EXHIBIT 10.82
SUPPLY AGREEMENT
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This Agreement is entered as of October 23, 1995, by and between Southwall
Technologies, Inc.("Seller"), a Delaware corporation, and Sony Corporation
("Buyer"), a Japanese corporation.
WHEREAS, the parties previously negotiated a preliminary agreement
entitled "Sony/Southwall Supply Agreement" that was executed by Seller on August
23, 1994 and by Buyer on August 30, 1994 that related to the tooling and supply
of anti-reflection film by Seller to Buyer for lamination to computer monitor
CRTs ("Preliminary Agreement").
WHEREAS, Buyer wishes to purchase such Products from Seller and Seller is
willing to supply Buyer with such Products on the terms hereof.
NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants set forth below, Seller and Buyer mutually agree as follows:
ARTICLE I
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DEFINITIONS
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1.1 "Affiliate" of a party shall mean (i) any entity controlled by such
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party, (ii) any entity controlling such party and (iii) any entity under common
control with such party. Control may be direct or indirect.
1.2 "Delivery Date(s)" shall mean a date(s) for which delivery of
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Products is properly requested in a purchase order.
1.3 "Computer Monitor CRT Applications" shall mean use of the Products as
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anti-reflective filters which Buyer will laminate onto computer monitor CRT
products.
1.4 "Products" shall mean the anti-reflective filters set forth in
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Exhibit I, attached hereto and made a part hereof, as such Exhibit may be
amended by the parties from time to time.
1.5 "After-Market Applications" shall mean the use of the Products as
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anti-reflective filters other than for Computer Monitor CRT Applications.
1.6 "Specification(s)" shall mean the specifications of the Products as
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prescribed in Exhibit I attached hereto and made a part hereof.
ARTICLE II
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SALE AND PURCHASE OF PRODUCTS; SUPPORT
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2.1 Sale and Purchase. Seller, subject to the terms and conditions herein
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contained, agrees to sell to Buyer, and Buyer agrees to purchase from Seller,
the Products during the term of this Agreement.
2.2 Exclusivity.
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(a) During the term of this Agreement, Seller will not sell or
authorize any third party to sell Products (other than to Buyer and companies
the parties have agreed upon in writing) (i) with the knowledge that they will
be used in Computer Monitor CRT Applications and/or (ii) without the promise of
such third party that it will not use such Products in Computer Monitor CRT
Applications; provided that Seller shall be released from the foregoing
restrictions if Buyer fails to purchase at least two million square feet
(2,000,000 sq. ft.) of Products for Computer Monitor CRT Applications each year.
Purchases of Products for non-Computer Monitor CRT Applications (e.g.,
television monitor applications) shall not count toward this minimum quantity.
(b) During the exclusivity period described in Section 2.2(a) of
this Agreement, Seller may freely sell and authorize others to sell Products for
After-Market Applications provided that Seller will submit the business overview
for such after-market business to Buyer for Buyer to review and the parties
shall at that time negotiate in good faith the circumstances under which Seller
shall pursue such business.
2.3 Re-sale of Products. Buyer agrees that it will not sell or distribute
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(or allow anyone else to sell or distribute) Products that Buyer purchases
hereunder except as part of a finished product that incorporates the Products.
2.4 Best Efforts. In addition to, and not in limitation of Section 2.2 of
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this Agreement, in exchange for the foregoing exclusivity, Buyer agrees to use
its best efforts to sell and market Products for the Computer Monitor CRT
Applications throughout the world. Without limiting the foregoing, Buyer expects
to and will use best efforts to purchase the following amounts of Products: (i)
two million square feet (2,000,000 sq. ft.) in the eighteen (18) month period
following the date first above written and (ii) two million square feet
(2,000,000 sq. ft.) for each twelve (12) month period thereafter.
2.5 Quantity; Forecasts.
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(a) Two (2) months prior to commencement of production Buyer will
provide to Seller (i) a firm purchase order and Delivery Dates for Products
covering the immediately following two (2) month period and (ii) a good faith
forecast of its
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quantity requirements for Products for the subsequent four (4) calendar months.
Thereafter, Buyer shall deliver to Seller within ten (10) days after the
beginning of each calendar month, Buyer's six (6) month forecast of required
Products quantity and Delivery Dates. The first two (2) months of each forecast
shall be deemed firm, noncancellable purchase orders; Buyer may, however,
reschedule any such shipment within the calendar month in which the shipment was
due, by giving Seller one (1) week prior written notice. The last four (4)
calendar months of any previous forecast may be changed as follows: (i) the
third month of the six month forecast's commitment may be increased or decreased
by up to an aggregate of twenty five percent (25%) of the forecast for that
month, (ii) the fourth month of the six month forecast's commitment may be
increased or decreased by up to an aggregate of fifty percent (50%) of the
forecast for that month and (iii) the fifth and sixth months of each six month
forecast's commitment may be increased or decreased by up to an aggregate of one
hundred percent (100%) of the forecast for each month. If a required forecast or
order for a month is not timely submitted for Products, then the sixth month of
the immediately preceding forecast shall become the new forecast or order for
the last month of the late forecast.
(b) Buyer's forecasts and orders shall reflect its good faith
expectations of customer demand and Buyer shall act in a commercially reasonable
manner to schedule orders to avoid creating over or under capacity problems
for Seller.
(c) Seller will use commercially reasonable efforts to fulfill
Buyer's firm, noncancellable purchase orders as referred to in Section 2.5(a) of
this Agreement which meet the terms and conditions hereof. Buyer will accept any
shipment of Products as fulfilling an order if the amount of Products shipped is
more than ninety-five percent (95%) and less than one hundred five percent
(105%) of the amount ordered. Notwithstanding the foregoing, Buyer shall be
responsible for paying Seller for the amount of Products actually shipped.
