¤ 5.15 Form: Circuit Board Alliance AgreementCIRCUIT BOARD ALLIANCE AGREEMENT
CIRCUIT BOARD ALLIANCE AGREEMENT (this "Agreement"), effective as of
______________, 20____, by and between ____________________, a ________________
corporation having an office at
_________________________________________________________ ("Low-Cost
Manufacturer") and ____________________ a ________________ corporation having an
office at _________________________________________________________ ("High-Cost
Manufacturer").
1. Recitals. 1.1. High-Cost Manufacturer is a technology leading U.S. manufacturer of
printed circuit boards ("PCBs");
1.2. Low-Cost Manufacturer is a quality non-U.S. manufacturer of PCBs;
1.3. High-Cost Manufacturer desires to establish a lower-cost
manufacturing capability for lower-technology PCBs; and
1.4. Low-Cost Manufacturer desires to establish itself in U.S. markets as
a quality manufacturer of PCBs.
NOW THEREFORE, in exchange for the promises contained herein and other good and
sufficient consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows.
2. Definitions. As used herein, the term:
2.1. "Agreement" means this Agreement, together with Exhibits A-C,
Appendix A, Exhibits 1 and 2 thereto, and Appendix B.
2.2. "Alliance" means the alliance relationship between Low-Cost Manufacturer
and High-Cost Manufacturer as set forth in this Agreement.
2.3. "Alliance Customers" means those customers listed in Exhibit A in the
territories listed in Exhibit A.
2.4. "Alliance Factory Direct Customer" has the meaning set forth in
Section 4.2.2 of Appendix A.
2.5. "Alliance Price" has the meaning set forth in Section 3 of Appendix
A.
2.6. "BUYER" has the meaning set forth in the preamble to Appendix A.
2.7. "Disclosing Party" has the meaning set forth in Section 9.4.
2.8. "Effective Date" means the date first written hereinabove.
2.9. "Factory" means Low-Cost Manufacturer-owned factory(ies), provided
that any Low-Cost Manufacturer-owned factory other than the factory located at
_________________________________________________________ will be approved in
writing by High-Cost Manufacturer before being added to the defined term Factory.
2.10. "Factory Direct Order" has the meaning set forth in Section 4.2.2 of
Appendix A.2.11. "Incoterms 2000" means the International Commercial Terms published
in November 1999 by the International Chamber of Commerce and effective as of
January 1, 2000.
2.12. "Indemnified Party" has the meaning set forth in Section 6.
2.13. "Indemnifying Party" has the meaning set forth in Section 6.
2.14. "Late Product" has the meaning set forth in Section 11 of Appendix
A.
2.15. "MFC Period" has the meaning set forth in Section 3 of Appendix A.
2.16. "Non-Alliance Customers" means those customers listed in Exhibit B
in the territories listed in Exhibit B, and, at all relevant times, all other
customers not listed in Exhibit A in the territories listed in Exhibit A.
2.17. "Offer" has the meaning set forth in Section 8.2.
2.18. "Part Number" means a specific Product manufactured for a specific
Alliance Customer, as described in Exhibit 1 to Appendix A, as may be changed
from time to time during the term of this Agreement by written agreement between
the Parties.
2.19. "Party" means Low-Cost Manufacturer or High-Cost Manufacturer, as
applicable, and "Parties" means Low-Cost Manufacturer and High-Cost
Manufacturer.
2.20. "PCBs" has the meaning set forth in Section 1.1.
2.21. "Preexisting Relationship" means, with respect to Low-Cost
Manufacturer, a contractual relationship in place as of the Effective Date
pursuant to which Low-Cost Manufacturer grants some form of marketing
exclusivity to a third party, and, with respect to High-Cost Manufacturer, a
contractual relationship in place as of the Effective Date pursuant to which
High-Cost Manufacturer performs exclusive marketing services for a third party.
All Preexisting Relationships are listed in Exhibit C.
2.22. "Product" means those types of PCBs described in Exhibit 1 to
Appendix A, as may be changed from time to time during the term of this
Agreement by written agreement between the Parties.
2.23. "Proprietary Information" has the meaning set forth in Section 9.4.
2.24. "Pullback" has the meaning set forth in Section 3.8.
2.25. "QTA" has the meaning set forth in Section 7 of Appendix A.
2.26. "Quality System" has the meaning set forth in Section 16 of Appendix
A.
2.27. "Receiving Party" has the meaning set forth in Section 9.4.
2.28. "Registration Date" has the meaning set forth in Section 3.2.
2.29. "Rejectable Product" has the meaning set forth in Section 11 of
Appendix A.
2.30. "SELLER" has the meaning set forth in the preamble to Appendix A.
2.31. "Specifications" has the meaning set forth in Section 1 of Appendix
A.
3. Marketing.
3.1. Alliance Customers. High-Cost Manufacturer will have the exclusive
right to market Low-Cost Manufacturer's PCB manufacturing capability and the
Products to Alliance Customers. Low-Cost Manufacturer will provide quotes and
accept orders only from High-Cost Manufacturer for Alliance Customers and their
designated subcontract assemblers subject to Section 3.3. High-Cost Manufacturer
will be Low-Cost Manufacturer's sole marketing channel for Alliance Customers,
and Low-Cost Manufacturer will not directly market or assign representatives to
market to Alliance Customers. Low-Cost Manufacturer is free to market to all
other customers and all other territories, through its own sales and marketing
organization as well as through other agents and sales channels. Any direct
inquiries from Alliance Customers will be directly forwarded to High-Cost
Manufacturer for marketing and selling response. Low-Cost Manufacturer will not
meet or hold telephone, video or other conferences with Alliance Customers
without High-Cost Manufacturer personnel present at such meetings or
participating in such conferences. High-Cost Manufacturer understands that Low-Cost Manufacturer has a number
of Preexisting Relationships, and High-Cost Manufacturer agrees that its
exclusivity with respect to Alliance Customers is superseded by the rights
granted in Preexisting Relationships, to the extent described in Exhibit C.
High-Cost Manufacturer may add additional Alliance Customers upon written
notice to Low-Cost Manufacturer and with Low-Cost Manufacturer's written
approval, which approval will be given or withheld within five days after
receipt of such notice and will not be unreasonably withheld.
