PRINTED CIRCUIT BOARD PURCHASE AGREEMENT
This PRINTED CIRCUIT BOARD PURCHASE AGREEMENT (this "PCB
Purchase Agreement") is made and entered into as of the 24th day
of July, 1997 by and between PHILIPS ELECTRONICS NORTH AMERICA
CORPORATION, a Delaware corporation, with offices in Knoxville,
Tennessee (hereinafter called "Buyer"), and CIRCUIT SYSTEMS OF
TENNESSEE, L.P., a Tennessee limited partnership, with its
principal place of business at 0000 Xxxxxxxxxx Xxxx, Xxxxxxxxxxx,
Xxxxxxxxx (hereinafter called "Seller").
W I T N E S S E T H :
WHEREAS, Buyer desire to purchase from Seller certain printed
circuit board ("PCB") products to be manufactured by Seller in
Greeneville, Tennessee for Buyer (hereinafter called "Products")
for resale and Seller desires to sell such Products to Buyer; and
WHEREAS, the parties hereto deem it desirable by means of
this PCB Purchase Agreement to establish the terms and conditions
which shall govern Seller's manufacture and sale of Products and
Buyer's purchase of Products;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual promises and covenants hereinafter set forth, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto mutually agree as follows:
ARTICLE 1
Orders; Quantity of Products
1.01 The Agreement between the parties ("Agreement") shall
consist of this PCB Purchase Agreement, the face of purchase
orders, the Schedules to this Agreement and other documents
executed by duly authorized representatives of both parties.
During the term of this Agreement, all agreements between the
parties for the purchase and sale of Products shall include and be
governed exclusively by the terms and conditions of this
Agreement, except as the parties may otherwise agree in writing
duly executed by their respective authorized representatives. In
case of any conflicts between this Agreement and any purchase
orders, acceptances, correspondence, memoranda, listing sheets and
other documents forming part of any order for the Products placed
by Buyer and accepted by Seller or any acceptance of such order by
Seller during the term of this Agreement, this Agreement shall
govern and prevail, and the contrary printed terms and conditions
of any such documents shall not be binding upon Seller or Buyer.
1.02 Purchase and sale of Products shall be made according
to the following schedule, with production of Products being given
a first priority status in all manufacturing scheduling by Seller:
(a) For the Buyer's model year beginning approximately
May 1, 1997, and continuing for approximately twelve
months thereafter, Seller shall produce in Greeneville,
Tennessee and sell to Buyer, and Buyer shall purchase
from Seller, Products consisting of all of Buyer's PCB
requirements for its Greeneville and Xxxxxx projection
and direct view television manufacturing production for
such model year, which shall consist of a minimum,
collectively, of 2,000,000 television sets (the "1997
Production Level"); and
(b) For the Buyer's model year beginning approximately
May 1, 1998, and continuing for approximately twelve
months thereafter, Seller shall produce in Greeneville,
Tennessee and sell to Buyer, and Buyer shall purchase
from Seller, Products consisting of all of Buyer's PCB
requirements for its Greeneville and Xxxxxx projection
and direct view television manufacturing production for
such model year, which shall consist of a minimum,
collectively, of 2,000,000 television sets (the "1998
Production Level"); and
(c) For the Buyer's model year beginning with the
"1999" and "2000" model years, respectively, Seller and
Buyer shall utilize the procedures for proposals set
forth in Section 2.03 to determine those Products, if
any, which may be manufactured and sold hereunder.
1.03 Purchase and sale of Products for each year of the
Agreement shall be made pursuant to individual purchase orders of
Buyer, provided, however, that the aggregate purchases and sales
of Products in any given year of the Agreement shall be within the
applicable Production Level for such year provided in Sections
1.02(a) and (b), unless such quantities shall be otherwise
adjusted as provided herein. Individual purchase orders shall be
in writing, shall state the quantities of each model of Products
by Buyer's Model Number, and shall indicate prices as calculated
pursuant to Article 2, quantities, shipping schedules and such
other terms of sale not covered by this Agreement as may be
mutually agreed upon; provided, however, that Buyer shall give
Seller not less than twenty (20) days notice in writing of Buyer's
delivery schedule. Price changes attributable to each Product
model agreed to by both parties will be reflected in purchase
order change notices from Buyer to Seller. The Buyer's "Material
Delivery Schedule" will reflect quantity and shipping schedule
changes on a monthly basis, with effects of changes, within the
twenty (20) day leadtime, reviewed as needed. An allowance of one
unscheduled change, per line, per shift, is reflected in the
current Standard Cost. The inability of Buyer and Seller to
mutually agree (in good faith negotiations) on the price,
quantity, production schedules and/or delivery schedules for
Products shall relieve Buyer from obligations hereunder with
regard to the Products represented by such order and the annual
Production Level shall be reduced accordingly by the number of
sets represented by such Products. For disputes over price only,
Seller may contest such cancellation and/or reduction by Buyer by
submitting the dispute over the price for the specific disputed
Product to binding arbitration pursuant to Section 13.02 hereof;
provided however that disputes over the award of contracts by
Buyer to third party manufacturers for or during the 1999 and 2000
Production years, pursuant to Section 2.03 hereof, shall not be
subject to the binding arbitration requirements hereof.
1.04 Standard production hours are defined for the purpose
of this agreement as the standard direct labor hours required to
manufacture an individual Product hereunder. Schedule 1.04
reflects the standard direct labor hours for Products currently in
production. The standard direct labor hours per product will be
agreed upon between Seller and Buyer in good faith negotiations,
beginning with the allocations per Product as set forth in
Schedule 1.04 for production year 1997.