2.6 Delivery and Incidental Charges; Packaging and Storage. All Products
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delivered to Buyer shall be F.O.B. Seller's plant or other place of shipment
designated by Seller. Commencing October 1, 1995, Seller shall use its best
efforts to deliver Products no more than one (1) day after, or three (3) days
prior, to Buyer's desired Delivery Date. Seller shall arrange with commercial
carefulness on Buyer's behalf transportation (which will normally be by land and
sea, but may be by air in unusual circumstances) to any destinations specified
in writing from time to time by Buyer. All customs, duties, costs, insurance
premiums, other expenses relating to such transportation and delivery, all costs
of compliance with export and import controls and regulations, and all sales,
use, withholding, value-added, excise and similar taxes or charges, as well as
risk of loss, are not included in the prices of the Products and shall be borne
by Buyer. Exhibit 1 contains specifications for the packaging and boxing of
Products and are included in the Products' price.
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2.7 Risk of Loss. Risk of loss and title to the Products shall pass from
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Seller to Buyer upon deliveries of the Products.
2.8 Inventory. Commencing October 31, 1995, Seller will use diligent
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efforts to maintain in inventory an amount of Products equal to one-half (0.5)
of the next month's Products commitment.
2.9 Products Improvement. Seller will use commercially reasonable efforts
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to improve Products quality, and shall inform Buyer if and when such
improvements are available; provided, however, that Seller shall not change
the Specifications without Buyer's written permission. In the event of a change
in the Specification, each party shall use diligent efforts to exhaust their
existing inventory. Each party agrees to keep the other informed as to any
changes in processes or technology that may affect the Products, including,
without limitation, effects on Products' performance.
2.10 Technical Support. Seller will provide Buyer, upon request and at
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Seller's expense, with reasonable technical support at Buyer's location; not to
exceed one (1) man week of effort.
ARTICLE III
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PRICE AND PAYMENTS
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3.1 Price. The prices for the Products applicable hereunder shall be set
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forth in Exhibit II attached hereto and made a part hereof. All such prices are
quoted in United States dollars.
3.2 Method of Payment. All payments due hereunder to Seller shall be paid
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to Seller in United States dollars by wire transfer on or before the fifteenth
day of the calendar month following the later of: (i) the invoice date and (ii)
the date Products were made available to Buyer pursuant to Section 2.6 of this
Agreement.
3.3 Price Review. Each quarter Seller and Buyer shall review the current
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pricing structure, and shall negotiate in good faith to adjust the price if
necessary.
ARTICLE IV
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TERMINATION, RIGHTS AND OBLIGATIONS UPON TERMINATION
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4.1 Term. Unless terminated earlier as provided herein, this Agreement
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shall continue in effect until two (2) years from the date first above written
(the "Initial
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Term"), and shall thereafter be extended for successive one year terms until
terminated by either party upon at least six (6) months prior notice to the
other party.
4.2 Termination for Default. If either party defaults in the performance of
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any material agreement, condition or covenant of this Agreement and such default
or noncompliance shall not have been remedied within sixty (60) days (or ten
days in the case of non-payment) after receipt by the defaulting party of a
written notice thereof from the other party, the party not in default may
terminate this Agreement.
4.3 Buyer's Obligations at Termination. If Buyer terminates this Agreement
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pursuant to Section 4.1 of this Agreement, or Seller terminates this Agreement
pursuant to Section 4.2 of this Agreement, then Buyer shall be required to pay
Seller: (i) for finished goods, work-in progress and unreturnable raw materials
manufactured or purchased by Seller in compliance with the requirement as set
forth in Section 2.5 of this Agreement and (ii) for any of Seller's unamortized
start-up costs not to exceed two hundred and forty thousand dollars
(US$240,000).
4.4 Seller's Obligations at Termination.
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(a) If Seller terminates this Agreement pursuant to Section 4.1 of this
Agreement (or it expires), or Buyer terminates this Agreement pursuant to
Section 4.2 of this Agreement, then Seller shall remain obligated to supply
Buyer with Products pursuant to the terms and conditions of this Agreement for
two (2) years from the date of such termination or expiration. Furthermore, if
Buyer properly terminates this Agreement pursuant to Section 4.2 of this
Agreement then Seller will negotiate in good faith with Buyer for a license
granting Buyer the right to manufacture Products.
(b) If Seller terminates this Agreement pursuant to Section 4.2 of this
Agreement, then Seller will have no obligation to fulfill any existing or future
orders of Buyer.
4.5 Survival of Terms. Except to the extent expressly provided to the
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contrary in this Agreement, the following provisions shall survive the
termination of this Agreement: Sections 2.5, 2.6, and 2.7 of this Agreement, all
to the extent necessary to comply with Section 4.3 of this Agreement, and
Sections 4.3, 4.4, 4.5, 4.6, and Articles III, V, VI and VII of this Agreement.
4.6 No Liability. Each party understands that the rights of termination
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hereunder are absolute and that it has no rights to a continued relationship
with the other after termination except as expressly stated herein. Neither
party shall incur any liability whatsoever for any damage, loss or expenses of
any kind suffered or incurred by the other (or for any compensation to the
other) arising from or incident to any termination of this Agreement by such
party which complies with the terms of the
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Agreement whether or not such party is aware of any such damage, loss or
expenses, except as expressly stated herein.
ARTICLE V
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WARRANTY, PRODUCTS INSPECTION AND INDEMNIFICATION
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5.1 Warranties. Seller warrants that Products, when used on CRT computer
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monitors for conductive anti-reflection purposes, and when properly laminated,
installed and maintained, will substantially maintain the performance
characteristics specified in Exhibit I for a period of one (1) year from the
date of sale of the CRT by Buyer to Buyer's customer, but in no event longer
than one and one-half (1.5) years from date of delivery of the Products by
Seller. In addition, Seller warrants against catastrophic failure of the
Products for a period of one and one-half (1.5) years from date of sale of the
CRT by Buyer, but in no event longer than two (2) years from the date of
delivery of the Products by Seller. Excluded from this warranty is any failure,
in whole or in part, related to or caused by the lamination adhesive, lamination
process as practiced by Buyer, PET substrate and/or the PET hardcoat. Also
excluded from this warranty is any nonconforming condition or deterioration
which is the result, in whole or in part, of unusual abrasion and/or scratching,
fire, accident, abuse, misuse, negligence, acts of God and the like.
