Exhibit 10.65
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MANUFACTURING ASSEMBLY AGREEMENT
This Manufacturing Assembly Agreement (the "Agreement") is entered into as
of October 31, 2001, by and between RF Monolithics, Inc., a corporation duly
organized under the laws of the State of Delaware, having its principal place of
business at 0000 Xxxxx Xxxx, Xxxxxx, XX, 00000, X.X.X. (hereinafter referred to
as "Company") and Tai-Saw Technology Co., Ltd. a corporation duly organized and
existing under the laws of the Taiwan with its principal place of business at
Xx. 0, Xxxxxxxxxx 0xx Xx., Xxxx-Xxxx Industrial District, Taoyuan, 324, Taiwan,
R.O.C. (hereinafter referred to as "Contractor").
RECITALS
WHEREAS, Company desires to enter into an agreement with Contractor for
certain manufacturing and production services for Products (defined below),
whereby Contractor will Manufacture (as defined below) for Company certain
Products at the Factory (as defined below) in accordance with the Specifications
and instructions of Company; and
WHEREAS, Contractor is willing to Manufacture the Products for Company
and provide such services under the terms and conditions set forth below.
NOW THEREFORE, in consideration of the premises and mutual promises,
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1. General Definitions. The terms set forth below in this Section 1 shall
have the meanings ascribed to them below:
Allowable Assembly Yield: shall mean the yield below which yield
Contractor may be required to pay Company for 50% of the standard cost of
Materials supplied by Company, not including Die, for the number of failed units
below the Allowable Assembly Yield. The circumstances determining when payment
is required are defined in Section 2.1(e)(ii). The Allowable Assembly Yield is
determined by the Assembly Yield monthly average for the first three months
following Production Start Up of a Generic Product Family.
Affiliate: with respect to any Person, shall mean any Person that
directly or indirectly controls, is controlled by or is under common control
with such Person.
Annual Review Process: shall mean the process conducted by Company and
Contractor to review commitments for the coming year concerning Product pricing,
production levels, quality and service levels. This process normally occurs
during Company's first fiscal quarter (the three months ended November 30), to
review the previous year's performance.
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Approved Vendor: shall have the meaning defined in Section 2.1(d)
hereof.
Approved Vendor List: shall have the meaning defined in Section 2.1(d)
hereof.
Assembly Final Visual Inspection: shall mean an inspection immediately
prior to Final Lot Acceptance on the Process Flow Chart. Reference Schedule B,
Typical Process Flow Chart.
Assembly Outs: shall mean the number of units, which pass from the
last operation of the assembly process, as depicted in the typical process flow
Schedule B, Typical Process Flow Chart, to the first operation of the test
portion of the manufacturing process, as depicted in Schedule C, Typical Test
Flow Chart.
Assembly Yield: shall mean the ratio, expressed as a percentage, of
the number of Products (Units) started in the assembly flow (typically at Die
mount) to the number of Assembly Outs minus the number of Product units found to
be defective at Test Final Visual Inspection. If Fine and Gross leak test is
performed after Electrical Test, the number of Products (Units) found to be
defective at Fine and Gross leak test will also be subtracted from the number of
Assembly Outs to determine Assembly Yield.
AY = (AO-FI)/AS
Where:
"AY" is the Assembly Yield;
"AS" is the number of products started in the assembly flow;
"AO" is the number of Assembly Outs;
"FI" is equal to the number of Product units found to be defective at
the Test Final Visual Inspection. FI will also include the number of
units found to be defective at Fine and Gross Leak test if the Fine and
Gross leak test is part of the test flow, typically performed after
Electrical Test.
Best Efforts: shall mean a party's efforts in accordance with
reasonable commercial practice and/or consistent with its past practice.
Consignment: shall mean property, including but not limited to
equipment, Die and Materials, that is owned by the Company that is used by the
Contractor to fulfill the purposes of this Agreement.
Defective Unit: shall mean Products returned from Company's customers
that do not meet specification due to assembly processing problems. Reference
Section 2.2(b).
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Die: shall mean the individual SAW device that Company provides
Contractor, either in sliced or wafer form.
Electrical Test: means a verification of the electrical functions of
Products.
FCA: Shall mean Free Carrier as defined in Incoterms 2000 as published
by the International Chamber of Commerce.
Factory: shall mean the Contractor's manufacturing facility for
Products located at Ping-Chen Industrial District, Taoyuan, Taiwan.
Finished Goods: shall mean any Product that is 100% complete, tested,
and packed in a shipping container awaiting shipment to Company.
Finishing Materials: Tubes, tape-and-reel, labels, tickets and
shipping cartons used to ship Finished Goods per Company Specifications
Generic Product Family: all Products assembled by the same process and
test sequence, as depicted in the typical process flow of Schedule B and as
depicted in the typical test flow chart of Schedule C.
Manufacture: shall mean the complete process of assembly and test of
the Products into Finished Goods as required under this Agreement.
Manufacturing Data: shall mean all data prepared in connection with
the performance of services under this Agreement, including, but not limited to,
any reports, drawings, sketches, formulas, designs, analyses, graphs, notes,
memoranda and notebooks.
Manufacture Defect: shall mean any defect which is attributable to the
Manufacture of a Product by Contractor under this Agreement.
Materials: shall mean all raw materials, Finishing Materials and
Die/wafers required by Contractor to Manufacture the Products.
New Products: shall mean new items or variations of current Products
that the Company and the Contractor have agreed in writing to be covered by this
Agreement.
Order: shall mean purchase order issued by the Company.
Other Support Services: shall have the meaning defined in Section 2.3
hereof.
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Person: shall mean any individual, firm, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization, government or agency or subdivision thereof or any other entity.
Product: shall mean the Products manufactured according to process and
test flows provided from time-to-time by Company and similar to the typical
flows of Schedule B and Schedule C. From time-to-time the description of
Products may be amended by change requests and New Products agreed to by Company
and Contractor in accordance with Section 2.1(c).
