ACTIVITIES (2,057,210) (894,740)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of equipment (net) (82,462) (13,899)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 150,000 195,648
Repayment of promissory notes in cash (373,439)
Issuance of common stock for cash 1,033,200
Costs directly related to financing activities (77,500)
------------ ------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 150,000 777,909
------------ ------------
EFFECT OF EXCHANGE RATE CHANGES 5,421 21,206
------------ ------------
NET INCREASE (DECREASE) IN CASH (1,984,251) (109,524)
CASH AT BEGINNING OF PERIOD 2,604,504 166,040
------------ ------------
CASH AT END OF PERIOD $ 620,253 $ 56,516
============ ============
</TABLE>
See notes to condensed consolidated financial statements
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MSU Corporation
Notes to Condensed Consolidated Financial Statements
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all normal recurring adjustments necessary to
present fairly the financial position of MSU Corporation and its subsidiaries at
December 31, 1999, the results of its operations for three and six months ended
December 31, 1999 and 1998, and its cash flows for the six months ended December
31, 1999 and 1998.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These condensed financial statements should be
read in conjunction with the Company's annual report on form 10-K for the fiscal
year ended June 30, 1999. The results of the operations for the three and six
months ended December 31, 1999 are not necessarily indicative of the operating
results that may be expected for the fiscal year ending June 30, 2000.
NOTE 2 - SHAREHOLDERS' EQUITY
During the six months ended December 31, 1999, there was a decrease in
shareholders' funds of approximately $1,723,000. Net loss for the six month
period was $2,060,000 and the cumulative translation adjustment increased by
approximately $6,000.
During the three month period ended December 31, 1999, the Company sold $150,000
10% convertible promissory notes which were subsequently converted into shares
of common stock at a conversion price of $2 for each $2 of promissory notes
held.
NOTE 3 - LOSS PER COMMON SHARE
The Loss per common share is computed based upon the weighted average of the
shares outstanding during the period.
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Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview of Business Operations and Significant Risks
The consolidated financial statements include the accounts of MSU Corporation,
MSU PLC, Web 2 U Limited and MSU Operations (US) Inc. (collectively the
'Company'). All significant inter company accounts have been eliminated in the
consolidated financial statements.
The Company operates primarily through Web 2 U Limited which is principally
engaged in the design and development of computer chips and chipsets principally
for use in high volume consumer electronic products. Most of the Company's chips
incorporate multiple functions, thereby eliminating the need for multiple chips
and permitting a more efficient printed circuit board design and a diminished
risk of malfunction and error at a lower cost.
During the six month period ended December 31, 1999 significant software and
hardware modifications to the television set top Internet Access Device were
completed and the Company has commenced production, through Shanghai Thakral
Electronic Industries Corp. of the latest 4 megabyte version of the proprietary
Slipstream Internet Access Device (recently renamed 'Web 2u'). The Company is
continuing to develop the main component of the television set top Internet
Access Device, the ISP Chip, which will provide enhanced Internet features.
The period has also seen significant change in the management of the company as
it begins to place greater focus on production and sales. The appointment of
Darran H. Evans as Chief Executive Officer and a member of the Board of
Directors and further appointments into executive positions has reflected the
objectives of the company in commercialising the products that have already been
successfully developed. In addition to changes in the executive team MSU
welcomed Jeffrey N. Green and Stephen W. Coles to the Board of Directors. Mr.
Green is Chairman and Chief Executive Officer of Paradigm Capital, Inc. a
Toronto, Ontario-based investment company focused on the telecommunications,
technology, industrial technology and niche brand areas. Mr. Coles is an
attorney with and Director of Brinkley Walser PLLC in North Carolina, and
specializes in corporate law. Messrs. Green and Coles provide more depth and add
an American presence to the Board, reflecting the importance of international
markets to the success of MSU. The Board now is comprised of eight members.
The period saw substantive progress in positioning the company to enter its
chosen markets. Within the UK, Argos, the largest UK catalogue retailer,
announced its intention to list the Web2u set top box in its Spring Summer
catalogue from January 30th 2000. Catalogue circulation is forecast at
approximately 16 million for the Spring Summer edition. The Web2u product will
additionally be included in some specialized instore catalogues within the 438
stores operated by Argos. Additionally, within the UK market, Tandy stores,
which specialize in consumer electronic products, will begin offering the Web2u
product in a majority of their stores in February. Tandy, owned by Carphone
Warehouse in the UK, operates 228 town center (high street) stores in the UK.
Tandy also is expected to include the Web2u in
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its catalogue to be available later in 2000. To ready the company for these and
further incursions into the UK retail market the company has achieved agreement
with a distribution and logistics company, Doro Audioline as well as a product
support specialist, Infoteam. Doro Audioline has agreed to distribute the Web2u
in selected UK retail accounts and mail order. Doro Audioline is a 25-year old
telecommunications firm with extensive experience in the UK markets. Doro
Audioline will also provide general warehousing and other distribution services
to MSU Corporation. Infoteam has agreed to provide consumer and technical
support for the Web2u product in the UK. Infoteam currently also supports the
Sony Playstation(R) as well as other electronic products in UK markets.
Outside the UK market, the Company has chosen to pursue partnering strategies
with companies that can provide MSU with immediate commercial advantages.
The Company's subsidiary, Web2U Limited, has signed a Swap Agreement, a Software
License Agreement, a Strategic Investment Agreement and a Product Know- How
Agreement (collectively, the "Agreements") with JadooNet.com Ltd. ("JadooNet"),
a joint venture between Salora International Ltd. and Infoquest E-Commerce Pvt
Ltd. The Agreements, copies of which are attached as Exhibits to this report,
provide for the exclusive license, manufacture and sale of the Web2u Internet
Set Top Box in India, Sri Lanka, Bangladesh and Nepal (the "Territory").
JadooNet will exclusively manufacture and market the Web2u system in the
Territory. MSU Corporation will receive a license fee per Unit on the initial
Units produced and a reduced specified fee per Unit thereafter in addition to a
product know-how fee and will sell certain components of the Web2u access device
to JadooNet. MSU will also help customize the product for the markets covered by
the Agreement. As part of the Agreements, each of MSU and JadooNet will receive
Warrants exercisable for a term of one year to purchase shares in the other, up
to an agreed upon amount of the outstanding capital stock of the other. JadooNet
is incorporated in India with its registered office in Bombay. It is an
associated company of Salora International Ltd., which is a manufacturer and
marketer of a variety of electronic products. Salora began introducing
television sets into the Indian market in 1977. It presently manufactures and/or
markets television sets, speakers, Panasonic fax machines, printers, and digital
cameras. It also sells color monitors and cordless phones under its own brand.
An on-going strategy for Salora has been to introduce new technology into the
Indian market with foreign partners. Salora possesses three manufacturing
facilities in India and has its own research and development staff. Infoquest
E-Commerce Pvt Ltd. is an Internet incubator with business interests in
innovative Internet access devices, Internet payment portals, an IT retail
chain, and web-based learning and IT-enabled services.
Within the territories of North and South America, the Company has entered into
a sales agency agreement with Corstar Business Computing Co., Inc. of Hawthorne,
New York, and McLaughlin International, Inc. in San Antonio, Texas
(collectively, the "Agents"), to promote and sell the Company's products. Mark
McLaughlin, a principal shareholder of the Company, is the controlling principal
of McLaughlin International, Inc. The Company has agreed to pay the Agents to be
divided equally
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between them, plus a commission per Unit of the Company's products sold. MSU, as
additional consideration, granted the Agents Warrants, and has agreed to issue
them additional Warrants upon the sale of additional Units of the Company's
products. The Agreement is terminable on 90 days prior written notice before the
end of any one-year term or it continues for another year.
The partnership approach is continuing to be pursued in other geographic
territories.
Management believe that initial revenues arising from the more aggressive sales
and marketing strategies that are being pursued will be seen during the next
quarter (third quarter of fiscal 2000).
Risks
The Company's consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. The Company has incurred losses
since inception. At December 31, 1999 there was an accumulated deficit of
$18,586,395. Additionally the Company has had recurring negative cash flows from
operations.
The Company expects that it is likely to incur net losses at least through to
the third quarter of fiscal 2000 and possibly through that year as it attempts
to further develop, upgrade and market its products and to develop its
infrastructure and organisation to support anticipated operations, including
anticipated product demand.
The foregoing statements are forward looking statements that involve risks and
uncertainties. The reader should be aware that the Company is likely to incur
net losses beyond the third quarter of fiscal 2000 if anticipated revenues from
license fees, royalties and conditional and forecasted purchase orders of
customised Internet Access Devices are not realised. Such conditional and
forecasted purchase orders in respect of the Internet Access Device assume,
without limitation, approval of final production samples by potential
purchasers; acceptance by and demand for customised Internet Access Devices by
consumers, satisfactory product performance, including chip and software
performance; modem approval from the local or national telephone company, and
the ability of the products to successfully compete in an extremely competitive
marketplace. The Company believes such assumptions are reasonable, however
should any one of such assumptions prove to be unfounded, the Company could
incur net losses beyond fiscal 2000 and/or be unable to continue as a going
concern. The foregoing factors raise substantial doubt about the Company's
ability to continue as a going concern without sufficient funds to meet its cash
requirements. There can be no assurance that the Company will be able to obtain
sufficient funds to enable it to continue as a going concern.
The company anticipates that if revenues from trading operations are not
generated in the coming months, it will, at least in the short term, have to
continue to fund its operations, through private sales of equity or debt
securities to and/or borrowings from third parties, to the extent such sources
of capital are available to the Company.
The markets for the Company's products has only recently begun to develop, are
rapidly evolving and are highly competitive, with substantially all competitors
having significantly greater resources than the Company. The Company and its
prospects must be considered in light of the substantial risks, expenses and
difficulties facing the Company.
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There can be no assurance that the Company will be successful in addressing any
of the foregoing risks, that it will be successful in implementing its strategy,
that it will ever achieve profitability or that it will be able to continue as a
going concern.
Results of Operations
Comparison of the three and six months ended December 31, 1999 to the three and
six months ended December 31, 1998
There were no revenues in the three months ended December 31, 1999 and the
revenues for the six months ended December 31, 1999 decreased over the same
period in 1998 by approximately $9,300 to $505 from $9,808. Comparison with the
previous periods however is not meaningful as in these periods, apart from the
sales of a small number of samples, there were no revenues generated as the
Company continued to concentrate its efforts on further software and hardware
developments of its Internet Access Device, and the Envoy chip.
The Company has only limited customers to date that frequently and
systematically purchase its products or retain its services. The loss of one
customer could have a material effect on the Company's business.
There were no costs of revenues for the three months ended December 31, 1999.
The cost of revenues for the six months ended December 31, 1999 decreased over
the same period in 1998 by approximately $4,000 to $300 from $4,308. The cost of
revenues fluctuate due to variations in gross margins as between chip sales,
support services and development services; however, because of the limited
number of sales in the six months ended December 31, 1999, comparison with 1998
is meaningless.
Research and development expenses generally consist of expenditures related to
the Company's development of its chips and prototype products, such as the ISP
Chip, the Envoy Chip, and the television set top Internet Access Device and
specific research and development performed pursuant to development arrangements
with third parties. For the three months and six months ended December 31, 1999
research and development expenses increased approximately $51,000 and $281,000,
respectively, over $411,112 and $689,371 in the corresponding periods in the
previous year which reflects the significant increase in resources which the
Company has been able to deploy in this area following the successful raising of
additional capital in the fourth quarter of fiscal 1999. The fluctuations from
period to period reflect the varying demands for research and development which
are dictated by technological changes and the need for the Company's products to
remain competitive and commercially viable, and the requirements of the
Company's customers. As mentioned above, as the revenues generated in the three
and six months ended December 31, 1999 were negligible, comparison of research
and development expenditure as a percentage of revenues for the respective
periods is not meaningful.
Selling, general and administrative and other expenses for the three and six
months ended December 31, 1999 increased by approximately $250,000 and $365,000
respectively over $263,141 and $504,000 in the same period of 1998. The increase
in the three and six months ended December 31, 1999 is primarily due to an
increase in personnel, marketing and promotional costs in these periods during
which, or shortly thereafter, the Company announced the formation of a business
alliance in the United States; distribution and support agreements in the United
Kingdom; and a licensing agreement in India, all of which are referred to in
more detail above. Selling, general and administrative and other
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expenses principally consist of the cost of employees (other than those
dedicated to research and development) advertising and promotional costs, which
are charged to operations as incurred, communication, rent and occupancy cost;
and professional fees.