BUYER'S SOLE AND EXCLUSIVE REMEDY FOR ANY BREACH OF THE FOREGOING
WARRANTIES SHALL BE REPLACEMENT OF OR (AT SELLER'S OPTION OR IF REPLACEMENT IS
IMPRACTICAL) REFUND FOR THOSE PRODUCTS PROVIDED BUYER PROVIDES SELLER WITH FULL
DOCUMENTATION AND PROOF OF WARRANTY BREACH WITHIN THE APPLICABLE WARRANTY
PERIOD. BUYER SHALL DESTROY THE BREACHING PRODUCTS AND CERTIFY SUCH DESTRUCTION
TO SELLER. EXCEPT FOR THE FOREGOING WARRANTIES, SELLER DOES NOT WARRANT THE
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PRODUCTS OR
PERFORMANCE OR NONINFRINGEMENT, DOES NOT MAKE ANY WARRANTY, EXPRESS OR IMPLIED,
WITH RESPECT TO PRODUCTS, SPECIFICATIONS, SUPPORT, SERVICE OR ANYTHING ELSE AND
DOES NOT MAKE ANY WARRANTY TO BUYER'S CUSTOMERS OR AGENTS. SELLER HAS NOT
AUTHORIZED ANYONE TO MAKE ANY REPRESENTATION OR WARRANTY OTHER THAN AS PROVIDED
ABOVE.
5.2 Buyer shall inspect, within a reasonable period, each shipment Seller
makes to verify that the Products materially conforms to the Specifications.
5.3 Neither party is aware of any claims of infringement, of any valid
patent by the Products and each will notify the other promptly of any such claim
of
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which it becomes aware. Seller shall hold buyer and its officers, directors,
agents and employees harmless from all damages, settlements, attorney's fees and
expenses arising out of or in connection with any claim or action that the
Products and/or portions and/or components thereof infringe any patent or other
intellectual property rights of third parties issued as of the date first
written above, provided Seller is promptly notified of any and all threats,
claims and proceedings related thereto and given reasonable assistance and the
opportunity to assume sole control over the defense and all negotiations for a
settlement or compromise; Seller will not be responsible for any settlement it
does not approve in writing. The foregoing obligation of Seller does not apply
with respect to Products or portions or components (i) not supplied by seller,
(ii) made in whole or in part in accordance to Buyer Specifications or
requests, if the alleged infringement relates to such Specifications or
requests, (iii) which are modified after delivery by Seller, if the alleged
infringement relates to such modification, (iv) combined, processed or used with
other products, processes or materials where the alleged infringement relates to
such combination, process or use, (v) where Buyer continues allegedly infringing
activity after being notified thereof or after being informed of modifications
that would have avoided the alleged infringement, or (vi) where the infringement
is incident to use of the Products but does not result primarily from the
Products. buyer will indemnify Seller and its officers, directors, agents and
employees from all damages, settlements, attorneys' fees and expenses (i)
related to a claim of infringement or misappropriation excluded from Seller's
indemnity obligation by the immediately preceding sentence or (ii) in connection
with Buyer's activities regarding the Products or its failure to effectively
pass on to its direct or indirect customers Seller's liability and warranty
limitations and disclaimers.
ARTICLE VI
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CONFIDENTIALLY
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6.1 For the purpose of this Agreement, the words "Confidential Information"
shall mean any confidential, proprietary or secret information (including, but
not limited to, technical business or financial information, business plans,
customer lists, product information, specifications, drawings, inventions,
processes, software and know-how) disclosed by either party ("Discloser") to the
other party ("Recipient") in connection with the performance of this Agreement,
and designated by Discloser as "Confidential," or if orally or visually
disclosed, reduced to writing with such "Confidential" designation and notified
to Recipient within thirty (30) days after the disclosure.
6.2 Recipient shall keep confidential and not disclose at any time, or use
other than in the performance of this Agreement, during the term of this
Agreement and any extension(s) thereof, if any, and for two (2) years
thereafter, any Confidential
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Information disclosed by Discloser without obtaining prior written authorization
of Discloser.
6.3 Recipient further agrees that the Confidential Information will be
disclosed only to those of Recipient's employees, officers, directors, agents or
representatives with a need to know the Confidential Information, and only after
such individuals have signed a written instrument obligating them at least to
the extent Recipient is obligated under this Agreement.
6.4 Buyer agrees not to analyze (except as necessary to determine defects)
or reverse engineer any Products or authorize anyone else to do so. Each party's
obligations under this Section 6.4 shall cease with respect to any Confidential
Information when one of the exceptions set forth in Section 6.5 of this
Agreement applies with respect thereto or, if earlier, when and to the extent
the Discloser releases such confidential Information from such obligations.
6.5 It is understood, however, that the foregoing restrictions shall not
apply to any portion of the Confidential Information which:
(a) was previously known to Recipient without restriction on disclosure
or use; or
(b) is rightfully obtained by Recipient from a third party source
without restriction on disclosure or use; or
(c) is or becomes part of the public domain through no fault of
Recipient or its employees; or
(d) is independently ascertainable or developed by Recipient or its
employees, officers, directors, agents or representatives who have not had
access to the Confidential Information; or
(e) is required to be disclosed by administrative or judicial action;
provided that Recipient attempted to maintain the confidentiality of such
Confidential Information by asserting in such action any applicable privileges,
and immediately after receiving notice of such action, notified Discloser of
such action to give Discloser the opportunity to seek any other legal remedies
to maintain such Confidential Information in confidence as herein provided; or
(f) is approved for release by written authorization of Discloser.
6.6 Recipient acknowledges and agrees that due to the unique nature of the
Confidential Information, there can be no adequate remedy at law for any breach
of its Article VI obligations hereunder, that any such breach may allow the
Recipient or
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third parties to unfairly compete with the Discloser resulting in irreparable
harm to the Discloser, and therefore, that upon any such breach or any threat
thereof, the Discloser shall be entitled to appropriate injunctive relief in
addition to whatever remedies it might have at law. The Recipient will notify
the Discloser in writing immediately upon the occurrence of any such
unauthorized release or other breach.