3.2. Term of Exclusivity. Low-Cost Manufacturer recognizes that High-Cost
Manufacturer must expend considerable time and effort to proceed from a first
sales call to booking an order, which time and effort can include developing
customer interest, defining the customer's procurement organization and process,
submitting sample pricing, accomplishing preliminary factory visits, gaining
quality approvals, producing qualification lots, gaining Approved Vendor Status,
producing prototypes and revisions, and competing with existing customer-
approved suppliers to receive production orders. Accordingly, the term of
exclusivity for each Alliance Customer will begin on the date the Alliance
Customer is included in Exhibit A (the "Registration Date"; the Registration
Date being the Effective Date for all initial Alliance Customers), and will
terminate as set forth below:
(1) Rule 1: If Low-Cost Manufacturer does not provide High-Cost
Manufacturer with a price quote for the Alliance Customer within twelve months
after the Registration Date, then the exclusivity period with respect to such
Alliance Customer will terminate twelve months after the Registration Date. (2) Rule 2: If Low-Cost Manufacturer provides High-Cost Manufacturer
with one or more price quote(s) within twelve months after the Registration
Date, then the exclusivity period with respect to such Alliance Customer will
terminate on the earlier of: (a) twelve months after the date of Low-Cost
Manufacturer's last price quote for the Alliance Customer; or (b) 18 months
after the Registration Date, unless one or more High-Cost Manufacturer purchase
orders for the Alliance Customer is accepted by Low-Cost Manufacturer within the
time period specified in this Rule 2, in which case the exclusivity period with
respect to such Alliance Customer will terminate in accordance with Rule 3, below.(3) Rule 3: If one or more High-Cost Manufacturer purchase orders
for the Alliance Customer are accepted by Low-Cost Manufacturer before the
exclusivity period has terminated in accordance with Rule 2 above, then the
exclusivity period with respect to such Alliance Customer will terminate twelve
months after the date of High-Cost Manufacturer's last purchase order accepted
by Low-Cost Manufacturer for Product for the Alliance Customer. Termination of the term of exclusivity will result in the automatic,
deemed removal of the Alliance Customer from Exhibit A, the loss of High-Cost
Manufacturer's exclusive marketing rights hereunder for the Alliance Customer
and the immediate right of Low-Cost Manufacturer to directly approach and sell
to the (former) Alliance Customer.
The following examples illustrate the application of the foregoing rules
to specific cases, for an Alliance Customer having a Registration Date of 10/1/02:
Example 1: If Low-Cost Manufacturer has not given High-Cost
Manufacturer a price quote by 9/30/03, then the term of exclusivity terminates
on 9/30/03 pursuant to Rule 1.
Example 2: If Low-Cost Manufacturer gives High-Cost Manufacturer a
price quote on 12/1/02 but does not accept a purchase order by 11/30/03, then
the term of exclusivity terminates on 11/30/03 pursuant to clause (a) of Rule 2. Example 3: If Low-Cost Manufacturer gives High-Cost Manufacturer a
price quote on 8/1/03 but does not accept a purchase order by 3/31/04, then the
term of exclusivity terminates on 3/31/03 pursuant clause (b) of Rule 2.
Example 4: If Low-Cost Manufacturer gives High-Cost Manufacturer a
price quote on 8/1/03, accepts a first purchase order by 3/31/04, and accepts a
last purchase order on 7/1/04, the term of exclusivity terminates on 6/30/05
pursuant to Rule 3.
3.3. Transfers to Subcontract Assemblers. If procurement or production for
a specific program or Part Number is transferred from an Alliance Customer to a
subcontract assembler not defined at such time as an Alliance Customer, then:
3.3.1. Orders submitted by the subcontract assembler for such
program or Part Number will be deemed to have been made by the original Alliance
Customer for purposes of exclusivity under this Agreement, and thus High-Cost
Manufacturer will continue to have exclusivity with respect to such program or
Part Number in respect of such subcontract assembler acting for the account of
the original Alliance Customer.
3.3.2. In the event that the Alliance Customer or the subcontract
assembler, for any reason, prefers to sign purchase orders directly with Low-
Cost Manufacturer, Low-Cost Manufacturer will accept factory direct orders, and
High-Cost Manufacturer will remain exclusive servicing representative of Low-
Cost Manufacturer on the transferred program or parts, if it is agreeable to the
Alliance Customer or the subcontract assembler.
3.3.3. In the event that the Alliance Customer or the subcontract
assembler, for any reason, chooses to sign purchase orders directly with Low-
Cost Manufacturer, and to be serviced by a representative of Low-Cost
Manufacturer other than High-Cost Manufacturer, then in recognition of High-Cost
Manufacturer's successful marketing effort to sell the Part Number for Low-Cost
Manufacturer, Low-Cost Manufacturer will pay High-Cost Manufacturer a fee equal
to 21Ú2% of Low-Cost Manufacturer's invoice price to the Alliance Customer or
subcontract assembler for so long as the Part Number is manufactured by Low-Cost
Manufacturer for such Alliance Customer or the subcontract assembler during the
applicable term of exclusivity.3.4. Non-Alliance Customers. High-Cost Manufacturer may not sell Low-Cost
Manufacturer's capability to Non-Alliance Customers unless otherwise agreed to
by Low-Cost Manufacturer in advance. Low-Cost Manufacturer will not be obligated
to provide High-Cost Manufacturer with price quotations or accept orders from
High-Cost Manufacturer for Non-Alliance Customers.
3.5. Account Reviews and Information. High-Cost Manufacturer sales
management will review the status of and marketing activity at each Alliance
Customer no less than once per calendar quarter. Low-Cost Manufacturer sales
management, at its discretion, may participate in these reviews, or may elect to
receive written reports thereof. High-Cost Manufacturer will provide Low-Cost
Manufacturer with a rolling twelve-month forecast, updated monthly. Low-Cost
Manufacturer understands that such forecast is a non-binding estimate only based
upon High-Cost Manufacturer's assumptions at such time and is provided for Low-
Cost Manufacturer's planning purposes only. Any measures undertaken by Low-Cost
Manufacturer based on such forecasts are at Low-Cost Manufacturer's risk. In
addition, a sales status summary report will be provided to Low-Cost
Manufacturer sales management for each Alliance Customer, and High-Cost
Manufacturer will provide Low-Cost Manufacturer with periodic reporting on
forecast status, quote status or Alliance Customer status as may be reasonably
requested by Low-Cost Manufacturer.
At the discretion of Low-Cost Manufacturer management, a review of each
Alliance Customer will be conducted every six months by Low-Cost Manufacturer
management and High-Cost Manufacturer sales management, with High-Cost
Manufacturer sales management presenting the status of each Alliance Customer to
Low-Cost Manufacturer management.
The Parties will establish a direct interface between High-Cost
Manufacturer's assigned executive and Low-Cost Manufacturer's Vice President of
Sales, and senior management team to provide for the timely escalation of
critical issues and opportunities and the effective and successful operation of
the alliance established by this Agreement. High-Cost Manufacturer's assigned
executive and the Vice President of Sales of Low-Cost Manufacturer will meet no
less than quarterly to review progress against goals and to share strategies and
plans which may affect the success of such alliance.
3.6. Capacity Allocation. Low-Cost Manufacturer will allocate up to 25% of
its total actual production capacity to High-Cost Manufacturer in support of
High-Cost Manufacturer's marketing efforts to the extent and during the time
that the periodic sales forecasts as contemplated in Section 3.5 justifies such
a level of allocation. Such allocation will apply even in the event that other
customers of Low-Cost Manufacturer are on reduced allocations or in an event of
force majeure, provided that Low-Cost Manufacturer is able to manufacture at or
more than 35% of its normal production capacity. Upon mutual agreement by the Parties, Low-Cost Manufacturer will allocate
up to 50% of its total actual production capacity to High-Cost Manufacturer
during such a period as justified by the sales forecasts contemplated by Section 3.5.
