EXHIBIT 10.25
CARD SUBSTRATE SUPPLY AGREEMENT
THIS CARD SUBSTRATE SUPPLY AGREEMENT (the "Agreement") is made and is
effective this 18th of October, 2000, by and between UltraCard, Inc., a Nevada
corporation, having a place of business at 00000 Xxxx Xxxxxx, Xxxxx 000, Xxx
Xxxxx, Xxxxxxxxxx 00000 ("UltraCard") and Komag, Incorporated, a Delaware
corporation, having a place of business at 0000 Xxxxxxxxxx Xxxxxxx, Xxx Xxxx,
Xxxxxxxxxx 00000 (hereinafter referred to as "KOMAG").
Recitals,
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(A) UltraCard desires to enter into a Card Substrate Supply Agreement
wherein KOMAG would fabricate, manufacture and supply card substrates in
compliance with cud substrate specifications set forth in Exhibit A hereof (the
"Card Substrate"), and wherein the Card Substrate is adapted to receive and
support a magnetic media including for use as a credit card-like data card,
(B) KOMAG is experienced in fabricating, manufacturing and supplying
magnetic disks having rigid substrates and KOMAG has the capability of
fabricating, manufacturing and supplying Card Substrates in accordance with
UltraCard's Card Substrate Specifications, as hereinafter defined, (the
"Contract Manufacturing Services").
(C) Upon acceptance by UltraCard of a manufactured Card Substrate meeting
the applicable Card Substrate Specifications, UltraCard is to agree to have
KOMAG supply, on a non-exclusive basis, a portion of UltraCard's manufacturing
requirements therefbr in quantities to be determined solely by UltraCard and on
mutually agreeable delivery schedules.
(D) UltraCard and KOMAG desire to enter into a Card Substrate Supply
Agreement setting forth the terms and conditions under which KOMAG is to provide
such Contract Manufacturing Services to UltraCard for Card Substrates.
Agreement:
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In consideration of the mutual premises set forth below between UltraCard
and KOMAG, the parties agree as follows:
(1) CARD SUBSTRATE SPECIFICATIONS
(A) A schedule labeled "ULTRACARD'S CARD SUBSTRATE SPECIFICATIONS" is
Identified as Exhibit A and is attached hereto (the "Card Substrate
Specifications"). The Card Substrate Specifications, including any amendments
made thereto made in accordance with the provisions of this Xxxxxxxxx 0, xxxxx
xx the applicable Card Substrate Specification for purposes of the Agreement.
(B) KOMAG agrees to assist UltraCard in making suggestions, identifying
and/or consulting with UltraCard as to any proposed revisions, changes,
modifications, additions or the like to the Card Substrate Specifications
(collectively referred to as the "Specification Revisions").
(C) KOMAG understands and agrees that UltraCard shall have the sole and
final discretion as to which, if any, Specification Revisions are to be
incorporated into the Card Subwate Specifications. If UltraCard detern-dnes that
any proposed Specification Revisions are required to the Card Substrate
Specification, the following revision process is agreed to by UltraCard and
KOMAG:
(i) UltraCard shall first advise KOMAG, in writing, of any proposed
Specification Revision;
(ii) KOMAG shall, within the period of ten (10) days from receipt of the
proposed Specification Revisions from UltraCard, advise UltraCard, in writing,
if KOMAG has any objection(s) to the proposed Specification Revisions;
(iii) If KOMAG has no objection(s) or fails to respond to the proposed
Specification Revisions within the ten (10) day period, then the Card Substrate
Specification shall be deemed amended, for purposes of this Agreement, to
include the proposed Specification Revisions.
(iv) If KOMAG has any objection(s) to the proposed Specification
Revisions and provides written notice of objection(s) to UltraCard within the
ten (10) day period, the parties shall meet within the ten (10) day period
commencing the date UltraCard receives the written objection(s) from KOMAG. The
parties shall, in good faith, attempt to resolve the objection(s). If KOMAG
requires payment of any fees, costs or expenses from UltraCard, including any
change to manufacturing costs as a part of KOMAG's written objection(s), KOMAG
shall supply such information in reasonable detail to UltraCard prior to the
above referenced meeting. If the parties agree in writing on proposed
Specification Revisions, then the Card Substrate Specifications shall be deemed
amended to include the same.
