ADDENDUM NO. 2 TO
TECHNOLOGY ELECTRONIC ASSEMBLY AND MANAGEMENT (T.E.A.M) PACIFIC CORPORATION
AND
THREE-FIVE SYSTEMS, INC.
AGREEMENT FOR THE ASSEMBLY OF OPTOELECTRIC AND OTHER RELATED PRODUCTS
THIS ADDENDUM NO. 2 TO THE AGREEMENT FOR THE ASSEMBLY OF OPTOELECTRIC AND OTHER
RELATED PRODUCTS ("Addendum No. 2") is entered into as of the 1st day of
January, 1998, by and between TECHNOLOGY ELECTRONIC ASSEMBLY and MANAGEMENT
(T.E.A.M.) PACIFIC CORPORATION, a Philippine Corporation, with principle offices
located at FTI Complex, Taguig Metro Manila, Philippines (hereinafter referred
to as "TEAM") and THREE-FIVE SYSTEMS, INC., a Delaware, U.S.A. corporation, with
its principle place of business located at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx,
Xxxxxxx 00000 (hereinafter referred to as "TFS").
RECITALS
A. On February 1995, TEAM and TFS entered into an agreement ("the
"Original Agreement") for the manufacture of optoelectric and other related
products( hereinafter referred to as "Products"). On March 12, 1997, the
Original Agreement was amended (the "Addendum No. 1").
B. TEAM and TFS now wish to add a second addendum to the Original
Agreement.
In consideration of the foregoing recitals and mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:
AGREEMENT
Section 1 Definitions.
The following terms are used in this Addendum No. 2:
1.1 Contract Exchange Rate: Shall be defined as the exchange rate
identified in Section V of the Original Agreement (US$1.00 = 27.00 Philippine
Pesos).
1.2 Spot Exchange Rate: Shall be defined as the actual exchange rate
reported in the Western Edition of the Wall Street Journal on date prior to
invoice payment date.
1.3 Contract Amount: Shall be in accordance with Section V (B)
calculations of the Original Agreement as modified by Addendum No. 1.
1.4 Contract Period: Shall commence as of February 22, 1995 and run
through any applicable payment date.
1.5 Lease Amount: Shall be the US$21,384 amount that TFS pays to Team
monthly for rent pursuant to the Lease Agreement between the parties.
1.6 Contract Amount Gain: Shall be defined as the excess (or deficit,
as the case may be) amount of money accrued by TFS on the payment of the
Contract Amount as the result of the payment of such Contract Amount being fixed
in Pesos at the Contract Exchange Rate and the Spot Exchange Rate of Pesos to US
dollars being higher or lower than the Contract Exchange Rate. To illustrate
this situation,
shown below is a sample computation assuming that the invoiced amount is
US$500,000 and that the Spot Exchange Rate at the time of invoicing was US$1.00
= 30.00 Philippine Pesos.
Invoice amount US $ 500,000.00
Multiply by Contract Exchange Rate X 27.00
-----------------------
Invoice Amount in Pesos PHP 13,500,000.00
Divide by Spot Exchange Rate / 30.00
-----------------------
Contract Amount to be paid in USD US $ 450,000.00
Contract Amount Gain US $ 50,000.00
=======================
1.7 Lease Amount Gain (Loss): Shall be defined as the excess (or
deficit, as the case may be) amount of money accrued by Team on the receipt of
the Lease Amount as the result of the payment of such Lease Amount being fixed
in dollars and the Spot Exchange Rate of Pesos to US dollars being higher or
lower than the Contract Exchange Rate. To illustrate this situation, shown below
is a sample computation assuming that the Spot Exchange Rate at the time of
invoicing was US$1.00 = 30.00 Philippine Pesos as compared with the Contract
Exchange Rate of US$1.00 = 27.00:
Lease Amount US $ 21,384.00
Multiply by Contract Exchange Rate X 27.00
--------------------
Lease Amount in Peso PHP 577,368.00
Divided By Spot Exchange Rate / 30.00
--------------------
Lease Amount In Dollars US $ 19,241.00
Lease Amount Gain US $ 2,138.00
====================
1.8 Net Exchange Rate Gain (Loss): Shall be defined as the sum of the
Contract Amount Gain (Loss) and the Lease Amount Gain (Loss).
Section 2 Responsibility and Payment for Net Exchange Rate Gain and Loss
2.1 Contract Amount Gain. TFS will retain 100% of all Contract Amount
Gains up to the date until all prior Contract Amount Losses incurred by TFS have
been offset against all such Contract Amount Gains. Upon the occurrence of this
offset event, TFS will thereafter pay TEAM an amount equal to (a) 30% of the Net
Exchange Rate Gain existing for any given invoicing period less (b) the Lease
Amount Gain for that same period. As of the date of this Agreement, the offset
date occurred as described in Attachment A.
2.2 Net Exchange Rate Loss. From and after the date of this Agreement,
upon the occurrence of a Contract Amount Loss, TEAM will pay to TFS an amount
equal to (a) 30 percent of the Net Exchange Rate Loss existing for any given
invoicing period less (b) the Lease Amount Loss for the same period. Team will
only be required to make payments under this Section 2.2 until the amounts paid
by TEAM pursuant to this Section 2.2 equal the amounts received by TEAM pursuant
to Section 2.1. Thereafter, TFS will bear 100 percent of the Contract Amount
Loss.
2.3 Catch Up. The calculation of the payments due under this Agreement
as of February 4, 1998 is set forth on Attachment A of this Addendum No. 2 and
shall be paid immediately upon the signing of this Addendum No. 2.
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Section 3 Integration
To the extent that this Addendum No. 2 conflicts with the Original
Agreement or Addendum No. 1, this Addendum No. 2 shall control. Otherwise, the
Original Agreement, Addendum No. 1 and this Addendum No. 2 will be considered as
one document.
The parties hereto have executed this Addendum as of the day and year
first above written.
THREE-FIVE SYSTEMS, INC TEAM PACIFIC CORPORATION
By: By:
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Name: Name:
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Its: Its:
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