ARTICLE 2
Price; Price Adjustments; Invoices
2.01 (a) For purposes of the 1997 Production Level and of the
1998 Production Level, the "standard production cost per hour" is
as follows:
Standard Production
Cost Per Hour
PCB Manufacture
1997 $53.58 (U.S.)
1998 $53.58 (U.S.)
(b) (i) For the 1997 and 1998 Production years, the
sale price of each Product of an individual design is
calculated as follows: (1) Standard Material Costs, plus (2)
Standard production costs, which for such item is defined as
the product of: (x) standard production hours multiplied by
(y) standard production cost per hour.
(ii) For the 1999 and 2000 Production years the
sale price per Product, if any, that may be purchased
hereunder shall be negotiated on each Product purchase as set
forth in Section 2.03.
(c) Standard Material Costs are defined as the cost of
the raw material used in creating Products and utilizing
historical basis for establishing raw material costs, as set
forth in Schedule 1.04. During the term of this Agreement
Standard Material Costs will be established from time to time
by the then current cost structure for raw material through
Philips' purchase price terms for such material with third
party suppliers, as set forth in Section 6.01 and without
xxxx-up of any nature. Product material volumes in excess of
the Standard Material Costs prescribed for each Product shall
be for the account of the Seller. Additional Standard
Material Cost terms are set forth in Schedule 2.01(c).
2.02 Unless otherwise agreed in writing by both parties,
payment by Buyer to Seller for individual purchase orders shall be
on open account, in U.S. dollars. Payment shall be made following
delivery of a detailed billing invoice by Seller to Buyer net
every sixty (60) days, in the form attached hereto as Schedule
2.02, following the delivery and acceptance of Products in
connection with each individual purchase order of Buyer. All
payments by Buyer to Seller shall be electronically transferred in
such commercial methods as are available to Buyer and as Seller
shall specify in writing.
2.03 Provided that Seller shall have complied with the
requirements of this Agreement for the 1998 model year Production
Level, Buyer agrees to allow Seller to submit to Buyer a proposal
for price, quantity and scheduling for the Buyer's 1999 model year
printed circuit board requirements or portions thereof; Buyer
agrees that, by December 1, 1998, Buyer shall notify Seller of
acceptance or rejection of Seller's proposals for such printed
circuit board requirements or portions thereof. If Seller
successfully completes any obligations for 1999 model year
requirements for Buyer's Products, Seller may similarly propose
for 2000 model year requirements by December 1, 1999. In 1999
and/or 2000 Buyer may solicit third party bids for some or all of
its requirements for such model year printed circuit boards. In
considering printed circuit board proposals for 1999 and 2000
model years hereunder (and provided Seller is in compliance with
this Agreement), Buyer shall give a preference to proposals by
Seller which, within 10 days after the selection date of December
1, are equal to or below any price quotations of any third parties
and based upon equivalent quality, specifications, volumes, and
delivery schedules (as such terms are disclosed to Seller by Buyer
by December 1). If any purchase orders are awarded to Seller for
any portion of the 1999 model year and/or 2000 model year products
of Buyer, all terms and conditions of this Agreements shall govern
the transactions; provided, however, that the price per Product
shall be determined in accordance with this Section 2.03 and the
terms of Sections 1.04, 2.01 and 2.02 shall be inapplicable to any
such order(s).
ARTICLE 3
Shipment and Delivery
3.01 All sales shall be F.O.B. Seller's Greeneville
premises, at which point title to and the risk of loss of Products
shall pass to Buyer, and Buyer shall bear all costs of insurance
after such point. Buyer will specify the carrier herein or in a
separate agreement. All products shall be packed in road-worthy
packing and containers in the manner specified by Buyer.
3.02 Seller shall strictly conform to the delivery schedule
as set forth in Buyer's individual purchase orders. If Seller
does not meet the delivery schedule and if such failure causes
Buyer's inability to sell Products ordered after good faith
effort, Buyer may, at its own discretion, cancel the relevant
order and/or decrease ratably its purchase obligation under
Section 1.02 hereto without liability for such cancellation.
ARTICLE 4
Government Approvals
Buyer shall, at its sole expense, obtain and maintain
necessary certifications and approvals for Buyer's product design
from Underwriters Laboratory and will comply with any and all
required and applicable laws, regulations and requirements of
United States federal, state or local government agencies, and
shall provide Seller with a copy of all submittals to and
approvals from such agencies.
ARTICLE 5
Buyer-Supplied Material
5.01 All tools and dies exclusively employed now or
hereafter added from time to time in the manufacture of the
Products for Buyer, including but not being limited to the
equipment listed on Schedule 5.01 hereto (the "Tools"), shall be
the sole and exclusive property of Buyer. Use of the Tools by
Seller shall be devoted exclusively to production of Products for
Buyer under this Agreement. Seller shall properly maintain all of
the Tools in its possession or control. Seller shall not, without
Buyer's prior written consent, substitute any tools and dies for
the Tools. The Tools shall be subject to removal at Buyer's
written request within two (2) years after the end of production,
at such time as they are no longer required for the production of
Products hereunder for any reason; and upon receipt of such
request Seller, at Buyer's cost and expense, shall prepare the
Tools for shipment and shall have them delivered to Buyer in the
same condition as originally received by Seller, reasonable wear
and tear excepted. If Buyer does not request delivery thereof,
the Tools may be disposed of by Seller, in its discretion, upon
reasonable prior written notice to Buyer, without incurring any
liability to Buyer.
