1
EXHIBIT 10.31
Volume Purchase Agreement
Lite-On Power Semiconductor Corp. / FabTech, Inc.
This agreement ("Agreement") is made and entered into the 25th day of
October, 2000, by and between Lite-On Power Semiconductor Corp. with
it's principal place of business at 28-1 Wu Shin St. Xx Xx Lung, Keelung
Taiwan, R.O.C. (herein referred to as "LPSC"), and FabTech, Inc., with
it's principal place of business at 000 X.X. Xxxx Xxxxxxx, Xxx'x Xxxxxx,
Xxxxxxxx, 00000 (herein referred to as "FabTech").
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS CONTAINED HEREIN, THE
PARTIES AGREE AS FOLLOWS:
1. SCOPE
The purpose of this agreement is to establish the terms and conditions
under which FabTech will sell to LPSC, and LPSC will purchase from
FabTech, Discrete Schottky Semiconductor die in wafer form. This
agreement does not constitute an order. LPSC Purchase Orders ("PO")
(per paragraph 5) will be required to purchase any Products from
FabTech.
2. DEFINITIONS
2.1. Wafer(s): Completed Discrete Schottky Semiconductor Products
through Wafer Probe electrical testing.
2.2. Product(s): All Schottky Barrier Diodes manufactured by FabTech
and purchased as die in wafer form as set forth on Attachment 1.
2.3. Yield: The number of die on a wafer passing Wafer Probe electrical
testing, divided by the total number of die on a Wafer.
2.4. Wafer Lot Yield: The average Yield of all wafers in one wafer lot
as calculated in 2.3 above.
2.5. Wafer Lot: A lot of wafers started together using the same lot
number and processed through wafer fabrication as a single group.
2.6. Device Type: Different die types and sizes are set forth on
Attachment 1.
2.7. Change in the Consumer Price Index: A percentage equal to the
overall percentage change in the Consumer Price Index-- All Urban
Consumers for the geographic area containing Kansas City, Missouri
published by or acknowledged by the U.S. Department of Labor (or,
if unavailable, a successor
-59-
2
or comparable index in the Lessor's reasonable discretion) from
and after the year 2000.
3. TERM
3.1. The term of this agreement shall be effective as of the date of
signature and continue for a period of four years from that date
(the "Initial Term") unless terminated earlier as otherwise
provided herein. After the Initial Term, the Agreement shall be
automatically renewed for additional two-year periods on a
period-to-period basis (each a "Renewal Term"). Either PARTY may
terminate this Agreement by providing written notice to the other
PARTY of it's intent to cancel at least ninety (90) days prior to
the start of any Renewal Term.
3.2. Except as otherwise provided in this Agreement, upon termination
of this Agreement the parties shall complete performance of all
POs issued, released and accepted by FabTech prior to the
effective date of termination that require delivery within the six
(6) month period, maximum, from the effective date of termination.
Any portion of an accepted and acknowledged PO outstanding on the
effective date of termination that does not require delivery
within such time shall be void. Any portion of an accepted and
acknowledged PO outstanding on the effective date of termination
that requests delivery within such six-month period shall remain
in effect, subject to the terms and conditions herein.
4. PURCHASE RIGHTS AND OBLIGATIONS
4.1. During the Initial Term of this Agreement, LPSC has the right to
purchase, and FabTech, upon receipt of a duly completed PO, shall
sell to LPSC up to the Maximum number of Wafers per month during
the calendar quarter set forth on Attachment 2 attached hereto and
identified on the table titled Monthly Wafer Maximum/Minimum Order
by LPSC.
4.2. During the Initial Term of this Agreement, LPSC shall purchase
from FabTech at least the number of Wafers per month during the
calendar quarter set forth on Attachment 2 attached hereto and
identified on the table titled Monthly Wafer Maximum/ Minimum
Order by LPSC, and as specified in the row of the table labeled as
"Minimum". In any event, LPSC shall purchase from FabTech at least
90% of the total Wafers purchased by LPSC from all parties
including FabTech, providing FabTech is competitive on Product
pricing and Product quality.
4.3. The parties presently anticipate that LPSC shall purchase Wafers
in the proportions set forth on Attachment 2 in the table titled
LPSC Sky Wafers Volume by Calendar Quarter.
-60-
3
4.4. Ninety days prior to the beginning of each Renewal Term, the
parties shall negotiate in good faith to determine the minimum and
maximum purchase quantities applicable during such Renewal Term.
