Exhibit 10.63
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MANUFACTURING AGREEMENT
This Manufacturing Agreement (the "Agreement") is entered into as of
October 12, 2001, by and between RF Monolithics, Inc., a corporation duly
organized under the laws of the State of Delaware, having its principal place of
business at 0000 Xxxxx Xxxx, Xxxxxx, XX, 00000, X.X.X. (hereinafter referred to
as "Company") and Tai-Saw Technology Co., Ltd. a corporation duly organized and
existing under the laws of the Taiwan with its principal place of business at
Xx. 0, Xxxxxxxxxx 0xx Xx., Xxxx-Xxxx Industrial District, Taoyuan, 324, Taiwan,
R.O.C. (hereinafter referred to as "Contractor").
RECITALS
WHEREAS, Company desires to enter into an agreement with Contractor for
certain engineering, manufacturing and production services for Products (defined
below), whereby Contractor will Manufacture (as defined below) for Company
certain Products at the Factory (as defined below) in accordance with the
Specifications and instructions of Company; and
WHEREAS, Contractor is willing to Manufacture the Products for Company and
provide such services under the terms and conditions set forth below.
NOW THEREFORE, in consideration of the premises and mutual promises,
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1. General Definitions. The terms set forth below in this Section 1 shall
have the meanings ascribed to them below:
Affiliate: with respect to any Person, means any Person that directly
or indirectly controls, is controlled by or is under common control with such
Person.
Annual Review Process: means the process conducted by Company and
Contractor to review commitments for the coming year concerning Product pricing,
production levels, quality and service levels. This process normally occurs
during Company's first fiscal quarter (the three months ended November 30), to
review the previous year's performance.
Approved Vendor: shall have the meaning defined in Section 2.1(d)
hereof.
Approved Vendor List: shall have the meaning defined in Section 2.1(d)
hereof.
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Best Efforts: shall mean a party's efforts in accordance with
reasonable commercial practice and/or consistent with its past practice.
Consignment: shall mean property, including but not limited to
equipment and Materials, that is owned by the Company that is used by the
Contractor to fulfill the purposes of this Agreement.
Control Plan: shall mean a written description of the system used for
controlling the manufacturing process. The system typically includes, but is not
limited to, process control measurements, tolerances and sample plans.
Defective Unit: shall mean Products returned from Company's customers
that do not meet specification due to Manufacturing problems. Reference Section
2.2(b).
Die: shall mean the individual SAW device. A processed wafer may
contain as few as approximately 50 die or as many as 3,000 die.
Electrical Test: shall mean a verification of the electrical functions
of Products.
Full Service: shall mean the process to Manufacture the Product where
the Product is the packaged SAW device and the process begins with wafer
fabrication through Die assembly, hermetic sealing, final Electrical Test and
final packaging for shipment.
FCA: shall mean Free Carrier as defined in Incoterms 2000 as published
by the International Chamber of Commerce.
Factory: shall mean the Contractor's manufacturing facility for
Products located at Ping-Chen Industrial District, Taoyuan, Taiwan.
Finished Goods: shall mean any Product that is 100% complete, tested,
and packed in a shipping container awaiting shipment to Company.
Finishing Materials: shall mean wafer carriers, tape-and-reels, tubes,
labels, tickets and shipping cartons used to ship Finished Goods per Company
Specifications
Manufacture: shall mean the complete process (Full Service) or a
portion of the process (Wafer Foundry) of wafer fabrication, Product assembly,
Electrical Test and packaging for shipment as required under this Agreement.
Manufacturing shall also include engineering the design for optimum yield and
cost.
Manufacturing Data: shall mean all data prepared in connection with
the performance of services under this Agreement, including, but not limited to,
any reports,
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drawings, sketches, formulas, designs, analyses, graphs, notes, memoranda and
notebooks.
Manufacture Defect: shall mean any defect which is attributable to the
Manufacture of a Product by Contractor under this Agreement.
Materials: shall mean raw materials required by Contractor to
Manufacture the Products.
New Products: shall mean new items or variations of current Products
that the Company and the Contractor have agreed in writing to be covered by this
Agreement.
Order: shall mean purchase order issued by the Company.
Other Support Services: shall have the meaning defined in Section 2.3
hereof.
Person: shall mean any individual, firm, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization, government or agency or subdivision thereof or any other entity.
Product: shall mean the Products Manufactured according to
Specifications and other Technical Information and Data provided from
time-to-time by Company and agreed to, in writing, by Contractor.
Provided Equipment: shall mean any equipment, including but not
limited to, manufacturing and Electrical Test equipment, including test
fixtures, supplies, Materials, and documentation which Company provides to
Contractor for use in providing services under this Agreement and for which
Company retains title of ownership
Quarterly Operations Reviews: shall mean the process conducted by
Company and Contractor to review yields, cycle times, delivery performance,
quality metrics and cost reduction roadmaps. This process normally occurs within
3 weeks of the end of the Company's fiscal quarter (Nov. 30, Feb. 28, May 31,
Aug. 31).
SAW: shall mean surface acoustic wave device
Shipping Date: shall mean the date on which the finished Product is
delivered to the freight forwarder designated by Company.
Specifications: shall mean drawings, criteria, and documented
specifications including but not limited to chip specification, test
specification, xxxx of materials, Product marking, Product packaging and
shipping specifications and materials
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specification. Additional Specifications will be issued by Company in similar
form as additional Products are added to this Agreement.