Interest expense for the three and six months ended December 31, 1999 decreased
approximately $26,000 and $39,000, respectively, from $38,333 and $95,833 in the
corresponding periods for the previous year. Interest expense in 1999 represents
interest payable on promissory notes totalling $580,000 which were outstanding
throughout these periods. In the same periods in 1998 (pound)2,300,000 10%
Convertible Notes were outstanding which were either repaid or converted in
November and December 1998.
Liquidity and Capital resources
The Company has financed its operations through private sales of equity and debt
securities.
For the six month period ended December 31, 1999 cash used in operating
activities of approximately $2,057,000 was attributable to the Company's net
loss for the period of $2,060,000. Cash flows from investing activities of
approximately $82,000 during such period related mainly to the acquisition of
computer equipment.
Cash flows from financing activities of $150,000 were attributable to an issue
of new convertible notes of $150,000 which were later converted into shares of
common stock at a conversion price of $2 per share.
At December 31, 1999 the Company's principal source of liquidity was
approximately $620,000 in cash of which approximately $290,000 is committed to
meet a letter of credit drawn in favor of the Company's supplier of the
television set top Internet Access Devices.
Since December 31, 1999 additional liquidity has been provided from the exercise
of options over 150,000 shares of common stock, which had been granted in 1998,
at $0.65 per share by Mr. Keith E. Peirson, a former director of the Company. In
addition, the Company has sold approximately $650,000 worth of 10% Convertible
Promissory Notes details of which are set out in Part II of this document.
The Company believes that cash flows expected to be generated by operations
through the remainder of fiscal 2000 will be insufficient to meet its cash needs
for working capital and capital expenditures for the remainder of fiscal 2000.
The Company is however actively pursuing negotiations for additional capital to
fund its operations through private sales of equity or debt securities and or
borrowings from third parties. The sale of additional equity or convertible debt
securities will result in an additional dilution to the Company's stockholders.
Even assuming such additional financing, there can be no assurance that the
Company's liquidity requirements will be met or that the Company will be able to
continue as a going concern.
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PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
None
Item 2 - Changes in securities
In July 1999 the Company issued 16,000 shares of its common stock in
consideration for the forgiveness of interest due on certain promissory notes,
the principle of which was converted into shares of common stock in June 1999.
In November 1999 the Company issued 75,000 shares of its common stock pursuant
to the conversion of $150,000 10% Convertible Promissory Notes.
On January 5, 2000 Mr. Keith E. Peirson, a former director of the Company,
exercised options over 150,000 shares of common stock. The options had been
granted to him in 1998, at $0.65 per share.
In January 2000, the Company agreed to issue, as part of the Agreements with
JadooNet, warrants exercisable for a term of one year to purchase shares of
stock of the Company See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
In January 2000, as part of a sales agency agreement, the Company granted to
Corstar Business Computing Co., Inc. and McLaughlin International, Inc.
Warrants, and has agreed to issue them additional Warrants upon the sale of
additional Units of the Company's products.
Since June 30, 1999, options over 601,000 shares of common stock were granted to
three new directors at prices between $2.75 and $3.38 and options over 164,000
shares were granted to eighteen employees at prices between $2.25 and $3.125.
Item 3 - Defaults upon Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
Commencing in September 1999, holders of a majority of the Company's issued and
outstanding shares of common stock voted by written consent to amend the
Company's Certificate of Incorporation to change the name of the Company to
Web2u, Inc. The officers of the Company are in the process of effecting this
amendment.
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Item 5 - Other information
In January and February 2000, the Company sold approximately $650,000 10%
Convertible Promissory Notes. The Notes are due on the earlier of December 31,
2000 or out of the proceeds of an offering by the Company that raises a minimum
of $5,000,000 prior to that date. The Notes are convertible into shares of
common stock at $3.00 per share but if at any time during the term of the Notes,
the closing market bid price of the common stock equals or exceeds $6.00 per
share for a period of thirty consecutive days, the Notes shall automatically be
converted. Attached to each $50,000 of the Notes are warrants to purchase 20,000
shares of common stock at $3.00 per share on or before December 31, 2001.
Item 6 - Exhibits and Reports on Form 8-K
Exhibits:
27 Financial Data Schedule
99.1 Product Know-How Agreement, dated as of January 18, 2000, by and
between Web2U, Limited and JadooNet.com Limited.
99.2 Software License Agreement, dated as of January 18, 2000, by and
between Web2U Limited and JadooNet.com Limited.
99.3 Strategic Investment Agreement, dated as of January 18, 2000, by and
between MSU Corporation, Web2U Limited and JadooNet.com Limited.
99.4 Swap Agreement, dated as of January 18, 2000, by and between Web2U
Limited and JadooNet.com Limited.
99.5 Sales Representative Agreement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorised.
MSU Corporation
(Registrant)
Date: February 11, 2000
R H Phillips, Vice President
(Principal Financial and Accounting Officer)
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PRODUCT KNOW-HOW AGREEMENT
--------------------------
THIS AGREEMENT is made the 18th day of January, 2000
B E T W E E N : [illegible initials]
WEB2U Limited, a Company incorporated under the laws of United Kingdom having
its registered office at Elder House, 526-528 Elder Gate, Milton Keynes, MK9
1LR, England (which expression shall unless repugnant to the context or meaning
thereof mean and include its successors and assigns) ('WEB2U') of One part and
JadooNet.com Limited, a company registered under the Companies Act, 1956 having
its registered office at Mathurdas Mill Compound, Ground Floor, SB Marg Lower
Parel Bombay 400013 ('JADOO') of the Other part;
WHEREAS
(a) WEB2U is a wholly owned subsidiary of MSU Corporation, a corporation
registered in the State of Florida, United States having its principal place
of business at Elder House, 526-528 Elder Gate, Milton Keynes, MK9 1LR,
England ('MSU') and is the owner of the Intellectual Property Rights in the
ISP Chip Set and the Product.
(b) Subject to all the applicable corporate and statutory approvals, WEB2U
agrees to grant a licence to JADOO on an exclusive basis to use the
Technical Information and Know How to manufacture the Product in the
Territory subject to clause 3.2 hereinbelow;
(c) The Parties have agreed to enter into the commitments of this Agreement and
regulate their rights in the manner appearing below.
IT IS AGREED as follows :-
1. Interpretation
1.1. "BOM" shall mean the bill of materials details of which are set out in
Schedule A hereto
1.2 "Intellectual Property Rights" (IPR'S) shall mean industrial and other
rights in the Product and ISP Chip Set including but not limited to
copyright, confidential information, patents and the right to apply for
patents, protected designs (whether registered or not) semi conductor
and topography rights and technical know-how.
1.3 "ISP Chip Set" shall mean the WEB2U propriety Internet Services
Processor as described in the ISP Chip Set reference manual.
1.4 "Know-how" shall mean :-
[illegible initials]
<PAGE>
1.4.1 Pre-production drawings for the Product;
1.4.2 Layout and other documents for manufacturing assembling and
testing the product;
1.4.3 Purchasing specifications for components of the Product
1.4.4 Test specifications for manufactured items;
1.4.5 Documents relating to installation, maintenance, factory
operation, data testing and training;
1.4.6 Drawing specifications and information for the manufacture or
procurement of all production tools, gauges, inspection equipment
and accessories required for the manufacture of the Product;
1.4.7 Specifications of machine tools and accessories required for the
manufacture of the Product together with written advice on their
ordering selection and procurement;
1.4.8 Technical assistance and training in the implementation of all the
foregoing in accordance with an agreed detailed program.
1.5 "License Fee" shall mean the license fee provided for in clause 6.1.
1.6 "Manual" shall mean user guide, loose leaf volume or volumes which will
include methods and procedures to manufacture the Product and other
documentation in respect to the Product.
1.7 "Product" shall mean the WEB2U proprietary Internet Access Device
incorporating the ISP Chip Set
1.8 "Software" shall mean WEB2U proprietary Internet Access Devise software
including Browser, e-mail, printer driver and enhancements which is
licensed to JADOO under the Software License Agreement of even date
1.9 "Technical Information" shall mean technical knowledge and data
specifications of materials and the manufacturing techniques and other
information of a secret and confidential nature in existence at the date
of this Agreement which are necessary to enable JADOO to manufacture the
Product properly and efficiently in reasonable quantities of a standard
and quality required by this Agreement
1.10 "Territory" means the territories of India Sri Lanka Bangladesh and
Nepal and such other territories as may be agreed in writing by the
parties from time to time
1.11 "The Trust and Confidence Agreement" shall mean the trust and confidence
agreement to be entered into by JADOO and relevant contractors and sub
contractors JADOO pursuant to clause 7.1 and in the form set out in
Schedule C hereto
2. Commencement Date and Term
2.1. This Agreement shall be effective only upon execution by the authorised
representative of both Parties on the date first above shown
("Commencement Date").
<PAGE>
2.2. The term of this Agreement shall be for an initial period of five years
from the Commencement Date and shall automatically renew for further
periods of one year unless three months prior notice in writing of
termination is given by either Party.
3. Grant of Licence
3.1. Subject to all applicable corporate and statutory approvals, WEB2U
hereby grants Jadoo an exclusive licence to make the Product during the
continuance of this Agreement in the Territory using for this purpose
(but not further or otherwise) the ISP Chip Set the Software the
Intellectual Property Rights and the Know How.
3.2. For so long as JADOO shall demonstrate the ability to produce a minimum
of [ ** ] units of the Product in the first two years of the Term the
License shall remain exclusive.
3.2.1 In the event of JADOO manifestly failing to demonstrate the
ability to achieve production of [ ** ] units during the first two
years of the Term or having failed to achieve production of [ ** ]
units during the first two years of the Term the License shall at
the option of WEB2U become non exclusive
3.2.2 To maintain exclusivity in subsequent years of the Term JADOO will
have to demonstrate the ability to produce [ ** ] units in each
year of the Term
3.3 Where Jadoo has failed in any period to achieve the volumes to retain
exclusivity set out in 3.2 above Jadoo shall be given a six month cure
period to remedy any shortfall
3.4 Engagement by Jadoo of manufacturing sub-contractors and agents who
will have access to Technical Information shall be subject to the prior
approval of WEB2U. Such approval shall not be unreasonably withheld
provided the provisions of Clauses 1.12 and 3.5 herein are complied
with.
3.5 Jadoo shall ensure that all manufacturing sub-contractors and agents
who will have access to Technical Information shall enter into direct
covenants of confidentiality with WEB2U in the form of the
Confidentiality and Trust Agreement set out in Schedule C hereto.
4. Improvements
4.1. It is anticipated that WEB2U will continue to develop the Product.
Improvements arising from the developments carried on by WEB2U shall
remain exclusive property of WEB2U.
4.2. The specification of the Product shall be the most current version in
commercial production from time to time but shall not include features
representing custom enhancements where such enhancements are proprietary
to any specific WEB2U customer
4.3. Anticipated improvements referred to in the development road map are as
set out in Schedule B
** The omitted information is confidential and is being filed separately with
the Securities and Exchange Commission.
<PAGE>
5. Manufacture (General)
5.1 It is the intention of the Parties that the Product will be manufactured
to the agreed specification . JADOO shall observe the standards,
formulae, quality control procedures and instructions agreed
with/supplied by WEB2U from time to time in respect of manufacturing of
the product and shall not modify, distort the Product and/or use the
Product in any other manner.
5.2 JADOO may sub-contract the whole or any part of the manufacturing
process but always subject to Clause3 3.4 and 3.5.
5.2.1 JADOO shall submit an authentic report every four months to WEB2U
certifying the total number of units manufactured by JADOO and/or
any Sub Contractors or manufacturing agents or any other person
authorised by JADOO to manufacture the Product
5.3. WEB2U will favourably consider the use of JADOO as a manufacturer of
Product in India for its own and OEM supplies subject to agreement as to
quantity quality and costs.
5.4. Subcontractors
5.4.1. JADOO shall use all necessary efforts to ensure that any
sub-contractor or manufacturing agent with access to the Product,
the ISP Chip Set, IPR's or Technical Information will not modify,
reverse, engineer, decompile, and or disassemble the Product.
5.4.2. JADOO shall not mask, modify or suppress any copyright notices or
any other propriety right notices. Furthermore JADOO shall not
unload, decode or password protect any part of the Product or
render any part of the Product to any third party for
unauthorised use or reverse engineering.
5.5. Technical Support
5.5.1. WEB2U shall provide technical support in relation to the
Technical Information free of charge provided that JADOO shall
treat such information as trade secrets and shall not disclose
such information to any third party without prior written consent
of WEB2U or pursuant to the terms of clause 3.4 above.
5.5.2. Upon WEB2U's request, JADOO its employees, officers, directors,
Contractors, Sub-Contractors, representatives or other agents who
may have obtained the Technical Information in the course of
their employment and/or business with JADOO shall return to WEB2U
all of the Technical Information provided with all copies or
duplicate documentation on the expiry or termination of this
Agreement.