Production Start Up: shall mean the time of initial shipments of a
Generic Product Family.
Provided Equipment: shall mean any equipment, including but not
limited to, manufacturing and Electrical Test equipment, including test
fixtures, supplies, Materials, and documentation which Company provides to
Contractor for use in providing services under this Agreement and for which
Company retains title of ownership.
Purchased Materials: means Materials that were initially consigned by
Company and were subsequently purchased by Contractor. Examples of Purchased
Materials are package lids, bases, and substrates. Materials not included in
Purchased Materials are die, adhesives, wire and marking ink.
Quarterly Operations Reviews: shall mean the process conducted by
Company and Contractor to review yields, cycle times, delivery performance,
quality metrics and cost reduction roadmaps. This process normally occurs within
3 weeks of the end of the Company's fiscal quarter (Nov. 30, Feb. 28, May 31,
Aug. 31).
SAW: shall mean surface acoustic wave device
Shipping Date: shall mean the date on which the finished Product is
delivered to the freight forwarder designated by Company.
Specifications: shall mean drawings, criteria, and documented
specifications including but not limited to Process Flow Chart, Test Flow Chart,
test specification, xxxx of materials, mount-bond diagram, Product marking,
Product packaging and shipping specifications and materials specification.
Additional Specifications will be issued by Company in similar form as
additional Products are added to this Agreement.
Technical Information: shall mean any information which relates to the
design, structure, functions, operation, manufacture, use, lease, sale or other
disposition of product or of Provided Equipment, and which is owned, developed,
discovered or otherwise acquired by Company at any time prior to the expiration
or termination of the
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term of this agreement, and which is disclosed or transferred by Company to
Contractor, or which Contractor has access to or obtains, or which becomes known
to Contractor, under or pursuant to this agreement.
Technical Data: shall mean any tangible medium embodying Technical
Information, which is owned, developed, discovered or otherwise acquired by
Company at any time prior to the expiration or termination of the term of this
Agreement, including but not limited to plans, Specifications, material lists,
machine drawings, software and instructions, whether in human or machine
readable form.
Test Final Visual Inspection: means a quality control visual
inspection that is part of the test flow, as depicted in the typical test flow
in Schedule C.
Test Yield: means the ratio, expressed in percentage, of the number of
Products (Units) started at Electrical Test to the number meeting Specifications
after Electrical Test, as depicted in the typical test flow in Schedule C.
Value Added: shall mean the price for Materials and Manufacture for
the Product supplied by Contractor.
WIP Inventory: shall mean the work-in-progress inventory of Product at
the Contractor.
Workweek: shall be seven (7) calendar days beginning on Monday and
ending on Sunday.
2. Services.
14.1 Manufacturing Services
14.1.1.1.1.1 General. Contractor covenants and agrees to Manufacture
the Products that Company requests it to Manufacture at the Factory utilizing
the tools, machinery, equipment, fixtures and computer systems of Contractor and
any other Provided Equipment. Contractor agrees that the Manufacture of Products
hereunder shall be carried out in a good and workmanlike manner in compliance
with the Specifications and instructions of Company provided to Contractor in
writing from time to time as specified herein. Contractor shall have available
to Manufacture the Products all facilities, employees, equipment, spare parts,
computer systems and any other items required to Manufacture the Products.
Company shall provide to Contractor all Specifications, manuals and other
relevant documentation necessary to Manufacture the Products.
(i) Contractor may use its standard processes, so long as
they conform to the Company's Specifications and quality requirements.
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(ii) Contractor shall assemble and test Product using Material
procured from suppliers on the Approved Vendor List or provided on a Consignment
basis, for an initial period, from Company and Die provided on a Consignment
basis from Company and under manufacturing processes approved by Company. Any
change to Manufacturing processes, Specifications, or outsourcing services
directly affecting Products shall be approved in writing by Company prior to
implementation by Contractor.
(iii) Contractor agrees to provide manufacturing and production
services to meet Company's Manufacturing requirements in accordance with Section
2.6 and 2.7. Changes to forecast shall not affect Product pricing, unless
mutually agreed in writing by parties.
(b) Change Requests. Company shall have the right at any time to make
changes in drawings, designs, Specifications, Materials, packaging, quantities,
time and place of delivery and method of transportation. If any such changes
cause an increase or decrease in the cost or the time required for performance
of the order, Contractor shall notify Company in writing (stating the amount of
the increase or decrease), within five (5) days, after receipt of such notice.
There will be no change in manufacturing and production service until accepted,
in writing, by the Contractor. If such notice is timely given, an equitable
adjustment shall be made, and Schedule A shall be modified in writing
accordingly. Contractor agrees to accept any such changes and proceed with the
performance of this Agreement, subject to this paragraph.
(i) Changes to Specifications by Company will be made according
to Company's Engineering Change Procedure (000-0101-001) (the "Change
Procedure"). The Contractor will approve all changes relating to Products
manufactured at Contractor according to the Change Procedure.
(ii) If Contractor proposes to change the Specifications with
respect to any Product, it shall provide the Company written notice thereof and
shall implement such changes only upon written consent from the Company. In no
event shall the Contractor ship other than strictly in accordance with the
Specifications or amendments thereto, which the Company has approved in writing.
(c) New Products. Company may from time to time request Contractor to
Manufacture, and perform prototype and pilot testing for any future versions of
the Product developed after the date of this Agreement by Company (each a "New
Product"). Such request shall be accompanied by all Specifications and other
relevant documentation necessary to Manufacture the New Product. Upon receipt of
such information, Contractor shall provide to Company the price to perform
prototype and pilot assembly and test for such New Product and the estimated
time schedule required to implement the Manufacture of the New Product.
Contractor shall not be obligated to Manufacture or perform any services
hereunder with respect to such price and time schedule for implementation.
Company and Contractor agree to modify this Agreement
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by amending Schedule A to reflect the New Product and the price of the New
Product agreed upon by Company and Contractor.