Technical Information: shall mean any information which relates to the
design, structure, functions, operation, manufacture, use, lease, sale or other
disposition of product or of Provided Equipment, and which is owned, developed,
discovered or otherwise acquired by Company at any time prior to the expiration
or termination of the term of this agreement, and which is disclosed or
transferred by Company to Contractor, or which Contractor has access to or
obtains, or which becomes known to Contractor, under or pursuant to this
agreement.
Technical Data: shall mean any tangible medium embodying Technical
Information, which is owned, developed, discovered or otherwise acquired by
Company at any time prior to the expiration or termination of the term of this
Agreement, including but not limited to plans, Specifications, material lists,
machine drawings, software and instructions, whether in human or machine
readable form.
Value Added: shall mean the price for Materials and Manufacture for
the Product supplied by Contractor.
Wafer Foundry: shall mean the process to Manufacture Product where the
Product is the SAW die or wafer fabrication.
WIP Inventory: shall mean the work-in-progress inventory of Product at
the Contractor.
Workweek: shall be seven (7) calendar days beginning on Monday and
ending on Sunday.
2. Services.
2.1 Manufacturing Services:
(a) General. Contractor covenants and agrees to Manufacture the
Products that Company requests it to Manufacture at the Factory utilizing the
tools, machinery, equipment, fixtures and computer systems of Contractor and any
other Provided Equipment. Contractor agrees that the Manufacture of Products
hereunder shall be carried out in a good and workmanlike manner in compliance
with the Specifications and instructions of Company provided to Contractor in
writing from time to time as specified herein. Contractor shall have available
to Manufacture the Products all facilities, employees, equipment, spare parts,
computer systems and any other items required to Manufacture the Products.
Company shall provide to Contractor all Specifications, manuals and other
relevant documentation necessary to Manufacture the Products.
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(i) Contractor may use its standard processes, so long as they
conform to the Company's Specifications and quality requirements. A typical Chip
Specification is provided in Schedule B.
(ii) Contractor shall Manufacture Product using Material procured
from suppliers on the Approved Vendor List or provided on a Consignment basis.
Any change to Control Plans, Specifications or outsourcing services pursuant to
the Manufacture of Product shall be approved in writing by Company prior to
implementation by Contractor.
(iii) Contractor agrees to provide manufacturing and production
services to meet Company's Manufacturing requirements in accordance with Section
2.6 and 2.7. Changes to forecast shall not affect Product pricing, unless
mutually agreed in writing by parties.
(b) Change Requests. Company shall have the right at any time to make
changes in drawings, designs, Specifications, quantities, time and place of
delivery and method of transportation. If any such changes cause an increase or
decrease in the cost or the time required for performance of the order,
Contractor shall notify Company in writing (stating the amount of the increase
or decrease), within five (5) days, after receipt of such notice unless
Contractor has requested additional time to respond, in writing, within the five
(5) day period. There will be no change in manufacturing and production service
until accepted, in writing, by the Contractor. If such notice is timely given,
an equitable adjustment shall be made, and Schedule A shall be modified in
writing accordingly. Contractor agrees to accept any such changes and proceed
with the performance of this Agreement, subject to this paragraph. An exception
to the requirement for written acknowledgement of a price increase is for a
change in the Probe Frequency specification, which is described in RFM Procedure
000-0101-005, OUTSOURCED CHIP RECORD CHANGE.
(i) Changes to Specifications by Company will be made according
to Company's Engineering Change Procedure (000-0101-001) (the "Engineering
Change Procedure") with one exception. A change to the frequency probe
specification (probe window) will be considered a record change and will be made
according to Company's Outsourced Chip Record Change Procedure (000-0101-005).
Except for the aforementioned exception, the Contractor will approve all changes
relating to Products manufactured at Contractor according to the Engineering
Change Procedure.
(ii) If Contractor proposes to change the Specifications with
respect to any Product, it shall provide the Company written notice thereof and
shall implement such changes only upon written consent from the Company. In no
event shall the Contractor ship other than strictly in accordance with the
Specifications or amendments thereto, which the Company has approved in writing.
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(c) New Products. Company may from time to time request Contractor to
Manufacture, and perform prototype and pilot testing for any future versions of
the Product developed after the date of this Agreement by Company (each a "New
Product"). Such request shall be accompanied by all Specifications and other
relevant documentation necessary to Manufacture the New Product. Upon receipt of
such information, Contractor shall provide to Company the price to provide small
volumes of such New Product and the estimated time schedule required to
implement the Manufacture of the New Product. Production pricing will be
negotiated following the small volume build. Contractor shall not be obligated
to Manufacture or perform any services hereunder with respect to such price and
time schedule for implementation. Company and Contractor agree to modify this
Agreement by amending Schedule A to reflect the New Product and the price of the
New Product agreed upon by Company and Contractor.
(d) Approved Vendor List. With respect to each component part
comprising Materials, Contractor shall maintain a list of suppliers recommended
by Company to supply such part (the "Approved Vendor List"). Company may remove
any supplier from or add any supplier to the Approved Vendor List with respect
to any component part comprising Materials by giving notice thereof to
Contractor. A supplier or vendor not on the Approved Vendor List shall not
provide material or services for the Manufacture of the Product without the
Company's written authorization. Contractor may request removal or addition of
supplier to Approved Vendor List.
(e) Yields. Parties understand and agree that production yields are a
primary driver for Manufacturing cost effectiveness. Both Company and Contractor
will work together to increase production yields. Yield improvement and cost
reduction goals will be established and evaluated at the Quarterly Operations
Reviews.
(i) Company outgoing testing and inspection of Materials supplied
by Company and incoming test and inspection by Contractor will be in place to
ensure the Materials are in Specification as they are introduced to the
Contractor's assembly Factory.
