EXHIBIT 10.85
CONTRACT
for
SPUTTER ROLL COATERS
between
SOUTHWALL TECHNOLOGIES INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇
Herein referred to as the "Buyer"
and
[*]
herein referred to as the "Seller"
CONTRACT NO: C9871SGE
DATE: April 29 1996
* Confidential portions omitted and filed separately with the Commission.
This Contract ("Contract") dated as of April 29 1996, is made by and between
Southwall Technologies Inc. (herein referred to as the "Buyer") and [*]
("Seller").
WHEREAS, Buyer desires to acquire two sputter roll coaters from Seller which
Buyer intends to combine with Buyer's technology.
NOW, THEREFORE, the parties hereto agree as follows:
1. SCOPE OF CONTRACT
1.1 Subject to the terms and conditions of this Contract, the Buyer agrees to
buy from the Seller, and the Seller agrees to sell to the Buyer, one
Sputter Roll Coater (hereinafter referred to as the "Coater") conforming
to the specification titled "Sputtering Roll Coater" attached hereto as
Exhibit A (the "Specification") together with all documentation specified
therein, together with an option to buy an identical machine (subject to
common parts supplied with the first machine) within 12 months of the
signing of this contract.
2. PRICE
The Contract Price of the Coaters as stipulated in Item 1.1 is US
$2,812,000 (two million eight hundred twelve thousand US dollars) for the
first machine and US $2,488,000 (two million four hundred eighty eight
thousand US dollars) for the second machine provided the second machine
is ordered within 12 months of the date of this contract. Details of the
price are set forth on Exhibit D.
3. TERMS OF PAYMENT
The Contract Price for each machine shall be paid by Buyer as follows:
(i) 10% within 30 days following the execution of the Contract; and
(ii) 10% on commencement of assembly or 18th September 1996 whichever is
earlier.
(iii) 70% upon the shipment of the Coater to USA following the date the
Coater has passed the portion of [*] Acceptance Test (as defined herein)
applicable to the items manufactured or provided by Seller.
(iv) 10% after final acceptance in the buyers factory or 120 days following
shipment whichever is earliest.
2
* Confidential portions omitted and filed separately with the Commission.
4. DELIVERY
Exhibit B hereto sets forth the production schedule for the first machine to be
met by Seller with respect to actions required to be taken or items to be
delivered by Seller (the "Sellers Production Schedule") and the production
schedule to be met by Buyer with respect to actions required to be taken or
items to be delivered by Buyer (the "Buyer's Production Schedule). Seller shall
use its best efforts to meet the Seller's Production Schedule. The first Coater
shall be available for the conducting of [*] Acceptance Tests in [*], not later
than the date set forth in the Seller's Production Schedule. In the event that
Seller fails to meet the Seller's Production Schedule, Seller shall pay to Buyer
a late penalty equal to 1% of the Contract Price for each machine for each week
of delay of each machine from the dates specified in the Seller's Production
Schedule (prorated in the case of a delay of less than a week) up to an
aggregate maximum of 5% of the Contract Price of the first machine. In the event
that Seller fails to meet the Seller's Production Schedule as a result of the
Buyer's failure to meet the Buyer's obligations, Seller shall be entitled to a
delay of equal duration to such delay of Buyer without liability for any late
penalty for such period. The Seller will promptly notify the Buyer of any such
delays as and when they occur and of the resultant delays in the Seller's
Production Schedule.
The delivery of the second machine will be 9 months from order but will be
subject to confirmation. All other Terms of their Agreement shall apply to the
second machine, but dates will be adjusted to reflect its order date.
5. ACCEPTANCE TESTS
Each Coater will be subjected to partial acceptance testing prior to shipment
[*] to USA and after installation at Southwall's facilities in USA. In the first
case, Seller shall promptly notify Buyer when each Coater is ready for
commencement of partial acceptance tests. As soon as practicable thereafter,
Seller and the Buyer shall jointly conduct the acceptance tests specified in
Exhibit C hereto, (the "Acceptance Tests"). If the Buyer determines that the
Coater has not passed all of the Acceptance tests, Buyer shall so notify the
Seller in writing and specify in reasonable detail the deficiencies and the
basis for that determination. Seller shall as soon as possible after receipt of
any notice of deficiency correct any such deficiency and notify Seller when the
Coater is ready to be retested and the foregoing test procedure will be
repeated. The [*] Acceptance Tests" shall mean the Acceptance Tests conducted
[*] prior to shipment of the Coater to USA and the term "USA Acceptance Tests"
shall mean the Acceptance Tests conducted at Southwall's facilities after the
Coater is installed. The Coater shall not be deemed to have passed [*]
Acceptance Tests until the Buyer (i) is personally satisfied that the Coater has
passed all of the criteria of all Acceptance Tests and (ii) Buyer has delivered
to Seller a notice to that effect.
