EXHIBIT 10.28
CONFIDENTIAL TREATMENT REQUESTED
FORMFACTOR, INC.
PRODUCTION AND DEVELOPMENT
MATERIALS AND SERVICES
PURCHASE AGREEMENT
BUYER: SELLER:
FormFactor, Inc. NTK Technologies, Inc.
2140 Research Drive 3255-2 Scott Blvd. Suite 101
Livermore, CA 94550 Santa Clara, CA 95054
Contact: Mark Zeni Contact: Adam Kuhara
---------------------- ------------------------------
Phone: 925-456-7302 Phone: (602) 470-9898
------------------------ --------------------------------
Fax: 925-294-8145 Fax: (602) 470-9797
-------------------------- ----------------------------------
Product(s): Items and Services as identified on Schedule A, and
consistent with the specifications of Schedule B.
Pricing: As identified on Schedule C.
Lead Time As specified in Schedule D.
Purchase Orders: Buyer may purchase and Seller shall accept
all Purchase Orders for Items, Custom Items and
Services in accordance with the prices and the terms
and conditions contained in this Agreement.
Terms and Conditions: Any and all Purchase Orders, as may
be issued by the Buyer, shall reference this
Agreement and be governed solely by the terms and
conditions of this Agreement notwithstanding any
terms and conditions on Seller's acknowledgment or
Buyer's Purchase Order. Any additional or different
terms as may be contained in Seller's documents are
hereby deemed to be material alterations, and Buyer
hereby gives notice of objection to and rejection of
such material alterations.
Alterations: As specified in Schedule F.
Term: Two (2) years from the Effective Date
CNDA No.: NTK 9902
---------------------------------
In consideration of the mutual promises and obligations contained within this
Production and Development Materials and Services Purchase Agreement (this
"Agreement"), FormFactor, Inc. (hereinafter "Buyer" or "FormFactor") and NTK
Technologies, Inc. (hereinafter "Seller" or "NTK") (Buyer and Seller are also
referred to individually as a "Party" and collectively as the "Parties"), agree
as set forth above, in the accompanying General Terms and Conditions of Purchase
Agreement, and in the appended Schedules, and hereby have caused this Agreement
to be duly and validly executed and in full force and effect as of the date of
full execution ("Effective Date").
FormFactor, Inc. NTK Technologies, Inc.
By: /s/ Mark Zeni By: /s/ Kay K. Yamasaki
------------------------------ ----------------------------------
Name: Mark Zeni Name: Kay K. Yamasaki
------------------------------ ----------------------------------
Title: VP Supply Chain Title: COO
------------------------------ ----------------------------------
Dated: May 15, 2002 Dated: June 25, 2002
------------------------------ ----------------------------------
* * * Confidential treatment has been requested for portions of this exhibit.
The copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
GENERAL TERMS AND CONDITIONS OF
PRODUCTION AND DEVELOPMENT MATERIALS AND SERVICES
PURCHASE AGREEMENT
ARTICLE 1. DEFINITIONS
In addition to the parenthetical definitions provided in this Agreement, the
following terms shall have the following meanings:
1.1 "ADVANCED PRODUCTS" means those products commonly known as Mercury and Large
Area Array. Mercury products refer to the use of * * * ceramic substrates used
to manufacture customized ceramics in short lead time. Large Area Array products
refer to 100mm (nominal), 150mm (nominal) and larger ceramic substrates.
1.2 "CUSTOM ITEMS" mean those Items manufactured by Seller for sale exclusively
to Buyer. It is understood that Buyer owns all intellectual property rights for
any tooling or data provided by Buyer to Seller, and used by Seller in the
design and manufacture of of Custom Items.
1.3 "DELIVERY POINT" means 2140 Research Drive, Livermore, CA 94550, or such
other location as may be identified by Buyer.
1.4 "HAZARDOUS MATERIALS" mean dangerous goods, chemicals, contaminants,
substances, pollutants or any other materials that are defined as hazardous by
relevant local, state, national, or international law, regulations and
standards.
1.5 "ITEMS" means either singly or collectively, as the context indicates those
products, product components, hardware, spare parts and Custom Items as
identified on Schedule A hereto (and as may be modified in the future by the
mutual agreement of the Parties), and any and all upgrades, retrofits,
modifications, and enhancements thereto, which Seller is to sell to Buyer as set
forth in this Agreement.
1.6 "LEAD-TIME" means the number of calendar days between when the Purchase
Order is issued for an Item to the date the Item is to be received by the Buyer
at the Delivery Point. The contractual Lead-time is specified in Schedule D.
1.7 "PRODUCT SPECIFICATION" means the specification for each Item purchased or
to be purchased pursuant to this Agreement, as set forth in Schedule B hereto,
and as the Parties may mutually agree to modify from time to time.
1.8 "PURCHASE ORDER" means Buyer's purchase order or change order to ship a
definite quantity of Items or to provide Services to a specified schedule.
1.9 "SERVICES" means the work to be performed by Seller as identified on
Schedule A.
ARTICLE 2. TERM AND MANUFACTURING AND SERVICE ACTIVITIES.
2.1 Term and Effective Date. The Term and Effective Date of this Agreement are
as set forth on the executed cover sheet. The Term shall renew automatically for
consecutive two (2) year periods after the expiration of the initial 2-year
period, unless a party gives written notice of the intent not to renew at least
one hundred and eighty (180) days prior to the expiration of the then-current
Term.