(ii) Should either party incur unacceptable yield loss, based on
monthly average yield, either party may request a failure analysis to determine
the cause of such failures. The requesting party shall bear the cost of the
analysis. However, if the analysis establishes that the unacceptable yield loss
is due primarily to the non-requesting party, the non-requesting party shall
reimburse the requesting party for the cost of the analysis.
(f) Annual Review Process. Company and Contractor shall meet annually
to review performance to the Agreement (Annual Review Process). Such review
shall include, but not be limited to, review of Contractor's performance to
Company's Specifications and quality and service standards, review of Product
pricing, and cost reductions.
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(g) Quarterly Operations Review Process. Company and Contractor shall
conduct Quarterly Operations Reviews. Such meetings shall include, but not be
limited to, review of Contractor's Product yields, cycle times, delivery
performance, quality metrics and cost reduction roadmaps. The meeting may be
scheduled to combine with other reviews, such as the annual review, or may be
held via conference telephone call or video conference. Production yield
improvement and cost reduction goals will be established and progress toward
these goals will be reviewed quarterly.
2.2 Return Services
(a) Company will be the recognized source for the Product and will be
the sole contact for third parties with Product problems related to Company's
customers. Company will issue all warranties to third parties for the Product,
but will be entitled to exercise its rights under paragraph 2.2.(b) against
Contractor as to any defects specified therein.
(b) Product returns will be authorized by Company which will perform
the initial failure analysis on the units. Those units indicating a defect due
to Manufacturing or Materials (Defective Unit) will be transmitted to Contractor
for confirmation of failure analysis at Contractor's expense and corrective
action by the Contractor. Contractor's sole responsibility and liability as a
result of any such defect shall be to provide compensation to Company for the
amount charged to Company for each Defective Unit. If the defect is not
confirmed by Contractor to be caused by Manufacturing or Materials, Company must
reimburse Contractor of reasonable failure analysis and shipping costs related
to the defective unit.
2.3 Other Support Services From time-to-time during the term of this
Agreement, Company may request Contractor to perform Other Support Services such
as but not limited to the purchase of Materials, previously consigned by
Company, and the drop shipment of Product to Company's assembly partners. In
connection with the performance of any Other Support Services, Company shall
issue an Order for the services which Company desires Contractor to perform.
Contractor shall notify the Company of their intent to provide the requested
service and accept the Order. If Contractor intends to provide the requested
service, Contractor shall furnish Company the estimated time schedule to
implement or complete the services and the estimated cost to Company if in
excess of the Order issued for the service. If such service results in
modification to the cost of the Product, there will be a change to Schedule A.
All prices and deliverables to be furnished by the Contractor with respect to
such services shall be mutually agreed to in writing by Company and Contractor.
2.4 Data
Contractor will periodically supply the Company with reasonably requested
data including, but not limited to yields, inventories and production status.
The frequency and format of the reporting will be agreed upon by the Company and
Contractor. As a
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minimum, Contractor will supply the Company with a detailed inventory and/or a
periodic physical inventory of all Consigned Materials on hand as of the last
day of the prior month on the first working day of each month.
2.5 Orders.
Company shall provide Contractor with an Order for Manufacture of Product.
Contractor agrees to acknowledge Company's Order within two (2) business days
from receipt by E-Mail or other electronic means. Thereafter, the Order shall
come into force and effect from the date of such acknowledgement. Contractor as
well as Company, shall be bound by all terms and conditions set forth in the
Order consistent with the terms and conditions herein agreed upon. The Order
will determine the Product, their quantities and Shipping Dates. In the event of
any disagreement between the Order and the Agreement, the terms of the Agreement
shall prevail.
2.6 Production and Shipping Dates.
The Order shall stipulate a lead time reasonably acceptable to Contractor.
Contractor agrees to allocate sufficient Manufacturing capacity for the
Manufacture of Products to meet Company's Production and Shipping Dates, and all
Materials, including Finishing Materials, acquired by Contractor to meet
Company's Production and Shipping Dates will be covered by the Buy-Back
provisions of this Agreement. If applicable, Company agrees to supply Materials
a minimum of one day prior to the associated starts at the Contractor.
2.7 Forecast and Buy-Back Guarantee. Company shall endeavor to provide
monthly a three (3) month rolling forecast and Quarterly a twelve (12) months
rolling forecast of Products to be Manufactured by Contractor under this
Agreement. Contractor shall acknowledge in writing acceptance of Company's three
(3) month forecast or provide notice to Company of limited Factory capacity.
Company agrees to buyback, at cost, all Manufacturing related Materials
inventory purchased by Contractor should Company fail to Order forecasted
quantities based on 100% of forecasted Materials for the three month period and
such failure to Order is in no way attributable to Contractor. The Company will
not be required to buy back any Materials beyond the third month of the twelve
(12) month forecast. Notwithstanding the above, Contractor will attempt to
divert Materials to other manufacturing uses so as to minimize this excess
inventory cost to Company.
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Schedules Purpose of Schedule Variations
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Purchase Order Authorizes Shipment (Contractor), Only by changes, in
Receiving (Company), Invoicing writing, from Company
(Contractor) and Payment (Company)
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Three Months Forecast Provided for Material and labor Volume for first month is firm,
Planning but line items may change.
Second month
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may change from previous
forecast no more than +/- 25%.
Third month may change from
previous forecast no more than
+/- 50%.
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Twelve Month Forecast Provided for space, equipment and First three months are as above,
labor planning. but all other is for planning
purpose only.