6. IMPORT LICENSE
Any import licence required for importation of the Coater into USA is the
responsibility of the Buyer. In the event that Buyer fails to obtain such an
import licence, and as a result the Seller is unable meet the Seller's
Production Schedule, Seller shall not be required to pay any resultant
3
* Confidential portions omitted and filed separately with the Commission.
penalties under Section 4 and Seller shall be entitled to payment of the entire
Contract Price for the Coater pursuant to Section 3 notwithstanding the fact
that the Coater has not been shipped, been installed, passed the Buyer's
Acceptance Tests or been commissioned. Seller agrees to cooperate with Buyer's
reasonable requests for information and documentation regarding Seller and the
Coater in connection with Buyer's attempts to receive all necessary import
licences and authorizations for the importation to USA. Seller shall be
responsible for, and shall obtain at Seller's expense any export licences or
other governmental approvals required for the export of the Coater.
7. IMPORT DUTIES
All import duty, local taxes etc., levied by the USA authorities on the Coater's
arrival in USA shall be the responsibility of the Buyer.
8. WARRANTY
The Seller warrants that the Coater will conform to and operate in accordance
with the Specifications and that all parts and components provided by Seller be
free from defects in material and workmanship during the warranty period.
Defects and deficiencies will be repaired and replaced free of charge during the
warranty period. Parts replaced will become the property of the Seller. The
warranty period will commence upon shipment of the Coater _______ expire upon
the earlier of (i) 12 months from the date the Coater passes the Buyer's
Acceptance Tests in USA or (ii) 15 months from the date the Coater passes [*]
Acceptance Tests.
9. CHANGE ORDERS
In the event that, during the design or construction of the Coater, the Seller
determines that it is necessary to make a change in construction or design which
will change some aspect of the Specification forming part of this Contract, then
the Seller will immediately notify the Buyer in writing of such a change, the
reason for it, and the implications on performance, cost and shipment. The Buyer
will respond promptly to such notices and, when agreed to in writing by both
parties, any such changes will become an integral part of the Specification and
this Contract. Any increase in cost as a result of such agreed upon changes
shall be borne by the Seller and shall not increase the Contract Price specified
in Section 2. Any decrease in cost as a result of such agreed upon changes shall
reduce the Contract Price and all payments specified in Section 3 shall be
adjusted accordingly.
In the event that, during the design, construction or assembly and completion of
acceptance tests of the Coater, the Buyer determines that it is necessary to
make a change in construction or design which will change some aspect of the
Specification forming part of this Contract, then the Buyer will immediately
notify the Seller in writing of such a change. The Seller will respond promptly
to such notice with information on the implications on performance, cost and
shipment time of such changes. When agreed to in writing by both parties, any
such changes will become an integral part of the Specification and of this
Contract. Any increase in cost as a result of such
4
* Confidential portions omitted and filed separately with the Commission.
agreed upon changes shall be borne by the Buyer and shall increase the Contract
Price and all payments specified in Section 3 shall be adjusted accordingly.
10. ASSIGNMENT
The rights and obligations of the parties under this Contract may not be
assigned or transferred, except (i) rights to payment of money may be assigned
and (ii) this Contract and the rights and obligations hereunder may be assigned
to an acquirer of all or substantially all the assets, business or stock of a
party.
11. TERM AND TERMINATION
11.1 If a party materially breaches a material provision of this Contract, the
other party may terminate this Contract upon 30 days' written notice unless
the breach is cured within the notice period. The failure of either Coater
to pass any of the Acceptance Tests within 60 days of the commencement of
the Acceptance Test shall be deemed a material breach of this Contract by
Seller.