(v) If KOMAG provides a written objection(s) in accordance with
Paragraph (1)(C)(iv) above and the parties fail to agree or cannot mutually
agree on the terms and conditions for resolving the proposed Specification
Revisions within the twenty (20) day period commencing the date UltraCard
received KOMAG's written objection(s), then the Card Substrate Specifications
then in effect shall, unless further amended or revised in accordance with this
Paragraph (1)(C), be the applicable Card Substrate Specifications for purposes
of this Agreement and shall apply only to any open firm purchase orders issued
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by UltraCard in accordance with the provisions of Paragraph (4) hereof.
Notwithstanding the provisions of this Paragraph (1)(C)(v). UltraCard shall have
the right to exercise its rights to termination of this Agreement as set forth
in Paragraph 9(A) and 9(B) hereof.
(2) DELIVERY OF PROTOTYPE MANUFACTURED CARD SUBSTRATE
(A) As part of this Agreement and subject to the provisions of Paragraph
(5) hereof, KOMAG and UltraCard agree as follows,
i) KOMAG shall perform non-recurring engineering (NRE) projects as set
forth in Paragraph 5 hereof to enable KOMAG to deliver prototype Card Substrates
to UltraCard. UltraCard " specify two (2) form factors for the Card Substrates
prior to commencement of the NRE projects. The NRE projects are expected to be
completed within approximately ninety (90) days from the date hereof KOMAG
shall, during performance of the NRE activities, provide to UltraCard such
prototype Card Substrates as it is reasonably able to provide. Thereafter, KOMAG
shall fabricate and deliver to UltraCard. within a targeted date of thirty (30)
days, but in no event later than 45 days, from the completion of tte NRE
projects, a minimum of five hundred (500) prototype manufactured Card Substrates
each in the two (2) form factors designated by UltraCard prior to commencement
of the NRE projects and meeting the applicable Card Substrate Specifications
(the "Prototype Manufactured Card Substrate");
ii) UltraCard shall within fourteen (14) days from receipt of the
Prototype Manufactured Card Substrate advise KOMAG in writing if the Prototype
Manufactured Card Substrates are or are not acceptable, and if not acceptable,
the reasons therefor. UltraCard shall provide to KOMAG, if appropriate, a
proposed Specification Revisions as required to make the Prototype Manufactured
Card Substrate acceptable to UltraCard.
(iii) In the event that UltraCard determines that one (1) or more
Prototype Manufactured Card Substrates should be refabricated and delivered to
UltraCard for inspection and review including compliance with the applicable
Card Substrate Specifications (the "Additional Prototype Manufactured Card
Substrates"), and UltraCard provides written notice thereof to KOMAG, the
procedure set forth in Paragraphs 2(A)(i) and Z(A)(ii) shall be followed fbr the
Additional Prototype Manufactured Card Substrates.
(3) DELIVERY OF FIRST ARTICLE OF MANUFACTURED CARD SUBSTRATES
(A) As part of this Agreement and subject to the provisions of
Paragraph (5) hereof, KOMAG and UltraCard agree as follows:
(i) KOMAG shall fabricate and deliver to UltraCard, within a targeted
date of thirty (30) days, but in no event later than 45 days, from the date of
acceptance of the Prototype Manufactured Card Substrate, a minimum of one
thousand (1,000) first article of manufactured Card Substrates each in the two
(2) form factors designated by UltraCard prior to commencement of the NRE
projects and meeting the applicable Card Substrate Specifications (the "First
Article of Manufactured Card Substrates");
ii) UltraCard shall, within fourteen (14) days from receipt of the
First Article of Manufactured Card Substrate advise KOMAG in writing if the
First Article of Manufactured Card Substrate are or not acceptable, and if not
acceptable, the reasons therefor. UltraCard shall provide to KOMAG, if
appropriate, a proposed Specification Revisions as required to make the First
Article of Manufactured Card Substrate acceptable to UltraCard. The parties
shall mutually agree, in writing on: (x) the final First Article of Manufactured
Card Substrate which is acceptable for manufacturing production; and (y) the
applicable Card Substrate Specification which is to be used for manufacturing
production of Card Substrates before proceeding with manufacturing production of
Card Substrates as set forth in Paragraph (4) below.