5.6. Supply and payment for the ISP Chip Set and other hardware
5.6.1. In the event of WEB2U supplying the ISP Chipset or any hardware
components to JADOO WEB2U shall restrict its charges for such
components to cost plus a handling charge to be mutually agreed
form time to time
5.6.2. JADOO shall make payment for supply of the ISP Chipset and
hardware components to WEB2U by irrevocable letter of credit in
favour of WEB2U which shall be made in the amount of each
purchase order.
<PAGE>
6. Licence Fee
6.1 JADOO shall pay to WEB2U as a Product Know-how fee a lump sum of
[** ] at the time of transfer of the Product Know-how and such further
sums as per the Schedule D annexed hereto subject to a maximum of [**].
7. Confidentiality
7.1. JADOO undertakes to ensure that all employees, suppliers,
sub-contractors, and any other person or organisations who it is
reasonable to contemplate having access to the IPR's, Know How, Software
or Technical Information will covenant directly with WEB2U in the same
terms as the Trust and Confidence Agreement annexed hereto as Schedule C
8. Marks
8.1. It is anticipated that from time to time the Product will carry a
distinctive mark or logo together with an acknowledgement of WEB2U
design and ownership of rights. Such marks will be carried on the
packaging of the Product and also on the Homepage of Jadoo and
sub-contractors
8.2. JADOO shall leave in position and not cover or erase any notice or other
marks (including without limitation details of patents or trademark or
copyright relating to the Product or its ownership by WEB2U which WEB2U
may reasonably insist are placed or fixed to the Product or their
packaging supplied pursuant to this Agreement).
9. Interest
All sums due from either of the Parties to the other which are not paid
on the due date shall bear interest from day to day at the annual rate
of 1.5% (one point five percent) over the current National Westminster
Bank Plc daily base rate with a minimum of 7% (seven percent) per annum.
10. Approvals/Permissions
It is understood and agreed between the Parties herein that all the
payments including Royalty/License fee and other payments are subject to
the applicable approval permissions from concerned authorities including
the Reserve Bank of India.
11 Warranty
11.1 JADOO warrants that the Product hardware will conform to the agreed
specification and will be free from all defects in material (other than
the ISP Chipset and any materials supplied by WEB2U)
11.2 JADOO warrants that it will produce the Product to a reasonable standard
with reasonable care and skill and acknowledges that failure so to do
may damage the reputation of WEB2U in the global market place.
** The omitted information is confidential and is being filed separately with
the Securities and Exchange Commission.
<PAGE>
12 Indemnities
12.1 WEB2U shall indemnify and hold harmless JADOO against any claims costs
and expenses that JADOO may incur in connection with any claim of
infringement of any third party IPR's caused by or arising out of the
manufacture, importation, possession, sale or use of the Product and in
respect of claims arising out of any defect in the ISP Chipset,
Know-how, and Technical information. This indemnity shall include all
costs and expenses of refuting defending or settling any claims as well
as any damage or compensation ordered to any third party by any Court.
12.2 JADOO shall except to the extent that the claim is due to any defect in
the ISP Chipset, Know-how, and Technical information fully indemnify and
hold harmless WEB2U against any claims or actions bought by third
parties against WEB2U due to manufacturing defects in the Product. This
indemnity shall include all costs and expenses of refuting defending or
settling any claims as well as any damage or compensation ordered to any
third party by any Court.
12.3 JADOO shall have no liability and shall be fully and completely
indemnified by WEB2U for any claim or suit where:
12.3.1 Infringement is primarily attributable to JADOO's incorporation
of WEB2U supplied designs into the Product;
12.3.2 Such claim or suit would have been avoided but for the
combination, operation or use of the Product with devices, parts
or software not supplied by JADOO or is subcontractors;
12.4 WEB2U shall have no liability and shall be fully and completely
indemnified by JADOO for any claim or suit where:
12.4.1 Infringement is primarily attributable to negligence and or
omission or failure of JADOO's incorporation of WEB2U supplied
designs into the Product;
12.4.2 Such claim or suit would have been avoided but for JADOO's
failure to adhere to the standards specified for production of
the Product by WEB2Uor subcontractors or any other person.
13 Termination
13.1 Notwithstanding the provisions of clause 2, either party may by notice
in writing to the other terminate this Agreement immediately upon the
happening of any one of the following events;
13.2 If either party goes into liquidation either compulsorily or voluntarily
or if a receiver or administrator is appointed in respect of the whole
or any part of its assets or makes an assignment for the benefit or
composition with its creditors generally or threatens to do these things
or any judgment or administration order is made against it become
bankrupt or be wound up or make any arrangement or composition with its
creditors.
13.3 If JADOO attempts or purports to assign or transfer this Agreement
without WEB2U's prior written consent.
<PAGE>
13.4 If either Party's ability to carry out its obligations hereunder is
prevented or substantially interfered with for any reason whatsoever
(whether or not within the control of that Party) including without
limitation by reason of any regulation, law, decree or any act of state
or other action of a government.
13.5 If a party is in material breach of any obligation under this agreement
(the defaulting party) and the other party (notifying party) gives
written notice to the defaulting party identifying the breach and the
defaulting party does not within 30 days of the date of such notice
remedy the breach
14 Limitation of Liabilities
14.1 Force Majeure. Neither party shall be liable to the other for any delay,
loss, damage or injury caused by acts of God, governmental order or
regulation, restraining imposed by governmental action, national
strikes, commotion, riots, war, war like situations, hostilities,
governmental disposal, mobilisation, blockage, embargo, custody,
revolution, fire, earthquake, tornado, explosion, storm, flood or for
any other cause beyond its reasonable control (hereinafter referred to
as Force Majeure).
14.2 Notification of such delay, loss, damage or injury arising solely from
circumstances attributable to the Force Majeure shall be given as soon
as possible and followed in writing to the other party within seven days
of the occurrence of such an event.
14.3 Non-Performance
Should any failure of performance persist for more than twenty eight
days WEB2U may by written notice to JADOO forthwith cancel the
particular order or part thereof of effected and such cancellation shall
be without any liability on the part of WEB2U to pay for any costs or
cancellation charge arising from such cancellation.
15 Severability
If any section or subsection of this Agreement is found by competent
authority to be void, voidable, illegal or otherwise unenforceable, the
remaining provisions of this Agreement shall remain in full force and effect.
16 No agency or Partnership.
The Parties are not partners or joint venturers nor is one Party entitled to
act as the agent of the other (unless specifically authorised in writing) nor
shall either Party be liable in respect of any representation, act or
omission of the other Party whatever nature.
17 Whole Agreement.
This Agreement contains the whole agreement between the Parties and
supersedes any prior written or oral agreements between them in relation to
its subject matter and the Parties confirm that they have not entered into
this Agreement on the basis of any representations that are not expressly
incorporated into this Agreement.
<PAGE>
18 No Modification.
This Agreement may not be modified except by an instrument in writing signed
by both of the Parties of their duly authorised representatives.
19 Survival of Term.
The warranties an indemnities and obligations of confidentiality contained in
this Agreement and the provision for payment of any accounting in respect of
continuing fees and other sums due to either party under this Agreement shall
survive the termination or expiry of this Agreement.
20 Arbitration.
Any question or difference which may arise concerning the construction
meaning or effect of this agreement or concerning the rights and liabilities
of the parties or any other matter arising out of or in connection with this
agreement shall be referred to a single arbitrator in London to be agreed
between the parties. Failing such agreement within 30 days of the request by
one party to the other that the matter be referred to arbitration in
accordance with this clause such reference shall be to the to an arbitrator
appointed by the President for the time being of the Law Society, London. The
Arbitrator shall neither be an Indian or UK national. The decision of the
arbitrator shall be binding upon the parties. Any reference under this clause
shall be deemed to be a reference to arbitration within the meaning of the
Arbitration Act 1996(UK)
21. Governing Law.
21.1 This Agreement shall be governed in accordance with the laws of England
and Wales.
21.2 Where either Party has any complaint of the other under this Agreement
it may at its option commence proceedings in any Court of competent
jurisdiction in the Courts of England and Wales
22. Notices.
All notices given pursuant to this agreement shall be sent by confirmed
facsimile transmission, prepaid registered mail or courier with signed
receipt to the addresses setout below or to such other addresses as a
party may from time to time notify the other in accordance with the
provision of this clause.
FOR WEB2U
Mr. Darren Evans
Elder House, 526-528, Elder Gate
Milton Keynes, MK9 ILR
United Kingdom
with a copy to:
Mr. William D. Snowdon
Company Secretary
c/o Hugh James Ford Simey
Arlbee House, Grey Friars Road
Cardiff CF10 3QB
United Kingdom
FOR JADOO
Mr. Praween Napate
Mathurdas Mill Compound
Ground Floor,
SB Mary
Lower Parel
Mumbai 400013
Signed /s/ William D. Snowdon AUTHORISED REPRESENTATIVE OF Web2u Limited
Signed [illegible signature] AUTHORISED REPRESENTATIVE of JadooNet.com
Limited
<PAGE>
SCHEDULE A
Bill of Materials
[ ** ]
SCHEDULE B
The development road map
[ ** ]
SCHEDULE C
TRUST AND CONFIDENCE AGREEMENT
This Trust and Confidence Agreement is made the 18th day of Janaury 2000
B E T W E E N :
WEB2U Limited whose registered office is at Elder House 526-528 Elder Gate,
Milton Keynes, MK9 1LR, United Kingdom ("WEB2U")
JadooNet.com Limited a company organised and existing under the laws of
India, whose registered office is at Mathurdas Mill Compound Ground Floor SB
Marg Lower Parel Bombay 4000013 ('the Recipient')
RECITALS
(a) WEB2U has developed a product for accessing the Internet incorporating its
Proprietary Internet Services Processor, Chip Set, and Software ("the
Product") and is the owner of confidential information relating to the
Product and of intellectual property rights therein.
(b) To enable the Recipient to evaluate the Product with a view to taking a
license to either :
(i) component supply, or;
(ii) manufacture, and/or;
(iii) sell the same
WEB2U is willing to disclose information relating to the Product to the
Recipient under conditions of confidentiality.
OPERATIVE PROVISIONS
1. Interpretation
1.1. For the purposes of this Agreement Proprietary Information means any
and all information which is now or at any time hereafter in the
possession of WEB2U and
<PAGE>
which relates to the Product, including without limitation data,
know-how, formula, processes, designs, photographs, drawings,
specifications, software programs and samples and any other material
bearing or incorporating any information relating to the Product.
2. Undertakings of the Recipient
2.1. In consideration of WEB2U disclosing information relating to the
Product to the Recipient, the Recipient hereby undertakes:
2.1.1. to use all Proprietary Information so disclosed exclusively for
the purpose of evaluation or any license granted in respect of
the Product, and;
2.1.2. to maintain confidential all Proprietary Information that it may
acquire in any manner;
and it will accordingly not directly or indirectly use or disclose any
of the Proprietary Information in whole or in part save for the
purposes of and in accordance with this Agreement.
3. Exceptions
3.1. The foregoing restrictions on the Recipient shall not apply to any
Proprietary Information which:
3.1.1. the Recipient can prove by documentary evidence produced to
WEB2U within 28 days of disclosure that such Proprietary
Information was already in the possession of the Recipient and
at its free disposal before the disclosure to the Recipient;
3.1.2. is hereafter disclosed to the Recipient without any obligations
of confidence by a third party who has not derived it directly
or indirectly from WEB2U;
3.1.3. is or becomes generally available to the public in printed
publications in general circulation through no act or default on
the part of the Recipient or the Recipient's agents or
employees.
4. Inclusion
4.1. Without prejudice to the generality of clause 3.1.3 information shall
not be deemed to be generally available to the public by reason only
that it is known to only a few of those people to whom it might be of
commercial interest, and a combination of two or more portions of the
Proprietary Information shall not be deemed to be generally available
to the public by reason only of each separation being so available.