11.2 At any time prior to the shipment of either Coater, Buyer may cancel this
Contract for any reason upon 30 days prior written notice; provided that
Buyer pays to Seller a cancellation fee equal to the difference between (i)
the product of the Contract Price multiplied by the Completion Percentage
on the date of such notice, minus (ii) the amount of the Contract Price
previously paid to Seller; provided, however, that if the amount in (ii)
above is greater than the amount in (i) above, Seller shall refund to Buyer
the amount of such excess within 30 days of such written notice and shall
be entitled to no other cancellation fee. The Completion Percentage means
that percentage which reflects the degree to which the design, construction
and assembly of the Coater has been completed and shall be determined by
the mutual agreement of the parties. Upon payment of the cancellation fee,
Buyer shall own all right, title and interest in the Coaters and all parts
and components thereof, whether or not assembled.
11.3 In the event of any termination of this Contract, Sections 8 and 11 through
14 shall survive, along with any cause of action for breach of this
Contract prior to termination (except, that if pursuant to Section 11.2 the
Buyer terminates this Agreement, Section 14.9 shall not survive
termination).
11.4 Except as provided in Section 11.2, neither party shall incur any liability
whatsoever for any damage, loss or expenses of any kind suffered or
incurred by the other arising from or incident to any termination of this
Contract (or any part thereof) by such party which complies with the terms
of the Contract whether or not such party is aware of any such damage, loss
or expenses.
11.5 Termination is not the sole remedy under this Contract and, whether or not
termination is effected, all other remedies will remain available.
5
12. INCIDENTAL AND CONSEQUENTIAL DAMAGES
NEITHER PARTY WILL BE LIABLE UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR
OTHER THEORY FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY
SUBJECT MATTER OF THIS CONTRACT, EXCEPT AS PROVIDED IN SECTION 4 HEREOF.
13. INDEPENDENT CONTRACTORS
The parties are independent contractors and not partners, joint ventures or
otherwise affiliated and neither has any right or authority to bind the other in
any way.
14. MISCELLANEOUS
14.1 Amendment and Waiver
--------------------
Except as otherwise expressly provided herein, any provision of this
Contract may be amended and the observance of any provision of this
Contract may be waived (either generally or any particular instance and
either retroactively or prospectively) only with the written consent of the
parties.
14.2 Governing Law and Legal Actions
-------------------------------
This Contract shall be governed by and construed under the laws of the
State of California and the United States without regard to conflicts of
laws provisions thereof, and without regard to the United Nations
Convention on Contracts for the International Sale of Goods. Unless
otherwise elected by Buyer in writing for a particular instance (which
Buyer may do at its option), the sole jurisdiction and venue for actions
related to the subject matter hereof shall be the California state and US
federal courts having within their jurisdiction the location of Buyer's
principal place of business. Both parties consent to the jurisdiction of
such courts and agree that process may be served in the manner provided
herein for giving of notices or otherwise as allowed by California or
federal law. In any action or proceeding to enforce rights under this
Contract, the prevailing party shall be entitled to recover costs and
attorneys; fees.
14.3 Headings
--------
Headings and captions are for convenience only and are not to be used in
the interpretation of this Contract.
14.4 Notices
-------
Notices under this Contract shall be sufficient only if personally
delivered, delivered by a major commercial rapid delivery courier service
or mailed by certified or registered mail, return receipt requested to a
party at its addresses set forth in the signature block below or as amended
by notice pursuant to this subsection. If not received sooner, notice by
mail shall be deemed received 5 days after deposit in the US and __________
14.5 Risk of Loss
------------
Upon shipment from Seller's factory [*] all risk of loss and damage to the
Coaters shall pass immediately to Buyer. Title to the Coaters shall pass
upon payment in full of the Contract price.
14.6 Arbitration
-----------
Except that either party may seek equitable or similar relief from a court,
any dispute, controversy or claim arising out of or in relation to this
Contract or at law, or the breach, termination or invalidity thereof, that
cannot be settled amicably by agreement of the parties hereto, shall be
finally settled by arbitration in accordance with the arbitration rules of
the International Chamber of Commerce ("ICC"), Paris, then in force by one
or more arbitrators appointed in accordance with said rules; provided,
however, that arbitration proceedings may not be instituted until the party
alleging breach of this Contract by the other party has given the other
party not less than sixty (60 days) to remedy any alleged breach and the
other party has failed to do so. The appointing authority shall be the ICC
Court of Arbitration. The place of arbitration shall be New york City. All
documents and agreements relative to any such dispute shall be read,
interpreted and construed from the [*] versions thereof. The award rendered
shall be final and binding upon both parties. Judgement upon the award may
be entered in any court having jurisdiction, or application may be made to
such court for judicial acceptance of the award and/or an order of
enforcement as the case may be.