6.7 All Confidential Information disclosed to or acquired by Recipient and
all inventions and developments which arise from the confidential Information,
shall be and remain the sole property of Discloser. No copies of any
Confidential Information may be made without Discloser's prior written consent.
Recipient agrees to return all Confidential Information, and any copies of same,
upon the expiration or termination of this Agreement or ten (10) days after
Discloser's request for return, whichever is earlier.
ARTICLE VII
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MISCELLANEOUS
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7.1 Sony Trading International Corporation. It is agreed between the
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parties that Buyer may, at its own discretion, have Sony Trading International
Corporation, a Japanese corporation and Affiliate of Buyer, issue purchase
orders, make payments, accept the delivery of the Products, inspect the
Products, and perform any other activities hereunder on behalf of Buyer in
accordance with the terms and conditions of this Agreement.
7.2 Entire Agreement. This Agreement contains the entire agreement of the
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parties regarding the subject matter hereof and supersedes all prior agreements,
understandings and negotiations regarding the same (including, without
limitation, the Preliminary Agreement). This Agreement may not be changed,
modified, amended or supplemented except by a written instrument signed by both
parties. Furthermore, it is the intention of the parties that this Agreement be
controlling over additional or different terms of any order, confirmation,
invoice or similar document, unless otherwise accepted in writing by both
parties. Further, waivers and amendments shall be effective only if made by
written agreements clearly understood by both parties to be an amendment or
waiver.
7.3 Assignability. This Agreement or any part hereof may not be assigned by
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either party without the prior written consent of the other party; provided,
however, that either party may assign this Agreement to any entity which
acquires substantially all of its assets or business, provided that the assignor
remains obligated hereunder.
7.4 Severability. If any provision of this Agreement shall be held illegal
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or unenforceable, that provision shall be limited or eliminated to the minimum
extent
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necessary so that this Agreement shall otherwise remain in full force and effect
and enforceable, and the parties will negotiate in good faith to restore to the
fullest extent legally possible the intent of the parties reflected in this
Agreement before such limitation or elimination.
7.5 Further Assurances. Each party hereto agrees to execute, acknowledge
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and deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
7.6 Use of Party's Name. No right, express or implied, is granted by
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this Agreement to either party to use in any manner the name of the other or any
other trade name or trademark of the other in connection with the performance of
this Agreement, except as expressly provided herein.
7.7 Notice and Reports. All notices, consent or approvals required by
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this Agreement shall be in writing sent by certified or registered air mail,
postage prepaid or by facsimile or cable (confirmed by such certified or
registered mail) to the parties at the following addresses or such other
addresses as may be designated in writing by the respective parties:
To Seller: Southwall Technologies, Inc.
0000 Xxxxxxxxxxx Xxx
Xxxx Xxxx, XX 00000 XXX
Attention: Xx. Xxxxxx X. Xxxxxxxx, President
To Buyer: Sony Trading International Corp.
TS Xxxx. 0-00-00, Xxxxx
Xxxxxx-xx, Xxxxx, 000 Xxxxx
Attention: Xx. Xxxxxx Xxxxxxxxx, Manager, International
Procurement
Notices shall be deemed effective five days after the date of mailing, if
mailed.
7.8 Relationships of the Parties. Both parties are independent
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contractors under this Agreement. Nothing contained in this Agreement is
intended nor is to be construed so as to constitute Seller and Buyer as
partners, agents or joint venturers with respect to this Agreement. Neither
party hereto shall have any express or implied right or authority to assume or
create any obligations on behalf of or in the name of the other party or to bind
the other party to any contract, agreement or undertaking with any third party.
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7.9 Waiver. The waiver by either party of a breach of any provisions
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contained herein shall be in writing and shall in no way be construed as a
waiver of any succeeding breach of such provision or the waiver of the provision
itself.
7.10 Applicable Law; Actions. All disputes arising in connection with
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this Agreement or relating to the subject matter hereof shall be finally settled
under the Rules of Conciliation and Arbitration of the International Chamber of
Commerce by one or more arbitrators appointed in accordance with those Rules.
Ordinary Law Courts will not be used to settle any dispute arising under this
Agreement or connected with the subject matter hereof, except that the parties
may apply to any court of competent jurisdiction for injunctive or other similar
relief or to enforce the decision of the arbitrators. Buyer and Seller represent
that the Rules of Conciliation and Arbitration of the International Chamber of
Commerce are known to them and that the parties are ready to comply voluntarily
with any decision. The place of arbitration shall be Palo Alto, California. The
substantive laws of Switzerland shall be applied to any arbitration proceedings
(, but the language of this Agreement and of any arbitration shall be English),
without regard to the United Nations Convention on the International Sales of
Goods. Service of process in any such action may be effected in the manner
provided in Section 7.7 of this Agreement for delivery of notices. The
prevailing party in any legal action (including arbitration) to enforce or
interpret this Agreement shall be entitled to reasonable costs and attorney's
fees.
7.11 Captions. Paragraph captions are inserted for convenience only and
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in no way are to construed to define, limit or affect the construction or
interpretation hereof.
7.12 Limited Liability. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR
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OTHERWISE, SELLER WILL NOT BE OBLIGATED OR LIABLE WITH RESPECT TO ANY SUBJECT
MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR
OTHER LEGAL OR EQUITABLE THEORY FOR (I) ANY AMOUNTS IN EXCESS IN THE AGGREGATE
OF AMOUNTS PAID TO SELLER HEREUNDER DURING THE THREE MONTH PERIOD PRIOR TO DATE
THE LAST CAUSE OF ACTION AROSE, ESTIMATED TO BE $3.75 MILLION, OR (II) ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES, OR (III) COST OF PROCUREMENT OF SUBSTITUTE
GOODS, TECHNOLOGY OR SERVICES. SELLER SHALL HAVE NO LIABILITY FOR ANY FAILURE OR
DELAY DUE TO MATTERS BEYOND ITS REASONABLE CONTROL (A "FORCE MAJEURE") OR FOR
ANY ALLOCATION OF PRODUCTS BETWEEN ITS CUSTOMERS IN THE EVENT OF A SHORTAGE.