3.7. Factory Exclusivity. With the exception of factories under its sole
ownership or control, High-Cost Manufacturer will place orders for Product from
Alliance Customers, directly or indirectly, with Low-Cost Manufacturer
exclusively. Notwithstanding the foregoing, all orders placed by High-Cost
Manufacturer will be subject to Low-Cost Manufacturer's acceptance; and upon
acceptance, each and every order will constitute an independent sale transaction
between the Parties.When the production volume of High-Cost Manufacturer orders pursuant to
this Agreement has reached 50% of the total actual production capacity of Low-
Cost Manufacturer in the most recent calendar quarter, High-Cost Manufacturer
will be free to market the capabilities of third parties, such as new alliance
partners, to Alliance Customers for specific Part Numbers. High-Cost
Manufacturer will not move any Part Number, at least one order for which has
been fulfilled by Low-Cost Manufacturer, to such a third party without first
obtaining Low-Cost Manufacturer's consent, which consent will not unreasonably
be withheld. Notwithstanding any contrary provision of this Agreement, in the event
that Low-Cost Manufacturer cannot provide the capacity, lead time, technology,
quality or price reasonably necessary to capture an order or produce a specific
Part Number, High-Cost Manufacturer will review the situation with Low-Cost
Manufacturer, and, if the Parties cannot agree on a resolution of the situation,
High-Cost Manufacturer will be free to place an order for and move such Part
Number with a third party. If High-Cost Manufacturer moves a Part Number to a third party without
following the applicable procedure from one of the above two paragraphs. Low-
Cost Manufacturer may choose, by written notice to High-Cost Manufacturer, to
remove such Alliance Customer from Exhibit A, and Low-Cost Manufacturer will be
free to sell to such Alliance Customer immediately and High-Cost Manufacturer
will be free to place orders for such Alliance Customer with third parties
immediately.
3.8. Pullbacks. A Pullback is defined as the transfer of production of a
Part Number from Low-Cost Manufacturer to a High-Cost Manufacturer factory.
High-Cost Manufacturer will follow the following procedure with regard to
Pullbacks:
3.8.1. High-Cost Manufacturer will not Pullback any orders which
have already been placed with Low-Cost Manufacturer.
3.8.2. High-Cost Manufacturer will not Pullback any Part Number
consisting of standard multilayer PCBs already in production at Low-Cost
Manufacturer without Low-Cost Manufacturer's written consent. As used in the
preceding sentence, "standard multilayer PCBs" means PCBs with between four and
seven layers and having five mil or greater lines and spacing.
3.8.3. High-Cost Manufacturer will not Pullback any Part Number
except for situations where, in High-Cost Manufacturer's reasonable
determination, (1) Low-Cost Manufacturer cannot or has failed to meet quality,
delivery or cost requirements; (2) the Pullback is necessary to support product
transition plans; or (3) the Pullback is necessary to maintain the operations of
High-Cost Manufacturer's plants and High-Cost Manufacturer's commitments to
employees. High-Cost Manufacturer will provide notice to Low-Cost Manufacturer
of its intent to do a Pullback pursuant to this Section 3.8.3 in writing at
least 60 days prior to such Pullback.
3.8.4. In the event that High-Cost Manufacturer executes a Pullback
in accordance with clause (3) of Section 3.8.3, High-Cost Manufacturer will not
subsequently place an order for any affected Part Number with a third party
without Low-Cost Manufacturer's prior written consent, which consent will not
unreasonably be withheld. In the event that High-Cost Manufacturer executes a
Pullback in accordance with clause (1) or clause (2) of Section 3.8.3, High-Cost
Manufacturer and Low-Cost Manufacturer will, upon request by Low-Cost
Manufacturer, use their good faith efforts to review the underlying situation in
order to reach a mutually acceptable solution. In no event (other than a force
majeure event under Section 9.15) will High-Cost Manufacturer execute Pullbacks
that, by themselves, reduce Low-Cost Manufacturer's total dollar value of
Products shipped pursuant to this Agreement by more than 25% in any one calendar
quarter, as measured against the previous calendar quarter's revenue. In the
event that High-Cost Manufacturer receives written notice from Low-Cost
Manufacturer of a force majeure event as contemplated in Section 9.15, High-Cost
Manufacturer may immediately execute a Pullback of all affected Part Numbers. As
soon as High-Cost Manufacturer receives written notice from Low-Cost
Manufacturer of the end of such force majeure event, High-Cost Manufacturer will
immediately revert to placing orders for such Part Numbers with Low-Cost
Manufacturer.3.9. New Relationships. Each Party agrees to provide the other Party with
the name and location of similar third party manufacturing or marketing
relationships that the Party establishes during the term of this Agreement,
whether established verbally or in writing. Neither Party will enter into any
such relationship that will conflict with or cause the Party to violate any
provision of this Agreement.
4. Commercial and Operating Terms. All Products sold to High-Cost Manufacturer
by Low-Cost Manufacturer for resale to Alliance Customers will be deemed to be
sold to High-Cost Manufacturer pursuant to the terms and conditions of this
Agreement, including, without limitation, the terms and conditions set forth in
Appendix A. The basic commercial and operating terms governing the Parties' day-
to-day operations are appended as Appendix A, which Appendix A will be deemed
incorporated into the terms of this Agreement.
5. Representations and Warranties.
5.1. By Low-Cost Manufacturer. Low-Cost Manufacturer hereby represents and
warrants to High-Cost Manufacturer that:
5.1.1. Low-Cost Manufacturer is a corporation duly organized,
validly existing, and in good standing under the laws of ________________, and
has all requisite power and authority to conduct its business as now conducted.
5.1.2. The execution, delivery and performance by Low-Cost
Manufacturer of this Agreement and the consummation of the transactions
contemplated hereby do not and will not violate or conflict with any provision
of the charter documents or by-laws of Low-Cost Manufacturer, or any other
agreement to which Low-Cost Manufacturer is a Party, including any Preexisting
Relationship.
5.1.3. Exhibit C contains a complete and accurate list of Low-Cost
Manufacturer's Preexisting Relationships.
5.2. By Low-Cost Manufacturer. High-Cost Manufacturer hereby represents
and warrants to Low-Cost Manufacturer that:
5.2.1. High-Cost Manufacturer is a corporation duly organized,
validly existing and in good standing under the laws of ________________, and
has all requisite power and authority to conduct its business as now conducted.
5.2.2. The execution, delivery and performance by High-Cost
Manufacturer of this Agreement and the consummation of the transactions
contemplated hereby do not and will not violate or conflict with any provision
of the articles of incorporation or by-laws of High-Cost Manufacturer, or any
other agreement to which High-Cost Manufacturer is a Party, including any
Preexisting Relationship.
5.2.3. Exhibit C contains a complete and accurate list of High-Cost
Manufacturer's Preexisting Relationships.