- -----------
*** Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
FormFactor Confidential 2
2.2 Manufacturing Capability. During the Term, Seller agrees to establish and
have in place at its expense facilities, manufacturing, test equipment and labor
necessary to manufacture Items as required by Buyer consistent with the terms
and conditions of this Agreement. Seller shall exercise its commercially
reasonable best efforts to manufacture Items in a timely manner in accordance
with the applicable Product Spec in such quantities as required by Buyer.
2.3 Services. During the Term, Seller agrees to exercise its commercially
reasonable best efforts to provide Services as required by Buyer consistent with
the terms and conditions of this Agreement.
2.4 Technical Assistance. Each Party agrees to provide the other with such
technical assistance reasonably necessary to facilitate the manufacture of Items
and/or the rendering of Services. Each Party shall bear and be solely
responsible for the fees and costs associated with such technical assistance.
ARTICLE 3. PRICING
3.1 Pricing. Prices for Items and Services are as set forth in Schedule C and
shall remain fixed or decline for the first * * * of the agreement. Seller and
Buyer agree that after the first * * * of the agreement, and after each
subsequent * * * period thereafter while this agreement is in still in effect,
the parties will renegotiate prices in good faith.
3.2 Low Price Commitment. Throughout the term of this Agreement and any
extensions thereto, Seller warrants to Buyer that the prices set forth in this
Agreement, in conjunction with the discounts offered herein for any Item or
equivalent Service, reflect the Seller's lowest price charged any customer of
Seller for Items or Service of similar complexity and volume, regardless of any
special terms, conditions, rebates or allowances of any nature. If Seller sells
any comparable Item or provides equivalent Services to any other customer at a
price less than the price set forth in this Agreement or any addendum or
amendment, Seller shall adjust its price to the lower price for all future
invoices for such Item or Service and rebate to Buyer an amount equal to the
difference in the price paid by Buyer and the lower price for any invoices
already paid by Buyer for such Item or Service. In addition, Buyer may adjust
the prices for any Item or Service invoiced by Seller and unpaid by Buyer to
reflect the lower price. Each of the above adjustments and the rebate shall be
calculated from the date the Seller first sells the Item or Service at the lower
price. In the event the Seller offers a lower price either as a general price
drop or to specific customer(s) for any reason, Seller shall immediately notify
Buyer of this price and adjust Buyer's pricing to meet the new pricing structure
3.3 Inspection Right. Buyer has the right, once per year, to appoint an
independent third party of it's choice and it's expense, to inspect and audit
Seller's records to ensure compliance with this Agreement
3.3.1 Seller shall have the option to review the audit report prior to the
release to the Buyer. If Seller disagrees with the findings in the
audit report for any reason, Seller shall have the right to issue a
letter in response, which shall detail the specific reasons for
Seller's disagreement and shall be included as part of the final audit
report issued to Buyer.
3.3.2 If discrepancies are found during the audit and price adjustments are
required to be paid by the Seller to the Buyer, Seller shall reimburse
Buyer for all costs associated with the audit, along with a single
payment or credit towards future orders covering the price adjustments
within thirty (30) days after the completion of the audit. The choice
of method of reimbursement, single payment or credit towards future
orders, shall be at the Buyers option. The results of such audit shall
be kept confidential by the auditor and only Seller's failures to abide
by the obligations of this Agreement, and the details of such
failure(s), shall be reported
- -----------
*** Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
FormFactor Confidential 3
to Buyer. In the event Seller reasonably and in good faith disputes the
audit results consistent with Section 3.3.1, and the Parties are unable
to agree as to the auditor's report, the procedures of Section 19.2
shall be implemented.
3.3.3 Seller will maintain complete and accurate records of the Items shipped
or the Services performed under this Agreement for a period of three
(3) years after the shipment of these Items or the completion of these
Services. Records relating to the performance of this Agreement shall
be made available to Buyer upon reasonable notice.
3.4 Taxes. Taxes, other than any applicable local sales tax that the Seller is
obligated to collect, and other charges such as duties, customs, tariffs,
imposts, and government-imposed surcharges shall be paid for by Seller without
reimbursement from Buyer as part of the purchase price for Items and Services.
In the event that Buyer is prohibited by law from remitting payments to the
Seller unless Buyer deducts or withholds taxes therefrom on behalf of the local
taxing jurisdiction, then Buyer shall duly withhold such taxes and shall remit
the remaining net invoice amount to the Seller. Buyer shall not reimburse Seller
for the amount of such taxes withheld.
3.5 No Additional Costs. Additional costs, except those provided for herein or
specified in a Purchase Order, will not be reimbursed without Buyer's prior
written approval.
3.6 U.S. Dollars. All prices are in U.S. dollars and quoted delivered to the
Delivery Point.
ARTICLE 4. PURCHASE ORDERS AND FORECASTS.
4.1 Issuance of Purchase Orders. Buyer may issue Purchase Orders to Seller
identifying: (i) a description of the Items to be purchased(ii) the unit
quantities being purchased, (iii) the prices for the Items being purchased, (iv)
the desired delivery date the item(s) are to be received at the Delivery Point;
and/or (v) the Services requested, fee, and the timing for the same.
4.2 Purchase Order Acknowledgement. Seller agrees to acknowledge and accept each
Purchase Order to Buyer within forty eight (48) hours after receipt of the
Purchase Order ("Purchase Order Acknowledgment"). Lack of a written Purchase
Order Acknowledgement by Seller to Buyer within 48 hours shall be deemed
acceptance of the Purchase Order.