5. Confidentiality measures
5.1. To secure the confidentiality attaching to the Proprietary Information
the Recipient shall:
5.1.1. keep separate all Proprietary Information and all information
generated by the Recipient based thereon from all documents and
other records of the Recipient;
<PAGE>
5.1.2. keep all documents and other material bearing or incorporating
any of the Proprietary Information at the usual place of
business of the Recipient, namely
5.1.3. not use, reproduce, transform, or store any of the Proprietary
Information in any externally accessible computer or electronic
information retrieval system or transmit it in any form or by
any means whatsoever outside of its usual place of business;
5.1.4. allow access to the proprietary exclusively to those employees
of the Recipient who have reasonable need to see and use it for
the purposes of its evaluation by the Recipient and shall inform
each of the said employees of the confidential nature of the
Proprietary Information and of the obligations on the Recipient
in respect thereof
5.1.5. wherever reasonably practicable obtain a written statement from
each of its employees having access to the Proprietary
Information undertaking to maintain the same confidential and
shall take such steps as may be reasonably desirable to enforce
such obligations
5.1.6. make copies of the Proprietary Information only to the extent
that the same is strictly required for the purposes of any
license granted to the Recipient;
5.1.7. on request of WEB2U made at any time shall deliver up to WEB2U
all documents and other material in the possession, custody or
control of the Recipient that bear or incorporate any part of
the Proprietary Information.
6. Governing Law
6.1 Where either Party has any complaint of the other under this Agreement
it may at its option commence proceedings in any Court of competent
jurisdiction in England and Wales
SIGNED /s/ William D. Snowdon
..............................................
WEB2U LIMITED
SIGNED [illegible signature]
.............................................
JadooNet.com Limited
Schedule D
(As referred to in Clause 6 hereinabove)
WEB2U becomes entitled to receive [**] from JADOO for every [**] Units
manufactured by JADOO or its authorized sub-contractors.
** The omitted information is confidential and is being filed separately with
the Securities and Exchange Commission.
<PAGE>
SOFTWARE LICENCE AGREEMENT
THIS AGREEMENT is made the 18th day of January, 2000;
B E T W E E N :
1. WEB2U Limited a Company incorporated under the laws of United Kingdom having
its registered office at Elder House, 526-528 Elder Gate, Milton Keynes, MK9
1LR, England (which expression shall unless repugnant to the context or
meaning thereof mean and include its successors and assigns ('WEB2U') of One
part and
2. JadooNet.com Limited a company registered under the Companies Act, 1956
having its registered office is at Mathurdas Mill Compound Ground Floor SB
Marg Lower Parel Bombay 400013 ('JADOO') of the Other part;
WHEREAS
(a) Subject to all the applicable corporate and statutory approvals, WEB2U
agrees to grant a license to JADOO on an exclusive basis to sub license the
software for use with the Product in the Territory subject to clause 3.2
herein below;
(b) WEB2U is a leading manufacture of software products set and as such owner of
the intellectual property rights in respect thereof;
(c) The Parties have agreed to enter into the commitments of this Agreement and
regulate their rights in the manner appearing below.
IT IS AGREED as follows :-
1. Interpretation
1.1 "Intellectual Property Rights" (IPR'S) shall mean industrial and other
rights in the Software including but not limited to copyright, confidential
information, patents and the right to apply for patents, protected designs
(whether registered or not) semi conductor and topography rights and
technical know-how.
1.2 "ISP Chip Set" shall mean the WEB2U propriety Internet Services Processor
as described in the ISP Chip Set reference manual.
1.3 Product" shall mean the WEB2U proprietary Internet Access Device
incorporating the ISP Chip Set
1.4 "Royalty" shall mean the Royalty provided for in clause 6.1 hereof
1.5 "Software" shall mean WEB2U proprietary Internet Access Devise software
including Browser, e-mail, printer driver, enhancements and operating
system
1.6 "Technical Information" shall mean technical knowledge and data
specifications of the software and other information of a secret and
confidential nature in existence at the date of this Agreement which are
necessary to enable JADOO to use the software properly and efficiently
<PAGE>
1.7 'Territory' means the territories of India Sri Lanka Bangladesh and Nepal
and such other territories as may be agreed in writing by the parties from
time to time
1.8 "The Trust and Confidence Agreement" shall mean the trust and confidence
agreement to be entered into by JADOO relevant contractors pursuant to clause
3.5 hereinbelow and in the form set out in Schedule A hereto
1.9 "Product Know-How Agreement" shall mean the Product Know-how Agreement of
even date which grants JADOO the Know-how to manufacture the Product
2. Commencement Date and Term
2.1 This agreement shall be effective only upon execution by the authorised
representative of both Parties on the date first above shown
("Commencement Date").
2.2. The term of this Agreement shall be for an initial period of five years
from the Commencement Date and shall automatically renew for further
periods of one year unless three months prior notice in writing of
termination is given by either Party.
3. Grant of License
3.1. Subject to all applicable corporate and statutory approvals, WEB2U
hereby grants Jadoo an exclusive license to sub-license the software
for use with the Product during the continuance of this Agreement in
the Territory.
3.2. For so long as JADOO shall demonstrate the ability to produce a minimum
of [ ** ] units of the Product in the first two years of the Term the
License shall remain exclusive in the Territory
3.2.1 In the event of JADOO manifestly failing to demonstrate the
ability to achieve production of [ ** ] units during the first
two years of the Term or having failed to achieve production of
[ ** ] units during the first two years of the Term the License
shall at the option of WEB2U become non exclusive
3.2.2 To maintain exclusivity in subsequent years of the Term JADOO
will have to demonstrate the ability to produce [** ] units in
each year of the Term
3.3 Where JADOO has failed in any period to achieve the volumes to retain
exclusivity set out in 3.2 above JADOO shall be given a six month cure
period to remedy any shortfall
3.4 Engagement by Jadoo of sub-contractors and agents who will have access
to Technical Information shall be subject to the prior approval of
WEB2U. Such approval shall not be unreasonably withheld provided the
provisions of Clauses 1.8 and 3.5 herein are complied with.
3.5 Jadoo shall ensure that all sub-contractors and agents who will have
access to Technical Information shall enter into direct covenants of
confidentiality with WEB2U in the form of the Confidentiality and Trust
Agreement set out in Schedule A hereto.
** The omitted information is confidential and has been filed separately with
the Securities and Exchange Commission.
<PAGE>
4. Improvements
4.1. It is anticipated that WEB2U will continue to develop the software.
Improvements arising from the developments carried on by WEB2U shall
remain exclusive property of WEB2U.
4.2. The Software shall be the most current version from time to time but
shall not include features representing custom enhancements where such
enhancements are proprietary to any specific WEB2U customer
5. Technical Support
5.1 WEB2U shall provide technical support in relation to the Technical
Information free of charge provided that JADOO shall treat such
information as trade secrets and shall not disclose such information to
any third party without any prior written consent of WEB2U or pursuant
to the terms of clause 3.4 above.
5.2 Upon WEB2U's request, JADOO, its employees, officers, directors,
Contractors, Sub-Contractors, representatives or other agents who may
have obtained the Technical Information in the course of their
employment and/or business with JADOO shall return to WEB2U all of the
Technical Information provided with all copies or duplicate
documentation on the expiry or termination date of this Agreement.
6. Royalty
JADOO shall pay to WEB2U royalty in respect of the Software in the
following manner for each unit of the Product manufactured in the
Territory:
Up to first [ ** ] units of the Product [ ** ] per unit
Beyond [ ** ] units [ ** ] per unit
7. Interest
7.1. All sums due from either of the Parties to the other which are not paid
on the due date shall bear interest from day to day at the annual rate
of 1.5% (one point five percent) over the current National Westminster
Bank Plc daily base rate with a minimum of 7% (seven percent) per
annum.
8. Approvals/Permissions
It is understood and agreed between the Parties herein that all the payments
including Royalty/License fee and other payments are subject to the
applicable approvals/ permissions from concerned authorities including
Reserve Bank of India.
9. Indemnities
9.1. WEB2U shall indemnify and hold harmless JADOO against any claims costs
and expenses that JADOO may incur in connection with any claim of
infringement of any
** The omitted information is confidential and has been filed separately with
the Securities and Exchange Commission.
<PAGE>
third party IPR's caused by or arising out of the manufacture,
importation, possession, sale or use of the Product and in respect of
claims arising out of any defect in the Software. This indemnity shall
include all costs and expenses of refuting defending or settling any
claims as well as any damage or compensation ordered to any third party
by any Court.
9.2 JADOO shall similarly indemnify and hold harmless WEB2U against any
claims costs and expenses that WEB2U may incur in connection with any
claim of infringement of any third party IPR's caused by or arising out
of negligence or misuse of the Software and/or the Product by JADOO or
any person. This indemnity shall include all costs and expenses of
refuting defending or settling any claims as well as any damage or
compensation ordered to any third party by any Court.
10. Termination
10.1. Notwithstanding the provisions of clause 2, either party may by notice
in writing to the other terminate this Agreement immediately upon the
happening of any one of the following events;
10.1.1. If either party goes into liquidation either compulsorily or
voluntarily or if a receiver or administrator is appointed in
respect of the whole or any part of its assets or makes an
assignment for the benefit or composition with its creditors
generally or threatens to do these things or any judgment or
administration order is made against it
10.1.2. If JADOO attempts or purports to assign or transfer this
Agreement without WEB2U's prior written consent.
10.1.3. If either Party's ability to carry out its obligations
hereunder is prevented or substantially interfered with for
any reason whatsoever (whether or not within the control of
that Party) including without limitation by reason of any
regulation, law, decree or any act of state or other action of
a government.
10.1.4. If a party is in material breach of any obligation under this
agreement (the defaulting party) and the other party
(notifying party) gives written notice to the defaulting party
identifying the breach and the defaulting party does not
within 30 days of the date of such notice remedy the breach
11. Termination Consequences
Upon expiry of the term and the termination under clause 9 herein of
this agreement;
(i) All licenses under this agreement, including the software
license right to process technical information shall cease.
(ii) JADOO shall immediately cease the use of all technical
information, Software and IPR's granted to it under this
agreement and immediately return and cause to return all
technical data, information and other materials in respect
thereof supplied by WEB2U to JADOO
<PAGE>
12. Limitation of Liabilities
12.1 Force Majeure. Neither party shall be liable to the other for any
delay, loss, damage or injury caused by acts of God, governmental order
or regulation, restraining imposed by governmental action, national
strikes, commotion, riots, war, war like situations, hostilities,
governmental disposal, mobilisation, blockage, embargo, custody,
revolution, fire, earthquake, tornado, explosion, storm, flood or for
any other cause beyond its reasonable control (hereinafter referred to
as Force Majeure).
12.2 Notification of such delay, loss, damage or injury arising solely from
circumstances attributable to the Force Majeure shall be given as soon
as possible and followed in writing to the other party within seven
days of the occurrence of such an event.
13 Severability
If any section or subsection of this Agreement is found by competent
authority to be void, voidable, illegal or otherwise unenforceable, the
remaining provisions of this Agreement shall remain in full force and
effect.
14 No agency or Partnership.
The Parties are not partners or joint venturers nor is one Party entitled to
act as the agent of the other (unless specifically authorised in writing)
nor shall either Party be liable in respect of any representation, act or
omission of the other Party whatever nature.
15 No Modification.
This Agreement may not be modified except by an instrument in writing signed
by both of the Parties of their duly authorised representatives.
16 Survival of Terms.
The warranties, indemnities and obligations of confidentiality contained in
this Agreement and the provision for payment of any accounting in respect of
continuing fees and other sums due to either party under this Agreement
shall survive the termination or expiry of this Agreement.
17 Arbitration.
Any question or difference which may arise concerning the construction
meaning or effect of this agreement or concerning the rights and liabilities
of the parties or any other matter arising out of or in connection with this
agreement shall be referred to a single arbitrator in London to be agreed
between the parties. Failing such agreement within 30 days of the request by
one party to the other that the matter be referred to arbitration in
accordance with this clause such reference shall be to the to an arbitrator
appointed by the President for the time being of the Law Society, London.
The Arbitrator shall neither be an Indian or UK national. The decision of
the arbitrator shall be binding upon the parties. Any reference under this
clause shall be deemed to be a reference to arbitration within the meaning
of the Arbitration Act 1996 (UK)
<PAGE>
18 Governing Law.
18.1 This Agreement shall be governed in accordance with the laws of England
and Wales.
18.2 Where either Party has any complaint of the other under this Agreement
it may at its option commence proceedings in any Court of competent
jurisdiction in the Courts of England and Wales
19 Notices
All notices given pursuant to this agreement shall be sent by confirmed
facsimile transmission, prepaid registered mail or courier with signed
receipt to the addresses setout below or to such other addresses as a party
may from time to time notify the other in accordance with the provision of
this clause.