6. Indemnification. Each Party (the "Indemnifying Party") will indemnify and
hold harmless the other Party and its affiliates, directors, officers, employees
and subcontractors (the "Indemnified Party") from and against any and all
claims, losses, expenses (including attorneys' fees and disbursements), damages
or liabilities to the Indemnified Party arising out of (1) any inaccuracy in or
failure of any representation or warranty given by the Indemnifying Party to the
Indemnified Party in this Agreement; or (2) any breach of any covenant,
obligation or undertaking of the Indemnifying Party in this Agreement. The Indemnifying Party will have sole control over, and will assume all
expenses with respect to, the defense, settlement, adjustment or compromise of
any claim as to which this Section 6 requires it to indemnify the Indemnified
Party; provided that, (1) the Indemnifying Party has acknowledged in writing its
obligation to indemnify and hold harmless the Indemnified Party; (2) the
Indemnified Party may, if it so desires, employ counsel at its own expense to
assist in the handling of such claim; and (3) the Indemnifying Party will obtain
the prior written consent of the Indemnified Party to any settlement, adjustment
or compromise of such claim or ceasing to defend against such claim, if pursuant
thereto or as a result thereof there would be imposed upon the Indemnified Party
injunctive relief or money damages, or if any such settlement, adjustment or
compromise does not include as a condition thereof an absolute and unconditional
release of the Indemnified Party from all further liability in connection with
such claim.
7. Term and Termination.
7.1. This Agreement is effective as of the Effective Date and will
continue in force until terminated pursuant to this Section 7.
7.2. Either Party may terminate this Agreement forthwith by written notice
in the event of the bankruptcy or insolvency of the other Party, an assignment
for the benefit of creditors of the other Party, voluntary dissolution or other
discontinuation of the other Party's PCB business, the nationalization of the
other Party or a substantial portion of its assets, or the existence of a state
of war between the United States of America and ________________. Such
termination will be without prejudice to any other rights or claims one Party
may have against the other.
7.3. At any time more than six months after the Effective Date, either
Party may terminate this Agreement by giving the other Party prior written
notice of such termination. Any such termination will be effective no less than
six months after the date of such notice.
7.4. If either Party defaults in any material respect in any of its
obligations under this Agreement, other than the commercial and operational
terms as specified in Appendix A, the other Party will have the right to
terminate this Agreement by giving written notice of termination no less than 60
days prior to the effective date of such termination, such notice specifying the
default; provided that, such notice will be of no effect and termination will
not occur if the specified default is remedied prior to said effective date of
termination. Such termination will be without prejudice to any other rights or
claims the Party may have against the other Party. If either Party defaults in
any of its obligations under the commercial and operational terms provided in
Appendix A in respect of any accepted purchase order, its rights and remedies
will be as specified in Appendix A.7.5. A Party may terminate this Agreement by giving the other Party three
months' prior written notice in the event that a competitor of the Party, as
determined in the Party's sole discretion, acquires, either directly, indirectly
or through a common parent, an ownership interest or right to control the other
Party or its PCB business.
7.6. In the event that this Agreement is terminated pursuant to 7.6, this
Agreement will be terminated in all respects and Low-Cost Manufacturer will be
free immediately to approach and sell Alliance Customers, and High-Cost
Manufacturer will be free immediately to place orders for Alliance Customers
with third parties. In the event that this Agreement is terminated pursuant to
Sections 7.3, 7.4 or 7.5, Low-Cost Manufacturer and High-Cost Manufacturer will
continue to serve and deliver Products to Alliance Customers for accepted
purchase orders in production during any applicable notice period and as of the
applicable termination date, and Low-Cost Manufacturer agrees that it will not
solicit or accept orders for business from Alliance Customers as same exist on
the effective date of the termination, either directly or through its agents,
for the following period of time following the effective date of the
termination:
(1) for two months if High-Cost Manufacturer terminates this
Agreement pursuant to Section 7.3; (2) for six months if Low-Cost Manufacturer terminates this
Agreement pursuant to Section 7.3;
(3) for six months if High-Cost Manufacturer terminates this
Agreement pursuant to Section 7.4;
(4) for 30 days if Low-Cost Manufacturer terminates this Agreement
pursuant to Section 7.4 based upon a material default by High-Cost Manufacturer
in its obligations pursuant to Sections 3.7 or 3.8;
(5) for three months if Low-Cost Manufacturer terminates this
Agreement pursuant to Section D based upon any material default by High-Cost
Manufacturer other than as specified in clause (4) of this Section 7.6; (6) for two months if High-Cost Manufacturer terminates this
Agreement pursuant to Section 7.5; and
(7) for two months if Low-Cost Manufacturer terminates this
Agreement pursuant to Section 7.5.
8. Equity Provisions.
8.1. Ownership. In the event that High-Cost Manufacturer has a bona fide
interest in acquiring an ownership interest in Low-Cost Manufacturer, Low-Cost
Manufacturer will use its best efforts to assist High-Cost Manufacturer in
acquiring Low-Cost Manufacturer shares at the best price and terms possible.
8.2. Right of First Refusal. In the event that Low-Cost Manufacturer will
receive a bona fide offer ("Offer") to sell substantially all of its PCB
business in the form of a sale of assets at any time during the term of this
Agreement, High-Cost Manufacturer will have a right of first refusal to purchase
the PCB business of Low-Cost Manufacturer on substantially the same terms and
conditions as contained in the Offer. Low-Cost Manufacturer will notify High-
Cost Manufacturer of the existence and nature of any Offer as soon as the Offer
is capable of acceptance, and High-Cost Manufacturer will have 15 days to meet
or refuse to meet the Offer. Should High-Cost Manufacturer meet an Offer, it
will have 60 days thereafter to close. If High-Cost Manufacturer refuses to meet
an Offer, Low-Cost Manufacturer will not sell substantially all of its business
thereafter unless it does so within 150 days after High-Cost Manufacturer's
refusal to meet the Offer and on terms and conditions at least as favorable to
Low-Cost Manufacturer as contained in the Offer.8.3. High-Cost Manufacturer Purchase of Asian Factory. High-Cost
Manufacturer will keep Low-Cost Manufacturer informed of its general intentions
with respect to the construction, lease or purchase of a manufacturing facility
in Asia, and will inform Low-Cost Manufacturer within 24 hours of any public
announcement of such a purchase.
9. Miscellaneous.
9.1. Notices. All notices required or permitted to be given under this
Agreement must be in writing in the English language, and may be delivered by
depositing them in the mail, addressed to the person to be notified, postage
prepaid, and registered or certified, with a return receipt requested. Notice
given by registered or certified mail will be deemed given and effective on the
date of delivery as shown on the return receipt. Notices also may be delivered
by hand, courier, facsimile, telex, telecopy or telegram, but will be deemed
given and effective as of the time of actual delivery thereof to the addressee.
Notwithstanding the foregoing, any notice delivered at a time other than during
the recipient's normal business hours will be deemed to have been received at
the opening of business on the next business day of the recipient. For purposes
of the giving of notice, the following addresses will be used:
If to Low-Cost Manufacturer:
__________________
__________________
__________________
with a copy to:
__________________
__________________
__________________
If to High-Cost Manufacturer:
__________________
__________________
__________________
with a copy to:
__________________
__________________
__________________
Either Party may, at any time, substitute for its previous record address
any other address by giving written notice of the substitution in the manner
provided for in this Section 9.1.