(d) Approved Vendor List. With respect to each component part
comprising Materials, Contractor shall maintain a list of suppliers recommended
by Company to supply such part (the "Approved Vendor List"). Company may remove
any supplier from or add any supplier to the Approved Vendor List with respect
to any component part comprising Materials by giving notice thereof to
Contractor. A supplier or vendor not on the Approved Vendor List shall not
provide material or services for the Manufacture of the Product without the
Company's written authorization. Contractor may request removal or addition of
supplier to Approved Vendor List.
Copies of Company pricing agreements shall be supplied to Contractor
for Purchased Materials. Company will request Approved Vendors to offer
Contractor the same pricing and payment terms as provided to Company for
Purchased Materials
(e) Yields. Parties understand and agree that production yields are a
primary driver for Manufacturing cost effectiveness. Company shall provide Die,
which are consistent with Specifications established by Company, in sufficient
quantity to meet Manufacturing requirements. Both Company and Contractor will
work together to increase production yields. Yield improvement and cost
reduction goals will be established and evaluated at the Quarterly Operations
Reviews.
(i) Company outgoing testing and inspection of Materials
supplied by Company and incoming test and inspection by Contractor will be in
place to ensure the Die, packages and assembly Materials are in Specification as
they are introduced to the Contractor's assembly Factory.
(ii) The Assembly Yield is primarily the responsibility of
Contractor. The Contractor is liable for the Materials supplied by Company,
according to the definition of Allowable Assembly Yield. When Contractor
supplies Materials, such as packages, the Allowable Assembly Yield does not
apply. Six months following the date of this agreement, Company and Contractor
will review the opportunity to have Contractor procure all Materials except die.
(iii) The Test Yield is a shared responsibility of Contractor and
Company. Contractor is responsible for yield loss at Electrical Test due to
assembly processing defects. Company is responsible for yield loss at Electrical
Test not due to assembly defects.
(iv) The Test Final Visual Inspection Yield is the
esponsibility of Contractor.
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(v) Should either party incur unacceptable yield loss, based on
monthly average yield, either party may request a failure analysis to determine
the cause of such failures. The requesting party shall bear the cost of the
analysis. However, if the analysis establishes that the unacceptable yield loss
is due primarily to the non-requesting party, the non-requesting party shall
reimburse the requesting party for the cost of the analysis.
(f) Annual Review Process. Company and Contractor shall meet annually
to review performance to the Agreement (Annual Review Process). Such review
shall include, but not be limited to, review of Contractor's performance to
Company's Specifications and quality and service standards, review of Product
pricing, and cost reductions.
(g) Quarterly Operations Review Process. Company and Contractor shall
conduct Quarterly Operations Reviews. Such meetings shall include, but not be
limited to, review of Contractor's Product yields, cycle times, delivery
performance, quality metrics and cost reduction roadmaps. The meeting may be
scheduled to combine with other reviews, such as the annual review, or may be
held via conference telephone call or video conference. Production yield
improvement and cost reduction goals will be established and progress toward
these goal will be reviewed quarterly.
2.2 Return Services
(a) Company will be the recognized source for the Product and will be
the sole contact for third parties with Product problems related to Company's
customers. Company will issue all warranties to third parties for the Product,
but will be entitled to exercise its rights under paragraph 2.2.(b) against
Contractor as to any defects specified therein.
(b) Product returns will be authorized by Company which will perform
the initial failure analysis on the units. Those units indicating a defect due
to assembly processing (Defective Unit) will be transmitted to Contractor
(material review board) for confirmation of failure analysis at Contractor's
expense and corrective action by the Contractor. Contractor's sole
responsibility and liability as a result of any such defect shall be to provide
compensation to Company for the amount charged to Company for each Defective
Unit. If the defect is not confirmed by Contractor to be caused by Manufacturing
or Materials, Company must reimburse Contractor of reasonable failure analysis
and shipping costs related to the defective unit.
14.1 Other Support Services.
From time-to-time during the term of this Agreement, Company may request
Contractor
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to perform Other Support Services such as but not limited to the purchase of
assembly Materials, previously consigned by Company, and the drop shipment of
Product to Company customers. In connection with the performance of any Other
Support Services, Company shall specify the services which Company desires
Contractor to perform. Contractor shall notify the Company within five (5)
working days of their intent to provide the requested service. If Contractor
intends to provide the requested service, Contractor shall furnish Company the
estimated time schedule to implement or complete the services and the estimated
cost to the Company, which, if a modification to the cost of the Product, will
be a change to Schedule A. All prices and deliverables to be furnished by the
Contractor with respect to such services shall be mutually agreed to in writing
by Company and Contractor.
2.4 Data
Contractor will periodically supply the Company with reasonably requested
data including, but not limited to yields, inventories and production status.
The frequency and format of the reporting will be agreed upon by the Company and
Contractor. As a minimum, Contractor will supply the Company with a detailed
inventory and/or a periodic physical inventory of all Consigned Materials on
hand as of the last day of the prior month on the first working day of each
month.
2.5 Orders.
Company shall provide Contractor with an Order for Manufacture of Product.
Contractor agrees to acknowledge Company's Order within two (2) business days
from receipt by E-Mail or other electronic means. Thereafter, the Order shall
come into force and effect from the date of such acknowledgement. Contractor as
well as Company, shall be bound by all terms and conditions set forth in the
Order consistent with the terms and conditions herein agreed upon. The Order
will determine the Product, their quantities and Shipping Dates. In the event of
any disagreement between the Order and the Agreement, the terms of the Agreement
shall prevail.
14.1 Production and Shipping Dates.
The Order shall stipulate a lead time reasonably acceptable to Contractor.
Contractor agrees to allocate sufficient Manufacturing capacity for the
Manufacture of Products to meet Company's Production and Shipping Dates, and all
Materials, including Finishing Materials, acquired by Contractor to meet
Company's Production and Shipping Dates will be covered by the Buy-Back
provisions of this Agreement. If applicable, Company agrees to supply Materials
a minimum of one day prior to the associated starts at the Contractor.