5. FORECASTING AND PURCHASE ORDER PLACEMENT
5.1. LPSC will provide a six (6) month rolling forecast of actual and
planned purchases to FabTech on or before the 25th day of each
month (the "Forecast Date"). The forecast shall be provided in die
quantity by Device Type. The current month is noted as Month 0 in
the tables and examples herein.
5.2. LPSC shall issue to FabTech at firm Purchase Orders each month as
follows:
5.2.1. A Purchase Order shall be issued for purchase of remaining
quantities for the second month forward (Month +2) not
placed in the preceding month. For instance, on the June
25th forecast date, LPSC would place a Purchase Order for
50% of the orders for August. The amount ordered for August
could increase the total volume forecast for August (in the
May Forecast) by 20%, but will not be less than the volume
forecast for August (in the May forecast).
5.2.2. A Purchase Order shall be issued for purchase of at least
50% of the forecast quantity in the third month forward
from the current month (Month +3). For instance, on the
June 25th forecast date, LPSC would place a Purchase Order
for 50% of the orders for September.
5.3. FabTech will show acceptance of each PO by transmitting to LPSC a
Sales Order Acknowledgement for each PO accepted by FabTech.
5.3 Month-to-month changes from the previous forecast will be limited
as follows (Month 0 is the current month, containing the Forecast
Date). Variations above or below contract limit quantities may be
accepted by FabTech on a "commercial best effort" basis:
-61-
4
------------------------------------------------------------------------------------------------------
PRESENT QUANTITY PART TYPE
FORECAST CHANGES* CHANGES* DELIVERIES & SHIPMENTS
------------------------------------------------------------------------------------------------------
Already committed and mostly shipped. This forecast and XX
Xxxxx 0 Xxxx Xxxx cycle starts on the 25th of this month.
------------------------------------------------------------------------------------------------------
Month +1 None None Already committed.
------------------------------------------------------------------------------------------------------
50% committed via P.O. last month. New PO for 50%
(or more) on this month. Volume for month can be
Month +2 +20%/-0% 50% increased by 20%
------------------------------------------------------------------------------------------------------
New PO for 50% of committed volume for this month. The
Month +3 +/- 20% 50% remainder will still be on the forecast until next month.
------------------------------------------------------------------------------------------------------
Contract Contract
Month +4 Limits Limits For substrate purchases
------------------------------------------------------------------------------------------------------
Contract Contract
Month +5 Limits Limits Information Only
------------------------------------------------------------------------------------------------------
Contract Contract
Month +6 Limits Limits Information Only
------------------------------------------------------------------------------------------------------
6. PRICE AND PAYMENT
6.1. Prices currently in effect will continue to be in effect through
March, 2001, excepting specific price modifications as allowed
herein.
6.2. New Device Types will be added from time-to-time and prices will
be negotiated at the time of initial offering for sale by FabTech.
6.3. The prices at which FabTech agrees to sell the Products to LPSC
pursuant to this Agreement are inclusive of epitaxial substrate
costs, wafer processing costs, electrical testing per FabTech
standard procedures, packaging costs per standard FabTech
procedures, and any applicable United States sales taxes.
6.4. Delivery of the Products will be F.O.B. FabTech's facility in
Xxx'x Summit, MO (Origin). It shall be the responsibility of LPSC,
at its own expense, to insure any shipments against damage to or
loss of the Products. Unless otherwise specified by LPSC,
transportation will be by the most cost effective method of
transportation in keeping with any particular delivery date.
Packaging of shipments shall be in accordance with standard
practices. Any special packaging requested by LPSC shall be made
at LPSC expense.
6.5. All prices may be subject to re-negotiation every year, and will
become effective on April 1 of each year.
6.6. LPSC shall make payment in full for any and all FabTech invoices
within forty-five days of the last day of the month in which the
Product is shipped and invoiced. In the event LPSC fails to comply
with this provision, FabTech reserves the right to suspend or
delay shipments, or alter payment terms. A finance charge equal to
the lesser of 1.0 percent per month (12 percent APR) or the
highest rate permitted by law will be assessed on all past due
accounts. In
-62-
5
any event, exercising this provision shall not be considered a
breach of this Agreement, nor in any way alter LPSC
responsibilities to abide by the terms of this Agreement.
6.7. At all times, LPSC will receive the best price offered by FabTech
to commercial accounts purchasing comparable wafer quantities,
excepting special discounts or other short-term promotional
prices. In the event FabTech offers special discounts or other
short-term promotional pricing for specific Products, LPSC shall
have first and equal opportunity to purchase FabTech Products
under such promotions and at the promotional prices.