5.02 Any equipment, components, tooling, dies, or other
material supplied by Buyer shall remain Buyer's sole property.
Seller shall keep Buyer's property reasonably segregated, shall
bear the risk of loss or damage to Buyer's property while in
Seller's custody or control, and shall adequately insure Buyer's
property within reasonable coverage limits acceptable to Buyer,
with Buyer named as a co-insured. Seller shall furnish Buyer with
certificates of insurance confirming the existence of such
insurance and stipulating that the insurer will give Buyer at
least thirty (30) days' written notice prior to any cancellation
of or material change in such insurance.
ARTICLE 6
Materials and Spare Parts
6.01 Seller shall issue purchase orders to the current
suppliers, and shall pay the suppliers according to the purchase
terms, price and quality standards currently in existence between
Buyer and suppliers. Buyer agrees to use commercially reasonable
good faith efforts to cause vendors to sell to Seller the material
and supplies used at the Greeneville Facility on the same terms as
presently sold to Seller. In order to protect Buyer's Product
quality, Seller may not change suppliers for, or components of, or
materials and supplies used in the manufacture of Products for
Buyer (now or in the future) without the express consent of Buyer.
ARTICLE 7
Specifications
7.01 Specifications applicable to Products (the
"Specifications") shall be as set forth in the Quality Agreement,
collective and/or individual purchase orders and/or in this
Agreement, and/or in specific Product definitions which shall be
supplied by Buyer, and/or in individual requests for quotes from
Buyer, as applicable, prior to production of any Product. All
Products shall be manufactured in accordance with the
Specifications.
7.02 Following the establishment of Specifications for each
Product, if thereafter Buyer requests any variation from the
Specifications or delivery schedule, or in the event current
suppliers (from which Seller is required to purchase pursuant to
Article 6) increase the cost of materials and supplies, and any of
the foregoing impacts cost or delivery times, then the parties
shall negotiate the effect of such variation on price and time of
delivery. The variation shall be made upon the issuance of a
purchase order change from Buyer which is agreed to in writing by
Seller, which agreement shall not be unreasonably withheld.
7.03 Upon obtaining Buyer's prior written approval, Seller
may from time to time (i) alter or deviate from the Specifications
for the purpose of improving Product quality or safety, or
(ii) substitute equivalent materials or components for unavailable
material or components. Seller shall make no such change in
design, Specifications, drawings, or other descriptions furnished
to Buyer, manufacturing processes, tooling or materials from those
used in manufacturing samples approved by Buyer pursuant to
Article 8 without Buyer's prior written approval. Seller shall
notify Buyer within fourteen (14) days before making any such
changes and provide Buyer with copies of engineering change
notices. Changes made pursuant to this Section 7.03 shall be made
at no cost or expense to Buyer. If any such changes are made
without Buyer's approval, Buyer may, but shall not be obligated
to, cancel all outstanding purchasing orders for the Product(s)
affected, and Seller shall indemnify Buyer against any liability
claim, loss, expense in connection therewith (including reasonable
attorneys fees and cost of voluntary or involuntary recall arising
out of such unapproved change).
7.04 In addition to its other obligations under this
Section 7, Seller shall notify Buyer in writing of all changes in
material, components, design and Specifications permitted by
Article 7 which affect the Products, and shall:
(a) provide the Buyer, as needed, parts change notices
which have been made in the Buyer's Product, with
information such as model number, affected serial
numbers or production dates of Products, and part
interchangeability; and
(b) provide the Buyer, as needed, technical bulletins
which will show circuit changes, modification, changes
in adjustment procedures, and various other engineering
changes using written description and diagrams.
7.05 Any alterations or improvements in Products (and to the
Intellectual Property) made by Seller using Intellectual Property
(as hereafter defined) shall belong exclusively to Buyer and
Seller shall execute all assignments or other instruments of
conveyance reasonably requested by Buyer to effectuate the
complete transfer of rights in those alterations or improvements.
Alterations or improvements in Products made by Seller not using
Intellectual Property shall belong to Seller, provided that Buyer
shall have a royalty free, perpetual, worldwide license to make,
have made, use, offer for sale, and sell, directly or indirectly
Products that embody any of the alterations or improvements. The
rights conferred upon Buyer herein shall extend to customers of
Buyer, and shall survive termination of this Agreement.
7.06 Seller acknowledges and agrees that the Specifications
and all alterations or improvements therein that become the
property of Buyer under this Agreement are the valuable property
of Buyer and shall be maintained in confidence by the Seller.
Seller represents and warrants that the Specifications and all
alterations or improvements therein shall be used only for the
purpose of manufacturing Products under this Agreement. Seller
shall exercise the same degree of care with respect to
confidentiality of the Specifications as it exercises over its own
confidential information and, with respect thereto, shall comply
with the provisions of Section 1.7 of the Asset Purchase Agreement
as they relate to Design IP.
ARTICLE 8
Samples and Approvals
8.01 From time to time after the execution of this
Agreement, Seller shall supply Buyer with agreed upon operating
samples of each model of the Product (the "Operating Samples"),
together with Specifications therefor relating to its electrical,
mechanical and performance characteristics for Buyer's approval as
to function, performance and serviceability. After submission of
the Operating Samples and specifications, Buyer shall give Seller
notice of its approval or disapproval in accordance with the
provisions of Section 8.02 hereof. After approval of the
Operating Samples, agreed upon pre-production models of each new
model of the Product, made from available production tooling, will
be submitted to Buyer for approval as to performance,
serviceability and conformity to the Specifications, prior to
commencement of actual production of each such model. All such
samples shall be provided to Buyer at cost; provided that prior to
undertaking the production of any Operating Sample, Buyer and
Seller shall negotiate in good faith to establish a commercially
reasonable price for production of Operating Samples, with such
price to be based upon actual cost (i.e., material, labor and
overhead) to Seller to produce the Samples. Production will not
commence until after Buyer's approval of performance,
serviceability and conformity to the Specifications.