9.2. General Waiver of Liability. EXCEPT AS OTHERWISE SET FORTH IN
SECTIONS 5, 11, 12, 13 AND 15 OF APPENDIX A TO THIS AGREEMENT, TO THE FULLEST
EXTENT THAT SAME MAY BE DISCLAIMED, THE PARTIES EXPRESSLY AGREE THAT NEITHER
PARTY WILL BE RESPONSIBLE FOR OR LIABLE TO THE OTHER PARTY (OR, TO THE EXTENT
PERMITTED BY LAW, TO ANY THIRD PARTY) FOR ANY INDIRECT, PUNITIVE, SPECIAL,
EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY CHARACTER WHATSOEVER
RESULTING FROM, IN CONNECTION WITH, OR ARISING OUT OF: (1) THIS AGREEMENT; OR
(2) A PARTY'S PERFORMANCE, PARTIAL PERFORMANCE OR NONPERFORMANCE OF ANY OF ITS
OBLIGATIONS UNDER THIS AGREEMENT, INCLUDING (BUT NOT BY WAY OF LIMITATION) LOSS
OF REVENUES, LOSS OF PROFITS, PROPERTY DAMAGE OR LOSS OF PRODUCTION, WHETHER
SUFFERED BY THE PARTIES HERETO OR ANY THIRD PARTY.NOTWITHSTANDING THE FOREGOING, LOW-COST MANUFACTURER ACKNOWLEDGES THAT
HIGH-COST MANUFACTURER WILL RELY UPON THE CAPACITY COMMITMENTS MADE HEREIN BY
LOW-COST MANUFACTURER WHEN HIGH-COST MANUFACTURER MAKES CONTRACTUAL AND OTHER
COMMITMENTS TO ALLIANCE CUSTOMERS AND THAT IT IS FORESEEABLE THAT THE BREACH OF
SECTIONS 3.6 OR 3.7 BY LOW-COST MANUFACTURER MAY RESULT IN THE BREACH BY HIGH-
COST MANUFACTURER OF SUCH THIRD PARTY CONTRACTS, INCLUDING HIGH-COST
MANUFACTURER GUARANTEES OF CAPACITY CONTAINED IN SUCH THIRD PARTY CONTRACTS.
ACCORDINGLY, LOW-COST MANUFACTURER ACKNOWLEDGES THAT HIGH-COST MANUFACTURER WILL
BE ENTITTLED TO ALL REMEDIES AVAILABLE AT LAW OR IN EQUITY, INCLUDING, WITHOUT
LIMITATION, INDIRECT, PUNITIVE, SPECIAL, EXEMPLARY, INCIDENTAL AND CONSEQUENTIAL
DAMAGES, AND SPECIFIC PERFORMANCE, IN THE EVENT OF A BREACH OF SECTIONS 3.6 OR
3.7 BY LOW-COST MANUFACTURER.
9.3. Further Assurances. Each Party will promptly execute and deliver all
such other agreements, instruments or documents and do and perform or cause to
be done and performed all such further acts and things as may be reasonably
requested by the other Party in order to carry out the intent and purposes of
this Agreement and the consummation of the transactions contemplated hereby.
9.4. Confidentiality. Each Party ("Receiving Party") acknowledges that the
other Party ("Disclosing Party") has "Proprietary Information" not in the public
domain that it may disclose to the Receiving Party in the course of the Parties'
dealings pursuant to this Agreement. The term "Proprietary Information"
hereunder includes: (1) written materials delivered to the Receiving Party
marked as confidential or with a similar legend of confidentiality; (2)
information indicated as confidential and disclosed through an electronic medium
to the Receiving Party, such as by e-mail or by a password-protected Web site
accessible by the Receiving Party; (3) visual information indicated as
confidential by means of written notices or signs; (4) oral information that is
indicated orally to be confidential and subsequently summarized and designated
as confidential in a written memo sent to the Receiving Party; and (5)
information disclosed in the form of tangible products or materials transmitted
to the Receiving Party with an accompanying confidential or proprietary label.
It is the responsibility of each Party to identify its own information that it
deems to be "Proprietary Information." All Proprietary Information disclosed
during negotiation or after the execution of this Agreement will be received by
the Receiving Party under the terms of this Agreement. A Receiving Party will protect the disclosed Proprietary Information by
using the same degree of care, but no less than a reasonable degree of care, to
prevent the unauthorized use or disclosure of the Proprietary Information, as
the Receiving Party uses to protect its own Proprietary Information of like
nature. Proprietary Information will be restricted to those employees having a
need-to-know. In the event that the Receiving Party is required by judicial or
administrative process to disclose Proprietary Information, the Receiving Party
will promptly notify the Disclosing Party and allow the Disclosing Party a
reasonable time to oppose such process. The obligations of confidentiality set forth above will remain in effect
for a period of two years after termination of this Agreement. This Agreement imposes no obligation upon a Receiving Party with respect
to information that: (1) was in the Receiving Party's possession before receipt
from the Disclosing Party; (2) is or becomes available to the public through no
fault of the Receiving Party; (3) is received in good faith by the Receiving
Party from a third party and is not subject to an obligation of confidentiality
owed to the third party; (4) is independently developed by the Receiving Party
without reference to information received hereunder; or (5) is disclosed by
Disclosing Party to a third party without a duty of confidentiality on the third party.A Receiving Party will return or properly dispose of all Proprietary
Information (including tangible products or materials) received from the
Disclosing Party upon request of the Disclosing Party, except that the Receiving
Party may retain one copy of written Proprietary Information and written
documentation of verbal or visual Proprietary Information for the sole purpose
of proving compliance with this Agreement.
9.5. Assignability. This Agreement will inure to the benefit of and be
binding upon the successors and assigns of Low-Cost Manufacturer and High-Cost
Manufacturer.
Notwithstanding the foregoing, neither Party may assign its rights and
obligations under this Agreement without the prior written consent of the other
Party, except that either Party may assign its rights and obligations under this
Agreement to a purchaser of all or substantially all of the assets of its PCB
business, subject to the Parties' right of termination as contemplated in
Section 7.
9.6. Legal and Ethical Business Practices. The Parties will abide by
ethical business practices and such laws and regulations of the United States of
America, ________________, and any other nations that govern or regulate the
Parties' activities pursuant to this Agreement, including, without limitation,
the Foreign Corrupt Practices Act, the Sherman Act and the Clayton Act and their
implementing regulations.
9.7. English Language. Should this Agreement be translated into any
language other than English, the English-language version will control and
prevail on any question of interpretation or otherwise.
9.8. Law. This Agreement will be governed by the laws of ________________,
disregarding any conflicts of laws provisions that may require the application
of the laws of another jurisdiction.
9.9. Dispute Resolution. Any dispute, controversy or claim arising out of
or relating to this Agreement, or the breach, termination or invalidity thereof,
will first be attempted to be settled by direct discussion between the President
of High-Cost Manufacturer and the President of Low-Cost Manufacturer. If such
discussion does not result in settlement of the dispute, then it will be settled
by arbitration in accordance with the International Chamber of Commerce ("ICC")
Rules of Arbitration as in force at the commencement of the arbitration.
