Equipment Procurement Agreement
Exhibit 10.13
Confidential
This Equipment Procurement Agreement (the “Agreement”) is made and entered into as of
this 31st day of August, 2006 (the “Effective Date”) by and between OmniVision Trading (Hong Kong)
Co. Ltd., a company duly incorporated and existing under the laws of the Hong Kong, having its
registered office at Xxxx 0-0, 0X, Xxxx Xxxx Xxxxx Xxxxx 1, 88 Container Port Rd. Xxxx Xxxxx, N.T.,
Hong Kong, (hereinafter, “OmniVision”), and XinTec Inc., a company duly organized and existing
under the laws of the Republic of China, having its principal business address at 0X, Xx. 00,
Xx-Xxx Xxxx, Xxxxx-Xx Industry Park, Tao Yuan Hsien, Taiwan, R.O.C., (“XinTec”). OmniVision and
XinTec are each sometimes referred to as a “Party” or collectively as the “Parties.”
RECITALS
WHEREAS, OmniVision and its affiliates are in the business, among others, of design,
development and manufacturing of certain CMOS Image Sensor (“CIS”) products;
WHEREAS, XinTec is in the business, among others, of providing certain Wafer Level Packaging
(“WLP”) services;
WHEREAS, XinTec desires to provide the WLP services to OmniVision on the terms and conditions
of a manufacturing agreement (the “Manufacturing Agreement”) to be negotiated by the Parties, and
OmniVision desires to procure certain equipment to be placed at XinTec, solely for XinTec to
provide the WLP services to OmniVision.
NOW THEREFORE, in consideration for XinTec to provide WLP services to OmniVision, and for
mutual covenants and promises contained herein, the Parties hereto agree as follows:
1 SCOPE AND CONDITIONS OF PROCUREMENT
1.1 The Equipment. Subject to the terms and conditions of this Agreement, OmniVision
agrees to procure, through XinTec, certain equipment (each individually or collectively, the
“Equipment”)for purpose of setting up the CSP2 and CSP3 production lines at XinTec for the WLP
services, and XinTec agrees to place orders, accept and install or have installed such Equipment.
1.2 Purchase Procedures. XinTec shall submit for acknowledgement and approval by
OmniVision the list or lists of such Equipment as required for setting up the production lines
contemplated by both Parties, along with i) the purchase schedule in line with the Clean Room
progress set forth in Section 1.4 below; and ii) the quotations from suitable equipment vendors.
Upon confirmation by OmniVision, XinTec may place the purchase orders to the pre-approved equipment
vendors. Equipment purchased and to be purchased shall be attached hereto as Exhibit A, and may be
modified from time to time as necessary and as agreed by both Parties. OmniVision and XinTec shall
negotiate in good faith and finalize the complete list of Equipment and purchase schedules within
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three (3) months after Effective Date. Subject to written approval of OmniVision, any advance
payment made by XinTec on behalf of OmniVision towards the procurement of the Equipment will be
reimbursed by OmniVision pursuant to the provisions set forth herein.
1.3 Purchase Fund. Subject to the terms and conditions of this Agreement, OmniVision
agrees to remit fund to XinTec periodically (each a “Purchase Fund”) for the procurement of the
Equipment in accordance with the approved list(s) and schedule(s) pursuant to Section 1.2 above.
The Purchase Fund shall be held in a separate account and in trust for the benefit of OmniVision.
The Purchase Fund will be disbursed and replenished from time to time for the payment of the
Equipment or reimbursement of the advance payments made by XinTec. All disbursements and
reimbursements shall be properly documented against duly issued invoices of the equipment vendors,
together with packing lists, bills of ladings, and/or other commercial papers. In no event shall
the Purchase Fund or any portion of it be used for any other purpose whatsoever. XinTec shall keep
detailed records of such account and submit to OmniVision for review at least once a month, or
sooner upon receipt of each shipment of Equipment pursuant to Section 1.5. Notwithstanding any
provisions to the contrary, the aggregate purchase prices, inclusive of all shipping costs, labor
costs, taxes, duties, insurances and installation fees, of the Equipment shall not exceed Fifty
Million US Dollars ($50,000,000) (the “Maximum Purchase Price”). XinTec agrees that any amount
over the Maximum Purchase Price shall be XinTec’s sole obligation. Upon disbursement and
reimbursement of the complete list of the Equipment permitted herein, any balance of Purchase Fund,
if any, shall be returned promptly to OmniVision.