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14.2 Forecast and Buy-Back Guarantee. Company shall endeavor to provide
monthly a three (3) month rolling forecast and Quarterly a twelve (12) months
rolling forecast of Products to be Manufactured by Contractor under this
Agreement. Contractor shall acknowledge in writing acceptance of Company's three
(3) month forecast or provide notice to Company of limited Factory capacity.
Company agrees to buyback, at cost, all Manufacturing related Materials
inventory purchased by Contractor should Company fail to Order forecasted
quantities based on 100% of forecasted Materials for the three month period and
such failure to Order is in no way attributable to Contractor. The Company will
not be required to buy back any Materials beyond the third month of the twelve
(12) month forecast. Notwithstanding the above, Contractor will attempt to
divert Materials to other manufacturing uses so as to minimize this excess
inventory cost to Company.
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Schedules Purpose of Schedule Variations
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Purchase Order Authorizes Shipment Only by changes, in writing,
(Contractor), Receiving from Company
(Company), Invoicing
(Contractor) and Payment
(Company)
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Three Months Forecast Provided for Material and Volume for first month is
labor planning. firm, but line items may
change. Second month may
change from previous forecast
no more than +/- 25%. Third
month may change from previous
forecast no more than +/- 50%.
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Twelve Month Forecast Provided for space, First three months are as
equipment and labor above, but all other is for
planning. planning purpose only.
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2 Deliveries
3.1 Deliveries. Contractor will Manufacture the Products as required by
this Agreement and the Order. In the event that Contractor cannot deliver the
Products by the Shipping Date, Contractor will notify Company, a minimum of one
Workweek prior to the Shipping Date.
3.2 Delivery Point. Once Manufacture of the Products has been completed,
Contractor shall be responsible for delivering the Finished Goods FCA, (as
defined in Incoterms (2000) published by the International Chamber of Commerce)
and to a freight forwarder specified by Company in its Order. "Delivery Point"
as used in this Agreement shall mean the specific time and location that the
Product is delivered to the shipper specified on the Order.
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3.3 Time of Essence. Contractor acknowledges and agrees that time is
of the essence and delivery performance is crucial in Company's evaluation of
Contractor's performance. No partial shipments are allowed unless expressly
authorized in advance and in writing by the Company, on a case-by-case basis.
Late deliveries will be a subject of the Quarterly Review Process and may be
subject to compensation discussions.
14.1 Risk of Loss. Company will insure Company assets against any risk
of loss during transit to and from Contractor and while located in Contractor's
facility.
14.2 Delivery of Materials. Company will properly pack all Materials
provided by Company to facilitate safe transport to Contractor.
4. Price and Payment
14.1 Price and Payment of Manufacturing Services. During the term of
this Agreement, Company shall pay for the services provided by Contractor under
Section 2.1 hereof for the Manufacture of Products in accordance with the test
price and assembly price listed on the schedule Products, Volumes, Assembly
Price, Test Price attached hereto as Schedule A provided that any modifications,
amendments and changes to the Specifications and the Manufacture of any New
Product shall be at such prices mutually agreed to by Contractor and Company in
Sections 2.1 (b) and Section 2.1 (c), respectively. Company will be charged for
all units tested at Final Electrical Test minus the units found defective at
Test Final Visual Inspection unless the Fine and Gross leak test is performed
after Final Electrical Test. If Fine and Gross leak test is performed after
Electrical Test, the number of Products (Units) to be found defective at Fine
and Gross leak test will also be subtracted from the units tested at Electrical
Test. Failures at Electrical Test will be subject to sample failure analysis on
a monthly basis and may result in credits to Company for assembly related
failures. The invoice amount shall be determined as follows:
I=(AO-FI)(AP+TP)
Where:
"I" is equal to the invoice amount;
"AO" is equal to the Assembly Outs;
"FI" is equal to the number of Products (Units) found to be defective
at the Test Final Visual inspection; FI will also include the number of units
found to be defective at Fine and Gross Leak test if the Fine and Gross leak
test is part of the test flow, typically performed after Electrical Test.
"AP" is equal to the assembly price; and "TP" is equal to the test
price.
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With each shipment, Contractor will send Company an invoice for all
services provided by Contractor under Section 2.1 hereof for Products
Manufactured by Contractor and delivered to the Delivery Point. Company shall
pay Contractor the amount invoiced within thirty (30) days following the
issuance of such invoice.
4.2 Payment for Other Support Services, as described in Section 2.3,
will be according to Section 4.1, if the cost of said Other Support Services has
been incorporated into the Product price in Schedule A, or will be invoiced
separately according to negotiated parameters as described in Section 2.3 if
they have not been incorporated into the Product price in Schedule A
4.3 General Payment Terms. All payments due hereunder shall be paid in
United States of America dollars by wire transfer and all bank fees for such
wire transfers shall be paid by the Company.
5. Inspection and Access by Company
5.1 Inspection. Contractor hereby agrees to allow Company's personnel
access at any time to the Factory during regular business hours or other
facilities at which the Products are being Manufactured, in order for Company's
personnel to ascertain compliance on the part of Contractor with all of the
terms and conditions of this Agreement and Specifications provided by Company in
connection with the process of Manufacture. Contractor shall provide competent
personnel in the Factory to perform inventories of Materials, WIP Inventory and
Finished Goods located at the Factory.
5.2 Acceptance. All shipments of Finished Goods are subject to
Company's workmanship inspection, agreed Electrical Test procedures and quality
audit upon receipt of Finished Goods in accordance with Company's Quality
Standards. Acceptance of Products in no event constitutes a waiver of any of
Company's rights or remedies arising from or related to warranty requirements
(Section 8.5) nonconforming Products or any other breach of this Agreement.