The arbitration will be conducted by a sole arbitrator if the dispute
involves $5 million or less. Either Party may propose to the other the names of
one or more persons, one of whom would serve as the sole arbitrator. If within
30 days after receipt by a Party of a proposal made in accordance with this
paragraph the Parties have not reached agreement on the choice of an arbitrator,
the sole arbitrator will be appointed by the arbitration administrator, as such
appointment and position are provided for under the ICC Rules of Arbitration. The arbitration will be conducted by a three-arbitrator tribunal if the
dispute involves more than $5 million, with one arbitrator named by High-Cost
Manufacturer, one arbitrator named by Low-Cost Manufacturer and the third
arbitrator (who will serve as chairperson of the tribunal) appointed by the two
Party-appointed arbitrators. If the two Party-appointed arbitrators fail to
appoint a third within 15 days after the appointment of the second of the two
Party-appointed arbitrators, then either Party may request that the arbitration
administrator appoint the chairperson.The place of arbitration will be ________________, and the arbitration
will be conducted by the ________________in English. The Parties may submit any dispute to mediation, if they both are in
agreement to do so. If mediation does not result in a resolution of the dispute
within 30 days after the date the mediator initiated it, then the arbitral
process will proceed. The award of the arbitrator will be final and binding upon the Parties and
may be entered and/or enforced in any court of competent jurisdiction. The
Parties acknowledge that the recognition and enforcement of any award rendered
pursuant to this Agreement will be governed by the by the United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
9.10. No Implied Licenses. No license, either express or implied, is
granted hereunder by either Party to the other Party with respect to any patent
or other intellectual property or Proprietary Information. No license, either
express or implied, is granted hereunder by High-Cost Manufacturer to Low-Cost
Manufacturer to use as a trademark or otherwise the words "________________" or
"________________" or any other trademark or trade or product name of High-Cost
Manufacturer, or any word or mark similar thereto. No license, either express or
implied, is granted hereunder by Low-Cost Manufacturer to High-Cost Manufacturer
to use as a trademark or otherwise the word "________________" or Low-Cost
Manufacturer's logo or any other mark or trade or product name of Low-Cost
Manufacturer, or any word or mark similar thereto.
9.11. Survival of Obligations. The expiration or prior termination of this
Agreement for any reason will not terminate, limit, or in any way affect, the
Party's rights or obligations under Sections 5, 6 or 7 (with respect to the
post-termination obligations listed thereunder), 9.1, 9.4, 9.7, 9.8, 9.9, 9.11
or this Agreement and under Appendix A to this Agreement (with respect to orders
filled pursuant to the post-termination provisions of Section 6 of Appendix A).
9.12. Superscedence; No Amendment. This Agreement contains all of the
terms and conditions agreed upon by the Parties regarding the specific subject
matter hereof; and all prior discussions, statements, representations,
negotiations, arrangements, proposals and agreements (whether oral, written or
implied from the conduct of the Parties) between the Parties are superseded
hereby. This Agreement will supercede the provisions of any general conditions
of purchase and sale that may be written on purchase orders issued by High-Cost
Manufacturer, and on order confirmations, invoices or other documents issued by
Low-Cost Manufacturer. Only a written instrument, executed on behalf of the
Parties by their respective, duly authorized representatives, may modify this
Agreement.
9.13. Rescission of Unenforceable Terms. If and to the extent that a court
of competent jurisdiction holds any provision (or any part thereof) of this
Agreement to be invalid or unenforceable, such holding will in no way affect the
validity of the remainder of this Agreement.
9.14. Waiver by Delay or Non-Enforcement. Failure of either Party to
insist upon the strict performance of any provisions hereof or to exercise any
right or remedy will not be deemed a waiver of any right or remedy with respect
to any existing or subsequent breach or default. The election by either Party of
any particular right or remedy will not be deemed to exclude any other, and all
rights and remedies of either Party will be cumulative.9.15. Force majeure. Upon the showing of satisfactory proof by a Party,
the Party's failure to perform an obligation under this Agreement will be
excused in the event of, and only for the duration of, an unforeseen event of
force majeure beyond the reasonable control of the Party insofar as such event
prevents or delays such Party's performance and such Party is unable to prevent
or remove the event at reasonable cost. Such events will include strikes,
blockade, war, mobilization, revolutions or riots and natural disasters. Any
delay occurring in the deliveries of subcontractors will be considered a force
majeure event only if (1) the delay is caused by a force majeure event; (2) the
order was placed with the subcontractor in the time required by this Agreement;
and (3) the subcontractor was supervised properly. A Party claiming force majeure will inform the other Party immediately in
writing, including the time it began and its probable duration, and will
immediately take reasonable steps to limit or minimize its consequences. The end
of force majeure will also be reported in writing. If an event of force majeure
lasts for more than 14 days, then the other Party may terminate all effected
purchase orders forthwith by written notice to the Party claiming force majeure.
9.16. Brokers; Expenses. Each Party represents and warrants to the other
that no finder, broker, agent or other intermediary has acted for or on behalf
of it in connection with the negotiation or consummation of this Agreement or
the transactions contemplated hereby. Each Party will pay its own expenses
incurred in connection with the negotiation and execution of this Agreement.
9.17. No Agency. Low-Cost Manufacturer and High-Cost Manufacturer are
independent Parties, and nothing in this Agreement will be construed to make
either Party an agent, employee, franchisee, joint venturer or legal
representative of the other Party. Neither Party will have or represent to have
any authority to bind the other Party or act on its behalf.
9.18. Section Headings. The headings and titles used in this Agreement are
for convenience only and are not part of this Agreement and do not in any way
limit or amplify the terms and provisions of this Agreement.
9.19. Counterparts. This Agreement may be executed in several
counterparts, all of which will constitute one and the same instrument.
9.20. Incorporation; Order of Priority. Exhibits A, B and C, Appendix A,
Exhibits 1 and 2 thereto, and Appendix B are incorporated into and made a part
of this Agreement. In the event of a conflict between the main agreement and
Appendix A, the provisions of the main agreement will prevail.
IN WITNESS WHEREOF, the Parties have caused this instrument to be executed
in duplicate by their duly authorized and empowered officers and representatives
as of the Effective Date.
High-Cost Manufacturer:
Signed:________________________
Printed name:__________________
Title:_________________________
Date:__________________________
Low-Cost Manufacturer:
Signed:________________________
Printed name:__________________
Title:_________________________
Date:__________________________
EXHIBIT A
ALLIANCE CUSTOMERS
Alliance Customers Territories Headquarters Location EXHIBIT B
NON-ALLIANCE CUSTOMERS
Non-Alliance Customers Territories Headquarters Location______________________ ___________ _____________________
EXHIBIT C
PREEXISTING RELATIONSHIPS
I. High-Cost Manufacturer Relationships:
Relationship Type of Relationship Exclusive Accounts and Territories
____________ ____________________ _______________________
II. Low-Cost Manufacturer Relationships:
Relationship Type of Relationship Exclusive Accounts and Territories
____________ ____________________ _______________________
APPENDIX A
COMMERCIAL AND OPERATIONAL TERMS As used in this Appendix A, "BUYER" means High-Cost Manufacturer and
"SELLER" means Low-Cost Manufacturer. Stylized terms used but not defined herein
have the meanings given them in Section 2 of the Agreement.