8.02 Whenever Buyer's approval shall be requested by Seller
or is required pursuant to this Agreement, Buyer shall notify
Seller in writing of its discretionary approval or rejection, and
reasons therefor, as soon as possible, except as otherwise
expressly provided for herein. At the time of making any such
request, Seller shall advise Buyer of the date by which Seller
should receive such approval or disapproval in order to avoid
delays in the shipment of Products or in the development and
production cycle. In the event that Buyer's approval or
disapproval is not received by Seller by the date designated, the
applicable shipment, development and/or production cycle date, as
the case may be, may be extended by Seller by that number of days
beyond the designated date required for Seller to obtain such
approval.
ARTICLE 9
Intellectual Property
9.01 The parties adopt and incorporate herein by reference
the definition of "Intellectual Property" and the provisions
relating to granting a license therein as set forth in
Sections 1.1 and 1.7(A)-(G) of the Asset Purchase Agreement of
even date herewith ("Asset Purchase Agreement"). Seller hereby
covenants with Buyer that it shall require affiliates to protect
the Intellectual Property of Buyer to the same extent as is
required of Seller hereunder.
9.02 Buyer hereby grants to Seller, and Seller hereby
accepts, subject to the terms and conditions of this Agreement, a
nonexclusive and nontransferable license to use the trademarks,
service marks, and trade names identified in Schedule 9.02
("Buyer's Brands"), only in connection with the manufacture of
Products for Buyer under the terms of this Agreement. Seller
understands and agrees that Buyer's Brands are the valuable
properties of Buyer, and that the acquisition of secondary meaning
in any instance is associated exclusively with Buyer. All use of
Buyer's Brands by Seller, and the goodwill generated thereby,
shall inure to the benefit of Buyer.
9.03 Buyer shall have the right in its sole discretion to
amend Schedule 9.02 from time to time for the purpose of adding,
deleting, or modifying marks and names contained therein. Buyer
shall give Seller prompt notices of all such amendments. Seller
shall comply with all guidelines and instructions from Buyer
regarding proper usage of the Buyer's Brands, including
instructions or guidelines relating to notices.
9.04 Seller shall not, during the term of this Agreement or
thereafter, (i) claim any right, title, or interest in or to the
Buyer's Brands or Intellectual Property other than the limited
right to use the Buyer's Brands and Intellectual Property under
the terms of this Agreement or the Asset Purchase Agreement,
(ii) challenge any right, title, or interest of Buyer in or to the
Buyer's Brands or Intellectual Property, (iii) take any action
likely to infringe or to violate any right, title, or interest of
Buyer in or to the Buyer's Brands or Intellectual Property, or
(iv) use the Buyer's Brands or Intellectual Property in any manner
that violates the terms of this Agreement or the Asset Purchase
Agreement.
Seller shall notify Buyer promptly of all actual or suspected
infringements of the Buyer's Brands or Intellectual Property.
Buyer shall have the right to take any action it deems
appropriate, including the initiation of legal proceedings, to
enjoin such infringements or otherwise to protect its rights in
and to the Buyer's Brands or Design Intellectual Property. Seller
shall provide reasonable assistance to Buyer (at Buyer's expense)
in protecting such rights against infringements as requested by
Buyer.
9.05 Seller acknowledges that the breach by Seller of any
obligation relating to Buyer's Brands or Intellectual Property
would cause immediate and irreparable harm to Buyer, and Buyer
would have no adequate remedy at law. Notwithstanding the
provisions of Section 13, in the event of a breach or threatened
breach of any obligation of Seller relating to Buyer's Brands or
Intellectual Property, Buyer shall be entitled (upon reasonable
proof thereof by affidavit executed by an officer or managing
agent of Buyer, but without notice or delivery of a bond) to such
temporary restraining and seizure orders as may be appropriate to
prevent the breach or further breach of the obligation and to
protect the rights of Buyer in and to the Buyer's Brands or
Intellectual Property. Furthermore, in the event of a breach or
threatened breach of any obligation relating to Intellectual
Property, Buyer shall also be entitled to such preliminary and
permanent injunctions as may be appropriate to prevent the breach
or further breach of the obligation or to protect the rights of
Buyer in and to the Intellectual Property. Nothing in this
paragraph shall be construed to prevent Buyer from pursuing any
other remedy for the breach or threatened breach of any such
obligation.
9.06 Without the prior express written consent of the other
party hereto, neither party shall disclose to any third person
(except as necessary to procure articles or services for the
manufacture or production of Products or as necessary to service
Products and under the same care as exercised in the protection of
such party's confidential information) any information which it
has acquired under or as a result of this Agreement, or
negotiations leading to it, concerning the other party's plans,
drawings, trade secrets, specifications, business objectives, know
how, financial and/or sales reports and forecasts, intellectual
property, marketing strategies, service records, product
development plans, price lists, customers or customer lists,
personnel, products and product specifications, product manuals,
work processes, work or services, unless such information (a) was
known to or becomes generally known without fault of the party
making disclosure, (b) is readily obtainable from other sources
without breach of any obligation, or (c) is requested by any
governmental body or court order or which may be reasonably
required in the opinion of Seller's counsel under federal
securities laws. All such confidential information shall be
returned at the termination of this Agreement.