(iii) In the event that UltraCard determines that one (1) or more First
Article of Manufactured Card Substrates shall be refabricated and delivered to
UltraCard for inspection and review including compliance with the applicable
Card Substrate Specifications (the "Additional First Article of Manufactured
Card Substrates") and UltraCard provides written notice thereof to KOMAG, the
procedure set forth in Paragraphs 3 (A)(i) and 3 (A)(iii) shall be followed for
the Additional First Article of Manufactured Card Substrates.
(4) CARD SUBSTRATE MANUFACTURING AND SUPPLY
(A) Subject to the conditions set forth below, KOMAG shall have the
non-exclusive right to manufacture and deliver a part of UltraCard requirements
of Card Substrates in such quantities and on delivery schedules to be determined
solely by UltraCard and consented to by KOMAG, which consent shall not be
unreasonably withheld, as set forth in Paragraph 4 (B)(ii) below.
(B) The first delivery of manufactured Card Substrates by KOMAG shall
commence forty five (45) days after the parties mutually agree in writing that
the First Article of Manufacture of Card Substrate and Card Substrate
Specifications are acceptable and such delivery of the manufactured Card
Substrates shall be in accordance with the terms of Paragraphs 4 (B)(iii), 4
(B)(iv) and 4 (B)(v) below;
(i) UltraCard shall provide KOMAG a written, non-binding forecast of
UltraCard's Card Substrate requirements to be supplied by KOMAG for the next
(twelve) 12 months of this Agreement.
(ii) Beginning one (1) month prior to scheduled manufacturing
production of one or more Card Substrates in one or more form factors, UltraCard
shall provide KOMAG with a
twelve (12) month non-binding forecast for the following twelve (12) month
period, UltraCard's anticipated requirements can be found in Exhibit B,
(iii) On the first day of the month prior to commencement of
manufacturing production, UltraCard will provide KOMAG with a non-cancelable,
firmpurchase order for Card Substrates with the weekly scheduled shipments
covering the next three (3) mouth period and a non-bindingforecast for the
remaining nine (9) months. Thereafter, UltraCard shall provide non-cancelable,
firm purchase orders and forecasts as set forth in Paragraph 4(B)(iv), below.
All purchase orders shall be subject to KOMAG's acceptance thereof in KOMAG's
discretion,
(iv) Provided KOMAG is meeting the Card Substrate Specifications, that
the manufactured Card Substrates conform to the samples of the First Article of
Manufactured Card Substrates accepted by UltraCard, costs, quality, quantities,
and delivery schedules for the Card Substrate and upon commencement of
manufacturing production, UltraCard shall provide KOMAG on the first day of each
month a non-cancelable firm purchase order for Card Substrates with weekly
scheduled shipment in order to provide a rolling three (3) months of firm
purchase orders and a non-binding forecast for the remaining nine (9) months.
(v) The applicable Card Substrates prices for aft purchase orders
for Card Substrate shall be in accordance with the pricing set forth in
Paragraph 5(B)(i) below.
(5) NON-RECURRING ENGINEERING AND CARD SUBSTRATES PRICING
(A) KOMAG and UltraCard agree as follows with respect to Non-Recurring
Engineering charges:
(i) The Contract Manufacturing Services to be rendered by KOMAG as set
forth herein shall include the Fabrication, Testing, Quality Control and
Delivery of the Card Substrates as required by Paragraphs 2 and 3 hereof and any
other engineering, contracting and related services provided by KOMAG under this
Agreement and all such services are to be deemed Non-Recurring Engineering
("NRE') charges and are to be accounted using KOMAG's normal fees, costs,
manufacturing overhead burden and related costs plus thirty percent (30%). KOMAG
agrees to provide such NRE charges up to a maximum, of $600,000.
(ii) UltraCard is to advance KOMAG a check for $600,000.00 for NRE expenses
on October 18, 2000 and, as a condition precedent to this Agreement becoming
effective, the check must clear. Further, the advancement of the $600,000.00 is
subject to the following conditions:
(a) KOMAG shall place the advanced $600,000.00 into a separate,
interest bearing account which funds are to be used for NRE charges only.