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3. Deliveries
3.1 Deliveries. Contractor will Manufacture the Products as required by
this Agreement and the Order. In the event that Contractor cannot deliver the
Products by the Shipping Date, Contractor will notify Company, a minimum of one
Workweek prior to the Shipping Date.
3.2 Delivery Point. Once Manufacture of the Products has been completed,
Contractor shall be responsible for delivering the Finished Goods FCA, (as
defined in Incoterms (2000) published by the International Chamber of Commerce)
and to a freight forwarder specified by Company in its Order. "Delivery Point"
as used in this Agreement shall mean the specific time and location that the
Product is delivered to the shipper specified on the Order. .
3.3 Time of Essence. Contractor acknowledges and agrees that time is of the
essence and delivery performance is crucial in Company's evaluation of
Contractor's performance. No partial shipments are allowed unless expressly
authorized in advance and in writing by the Company, on a case-by-case basis.
Late deliveries will be a subject of the Quarterly Review Process and may be
subject to compensation discussions.
3.4 Risk of Loss. Company will insure Company assets against any risk of
loss during transit to and from Contractor and while located in Contractor's
facility.
3.5 Delivery of Materials. Company will properly pack all Materials
provided by Company to facilitate safe transport to Contractor.
4. Price and Payment.
4.1 Price and Payment of Manufacturing Services. During the term of this
Agreement, Company shall pay for the services provided by Contractor under
Section 2.1 hereof for the Manufacture of Products in accordance with the price
listed on the schedule Products, Volumes, Price attached hereto as Schedule A,
provided that any modifications, amendments and changes to the Specifications
and the Manufacture of any New Product shall be at such prices mutually agreed
to by Contractor and Company in Sections 2.1 (b) and Section 2.1 (c),
respectively. Company will be charged for all units meeting the Specifications
for that specific Product.
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With each shipment, Contractor will send Company an invoice for all
services provided by Contractor under Section 2.1 hereof for Products
Manufactured by Contractor and delivered to the Delivery Point. Company shall
pay Contractor the amount invoiced within thirty (30) days following the
issuance of such invoice.
4.2 Payment for Other Support Services, as described in Section 2.3, will
be according to Section 4.1, if the cost of said Other Support Services has been
incorporated into the Product price in Schedule A, or will be invoiced
separately according to negotiated parameters as described in Section 2.3 if
they have not been incorporated into the Product price in Schedule A
4.3 General Payment Terms. All payments due hereunder shall be paid in
United States of America dollars by wire transfer and all bank fees for such
wire transfers shall be paid by the Company.
5. Inspection and Access by Company
5.1 Inspection. Contractor hereby agrees to allow Company's personnel
access at any time to the Factory during regular business hours or other
facilities at which the Products are being Manufactured, in order for Company's
personnel to ascertain compliance on the part of Contractor with all of the
terms and conditions of this Agreement and Specifications provided by Company in
connection with the process of Manufacture. Contractor shall provide competent
personnel in the Factory to perform inventories of Materials, WIP Inventory and
Finished Goods located at the Factory.
5.2 Acceptance. All shipments of Finished Goods are subject to Company's
workmanship inspection, agreed Electrical Test procedures and quality audit upon
receipt of Finished Goods in accordance with Company's Quality Standards.
Acceptance of Products in no event constitutes a waiver of any of Company's
rights or remedies arising from or related to warranty requirements (Section
8.5) nonconforming Products or any other breach of this Agreement.
6. Rejection.
6.1 Manner of Rejection: Company may reject any Product manufactured by the
Contractor if such Product fails to meet the Specifications or contain a
Manufacture Defect when inspected by the Company. The Company shall notify the
Contractor within five (5) days of receipt of the Product if the Product is
rejected. The Company may, at it's option, (i) return the Product to the
Contractor for rework,(ii) rework the Product, and charge any labor cost, not to
exceed Contractors Value Added, to the Contractor, or (iii) scrap the Product if
it cannot be reworked. If the Product is scrapped, the Contractor will reimburse
the Company for the amount charged to Company for the Product so scrapped.
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6.2 Restrictions on Disposal of Rejected Products. Contractor may not,
under any circumstances or for any reason, sell or offer for sale any Products
rejected hereby, without the express written consent of Company.
7. Representations, Warranties and Covenants of Company: The Company
represents and warrants to Contractor, and covenants as follow:
7.1 Corporate Status and Good Standing. Company is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation with full corporate power and authority under its
articles of incorporation and bylaws to own and lease its properties and to
conduct its business as the same exists. Company is duly qualified to do
business as a foreign corporation in all states or jurisdictions in which the
nature of its business requires such qualification, except where the failure to
be so qualified would not have an adverse effect on such party.
7.2 Authorization. Company has full corporate power and authority under its
articles of incorporation and bylaws and its managers and members have taken all
necessary action to authorize it, to execute and deliver this Agreement and the
exhibits and schedules hereto, to consummate the transactions contemplated
herein and to take all actions required to be taken by it pursuant to the
provisions hereof, and each of this Agreement and the exhibits hereto
constitutes the valid and binding obligations of Company, enforceable in
accordance with its terms, except as enforceability may be limited by general
equitable principles, bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally.
7.3 Non-Contravention. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated herein or therein, does or
will violate, conflict with, result in breach of or require notice or consent
under any law, the articles of incorporation or bylaws of Company or any
provision of any agreement or instrument to which Company is a party.
7.4 Validity. There are no pending or threatened judicial or administrative
actions, proceedings or investigations which question the validity of this
Agreement or any action taken or contemplated by Company or in connection with
this Agreement.