FOR WEB2U
Mr. Darren Evans
Elder House, 526-528, Elder Gate
Milton Keynes, MK9 ILR
United Kingdom
with a copy to:
Mr. William D. Snowdon
Company Secretary
c/o Hugh James Ford Simey
Arlbee House, Grey Friars Road
Cardiff CF10 3QB
United Kingdom
FOR JADOO
Mr. Praween Napate
Mathurdas Mill Compound
Ground Floor,
SB Mary
Lower Parcel
Mumbai 400013
Signed ...............................AUTHORISED REPRESENTATIVE OF Web2u Limited
Signed ............................... AUTHORISED REPRESENTATIVE of JadooNet.com
Limited
<PAGE>
SCHEDULE A
TRUST AND CONFIDENCE AGREEMENT
This Trust and Confidence Agreement is made the 18th day of January 2000
B E T W E E N :
WEB2U Limited whose registered office is at Elder House 526-528 Elder Gate,
Milton Keynes, MK9 1LR, United Kingdom ("WEB2U")
JadooNet.com Limited a company organised and existing under the laws of
India, whose registered office is at Mathurdas Mill Compound Ground Floor SB
Marg Lower Parel Bombay 4000013 ('the Recipient')
RECITALS
(a) WEB2U has developed a product for accessing the Internet incorporating its
Proprietary Internet Services Processor, Chip Set, and Software ("the
Product") and is the owner of confidential information relating to the
Product and of intellectual property rights therein.
(b) To enable the Recipient to evaluate the Product with a view to taking a
license to either :
(i) component supply, or;
(ii) manufacture, and/or;
(iii) sell the same WEB2U is willing to disclose information relating to the
Product to the Recipient under conditions of confidentiality.
OPERATIVE PROVISIONS
1. Interpretation
1.1. For the purposes of this Agreement Proprietary Information means any
and all information which is now or at any time hereafter in the
possession of WEB2U and which relates to the Product, including without
limitation data, know-how, formula, processes, designs, photographs,
drawings, specifications, software programs and samples and any other
material bearing or incorporating any information relating to the
Product.
2. Undertakings of the Recipient
2.1. In consideration of WEB2U disclosing informatio relating to the Product
to the Recipient, the Recipient hereby undertakes :
2.1.1. to use all Proprietary Information so disclosed exclusively for
the purpose of evaluation or any license granted in respect of
the Product, and;
2.1.2. to maintain confidential all Proprietary Information that it may
acquire in any manner; and it will accordingly not directly or
indirectly use or disclose any of the Proprietary Information in
whole or in part save for the purposes of and in accordance with
this Agreement.
3. Exceptions
3.1. The foregoing restrictions on the Recipient shall not apply to any
Proprietary Information which :
<PAGE>
3.1.1. the Recipient can prove by documentary evidence produced to
WEB2U within 28 days of disclosure that such Proprietary
Information was already in the possession of the Recipient and
at its free disposal before the disclosure to the Recipient;
3.1.2. is hereafter disclosed to the Recipien without any obligations
of confidence by a third party who has not derived it directly
or indirectly from WEB2U;
3.1.3. is or becomes generally available to the public in printed
publications in general circulation through no act or default
on the part of the Recipient or the Recipient's agents or
employees.
4. Inclusion
4.1. Without prejudice to the generality of clause 3.1.3 information shall
not be deemed to be generally available to the public by reason only
that it is known to only a few of those people to whom it might be of
commercial interest, and a combination of two or more portions of the
Proprietary Information shall not be deemed to be generally available
to the public by reason only of each separation being so available.
5. Confidentiality measures
5.1. To secure the confidentiality attaching to the Proprietary Information
the Recipient shall :
5.1.1. keep separate all Proprietary Information and all information
generated by the Recipient based thereon from all documents
and other records of the Recipient;
5.1.2. keep all documents and other material bearing or incorporating
any of the Proprietary Information at the usual place of
business of the Recipient, namely
5.1.3. not use, reproduce, transform, or stor any of the Proprietary
Information in any externally accessible computer or
electronic information retrieval system or transmit it in any
form or by any means whatsoever outside of its usual place of
business;
5.1.4. allow access to the Proprietary Information exclusively to
those employees of the Recipient who have reasonable need to
see and use it for the purposes of its evaluation by the
Recipient and shall inform each of the said employees of the
confidential nature of the Proprietary Information and of the
obligations on the Recipient in respect thereof;
5.1.5. wherever reasonably practicable obtain a written statement
from each of its employees having access to the Proprietary
Information undertaking to maintain the same confidential and
shall take such steps as may be reasonably desirable to
enforce such obligations.
5.1.6. make copies of the Proprietary Information only to the extent
that the same is strictly required for the purposes of any
license granted to the Recipient;
5.1.7. on request of WEB2U made at any time shall deliver up to WEB2U
all documents and other material in the possession, custody or
control of the Recipient that bear or incorporate any part of
the Proprietary Information.
6. Governing Law
6.1 Where either Party has any complaint of the other under this Agreement
it may at its option commence proceedings in any Court of competent
jurisdiction in England and Wales
SIGNED /s/ William D. Snowdon
.........................
WEB2U LIMITED
SIGNED [illegible signature]
.........................
JadooNet.com Limited
<PAGE>
STRATEGIC INVESTMENT AGREEMENT
------------------------------
THIS AGREEMENT is made the 18th day of January, 2000.
B E T W E E N:
MSU Corporation a United States corporation registered in Florida whose
principal place of business is situated at Elder House, 526-528 Elder Gate,
Milton Keynes, MK9 ILR, England ('MSU')
JadooNet.com Limited a company organised and existing under the laws of
India, whose registered office is at Mathurdas Mill Compound Ground Floor,
SB Marg, Lower Parel, Bombay 400 013 ('JADOO').
3. WEB2U Limited a United Kingdom Company having its registered office at
Elder House, 526-528 Elder Gate, Milton Keynes, MK9 ILR, England ("WEB2U").
WHEREAS
(a) WEB2U is wholly owned subsidiary of MSU and is the owner of the
Intellectual Property Rights in the ISP Chip Set and the Product;
(b) By an agreement dated 18th January 2000 between WEB2U and JADOOss ("the
Product Know-How Agreement"), WEB2U has granted JADOO the Know-How on an
exclusive basis to enable
<PAGE>
JADOO to manufacture and deal in WEB2U proprietary Internet Access Device
incorporating the ISP Chip Set ("the Product").
(c) The technology to be thus supplied by WEB2U to JADOO being of a proprietary
and confidential nature and subject to sensitivity concerns about
protection of IPRs, it is in the interest of JADOO to participate in
MSU/WEB2U venture abroad by acquiring an initial strategic stake in MSU
whose shares are already listed on the OTC Exchange in New York;
(d) Similarly, in order to protect its rights under the Product Know-How
Agreement and build up a long term strategic relationship with JADOO and in
view of the exclusivity granted to JADOO to manufacture and deal in the
Product in the Territory, it is in the interest of MSU/WEB2U to similarly
acquire an initial strategic stake in JADOO;
(e) It is the intention of the Parties that such cross holdings would enhance
the value of their investments and commitments to each others business.
(f) This Agreement therefore records the mode and manner of JADOO participating
in MSUs venture abroad and MSU acquiring a stake in JADOO upon the
following terms:
IT IS AGREED as follows:-
1. The recitals contained herein shall be deemed to form an integral part of
this Agreement.
2. All words and expressions used herein shall have the same meaning as
assigned to them under the Product Know-How Agreement.
3. The Parties shall grant to each other warrants which are to be allotted in
the manner following.
<PAGE>
4. MSU will grant to JADOO warrants to purchase up to the greatest of [ ** ]
of the fully diluted outstanding shares or [ ** ] shares of MSU common
stock. Such warrants shall be exercisable for a term of 12 months from the
date of execution of this agreement at a price calculated by reference to
the average trading price of the shares of MSU common stock during the last
15 days prior to the signing of this agreement ("MSU Price"). In the event
of any increase in the issued share capital of MSU during the period of 15
months from the date of this agreement, then JADOO shall be entitled to
subscribe for such further number of equity shares of MSU at the
Acquisition Price so as to retain the [ ** ] of fully diluted outstanding
equity shares of MSU. In the event of any increase in the issued share
capital of MSU for a further period of 12 months thereafter, JADOO shall be
entitled to subscribe for such further number of shares of MSU at the at
the Acquisition Price so as to retain the [ ** ] of fully diluted
outstanding equity shares of MSU ("MSU Price").
5. JADOO will grant to MSU warrants to purchase up to [ ** ] of the fully
diluted outstanding equity shares of JADOO. Such warrants shall be
exercisable for a term of 12 months from the date of agreement of the First
Valuation of the pursuant to Clause 6.2 of the Product know-how Agreement
at a price calculated by reference to the First Valuation ("JADOO Price").
In the event of any increase in the issued share capital of JADOO during
the period of 15 months from the date of this agreement, then MSU shall be
entitled to subscribe for such further number of equity shares of JADOO at
the first valuation price agreed price so as to retain the [ ** ] of fully
diluted outstanding equity shares of JADOO. In the event of any increase in
the issued share capital of JADOO for a further period of 12 months
thereafter, MSU shall be entitled to subscribe for such further number of
shares of JADOO at the first valuation price agreed so as to retain the
[ ** ] fully diluted outstanding equity shares of JADOO.
6. This Agreement is subject to the receipt of all relevant regulatory /
governmental approvals in
**The omitted information is confidential and is being filed separately with the
Securities and Exchange Commission.
<PAGE>
India including under Exchange Control laws. Provided however, it is
clarified, for the removal of doubt, that this Agreement shall become
effective if and only if all such approvals are obtained in respect of both
the proposed investments by MSU and JADOO.
7. Limitation of Liabilities
7.1 Force Majeure. Neither party shall be liable to the other for any
delay, loss, damage or injury caused by acts of God, governmental
order or regulation, restraining imposed by governmental action,
national strikes, commotion, riots, war, war like situations,
hostilities, governmental disposal, mobilisation, blockage, embargo,
custody, revolution, fire, earthquake, tornado, explosion, storm,
flood or for any other cause beyond its reasonable control
(hereinafter referred to as Force Majeure).
7.2 Notification of such delay arising solely from circumstances
attributable to the Force Majeure shall be given as soon as possible
and followed in writing to the other party within seven days of the
occurrence of such an event.
8. Severability
If any section or subsection of this Agreement is found by competent
authority to be void, voidable, illegal or otherwise unenforceable, the
remaining provisions of this Agreement shall remain in full force and
effect.
9. Whole Agreement.
This Agreement contains the whole agreement between the Parties and
supersedes
<PAGE>
any prior written or oral agreements between them in relation to its
subject matter and the Parties confirm that they have not entered into this
Agreement on the basis of any representations that are not expressly
incorporated into this Agreement.
10. No Modification.
This Agreement may not be modified except by an instrument in writing
signed by both of the Parties of their duly authorised representatives.
11. Survival of Term.
The warranties an indemnities and obligations of confidentiality contained
in this Agreement and the provision for payment of any accounting in
respect of continuing fees and other sums due to either party under this
Agreement shall survive the termination or expiry of this Agreement.
12. Arbitration.
Any question or difference which may arise concerning the construction
meaning or effect of this agreement or concerning the rights and
liabilities of the parties or any other matter arising out of or in
connection with this agreement shall be referred to a single arbitrator in
London to be agreed between the parties. Failing such agreement within 30
days of the request by one party to the other that the matter be referred
to arbitration in accordance with this clause such reference shall be to
the to an arbitrator appointed by the President for the time being of the
Law
<PAGE>
Society, London. The Arbitrator shall neither be an Indian or UK national.
The decision of the arbitrator shall be binding upon the parties. Any
reference under this clause shall be deemed to be a reference to
arbitration within the meaning of the Arbitration Act 1996(UK)
13. Governing Law.
13.1 This Agreement shall be governed in accordance with the laws of
England and Wales.
13.2 Where either Party has any complaint of the other under this
Agreement it may at its option commence proceedings in any Court of
competent jurisdiction in the Courts of England and Wales.
SIGNED /s/ William D. Snowdon
...............................
MSU Corporation
SIGNED [illegible signature]
..............................
JadooNet.com Limited
<PAGE>
SWAP AGREEMENT
THIS AGREEMENT is made the 18th day of January, 2000
B E T W E E N :
WEB2U Limited a United Kingdom Company having its registered office at Elder
House, 526-528 Elder Gate, Milton Keynes, MK9 1LR, England ('WEB2U'); and
JadooNet.com Limited a company organised and existing under the laws of
India, whose registered office is at Mathurdas Mill Compound Ground Floor SB
Marg Lower Parel Bombay 4000013 ('JADOO')
RECITALS
(a) WEB2U is the owner of the Intellectual Property Rights in the ISP Chip Set
and the Product.
(b) WEB2U agrees to license to JADOO and JADOO agrees to accept from WEB2U the
Software, the Hardware Components and the ISP Chip Set ("Goods").
(c) The Parties have agreed to enter into the commitments of this Agreement and
regulate their rights in the manner appearing below.