1. Product Specifications. Products purchased and sold in accordance with this
Agreement are described in Exhibit 1. SELLER guarantees the availability of the
volumes listed in Exhibit 1 of the Products during the time when the Products
are included in Exhibit 1.
The specifications of the Products will be at any given time the specifications
associated from time to time with each Part Number (the "Specifications"). The
current Specifications are attached to Exhibit 1. The Parties agree that BUYER
may, in its sole discretion, provide and approve the Specifications. Each
Product delivered by SELLER to BUYER will meet such Specifications agreed upon
by the Parties. SELLER will be deemed to agree to the Specifications if SELLER
runs production orders of the Products. SELLER is not entitled to change the
Specifications or the raw materials contained in the Products without BUYER's
prior written consent. SELLER further agrees that a change of the place of
manufacture of a Product or any change in a process used to make a Product that
affects the quality of a Product and/or similar changes that will affect the
quality of any Product require the prior written consent of BUYER.
2. Rights to the Products. SELLER agrees that BUYER or BUYER's customers will
have the exclusive rights in all respects to the Products' designs and
Specifications to the extent such designs and Specifications were developed and
provided to SELLER by BUYER or BUYER's customers. SELLER will not directly or
indirectly manufacture, sell or otherwise use or commercialize such designs and
Specifications with respect to any PCB designed or manufactured for any other
person (including itself or any of its affiliates) without BUYER's prior written consent.
3. Price Quotation Procedure. From time to time, BUYER will request a price
quotation from SELLER for a product that BUYER would like SELLER to manufacture
for BUYER for resale to BUYER's customer. SELLER will either provide a price
quotation to BUYER or indicate in writing that it cannot provide such a
quotation due to a Preexisting Relationship or other business considerations
within 48 hours of receipt of such request. Such business considerations include
without limitation (1) the production volume of BUYER's orders pursuant to this
Agreement has reached 50% of the total available production capacity of Low-Cost
Manufacturer in the most recent calendar quarter; and (2) Low-Cost Manufacturer,
in its sole discretion, is not able to provide the lead time, technology or
price necessary to meet the needs of a customer or to capture an order. Each
price quotation provided by SELLER will be considered an offer by SELLER to sell
at such price and will be binding upon SELLER as soon as SELLER receives BUYER's
written notice, within the validity period of the offer, that BUYER has relied
upon it to submit a price quotation for such product to BUYER's customer.
BUYER's quotation to its customers will carry the same validity period as that
indicated in SELLER's quotation to BUYER.All prices quoted by SELLER to BUYER, except for QTA Product, will be
discounted by 5% from the lowest price that SELLER charges any of its other
customers for PCBs of similar composition and complexity in the current or
preceding two calendar quarters (such period being referred to herein as the
"MFC Period"; and the resulting price quotes to BUYER, so discounted, being
referred to herein as "Alliance Prices"). All Alliance Prices will be in United
States currency and FCA port of export in ________________ or loaded at the
commercial airport nearest the Factory, unless specified otherwise by BUYER.
Each Alliance Price will include the exchange rate applied and the applicable
price per square inch of finished PCB. All pricing will be inclusive of all
costs, expenses and fees that may be incurred by SELLER in connection with this
Agreement up to the FCA port of export in ________________ or loaded at the
commercial airport nearest the Factory, including, without limitation, packing
costs. Current Alliance Prices are listed in Exhibit 1.
In the event that SELLER provides a price quotation to a third party for
the same part for which it has quoted a price to BUYER in the MFC Period, SELLER
will notify BUYER immediately. In the event that this price quotation is less
than the Alliance Price divided by 0.95, SELLER will provide BUYER with a new
Alliance Price in compliance with this Section 3 and promptly refund any prior
overcharges to BUYER, as well as any reasonable, out-of-pocket costs incurred by
BUYER in discovering the discrepancy.
It is possible that, from time to time during the term of this Agreement,
BUYER's pricing information may be inadvertently disclosed to SELLER. SELLER
agrees that in the event of any such disclosure, it will not use any such
information to set pricing for any customers or accounts that are not governed
by this Agreement. An individual will be assigned, no less than one at BUYER and one at
SELLER, to interface daily and respond to price quotations, scheduling and
accounting issues.
4. Ordering Procedure.4.1. Purchase Orders Submitted by BUYER. Purchase orders may be submitted
hereunder by BUYER to SELLER by first class mail, facsimile transmission or any
agreed manner of electronic transmission to SELLER's agreed address for
accepting purchase orders. SELLER will send its written confirmation or
rejection of each such purchase order no later than 72 hours from the time of
receipt of the purchase order. Each Party will have the right to require
correction of obvious calculation and typing errors in the purchase order.
When an Alliance Customer's purchase order is issued and accepted by BUYER and
BUYER then issues its purchase order to SELLER for the production of the related
Product, BUYER will offer to the Alliance Customer the set of customer support
services listed in Exhibit 2. The levels of the services listed in Exhibit 2
that are necessary to support any particular customer purchase order will be
determined by BUYER in its sole discretion and at its sole cost.
4.2. Purchase Orders Submitted by Alliance Customers. In the event that an
Alliance Customer prefers to sign purchase orders directly with SELLER, the
following procedures will apply:
4.2.1. SELLER will accept these orders, invoice the customer
directly and compensate BUYER for selling and servicing the customer. These
orders are defined as Factory Direct Orders. Such customers are defined as
Alliance Factory Direct Customers.
4.2.2. BUYER will be the exclusive servicing organization for
Alliance Factory Direct Customers if it is agreeable with the said Alliance
Customer, and all of the terms and conditions of this Agreement will apply. The customer support services provided to support Alliance Factory
Direct Customers may vary based on their needs, as set forth in Exhibit 2, and
will be determined jointly by the Parties. In addition to the compensation payable to BUYER pursuant to Section
3.3.3 of this Agreement, additional compensation to be paid by SELLER to BUYER
on Alliance Factory Direct Customers will be based on the specific support
services provided by BUYER to the Alliance Factory Direct Customer, which will
be negotiated by the Parties on a case-by-case basis.
5. Delivery and Lead-Time. SELLER will deliver Products in accordance with the
accepted purchase orders that have been placed in accordance with this
Agreement. The terms of delivery are FCA port of export in ________________ or
loaded at the commercial airport nearest the Factory, as defined by reference to
Incoterms 2000. BUYER is not obliged to take Products into BUYER's possession before the
agreed time of delivery. Partial deliveries are not allowed, unless accepted by
BUYER in writing prior to any such partial delivery.
The standard lead-time will be five weeks, and thus the time of delivery
will be five weeks after the date of SELLER's confirmation of BUYER's purchase
order, unless a different time of delivery is requested in such purchase order.