ARTICLE 10
Warranty
10.01 Seller hereby indemnifies and upon request of Buyer,
at Seller's cost and expense, will defend Buyer from and against
any cause of action, liability, or claims and demands therefor, or
damage arising out of death or injury to any person or damage to
property, by whomsoever suffered, resulting from or arising out of
any defects in the workmanship of Products, or the failure of
Seller or the workmanship of Products to comply with applicable
United States federal, state or local laws, ordinances,
regulations or standards; and against the expenses of any Product
recalls necessary or advisable due to defects caused by Seller.
Buyer hereby indemnifies Seller, and will at Seller's request
defend Seller from damage arising out of death or injury to any
person or damage to property, by whomsoever suffered, resulting
from or arising out of any defects in the design of and materials
specified or components supplied by Buyer for Products, or the
failure of Buyer or the design of and materials specified for
Products to comply with applicable United States federal, state or
local laws, ordinances, regulations or standards; and against the
expenses of any Product recalls necessary or advisable due to
defects caused by Buyer. The parties shall comply with Section
11.04 hereof and any such indemnity shall be null and void if any
such claim, liability or damage is due to the negligence of the
indemnified party.
10.02 Buyer represents and warrants that the design of
Products is not in violation of any applicable United States
Federal, State or local law, ordinance, regulation or standard and
that none of such regulations or standards prohibits the
importation, shipment, offering for sale, sale or use for its
intended purpose of Products on account of their design; and that
Products will be free from defects in design or component parts
which will create a "substantial product hazard" within the
meaning of the United States Consumer Product Safety Act.
Further, Seller represents and warrants that Products will be free
from defects in workmanship that create a "substantial product
hazard" and that all Products will be manufactured, packaged,
labeled, shipped, and if required, certified or registered in
accordance with all such applicable laws, ordinances, regulations
and standards, including the standards of Underwriters
Laboratories, if applicable. Each party agrees to notify the
other of and cooperate in the response to any "substantial product
hazard."
10.03 Simultaneously herewith Buyer and Seller shall enter
into a Quality Agreement which is incorporated herein by
reference, and is attached hereto as Schedule 10.03. All Products
manufactured hereunder shall conform to the requirements of the
Quality Agreement.
ARTICLE 11
Indemnity and Insurance
11.01 Seller shall procure and maintain product liability
insurance relating to the Products in an amount not less than a
combined single limit of Ten Million U.S. Dollars ($10,000,000)
for bodily injury and death liability and property damage
liability, written by a reputable insurance company satisfactory
to Buyer, naming Buyer as an additional insured. Seller shall
furnish Buyer with certificates of insurance confirming the
existence of such insurance and stipulating that the insurer will
give Buyer at least thirty (30) days' written notice prior to any
cancellation of or material change in such insurance. The
procurement and maintenance of product liability insurance by
Seller shall not operate as any limitation on Seller's liability,
to Buyer or to any third party, for any claim of a third party for
bodily injury, death or property damage caused by Products.
Seller shall be liable for all such claims, as provided in Section
10.01.
11.02 Buyer shall indemnify and hold Seller harmless from
and against any judgments, decrees, costs and expenses (including
any attorney's fees and expenses) resulting from any suit, action
or claim for infringements brought against Seller by any third
party as the result of Seller's use of Intellectual Property in
accordance with this Agreement.
11.03 Buyer shall further indemnify and hold harmless Seller
from and against any and all liabilities, costs, expenses, losses
and damages, including counsel fees and expenses and costs of
settlement, arising out of or relating to any claim made by any
third party which is based upon or arises from or as a result of
any items that are incorporated in any Products at Buyer's
direction.
11.04 Where either party has agreed to indemnify the other
party pursuant to Article 10 or 11 , the indemnifying party shall
assume the defense of any action or suit relating thereto, by
reputable counsel retained at the indemnifying party's expense,
and shall pay any damages assessed against or otherwise payable to
the indemnified party as a result of the disposition of any such
action or suit. The indemnified party shall promptly notify the
indemnifying party of the commencement of any such action or suit,
or threats thereof, and the indemnifying party shall be afforded
the opportunity to determine the manner in which such action or
suit shall be handled or otherwise disposed of. The indemnified
party shall give the indemnifying party the cooperation reasonably
required, at the indemnifying party's expense, for out-of-pocket
expenses incurred by the other party and paid to third parties
(except for salaries of the other party's employees), in
connection with any such action or suit. Notwithstanding the
foregoing, the indemnified party may participate in any such
action or suit at its own expense and by its own counsels.
ARTICLE 12
Term and Termination
12.01 This Agreement shall become effective on the date of
its execution by the parties hereto and shall remain effective for
two (2) years from such date and shall extend thereafter to
include any Product sold by Seller to Buyer in 1999 and 2000
production years, unless otherwise canceled or terminated as
provided herein.
12.02 This Agreement, and any purchase order hereunder, may
be terminated by either party upon written notice to the other:
(i) in the event that performance of this Agreement or any
purchase order hereunder shall have been rendered impossible or
impracticable for a period of ten (10) consecutive days after the
scheduled delivery date (which is 20 days from the purchase order
date) by reason of the happening of one or more events referred to
in Section 15.03 hereof, or (ii) at any time upon or after the
filing by the other party of a petition in bankruptcy or
insolvency, or upon or after any adjudication that the other party
is insolvent, or upon or after the filing by the other party of
any petition or answer seeking reorganization, readjustment or
arrangement of the business of the other party under any law
relating to bankruptcy or insolvency, or upon or after the
appointment of a receiver for all or substantially all the
property of the other party, or upon or after the making by the
other party of any assignment or attempted assignment for the
benefit of creditors, or upon or after the institution of any
proceedings for the liquidation or winding up of the other party's
business or for the termination of its corporate charter.