4.3 Forecasts. By the tenth (10th) day of each month, Buyer shall supply to
Seller a forecast setting forth Buyer's anticipated purchases of Items in each
month for the proceeding * * * month period ("Rolling Forecast"). The Rolling
Forecast is provided to Seller for planning purposes only and neither
constitutes a firm commitment from Buyer to purchase a specific number of Items,
nor a Purchase Order. Buyer shall modify the Rolling Forecast in the event it
determines that it is not a reasonably accurate forecast of Buyer's anticipated
purchases of Items, but Buyer shall have no obligation to and may, at its sole
discretion, issue Purchase Orders under this Agreement. Buyer shall be
responsible only for Items or Services for which it has issued Purchase Orders
hereunder.
4.4 Buyer's engineering and technical personnel may from time to time, in
Buyer's discretion, render assistance to Seller concerning the Items to be
furnished pursuant to the Purchase Order. Such assisting personnel are not
authorized to change the Items ordered or the provisions of the Purchase Order.
No change order will be binding on the Buyer unless it is issued by an
authorized Buyer representative.
- ---------------
***Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
FormFactor Confidential 4
ARTICLE 5. INVOICING AND PAYMENT.
5.1 Invoicing. Original hard-copy invoices ("Invoices") shall be mailed or
delivered by courier. Invoices shall include the following information: (i) the
Buyer's Purchase Order number, (ii) a description of the Items shipped (or
Services rendered, including dates services were rendered); (iii) the part
number(s) (if applicable), (iv) the quantities, unit prices and extended total
in US dollars for the Items that were shipped; all of which must match the
information in the Buyer's Purchase Order. Any applicable taxes or other charges
such as duties, customs, tariffs, imposts and government-imposed surcharges
shall be stated separately on Seller's invoice.
5.2 Invoice Grace Period. Seller agrees to invoice Buyer no later than one
hundred eighty (180) days after delivery of Items or completion of Services
rendered. Buyer will not be obligated to make payment against any invoices
submitted after such period.
5.3 Payments. All payments shall be one hundred percent (100%) net * * * days
from the receipt of Invoice, Items, or Services, whichever is later. Buyer may
at its option make payment within * * * days and receive a * * * from the total
invoice. Prompt payment discounts will be computed from the latest of: (i) the
scheduled delivery date; (ii) the date received at the Delivery Point; or (iii)
the date a properly filled out original invoice or packing list is received.
Payment is made when Buyer's check is mailed or EDI funds transfer initiated.
Payment of an invoice shall not constitute acceptance of the Item or Service.
Product shall be subject to appropriate adjustment for failure of Seller to meet
the Purchase Order requirements. Buyer may set off any amount owed by Seller or
any of its affiliated companies to Buyer against any amount owed by Buyer under
the Purchase Order.
5.4 Vendors and Subcontractors. Seller may utilize vendors or subcontractors to
manufacture Items or render Services, provided that: (i) Seller advises Buyer in
advance of the intent to utilize such vendor(s) or subcontractor(s) and Buyer
agrees, in writing, to the utilization of such entities; and (ii) Seller at all
times remains (x) fully responsible for, and indemnifies and holds Buyer
harmless from, any and all payments to its vendors or subcontractors utilized in
the delivery of Items or performance of Services, and (y) fully responsible for
the obligations and duties hereunder, even if the same are to be undertaken by
permitted vendors and subcontractors.
ARTICLE 6. SHIPPING AND DELIVERY
6.1 Lead-Time Guarantee. Throughout the term of this Agreement and any
extensions thereto, Seller warrants to Buyer that the Lead-times set forth in
Schedule D to this Agreement or any Lead-times subsequently agreed to, reflect
the Seller's shortest Lead-times for any customer of Items or Service of similar
complexity and volume. If Seller delivers any comparable Item or provides
equivalent Services to any other customer at a Lead-time that is shorter than
what is set forth in this Agreement, Seller agrees to adjust its Lead-time to
Buyer for all future Purchase Orders for such Item or Service. Seller and Buyer
agree that after the first * * * months of the agreement, and after each
subsequent * * * month period thereafter while this agreement is in still in
effect, the parties will renegotiate lead time in good faith.
6.2 Shipping Terms. All Items shall be delivered duty paid ["DDP"; ICC Incoterms
2000] to the Delivery Point as specified in the Purchase Order. Title and risk
of loss shall pass to Buyer upon delivery of Items to the Delivery Point.
6.3 Delivery Commitment. Seller agrees that all Items will be delivered to the
Delivery Point on the exact date specified in the Purchase Order ("Delivery
Date"). Delivery is only considered completed when all items on the Purchase
Order have been delivered. Partial shipments will be
- -------------
***Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
FormFactor Confidential 5
considered complete when the total number of Items ordered on the Purchase Order
have been received at the FCA point.
6.4 Anticipated Delivery Miss. Seller shall notify Buyer, or Buyer's purchasing
agent as noted on the Purchase Order, within twenty-four (24) hours of the
information becoming available, if Seller is unable to make any scheduled
delivery of Items or perform Services as scheduled and shall state the reasons
for the delay. Such notification by Seller shall not affect Buyer's termination
rights under Section 10.
6.5 Missed Delivery Date. Notwithstanding anything else in this Agreement,
failure to meet the delivery date(s) in the Purchase Order by more than * * *
business days shall be considered a material breach of contract and shall allow
Buyer, in it's sole discretion, to either (i) terminate immediately the order
for the Item and/or any subsequent Purchase Orders without any liability even if
the Purchase Order was for Custom Items, or (ii) receive a * * * for each
calendar date late, up to * * * of the price of the delinquent items, but (ii)
is subject to the failure of the Supplier to meet the delivery date(s) resulting
in missed delivery date by Buyer to Buyer's Customer.