In such a case, the time of delivery will be as described in SELLER's
confirmation of the purchase order. If a delivery is delayed past the time of delivery as provided herein,
SELLER will pay for charges for express shipments to the extent it is required
to meet BUYER's delivery commitments to its customer. If a delivery delay
results in the cancellation of an order by BUYER's customer or requires BUYER to
produce the order in its own factory, then BUYER has the right to cancel the
delayed quantity. Subject to Section 9.15 of this Agreement, if a delivery is
delayed on grounds of force majeure, or because of an act or omission of BUYER,
the time of delivery will be extended as considered reasonable, taking into
consideration all pertinent circumstances. Notwithstanding the remedies
available to BUYER pursuant to this Section 5 and pursuant to Section 11 of this
Appendix A, BUYER will be entitled to reimbursement from SELLER for BUYER's
direct damages resulting from SELLER's delay.Notwithstanding the remedies available to BUYER pursuant to this Section
11 and pursuant to Section 11 of this Appendix A, if a delivery is delayed and
such delay results in the payment of a penalty or liquidated damage by BUYER to
BUYER's customer, then BUYER will be entitled to recover the amount of such
payment from SELLER; provided that, SELLER will not be required to pay any
amount pursuant to this Section 5 that in total exceeds 10% of the sales price
of the affected Products, or that relates to a shorter-than-standard-lead-time delivery. Upon request by BUYER, SELLER will provide BUYER a credit note for any
amount that BUYER is owed pursuant to this Section 5.
6. Rescheduling and Cancellation. BUYER will not have the right to reschedule to
a later date, or cancel, any delivery of Product free of charge or liability
within five weeks of the time of delivery, unless otherwise agreed to by SELLER
in writing. The Parties acknowledge that any rescheduling or cancellation of a
delivery of Product within such five-week period may have a negative impact on
the SELLER's ability to comply with its warranty obligations contained in
Section 12 of this Appendix A with respect to work in progress at the time of
such rescheduling or cancellation. In the case where BUYER requests the
rescheduling or cancellation of a delivery of Product within such five-week
period, the Parties will use their best efforts to work out a mutually
acceptable arrangement, including, without limitation, obtaining payment from
BUYER's customer of SELLER's standard cancellation charges. BUYER may reschedule
or cancel any delivery of Product free of charge and liability if such
rescheduling or cancellation occurs more than five weeks prior to the time of delivery.
7. QTA Capability. SELLER will provide quick turnaround ("QTA") capability for
the Products and turnaround times listed in Exhibit 1 for each calendar quarter
during the term of this Agreement. For such QTA Product, the standard time of
delivery will be as agreed to by the Parties, and SELLER's price will have a
premium as agreed to by the Parties.
8. Passing of Title. Title to the Products will pass to BUYER upon delivery by
Seller to Buyer of bills of lading, waybills or carrier's receipts for the Product.
9. Payment Terms. SELLER will invoice BUYER when Product is shipped, and the
payment terms will be net 60 days after the date of the invoice. BUYER will not
be obligated to pay an invoice unless SELLER has delivered in accordance with
this Agreement the total quantity of Product referenced in the invoice and the
delivered Product has not been rejected by BUYER or BUYER's customer pursuant to
Section 11 of this Appendix A. BUYER is entitled to withhold payment of disputed
amounts in respect of a rejected delivery that is made in accordance with this
Agreement. If an invoice has been paid by BUYER and BUYER's customer thereafter
rejects Product invoiced on such invoice and such rejection is verified by BUYER
and SELLER pursuant to Section 11 of this Appendix, then BUYER will be entitled
to offset the amount of the payment related to such Product against any future
payments by BUYER to SELLER or to receive a cash refund for such amount, at its
option.
10. Packing. SELLER will pack Products properly as required in the BUYER's
customers' packing specifications that have been given to SELLER, to prevent
damage to or deterioration of the Products during transportation and storage,
and will indemnify BUYER against damage due to improper packing. SELLER will
adopt BUYER's reasonable requirements for changes to packing. BUYER's purchase
order numbers, SELLER's invoice numbers and any other information required by
law will be clearly specified upon each delivery. SELLER will use reasonable
efforts to use packing material that can be recycled.
11. Acceptance and Rejection of Product. BUYER will have the option to conduct
source inspections of Product at the factory and both BUYER and BUYER's
customers may conduct inspections of incoming Product. BUYER will have the right
to reject any Product that does not meet the Specifications or SELLER's
obligations as specified in Sections 10, 12, 19 and 21 of this Appendix A (a
"Rejectable Product"). A rejection hereunder will include a written report of
the alleged issue.Acceptance of Product by BUYER or BUYER's customer, with or without
inspection, will not to any extent release SELLER from any of its obligations to
deliver Products that are not Rejectable Products. Acceptance of a Product will
not limit BUYER's right to make a rejection relating to a Rejectable Product. In the event that BUYER or BUYER's customer suspects that a Product is a
Rejectable Product but is unable to verify such, BUYER will send a written
investigation request to SELLER. SELLER will analyze the suspected Rejectable
Product and will take actions to correct any verified issue within a reasonable
amount of time. If applicable, SELLER will issue a return material authorization
for verified Rejectable Product within 3 days after such verification. The
investigation request will not be considered as a final claim regarding the
quality of any Product. SELLER will take immediate steps to minimize the consequences of any
Rejectable Product. SELLER will keep BUYER informed of the implementation of
such actions. SELLER will within a reasonable amount of time take actions to
analyze and correct the cause of Rejectable Product and to prevent its re-
occurrence. SELLER will make and report the root cause analysis and the
corrective and preventive actions taken within 14 days after receipt of samples
(if any) of Rejectable Products and BUYER's claim report. The final analysis and
preventive actions will be defined and implemented promptly by SELLER. SELLER
will permit reasonable contact with SELLER's design and manufacturing staff to
assist in the timely resolution of any field problems. SELLER will provide
reasonable assistance upon request to assist in the investigation of suspected
field problems.
Notwithstanding any other remedies available to BUYER pursuant to this
Agreement, the Parties expressly agree that SELLER will be liable for incidental
and consequential damages pursuant to applicable law with respect to Product
delivered after the time of delivery pursuant to Section 5 of this Appendix A
("Late Product") and with respect to Rejectable Product; provided that, SELLER's
total maximum liability, including, without limitation, indirect, punitive,
special, exemplary, incidental and consequential damages (including all remedies
listed in Section 5 of this Appendix A), for Late Product and Rejectable Product
will not be more than an amount equivalent to 10 times the value of such Late
Product or Rejectable Product (even when a Late Product is also a Rejectable
Product) as specified in the accepted purchase order therefor.
12. Warranty. SELLER hereby warrants to BUYER all Products to be free from
defects in materials and workmanship for a period of 12 months after the date of
delivery to BUYER. To the extent of designs developed and provided solely by
SELLER, SELLER hereby warrants all Products manufactured with such designs to be
free from defects in design and to be fit for the purpose for which they are
intended. The warranty provided by SELLER to BUYER will include that the
Products supplied will: (1) be new, unused and in a good working condition; and
(2) conform to the Specifications and the quality requirements contained in the
confirmed purchase order.Notwithstanding any other remedies available to BUYER pursuant to this
Agreement or applicable law, including, without limitation, consequential
damages of the type known in the industry as "value add" and "line down" claims,
but subject to the limitation of liability contained in Section 1