12.03 This Agreement may also be terminated upon the
occurrence of an Event of Default. Each of the following shall
constitute a separate "Event of Default" hereunder:
(a) Seller's failure to make any delivery due
hereunder. Seller recognizes that the continual, timely
and conforming delivery to Buyer of Products is the
essence of this Agreement, and that failure to perform
delivery obligations by Seller may damage Buyer and
Buyer's business. Notwithstanding any other provision
contained in this Agreement (including Section 15.03),
in the event Seller is unable to cure any delivery
failure hereunder within ten (10) days of the scheduled
delivery due date, Buyer shall thereafter have the right
(upon twenty-four (24) hours notice to Seller) to remove
Buyer's Tools (as described in Section 5.01) from the
Seller's premises in order to utilize such Tools in
another facility of Buyer's selection. Seller
recognizes and acknowledges that granting this right to
Tool removal is an appropriate and necessary remedy and
has the effect of mitigating damage claims by Buyer
against Seller.
(b) A default or violation by either Buyer and/or
Seller in performing any of the terms or covenants of
this Agreement (other than delivery requirements as
governed by Section 12.03(a)) which continues for a
period of twenty (20) days after notice thereof,
provided, however, that said twenty (20) day period will
be extended an additional twenty (20) days so long as
Seller is diligently attempting to cure such violation
in a reasonable commercial manner.
(c) Seller's transfer of, or agreement to transfer,
substantially all of its business or assets to an entity
which Buyer, in its reasonable discretion, deems to be a
competitor of Buyer; Buyer shall be given thirty (30)
days advance notice of any proposed transfer of
ownership of more than 10% of the assets of Seller.
(d) The calling of a meeting of creditors, an
appointment of a committee of creditors or liquidating
agents, or an offering of a composition or extension to
creditors by, for, or of Seller.
(e) The occurrence of any transaction or series of
transactions (whether or not such transactions are
related), a result of which the voting control over
Seller is held by a person or entity which Buyer in its
reasonable discretion, deems to be a competitor of
Buyer.
(f) Seller's challenge to Buyer's title or rights in
and to the Buyer's Brands or Intellectual Property, or
the validity of the Buyer's Brand or other proprietary
rights of Buyer relating to Products.
Upon the occurrence of an Event of Default and expiration of
an applicable cure period, if any, the non-defaulting party may,
in its sole discretion, elect to terminate the Agreement by
written notice to the other party.
12.04 Upon termination of this Agreement, Seller shall
immediately cease and desist using the Buyer's Brands, Design IP,
and Tools and shall comply with Buyer's instructions relating to
return or destruction of the Buyer's Brands, Design IP, Tools, or
any of them.
12.05 The termination of this Agreement shall not affect or
impair the rights and obligations of either party under any
Product purchase order placed prior to such termination, nor
relieve any party of any obligation or liability accrued hereunder
or under any such purchase order prior to such termination, nor
affect or impair the rights of either party arising under this
Agreement prior to such termination, except as expressly provided
in this Agreement.
12.06 Any termination of this Agreement due a party's Event
of Default shall be without prejudice to any remedy of the party
for the recovery of any moneys then due to it under this Agreement
or in respect to any antecedent breach of this Agreement, and
without prejudice to any other right of a party, including,
without limitation, damages for breach to the extent they may be
recoverable.
12.07 The parties' performance and obligations under this
Agreement are contingent upon the execution and closing by the
parties hereto of that certain Asset Purchase Agreement between
the parties of even date and related thereto and referenced
therein and constituting integral parts of this transaction,
provided, however, that the failure to execute and close such
Asset Purchase Agreement shall not terminate the duties and
obligations contained in Section 9 hereto or subsections thereof.
12.08 SELLER HEREBY EXPRESSLY AGREES TO THE FOLLOWING
LIMITATION OF DAMAGE CLAIMS AGAINST BUYER:
Except for claims strictly for payment for Product delivered
in conformity herewith pursuant to purchase orders from Buyer, the
cumulative liability of Buyer to Seller for all other claims
relating to this Agreement, including any cause of action sounding
in contract, tort, or strict liability, shall not exceed the total
amount of the result determined by multiplying the (i)
deficiencies in television PCB sets below the 2,000,000 minimum
requirement (not otherwise subject to force majeure hereunder) in
1997 and/or 1998 by (ii) $1.50 (one dollar and fifty cents). This
limitation of liability is intended to apply without regard to
whether other provisions of this Agreement have been breached or
have proven ineffective. Seller acknowledges that the damages
limitation herein specified is reasonable in light of the
anticipated harm it may suffer as a result of a breach by Buyer.
In no event shall Buyer be liable for any loss of profits;
any incidental, special, exemplary, or consequential damages; or
any claims or demands brought against Buyer, even if Buyer has
been advised of the possibility of such claims or demands. This
limitation upon damages and claims is intended to apply without
regard to whether other provisions of this Agreement have been
breached or have proven ineffective.
ARTICLE 13
Mediation; Binding Arbitration
13.01 In the event of any claim or controversy under or
otherwise relating to this Agreement, except as set forth in
Section 1.03 and/or Section 9.05, the parties shall attempt to
resolve the claim or controversy by good faith participation in
nonbinding mediation in Xxxx County, Tennessee, prior to the
commencement of litigation. The mediator and the rules of
mediation shall be agreed upon by the parties within ten (10) days
following notice of an intent to mediate. In the absence of the
parties' agreement, the mediator and the rules for the mediation
shall be determined by the Federal Mediation and Conciliation
Service or, if that Service is unable or unwilling to serve, the
American Arbitration Association. The mediation shall continue
until the claim or controversy is resolved or the mediator makes a
finding that there is no possibility of settlement through
mediation.