(b) KOMAG shall, within 7 days of the execution hereof, prepare a
budget of the anticipated NRE charges for the first one month period of
development. KOMAG shall thereafter prepare and submit to UltraCard, each
month, a budget for the subsequent month within 7 days of the last day of the
previous budget, UltraCard shall, within 3 days of receipt of a budget from
KOMAG, either i) approve the same by signing the budget and returning the budget
to KOMAG, or ii) notify KOMAG of any disagreement with the budget. In the event
UltraCard disagrees with the budget, it shall so notify KOMAG and provide its
reasons therefor. Upon notification by UltraCard to KOMAG, KOMAG will cease
incurring NRE charges. The parties shall meet and mutually resolve such
disagreement within 3 days of
UltraCard's notification of the saint and if the parties cannot so resolve the
disagreement within ten (10) business days, either party may terminate the
Agreement pursuant to Section 9(A) or 9(B). Upon termination of the Agreement,
KOMAG will, within 3 days, return to UltraCard the remaining balance of the
$600,000 advanced to KOMAG.
(c) KOMAG shall submit to UltraCard invoices for goods provided or
services performed.
(d) UltraCard shall, , 45 days from the beginning of the NRE period,
advance KOMAG $500,000 to secure payment for the first 100,000 Card Substrates
to be provided under Paragraph 5(B). In the event the Agreement Is terminated
pursuant to Section 9(A) for breach by KOMAG or Section 9(B), KOMAG will return
to UltraCard the balance of the $500,000.00 advance not applied to Card
Substrates shipped by KOMAG and received by UltraCard.
(iii) KOMAG shall provide to UltraCard NRE Charge Accounting Report of
the NRE charges on a thirty (30) day basis and the 30 Day NRE Charge Accounting
Report shall be delivered to UltraCard within ten (10) days from the end of the
applicable thirty (90) days.
(iv) Within thirty (30) days of the receipt of 30 Day NRE Charge
Accounting Report and upon UltraCard review of the same, If UltraCard has any
objections thereto UltraCard will notify KOMAG of UltraCard's objections in
writing. Upon notification by UltraCard to KOMAG, KOMAG will cease incurring
NRE charges. The parties shall meet and mutually resolve such disagreement
within three (3) days of UltraCard's notification of the same and if the parties
cannot so resolve the disagreement within ten (10) business days, either party
may terminate the Agreement pursuant to Section 9(A) or 9(B).
(v) In the event that KOMAG forecasts that the NRE charges will exceed
$600,000, KOMAG shall promptly provide written notice thereof to UltraCard
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together with an estimate of the remaining forecasted NRE charges together with
sufficient detail to enable UltraCard to reasonably analyze and understand the
same. KOMAG and UltraCard shall then meet as promptly as possible and, in good
faith, negotiate, if appropriate, a new maximum amount for the NRE charges and
the method by what UltraCard is to pay for the same, e,g., letter of credit,
amortization per Card Substrate basis or otherwise.
(vi) The major items of NRE projects currently expected to be necessary
under this Agreement are set forth in Exhibit C attached hereto, The parties
recognize that they may mutually determine that it is necessary or desirable to
have one or more vendors mutually selected by the parties to produce one or more
of a texture machine, a cleaning machine, and cassettes, and that such vendor
may charge NRE charges to develop the same. The NRE charges set forth in this
Paragraph 5 do not include the foregoing vendor NRE charges for a texture
machine, a cleaning machine, or cassettes, nor any NRE charges that KOMAG may
incur in the event it is necessary for KOMAG to participate in the development
of the texture machine, a cleaning machine or cassettes ("Additional NRE
charges"). In the event during the course of this Agreement the parties
mutually agree to have one or more mutually selected vendors produce one or more
of a texture machine or cassettes, UltraCard shall pay the Additional NRE
charges in accordance with the principals of Paragraph 5(A)(1)-5(A)(v), should
the existing NRE charges exceed $600,000.
(B) KOMAG and UltraCard agree on the following with respect to
manufacturing cost for Card Substrates;
(i) The target price per Card Substrate, cost plus thirty (30) percent,
shall be as follows:
CARD SUBSTRATE PRICING PER CARD SUBSTRATE WITHOUT NRE
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AS A FUNCTION OF AGGREGATE NUMBER OF CARD SUBSTRATES ACTUALLY SH[PPED
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Form of Completion 1 - 100k 100k - 500k* Over 500k **
Card Substate
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Polished Substrate $ 5.00 $ 1.00 TBN
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* After the purchase of 100, 000 card substrates, the target price for purchases
of greater than 1,000,000 card substrates in any calendar quarter will be as
shown.
