Exhibit 10.52
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MANUFACTURING AGREEMENT
This Manufacturing Agreement (the "Agreement") is entered into as of March
23, 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 Cirtek Electronics Corporation, a corporation duly organized and
existing under the laws of the Philippines with its principal place of business
at 116 East Main Avenue, Phase V, SEZ, Laguna Technopark, Binan Laguna,
Philippines (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: means 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, means any Person that directly
or indirectly controls, is controlled by or is under common control with such
Person.
Annual Review Process: means 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.
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 Outs: means 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: means 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.
1 Initials: Contractor_____Company____
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 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.
Best Efforts: means a party's efforts in accordance with
reasonable commercial practice and/or consistent with its past practice.
Consignment: means 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: means Products returned from Company's customers
that do not meet specification due to assembly processing problems. Reference
Section 2.2(b).
Die: means the chips that Company provides Contractor, either in
sliced or wafer form. This includes Die and transistors and integrated circuits
that Company may provide on a Consignment basis to Contractor.
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: means the Contractor's manufacturing facility for
Products located at Laguna Technopark, Binan Laguna, Philippines.
Finished Goods: means any Product that is 100% complete, tested,
and packed in a shipping carton 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.
Manufacture Defect: means 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: means new items or variations of current Products
that the Company and the Contractor have agreed in writing to be covered by this
Agreement.
Order: means purchase order issued by the Company.
Other Support Services: shall have the meaning defined in Section
2.3 hereof.
2 Initials: Contractor_____Company___
Person: means 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: means 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: means the time of initial shipments of a
Generic Product Family as requested by the initial Weekly Start Schedule for
that Generic Product Family.
Provided Equipment: means any equipment, including but not
limited to, manufacturing and test equipment; 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
Quarterly Operations Reviews: means 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).
Shipping Date: means 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
and mount-bond diagram. Additional Specifications will be issued by Company in
similar form as additional Products are added to this Agreement.
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: the price for Materials and assembly/test services
for the Product supplied by Contractor.
Weekly Start Schedule: shall have the meaning defined in Section
2.6 hereof.
WIP Inventory: means 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.
2.1 Manufacturing Services:
(a) 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.
3 Initials: Contractor_____Company___
(i) Contractor may use its standard processes, so long as
they conform to the Company's Specifications and quality requirements.
(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, Materials, 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 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.
(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.
4 Initials: Contractor_____Company___
(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, during the fourth
through sixth months following Production Start Up. Beginning month seven (7)
after Production Start Up, Contractor is responsible for procurement of all
Materials required to Manufacture the Product except Die unless a delay to
initiate procurement is approved, in writing, by Company.
(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
responsibility of Contractor.
(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 goals 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.
2.3 Other Support Services From time-to-time during the term of this
Agreement, Company may request Contractor 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 issue a
Purchase Order for 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 and accept the Purchase Order. 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 Company in excess of the Purchase order issues for the service. If such
service results in 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.
5 Initials: Contractor_____Company___
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 raw
material and Die inventory on hand as of the last day of the prior month on the
first working day of each month.
2.5 Purchase Orders.
Company shall provide Contractor with a Purchase Order for Manufacture
of Product for six (6) month's requirement in advance. Contractor agrees to
acknowledge Company's Purchase Order within two (2) business days from receipt
by facsimile or other electronic means. Thereafter, the Purchase 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
Purchase Order by the Contractor consistent with the terms and conditions herein
agreed upon. However, the Weekly Start Schedule will determine quantities and
Shipping Dates. In the event of any disagreement between the Purchase Order and
the Agreement, the terms of the Agreement shall prevail.
2.6 Production and Shipping Dates.
Company shall provide Contractor with a Weekly Start Schedule four (4)
days before the start of the Workweek and Shipping Dates with a lead time
reasonably acceptable to Contractor. The estimated cycle time is two Workweeks
after schedule start date of the Die. Each Weekly Start Schedule will show start
quantities by line, Shipping Dates, and priorities. Contractor agrees to
allocate sufficient Manufacturing capacity for the Manufacture of Products to
meet Company's Production and Shipping Dates, and all Material acquired by
Contractor to meet Company's Production and Shipping Dates will be covered by
the Buy-Back provisions of this Agreement. Company agrees to supply Materials,
including Die, a minimum of one day prior to the associated starts at the
Contractor. Contractor will not start more Product than required by the Weekly
Start Schedule without written approval from the Company.
2.7 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, from
(Contractor), Receiving Company
(Company), Invoicing
(Contractor) and Payment
(Company)
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Weekly Start Schedule Provide weekly start schedule with The volume and line items are
delivery dates and priorities. firm.