6.6 Early Delivery. Early deliveries of Product (measured by adherence to the
Delivery Date) that are greater than * * * days early must be approved in
writing by Buyer prior to shipment by Seller. If any Product is received at
Buyer's dock prior to the Delivery Date, and approval for the delivery has not
been granted by Buyer, Buyer shall have the right to (i) return the Product to
Seller, with Seller paying all shipping and handling costs, and request Seller
re-ship Product on the Delivery Date in the Order, (ii) accept the early
delivery and * * * for each calendar day that Product is delivered.
6.7 Purchase Order Hold. Buyer may place any portion of a Purchase Order on hold
by notice that will take effect immediately upon receipt. Purchase Orders placed
on hold will be rescheduled or cancelled within * * * days. Buyer may not place
a Purchase Order on hold if the Item ordered under such Purchase Order has
already been completed. Any items cancelled shall be subject to the cancellation
charges outlined in section 10 of this Agreement. Also, the price charged for
units shipped from Seller to Buyer shall be per the Pricing Schedule (Schedule
C) for the quantity shipped, not for the Purchase Order quantity originally
issued.
6.8 Packaging. All Items shall be prepared for shipment in a manner which: (i)
follows good commercial practice, (ii) is acceptable by common carriers for
shipment at the lowest rate, and (iii) is adequate to ensure safe arrival. If
Buyer requests, Seller will package Items for cleanroom delivery, per Buyer
specification. Seller shall mark all containers with necessary lifting,
handling, unpacking and shipping information, Purchase Order number, Buyer's
Item Identification number or part number, description, Line item number, date
of shipment and the names of the Buyer and Seller.
ARTICLE 7. ASSURED SUPPLY.
7.1 Assured Quantity. Seller acknowledges that a reliable and continuing source
of Items and Custom Items is essential to Buyer. As a material inducement to
Buyer's execution of this Agreement, Seller hereby covenants that it shall
reserve capacity of its manufacturing facility and inventory levels to assure
supply of Items to Buyer up to the quantity of * * * of Buyer's average monthly
requirements per the Buyer's Rolling Forecast.
- -------------
***Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
FormFactor Confidential 6
7.2 Release of Reserved Capacity. Should Buyer fail to issue sufficient Purchase
Orders to consume the reserved capacity in any given month, Seller shall have
the right to re-allocate the excess, unused capacity to other Customers. Seller
shall notify Buyer in writing of its intent to reallocate such capacity thirty
(30) days prior to date it wished to reallocate. Buyer shall have ten (10) days
to respond to the notification by either issuing additional Purchase Orders to
consume the unused reserved capacity or granting approval for the reallocation.
Supplier agrees to discontinue the reallocation of excess capacity once the
Buyers Purchase Orders reach the forecasted level.
7.3 Expedited Shipping Reserve. At Buyer discretion, Seller will make available
up to * * * of the average monthly volume in the Buyer's Rolling Forecast for
shipment within * * * of contractual Lead-time as described in Schedule D.
7.4 Changes. Configuration and other Buyer-requested or Buyer-approved
changes that result in Ship Date changes will be reflected on a change
order to the Purchase Order showing the revised ship and delivery
dates.
7.5 Cessation of Manufacturing. Seller must notify Buyer in writing * * *
prior to any determination it makes to stop manufacturing Items and/or
Custom Items for Buyer. During the * * * period, Buyer may issue and
Seller shall continue to accept, all Purchase Orders for Items and/or
Custom Items provided the Purchase Orders conform to the terms and
conditions in this Agreement.. In the event that at the end of the * *
* period Seller has not fulfilled all of the Buyer's open Purchase
Orders with the Seller, Seller shall nonetheless be obligated to meet
the Purchase Order requirements. Any deliveries of Items that are
delivered to the Delivery Point after the Delivery Date specified in
the Purchase Order shall be subject to the late delivery provisions and
penalties included in Section 6 to this Agreement.
ARTICLE 8. INSPECTION, ACCEPTANCE AND WARRANTIES
8.1 Inspection. All inspection records relating to Items covered by Purchase
Orders under this Agreement shall be available to Buyer in its acceptance of the
inspection procedure.
8.2 Source Inspection. Buyer shall have the right to inspect the Product(s) at
Seller's facility prior to shipment. Buyer agrees to give Seller at least
forty-eight (48) hours notice that it wishes to exercise this right. If Buyer
does exercise this right, Seller agrees to provide all reasonable assistance
with the inspection at no charge to Buyer. . Source inspection requirements are
described in the Product Specification unless agreed otherwise in writing by the
parties.
8.3 Acceptance Inspection Right. Notwithstanding any source inspection or
testing at Seller's premises, all Items purchased by Buyer are subject to
Buyer's inspection and test (qualification) before final acceptance at Buyer's
premises. Final acceptance requirements are as described in the Product
Specification ("Final Acceptance Criteria") unless agreed otherwise in writing
by the Parties. Items rejected by Buyer as not conforming to the Product
Specification or product drawing ("Defective Items") may be returned to Seller
at Seller's risk and expense and, at Buyer's option, such Defective Items shall
be immediately repaired or replaced.