8. Representations and Warranties of Contractor. Contractor represents and
warrants to Company the following:
8.1 Corporate Status and Good Standing. Contractor is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, with full corporate power and authority under its
certificate or articles of organization and regulations to own and lease its
properties and to conduct its business as the same exists. Contractor is duly
qualified to do business as a foreign corporation in all states or jurisdictions
in which the nature of its business requires such qualification, except where
the failure to be so qualified would not have an adverse effect on such party.
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8.2 Authorization. Contractor has full corporate power and authority under
its certificate or articles of organization and regulations and its board of
directors and stockholders have taken all necessary action to authorize it, to
execute and deliver this Agreement and the exhibits and schedules hereto, to
consummate the transactions contemplated herein and to take all actions required
to be taken by it pursuant to the provisions hereof or thereof, and each of this
Agreement and exhibits hereto constitutes the valid and binding obligation of
Contractor, enforceable in accordance with its terms, except as enforceability
may be limited by general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally.
8.3 Non Contravention. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated herein or therein, does or
will violate, conflict with or result in breach of, or require notice or consent
under any law, the certificate or article or regulations of Contractor or any
provision of any agreement or instrument to which Contractor is a party.
8.4 Validity. There are no pending or threatened judicial or administrative
actions, proceedings or investigations which question the validity of this
Agreement or any action taken or contemplated by Contractor in connection with
this Agreement.
8.5 Warranty: Contractor warrants that (i) for a period of twelve (12)
months after the date of delivery to the Delivery Point, the Products will not
contain any Manufacture Defect; and (ii) Contractor has complied in all material
respects with all applicable local, foreign, domestic and other laws, rules,
regulations and requirements. THE FOREGOING WARRANTIES ARE EXCLUSIVE AND IN LIEU
OF ALL OTHER EXPRESS AND IMPLIED WARRANTIES WHATSOEVER, INCLUDING BUT NOT
LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR PARTICULAR
PURPOSE. In the event of any breach by Contractor of the warranties contained
herein, Contractor's liability shall be limited to an amount equal to the amount
charged to Company for the units delivered pursuant to this Agreement.
Notwithstanding the foregoing, the parties recognize that Materials may be
supplied by Company for use in the Manufacture of products. Contractor makes no
warranty to Company as to the quality of functionality of the Materials supplied
by Company.
9. Labor. During the term of this Agreement, Contractor agrees that it
shall be solely responsible for the payment of all wages, fringe benefits,
social security, unemployment and similar expenses and taxes in respect of
Contractor's employees and applicable to the Manufacture of the Products and the
performance of any procurement services and support services contemplated under
this Agreement. As required by any applicable law, Contractor warrants and
agrees that it has produced and shall maintain in effect full statutory coverage
for workers' compensation, employers' liability and disability insurance for all
of its employees. Contractor further agrees and warrants that it has and shall
comply with all applicable Taiwan national and local labor laws and other
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applicable wage and hour and other labor laws, including without limitation,
all child labor, minimum wage, overtime and safety related laws.
10. Ownership of Materials, Provided Equipment and Supplies.
10.1 Ownership. Contractor understands and acknowledges that it shall under
no circumstances be considered to have any ownership or proprietary interest in
Provided Equipment. Contractor agrees to segregate and label such Provided
Equipment. Contractor will not mortgage, pledge, assign or borrow against such
Provided Equipment.
10.2 Storage/Use. Contractor shall: (a) take delivery, store and use at the
Factory the Provided Equipment using the same degree of care as Contractor
exercises in respect of its own similar property; and (b) inform Company of the
exact location of the Provided Equipment, if it is located outside the
Contractor's principal manufacturing or storage facilities, as well as the
location of all Finished Goods and WIP Inventory stored outside of Contractor's
principal manufacturing and storage facilities. Contractor agrees to comply with
Company's reasonable instructions as to the performance of any preventive
maintenance on any Provided Equipment, said Preventative Maintenance shall be at
Contractor's sole expense. All repairs will be the responsibility of Contractor.
Company shall maintain insurance, at his sole discretion, for all Provided
Equipment owned by or paid for by Company, while in Contractor's Factory.
11. Indemnification.
11.1 Contractor's Indemnification. Contractor shall indemnify Company and
its Affiliates (including their officers, directors, employees and agents)
against, and hold harmless from and against, any and all claims, actions, causes
of action, arbitrations, proceedings, losses, damages, liabilities, judgments
and expenses (including without limitation, reasonable attorneys' fees)
("Indemnified Amounts") incurred by Company or any of its Affiliates as a result
of (i) any material error, inaccuracy, breach or misrepresentation in any of the
representations and warranties made by Contractor in this Agreement; (ii) any
claim or allegation that Contractor or any of its contractors, representatives
and agents, have not fully discharged all obligations under labor laws as set
forth in Section 9.1; (iii) any dispute with a subcontractor, employee,
independent contractor, manufacturer, agent or supplier; (iv) the operation by
Contractor of the Factory during the term of this Agreement; and; and (v) any
Manufacture Defect. Company shall be entitled to recover its reasonable and
necessary attorneys' fees and litigation expenses incurred in connection with
successful enforcement of its rights under this Section 11.1. Any liability
under this Section 11.1 of the Contractor shall be limited in the aggregate to a
maximum amount equal to (i) with respect to claims based on a Manufacture
Defect, the price paid by Company to Contractor for the Finished Goods (Value
Added) subject to such claim and (ii) with respect to claims based on the
performance of any services hereunder (as covered in Section 2.3), the price
paid by Company for such services.