** Price to be negotiated.
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The pricing set forth above has been determined based upon the mutual
understanding that raw material that has been fine blanked or photo milled and
heat treated meeting the Card Substrate Specifications (i.e, ready for Flat Lap
or Grind step (a) of Paragraph 5(B)(ii), below) can be obtained at a price to
KOMAG of $0.20 per piece; or that the cost for KOMAG to procure the raw
material, perform fine blanking or photo milling and heat treating, plus
manufacturing overhead burden and related costs plus thirty percent (30%) shall
be no more than $0.20 per piece in volume production,
(ii) In the event that the cost of the raw material, fine blanking or
photo milling, and heat treating cannot be procured for $0.20 per piece or
supplied by KOMAG at $0.20 per piece, the parties agree to adjust the pricing in
Paragraph 5(B)(i) accordingly to reflect the deviation in price from $0.20.
(iii) The above price per Card Substrate shall include:
(a) Purchased raw material;
(b) Fine Blanking or Photo Mill;
(c) Heat Treat;
(d) Flat Lap or Grind;
(e) Nip plate;
(f) Polish;
(g) Cleanings steps between processes as necessary; and
(h) Inspection and packaging,
(iv) The prices set forth above are based upon a volume of 1,000,000
Card Substrates per quarter. In the event that the actual orders from UltraCard
on a quarterly basis do not meet 1,000,000 Card Substrates per quarter, KOMAG
will be entitled to recover from UltraCard, in addition to the $1.00 per Card
Substrate already paid by UltraCard, the following amount for that quarter:
RECOVERY IN THE EVENT ULTRACARD FAILS TO ORDER
1,000,000 OR MORE CARD SUBSTRATES PER QUARTER
CARD SUBSTRATES ACTUALLY ADDITIONAL AMOUNT
ORDER DURING THE QUARTER DUE KOMAG
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Less than 250,000 for the Quarter $ 400,000.00
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250,001 - 500,000 for the Quarter $ 300,000.00
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500,001 - 750,000 for the Quarter $ 200,000.00
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750,001 - 999,999 for the Quarter $ 100,000.00
(v) KOMAG shall actively work to minimize Manufacturing costs and shall
share cost reductions equally with UltraCard. KOMAG shall have full
responsibility and authority for allocating quantities and placing orders to
suppliers, including component price negotiations.
(vi) Pricing set forth above is FOB from KOMAG's manufacturing sites.
(vii) LIMITED EXPRESS WARRANTY, For a period of the lesser of 150 days
from date of delivery of Card Substrate to UltraCard or 90 days from UltraCard's
delivery of Card Substrate to UltraCard's customer, KOMAG will, at its option,
repair, replace, or reimburse for any Card Substrate purchased by UltraCard from
KOMAG which, not withstanding a transfer of the Card Substrate having a defect
in materials or workmanship provided the product is returned, transportation
charges prepaid, to KOMAG with written notification and provided further that
the product has not been modified, misused. or damaged by UltraCard or its
transferee.
THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR
STATUTORY INCLUDING THE WARRANTY OF MERCHANTABILITY AND THE WARRANTY OF FITNESS
OR OF SUITABILITY FOR A PARTICULAR PURPOSE, AND OF ALL OTHER OBLIGATIONS OR
LIABILITIES ON SELLER'S. PART, AND IT NEITHER ASSUMES NOR AUTHORIZES ANY OTHER
PERSON TO ASSUME FOR SELLER ANY OTHER LIABILITIES IN CONNECTION WITH THE SALE OF
THE SAID ARTICLES.
(viii) The parties recognize that the Card Substrate to be purchased
under this agreement is under development, and agree that the above stated
determination of defect in materials or workmanship shall be made with respect
to the reasonable expectations with respect to materials and workmanship
according to the Card Substrate Specifications in effect at the time of
manufacture of the Card Substrate, Should a dispute arise over whether a Card
Substrate is defective, that dispute will be resolved, in an due haste, under
binding arbitration in the county of San Xxxx in the state of California. If
binding arbitration does not determine a defect in materials or workmanship on a
product claimed to be defective, UltraCard agrees to pay KOMAG's established
charges for unpacking, testing, and repackaging of the product for reshipment to
UltraCard.