<PAGE>
IT IS AGREED as follows :
1. Interpretation
1.1.1 "Valuation" shall mean the valuation of each of the Shares to be
carried out by the appointed auditor in the Valuation Report at a date
3, 12, 15 and 24 months from the date of this agreement.
1.2 "ISP Chip Set" shall mean the WEB2U propriety Internet Services
Processor as described in the ISP Chip Set reference manual.
1.3 "Shares" shall mean the shares of JADOO to be subscribed by WEB2U in
accordance with clause4 (a) herein below.
1.4 "Product" shall mean the WEB2U proprietary Internet Access Device
incorporating the ISP Chip Set
1.5 "Software" shall mean WEB2U proprietary Internet Access Devise
software including operating system, Browser, e-mail, printer driver
and enhancements
1.6 "Valuation Report" shall mean the valuation report of Jadoonet.com Ltd
to be prepared by one of the First Five global accountancy firms in
relation to the value from time to time of the Shares.
1.7 "Product Know-How Agreement" shall mean the Agreement of even date
between the Parties hereto under which WEB2U has agreed to license
the Know-How to JADOO.
<PAGE>
1.7. "Software Agreement" shall mean the Agreement of even date between the
Parties hereto under which WEB2U has agreed to license the Software
to JADOO.
1.8 "First Valuation " shall mean the valuation of the Shares to be
carried out by the appointed auditor in the Valuation Report at a date
3 months from the date of this agreement
Any term not defined in this Agreement shall bear the meaning assigned
to it in the Software Agreement and the Product Know-How Agreement.
2. Commencement Date and Term
2.1. This Agreement shall be effective only upon execution by the
authorised representative of both Parties on the date first above
shown ("Commencement Date").
2.2. The term of this Agreement shall be for an initial period of five
years from the Commencement Date and shall automatically renew for
further periods of one year unless three months prior notice in
writing of termination is given by either Party.
2.3 This Agreement is subject to the receipt of all relevant
regulatory/governmental approvals in India including under Exchange
Control laws.
<PAGE>
3. Software/Product
3.1 In accordance with the provisions of the Software Agreement and the
Product Know-How Agreement:
3.1.1 JADOO shall place orders from time to time on WEB2U for
the Software, and the Product, ("the Goods").
3.1.2 WEB2U shall execute such orders not later than 30 days from
receiving the same and despatch the Goods to JADOO.
3.1.3 The price of ISP chip set will be communicated from time to time
(quarterly basis) by WEB2U to JADOO.
3.2 It is the express understanding of the Parties that notwithstanding
the provisions of the Software Agreement and the Product Know-How
Agreement, the price of the Software and the Know-How fees for the
Product shall be paid in cash subject to the undertaking of WEB2U
subscribing to the Shares in the manner provided herein.
3.5 The Goods shall be dispatched on f.o.b. basis
4. Mode of discharge of Price of the Software and the Product Know-How fees
(a) Subject to regulatory approvals relating to foreign investment in
India from time to time a sum equivalent to [ ** ] of the Product
know-how fees payable for the Product and a sum equivalent to [ ** ]
of the Software Royalty for the first [ ** ] units of the Product
manufactured in India and received by WEB2U, shall be invested by
WEB2U in JADOO by WEB2U
** The omitted information is confidential and is being filed separately with
the Securities and Exchange Commission.
<PAGE>
subscribing to and such number of Shares as may be determined by the
Valuation Report.
(b) Following the production of the initial [ ** ] units WEB2U will
determine at its option whether to invest a sum equivalent to [ ** ]
of the Product Know how fees payable for the Product and a sum
equivalent to [**] of the Software Royalty by subscribing the Shares
as set out in clause 4(a) above or to retain the cash with WEB2U.
After the production of [ ** ] units, WEB2U shall not have an option
to invest a sum equivalent to [ ** ] of Software and the sum
equivalent to [ ** ] of the product Know How fee in the Shares.
The Valuation Report shall be prepared and the number of Shares
calculated in the third and twelfth month of each of the first two
years of this agreement. The number of Shares to be issued shall be
calculated by taking a mean average of these prices in each year of
this agreement discounted by [ ** ].
(c) In an event that JADOO does not list the Shares on a suitable stock
exchange during a period of 24 months from the date of signing the
agreement, WEB2U may at its option require JADOO to repurchase the
Shares from WEB2U at the price at which they were issued to WEB2U,
subject to regulatory approvals in India. WEB2U shall have further
option to deal with the Shares in a manner it deems fit, if JADOO
fails to repurchase the Shares.
** The omitted information is confidential and is being filed separately with
the Securities and Exchange Commission.
<PAGE>
(d) JADOO hereby warrants to WEB2U that it is a company in good standing
duly organised and validly existing under the laws of India and has
all corporate and legal authority to issue the Shares.
(e) JADOO hereby agrees that during the term of this Agreement and for so
long as WEB2U is the owner of any of the Shares, JADOO will adopt and
comply with the minimum corporate governance requirements necessary
for listing on the Nasdaq/National Markets
5 Limitation of Liabilities
5.1 Force Majeure.
Neither party shall be liable to the other for any delay, loss, damage
or injury caused by acts of God, governmental order or regulation,
restraining imposed by governmental action, national strikes,
commotion, riots, war, war like situations, hostilities, governmental
disposal, mobilisation, blockage, embargo, custody, revolution, fire,
earthquake, tornado, explosion, storm, flood or for any other cause
beyond its reasonable control (hereinafter referred to as Force
Majeure).
5.2 Notification of such delay, loss, damage, or injury arising solely
from circumstances attributable to the Force Majeure shall be given as
soon as possible and followed in writing to the other party within
seven days of the occurrence of such an event.
<PAGE>
order or part thereof of effected and such cancellation shall be
without any liability on the part of WEB2U to pay for any costs or
cancellation charge arising from such cancellation.
6 Severability
If any section or subsection of this Agreement is found by competent
authority to be void, voidable, illegal or otherwise unenforceable, the
remaining provisions of this Agreement shall remain in full force and
effect.
7 Whole Agreement.
This Agreement contains the whole agreement between the Parties and
supersedes any prior written or oral agreements between them in relation to
its subject matter and the Parties confirm that they have not entered into
this Agreement on the basis of any representations that are not expressly
incorporated into this Agreement.
8 No Modification.
This Agreement may not be modified except by an instrument in writing signed
by both of the Parties of their duly authorised representatives.
9 Survival of Term.
The warranties an indemnities and obligations of confidentiality contained
in this Agreement and the provision for payment of any accounting in respect
of continuing fees and other sums due to either party under this Agreement
shall survive the termination or expiry of this Agreement.
<PAGE>
10 Arbitration.
Any question or difference which may arise concerning the construction
meaning or effect of this agreement or concerning the rights and liabilities
of the parties or any other matter arising out of or in connection with this
agreement shall be referred to a single arbitrator in London to be agreed
between the parties. Failing such agreement within 30 days of the request by
one party to the other that the matter be referred to arbitration in
accordance with this clause such reference shall be to the to an arbitrator
appointed by the President for the time being of the Law Society, London.
The Arbitrator shall neither be an Indian or UK national. The decision of
the arbitrator shall be binding upon the parties. Any reference under this
clause shall be deemed to be a reference to arbitration within the meaning
of the Arbitration Act 1996(UK)
11 Governing Law.
11.1 This Agreement shall be governed in accordance with the laws of
England and Wales.
11.2 Where either Party has any complaint of the other under this Agreement
it may at its option commence proceedings in any Court of competent
jurisdiction in the Courts of England and Wales
SIGNED /s/ William D. Snowdon
..............................................
WEB2U LIMITED
SIGNED [illegible signature]
..............................................
JadooNet.com Limited
<PAGE>
Sales Representative Agreements
Date: 19
Parties:
1. MSU Corporation ("MSU") is a Florida registered corporation having its
principal place of business at Elder House, 526-528 Elder Gate Central
Milton Keynes MK9 1LR in the United Kingdom
2. WEB2U Limited ("Web2u") is a company incorporated in England and Wales whose
registered office is situate at Elder House 526-528 Elder Gate Central
Milton Keynes MK9 1LR
3. McLaughlin International Inc ("MII") a company incorporated in the United
States of America whose principal place of business is at 13750 US281 North
Suite 660 San Antonio Texas 79232 United States of America
4. Corstar Business Computing Inc ("Corstar") a company incorporated in the
United States of America whose principal place of business is at 50 Saw Mill
River Road Hawthorne NY 10532 United States of America
Recitals:
(A) MSU is the owner of the whole of the issued share capital in Web2u
(B) Web2u is the owner of the proprietary rights in an internet access device
incorporating a proprietary chip and browser software which is referred to
herein as the Product
(C) Web2u wishes to outsource the sales and marketing and product support
services in the Territory and wishes to commission the support of MII and
Corstar (together referred to as the Contractor) to fulfil the delivery of
the Services subject to the terms and conditions of this Agreement
1
<PAGE>
(D) In consideration Of the provision of the services MSU will issue to the
Contractor the Warrants and make payment of the Retainer
Operative provisions:
1 Interpretation
1.1 In this Agreement, unless the context otherwise requires:
'FORCE MAJEURE' means, in relation to either party, any circumstances
beyond the reasonable control of that party (including,
without limitation, any strike, lock-out or other form
of industrial action)
'INTELLECTUAL PROPERTY' means any patent, copyright, registered design, trade
mark or other industrial or intellectual property right
subsisting in the Territory in respect of the Products,
and applications for any of the foregoing
'MARKS' means the Trade Marks set out in Schedule Two hereto
'PRODUCT' means such product or products of the kind referred to
in Recital (A) as are manufactured by or for Web2u and
are from time to time notified in writing by Web2u to
the Contractor
'QUARTER' means each period of three months ending on 31 March,
30 June, 30 September or 31 December
'RESTRICTED INFORMATION' means any information which is disclosed to the
Contractor by Web2u pursuant to or in connection with
this Agreement that is routinely treated by Web2u as
confidential as a part of its normal business practices
whether orally, if confirmation of its status as
Restricted Information is subsequently confirmed in
writing or in writing in relation to documents which
are properly designated as containing Restricted
Information
2
<PAGE>
'RETAINER' means the recurring monthly fee payable to the
Contractor during the Term attributable to inter alia
salaries set up costs minor capital and overhead
expenses designed to achieve a professional presence
for Web2u in the United States
'SERVICES' means the services specified in the Schedule attached
hereto
'TERRITORY' means North and South America or such other countries
as shall from time to time be agreed in writing by the
parties
'WARRANTS' means the warrants in relation to MSU Corporation
Common Stock to be issued pursuant to clause 7.2 to
which the Contractors are or will become entitled
'YEAR OF THIS AGREEMENT' means the period of 12 months from the date of
this Agreement and each subsequent consecutive period
of 12 months during the period of this Agreement.
1.2 Any reference in this Agreement to 'writing' or cognate expressions
includes a reference to telex, cable, facsimile transmission or comparable
means of communication.
1.3 Any reference in this Agreement to any provision of a statute shall be
construed as a reference to that provision as amended, re-enacted or
extended at the relevant time.
1.4 The headings in this Agreement are for convenience only and shall not
affect its interpretation.
2 Appointment of Contractor
2.1 Web2u hereby appoints the Contractor as a strategic marketing and business
development agent in the Territory for the promotion of, and solicitation
of customers for, the Products, and the Contractor hereby agrees to act in
that capacity and to provide the Services, subject to the terms and
conditions of this Agreement.
3
<PAGE>
2.2 Web2u shall be entitled to make sales of the products to customers in the
Territory whether or not they have been introduced to Web2u by the
Contractor.
2.3 The Contractor shall not solicit any orders for the Products:
2.3.1 from any person in the Territory if the Contractor knows or has
reason to believe that the Products concerned will be resold outside
the Territory; or
2.3.2 from any person outside the Territory without the prior written
consent of Web2u which shall not be unreasonably withheld
2.4 Web2u may from time to time by written notice require the Contractor not
to, and if so required the Contractor shall not, solicit orders for the
Products from particular customers or prospective customers in the
Territory if Web2u has reasonable grounds for believing that such customers
are not creditworthy.
3 The Contractor's duties
3.1 The Contractor shall use its best endeavours to promote and market the
Products in the Territory and to seek orders for the Products in the
Territory, and generally to assist Web2u in the sale of the Products in the
Territory, but the Contractor shall not be entitled to sell or to enter
into any negotiations or contracts for the sale of the Products on behalf
of Web2u, or to bind Web2u in any way.
3.2 The Contractor shall conduct the promotion and marketing of the Products in
the Territory with all due care and diligence and shall cultivate and
maintain good relations with customers and potential customers in the
Territory in accordance with sound commercial principles.