6.7.1. LPSC represents and warrants that FabTech Products
(including wafers) purchased under this agreement are for
assembly by LPSC into a higher level of assembly, and are
expressly NOT for resale as die in wafer form or any other
form. LPSC agrees that it shall not resell Products
purchased from FabTech, in wafer or die form, without prior
written consent by FabTech, which shall not be unreasonably
withheld. In addition to any other remedies available to
FabTech, breach of this Section 6.7 shall sever Section 6.7
and related subsections from this Agreement, without
relieving either Party from any and all remaining
obligations herein.
7. ADDITIONAL SERVICES
7.1. PRODUCT DEVELOPMENT: Both parties agree to use commercially
reasonable efforts to develop, design and manufacture such new
products as required to meet LPSC customer requests. Non-recurring
expense ("NRE") charges may be assessed by FabTech for development
of products to LPSC specifications. Payment of NRE charges by LPSC
to FabTech shall not convey to LPSC any ownership interest in or
any license or right to produce existing or developed FabTech
products or processes.
8. WARRANTIES
8.1. All Products sold by FabTech under this Agreement shall have Wafer
Lot traceability using a lot number assigned by FabTech. Any and
all communications between LPSC and FabTech concerning warranty
issues shall reference this lot number.
8.2. Any deviations from accepted specifications must be approved in
writing by LPSC and FabTech. Products shipped by FabTech to LPSC
shall be electrically tested per specifications in effect at time
of purchase.
8.3. LPSC shall promptly inspect FabTech Schottky Products upon
delivery of the Products to a designated LPSC facility. LPSC shall
complete all inspections within 30 days of delivery.
-63-
6
8.4. If any Schottky Product is claimed to be defective by LPSC, LPSC
may, before the end of the inspection period, submit a Corrective
Action Request ("CAR") to FabTech for FabTech evaluation and/or
analysis of the claimed defective product. Failure by LPSC to
deliver a CAR to FabTech within thirty days after delivery of the
Products shall constitute acceptance of the Products by LPSC.
8.5. Upon receipt of a CAR tracking number, LPSC shall promptly return
SAMPLES exhibiting the claimed defect to FabTech for analysis.
Cartons containing samples returned for analysis shall have the
CAR tracking number clearly marked on the outside of the carton.
Failure to comply with this provision may result in FabTech
rejecting the return shipment.
8.6. Upon completion of FabTech analysis, FabTech will judge the claim
as either Valid or Invalid. If FabTech agrees the defect as
claimed is Valid, a Returned Material Authorization ("RMA") number
will be provided by FabTech for return of the materials (wafers
and/or wafer lots) claimed under the initial request. Cartons
containing returned materials shall have the RMA tracking number
clearly marked on the outside of the carton. Failure to comply
with this provision may result in FabTech rejecting the return
shipment.
8.7. If FabTech determines that the defect as claimed is Invalid, then
LPSC may dispute the claim as set forth in Section 15.
8.8. Upon receipt of and verification that materials returned under RMA
are in good condition and of indicated quantity, FabTech will
issue a Credit Memo to LPSC for adjustment of the amount invoiced
to LPSC.
8.9. FabTech's indemnification on warranty of FabTech products shall be
strictly limited as set forth in Article 10 below. 8.10.The
provisions of the warranties set forth in this Agreement shall not
apply to and no warranty of whatever kind shall exist for any
Product or part therof which has been subject to misuse,
negligence or accident or that has been altered by anyone other
than FabTech nor to normal deterioration of any Product or part
thereof due to wear, usage or exposure. In addition, FabTech is
not responsible for damages of whatever nature resulting form
improper installation or operations beyond design capability,
whether intentional or accidental.
8.11. EXCEPT AS SPECIFICALLY STATED IN THIS SECTION, FABTECH DISCLAIMS
ALL WARRANTIES, WHETHER EXPRESSED, IMPLIED OR STATUTORY,
INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES AS TO THE QUALITY OF
THE PRODUCTS, AND ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
-64-
7
9. PRODUCT CHANGES AND APPROVALS
9.1. After FabTech Products sold under this Agreement have been
qualified and released (in accordance with the parties' course of
performance) by both LPSC and FabTech, all major manufacturing
processes shall remain unchanged unless both parties agree via the
procedure below to modify said process.
9.1.1. FabTech will provide LPSC with written notice of any
proposed major process change, accompanied by appropriate
data to support the change.
9.1.2. LPSC will have fourteen (14) working days to accept or
reject the proposed change in writing. In the event LPSC
fails to reply within the fourteen day period, the proposed
change will be considered as accepted by LPSC and may be
fully implemented by FabTech.