7.13 Foreign Law. Buyer represents and warrants that neither this
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Agreement (or any term hereof) nor the performance of or exercise of rights
under this Agreement, is restricted by, contrary to, in conflict with,
ineffective under, requires
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registration or approval or tax withholding under, or affects Seller's
proprietary rights (or the duration thereof) under, or will require any
termination payment or compulsory licensing under, any law or regulation of or
binding upon or effective in Japan.
7.14 Export Control. Each party agrees to comply with all export laws and
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restrictions and regulations of the Department of Commerce or other United
States or foreign agency or authority, and not to export, or authorize the
export or reexport of any Products (or technical data or information related
thereto) or any direct product thereof in violation of any such restrictions,
laws or regulations, or, without all necessary licenses and approvals, to
Afghanistan, the People's Republic of China or any Group Q, S, W, Y or Z country
specified in the then current Supplement No. 1 to Section 770 of the U.S. Export
Administration Regulations (or any successor supplement or regulations). Buyer
will notify its customers of the obligation to comply with such export laws and
regulations.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date first written above.
SELLER
By: /s/ Xxxxxx X. Xxxxxxxx
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Title: President/CEO
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BUYER
By: /s/
--------------------------------
Title: General Manager/Sony CPC
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EXHIBIT 1
SONY-SOUTHWALL SUPPLY AGREEMENT
PRODUCT SPECIFICATIONS
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Specifications for the Anti-Reflection Film Product are attached in this
exhibit. The draft form of these specifications, identified as PS-0059 -
09/15/95, REV. B - DRAFT (13 pages), represents the current status of our
agreement. Such product specifications are anticipated to be subject to change
as improved definitions, measurement techniques and product attributes are
identified and modified. Any changes or modifications of this document require
written agreement of both parties. Specifications for Packaging, Shipping and
Storage are included in this document.
1.0 PURPOSE
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This document defines the requirements for 15" and 17" SONY CRT
Anti-Reflective Coatings.
2.0 RELATED DOCUMENTS
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2.1 Standard Method for Computing the Colors of Objects by Using the CIE
System, ASTM E 308.
2.2 Method of Measuring and Specifying Color Rendering Properties of Light
Sources, CIE 13.2.
2.3 Standard Packaging Specification, MT-0009.
2.4 Standard Test Method for Measuring Adhesion by Tape Test, ASTM D 3359.
2.5 Standard Test Method for Film Hardness by Pencil Test, ASTM D 3363.
2.6 AR1 Defect Definitions, II-0078.
3.0 PRODUCT SPECIFICATION
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NOTE 1: Physical dimensions for QC samples are located in Figure 1. Data
are to be taken at the beginning and end of each finished roll.
NOTE 2: Table 1 describes which of the items in section 3.0 are to be
measured by the QC department, measured and reported by the Post
Processing department, or are not routinely measured but are
certified to meet the appropriate specification based on
demonstrated process repeatability. Post Processing data regarding
the location of physical defects will be supplied for each roll.
NOTE 3: Items with asterisks are areas that are to be reviewed at a future
date. These items include both the current specification and
proposed goal.
3.1 PART NUMBERS.
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3.1.1 Southwall Technologies:
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17" monitors: 904-7003
15" monitors: 904-7004
3.1.2 Sony:
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17" monitors: 2-162-321-01
15" monitors: 2-162-318-01
3.2 OPTICAL SPECIFICATION.
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Note 1 Refer to Figure 1. Make scans at the center of the web and
(plus/minus) 100 mm from the center of the web for each QC sample
pulled from a finished roll. Make all scans on the Xxxxxx Xxxxx
Lambda 9 spectrophotometer equipped with an integrating sphere. Scans
are to span the wavelength region between 400nm and 820 nm, with
measurement every 5nm. Base all chromaticity measurements on color
illuminant D65 (CIE 1931).
Note 2 All reflection measurements are to be specular and made at near
normal incidence. Laminate samples (coated side out) to a specially
designed light trap (this is a laminate made up of .090" clear float
glass, approximately 11 mm (.450") of Monsanto's black PVB and a
piece of 1/8" bronze glass) using Norland type 7204 U.V. curing
adhesive.
Note 3 Smooth interference fringes set up by the index mis-match between
the PET and hard coat using a simplified least squares procedure
(from Savitzky, A. and X.X. Xxxxx: Analytical Chemistry vol. 36 no.
8, pp 1627-1639).
Note 4 Determine the coating absorption using non-laminated samples.
Measure coating absorption at the center of the web only for each QC
sample pulled from a finished roll.
3.2.1 Spectral Reflectance.
---------------------
The spectral reflection between 450 nm and 650 nm shall have an
average reflection of 0.75% or less. No measurement is to exceed 2.0%
within this wavelength region.
3.2.2 Reflection Color.
-----------------
The reflection color (x,y) is to fall within a box defined by the
following co-ordinates:
A: x= 0.13, y= 0.13
B: x= 0.13, y= 0.24
C: x= 0.20, y= 0.40
D: x= 0.34, y= 0.40
E: x= 0.34 y= 0.20
F: x= 0.24 y= 0.13
3.2.3 Visible Reflection.
------------------
The RVis (1931 standard observer with a D65 color illuminant)
will be (less than or equal to) 0.6%.
*3.2.4 Coating Bandwidth.
-----------------
The coating bandwidth is to be equal to or greater than:
Current: 1.41 Goal: 1.50 (Target date: 1/1/96).
The coating bandwidth is defined as the ratio of the long
((lambda)\\red\\) to short ((lambda)\\blue\\) wavelengths
having a reflection value of 1.0%. Use the average reflection of
the scan when determining bandwidth (i.e. all hard coat fringes
are to be averaged out as described above in section 3.0,
Note 3).
3.2.5 Crossweb Reflectance Change:
---------------------------
The crossweb reflection variation (as defined below) is to be
(less than or equal to) 0.05 (i.e. (less than or equal to) 5%).