14 Rejection.
6.1 Manner of Rejection: Company may reject any Product manufactured by
the Contractor if such Product fails to meet the Specifications or contain a
Manufacture Defect when inspected by the Company. The Company shall notify the
Contractor within five (5) days of receipt of the Product if the Product is
rejected. The Company may, at it's option, (i) return the Product to the
Contractor for rework,(ii) rework the Product, and charge any labor cost, not to
exceed Contractors Value Added, to the Contractor, or (iii)
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scrap the Product if it cannot be reworked. If the Product is scrapped, the
Contractor will reimburse the Company for the amount charged to Company for the
Product so scrapped.
6.2 Restrictions on Disposal of Rejected Products. Contractor may not,
under any circumstances or for any reason, sell or offer for sale any Products
rejected hereby, without the express written consent of Company.
7. Representations, Warranties and Covenants of Company: The Company
represents and warrants to Contractor, and covenants as follow:
7.1 Corporate Status and Good Standing. Company is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation with full corporate power and authority under its
articles of incorporation and bylaws to own and lease its properties and to
conduct its business as the same exists. Company is duly qualified to do
business as a foreign corporation in all states or jurisdictions in which the
nature of its business requires such qualification, except where the failure to
be so qualified would not have an adverse effect on such party.
7.2 Authorization. Company has full corporate power and authority under
its articles of incorporation and bylaws and its managers and members have taken
all necessary action to authorize it, to execute and deliver this Agreement and
the exhibits and schedules hereto, to consummate the transactions contemplated
herein and to take all actions required to be taken by it pursuant to the
provisions hereof, and each of this Agreement and the exhibits hereto
constitutes the valid and binding obligations of Company, enforceable in
accordance with its terms, except as enforceability may be limited by general
equitable principles, bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally.
7.3 Non-Contravention. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated herein or
therein, does or will violate, conflict with, result in breach of or require
notice or consent under any law, the articles of incorporation or bylaws of
Company or any provision of any agreement or instrument to which Company is a
party.
7.4 Validity. There are no pending or threatened judicial or
administrative actions, proceedings or investigations which question the
validity of this Agreement or any action taken or contemplated by Company or in
connection with this Agreement.
8. Representations and Warranties of Contractor. Contractor represents
and warrants to Company the following:
8.1 Corporate Status and Good Standing. Contractor is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, with full corporate power and authority under its
certificate or articles of organization and regulations to own and lease its
properties and to conduct its business as
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the same exists. Contractor is duly qualified to do business as a foreign
corporation in all states or jurisdictions in which the nature of its business
requires such qualification, except where the failure to be so qualified would
not have an adverse effect on such party.
8.2 Authorization. Contractor has full corporate power and authority
under its certificate or articles of organization and regulations and its board
of directors and stockholders have taken all necessary action to authorize it,
to execute and deliver this Agreement and the exhibits and schedules hereto, to
consummate the transactions contemplated herein and to take all actions required
to be taken by it pursuant to the provisions hereof or thereof, and each of this
Agreement and exhibits hereto constitutes the valid and binding obligation of
Contractor, enforceable in accordance with its terms, except as enforceability
may be limited by general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally.
8.3 Non Contravention. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated herein or
therein, does or will violate, conflict with or result in breach of, or require
notice or consent under any law, the certificate or article or regulations of
Contractor or any provision of any agreement or instrument to which Contractor
is a party.
8.4 Validity. There are no pending or threatened judicial or
administrative actions, proceedings or investigations which question the
validity of this Agreement or any action taken or contemplated by Contractor in
connection with this Agreement.
8.5 Warranty: Contractor warrants that (i) for a period of twelve (12)
months after the date of delivery to the Delivery Point, the Products will not
contain any Manufacture Defect; and (ii) Contractor has complied in all material
respects with all applicable local, foreign, domestic and other laws, rules,
regulations and requirements. THE FOREGOING WARRANTIES ARE EXCLUSIVE AND IN LIEU
OF ALL OTHER EXPRESS AND IMPLIED WARRANTIES WHATSOEVER, INCLUDING BUT NOT
LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR PARTICULAR
PURPOSE. In the event of any breach by Contractor of the warranties contained
herein, Contractor's liability shall be limited to an amount equal to the amount
charged to Company for the units delivered pursuant to this Agreement.
Notwithstanding the foregoing, the parties recognize that Materials may
be supplied by Company for use in the Manufacture of products. Contractor makes
no warranty to Company as to the quality of functionality of the Materials
supplied by Company.
9. Labor. During the term of this Agreement, Contractor agrees that it
shall be solely responsible for the payment of all wages, fringe benefits,
social security, unemployment and similar expenses and taxes in respect of
Contractor's employees and applicable to the Manufacture of the Products and the
performance of any procurement
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services and support services contemplated under this Agreement. As required by
any applicable law, Contractor warrants and agrees that it has produced and
shall maintain in effect full statutory coverage for workers' compensation,
employers' liability and disability insurance for all of its employees.
Contractor further agrees and warrants that it has and shall comply with all
applicable Taiwan national and local labor laws and other applicable wage and
hour and other labor laws, including without limitation, all child labor,
minimum wage, overtime and safety related laws.
10. Ownership of Materials, Provided Equipment and Supplies.
10.1 Ownership. Contractor understands and acknowledges that it shall
under no circumstances be considered to have any ownership or proprietary
interest in Provided Equipment. Contractor agrees to segregate and label such
Provided Equipment. Contractor will not mortgage, pledge, assign or borrow
against such Provided Equipment.
14.1 Storage/Use. Contractor shall: (a) take delivery, store and use at
the Factory the Provided Equipment using the same degree of care as Contractor
exercises in respect of its own similar property; and (b) inform Company of the
exact location of the Provided Equipment, if it is located outside the
Contractor's principal manufacturing or storage facilities, as well as the
location of all Finished Goods and WIP Inventory stored outside of Contractor's
principal manufacturing and storage facilities. Contractor agrees to comply with
Company's reasonable instructions as to the performance of any preventive
maintenance on any Provided Equipment, said Preventative Maintenance shall be at
Contractor's sole expense. All repairs will be the responsibility of Contractor.