8.3.1 If an Item is identified as a Defective Item, due to no fault of Buyer,
within * * * days of delivery, then Buyer may give written notice to
Seller of failure to meet Final Acceptance Criteria. If Seller does not
replace or repair the Defective Item with an Item that meets the Final
Acceptance Criteria within * * * days of such notice, Buyer may, at
Buyer's option; (a) return the Item for * * *, (b) have the Item
replaced with a new Item from Seller or repaired by Seller within * * *
business days of Buyer's written election of
- --------
***Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
FormFactor Confidential 7
option (b), or (c) accept such Defective Items at * * * in price,
agreed to by both parties.
8.3.2 Acceptance and/or inspection by Buyer shall in no event constitute a
waiver of Buyer's rights and remedies with regard to any subsequently
discovered defect or nonconformity.
8.4 Warranty. Seller warrants to Buyer that all Items provided by Seller for
delivery hereunder shall (i) conform in all respects to the Product
Specification, including the Final Acceptance Criteria, (ii) be free of defects
in design except to the extent that such designs were provided by the Buyer,
(iii) be free from defects in material and workmanship, and (iv) be new, of the
grade and quality specified.
8.4.1 If an Item delivered hereunder does not comply with any of the above
warranties, Buyer shall notify Seller as soon as practicable and at
Buyer's option, Seller shall repair or replace the defective Item, at
its sole cost and expense, or refund the purchase price. Seller shall
also be responsible for and pay the cost of shipping of all Items not
conforming to the warranties and will bear the risk of loss of such
Items while in transit and any other costs reasonably associated with a
nonconforming Item.
8.4.2 Seller further warrants that, to the best of Seller's knowledge, all
Items furnished hereunder will not infringe any third party's
intellectual property rights, and that Seller has the necessary right,
title, and interest to provide said Items and Services to Buyer free of
liens and encumbrances.
8.4.3 Seller warrants that all Items and/or Services provided shall be in
accordance with good workmanlike standards and shall meet the
descriptions and specifications provided on the Product Spec. Seller
shall guarantee workmanship for one (1) year after the Items have been
delivered or the Services have been performed unless agreed otherwise
in writing by the parties. Seller shall promptly correct any
non-conforming or defective workmanship at no additional cost to Buyer.
8.4.4 All of the above warranties shall survive any delivery, inspection,
acceptance, payment or resale of the Items.
ARTICLE 9. PRODUCT SPECIFICATION, IDENTIFICATION AND DESIGN EXCLUSIVITY
9.1 Product Specification. Seller shall not modify the Product Specifications
for any Item or Services without the prior written approval of the Buyer.
9.2 Systems. Seller shall cooperate with Buyer to provide configuration control
and traceability systems for Items and Services supplied hereunder.
9.3 During the term of this Agreement and any extension thereto, Supplier agrees
that * * * ("Restricted Products") * * *. After the termination of this
Agreement, Supplier is free to design, manufacture and/or sell Restricted
Products; provided, however, that in no event may Supplier use, disclose or rely
upon in any manner Buyer's confidential information or intellectual property
rights
- --------
***Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
FormFactor Confidential 8
ARTICLE 10. TERMINATION
10.1 Buyer Termination. Buyer may terminate any Purchase Order placed hereunder,
in whole or in part, at any time for its sole convenience by giving written
notice of termination to Seller. Upon Seller's receipt of such notice, Seller
shall, unless otherwise specified in such notice, immediately stop all work
following any process step already in process hereunder, give prompt written
notice to and cause all of its vendors or subcontractors to cease all related
work and, at the request of Buyer, return any materials provided to Seller by
Buyer.
10.2 Termination Charges. There shall be no charges for termination of orders
for standard Items or for Services not yet provided even if the Purchase Order
has been "accepted" by Seller. Buyer will be responsible for payment of
authorized Services and Items already provided by Seller but not yet invoiced.
Notwithstanding anything to the contrary, Seller shall not be compensated in any
way for any work done after receipt of Buyer's notice, nor for any costs
incurred by Seller's vendors or subcontractors after Seller receives the notice,
nor for any costs Seller could reasonably have avoided, nor for any indirect
overhead and administrative charges or profit of Seller.
10.3 Custom Items. Cancellation of Purchase Orders for Custom Items will be
subject to termination charges as dictated in section 10.3.1. Any claim for
termination charges ("Termination Claim") for Custom Items must be submitted to
Buyer in writing within thirty (30) days after receipt of Buyer's termination
notice along with a summary of all mitigation efforts.
10.3.1 Seller's Termination Claim shall be based on the costs incurred in the
manufacturing of the cancelled Custom Items. This may include the net
cost of custom work in process under an open Purchase Order and which
must be scrapped due to the cancellation. In no event shall such claim
exceed the cancellation schedule set forth in Schedule E.
10.3.2 Upon payment of Seller's claim, Buyer shall be entitled to all such
work and materials paid for.
10.4 Pre-payment Rights. Before assuming any payment obligation under this
section, Buyer may inspect Seller's work in process and audit all relevant
documents prior to paying Seller's invoice. Buyer may exercise this pre-payment
inspection right at any time within fourteen (14) calendar days of Buyer
receiving Seller's invoice. If Buyer fails to exercise this inspection right and
perform an inspection within fourteen (14) calendar days of Buyer receiving
Seller's invoice, Buyer's pre-payment inspection right will be waived and the
invoice will be deemed accepted.