13.02 Binding Arbitration on Price Disputes. In order to
achieve an immediate resolution of price disputes, if the parties
are unable to agree on a price adjustment, under Section 1.03
hereof, at any time during the 1997 and/or the 1998 model years of
this agreement, then either party may initiate binding arbitration
in regard to the price dispute, according to the following
procedure: either Buyer or Seller may initiate the binding
arbitration by giving notice of the demand for such resolution to
the other party. Such notice shall be in writing; shall be
delivered in accordance with the notice provisions of this
agreement; shall state in writing the specific terms of the such
parties demand for price adjustment (and the basis therefor);
shall name an arbitrator who shall be the designated arbitrator
for such party. Not later than two business days after receipt of
such notice, the recipient shall respond to said notice: in
writing; in accordance with the Notice delivery terms hereof;
stating the basis for its objection to the proposed adjustment;
and naming an arbitrator who shall be the designated arbitrator
for such party. Thereafter within two business days of the
designation of the second arbitrator by the responsive notice set
forth above, the two designated arbitrators shall select a third
arbitrator. The three arbitrators shall then thereafter
immediately meet to consider the positions of the parties and the
terms of this Agreement and shall render a binding decision of
such price dispute seven days thereafter. This binding
arbitration provision shall apply only to the price issues under
Section 1.03 and not for any other dispute regarding this
Agreement. Neither party hereunder may suspend its performance of
the other terms of this Agreement during the pendency of such
arbitration. To the extent not contradicted by the terms of this
section (in which case this section shall govern) the rules of the
American Arbitration Association shall apply to arbitration
pursuant to this section. A decision of the arbitrators
hereunder, as to any price dispute under Section 1.03, shall be a
final and conclusive resolution of the considered issue, not
subject to review by, or appeal to, any court otherwise having
jurisdiction over the matter (provided, however, that a court may
be asked to enforce the terms of any arbitration decision pursuant
to this section). The agreed purpose of this provision is to
resolve in two weeks time any price dispute under Section 1.03.
ARTICLE 14
Contract Administrators
14.01 Buyer and Seller each shall designate an employee who
shall have the primary responsibility for implementing these
agreements and who shall be responsible for overseeing the
administration of this Agreement and with the authority to make
decisions required by this Agreement ("Contract Administrators").
The designation required by this Section 14.01 shall be made in
writing at or prior to Closing. The Contract Administrators, and
the parties generally, shall cooperate and negotiate with one
another in good faith to resolve any question that may arise as to
the interpretation of any provision of the Agreement and to
resolve any dispute arising under this Agreement, to the extent
possible. Each party may change the employee designated as
Contract Administrator by written notice to the other party.
ARTICLE 15
Additional Terms
15.01 The relationship between Seller and Buyer is solely
that of vendor and vendee. Neither party, nor its agents, and
employees shall, under any circumstances, be deemed to be agents,
partners, joint venturers, legal representatives or servants of
the other party for any purpose whatsoever, and neither party
shall have any right or authority to enter into any contract,
obligation, responsibility or commitment in the name of or on
behalf of the other or to bind or purport to bind the other in any
manner whatsoever.
15.02 Accordingly, this Agreement shall be assignable by
Seller, in whole or in part, (whether by operation of law or
otherwise) without the prior written consent of the Buyer,
provided Seller is not then in default of any provision of this
Agreement and that the manufacturing facilities for any Product
hereunder (other than the use of present processes at the
Greeneville facility) are certified for the Buyer's Product
Qualification Approval PQA process, attached as Schedule 15.02.
Buyer may assign its rights hereunder to a successor, subsidiary
or affiliated corporation or business entity wholly owned by Buyer
without releasing the Buyer from liability hereunder. Any
assignment contrary to the terms hereof shall be null and void and
of no force or effect and shall be deemed to constitute an Event
of Default hereunder.
15.03 Neither Buyer nor Seller shall be liable for failure
to perform or be deemed to be in default of this Agreement and/or
any purchase orders under this Agreement because of delays or
failures in the performance of its obligations (other than the
payment of money) results from strikes, accidents, fires, shutdown
of manufacturing plants supplying the affected parties, court
imposed or other allocation of vendor supplies, governmental or
court orders, injunctions, riots, acts of God or war, embargoes,
earthquakes, floods, tornadoes or other types of unusually severe
weather, quarantine restrictions, inability to secure
transportation facilities or contingencies arising out of or due
to national defense activities or emergency conditions, or any
other cause, beyond the reasonable control of the party claiming
benefit hereof. The party claiming the benefit of the
aforementioned force majeure condition shall continue to make a
commercially reasonable good faith effort to cure the condition of
force majeure, promptly resume performance when the cause for non-
performance is removed, and shall send to the other notice in
writing of the cause within three (3) working days after the
occurrence of such cause is known. If any of the condition(s) of
force majeure set forth herein shall continue to exist
uninterrupted for a period of ten (10) consecutive days from the
date of notice, then the party not asserting force majeure
hereunder may elect to suspend deliveries, excuse deliveries
and/or cancel (in whole or in part) affected deliveries hereunder.