9.1.3. LPSC shall have the right to require re-qualification of
FabTech Product where there has been a major process
change. Upon LPSC acceptance of the proposed change, the
newer process shall be deemed qualified and may be fully
implemented by FabTech. FabTech shall, through lot
traceability, be able to identify Product processed under
the both old and new processes.
9.1.4. If LPSC rejects a proposed major process change, LPSC shall
identify to FabTech the reason for such rejection of the
proposed change. FabTech shall have the option, in
FabTech's sole discretion, to (a) continue to manufacture
for LPSC hereunder using the previously qualified process;
(b) eliminate such product, offering LPSC the opportunity
to place a last-time buy; or (c) a combination of (a) and
(b) or other alternatives as may be proposed by FabTech.
9.2. LPSC may, at any time, submit written requests for change to
FabTech Products regarding specifications, designs, drawings,
features, or other characteristics of Products covered by this
Agreement. FabTech may, at its sole discretion, notify LPSC in
writing that implementation of said change(s) renders FabTech
unable to comply with its obligations hereunder. Both parties
hereby agree that any and all change requests shall be acted upon
by FabTech only if such suggested change is in writing, cost
impacts have been evaluated, and agreement reached on new prices,
NRE payments, and/or other compensation resulting from the costs
associated with the requested change.
9.2.1. FabTech will reply to all change requests submitted by LPSC
in writing, indicating FabTech's response to the requested
change. If the requested change is accepted by FabTech in
writing, such change is assumed to be a written amendment
to this Agreement, executed by both parties.
9.3. Any Changes to FabTech Products made in compliance with this
Agreement shall not relieve FabTech of any of FabTech's
obligations hereunder unless
-65-
8
such relieved obligation has been covered by a written amendment
to this Agreement, executed by both parties.
10. INDEMNIFICATION AND LIMITATION OF LIABILITY
10.1. FabTech hereby agrees to indemnify LPSC against and save it
harmless from all liability, claims or demands made by any party
arising out of damage to any property or death or injury to any
employee of FabTech that is the result of negligence of FabTech.
10.2. LPSC shall at all times defend, indemnify and hold harmless
FabTech, its officers, agents, directors, employees,
representatives, and permitted successors and assigns from and
against any and all losses, claims, demands, actions, suits,
liabilities, damages, costs or other expenses (including without
limitation reasonable fees and expenses of counsel and costs of
investigation) related to or arising out of any acts, duties or
obligations of LPSC or of any personnel employed or otherwise
engaged by the LPSC, including (i) injury and/or death to persons
including LPSC's employees, agents or representatives and damage
to property, (ii) fines, levies or other charges imposed by any
governmental authority or agency, (iii) failure to comply with or
violation of any applicable Federal, state, local, or foreign
laws, regulations, rules and ordinances, (iv) any alleged
infringement or violation of any patent right in connection with
the manufacture or sale of products by LPSC using the Products
(unless the alleged infringement or violation was directed by
FabTech). FabTech shall provide LPSC (i) written notice of any
claim, demand, action, suit or other proceeding subject to
indemnification hereunder, and (ii) if such action is brought by a
third party, reasonable cooperation (at LPSC's expense) in the
defense or settlement thereof. Notwithstanding the foregoing,
FabTech may be represented in, but may not control, such action,
suit, or proceeding at its own expense and by its own counsel.
10.3. FabTech shall not in any circumstances be liable to LPSC for
anything whatsoever other than the direct loss to LPSC (excluding
any loss of use, revenue or profit by LPSC or the amount of
damages awarded against LPSC in favor of, or monies paid by LPSC
by way of settlement to, any third party and any costs or expenses
of LPSC in connection with the same) due to the failure of the
Products or defective Products.
10.4. At all times and under all conditions, FabTech's liability for
direct loss or damages is strictly limited to the value of the
product shipped and invoiced, and at no time shall FabTech's
liability exceed the value of the original amount invoiced by
FabTech or paid by LPSC, whichever is less.
10.5. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY ACTION IN
CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR ANY
OTHER THEORY OR FORM OF ACTION FOR ANY
-66-
9
CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL OR PUNITIVE DAMAGES,
LOSS OF PROFITS OR REVENUES, LOSS OF ANTICIPATED PROFITS OR
REVENUES, OR COST OF SUBSTITUTED PRODUCTS INCURRED BY THE OTHER
PARTY OR ANY OTHER PARTY AS A RESULT OF THE PRODUCTS PROVIDED
UNDER THIS AGREEMENT OR IN ANY WAY ARISING OUT OF THIS AGREEMENT,
REGARDLESS OF WHETHER THE POSSIBILITY OF SUCH DAMAGES WAS
DISCLOSED TO OR REASONABLY COULD HAVE BEEN FORESEEN BY SUCH PARTY.
