Chapter 4027 Restrictive Clauses
Chapter 4027 Restrictive Clauses
Was Ves dreaming?
The breakthrough in the negotiations between the Larkinson Clan and the Voiken Family sounded like music to his ears.
In exchange for contributing to the Pacifier Project, Ves would essentially receive 20 percent of the proceeds of the entire ecosystem of mechs, auxiliary products, replacement parts and other related goods!
Though Ves felt extremely happy to earn a lot of money for a large amount of products that he didn't even require his input, as soon as he sobered up a bit, he grew a bit suspicious why the deal was so heavily favored towards the Larkinson Clan.
Even if it became evident that the Voikens developed a clear intention of befriending the Larkinsons, why give away such a large share when they were doing almost all of the work?
While it was understandable for the Voikens to pay a lot of 'royalty fees' to earn the right to utilize Lufa's glow in one of their key designs, a 20 percent share on the entire range sounded a bit excessive!
There were dozens of other mech models that Ves had not committed to contributing!
Were the Voikens truly willing for Ves to freeload off the income generated by the products of their labor?
If the Voiken Family wanted to show enough sincerity, then gifting the Larkinsons with a one-time gift like the large-capacity combat carrier was already sufficient.
As precious as a starship in the Red Ocean might be, giving away such a precious vessel only affected the early development of the Voiken Family.
On the other hand, a deal that continually forced Voiken Industries to pass on 20 percent of the money it made from selling every single mech and good from their law enforcement mech ecosystem would continue to drag on their heels for many years!
It was extremely unlikely for the Voikens to be able to break off this chain once they shackled it onto their ankles.
Ves distinctly recalled that Professor Taigen Herman Voiken, the Senior in charge of the Voiken Family's operations in the Red Ocean, specialized in designing law enforcement mechs!
This meant that this important Senior had no alternative! He wasn't like Ves who could easily decide to work on a different mech type whenever he wished.
If Professor Taigen wished to push his design philosophy to the next level, then he could only continue to surrender 20 percent of the money made from selling much of his own work.
Of course, if Taigen and the Voikens truly wanted to renege on this onerous restriction in the future, they had plenty of ways to break the chain by force.
They could convince the MTA to intervene and forcibly alter a contract that it was responsible for enforcing.
Voiken Industries could go bankrupt and close its doors, thereby invalidating every agreement made to it while the Voikens could just start a new company.
Taigen could officially leave Voiken Industries and start a new mech company that was not related to the Voiken Family.
When Ves voiced all of these possible concerns to Gavin, his personal assistant smiled back and shook his head.
"If you study the contract more closely, you will realize that the contents already address a part of the scenarios that you have brought up. For example, the agreement doesn't just cover Voiken Industries alone, but also mentions Professor Taigen Voiken by name. This way, it doesn't matter if he leaves his current company and starts a new one. He will still be bound by the terms of our contract! Not even passing through the greater beyonder gate and returning to the Milky Way will allow him to escape our agreement so easily!"
Ves brought the data pad closer to his head and studied the text more seriously. Even though it was filled with a mix of dense legalese jargon and constant references to other clauses, he could see that many of the terms were only there to close up every conceivable loophole that the Larkinson negotiators could come up with. They had not been holding back!
"Besides, as a mech designer, you should know the temperament of high-ranking mech designers. Their credibility and reputation is more valuable than mere profits. It is not difficult for Seniors and Masters to earn money. Giving away 20 percent of the money earned from their law enforcement mech ecosystem in exchange for a substantial amount of long-term benefits is not necessarily a bad deal from their perspective."
"Oh?" Ves raised his eyebrow. "I get the feeling that I am missing a few details. What is in it for the Voikens, exactly?"
"First, you should know that the contract includes a non-compete clause. It essentially states that as long as the contract holds true, we cannot compete against the Voikens in the product category of law enforcement mechs by selling our own versions of this mech type."
Ves immediately frowned. "This is a serious restriction!"
He hated being limited, but he understood why the Voikens wanted to add this reassurance to the agreement. If the Larkinsons did not make this promise, then what would stop the Larkinsons from studying how to design law enforcement mechs and poach their clients while they were nominally cooperating?
The Voikens did not want to spell their own doom in this market by raising their own competitor!
"I don't think it is good to enter into these kinds of agreements either, but right now it is too difficult for our business operations to take off by relying on our own efforts." Gavin laid out his thoughts. "The Voiken Family is a good collaborative partner for us, and our cooperation only covers a single area of the total mech market. Sure, we will be passing on the opportunity to come out with our own line of law enforcement mechs, but it is not a bad deal for us to collect our 20 percent rent from Voiken Industries while concentrating our efforts onto our core product lines. Maybe we can consider entering this market by ourselves in the future, but for now our mech company is too small and limited to compete in too many markets."