1.4 Clean Room Construction. In conjunction with and conditional to the Equipment
procurement and continuing procurement, XinTec shall, at its own expenses and costs, build up the
clean room or rooms (together, the “Clean Room”) , including all equipment and facilities required
therefor, at the following fabrication facilities, in accordance with the construction schedule
agreed between the Parties.
Fab 1: Xx. 00, Xx-Xxx Xxxx, Xxxxx-Xx Industry Park
Fab 2: (to be filled in)
1.5 Acknowledgement of Receipt. XinTec shall inform OmniVision promptly (but no later
than 48 hours upon receipt of each Equipment shipment), and acknowledge the receipt of the
Equipment by providing OmniVision with one set of receipts, together with final invoices and
commercial papers, if available. Any invoices and commercial papers not timely submitted shall be
produced to OmniVision with the monthly reports as required in Section 1.3.
1.6 Installation. It is the sole responsibility of XinTec to have the Equipment
properly installed at the fabrication facilities specified in Section 1.4. XinTec shall inspect
and test the Equipment to ensure it meets all engineering and technical specifications and
requirements within sixty (60) days after receipt of the Equipment.
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XinTec shall issue certificate of acceptance (the “Certificate of Acceptance”) and notify
OmniVision in writing at the end of such inspection and test. If more time is needed to test the
Equipment, XinTec shall promptly provide OmniVision with a written notice with explanation, and
obtain OmniVision’s consent, provided that such consent shall not be unreasonably withheld.
2 OWNERSHIP AND CUSTODY
2.1 Title of Ownership. OmniVision shall take the title (the “Title”) to the
Equipment as soon as practicable after the Equipment is installed at each XinTec fab but no later
than the delivery of the Certificate of Acceptance pursuant to Section 1.6 above. Upon such
delivery, Title shall be transferred and pass unto OmniVision at the location where the Equipment
is installed. Prior to the Title transfer unto OmniVision, the Title of the Equipment shall be
held by XinTec and in trust for the benefit of OmniVision. XinTec shall use due care and ensure
that the Equipment will not be subject to any claim made by a creditor of XinTec or any other
party.
2.2 Covenants. XinTec shall take the necessary steps in order to safeguard
OmniVision’s right, title, interest and ownership in the Equipment. XinTec agrees and covenants not
to sell, assign, donate, transfer, or pledge by way of security or otherwise the Equipment to third
parties under whatsoever conditions, or in any way transfer its rights to use to any other party.
2.3 Duty of Care. XinTec shall be responsible for the custody of the Equipment during
the term of this Agreement. XinTec agrees to exercise all due and reasonable care in the handling,
operation and maintenance of the Equipment.
2.3.1 Distinctive Label. XinTec shall identify the Equipment so as not to confuse
with other equipment in the possession of XinTec. This identification shall be done by distinctive
labeling or marking as reviewed and agreed by OmniVision.
2.3.2 Insurance and Loss and Damage. XinTec shall be liable for all risks of loss or
damage of or to the Equipment prior to the Title transfer to OmniVision pursuant to Section 2.1.
XinTec shall subscribe to an insurance policy and XinTec hereby represents to OmniVision that it
does have such policy in place, covering the Equipment at full value and for the benefit of
OmniVision, up to the point when the Title is properly transferred unto OmniVision pursuant to
Section 2.1. XinTec agrees to produce such proof of insurance upon requested by OmniVision. It is
responsibility of OmniVision to subscribe and have in place proper insurance policy covering the
Equipment from the point Title passes unto OmniVision. In case of loss or damage, XinTec shall i)
report to OmniVision in writing immediately; ii) provide necessary assistance for OmniVision to
file the insurance claims; and iii) promptly remit to OmniVision the proceeds received by it, if
any, under any and all insurance policy.
3 OPERATION AND MAINTENANCE
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3.1 Use of Equipment. XinTec agrees and covenants that the Equipment will be only
used for manufacturing of the products of OmniVision and/or its designated entities or licensees,
or, subject to OmniVision’s prior written consent, of such limited amount of products of other
party as reasonably necessary for purposes of fab maintenance and operational adjustment, provided
that such consent shall not be unreasonably withheld by OmniVision. XinTec agrees to permit
OmniVision or its representative to enter its premises at any time during the XinTec’s
usual business hours, for the purpose of examining and inspecting the Equipment.
3.2 Maintenance. XinTec shall at its cost and expense follow the operation
instruction and maintenance schedule as suggested by the equipment manufacturer at the time of
delivery and such procedures as the equipment manufacturer may from time to time establish in
writing. XinTec shall bear all the costs for the repair and maintenance.