The crossweb reflection change I/red/ is defined as the absolute
value of the center of web red wavelength ((lambda)\\CRed\\) at
1.0% reflection minus the edge ((plus/minus) 100 mm from the
center) of web red wavelength ((lambda)\\ERed\\) at 1.0%
reflection divided by the center of web red wavelength at 1.0%
reflection. Only the red portion (from 600 to 750 nm) of the
reflection spectrus is to be analyzed. Use the average reflection
of the scan when determining band width (i.e. all hard coat
fringes are to be averaged out as described above in Note 3).
I\\red\\ = |((lambda)\\CRed\\ (minus) (lambda)\\ERed\\) /
(lambda)\\CRed\\|
Where:
Cross web reflection change = I\\red\\
Center of web red wavelength = (lambda)\\CRed\\
Edge of web red wavelength = (lambda)\\ERed\\)
3.2.6 Production Absorption.
---------------------
The center of web visible absorption (AVis) (1931 standard
observer with a D65 color illuminant) is to be (less than or
equal to) 3.0%. This measurement is to be made in the center of
the web.
3.2.7 Product Haze.
------------
The product haze is not to exceed 1.5%. This measurement is to be
made in the center of the web.
3.3 COATING DURABILITY.
------------------
3.3.1 Coating Adhension.
-----------------
Refer to Figure 1. The coating shall show no evidence of damage
(ASTM D 3359 5b) after a "snap tape test" by which Scotch(R)
brand #610 cellulose tape is pressed firmly against the scribed
coating surface and quickly removed. The tape test is to be done
(plus/minus) 100 mm from the center of web for all QC samples.
3.3.2 3H Pencil Test.
--------------
Refer to Figure 1. The coating shall show no evidence of visible
deterioration after being subjected to the "3H pencil test" using
9.8 N of force (loaded with a 1000g mass). There will be a total
of 5 pulls evenly spaced across each QC sample taken from a
finished roll. Tests are to be made using Sony 3H pencil tester
part #1705637.
Visible deterioration is defined as any xxxx showing up in
reflection ONLY caused by the abrasion test. Initial digs or pits
caused by the testing are to be ignored. Any noticeable marking
or loose debris is to be cleaned with a soft lens tissue. If the
marking is not removed the sample is considered rejected.
3.3.3 Mechanical Pencil Tip Test.
--------------------------
Refer to Figure 1. The coating shall show no evidence of visible
deterioration (see section 3.3.2 for definition) after being
subjected to a mechanical pencil tip using a 1.5 N force (loaded
with a 150g mass). There will be a total of 3 tests having a
length of 100 mm long evenly spaced down the center of the web
for each QC sample pulled from a finished roll.
3.3.4 Steel Wool Test.
---------------
The product shall show no evidence of visible deterioration (see
section 3.3.2 for definition) after being subjected to 60 strokes
of steel wool #0000. The force applied is to be 2.0 N (200 g
mass) over an area of 1 cm/2/ (0.155 in/2/).
The test is to be conducted in the center portion of each QC
sample pulled from a finished roll (see Figure 1).
3.3.5 Acetone Rub Test.
----------------
The product shall show no evidence of visible deterioration,
whether before or after humidity testing, after being subjected
to 50 strokes at a force of 22 N/cm/2/ (2224 grms/cm/2/).
Test set-up:
Use a Xxxxxxxxxx Ink Rub Tester machine for this test. Raise the
area of the machine that is swept by the abrader approximately 5
mm (3/16") by attaching a 3 mm (1/8") thick by 70 mm (2.75") wide
by 140 mm (5.5") long piece of clear float glass centered under
the area being swept by the abrader. Place on top of this piece
of glass a 1.5 mm (1/16") thick piece of ABS or equivalent
plastic 125 mm (5") wide by 150 mm (6") long. Attach to the top
of the plastic and center in the area being swept by the abrader
a piece of black paper (generated by making a photocopy with the
cover open) measuring 45 mm (1.75") wide by 100 mm (4") long.
Surround this piece of paper with double-back adhesive tape to
keep the sample from moving during the test.
The abrader has a 3 mm (1/8") thick by 12.5 mm (1/2") diameter
rubber pad attached to the bottom center of the abrader. Place a
lint free towel (as prepared below) over the rubber pad with the
long axis of the towel wrapped over the edges of the long axis of
the abrader. Hold the towel in place with a rubber band.
Prepare each towel by cutting a fresh lint-free towel into
quarters. Fold one quarter section in half, making a square. Fold
twice more in the same direction making a finished towel having 8
layers and measuring 40 mm (1.5") by 150 mm (6").
Test Procedure:
The sample to be tested should be at least 50 mm (2") by 125 mm
(5") in size. Place the sample on the tester coated side up and
orientated so that the north/south axis is in line with the
motion of the abrader. Position the sample so that the double-
back tape will hold it in place.
Saturate the area of the towel covering the rubber pad with
acetone. Place the abrader into position on the machine rubber
pad/towel side down, with the towel against the sample. Add
additional weight to the top of the abrader to bring the total
weight on the sample up to 2224 grams.
Abrade the test sample using five sets of 10 strokes each. Remove
the abrader after each set of 10 strokes and check the sample for
scratching or coating removal. The sample passes if no noticeable
scratching or coating removal takes place (the sample can be
cleaned of any residue with acetone prior to being checked). Add
acetone to the towel between each set before continuing with
another set of 10 strokes.
3.3.6 Thermal Shock Test.
------------------
The product shall show no evidence of deterioration after being
exposed to an ambient temperature of (minus)54(degrees)C for 4
hours and then 71(degrees)C for 4 hours.
Refer to Figure 1 for sample size. Laminate samples to be
environmentally tested to the AR side out to a piece of 1/8"
clear float glass or equivalent using SONY supplied U.V. curable
optical adhesive. After lamination, apply a cross-web and
down-web scribe spanning the length and width of the sample. This
scribe is to penetrate the sputtered coating and continue into
the hard coat.
3.3.7 Humidity Test.
-------------
The product shall show no evidence of deterioration after being
subjected for 48 hrs to a temperature of 48.9 (plus/minus)
2.2(degrees)C and a relative humidity of 98 (plus/minus) 2%.