Company shall maintain insurance, at his sole discretion, for all Provided
Equipment owned by or paid for by Company, while in Contractor's Factory.
11. Indemnification.
11.1 Contractor's Indemnification. Contractor shall indemnify Company
and its Affiliates (including their officers, directors, employees and agents)
against, and hold harmless from and against, any and all claims, actions, causes
of action, arbitrations, proceedings, losses, damages, liabilities, judgments
and expenses (including without limitation, reasonable attorneys' fees)
("Indemnified Amounts") incurred by Company or any of its Affiliates as a result
of (i) any material error, inaccuracy, breach or misrepresentation in any of the
representations and warranties made by Contractor in this Agreement; (ii) any
claim or allegation that Contractor or any of its contractors, representatives
and agents, have not fully discharged all obligations under labor laws as set
forth in Section 9.1; (iii) any dispute with a subcontractor, employee,
independent contractor, manufacturer, agent or supplier; (iv) the operation by
Contractor of the Factory during the term of this Agreement; and; and (v) any
Manufacture Defect. Company shall be entitled to recover its reasonable and
necessary attorneys' fees and litigation expenses incurred in connection with
successful enforcement of its rights under this Section 11.1. Any liability
under this Section 11.1 of the Contractor shall be limited in the aggregate to a
maximum amount equal to (i) with respect to claims based on a
15
Manufacture Defect, the price paid by Company to Contractor for the Finished
Goods (Value Added) subject to such claim and (ii) with respect to claims based
on the performance of any services hereunder (as covered in Section 2.3), the
price paid by Company for such services.
11.2 Company's Indemnification. Company shall indemnify Contractor and
its Affiliates (including their officers, directors, employees and agents)
against, and hold harmless from and against, any and all Indemnified Amounts
incurred by Contractor or any of its Affiliates as a result of; (i) any material
error, inaccuracy, breach or misrepresentation in any of the representations and
warranties made by Company in this Agreement; (ii) any dispute with a
subcontractor, employee, independent contractor, agent or supplier (including
Approved Vendors) related in any way to this Agreement; and (iii) any of the
Products and its design (other than a Manufacture Defect). Contractor shall be
entitled to recover its reasonable and necessary attorneys' fees and litigation
expenses incurred in connection with successful enforcement of its rights under
this Section 11.2.
12. Termination
This AGREEMENT shall take effect on October 31, 2001 and shall
continue in force until October 31, 2004, thereafter renewable yearly at
mutually agreeable terms and reviewed yearly unless terminated earlier per
Section 12.1 of this Agreement.
12.1 Subject to the provision of Section 12.3, this Agreement may be
terminated in accordance with the following provisions:
(a) Either party may terminate this Agreement by giving notice in
writing to the other party in the event the other party is in material breach of
this Agreement and shall have failed to cure such breach within ninety (90) days
of receipt of written notice thereof from the first party.
(b) Either party may terminate this Agreement at any time by
giving notice in writing to the other party, which shall be effective upon
dispatch, should the other party file a petition at any time as to its
bankruptcy, be declared bankrupt, become insolvent, make an assignment for the
benefit of creditors, go into liquidation or receivership or otherwise lose
control of its business.
(c) Company may terminate this Agreement without cause upon 180
days written notice to Contractor.
(d) Contractor may terminate this Agreement without cause upon 180
days written notice to Company.
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(e) Company may terminate, if the Contractor at any time has a
change in control.
12.2 For purposes of Section 12.1(e) above, a "change in control" shall
be deemed to have occurred at such time ownership of not less than 50% of the
equity securities of Contractor undergo a change in ownership during the term of
this Agreement, excluding from such calculation transfers that do not change the
Person in ultimate control of Contractor.
12.3 Rights and Obligations on Termination. In the event of termination
of this Agreement pursuant to Section 12.1 above, the parties shall have the
following rights and obligations:
(a) Termination of this Agreement shall not release either party
from the obligation to make payment of all amounts then due and payable.
(b) In the event of termination under Section 12.1(c), Company
will purchase from Contractor all scheduled Finished Goods and Materials
inventory affected by termination. Contractor agrees, in the event of
termination under Section 12.1 (c) to, (i) immediately terminate all open
purchase orders for Materials, (ii) pursue the return for refund or credit of
Materials already received but not in Manufacture, and (iii) follow all
reasonable instructions to minimize the cost of such termination to Company.
(c) In the event of termination under Section 12.1, Contractor
shall return all of Company's Materials, documents, Provided Equipment and
supplies via ship method requested by Company. The shipping cost will be at the
expense of the Company.
(d) Contractor's obligation under Section 8 will still be enforced
notwithstanding termination of this Agreement.
12.4 Remedies.
In the event either party breaches in any material respect any
representations, warranties or covenants hereunder or fails to comply in any
material respect with any term or requirement of this Agreement, in addition to
any other remedies the non-breaching party shall be entitled to (a) terminate
this Agreement in accordance with Section 12.1; (b) recover any and all actual
costs, expenses and damages, (including reasonable attorneys' fees); and/or (c)
offset any amounts due to the non-breaching party by any actual costs and
expenses incurred by the non-breaching party as a result of such breach or
failure to comply. Remedies herein shall not be exclusive but shall be
cumulative of any other remedy herein or under any other statute or law. Upon
such termination, none of the parties nor any other Person shall have any
liability or further obligation arising out of this Agreement except for any
liability resulting from its breach
17
of this Agreement prior to termination, except that the provisions of Sections
13, 14, 15, 16.1 and 16.15 shall continue to apply.