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He was right. The Larkinsons might have a powerful design solution that was extremely relevant for law enforcement mechs, but none of them possessed a notable background or specialty in those kinds of mechs.
Ves didn't care too much about conquering the market for peacekeeping mechs either. Acquiescing to a deal where he could earn easy money while doing almost nothing was still a win-win transaction even if he was prohibited from competing against the Voikens on their own turf.
Of course, Gavin was also right that he and his clan should be careful not to make too many of these restrictive agreements. If Ves kept collaborating like this with mech companies left and right, then soon he would be bound by so many shackles that there were hardly any product categories left that the Larkinsons could engage by themselves!
That reminded Ves of an important consideration.
"The non-compete clause shouldn't cover mechs developed for private use, right?"
"Correct. It only concerns commissioned mechs and commercial mechs. The Voikens don't care too much if we want to develop a law enforcement mech for our own use. That is rarely prohibited."
Ves relaxed a bit. "That sounds good. Are there any other notable concessions that I should be informed about?"
"Hmm, the Voikens have also requested to obtain the possibility of requesting your contributions for a limited number of other mech designs in the same ecosystem. They won't let you do it for free. The share of earnings made from selling the copies of those designs will bump from 20 percent to 30 percent."
That didn't sound like much, but it was quite a heavy concession if the model turned out to be a key machine that could easily be sold in large batches!
In any case, this was not a particularly onerous request as Ves only needed to add his specialty and nothing else to an existing Voiken mech design.
"I will agree to his term as long as I have the right to refuse it for any reason." Ves stated. "There are times when I am too busy to divert my attention to other projects. There are also times where I don't think a particular mech design aligns with my vision and preferences."
"I shall pass that on." Gavin nodded while not looking too surprised.
"Anything else, Benny?"
"Well, there are a few minor issues of contention that I am not sure that I should mention to you. They range from allowing Voiken Industries from borrowing the LMC's branding to market their mech ecosystem to setting a penalty fee in case either party wishes to unilaterally end the contract."
"A penalty fee?"
"Neither side thinks we should be forever bound by this partnership agreement. No one knows how our clan or their family will look like a century later. Perhaps by that time Taigen Voiken would have already advanced to Master and be able to support his entire mech ecosystem by relying on his own advantages. Our clan and mech company may have also grown up to the extent where there is no value to allying with the Voiken Family anymore. Currently, the negotiators from both sides agree that there should be a mechanism in the contract that allows one of them to pull out of the deal, but only after paying a substantial penalty fee."
This sounded reasonable enough. If one party decided to call it quits, then the other party would always suffer a loss. The former had to pay compensation to the latter in order to cover for the damage.
The question was how high the penalty should be set.
If the penalty was too light, then the foundation of the partnership would be far too weak. When either side could easily pull out at any time if they wanted, there was no way for them to cooperate with each other with sincerity!
On the other hand, a penalty that was overly harsh would forcibly bind two partners together that might not be able to get along with each other anymore.
If one of them wanted a divorce but could not pay the exorbitant penalty fees at all, then that would lead to a lot of one-sided resentment, which was not good for their cooperation in the long-term!
"What is the current range?"
"From what I have learned, the negotiators are thinking about setting the penalty free at 20 to 30 times of what the disadvantaged side makes in a year from this cooperative agreement."
Ves winced. That was a huge sum of money, enough to make both sides extremely reluctant to unilaterally break the deal!
However, he liked it quite a bit. If the Voikens no longer wanted to play ball with him, then his clan would at least get what they were owed for the following two decades.
That was plenty of time for the Larkinsons to compensate for the loss of an income stream by developing another lucrative channel!
"This term sounds a bit weird." Ves pointed out. "It's much more favored towards the Voiken Family. After all, their share of the annual profits are much greater than ours. That means that we have to pay four times more than the Voikens if we are the ones to break this deal!"
"That is correct. It can't be helped. The Voikens invest the most effort and resources into building up their mech ecosystem around the Pacifier Project. This interconnected group of products will lose its most important selling point if we decide to pull out all of a sudden. The Voiken Family must put far greater effort into developing alternatives of the Pacifier Project that does not have the benefit of glows to attract lots of clients."
Though Ves felt uncomfortable with this clause, it wasn't that big of a deal as long as the Larkinsons had no thoughts about competing against the Voikens in this sector.
Even if Ves ever changed his mind, the price was not an insurmountable obstacle. He fully believed that his mech company would expand and compete in many different markets and product categories, thereby building up an income base that was so broad that the money earned from the Voiken mech ecosystem was not an insurmountable obstacle!