Refer to 3.3.6 for sample preparation.
3.3.8 Chemical Test.
-------------
The product shall show no evidence of deterioration after being
immersed for 24 hours in a solution of sodium chloride (NaCl)
that consists of 45 grams of NaCl per liter of distilled water.
The product shall show no evidence of deterioration after a 15 mm
(1/2") diameter puddle of the following agents is allowed to remain on
the AR coating surface for 24 hours:
Acetone, ethanol, methanol, isopropanol, ammonia hydroxide (50% by
volume or 30% concentration in DI H\\2\\O), acetic acid (50% by volume
in DI H\\2\\O), citric acid (10% by volume in DI H\\2\\O), artificial
perspiration (NaCl 5g, acetic acid 5 ml, butyric acid 3 ml, DI H\\2\\O
84 ml), rubber cement, office automation cleaner, 5% by volume Triton
X-10 cleansing agent, tea, ballpoint pen ink, coffee, cola, stamping
ink, felt pen, nail polish, grease pencil, lipstick, pencil lead
(soft #2).
3.4 ELECTRICAL SPECIFICATIONS.
-------------------------
Sheet resistance is measured at the center and (plus/minus) 100 mm from the
center (see Figure 1 for sample size). The product is to have an average
ohms/square value of less than 250. No individual reading is to exceed 270
ohms/square. This is measured on an LEI Contactless Conductivity Probe,
Model 1000.
3.5 PHYSICAL DEFECTS.
----------------
Physical defects are marked out in Post Processing. Unacceptable physical
defects should occur no closer than 30.48 cm (one foot), otherwise the web
is marked out continuously. If the continuously marked out section is longer
than 3.048 meters (ten feet), then the defective section is physically
removed and replaced by a splice. If a roll averages more than one defect
per two meters (one defect per six feet) after splicing out unacceptable
sections, then the entire roll is rejected.
Physical defects are marked on each side of the web no further than 5 mm
(0.20 inches) from each edge.
3.5.1 Spot Defects-Coated Side.
------------------------
The following applies to translucent defects on the coated surface.
===============================================================================
Average Size Allowable Number/Notes
-------------------------------------------------------------------------------
(greater than)0.6mm mean diameter*: None allowed
-------------------------------------------------------------------------------
0.4 mm to 0.6 mm mean 6 or less allowed per sample with a
diameter*: minimum distance of 50 mm between
defects.
-------------------------------------------------------------------------------
(less than)0.4 mm mean diameter*: unlimited provided that no more than
6 occur in a 20 mm diameter and no
more than 3 are bunched.
===============================================================================
*where mean diameter = (length + width)/2
3.5.2 Scratch Defects - Coated Side.
-----------------------------
The following applies to translucent linear defects on the coated surface
and visible in reflection only:
===============================================================================
Average Width Allowable Notes
Length
-------------------------------------------------------------------------------
(equal to or None Allowed Can be felt by dragging
greater than)0.076 mm finger nail across surface
-------------------------------------------------------------------------------
0.025 to 0.076 mm 15 mm long Can not be felt by dragging
max. finger nail across surface
===============================================================================
3.5.3 Star Defects-Coated Side.
------------------------
These defects are not allowed regardless of size. Use a 20x magnification
eye loop for identification ease.
3.5.4 Cross Web Cracks-Coated Side.
----------------------------
Cross web cracks in the coating which extend more than 5 mm (0.197 inches)
from the edge are unacceptable.
3.5.5 Feathers-Uncoated Side.
----------------------
Feathers which are larger than 3mm (0.118 inches) are not acceptable.
3.5.6 Scratches - Uncoated Side.
-------------------------
Scratches on the backside of AR1 material which are visually
detectable after being laminated to a glass sheet using Sony's UV
cured adhesive are not acceptable. Use Sony provided samples to
determine acceptability. Generally these scratches have
dimensions as outlined below.
===============================================================
Average Width Allowable Length Notes
---------------------------------------------------------------
XXX XXX TBD
===============================================================
3.5.7 Web Distortion.
--------------
Web distortion which results in an uneven surface after
lamination using Sony's UV curable adhesive is not acceptable.
(Limit samples will be provided by Sony.)
3.5.8 Stains.
------
Stains which cannot be wiped off are not acceptable if the mean
diameter is greater than 0.6 mm (0.024 inches).
3.5.9 Curl Specification.
------------------
See Figure 1 for sample size. No QC sample is to show more than a
5.0 mm (0.197") curl along any edge when viewed with the coating
side up. Wind all QC samples onto 6" laboratory cores prior to
being cut to the required size.
Measure QC samples after allowing for 24 hours of relaxation
stored in a flat or unwound condition.
3.6 Post Processing.
---------------
3.6.1 Material Width:
--------------
15" Monitors: Coated material is to be slit to
240(plus/minus) 1.0 mm.
17" Monitors: Coated material is to be slit to
269(plus/minus) 1.0 mm.
3.6.2 Centering.
---------
Center slit material onto the re-wind core within (plus/minus)
1.5 mm (0.06") from one edge of the core.
3.6.3 Roll size.
---------
The maximum roll weight (core and product only) is 18.2 Kg (40
lbs). This equates to a roll length of approximately 255 M (837
ft) for 269 mm wide. The maximum roll length is not to exceed
this length for either 269 mm (17" monitors) or 240 mm (15"
monitors) material widths. The minimum roll length is 200 M (656
ft).
3.6.4 Wrap.
----
Wind material onto cores coated side out.
3.6.5 Core Dimension.
--------------
Wind slit material onto 6" Schedule 40 ABS type plastic cores
having a 154 (STOCK) mm (6.063") I.D. and a 168 (STOCK) mm
(6.625") O.D. Use a core length of 275 (plus/minus) 3 mm (10.827
(plus/minus) .12"). The edges of the cores are to be
perpendicular to the central axis to within (plus/minus) 0.4 mm
(0.015") with a surface flatness of 0.4mm (0.015").
3.6.6 Defect Location.
---------------
All rolls are to have tables or graphs explaining the location of
xxxx-outs and splices.