3.3 Subject as provided in this Agreement and to any directions which Web2u may
from time to time properly give, the Contractor shall be entitled to
perform its duties hereunder in such manner as it may think fit.
4
<PAGE>
3.4 The Contractor shall promptly notify Web2u of all enquiries concerning and
orders for the Products which it receives from customers and prospective
customers both within and outside the Territory.
3.5 The Contractor shall in relation to the Products:
3.5.1 describe itself as 'strategic marketing and business development
agent' for Web2u;
3.5.2 not hold itself out, or permit any person to hold it out, as being
authorised to bind Web2u in any way; and
3-5.3 not do any act which might reasonably create the impression that it
is so authorised.
3.6 The Contractor shall be responsible for obtaining all licences, permits and
approvals which are necessary or advisable for the sale of the Products in
the Territory and for the performance of its duties hereunder.
3.7 The Contractor shall maintain a list of customers and potential customers
for the Products in the Territory and shall at the request of Web2u supply
it with a copy of that list.
3-8 The Contractor shall from time to time keep Web2u fully informed of the
Contractor's promotional and marketing activities in respect of the
Products and shall, within 30 days after the end of each Quarter, provide
Web2u with a detailed report of such activities and the amount of its
advertising expenditure during that Quarter.
3.9 The Contractor shall keep Web2u informed of conditions in the market for
the Products in the Territory, and of competing products and the activities
of Web2u's competitors in the Territory.
3.10 The Contractor shall promptly inform Web2u of:
3.10.1 any complaint or after-sales enquiry concerning the Products which
is received by the Contractor; and
5
<PAGE>
3.10.2 any matters likely to be relevant in relation to the Manufacture,
sale, use or development of the Products within or outside the
Territory.
3.11 The Contractor will provide the Services and meet its obligations pursuant
to this agreement with reasonable care and skill
3.12 The Contractor shall not:
3.12.1 pledge the credit of Web2u in any way;
3.12.2 use any advertising, promotional or selling materials in relation to
the Products except those supplied or approved by Web2u;
3.12.3 engage in any conduct which in the opinion of Web2u is prejudicial
to Web2u's business or the marketing of the Products generally; or
3.12.4 be concerned or interested either directly or indirectly in the
manufacture, sale, promotion, marketing or importation into the
Territory of any goods which compete with the Products.
4 Sale of the products
4.1 All sales of the Products in the Territory shall be made on such terms and
conditions as Web2u in its absolute discretion may from time to time
determine, and:
4.1.1 Web2u shall provide to the Contractor copies of those terms and
conditions as varied from time to time;
4.1.2 the Contractor shall bring to the notice of all customers and
prospective customers for the Products in the Territory those terms
and conditions;
4.1.3 the Contractor shall not make or give any promises, warranties,
guarantees or representations concerning the Products other than
those contained in those terms and conditions.
4.2 Unless otherwise agreed in writing, the Contractor shall not be entitled to
receive payments on Web2u's behalf in respect of sales of the products.
6
<PAGE>
4.3 At the time of any sale of the Products the contractor shall cause the
customer to execute a purchase order in a form previously agreed to by
Web2u and the Contractor. The Contractor shall promptly deliver the
purchase order to Web2u and Web2u shall have ten (10) business days to
notify the Contractor whether the purchase order has been accepted or
rejected. If Web2u does not notify the Contractor of the status of the
purchase order within ten (10) business days the purchase order shall be
deemed to have been rejected.
4.4 The purchase price for the sale of all Products shall be paid by the
customer to Web2u. Web2u shall be responsible for the collection and
deposit of all sales and other taxes in connection with each transaction,
the filing of all required tax returns and the maintenance of all records
to be retained by any applicable law.
4.5 Web2u shall be responsible for all arrangements to ship the Products to the
customer, including the payment of all shipping storage and transport
charges, and all customs fees and duties.
5 Intellectual property
5.1 The Contractor shall promptly and fully notify Web2u of any actual,
threatened or suspected infringement in the Territory of any Intellectual
Property of Web2u which comes to the Contractor's notice, and of any claim
by any third party so coming to its notice that the importation of the
Products into the Territory, or their sale therein, infringes any rights of
any other person, and the Contractor shall at the request and expense of
Web2u do all such things as may be reasonably required to assist Web2u in
taking or resisting any proceedings in relation to any such infringement or
claim. In the event Contractor, or any officer, director, manager, partner,
employee or agent of Contractor, or of MII or Corstar (referred to either
individually or collectively as a "Protected Party") is named as a party in
any proceedings alleging that the sale or use of the Products infringes on
the intellectual property rights of any third party Web2u shall
(i) pay for the costs to defend the Protected Party, included but not
limited to reasonable attorney's fees, by counsel of the
Protected Party's choice, and
7
<PAGE>
(ii) indemnify the Protected Party from and against any damages
finally determined to be due from the Protected Party
5.2 Nothing in this Agreement shall give the Contractor any rights in respect
of any trade names or trade marks used by Web2u in relation to the Products
or of the goodwill associated therewith, and the Contractor hereby
acknowledges that, except as expressly provided in this Agreement, it shall
not acquire any rights in respect thereof and that all such rights and
goodwill are, and shall remain, vested in Web2u. During the term of the
Agreement, Contractor shall have the right in its performance of the
Services to use any trademark, trade name, trade address or service mark
used by Web2u in relation to the Products.
5.3 The Contractor shall not use in the Territory any trade marks or trade
names so resembling the trade marks or trade names of Web2u as to be likely
to cause confusion or deception.
5.4 The Contractor shall, at the expense of Web2u, take all such steps as Web2u
may reasonably require to assist Web2u in maintaining the validity and
enforceability of the Intellectual Property of Web2u during the continuance
of this Agreement.
5.5 Without prejudice to the right of the Contractor or any third party to
challenge the validity of any Intellectual Property of Web2u, the
Contractor shall not do or authorise any third party to do any act which
would or might invalidate or be inconsistent with the Intellectual Property
of Web2u and shall not omit or authorise any third party to omit to do any
act which, by its omission, would have that effect or character.
5.6 Web2u represents to Contractor that Web2u (or MSU) is the owner of the
registered trademark in the United States for the Marks set forth in
Schedule 2 attached hereto and made a part hereof. Notwithstanding the
representations set forth in the preceding sentence, Web2u and MSU agree
that in the event any sale of the Products provided for by the agreement,
or the use of the Products subsequent to sale, results in the loss to Web2u
or MSU or any Intellectual Property rights that would have been available
8
<PAGE>
but for that sale or use, Contractor shall have no liability to Web2u or
MSU for any loss incurred.
6 Rights and duties of Web2u
6.1 Web2u shall be entitled:
6.1.1 for any reason to reject any order for the Products; and
6.1.2 from time to time to extend the range of Products, or discontinue
any of the same, upon giving not less than one months' notice in
writing to the Contractor.
6.2 Web2u shall:
6.2.1 at its own expense promptly supply the Contractor with such samples,
catalogues, advertising, promotional and selling materials,
literature and information as the Contractor may from time to time
reasonably require for the purpose of complying with its obligations
under this Agreement;
6.2.2 subject as provided in clause 6.1.1, honour any contracts for the
sale of the Products to customers in the Territory introduced to
Web2u by the Contractor;
6.2.3 promptly and efficiently deal with any after sales enquiry relating
to the Products raised by a customer in the Territory;
6.2.4 comply with all the applicable laws and regulations relating to the
nature, method of manufacture, packaging and labelling of the
Products;
6-2.5 Web2u shall use its best efforts to maintain manufacturing capacity
sufficient to meet the volume sales generated by the Contractor
where in its sole discretion it makes commercial sense so to do
6.2-6 Web2u shall devote the resources necessary to develop such
enhancements, improvements and additions to the Products as may be
required to address changing customer needs and the product
offerings of its competitors where in its sole discretion it makes
commercial sense so to do
6.3 Subject to compliance by the Contractor with its obligations under this
Agreement, Web2u shall indemnify the Contractor against any liability
(including, without prejudice to the generality of the foregoing, all costs
and expenses which the
9
<PAGE>
Contractor may reasonably incur in defending any proceedings) which it may
incur by reason only of its being held out as Web2u's Contractor.
7 Financial provisions
7.1 In consideration of the obligations undertaken by the Contractor hereunder,
Web2u shall pay the Contractor:
7.1.1 the Retainer at the rate of _____ except as provided by clause 7.1.2
is to be paid by wire transfer on the first day of each month
(except that the first payment of the Retainer shall be due within 5
days after execution hereof); and Web2u agrees to pay interest on
any monthly payment that is not paid within (10) days after it is
due at a rate equal to the prime lending rate as published in the
Wall Street Journal, plus two percentage points
7.1.2 the Retainer shall be paid in full during the first two months of
this Agreement. Thereafter the Retainer shall be paid at the reduced
rate of $____ during each month in which the Contractor has failed
to secure the services of Ms Debbie Miller or an approved employee
of similar status and rank
7.1.3 a commission in the circumstances and at the rates as set out in
Schedule One for all units of the Product which are sold and paid
for at any time during the continuance of and within one year after
the termination of this Agreement
7.1.4 all travelling and other out-of-pocket expenses reasonably incurred
in the proper provision of the Services. All expenses incurred in
excess of $____ in respect of any single item or $____ cumulatively
in any one-month period shall require the written approval of Web2u.
All expenses shall be property vouched.
7.2 MSU will grant to the Contractor warrants to purchase _____ shares of MSU
Corporation common stock at an exercise price of $____ for a term of 5
years from the date of the Agreement.
7.3 By way of a performance related incentive upon fulfilment and payment of
orders for sale of the Product according to the formula set out in the
following table (subject to a
10
<PAGE>
maximum of _____ warrants) at an exercise price of $____ for a term of ____
years from the date of this Agreement.
- --------------------------------------------------------------------------------
NUMBER OF UNITS SOLD AND NUMBER OF WARRANTS
PAID FOR
- --------------------------------------------------------------------------------
--------- ----------
--------- ----------
--------- ----------
--------- ----------
- --------------------------------------------------------------------------------
7.4 Such warrants shall be issued equally to each of MII or Corstar or as
otherwise instructed in writing by the Contractor.
7.5 MSU will make available to the Contractor a block of _____ warrants for
shares of MSU Corporation common stock to be utilised as staff incentive at
a price of $____ for a term of _____ years from the date of the Agreement.
Such warrants are to be issued in the sole discretion of the Contractor to
bone fide employees (but for the purpose of clarification not to the
principals of either of the parties who constitute the Contractor)
7.6 Web2u shall:
7.6.1 within 28 days after the end of each month during the continuance of
this Agreement and after the end of each month falling within one
year after its termination send to the Contractor a statement
showing the number of Products sold and (paid for) in the Territory
by Web2u during that month and the commission thereon to which the
Contractor is entitled pursuant to clause 7.1; and
7.6.2 forthwith upon receipt from the Contractor of an invoice therefor,
send to the Contractor a remittance in US dollars in respect of that
commission
7.7 Web2u shall keep separate records and accurate accounts of all sales of the
Products
11
<PAGE>
made by it in the Territory and shall permit the Contractor or its duly
appointed representatives to inspect all such records and accounts and take
copies thereof at all reasonable times (but not exceeding once in any six
month period).
7.8 Web2u shall, if so requested by the Contractor within 72 days after the end
of any Year of this Agreement or after the end of the 12 month period
following the termination of this Agreement, at its own expense provide to
the Contractor a report from its external auditors as to accuracy of the
information submitted by it in respect of that Year or period pursuant to
clause 7.6
7.9 Web2u shall pay the commission due to the Contractor hereunder without any
deduction other than such amount (if any) that it may at anytime be
required to deduct by law. If Web2u is required to make such deduction, it
shall do all things in its power which may be reasonably necessary to
enable or assist the Contractor to claim exemption therefrom under any
double tax or similar agreement from time to time in force and shall from
time to time give to the Contractor proper evidence as to the deduction and
payment over of the tax or sums withheld.
7.10 All sums payable under this Agreement are exclusive of any value added tax
or other applicable sales tax, which shall be added to the sum in question
or otherwise included in any relevant calculation, and where any
withholding tax or similar deduction is required to be made, the sum in
question shall be paid net of that deduction.
7.11 Where at any time arty monies are properly due and payable by one party to
the other and remain outstanding interest shall accrue in relation to the
outstanding amount at the rate of 2% per annum over Prime Bank Rate
8 Confidentiality
8.1 Except as provided by clauses 8.2 and 8-3, the Contractor shall at all
times during the continuance of this Agreement and after its termination:
12
<PAGE>
8.1.1 use its best endeavours to keep all Restricted Information
confidential and accordingly not to disclose any Restricted
Information to any other person; and
8.1.2 not use any Restricted Information for any purpose other than the
performance of its obligations under this Agreement.