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11.2 Company's Indemnification. Company shall indemnify Contractor and its
Affiliates (including their officers, directors, employees and agents) against,
and hold harmless from and against, any and all Indemnified Amounts incurred by
Contractor or any of its Affiliates as a result of; (i) any material error,
inaccuracy, breach or misrepresentation in any of the representations and
warranties made by Company in this Agreement; (ii) any dispute with a
subcontractor, employee, independent contractor, agent or supplier (including
Approved Vendors) related in any way to this Agreement; and (iii) any of the
Products and its design (other than a Manufacture Defect). Contractor shall be
entitled to recover its reasonable and necessary attorneys' fees and litigation
expenses incurred in connection with successful enforcement of its rights under
this Section 11.2.
12. Termination
This AGREEMENT shall take effect on October 12, 2001 and shall continue in
force until October 12, 2004, thereafter renewable yearly at mutually agreeable
terms and reviewed yearly unless terminated earlier per Section 12.1 of this
Agreement.
12.1 Subject to the provision of Section 12.3, this Agreement may be
terminated in accordance with the following provisions:
(a) Either party may terminate this Agreement by giving notice in
writing to the other party in the event the other party is in material breach of
this Agreement and shall have failed to cure such breach within ninety (90) days
of receipt of written notice thereof from the first party.
(b) Either party may terminate this Agreement at any time by giving
notice in writing to the other party, which shall be effective upon dispatch,
should the other party file a petition at any time as to its bankruptcy, be
declared bankrupt, become insolvent, make an assignment for the benefit of
creditors, go into liquidation or receivership or otherwise lose control of its
business.
(c) Company may terminate this Agreement without cause upon 180 days
written notice to Contractor.
(d) Contractor may terminate this Agreement without cause upon 180
days written notice to Company.
(e) Company may terminate, if the Contractor at any time has a change
in control.
12.2 For purposes of Section 12.1(e) above, a "change in control" shall be
deemed to have occurred at such time ownership of not less than 50% of the
equity securities of Contractor undergo a change in ownership during the term of
this
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Agreement, excluding from such calculation transfers that do not change the
Person in ultimate control of Contractor.
12.3 Rights and Obligations on Termination. In the event of termination of
this Agreement pursuant to Section 12.1 above, the parties shall have the
following rights and obligations:
(a) Termination of this Agreement shall not release either party from
the obligation to make payment of all amounts then due and payable.
(b) In the event of termination under Section 12.1(c), Company will
purchase from Contractor all scheduled Finished Goods and Materials inventory
affected by termination. Contractor agrees, in the event of termination under
Section 12.1 (c) to, (i) immediately terminate all open purchase orders for
Materials, (ii) pursue the return for refund or credit of Materials already
received but not in Manufacture, and (iii) follow all reasonable instructions to
minimize the cost of such termination to Company.
(c) In the event of termination under Section 12.1, Contractor shall
return all of Company's Materials, documents, Provided Equipment and supplies
via ship method requested by Company. The shipping cost will be at the expense
of the Company.
(d) Contractor's obligation under Section 8 will still be enforced
notwithstanding termination of this Agreement.
12.4 Remedies.
In the event either party breaches in any material respect any
representations, warranties or covenants hereunder or fails to comply in any
material respect with any term or requirement of this Agreement, in addition to
any other remedies the non-breaching party shall be entitled to (a) terminate
this Agreement in accordance with Section 12.1; (b) recover any and all actual
costs, expenses and damages, (including reasonable attorneys' fees); and/or (c)
offset any amounts due to the non-breaching party by any actual costs and
expenses incurred by the non-breaching party as a result of such breach or
failure to comply. Remedies herein shall not be exclusive but shall be
cumulative of any other remedy herein or under any other statute or law. Upon
such termination, none of the parties nor any other Person shall have any
liability or further obligation arising out of this Agreement except for any
liability resulting from its breach of this Agreement prior to termination,
except that the provisions of Sections 13, 14, 15, 16.1 and 16.15 shall continue
to apply.
13. Confidentiality.
13.1 Neither Contractor nor its Affiliates will, directly or indirectly,
disclose or provide to any other Person any non-public information of a
confidential nature concerning the business or operations of Company or its
Affiliates, including without
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limitation, any trade secrets or other proprietary information of Company or its
Affiliates, known or which becomes known to Contractor or Affiliates thereof as
a result of the transactions contemplated hereby or Contractor's operation of
the Factory, except as is required in governmental filings or judicial,
administrative or arbitration proceedings. In the event that Contractor or any
Affiliate becomes legally required to disclose any such information in any
governmental filings or judicial, administrative or arbitration proceedings,
Contractor shall, and shall cause any Affiliate to, provide Company with prompt
notice of such requirements so that Company may seek a protective order or other
appropriate remedy. In the event that such protective order or other remedy is
not obtained, Contractor shall, and shall cause any Affiliate to, furnish only
that portion of the information that Contractor or its Affiliate, as the case
may be, is advised by its counsel as legally required, and such disclosure shall
not result in any liability hereunder unless such disclosure was caused by or
resulted from a previous disclosure by Contractor or any Affiliate that was not
permitted by this Agreement.
14. Intellectual Property/Data Rights.
14.1 All Contractor intellectual property owned by Contractor before the
date, of this Agreement shall remain the sole property of Contractor and any
intellectual property developed solely by the Contractor during the term of this
agreement shall be the sole property of Contractor.