3.6.7 Roll Splicing/Xxxx-outs.
-----------------------
Limit splices to 3 per roll. Use 1 mil Kapton tape on both side
of the joint for splices.
Xxxx out all rejectable areas with a Sharpie or equivalent
permanent marker within 5 mm (1 inch) of either edge.
3.6.8 Escapes.
-------
Escapes are optical or physical non-conformities that have been
missed during the material inspection process. Goal: "Escapes"
are not to exceed 3%.
Table 1: Items to be measured for each QC sample pulled from a finished
roll.
==============================================================================
Item Number/Description Measurement Scheme
==============================================================================
3.2.1 Spectral Reflectance QC Measured
------------------------------------------------------------------------------
3.2.2 Reflection Color QC Measured
------------------------------------------------------------------------------
3.2.3 Visible Reflection QC Measured
------------------------------------------------------------------------------
3.2.4 Coating Bandwidth QC Measured
------------------------------------------------------------------------------
3.2.5 Crossweb Reflectance QC Measured
------------------------------------------------------------------------------
3.2.6 Product Absorption QC Measured
------------------------------------------------------------------------------
3.2.7 Product Haze QC Measured
------------------------------------------------------------------------------
3.3.1 Coating Adhesion QC Measured
------------------------------------------------------------------------------
3.3.2 3H Pencil Test QC Measured
------------------------------------------------------------------------------
3.3.3 Mechanical Pencil Tip Test QC Measured
------------------------------------------------------------------------------
3.3.4 Steel Wool Test QC Measured
------------------------------------------------------------------------------
3.3.5 Acetone Rub Test QC Measured
------------------------------------------------------------------------------
3.3.6 Thermal Shock Certified to meet spec.
------------------------------------------------------------------------------
3.3.7 Humidity Test Certified to meet spec.
------------------------------------------------------------------------------
3.3.8 Chemical Test Certified to meet spec.
------------------------------------------------------------------------------
3.4.1 Resistance, Xxxx to Xxxx QC Measured
------------------------------------------------------------------------------
3.4.2 Resistance, Sheet QC Measured
------------------------------------------------------------------------------
3.5.1 Spot Defects Post Processing Measured
------------------------------------------------------------------------------
3.5.2 Scratch Defects Post Processing Measured
------------------------------------------------------------------------------
3.5.3 Star Defects Post Processing Measured
------------------------------------------------------------------------------
3.5.4 Cross Web Cracks Post Processing Measured
------------------------------------------------------------------------------
3.5.5 Feathers Post Processing Measured
------------------------------------------------------------------------------
3.5.6 Scratches - Uncoated Post Processing Measured
------------------------------------------------------------------------------
3.5.7 Web Distortion Post Processing Measured
------------------------------------------------------------------------------
3.5.8 Stains Post Processing Measured
------------------------------------------------------------------------------
3.5.9 Curl Specification QC Measured
------------------------------------------------------------------------------
3.6.1 Material Width Post Processing Measured
==============================================================================
4.0 SHIPPING AND PACKAGING
----------------------
4.1 Package all product for shipment according to STI's standard packaging
specification number MT-0009.
4.2 Place desiccant on the outer wrap of all rolls prior to covering the
roll with the polyethylene roll bag.
4.3 Box only one roll in each telescoping type box (this type of a box
provides quadruple wall protection). Use this packaging for air or
ground freight only. Additional packaging or crating is required for
ocean shipment. Inside box dimensions are 381 mm (15") X 381 mm (15") X
318 mm (12.5").
4.4 ROLL INFORMATION.
----------------
Ship rolls that are within specification with the QC and Post Processing
data and any appropriate defect location tables. Material that does not meet
specification will be evaluated by a Southwall Material Review Board. If it
is deemed likely to be usable by Sony, it will be shipped accompanied with
QC results and comments from the Material Review Board.
4.5 STORAGE
-------
4.5.1 Store rolls remaining in their shipping boxes in a horizontal
position. Store rolls that have been removed from their shipping boxes
in either a horizontal or vertical position.
4.5.2 All rolls are to be supported by their end plates when boxed, stored,
or being transported and are to remain banded with end plates and
protective plastic cover until use.
4.5.3 Do not store rolls more than 1 year.
4.5.4 Do not allow un-boxed rolls to remain in direct sunlight for more than
1 hour.
4.5.5 Storage temperature is not to exceed 50(degree)C (122(degree)F) with a
relative humidity of 90%.
Figure 1. Approximate inspection locations and dimensions for SONY Q.C.
measurements.
[CHART APPEARS HERE]
6. Numbers in parenthesis are dimensions for 15" monitors.
5. Both Mechanical and Pencil Tests are to use 10 mm long pulls.
4. Unless otherwise noted, all dimensions are (plus/minus) 1.0 mm.
3. Scale = None.
2. Approximate location for 5 EA. 3H Pencil Test.
1. Approximate location for 2 EA. Cross Hatch Peel Test.
NOTES: UNLESS OTHERWISE SPECIFIED
EXHIBIT II
SONY - SOUTHWALL SUPPLY AGREEMENT
PRICES
------
CURRENT ORDER - THROUGH Q3-1995
The price of product to SONY shall continue at U.S. $10.00 per linear foot (for
product in widths for both 15" and 17" CRTs) until Purchase order No. STI-001
(from STIC), dated April 24, 1995, is complete (anticipated in early October,
1995). The price does not include the cost of hardcoated substrate. The product
price shall be FOB Palo Alto factory.
Substrate has been provided by STIC, free of charge, except freight and duty,
which have been paid by STI. Should SONY elect to chare STI for substrate, the
price of product to SONY shall be adjusted, with allowance for STI production
yields, so as to fully compensate STI for all costs of purchase and use of
vendor's (Teijin) hardcoated substrate.
NEW ORDER FOR Q4-1995
For any new orders covering purchases in Q4-1995, the price of product to SONY
shall be determined by negotiation prior to placement of order. The product
price shall be FOB Palo Alto factory.
Should SONY elect to charge STI for substrate, the price of product to SONY
shall fully compensate STI for all costs of purchase and use of vendor's
(Teijin) hardcoated substrate.