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Volume for first month is firm,
but line items may change.
Second month may change from
Three Months Forecast Provided to Material and labor previous forecast no more than +/-
planning. 25%. Third month may change from
previous forecast no more than +/-
50%.
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6 Initials: Contractor_____Company___
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Schedules Purpose of Schedule Variations
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Twelve Month Forecast Provided for space, equipment and First three months are as above,
labor planning. but all other is for planning
purpose only.
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3. Deliveries
3.1 Deliveries. Contractor will Manufacture the Products as required by
this Agreement and the Order, in the priority sequence reasonably requested by
the Weekly Start Schedule and within the reasonably requested time frames. In
the event that Contractor cannot meet a Weekly Start Schedule or 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.
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.
3.4 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.
3.5 Delivery of Die. Company will properly pack all Die and Materials
provided by Company to facilitate safe transport to Contractor. Die shipments
shall be clearly labeled to identify part number, lot number and quantity.
4. Price and Payment.
4.1 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
7 Initials: Contractor_____Company____
"TP" is equal to the test price.
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 Contractor will provide office space for a maximum of one (1) Company
employee, with suitable office furniture at no additional cost to the Company.
Company will supply computer and a phone line for the employee and assume all
charges associated with Company employees' use of the phone line. Space for
additional employees will be reviewed on an as needed basis and will not be
unreasonably denied by Contractor.
5.3 Acceptance. All shipments of Finished Goods are subject to Company's
workmanship inspection, agreed 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.
6. 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) 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. All scrap
emanating from the Manufacture of Product for Company by Contractor shall be
returned to Company for disposition unless Company notifies Contractor, in
writing, authorizing alternate disposition.
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
8 Initials: Contractor_____Company____
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 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 Value
Added by Contractor to the devices assembled pursuant to this Agreement.
9 Initials: Contractor_____Company____
Notwithstanding the foregoing, the parties recognize that Die will 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 Die 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 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 Philippine 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.
10.2 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,
with the exception of test equipment that is Provided Equipment. Company shall
maintain insurance, at his sole discretion, for all Provided Equipment owned by
or paid for by Company, while in Contractor's Factory. The Parties shall under
separate agreement, agree on the lease/purchase price for the Provided Equipment
to be charged to Contractor by Company prior to delivery of Provided Equipment
by Company to 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 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
10 Initials: Contractor_____Company____
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 March 23, 2001 and shall continue
in force until March 23, 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 365
days written notice to Company.
(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.
11 Initials: Contractor_____Company____
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 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.
13.2 During the term of this Agreement and for a period of two years
thereafter, Contractor agrees not to market products competitive with the
Products.
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 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 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.
14.4 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.
14.5 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.
14.6 Contractor hereby assigns to Company all rights in data prepared in
connection with the performance of services under this Agreement, including, but
not limited to, any reports, drawings, sketches,
12 Initials: Contractor_____Company____
formulas, designs, analyses, graphs, notes and notebooks. Contractor agrees that
all rights, title and interest to such data, including all related copyright and
other intellectual property rights, shall vest immediately with Company upon
preparation.
14.7 Contractor agrees that all notes, drawings, designs, analyses,
memoranda, and other data prepared or produced in the performance of services
under this Agreement or at Company's request shall be the sole and exclusive
property of Company, that Contractor shall not disclose such property to anyone
outside of Company, and that Contractor shall xxxx such property "RFM
Proprietary Confidential."
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, 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.
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:
If to Contractor, to: Xxxxx Xxx
Cirtek Electronics Corporation
116 East Main Avenue
Phase V, SEZ Laguna Technopark
Binan Laguna, Philippines
Facsimile: (00) 00-000-0000
E-Mail: Jerry Xxx@xxxxxx.xxx.xx
If to Company, to: Xxxxx X. Xxxxxxxxxx
13 Initials: Contractor_____Company____
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 the Philippines, 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 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.
14 Initials: Contractor_____Company____
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 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 Philippines 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 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.
15 Initials: Contractor_____Company____
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. CIRTEK ELECTRONICS CORPORATION
Xxxxx X. Xxxxxxxxxx Xxxxxx Xxxx
------------------------------------ ------------------------------
(Printed Name) (Printed Name)
/s/ Xxxxx X. Xxxxxxxxxx /s/ Xxxxxx Xxxx
------------------------------------ ------------------------------
(Signature) (Signature)
VP QA and Corporate Development VP Finance
------------------------------------ ------------------------------
(Title) (Title)
April 17, 2001 April 6, 2001
------------------------------------ ------------------------------
(Date) (Date)
16 Initials: Contractor_____Company____