3.3 Indemnification. OmniVision shall not be liable for any damages or losses
including any bodily injury, damages to property and other losses sustained by XinTec, its
employees, or any other third parties as a result of the use of the Equipment. XinTec agrees to
indemnify, defend and hold OmniVision and its affiliated companies and their directors, officers,
employees, and agents harmless from and against any and all claims (including those for personal
injury or death) and liabilities (including without limitation attorneys’ fees and other costs)
arising out of or attributable to the use of the Equipment.
3.4 Location. XinTec shall not move the Equipment, in whole or in part, to any
location other than the locations specified in Section 1.4 without prior written approval by
OmniVision.
4 FURTHER UNDERSTANDINGS AND COVENANTS
4.1 Agreement to Manufacture. Both Parties shall negotiate in good faith and enter
into as soon as applicable, but no later than three (3) months after this Agreement, the
Manufacturing Agreement consistent with the provisions contained herein, as well as common
industrial practices.
4.1.1 Capacity Commitment. Upon installation of the Equipment, XinTec agrees to ramp
up the production capacity to process at minimum [***] (including Fab 1 and Fab 2) and shall
dedicate such capacity to fulfill the orders placed by OmniVision.
4.1.2 Per Wafer Price. The prices for the WLP services charged by XinTec to
OmniVision shall be negotiated by both Parties in good faith, taking into consideration of
contributions of OmniVision’s Equipment and then market conditions as well as cost reduction
measures available. However, in no event shall the price exceed [***].
4.2 Confidentiality. Each of the Parties hereto agrees not to disclose to any third
party the terms or conditions of this Agreement without the prior written consent of
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the other Party hereto, except (i) to accountants, consultants, and insurance company on a
need-to-know basis under conditions which reasonably ensure the confidentiality thereof; (ii) as
required by any court or other governmental body; (iii) as otherwise required by law; (iv) in
confidence to legal counsel of such parties; (v) in confidence, in connection with the enforcement
of this Agreement or rights under this Agreement; (vi) in confidence, in connection with a merger,
acquisition of stock or assets, proposed merger or acquisition, or the like; or (vii) as advisable
or required in connection with any government or regulatory filings, including without limitation
filings with the SEC and disclosures reasonably recommended by financial advisors. The obligations
of confidentiality provided in this shall survive the expiration or termination of this Agreement,
and for three (3) years thereafter.
5 TERM AND TERMINATION
5.1 Term. This Agreement shall commence on the Effective Date, and unless early
terminated pursuant to this Section 5 , shall remain in full force and effect until the expiration
or termination of the Manufacturing Agreement, plus any necessary negotiation period immediately
preceding the execution of the Manufacturing Agreement as set forth in 4.1. The Agreement shall be
automatically extended in conjunction with the Manufacturing Agreement.
5.2 Termination for Cause. In the event of a material breach of this Agreement, or
any major terms of the Manufacturing Agreement, then the non-defaulting party may give a written
notice to the defaulting party to cure the deficiency. If the default is not cured within 30 days,
the non-defaulting party may terminate this Agreement immediately after that period. For purpose
of clarification, time is of essence to OmniVision and any breach of such, and among others, breach
of the Clean Room construction as set forth in Section 1.4 and capacity commitment set forth in
Section 4.1.1, shall be material breach contemplated herein.
5.3 Termination for Convenience. OmniVision may terminate this Agreement for any or
for no reason upon ninety (90) days prior written notice to XinTec.
5.4 Insolvency. OmniVision shall have the right to terminate this Agreement
immediately upon (i) a petition or other application or resolution being filed or passed by or
against XinTec in a bankruptcy proceeding or any other proceeding for the protection of creditors,
or notice of its intention to propose or file such a resolution, application, or petition, (ii) the
winding up, liquidation or dissolution of the XinTec or any material portion of its assets; or
(iii) the appointment of a receiver, or manager, for all or any material part of XinTec’s assets.
5.5 Effect of Termination.
5.5.1 No Release. Termination or expiration of this Agreement for any reason shall
not release either Party hereto from any liability which at the time of such termination or
expiration has already accrued to the other Party.