10.5 Failure of Seller to Perform. If (i) Seller fails to make any delivery or
perform any service in accordance with the specified delivery dates or otherwise
fails to comply with the Purchase Order and does not remedy such failure within
ten (10) days after receipt of written notice thereof from Buyer, (ii) Seller
fails to make progress to such an extent that performance of the Purchase Order
is endangered, (iii) any proceedings is filed by or against Seller in bankruptcy
or insolvency, or for appointment for the benefit of creditors, or (iv) Seller
is in any way in any other breach of the Purchase Order then Buyer may (in
addition to any other right or remedy provided by the Purchase Order or by law)
terminate all or any part of the Purchase Order by written notice to Seller
without any liability. If the Purchase Order is terminated or cancelled by Buyer
consistent with this section, Buyer, in addition to any other rights provided in
this clause, may require Seller to transfer title and deliver to Buyer: (i) any
completed supplies, and (ii) such partially completed supplies and materials,
parts, tools, dies, jigs, fixtures, plans, drawings, information, and contract
rights as Seller has specifically produced or specifically acquired for the
performance of such Purchase Orders as have been terminated. Buyer will pay for
the lesser of invoice or current market value of these items and any partial
payments made by the Buyer on the terminated Purchase Order will be used to
reduce the amount owed by the Buyer to the Seller.
- ------------------
*** Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
FormFactor Confidential 9
10.6 Termination For Breach. In the event of a material breach of this Agreement
by a Party, the complaining Party shall give the breaching Party written notice
of the breach. If the breach is not cured within thirty (30) days of the written
notice, the complaining Party may immediately terminate this Agreement. Should
Seller fail to cure any breach within the thirty (30) day grace period, Buyer
shall also have the right to cancel any open Purchase Orders with the Seller
without being subject to any termination charges.
ARTICLE 11. OWNERSHIP AND BAILMENT RESPONSIBILITIES.
11.1 Ownership. Any specifications, drawings, schematics, technical information,
data, tools, dies, patterns, masks, gauges, test equipment and other materials
furnished to Seller or paid for by Buyer shall (i) remain or become Buyer's
property, (ii) be used by Seller exclusively for Buyer's orders, (iii) be
clearly marked as Buyer's property, (iv) be segregated when not in use, (v) be
kept in good working condition at Seller's expense, and (vi) be shipped to Buyer
promptly on Buyer's demand or upon termination or expiration of this Agreement,
whichever occurs first. Any such property furnished by Buyer to Seller that is
marked or otherwise noted by Buyer as being confidential information will be
treated by Seller in accordance with Section 12 hereafter.
11.2 Loss or Damage. Seller shall be liable for any loss of or damage to Buyer's
property while in Seller's possession or control, ordinary wear and tear
excepted.
ARTICLE 12. CONFIDENTIALITY AND PUBLICITY.
12.1 Confidentiality Obligation. During the course of this Agreement, either
Party may have or may be provided access to the other's confidential information
and materials. Additionally, Seller may be engaged to develop new information
for Buyer, or may develop such information during the performance of Services,
which information will become, upon creation, Buyer's confidential information
unless otherwise agreed in writing. Provided information and materials are
marked in a manner reasonably intended to make the recipient aware, or the
recipient is sent written notice within forty-eight (48) hours of disclosure,
that the information and materials are "Confidential", each party agrees to
maintain such information in accordance with the terms of this Agreement and the
CNDA referenced on the signature page of this Agreement and any other applicable
separate nondisclosure agreement between Buyer and Seller. At a minimum each
party agrees to maintain such information in confidence and limit disclosure on
a need to know basis, to take all reasonable precautions to prevent unauthorized
disclosure, and to treat such information as it treats its own information of a
similar nature, until the information becomes rightfully available to the public
through no fault of the non-disclosing party. Seller's employees who access
Buyer's facilities may be required to sign a separate access agreement prior to
admittance to Buyer's facilities. Seller shall not use any of the confidential
information created for Buyer for any other customer other than for Buyer.
12.2 Disclosure. Neither party may use the other party's name in advertisements,
news releases, publicity statements, financial statement filings, nor any of its
details or the existence of the relationship created by this Agreement, to any
third party without the specific, written consent of the other (unless in areas
specifically required to meet General Accepted Accounting Principles (GAAP) or
Securities Exchange Commission (SEC) filing requirements). If disclosure of this
Agreement or any of the terms hereof is required by applicable law, rule, or
regulation, or is compelled by a court or governmental agency, authority or
body: (i) the parties shall use all legitimate and legal means available to
minimize the disclosure to third parties of the content of the Agreement,
including without limitation seeking a confidential treatment request or
protective order; (ii) the disclosing party shall inform the other party at
least ten (10) business days in advance of the disclosure; and (iii) the
FormFactor Confidential 10
disclosing party shall give the other party a reasonable opportunity to review
and comment upon the disclosure, and any request for confidential treatment or a
protective order pertaining thereto, prior to making such disclosure. The
parties may disclose this Agreement in confidence to their respective legal
counsel, accountants, bankers and financing sources as necessary in connection
with obtaining services from such third parties. The obligations stated in this
section shall survive the expiration or termination of this Agreement.
12.3 No Right to Publicity. Neither party may use the other party's name or
trademarks in advertisements, brochures, banners, letterhead, business cards,
reference lists, or similar advertisements without the other's written consent.
ARTICLE 13. INTELLECTUAL PROPERTY.
13.1 Warranty. Seller shall defend, indemnify and hold Buyer and its customers
harmless from any and all costs, expenses (including reasonably attorneys'
fees), losses, damages or liabilities incurred because of actual or alleged
infringement of any patent, copyright, trade secret, trademark, maskwork or
other intellectual rights arising out of the use or sale by Buyer or Buyer's
customers of Items or Buyer's products manufactured using the Item(s) provided
by Seller. Both parties agree to notify the each other within ten (10) days of
receiving notice of the alleged infringement and both parties shall be permitted
to participate in the defense or settlement thereof. Buyer shall have the option
to participate in it's own defense at it's own cost but Seller shall not be
responsible for any compromise reached by Buyer without the express written
consent of the Seller.