13. Confidentiality.
13.1 Neither Contractor nor its Affiliates will, directly or
indirectly, disclose or provide to any other Person any non-public information
of a confidential nature concerning the business or operations of Company or its
Affiliates, including without limitation, any trade secrets or other proprietary
information of Company or its Affiliates, known or which becomes known to
Contractor or Affiliates thereof as a result of the transactions contemplated
hereby or Contractor's operation of the Factory, except as is required in
governmental filings or judicial, administrative or arbitration proceedings. In
the event that Contractor or any Affiliate becomes legally required to disclose
any such information in any governmental filings or judicial, administrative or
arbitration proceedings, Contractor shall, and shall cause any Affiliate to,
provide Company with prompt notice of such requirements so that Company may seek
a protective order or other appropriate remedy. In the event that such
protective order or other remedy is not obtained, Contractor shall, and shall
cause any Affiliate to, furnish only that portion of the information that
Contractor or its Affiliate, as the case may be, is advised by its counsel as
legally required, and such disclosure shall not result in any liability
hereunder unless such disclosure was caused by or resulted from a previous
disclosure by Contractor or any Affiliate that was not permitted by this
Agreement.
14 Intellectual Property/Data Rights.
14.1 All Contractor intellectual property owned by Contractor before
the date, of this Agreement shall remain the sole property of Contractor and any
intellectual property developed solely by the Contractor during the term of this
agreement shall be the sole property of Contractor.
14.2 All Company intellectual property owned by Company before the
date, of this Agreement shall remain the sole property of Company and any
intellectual property developed solely by the Company during the term of this
agreement shall be the sole property of Company.
14.3 Contractor shall not alter, enhance or otherwise modify the
Technical Information or Technical Data, except as agreed by the parties in
writing. Contractor shall not disassemble, decompile or reverse engineer any of
the Technical Data or prepare derivative works of any of the Technical Data
except for use on Company Product. Contractor shall not sell, distribute or
offer any Product, pursuant to this agreement, without written approval from the
Company.
14.4 All intellectual property that is jointly developed by Contractor
and Company during the term of this Agreement shall be jointly owned (the "Joint
Intellectual Property"). Contractor and Company agree to take such actions and
sign such agreements as may be necessary to protect or perfect the other's
individual intellectual property or its
18
joint interest in Joint Intellectual Property and to allow the other party to
exploit the Joint Intellectual Property in a manner not inconsistent with this
Agreement.
14.5 Contractor agrees to execute all papers and provide requested
assistance, at Company's request and expense, during and subsequent to its work
for Company, to enable Company or its nominees to obtain patents, copyrights,
and legal protection for Joint Intellectual Property in any country.
14.6 Company agrees to execute all papers and provide requested
assistance, at Contractor's request and expense, during and subsequent to its
work at Contractor, to enable Contractor or its nominees to obtain patents,
copyrights, and legal protection for Joint Intellectual Property in any country.
14.7 Contractor agrees that RFM shall be entitled to receive copies of
and use all Manufacturing Data. RFM affirms that Manufacturing Data that
constitutes Contractor's solely owned intellectual property shall remain
Contractor's property, subject only to RFM's right of use provided in the
preceding sentence.
14.8 Upon termination of this Agreement, whether by expiration,
cancellation, or otherwise, Contractor agrees to promptly deliver to a proper
Company representative all data, documents, and other records which relate to
the business activities of Company, and all other Materials and badges which
are the property of Company.
14.9 Contractor hereby grants and agrees to grant to Company a
worldwide, non-exclusive right and license to use financial data related to
services under this agreement , Manufacturing Data, sales data, tracking data,
reports, and other information transferred to or otherwise provided to or for
Company for its business purposes. Company agrees that all right, title and
interest in such data shall remain the property of Contractor.
15. Intellectual Property Infringement and Indemnification
Company shall hold Contractor harmless against any expense or loss
resulting from a claim of infringement of patents, trademarks, copyrights or
other intellectual property rights arising from compliance with Company's
designs, Specifications or instructions and Contractor shall hold Company
harmless against any expense or loss resulting from infringement of patents,
trademarks, copyrights or other intellectual property rights arising from
Contractor's actions not necessitated by Company's designs, Specifications or
instructions.
16. General Provisions.
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16.1 Expenses. Each party shall pay its own expenses, including the
fees and disbursements of its counsel in connection with the negotiation,
preparation and execution of this Agreement and the consummation of the
transactions contemplated herein, except as otherwise provided herein.
16.2 Entire Agreement. This Agreement, including all schedules and
exhibits hereto, constitutes the entire agreement of the parties and supersedes
all previous proposals, oral or written, and all negotiations, conversation or
discussions heretofore and between the parties with respect to the subject
matter hereof, and may not be modified, amended or terminated except by a
written instrument specifically referring to this Agreement signed by all the
parties hereto.
16.3 Waivers and Consents. All waivers and consents given hereunder
shall be in writing. No waiver by any party hereto of any breach or anticipated
breach of any provision hereof by any other party shall be deemed a waiver of
any other contemporaneous, preceding or succeeding breach or anticipated breach,
whether or not similar.
16.4 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
20
If to Contractor, to: Yu-Xxxx Xxxxx
Tai-Saw Technology Co., Ltd.
Xx. 0, Xxxxxxxxxx 0/xx/ Xx.
Xxxx-Xxxx Xxxxxxxxxx Xxxxxxxx
Taoyuan, 324, Taiwan, R.O.C.
Facsimile: (000) 0-000-0000
E-Mail: xxxxxx0@xx00.xxxxx.xxx
If to Company, to: Xxxxx X Xxxxxxxxxx
R F Monolithics
0000 Xxxxx Xxxx
Xxxxxx, XX 00000
XXX
Facsimile: (000) 000-0000
E-Mail: xxxxxxxxxx@xxx.xxx
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.
16.5 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors, legal representatives and assigns. No third party shall have any
rights hereunder. No assignment shall release the assigning party.
16.6 Choice of Law; Section Heading. This Agreement is performable, in
part, in Dallas County, Texas and, in part, in Taiwan, and shall be governed by
and construed in accordance with laws of the State of Texas, U.S.A., without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Texas or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Texas. The United Nations
Convention On Contracts For The International Sale Of Goods shall not apply to
this Agreement. The section headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
16.7 Severability: If any term or provision of this Agreement or the
application thereof to any Person or circumstance shall be deemed invalid,
illegal or unenforceable to
21
any extent or for any reason, such provision shall be severed from this
Agreement and the remainder of this Agreement and the application thereof shall
not be affected and shall be enforceable to the fullest extent permitted by law.