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5.5.2 Return / Disposal of Equipment. Upon expiration or termination of this
Agreement, XinTec shall immediately stop using the Equipment and promptly ship or cause to ship at
the cost of OmniVision, the Equipment to OmniVision designated location. All the Equipment will be
shipped “AS IS” except for the loss and damages for which XinTec is responsible. At its sole
discretion, OmniVision may otherwise dispose the Equipment and XinTec shall fully cooperate with
such disposal. XinTec may purchase the Equipment at a price based on the then fair market value of
the Equipment.
5.5.3 Survival. Sections 2.1 (Title of Ownership), 3.3 (Indemnification), 4.2
(Confidentiality), 5.5 (Effect of Termination), and 6 (General), together with any and all
outstanding balance of Purchase Price set forth in Section 1.3 or insurance proceeds set forth in
Section 2.3.2 due and payable to OmniVision, shall survive any termination or expiration of this
Agreement. All other terms and conditions of this Agreement shall terminate, and have no further
force or effect, at such time.
6 GENERAL
6.1 No Agency. The parties do not intend that any agency or partnership relationship
be created between them by this Agreement.
6.2 Modification. This Agreement may be amended or modified only in writing signed by
both parties.
6.3 Governing Law; Jurisdiction and Venue. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without giving effect to its
conflict of laws principles. OmniVision and XinTec agree that all dispute and litigation regarding
this Agreement shall be subject to the exclusive jurisdiction and venue of the federal or state
courts located in County of Santa Xxxxx, State of California.
6.4 Notices. Any notice required or permitted hereunder shall be in writing and shall
be deemed effectively given upon personal delivery, three days after deposit in the United States
mail, by certified mail, postage prepaid, return receipt requested, or the day after delivery to a
recognized overnight courier, to the following addresses:
| If to OmniVision: | OmniVision Trading (HK) Co. Ltd. | |||
| Xxxx 0-0, 0X, Xxxx Xxxx Xxxxx Xxxxx 1 | ||||
| 88 Container Port Rd. Xxxx Xxxxx, N.T. | ||||
| Hong Kong, | ||||
| Attn: Director | ||||
| With a copy to: | OmniVision Technologies, Inc. |
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| 0000 Xxxxxxx Xxxxx | ||||
| Xxxxxxxxx, XX00000 | ||||
| Attn: General Counsel | ||||
| If to XinTec: | XinTec, Inc. | |||
| 0X, Xx. 00, Xx-Xxx Xxxx | ||||
| Xxxxx-Xx Industry Park | ||||
| Tao Yuan Hsien, Taiwan, R.O.C. | ||||
| Attn: President |
Such addresses may be changed, from time to time, by means of a notice given in the manner provided
in this Section 6.4.
6.5 Severability. If all or part of any section, paragraph or provision of this
Agreement is held invalid or unenforceable, it shall not have any effect whatsoever on any other
section, paragraph or provision of this Agreement, nor on the remainder of the said section,
paragraph or provision, unless otherwise expressly provided for in this Agreement.
6.6 Headings. The headings in this Agreement have been inserted solely for ease of
reference and shall not modify, in any manner whatsoever, the meaning or scope of the provisions
hereof.
6.7 No Waiver. Under no circumstances shall the failure, negligence or tardiness of a
Party as regards the exercise of a right or a recourse provided for in this Agreement be considered
to be a waiver of such right or recourse.
6.8 Cumulative Rights. All rights set forth in this Agreement shall be cumulative and
not alternative. The waiver of a right shall not be interpreted as the waiver of any other right.
6.9 Entire Agreement. This Agreement constitutes the entire understanding between the
Parties concerning the subject matter hereof, and shall supersede any and all prior communications,
representations, promises or understandings.
6.10 No Right to Transfer. Neither of the Parties may, in any manner whatsoever,
assign, and transfer nor convey its rights in this Agreement to any third party, without the prior
written consent of the other Party.
6.11 Successors. This Agreement shall bind the Parties hereto as well as their
respective successors, heirs and assigns.
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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized representatives to execute
this Agreement on the date first written above.
| XinTec Inc.: | OmniVision Trading (Hong Kong) Co. Ltd.: | |||||||
By:
|
By: | |||||||
Title:
|
Title: | |||||||
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EXHIBIT A
EQUIPMENT LIST AND PURCHASE SCHEDULE
Fab 1, Equipment List, see, Attachment I; [***]
Fab 2, Equipment List, see, Attachment II (to be completed and finalized 3 months after, pursuant
to Section 1.2). [***]
| XinTec: | OmniVision: | |||||||
By:
|
By: | |||||||
Title:
|
Title: | |||||||
Date:
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Date: | |||||||
| *** | Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. |
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