13.2 Injunctions. If an injunction issues as a result of any claim or action,
Seller agrees, at its sole cost and expense, and Buyer's option to either: (i)
procure for Buyer the right to continue using the Items, (ii) replace the Items
with non-infringing Items or (iii) modify the Items so they become
non-infringing. If, despite Seller's best efforts, none of the foregoing options
are available, Buyer may at its option return the Item at Seller's sole cost and
expense, and Seller shall refund to Buyer the purchase price of the Item.
13.3 Warranty Exceptions. Seller's obligations pursuant to this Section 13 shall
not apply where: (i) Custom Items are manufactured to Buyer's detailed design
and such design is the cause of the claim; or (ii) Items are used in combination
with equipment, software or other products that are (x) not supplied, required
or recommended by Seller, and (y) not reasonably utilized within the scope of
the intended use of the Items, and (z) such infringement would not have occurred
but for such combination.
13.4 Waiver. THE FOREGOING STATES THE ENTIRE OBLIGATIONS AND REMEDIES FLOWING
BETWEEN BUYER AND SELLER ARISING FROM ANY INTELLECTUAL PROPERTY CLAIM BY A THIRD
PARTY.
13.5 Limitation on Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR LOST
PROFITS, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER UNDER THEORY OF
TORT, CONTRACT OR OTHERWISE, EVEN IF ADVISED IN ADVANCE OF THE POSSIBILITY OF
SUCH LOST PROFITS OR DAMAGES UNLESS SUCH LIABILITIES ARISE OUT OF GROSS
NEGLIGENCE OR INTENTIONAL MISCOUNDUCT.
13.6 Right to Use and Reproduce Literature. Buyer shall have the right at no
additional charge to use and/or reproduce, for internal purposes only, the
Seller's applicable literature, such as operating and maintenance manuals,
technical publications, prints, drawings, training manuals and other similar
supporting documentation and sales literature. Seller agrees to advise Buyer of
any updated information relative to the foregoing literature and documentation
with timely notifications in writing
FormFactor Confidential 11
ARTICLE 14. HAZARDOUS MATERIALS.
14.1 Hazardous Materials. If Items or Services provided hereunder include
Hazardous Materials, Seller represents and warrants that Seller and its
employees, agents, and subcontractors providing Services to Buyer understand the
nature of and hazards associated with the handling, transportation, and use of
such Hazardous Materials, as applicable to Seller.
14.2 Material Safety Data Sheets. Prior to causing Hazardous Materials to be on
Buyer's premises, Seller shall provide Buyer with Material Safety Data Sheets
(MSDS) and any other documentation reasonably necessary to enable Buyer to
comply with the applicable laws and regulations, and obtain written approval
from Buyer's Site Environmental, Health, and Safety (EHS) organization. Buyer
will not grant approval without Seller's agreement to comply with Buyer's
Hazardous Materials management requirements.
14.3 Indemnity Obligation. Seller will be fully responsible for, defend,
indemnify and hold Buyer harmless from any claim or liability arising in
connection with (1) providing such Hazardous Materials to Buyer, or (2) the use
of such Hazardous Materials by Seller, its agents or subcontractors in providing
Services to Buyer.
14.4 No Class I Ozone Depleting Substances. Seller hereby certifies that Items
supplied to Buyer do not "contain" any Class I ozone depleting substances, as
those terms are defined by law.
14.5 Decontamination. Except as provided hereafter, Items returned to Seller by
Buyer will be decontaminated from Hazardous Materials to the degree practical,
reasonable and as required by applicable law or regulation. Upon request, Buyer
shall provide appropriate documentation to Seller that the returned Items have
been decontaminated. If Seller is financially responsible for shipping the
return Items, Seller will be responsible for their decontamination, and Buyer
shall make Buyer's facilities available to Seller for the decontamination.
ARTICLE 15. CUSTOMS CLEARANCE AND LEGAL COMPLIANCE.
15.1 Customs. Upon Buyer's request, Seller will promptly provide Buyer with a
statement of origin for all Items and with applicable customs documentation for
Items wholly or partially manufactured outside of the country of import.
15.2 Compliance Obligation. Throughout the term of this Agreement and any
extension thereto, Seller shall comply, at its sole cost and expense, with all
applicable statutes, regulations, rules, ordinances, codes and standards (Laws)
governing the manufacture, transportation or sale of Items or the performance of
Services covered by this Agreement anywhere in the world. Without limiting the
foregoing, in the United States (U.S.) this includes all applicable commerce,
environmental, occupational safety, transportation and securities Laws and all
employment and labor Laws governing Seller's personnel providing Services to
Buyer.
FormFactor Confidential 12
ARTICLE 16. INSURANCE.
16.1 Maintenance of Policy. Without limiting or qualifying Seller's liabilities,
obligations or indemnities otherwise assumed by Seller pursuant to this
Agreement, Seller shall maintain, at its sole cost and expense, a Commercial
General Liability and Automobile Liability Insurance with limits of liability
not less than $1,000,000.00 per occurrence and including liability coverage for
bodily injury or property damage (1) assumed in a contract or agreement
pertaining to Seller's business and (2) arising out of Seller's product,
Services or work. .
16.2 Workers' Compensation Coverage. Seller shall also maintain statutory
Workers' Compensation coverage, including a Broad Form All States Endorsement in
the amount required by law, and Employers' Liability Insurance in the amount of
$1,000,000.00 per occurrence. Such insurance shall include an insurer's waiver
of subrogation in favor of Buyer.