A provision which is valid, legal and enforceable shall be substituted for the
severed provision.
16.8 Construction: The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
16.9 Force Majeure: Neither party shall be liable for loss or damage
or deemed to be in breach of this Agreement if its failure to perform its
obligations results from (i) compliance with any law, ruling, order, regulation,
requirement, or instruction of any federal, state, foreign, or municipal
government or any department or agency thereof; (ii) acts of God; or (iii)
fires, strikes, embargoes, war, or riot. The party experiencing such cause or
delay shall immediately notify the other party of the circumstances which may
prevent or significantly delay its performance hereunder and shall use its Best
Efforts to alleviate the effects of such cause or delay. Any delay resulting
from any of these causes shall extend performance accordingly or excuse
performance, in whole or in part, as may be reasonable.
16.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
16.11 Agency. Contractor is an independent contractor. Nothing in this
Agreement shall be construed to constitute either party the agent of the other
party and neither party shall represent to any third party that it has any right
or authority to act as the agent for or otherwise to represent the other party.
16.12 Bankruptcy. If during the term of this Agreement a petition in
bankruptcy is filed by or against Contractor, or if Contractor, as a debtor,
seeks or takes the benefit of any insolvency or debtor's relief proceeding, or
if Contractor shall file or attempt to file an assignment for the benefit of
creditors, or if Contractor shall apply to its creditors to compound its debts,
then in any such event, Company shall have the right to decline to take further
deliveries hereunder or Company may, without prejudice to any other lawful
remedy, cancel this Agreement, and in either case, Contractor shall upon demand
deliver to Company all Provided Equipment, Materials, WIP Inventory, Finished
Goods, tooling and other property of Company in Contractor's custody. If during
the term of this Agreement a petition in bankruptcy is filed by or against
Company, or if Company, as a debtor, seeks or takes the benefit of any
insolvency or debtor's relief proceeding, or if Company shall file an assignment
for the benefit of creditors, or if Company applies to its
22
creditors to compound its debts, then in any such event, Contractor may without
prejudice to any other lawful remedy, cancel this Agreement.
16.13 Assignment of Obligations. Neither party may assign this
Agreement without the prior written consent of the other party; provided that
Company may assign this Agreement to any Person acquiring all or substantially
all of Company's assets.
16.14 Export & Import Laws/Regulations. The parties shall comply with
all applicable Taiwan and International Export and Import laws and regulations
in the execution of this Agreement. Contractor shall execute such other
agreements and documents as Company requests, from time to time, in order to
ensure compliance with said laws.
16.15 Dispute Resolution.
(a) Negotiation. In the event of any dispute or disagreement
between parties as to the interpretation of any provision of this Agreement (or
the performance of obligations hereunder), the matter, upon written request of
either party, shall be referred to representatives of the parties for decision,
each party being represented by a senior executive officer who has no direct
operational responsibility for the matters contemplated by this Agreement. The
representatives shall promptly meet in a good faith effort to resolve the
dispute. If the representatives do not agree upon a decision within 30 calendar
days after reference of the matter to them, each of the parties shall be free to
exercise all other remedies available to it.
(b) Arbitration. Any controversy, dispute or claim arising out
of or relating in any way to this Agreement or the other agreements contemplated
hereby or the transactions arising hereunder or thereunder that cannot be
resolved by negotiation pursuant to paragraph (a) above shall, be settled
exclusively by binding arbitration in Hong Kong and in accordance with the
current Commercial Arbitration Rules of the International Chamber of Commerce.
The parties shall endeavor to select a mutually acceptable arbitrator
knowledgeable about issues relating to the subject matter of this contract. In
the event the parties are unable to agree upon an arbitrator, each party will
select an arbitrator and the arbitrators in turn shall select a third
arbitrator. The language of the arbitration will be in English. The fees and
expenses of the arbitrator shall be shared equally by the parties and advanced
by them from time to time as required; provided that at the conclusion of the
arbitration, the arbitrator may award costs and expenses (including the costs of
the arbitration previously advanced and the fees and expenses of attorneys,
accountant and other experts) plus interest, to the prevailing party to the
extent that in the judgment of the arbitrator it is fair to do so. No
pre-arbitration discovery shall be permitted, except that the arbitrator shall
have the power in his or her sole discretion, on application by any party, to
order pre-arbitration examination solely of those witnesses and documents that
any other party intends to introduce in its case-in-chief at the arbitration
hearing. The arbitrator shall render his or her award within 90 days of the
conclusion of the arbitration hearing. Notwithstanding anything to the
23
contrary provided in this Section 16.15 and without prejudice to the above
procedures, either party may apply to any court of competent jurisdiction for
temporary injunctive or other provisional judicial relief if such action is
necessary to avoid irreparable damage or to preserve the status quo until such
time as the arbitration panel is convened and available to hear such party's
request for temporary relief. The award rendered by the arbitrator shall be
final and not subject to judicial review and judgment thereon may be entered in
any court of competent jurisdiction. Any monetary award will be made and payable
in U.S. dollars free of any tax or other deduction.
16.16 English Controlling. For purposes of convenience, this Agreement may
be translated but it is understood that the English version of this Agreement
(and the schedules and exhibits) will control for all purposes. In case of a
conflict in meaning between the two versions, the parties are responsible for
performing in accordance with the English version hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
RF MONOLITHICS, INC. TAI-SAW TECHNOLOGY CO., LTD.
Xxxxx X. Somerville_________________ Chih-Hsyong Wu__________________
(Printed Name) (Printed Name)
/s/ Xxxxx X. Somerville_____________ /s/ Chih-Hsyoug Wu______________
(Signature) (Signature)
VP-QA & Corporate Development_________ General Manager_________________
(Title) (Title)
Nov. 8, 2001________________________ Nov. 7, 2001____________________
(Date) (Date)
24