10.6. No action for breach of this Agreement may be commenced more than
one year after the date of the alleged breach.
11. FORCE MAJEURE
11.1. Neither party shall be liable to the other party for any inability
to comply with the provisions of this Agreement due to causes
reasonably beyond its control including but not limited to, fire,
flood, earthquake, explosion, accident, acts of public enemy,
riots, insurrections, war, labor disputes, transportation, or
failures or delays in transportation, embargoes, acts of God, acts
of any government, or any agency or department thereof or judicial
action. Upon the occurrence of such a force majeure condition, the
affected party shall promptly notify the other party and describe
in reasonable detail the circumstances of such condition and shall
promptly inform the other party of any further developments. If
such non-performance continues in effect for more than ninety (90)
days, the other party may, at its option, terminate this Agreement
without further cause or liability. Otherwise, this Agreement
shall continue in full force and effect for the remainder of its
term upon cessation of such event of force majeure.
12. ASSIGNMENT AND SUCCESSION
12.1. Neither PARTY may assign or transfer (by operation of law or
otherwise) its rights or obligations under this Agreement without
the prior written consent of the other PARTY which consent shall
not be unreasonably withheld.
12.2. This Agreement shall be binding upon and inure to the benefit of
the parties successors and permitted assigns.
13. TERMINATION
13.1. Either PARTY may terminate this Agreement immediately in the event
that the other PARTY is the subject of a petition filed in
Bankruptcy Court of the United States, Singapore, Hong Kong, or
Taiwan, whether voluntary or involuntary, if a Receiver or Trustee
is appointed for all or a substantial portion of the assets of the
petitioning PARTY, or if the petitioning PARTY makes an
-67-
10
assignment for the benefit of its creditors. Such proceedings
shall be conducted in the English language.
14. PARAGRAPH TITLES
The paragraph tittles herein are intended for convenience only and shall
not be construed to alter either parties' obligations or rights as
otherwise set forth herein.
15. GOVERNING LAW AND ARBITRATION
15.1. All disputes arising in connection with this Agreement shall be
settled amicably through good faith negotiation. In the event no
agreement can be reached after 30 days, all disputes shall be
submitted to arbitration in Kansas City, Missouri before and under
the rules of the American Arbitration Association. The
arbitrator's decision shall be written and shall be final,
conclusive, and binding, and judgment on any arbitration award or
decision may be entered in any court of competent jurisdiction.
15.2. The parties agree that after arbitration the State of Missouri
shall have jurisdiction to determine the validity, construction
and performance of this Agreement and the legal relations between
the parties. All disputes are subject to venue of the State and
Federal courts in Missouri, and the parties consent to the
personal and exclusive jurisdiction and venue of those courts.
16. ENTIRE AGREEMENT
This Agreement, including all other documents incorporated by reference and
those attached hereto as ATTACHMENTS, expresses the entire understanding of
the parties hereto and cancels and supersedes any previous agreements,
understandings or representations between the parties relating to the
subject matter hereof. This Agreement may not be modified except in a
writing signed by an authorized officer or representative of each PARTY.
17. SEVERABILITY
If any provision of this Agreement is held invalid, the remaining
provisions shall remain valid and in force, unless such invalidity would
frustrate the purpose of this Agreement.
18. NOTICES
Any notice to be given under this Agreement shall be in writing and shall
be sent to the appropriate PARTY at the address first stated in this
Agreement, or to such other address as a PARTY may later designate in
writing to the other. Notices shall be deemed to have been adequately sent
and delivered when received by the appropriate PARTY, after having been
deposited in the mail (registered or certified), postage prepaid.
-68-
11
19. PUBLICITY
Neither PARTY shall publicize or otherwise disclose the terms of this
Agreement without the prior approval of the other PARTY, which approval
shall not be unreasonably withheld.
20. WAIVER
No failure or delay on the part of either PARTY in the exercise of any
power, right or privilege arising hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right
or privilege preclude other or further exercise thereof or of any other
right, power or privilege.
SIGNED,
LITE-ON POWER SEMICONDUCTOR CORP. FABTECH, INC.
BY: /S/ X.X. XX /S/ XXXXXX XXXXXXXX
X.X. Xx, President Xxxxxx Xxxxxxxx, President
-69-