If a herein described force majeure condition prohibits Seller
from filling and delivering to Buyer the majority of Products for
ten (10) consecutive days, then (in addition to the rights
otherwise set forth herein) Buyer shall have the right to remove
its tooling and dies from Seller's premises and to transport such
property to other locations in order to provide for the
manufacture of its PCB needs.
15.04 The failure or delay of Buyer or Seller in any one or
more instances to exercise any right or privilege in this
Agreement or the waiver of any breach by Buyer or Seller of any
terms and conditions of this Agreement shall not be construed as
thereafter waiving any such terms and conditions, and the same
shall continue and remain in full force and effect as if no waiver
had occurred. Any such failure, delay or waiver shall not preclude
any other or further exercise thereof or the exercise of any
right, power or remedy provided herein. No express waiver or
assent by either party to any breach or default shall constitute a
waiver of or assent to any succeeding breach or default.
15.05 If any provisions of this Agreement as applied to
either party or to any circumstance shall be adjudged by a court
of competent jurisdiction to be void or unenforceable for any
reason, the same shall in no way affect (to the maximum extent
permitted by applicable law) any other provision of this
Agreement, the application of any such provision under
circumstances different from those adjudicated by the court, or
the validity or enforceability of the Agreement as a whole. Any
clauses of this Agreement intended to survive this Agreement shall
survive the termination date of this Agreement.
15.06 This Agreement, the Schedules and Purchase Orders
issued hereunder, and all documents for the purchase and sale of
Products shall be governed by and construed and enforced in
accordance with the laws of the State of Tennessee, without regard
to conflicts of laws principles. The Buyer and Seller acknowledge
that the only forum and venue for resolution of any litigation
and/or other judicial proceeding in connection with any matter
pertaining to this Agreement shall be in the United States
District Court for the Eastern District of Tennessee located at
Knoxville, Tennessee.
15.07 The articles, sections, paragraphs, captions and
headings set forth in each of the sections of this Agreement have
been inserted only for the convenience of the parties and shall
not be considered in the interpretation or enforcement of the
provisions of the Agreement.
15.08 All Schedules and amendments to this Agreement are
incorporated as if fully set forth therein.
15.09 All notices required or permitted hereunder, requests
and other communications relating to this Agreement shall be made
in writing and shall be deemed duly given when personally
delivered by hand or when sent by registered or certified mail,
return receipt requested, postage prepaid, by Federal Express or
such other similar overnight courier service, by facsimile
addressed to the intended recipient thereof at the address and
facsimile number set forth below (or to such other address as
either party may hereafter provide to the other party), or by
cable confirmed by letter as aforesaid, as follows:
Notice to Purchasing Department
Buyer: Philips Consumer Electronics Company
X.X. Xxx 00000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Copy to: Law Department
North American Philips Corporation
X.X. Xxx 00000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Additional Law Department
Copy to: Philips Electronics North America Corporation
00 Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile: (000) 000-0000
And to: Hunton & Xxxxxxxx
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
2000 Riverview Tower, 000 X. Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile (000) 000-0000
Notice to Circuit Systems, Inc.
Seller: Attention: Xxxxx X. Xxxx
0000 Xxxx Xxxx Xxxxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Copy to: Xxxxx and Xxxxxx, P.C.
Attention: Xxxxxx X. Xxxxx, Esq.
00 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Facsimile (000) 000-0000
or to such other address as either party may hereafter designate
in writing by like notice.
15.10 Time is of the essence as to each and every provision
of this Agreement.
15.11 The specified remedies herein provided in case of
default in the performance of any of the obligations of either
party under this Agreement or any Production Release under this
Agreement are in addition to, and the exercise of any right or
remedy herein provided shall be without prejudice to, any other
right or remedy provided under this Agreement or at law or in
equity.
15.12 This Agreement constitutes the entire contract and
agreement between the parties, and it supersedes all prior and
contemporaneous oral or written statements, representations or
agreements. No course of prior dealings between the parties and
no trade usage shall be relevant or admissible to supplement,
explain or alter any of the terms of this Agreement. Acceptance or
waiver of a course of performance under this Agreement shall not
be relevant or admissible to determine the meaning of this
Agreement. No understandings or agreements have been made or
relied upon in making this Agreement except for those specifically
set forth herein. This Agreement may not be modified or amended
unless such modification or amendment is set forth in a writing
duly executed by authorized representatives of Buyer and Seller.
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound hereby, have executed this Agreement as of the date
first above written.
[Remainder of page intentionally left blank]
("BUYER")
PHILIPS ELECTRONICS NORTH AMERICA
CORPORATION, a Delaware corporation
BY: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Vice President and General Counsel,
Philips Consumer Electronics Company,
a division of Philips Electronics
North America Corporation
[Signature Page to Printed Circuit Board Purchase Agreement]
("SELLER")
CIRCUIT SYSTEMS OF TENNESSEE, L.P.,
a Tennessee limited partnership
CIRCUIT SYSTEMS OF TENNESSEE, INC.
a Tennessee corporation, general partner
BY: /s/ Xxxxx X. Xxxx
Xxxxx X. Xxxx
Vice President
[Signature Page to Printed Circuit Board Purchase Agreement]
Schedule 2.01(c)
For Automatic Process
Ink allowance of $0.1248 per square foot of board
Scrap allowance of 2%, of board material (CEM-1) plus ink
allowance, provided that any paper phenolic (or other newly
introduced board material) allowances shall be reviewed by the
parties, subsequent to the Closing and based on experience, to
reflect actual waste experience.
For Carbon Process
Ink allowance of $0.4000 per square foot of board
Scrap allowance of 13%, of board material plus ink allowance