14.2 All Company intellectual property owned by Company before the date,
of this Agreement shall remain the sole property of Company and any intellectual
property developed solely by the Company during the term of this agreement shall
be the sole property of Company.
14.3 Contractor shall not alter, enhance or otherwise modify the Technical
Information or Technical Data, except as agreed by the parties in writing. An
example of permitted Technical Data modifications are modifications of the
Company GDS files for the generation of photo masks to meet Contractor's
processing requirements to fabricate the Product. However, the GDS file or file
modifications are to be used exclusively on Company Product. Contractor shall
not disassemble, decompile or reverse engineer any of the Technical Data or
prepare derivative works of any of the Technical Data except for use on Company
Product. Contractor shall not sell, distribute or offer any Product, pursuant to
this agreement, without written approval from the Company.
14.4 All intellectual property that is jointly developed by Contractor and
Company during the term of this Agreement shall be jointly owned (the "Joint
Intellectual Property"). Contractor and Company agree to take such actions and
sign such agreements as may be necessary to protect or perfect the other's
individual intellectual property or its joint interest in Joint Intellectual
Property and to allow the other party to exploit the Joint Intellectual Property
in a manner not inconsistent with this Agreement.
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14.5 Contractor agrees to execute all papers and provide requested
assistance, at Company's request and expense, during and subsequent to its work
for Company, to enable Company or its nominees to obtain patents, copyrights,
and legal protection for Joint Intellectual Property in any country.
14.6 Company agrees to execute all papers and provide requested
assistance, at Contractor's request and expense, during and subsequent to its
work at Contractor, to enable Contractor or its nominees to obtain patents,
copyrights, and legal protection for Joint Intellectual Property in any country.
14.7 Contractor agrees that RFM shall be entitled to receive copies of and
use all Manufacturing Data. RFM affirms that Manufacturing Data that constitutes
Contractor's solely owned intellectual property shall remain Contractor's
property, subject only to RFM's right of use provided in the preceding sentence.
14.8 Upon termination of this Agreement, whether by expiration,
cancellation, or otherwise, Contractor agrees to promptly deliver to a proper
Company representative all data, documents, and other records which relate to
the business activities of Company, and all other Materials and badges which are
the property of Company.
14.9 Contractor hereby grants and agrees to grant to Company a worldwide,
non-exclusive right and license to use financial data related to services under
this agreement , Manufacturing Data, sales data, tracking data, reports, and
other information transferred to or otherwise provided to or for Company for its
business purposes. Company agrees that all right, title and interest in such
data shall remain the property of Contractor.
15. Intellectual Property Infringement and Indemnification
Company shall hold Contractor harmless against any expense or loss
resulting from a claim of infringement of patents, trademarks, copyrights or
other intellectual property rights arising from compliance with Company's
designs, Specifications or instructions and Contractor shall hold Company
harmless against any expense or loss resulting from infringement of patents,
trademarks, copyrights or other intellectual property rights arising from
Contractor's actions not necessitated by Company's designs, Specifications or
instructions.
16. General Provisions.
16.1 Expenses. Each party shall pay its own expenses, including the fees
and disbursements of its counsel in connection with the negotiation, preparation
and execution of this Agreement and the consummation of the transactions
contemplated herein, except as otherwise provided herein.
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16.2 Entire Agreement. This Agreement, including all schedules and exhibits
hereto, constitutes the entire agreement of the parties and supersedes all
previous agreements; proposals, oral or written; and all negotiations,
conversation or discussions heretofore and between the parties with respect to
the subject matter hereof, and may not be modified, amended or terminated except
by a written instrument specifically referring to this Agreement signed by all
the parties hereto.
16.3 Waivers and Consents. All waivers and consents given hereunder shall
be in writing. No waiver by any party hereto of any breach or anticipated breach
of any provision hereof by any other party shall be deemed a waiver of any other
contemporaneous, preceding or succeeding breach or anticipated breach, whether
or not similar.
16.4 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Contractor, to: Yu-Xxxx Xxxxx
Tai-Saw Technology Co., Ltd.
Xx. 0, Xxxxxxxxxx 0/xx/ Xx.
Xxxx-Xxxx Xxxxxxxxxx Xxxxxxxx
Taoyuan, 324, Taiwan, R.O.C.
Facsimile: (000) 0-000-0000
E-Mail: xxxxxx0@xx00.xxxxx.xxx
If to Company, to: Xxxxx X Xxxxxxxxxx
R F Monolithics
0000 Xxxxx Xxxx
Xxxxxx, XX 00000
XXX
Facsimile: (000) 000-0000
E-Mail: xxxxxxxxxx@xxx.xxx
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.
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16.5 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors, legal representatives and assigns. No third party shall have any
rights hereunder. No assignment shall release the assigning party.
16.6 Choice of Law; Section Heading. This Agreement is performable, in
part, in Dallas County, Texas and, in part, in Taiwan, and shall be governed by
and construed in accordance with laws of the State of Texas, U.S.A., without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Texas or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Texas. The United Nations
Convention On Contracts For The International Sale Of Goods shall not apply to
this Agreement. The section headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
16.7 Severability: If any term or provision of this Agreement or the
application thereof to any Person or circumstance shall be deemed invalid,
illegal or unenforceable to any extent or for any reason, such provision shall
be severed from this Agreement and the remainder of this Agreement and the
application thereof shall not be affected and shall be enforceable to the
fullest extent permitted by law. A provision which is valid, legal and
enforceable shall be substituted for the severed provision.