8.2 Any Restricted Information may be disclosed by the Contractor to:
8.2.1 any customers or prospective customers;
8.2.2 any governmental or other authority or regulatory body; or
8.2.3 any employees or authorised agents of the Contractor or of any of
the aforementioned persons,
to such extent only as is necessary for the purposes contemplated by this
Agreement, or as is required by law and subject in each case to the
Contractor using its best endeavours to ensure that the person in question
keeps the same confidential and does not use the same except for the
purposes for which the disclosure is made.
8.3 Any Restricted Information may be used by the Contractor for any purpose,
or disclosed by the Contractor to any other person, to the extent only
that:
8.3.1 it is at the date hereof, or hereafter becomes, public knowledge
through no fault of the Contractor (provided that in doing so the
Contractor shall not disclose any Restricted Information which is
not public knowledge); or
8.3.2 it can be shown by the Contractor, to the reasonable satisfaction of
Web2u, to have been known to the Contractor prior to its being
disclosed by Web2u to the Contractor.
9 Force Majeure
9.1 If either party is affected by Force Majeure it shall forthwith notify the
other party of the nature and extent thereof.
13
<PAGE>
9.2 Neither party shall be deemed to be in breach of this Agreement, or
otherwise be liable to the other, by reason of any delay in performance, or
non-performance, of any of its obligations hereunder to the extent that
such delay or non-performance is due to any Force Majeure of which it has
notified the other party; and the time for performance of that obligation
shall be extended accordingly.
9.3 If the Force Majeure in question prevails for a continuous period in excess
of six months, the parties shall enter into bona fide discussions with a
view to alleviating its effects, or to agreeing upon such alternative
arrangements as may be fair and reasonable.
10 Duration and termination
10.1 This agreement shall come into force on the date hereof and, subject as
provided in clauses 10.2, 10.3 and 10.4, shall continue in force for a
period of One year and thereafter unless or until terminated by either
Party giving to the other not less than 90 days written notice expiring at
or at any time after the Year of this Agreement.
10.2 Either party shall be entitled forthwith to terminate this Agreement by
written notice to the other if:
10.2.1 that other party commits any breach of any of the provisions of this
Agreement and, in the case of a breach capable of remedy, fails to
remedy the same within 30 days after receipt of a written notice
giving full particulars of the breach and requiring it to be
remedied;
10.2.2 an encumbrancer takes possession or a receiver is appointed over any
of the property or assets of that other party;
10.2.3 that other party makes any voluntary arrangement with its creditors
or becomes subject to an administration order;
10-2.4 that other party goes into liquidation (except for the purposes of
amalgamation or reconstruction and in such manner that the company
resulting therefrom effectively agrees to be bound by or assume the
obligations imposed on that other party under this Agreement);
14
<PAGE>
10.2.5 anything analogous to any of the foregoing under the law of any
jurisdiction occurs in relation to that other party; or
10.2.6 that other party ceases, or threatens to cease, to carry on
business.
10.3 For the purposes of clause 10.2.1, a breach shall be considered capable of
remedy if the party in breach can comply with the provision in question in
all respects other than as to the time of performance (provided that time
of performance is not of the essence).
10.4 Any waiver by either party of a breach of any provision of this Agreement
shall not be considered as a waiver of any subsequent breach of the same or
any other provision thereof.
10.5 The rights to terminate this Agreement given by this clause shall be
without prejudice to any other right or remedy of either party in respect
of the breach concerned (if any) or any other breach.
11 Consequences of termination
11.1 Upon the termination of this Agreement for any reason:
11.1.1 the Contractor shall within 30 days send to Web2u or otherwise
dispose of in accordance with the directions of Web2u all samples of
the Products and all advertising, promotional or sales material
relating to the Products then in the possession of the Contractor;
11.1.2 the Contractor shall cease to promote, market, advertise or solicit
customers for the Products;
11.1.3 the provisions of clause 7 shall continue in force in accordance
with its terms
11.1.4 the Contractor shall have no claim against Web2u for compensation
for loss of agency rights, loss of goodwill or any similar loss
(except unpaid commission);
11.1.5 clause 8 shall continue in force in accordance with its terms; and
15
<PAGE>
11.1.6 subject as otherwise provided herein and to any rights or
obligations which have accrued prior to termination, neither party
shall have any further obligation to the other under this Agreement.
11.2 The costs incurred by the Contractor in complying with clause 11.1.1 shall,
where the termination is by the Contractor pursuant to clause 10.2, be for
the account of Web2u and where termination is by Web2u pursuant to clause
be for the account of the Contractor.
11.3 The provisions of clause 3.12.4 shall continue to apply for a period of 9
months after the date of termination other than where the termination is
occasioned by Web2u in which case the Contractor may be released from the
obligation in clause 3.12.4 upon repayment to Web2u of any payments of the
Retainer made to the Contractor during any prior period of 9 months.
12 Nature of agreement
12.1 Web2u shall be entitled to perform any of the obligations undertaken by it
and to exercise any of the rights granted to it under this Agreement
through any other company which at the relevant time is its holding company
or subsidiary or the subsidiary of any such holding company and any act or
omission of any such company shall for the purposes of this Agreement be
deemed to be the act or omission of Web2u.
12.2 Web2u may assign this Agreement and the rights and obligations thereunder.
12.3 Subject as provided in clause 12.4, this Agreement is personal to the
Contractor, which may not without the written consent of Web2u, assign,
mortgage, charge (otherwise than by floating charge) or dispose of any of
its rights hereunder, or subcontract or otherwise delegate any of its
obligations hereunder Save that the Contractor may for bone fide
commercial reasons be permitted to assign the benefit and burden of this
agreement to an entity in which either of the Contractors (or the
principals of either of the Contractors) owns a majority interest.
16
<PAGE>
12.4 The Contractor shall not without the prior written consent of Web2u which
shall not be unreasonably withheld employ material sub-Contractors at a
strategic level; each and every act or omission of the sub-Contractor
shall for the purposes of this Agreement be deemed to be the act or
omission of the Contractor.
12.5 Nothing in this Agreement shall create, or be deemed to create, a
partnership or the relationship of employer and employee between the
parties.
12.6 This Agreement contains the entire agreement between the parties with
respect to the subject matter hereof, supersedes all previous agreements
and understandings between the parties with respect thereto, and may not be
modified except by an instrument in writing signed by the duty authorised
representatives of the parties.
12.7 Each party acknowledges that, in entering into this Agreement, it does not
do so on the basis of, and does not rely on, any representation, warranty
or other provision except as expressly provided herein, and all conditions,
warranties or other terms implied by statute or common law are hereby
excluded to the fullest extent permitted by law.
12.8 If any provision of this Agreement is held by any court or other competent
authority to be void or unenforceable in whole or part, this Agreement
shall continue to be valid as to the other provisions thereof and the
remainder of the affected provision.
13 Proper law
13.1 This Agreement shall be governed by and construed in all respects in
accordance with the Laws of the State of New York.
13.2 Any controversy or claim arising out of or relating to this agreement or
the breach thereof shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association and
judgement on the award by the arbitrator(s) may be entered in any court
having jurisdiction thereof.
17
<PAGE>
14 Notices and service
14.1 Any notice or other information required or authorised by this Agreement to
be given by either party to the other may be given by hand or sent (by
first class pre-paid post, telex, cable, facsimile transmission or
comparable means of communication) to the other party at the address
referred to in clause 14.4.
14.2 Any notice or other information given by post pursuant to clause 14-1 which
is not returned to the sender as undelivered shall be deemed to have been
given on the 7th day after the envelope containing the same was so posted;
and proof that the envelope containing any such notice or information was
properly addressed, pre-paid, registered and posted, and that it has not
been so returned to the sender, shall be sufficient evidence that such
notice or information has been duly given.
14.3 Any notice or other information sent by telex, cable, facsimile
transmission or comparable means of communication shall be deemed to have
been duly sent on the date of transmission, provided that a confirming copy
thereof is sent by first class prepaid post to the other party at the
address referred to in clause 14.4 within 24 hours after transmission.
14.4 Service of any legal proceedings concerning or arising out of this
Agreement shall be effected by causing the same to be delivered to the
Company Secretary of the party to be served at its principal place of
business (in the case of Web2u) or its registered office (in the case of
the Contractor), or to such other address as may from time to time be
notified in writing by the party concerned.
- ---------------------------
Authorised Signatory
MSU Corporation
18
<PAGE>
- ---------------------------
Authorised Signatory
WEB2U Limited
- ---------------------------
Authorised Signatory
McLaughlin International Inc.
- ---------------------------
Authorised Signatory
Corstar Business Computing Co. Inc.
19
<PAGE>
Schedule
"The Services"
o To facilitate the marketing and Product PR related strategy of Web2u in the
Territory and to interface with all and any prospective customers and trade
leads developed by either Web2u or the Contractor in the Territory.
o To establish a San Antonio and Whiteplains sales and marketing office and
to provide demonstration facilities and pre sales technical and customer
product support
o To provide competent technical staff to support the marketing and sales
activity in the Territory
o The Contractor will engage and utilise upon a full time basis the services
of Deborah Miller and Alex Munios (or such other persons who are previously
agreed in writing by Web2u) in the provision of the Services.
o The Contractor will make available such time as is reasonably required of
Mark McLaughlin and John Sitar as is reasonably required for the provision
of the Services.
o The Contractor will make available such number of engineers to be based at
Whiteplains and or San Antonio such number engineers to be available to
customers or prospective customers of WEB2U in the Territory for the
fulfilment of the Services
o Each party will nominate a contract manager (acceptable to the other party)
to liase in relation to the day to day reporting and issues. The Contract
Managers will provide feedback in relation to problem areas, Product
enhancements, market information and conditions.
o The Contractor shall procure that its representatives:
1 make themselves available, at all reasonable times and upon reasonable
notice, to Web2u for the purposes of consultation and advice relating
to this Agreement and the Products;
2 attend meetings with representatives of Web2u and such customers or
prospective customers in the Territory as may be necessary for the
performance of its duties under this Agreement;
20
<PAGE>
3 make such calls upon customers or potential customers in the Territory
for the purpose of promoting the Products as the Contractor may think
fit; and
4 attend such trade exhibitions and other sales outlets in the Territory
as Web2u or the Contractor may think commercially suitable for the
purpose of promoting the Products.
"Commission"
(a) For each unit of the Product sold and paid for by way of reference to
the Contractors contacts and activities WEB2U will pay to the
Contractor a commission of $____.
(b) A commission shall be deemed earned and shall be paid in accordance
with clauses 7.1.3 and 7.6 upon acceptance and payment of a purchase
order that (i) was submitted to Web2u by the Contractor or (ii) was
from a customer originally introduced to Web2u by the Contractor
(c) The parties agree to enter into good faith discussions regarding the
potential compensation to the Contractor for (i) providing pre sales
support services to customers not introduced to Web2u by the
Contractor (ii) providing support maintenance and warranty support
services for installed customers and (iii) generating revenue
opportunities for Web2u other than from sales of the Products
In the event of any extra territorial activity sales possibilities being
recognised by the Contractor the parties will enter into separate
discussions to agree a level of commission to be paid to the contractor
"Pricing"
An outline pricing structure is set out below. These prices may be
enhanced/reduced by reference to ongoing royalty/revenue deals or different
business models. Web2u will agree in final contract terms direct with
each customer in co-operation with the Contractor.
21
<PAGE>
- --------------------------------------------------------------------------------
Number of Units Price per unit
- --------------------------------------------------------------------------------
For the first _____ units US$_____ fob Shanghai
- --------------------------------------------------------------------------------
_____ to _____ units US$_____ fob Shanghai
- --------------------------------------------------------------------------------
_____ to _____ units US$_____ fob Shanghai
- --------------------------------------------------------------------------------
_____ and greater US$_____ fob Shanghai
- --------------------------------------------------------------------------------
"Trade Marks"
- --------------------------------------------------------------------------------
Country Mark or Device Owner Registered Number
- --------------------------------------------------------------------------------
United States "Web2u" Web2u Limited 75/694/832
- --------------------------------------------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Financial Statements of MSU Corporation and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 620,254
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 201,543
<CURRENT-ASSETS> 974,790
<PP&E> 170,763
<DEPRECIATION> 201,733
<TOTAL-ASSETS> 1,536,178
<CURRENT-LIABILITIES> 1,212,265
<BONDS> 505,000
0
0
<COMMON> 254,554
<OTHER-SE> (435,641)
<TOTAL-LIABILITY-AND-EQUITY> 1,536,178
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (1,013,531)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,200
<INCOME-PRETAX> (1,151,550)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,151,550)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,151,550)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