THIS PROVISION STATES ULTRACARD'S EXCLUSIVE AND SOLE REMEDY FOR BREACH OF
WARRANTY AND THE ENTIRE EXTENT OF KOMAG'S LIABILITY FOR DEFECTIVE PRODUCT.
This provision does not extend the original warranty period of any product which
has been repaired or replaced by KOMAG.
(ix) DAMAGE LIMITATION. INDEPENDENTLY OF ANY OTHER REMEDY LIMITATION
HEREOF AND NOT WITHSTANDING ANY FAILURE OF THE ESSENTIAL PURPOSE OF ANY SUCH
LIMITED REMEDY, IT IS AGREED THAT IN NO EVENT SHALL KOMAG BE LIABLE FOR SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND UNDER THIS AGREEMENT ARISING
FROM A BREACH OF THIS LIMITED EXPRESS WARRANTY.
(6) QUALITY SYSTEM/ACCEPTANCE OF CARD SUBSTRATE
(A) KOMAG and UltraCard will cooperate to establish manufacturing
reliability testing to be performed by KOMAG on finished Card Substrate. Unless
the parties mutually agree on acceptance program at KOMAG manufacturing site,
UltraCard shall have the right to perform Card Substrate inspection and
acceptance within a period of thirty (30) days of the delivery of the Card
Substrate by KOMAG to UltraCard's facilities.
(7) CONFIDENTIALITY
(A) The parties agree as follows with respect to confidential
information;
(i) Each party's confidential information will be kept confidential by
the other party as set forth herein.
(ii) Subject to the provisions of Paragraph (7)(A)(iii) below, it is
understood that during the performance under this Agreement, there will be a
technical exchange between UltraCard, its employees and agents, and KOMAG and
its employees and agents, and that confidential proprietary information will be
disclosed to and/or developed by each party, its employees and agents during the
term of the Agreement (the "Confidential Business Information"). It is
expressly understood and agreed, as part of this Agreement, each party shall own
all of such Confidential Business Information it discloses or develops, and that
each party agrees that the same shall be, and is, confidential & and proprietary
information of the party disclosing or developing the same. It is expressly
understood and agreed that a party shall not have the right to use the other
party's Confidential Business Information for it's own benefit nor to use the
same for the benefit of any third party except as provided herein,
(iii) The obligation of confidentiality imposed on a party hereunder
shall be to the same extent a party protects its own information it considers to
be confidential information, but in no event less than a remarkable degree of
care, and shall not apply with respect to the following:
(a) As to any information lawfully disclosed to a party by a third
party, either oral or written, not under an obligation of confidentiality and
not in violation of any rights of the other party, or disclosed to a party by a
third party who has received the information from the other party and is
authorized to disclose the same to the public; or
(b) As to any information that is or becomes known to the public, that
is disclosed in a printed publication available to public or that is described
in a patent anywhere in the world; or
(c) As to any information which has been developed
Independently by a party as demonstrated by written documents prior to the date
of disclosure by the other party.
(iv) The obligation of confidentiality will automatically terminate
upon the expiration of three (3) years from the expiration or Effective Date of
Termination (as defined below) of this Agreement, except that Confidential
Business Information incorporated in the Card Substrate or in the making thereof
shall remain confidential unless and until one or more of the exceptions of
Paragraph 7(B)(iv)(a),(b) and (c), above, applies, provided that the same may be
disclosed in accordance with the terms of the Intellectual Property Agreement
(including the confidentality provisions thereof) described in Paragraph 8,
below.
(v) KOMAG will provide UltraCard access to its facilities to observe
and assist with the progress of Contract Manufacturing Services hereunder for a
period no less than sixteen (16) hours per week, upon reasonable advance notice
and during normal business hours.
(8) INTELLECTUAL PROPERTY RIGHTS
(A) UltraCard and KOMAG are to enter into prior to or concurrent with the
execution of the Card Substrate Supply Agreement and Intellectual Property
Agreement in the form of Exhibit D attached hereto. The parties agree that the
execution and delivery of the Intellectual Property Agreement is a condition
precedent to the Card Substrate Supply Agreement becoming effective.