16.8 Construction: The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
16.9 Force Majeure: Neither party shall be liable for loss or damage
or deemed to be in breach of this Agreement if its failure to perform its
obligations results from (i) compliance with any law, ruling, order, regulation,
requirement, or instruction of any federal, state, foreign, or municipal
government or any department or agency thereof; (ii) acts of God; or (iii)
fires, strikes, embargoes, war, or riot. The party experiencing such cause or
delay shall immediately notify the other party of the circumstances which may
prevent or significantly delay its performance hereunder and shall use its Best
Efforts to alleviate the effects of such cause or delay. Any delay resulting
from any of these causes shall extend performance accordingly or excuse
performance, in whole or in part, as may be reasonable.
16.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
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16.11 Agency. Contractor is an independent contractor. Nothing in this
Agreement shall be construed to constitute either party the agent of the other
party and neither party shall represent to any third party that it has any right
or authority to act as the agent for or otherwise to represent the other party.
16.12 Bankruptcy. If during the term of this Agreement a petition in
bankruptcy is filed by or against Contractor, or if Contractor, as a debtor,
seeks or takes the benefit of any insolvency or debtor's relief proceeding, or
if Contractor shall file or attempt to file an assignment for the benefit of
creditors, or if Contractor shall apply to its creditors to compound its debts,
then in any such event, Company shall have the right to decline to take further
deliveries hereunder or Company may, without prejudice to any other lawful
remedy, cancel this Agreement, and in either case, Contractor shall upon demand
deliver to Company all Provided Equipment, Materials, WIP Inventory, Finished
Goods, tooling and other property of Company in Contractor's custody. If during
the term of this Agreement a petition in bankruptcy is filed by or against
Company, or if Company, as a debtor, seeks or takes the benefit of any
insolvency or debtor's relief proceeding, or if Company shall file an assignment
for the benefit of creditors, or if Company applies to its creditors to compound
its debts, then in any such event, Contractor may without prejudice to any other
lawful remedy, cancel this Agreement.
16.13 Assignment of Obligations. Neither party may assign this
Agreement without the prior written consent of the other party; provided that
Company may assign this Agreement to any Person acquiring all or substantially
all of Company's assets.
16.14 Export & Import Laws/Regulations. The parties shall comply with
all applicable Taiwan and International Export and Import laws and regulations
in the execution of this Agreement. Contractor shall execute such other
agreements and documents as Company requests, from time to time, in order to
ensure compliance with said laws.
16.15 Dispute Resolution.
(a) Negotiation. In the event of any dispute or disagreement
between parties as to the interpretation of any provision of this Agreement (or
the performance of obligations hereunder), the matter, upon written request of
either party, shall be referred to representatives of the parties for decision,
each party being represented by a senior executive officer who has no direct
operational responsibility for the matters contemplated by this Agreement. The
representatives shall promptly meet in a good faith effort to resolve the
dispute. If the representatives do not agree upon a decision within 30 calendar
days after reference of the matter to them, each of the parties shall be free to
exercise all other remedies available to it.
(b) Arbitration. Any controversy, dispute or claim arising out
of or relating in any way to this Agreement or the other agreements contemplated
hereby or the transactions arising hereunder or thereunder that cannot be
resolved by negotiation pursuant to paragraph (a) above shall, be settled
exclusively by binding arbitration in
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Hong Kong and in accordance with the current Commercial Arbitration Rules of the
International Chamber of Commerce. The parties shall endeavor to select a
mutually acceptable arbitrator knowledgeable about issues relating to the
subject matter of this contract. In the event the parties are unable to agree
upon an arbitrator, each party will select an arbitrator and the arbitrators in
turn shall select a third arbitrator. The language of the arbitration will be in
English. The fees and expenses of the arbitrator shall be shared equally by the
parties and advanced by them from time to time as required; provided that at the
conclusion of the arbitration, the arbitrator may award costs and expenses
(including the costs of the arbitration previously advanced and the fees and
expenses of attorneys, accountant and other experts) plus interest, to the
prevailing party to the extent that in the judgment of the arbitrator it is fair
to do so. No pre-arbitration discovery shall be permitted, except that the
arbitrator shall have the power in his or her sole discretion, on application by
any party, to order pre-arbitration examination solely of those witnesses and
documents that any other party intends to introduce in its case-in-chief at the
arbitration hearing. The arbitrator shall render his or her award within 90 days
of the conclusion of the arbitration hearing. Notwithstanding anything to the
contrary provided in this Section 16.15 and without prejudice to the above
procedures, either party may apply to any court of competent jurisdiction for
temporary injunctive or other provisional judicial relief if such action is
necessary to avoid irreparable damage or to preserve the status quo until such
time as the arbitration panel is convened and available to hear such party's
request for temporary relief. The award rendered by the arbitrator shall be
final and not subject to judicial review and judgment thereon may be entered in
any court of competent jurisdiction. Any monetary award will be made and payable
in U.S. dollars free of any tax or other deduction.
16.16 English Controlling. For purposes of convenience, this Agreement
may be translated but it is understood that the English version of this
Agreement (and the schedules and exhibits) will control for all purposes. In
case of a conflict in meaning between the two versions, the parties are
responsible for performing in accordance with the English version hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
RF MONOLITHICS, INC. TAI-SAW TECHNOLOGY CO., LTD.
Xxxxx Kirk_______________________________ Xx-Xxxx Huang_______________________
(Printed Name) (Printed Name)
/s/ Xxxxx Kirk___________________________ /s/ Xx-Xxxx Huang__________________
(Signature) (Signature)
President & CEO__________________________ President__________________________
(Title) (Title)
10/11/01_________________________________ 10/11/01___________________________
(Date) (Date)
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