14.7 Insurance and Indemnity
-----------------------
Each party hereto shall effect at its own expense accident insurance for
those of its personnel sent to the other party pursuant to this Contract
and shall indemnify the other party for any and all damages and claims
resulting from personal injury or deal of its own personnel. Each party
hereto shall also obtain insurance at its own expense covering personal
injury, death or property damage to it or to any third party that may
result from the work or services of personnel of the other party sent to
its plant under this Contract and shall indemnify the other party for all
such damages and claims. An indemnifying party's obligations shall be
conditioned upon (i) prompt notification of any claim or threat and (ii)
such party having the option to control any defence and settlement. If the
indemnifying party does not control defence or settlement, any settlements
shall be subject to its approval, which approval shall not be unreasonable
withheld. The foregoing
7
* Confidential portions omitted and filed separately with the Commission.
indemnities shall not be unreasonably withheld. The foregoing indemnities
shall not apply to injury, death or damage caused by the gross negligence
or wilful misconduct of the party seeking to be indemnified.
14.8 Licence Fees
------------
This is an agreement regarding the supply of two Coaters and no licences
of any sort are granted hereunder expressly or by implication except that
Buyer and its successors may use, repair, rebuild, obtain replacement
parts for, and take all other actions necessary or appropriate to
operating or maintaining the Coaters (or have others perform the
foregoing.) In the event that any third party is entitled to receive a
licence fee with respect to a component or technology supplied by the
Seller, Seller shall be responsible for any fees payable to such a third
party. Buyer shall not be responsible for any infringement or unauthorized
use with regard to any patent, utility model, trademark, design, copyright
or any other industrial property right, whether in [*] any other place in
respect of any component or technology supplied by the Seller. Nothing
herein contained shall be construed to be a transfer of any patent,
utility model, trademark, design, copyright or any other industrial
property right covering the goods, and all such rights are expressly
reserved to the true and lawful owners thereof. In case any dispute or
claim arises in connection with the above right or rights, Buyer may
cancel at its discretion any remaining shipment under this contract, if
any, and in any case shall be free from any liability arising therefrom,
and Seller shall be responsible for any and all loss or damage caused
thereby.
14.9 Payment Advance Guarantee
-------------------------
To secure the payments made by Buyer to Seller, at all times until the
Coaters have been shipped, Seller shall furnish Buyer with a bank
guarantee in the amount of the aggregate payment actually made by Buyer
hereunder from a bank, reasonably acceptable to Buyer, which will permit
Buyer to receive on demand an amount equal to any amount (without
interest) which is determined to be owing by Seller to Buyer as a result
of any breach or non-performance by Seller of the provisions of this
Contract.
14.10 Spare Parts
-----------
A certified Parts List will be supplied by Seller after the design stage
of the Contract to enable the Buyer to ascertain which parts are available
locally and which may be purchased from Seller. The price of spare parts
available from Seller will be determined by Buyer and Seller if and when
Buyer elects to purchase any spare parts.
14.11 Force Majeure
-------------
Neither party hereto shall be responsible for any failure to perform its
obligations under this Agreement (other than obligations to pay money) if
such failure is caused by acts of God, war, strikes, revolutions, lack or
failure of transportation facilities, laws or governmental
8
* Confidential portions omitted and filed separately with the Commission.
regulations or other causes which are beyond the reasonable control of such
party. Obligations hereunder, however, shall in no event be excused but
shall be suspended only until the cessation of any cause of such failure.
In the event that such force majeure should obstruct performance of this
Agreement for more than six (6) months, the parties hereto shall consult
with each other to determine whether this Agreement should be modified. The
party facing any event of force majeure shall use its best endeavors in
order to remedy that situation as well as to minimize its effects. A case
of force majeure shall be notified to the other party by telex or telefax
within five (5) days after its occurrence and shall be confirmed by a
letter.
IN WITNESS WHEREOF, the undersigned have executed this Contract as of the date
first set forth above.
SOUTHWALL TECHNOLOGIES INC. [*]
By /s/ ▇. ▇. ▇▇▇▇▇▇ By [*]
---------------- -----------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President [*]
Technology
9
* Confidential portions omitted and filed separately with the Commission.