(9) TERM / TERMINATION RIGHTS
(A) The term of this Agreement is two (2) years, unless earlier terminated
as provided herein, which can be extended as by mutual written agreement
("Term"). This Agreement can be terminated and/or cancelled by either party
for non-performance or breach of terms by a party providing written notice
thereof to the other party, provided, however, that the party
exercising its rights hereunder shall first provide the other party with thirty
(30) days prior written notice of the non-perfomance or breach and the other
party shall have failed to cure the same within the thirty (30) day period, The
end of the thirty (30) day cure period shall be the "Effective Date of
Termination."
(B) Notwithstanding any other provision of this Agreement, UltraCard is to
have the right to terminate and/or cancel this Agreement at any time up to
completion of the NRE projects by providing and delivering to KOMAG a Written
Notice of Termination, which termination shall be effective upon receipt of the
same by KOMAG (the "Effective Date of Temination").
(C) The parties acknowledge and agree that the Card Substrate to be
supplied hereunder is under development and that it is unknown and unknowable
whether the Card Substrate (including the Prototype Card Substrate, the First
Article of Manufactured Card Substrate, and the Card Substrate thereafter) is
manufacturable on an economic basis or at all. Accordingly, if KOMAG determines,
in good faith, that the Card Substrate is not manufacturable, and KOMAG provides
UltraCard with written notice thereof specifying the reasons therefore, KOMAG
shall then have the right to terminate and/or cancel this Agreement by providing
written notice thereof to UltraCard thirty (30) days before the first scheduled
delivery date of Prototype Card Substrates as set forth in Paragraph 2, First
Article of Manufactured Card Substrates as set forth in Paragraph 3, or Card
Substrates as set forth in Paragraph 4. (The date of UltraCard's receipt of
such notice shall be the "Effective Date of Termination")
(D) In the event that KOMAG terminates for UltraCard's breach or
default under Paragraph 9(A) or UltraCard exercises its rights set forth in
Paragraph 9(B) above, UltraCard
shall be obligated to pay the purchase order price for Card Substrates subject
to firm purchase order as set forth in Paragraph (4), provided that KOMAG
delivers the same to UltraCard. KOMAG shall also be entitled to recover all
amounts set forth in Paragraph 5(B)(iv), above. In the event that the NRE
charges subject of Paragraph 5 (A)(i) have not been paid to KOMAG by UltraCard,
the parties agree as follows:
(i) KOMAG shall provide UltraCard with a written accounting of the NRE
charges including the details of the unpaid NRE charges, If UltraCard has no
objection(s) to such NRE charges accounting, then the amount due shall be paid
within thirty (30) days.
(ii) If UltraCard has any objection(s) to the NRE charges accounting,
UltraCard shall promptly provide KOMAG with written objection(s) thereto setting
forth the reasons for such objection(s) and the parties shall promptly meet and,
in good with, attempt to resolve such objection(s). Upon reaching mutual
agreement on resolutions of the objection(s) and as to a liquidated amount due,
the agreed upon amount the NRE charge shall be paid by UltraCard in Thirty (30)
days,
10. INTERPRETATION / APPLICABLE LAW
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(A) The parties agree that all provisions of this Agreement, and any
questions concerning its construction and interpretation, shall be governed by
the laws of the State of California, without regard to its conflict of laws
provisions,
(B) This Agreement supersedes any and all previous agreements, written
or oral, between the parties relating to the subject matter hereof. Without
limiting the foregoing, the confidentiality provisions of this Agreement shall
supersede any confidentiality or nondisclosure agreements between the parties.
(C) No amendment or modification of the terms of this Agreement shall
be binding upon either party unless reduced to writing and signed by the
parties.
(D) In the event any provision hereof is deemed null and void or
unenforceable, the remaining provisions thereof shall remain in full force and
effect.
11 NOTICES
All notices, reports and payments made pursuant to this Agreement "I be in
writing and addressed to the parties at the address set forth in the first
paragraph of this Agreement unless notice of a difference address is supplied by
either party to the other.
IN WITNESS WHEREOF, each of the parties has executed this Agreement as of
the day and year set forth below adjacent to their respective signatures, but
effective as of the day and year as set forth above.
UltraCard, Inc,
a Nevada corporation
Date: October 18, 2000 By: /s/ Xxxxxx Xxxxx
Chief Executive Officer
KOMAG, Incorporated,
a Delaware corporation
Date: October 18, 2000 By: /s/ T. H. Tan
Chief Executive Officer