EXHIBIT A
[ * ]
SPUTTERING ROLL COATER
[ * ]
* Confidential portions omitted and filed separately with the Commission.
EXHIBIT B
ID Task Name Duration Start Finish
-----------------------------------------------------------------------------
1
2 Pre Design Order 0d 12/04/96 12/04/96
3 Contract Order 0d 20/04/96 29/04/96
4
5 Design 80d 15/04/96 18/08/96
6 Schematics 7w 15/04/96 31/05/96
7 Layout Drawings 7w 15/04/96 31/05/96
8 Cathode Design 38d 17/04/96 07/08/96
9 Visit 1d 17/04/96 17/04/96
10 Design Layout 4d 18/04/96 23/04/96
11 Design Review 2d 23/04/96 24/04/96
12 Southwall visit 2d 25/04/96 26/04/95
13 Design Review 1w 13/05/96 17/05/96
14 Design Review 1w 03/06/96 07/06/96
15 Define Long Lead Items 0d 17/05/96 17/05/96
16 Detail Drawings 80d 15/04/96 18/08/96
17 Start 0d 15/04/96 15/04/96
18 Complete 0d 16/08/96 16/08/96
19
20
Page 1
EXHIBIT B
ID Task Name Duration Start Finish
-----------------------------------------------------------------------------
21 Manufacture 284d 22/04/96 29/05/97
22 Purchase components 90d 22/04/96 23/08/96
23 Order Long Lead Items 2w 22/04/96 03/05/96
24 Detail Manufacturer 277d 01/06/96 29/05/97
25 Face plate 60d 01/06/96 20/08/96
26 Material 8w 01/05/96 25/08/96
27 Fabrication 8w 26/06/96 20/08/96
28 Vessel 100d 01/05/96 17/09/96
29 Material 8w 01/05/96 25/06/96
30 Fabrication 8w 26/06/96 20/08/96
31 Polish/mte. 4w 21/08/96 17/09/96
32 Assembly Mte. No 1 75d 18/08/96 07/01/97
33 Vessel 3w 18/09/96 08/10/96
34 Mechanism End 0w 09/10/96 10/12/96
35 Source End 8w 09/10/96 03/12/96
36 Cathode Deliver 0d 10/12/96 10/12/96
37 Cathode Assy 3w 11/12/96 07/01/97
38 Pumping Group 8w 09/10/96 03/12/96
39 Services 7w 13/11/96 07/01/97
40 Electrics 8w 20/11/96 07/01/97
Page 2
EXHIBIT B
ID Task Name Duration Start Finish
-----------------------------------------------------------------------------
41 Test 8w 08/01/97 04/03/97
42 Strip & Package 3w 05/03/97 25/03/97
43 Ship to Oakland 4w 26/03/97 22/04/97
44 Deliver to Site 1w 23/04/97 28/04/97
45 Install 2w 30/04/97 13/05/97
46 Commission 2w 14/05/97 27/05/97
47 Customer Acceptance 2d 26/05/97 28/05/97
Page 3
EXHIBIT C
ACCEPTANCE TEST CRITERIA FOR STAR 1
1.0 INTRODUCTION
Comprehensive acceptance tests will be agreed between the buyer and the seller
to assure that the equipment meets the specifications set out in exhibit A.
2.0 CRITERIA
2.1 VACUUM
Ultimate pressure.
Time to base pressure.
Leak rate.
Polycold operation.
Gauging.
Gas load.
2.2 WINDING
Thin and thick substrate.
Tension ratios.
Speeds.
Modes.
Rewind arm function.
2.3 DRUM CHILLER
Temperature requirements.
Chiller operation.
2.4 MECHANISM
Mechanical end.
Cathode door movement.
Minichamber to drum, extraction,...
Lighting.
Fit cathodes and PEM sensors.
2.5 CONTROL SYSTEM
Speed.
Mimics.
Handshakes.
2.6 GAS CONTROL SYSTEM
MFC operation.
EXHIBIT D
PRICE BREAKDOWN
MACHINE 1 MACHINE 2
ONE 1170 mm WIDE SPUTTER ROLL
COATING MACHINE INCLUDING $2,688,000 $2,414,000
INSTALLATION AND COMMISSIONING
PACKING AND CARRIAGE TO US PORT $74,000 $74,000
SPARE PARTS $50,000 -
TOTAL MACHINE PRICE $2,812,000 $2,488,000