16.3 Professional Liability Service. If Seller is providing any professional
service to Buyer, Seller shall maintain Professional Liability Insurance
(including errors and omissions coverage) with liability limits not less than
$1,000,000.00.
16.4 Certificate of Insurance. Seller shall provide Buyer with properly executed
Certificate(s) of Insurance prior to commencement of any operation hereunder and
shall notify Buyer, no less than 30 days in advance, of any reduction or
cancellation of the above coverages.
ARTICLE 17. GENERAL INDEMNIFICATION.
17.1 Seller's Indemnification Obligation. Seller agrees to protect, defend,
indemnify and hold Buyer harmless from and against any and all third party
claims, liabilities, demands, penalties, forfeitures, suits, judgments and the
associated costs and expenses (including reasonable attorney's fees), which
Buyer may hereafter incur, become responsible for or pay out as a result of
death bodily injury to any person, destruction or damage to any property,
contamination of or adverse effects on the environment and any clean up costs in
connection therewith, or any violation of governmental law, regulation, or
orders, caused, in whole or in part, by (a) Seller's breach of any term or
provision of this Agreement, (b) any negligent or willful acts, errors or
omissions by Seller, its employees, officers, agents, representatives or
sub-contractors in the performance of Services under this Agreement; or (c)
dangerously defective Items. Buyer shall have the option to participate in it's
own defense at it's own cost but Seller shall not be responsible for any
compromise reached by Buyer without the express written consent of the Seller.
17.2 Limitation on Seller's Idemnification Obligation. Seller shall not be
responsible for any such damages or liabilities arising out of Buyer or its
representatives utilizing or operating the Items in an unsafe manner or in a
manner contrary to the operating instructions provided to Buyer by Seller
17.3 Buyer's Indemnification Obligation. Buyer agrees to protect, defend,
indemnify and hold Seller harmless from and against any and all claims,
liabilities, demands, penalties, forfeitures, suits, judgments and the
associated costs and expenses (including reasonable attorney's fees), which
Seller may hereafter incur, become responsible for or pay out as a result of
death, bodily injury to any person, destruction or damage to any property,
contamination of or adverse effects on the environment and any clean up costs in
connection therewith, or any violation of governmental law, regulation, or
orders, caused, in whole or in part, by Buyer's breach of any term or provision
of this Agreement.
17.4 Indemnification Cap. With the exception of Seller's indemnification
obligation under Article 13, in no event shall a Party's indemnification
obligation exceed more than the total amount paid by
FormFactor Confidential 13
Buyer to Seller for the Item(s) which caused the liability at issue unless such
liabilities arise out of the gross negligence or intentional misconduct.
ARTICLE 18. NEW DEVELOPMENTS.
18.1 Services. If development Services are to be provided pursuant to this
Agreement or if at any time during the term of this Agreement, Buyer pays any
fee to the Seller for development Services, the following terms and conditions
shall apply unless agreed otherwise in writing by the parties.
18.1.1 All intellectual property associated with any ideas, concepts,
techniques, inventions, processes, or works of authorship developed,
created or conceived by Seller, its employees, subcontractors or agents
while performing the development Services for Buyer or from proprietary
and/or confidential information or materials belonging to Buyer
(collectively, "Developments") shall belong exclusively to Buyer and be
deemed the confidential information of Buyer. Seller agrees to assign
(or cause to be assigned) and does hereby assign fully to Buyer all
such Developments, including but not limited to any and all copyrights
therein.
18.1.2 Buyer acknowledges and agrees that Seller shall retain sole and
exclusive ownership of any invention, improvement, development,
concept, discovery, or other proprietary information owned by Seller or
in which Seller has an interest ("Seller IP"). Notwithstanding the
foregoing, Seller agrees that if in the course of performing the
Services, Seller incorporates any Seller IP into any Development
developed hereunder, Buyer is hereby granted and shall have a
nonexclusive, royalty free, perpetual, irrevocable, worldwide license,
including the right to sublicense, under any such Seller IP to make,
have made, use, import, prepare derivative works of, reproduce, have
reproduced, perform, display, offer to sell, sell, or otherwise
distribute such invention, improvement, development, concept,
discovery, or other proprietary information as part of or in connection
with such Development.
18.1.3 Seller shall assist Buyer, at Buyer's expense, in obtaining,
registering, perfecting and enforcing all patents, trademarks, mask
work rights or copyrights necessary to protect Buyer's interest in the
Developments assigned to Buyer pursuant to Paragraph (18.1.1) above.
This includes the disclosure of all pertinent information, the
execution of applications, specifications, oaths and assignments and
any other papers by Seller necessary to ensure said protection for
Buyer. Upon Buyer's request, Seller shall execute an Assignment of
Copyright to Buyer covering any copyrightable deliverable accepted by
Buyer hereunder.
18.1.4 Documentation. All documentation connected with the development
Services or associated with Developments assigned to Buyer pursuant to
Paragraph 18.1.1 above, shall be the exclusive property of Buyer. Upon
Buyer's request, Seller shall make all such documentation available to
Buyer.
ARTICLE 19. MISCELLANEOUS
19.1 Choice of Law. This Agreement shall be governed by the law of the State of
California, United States of America, without regard to its conflict of law
principles.
19.2 Dispute Resolution. Except for claims regarding the infringement, validity
or scope of either Party's Patent Rights, to which this Section 19.2 will not
apply, the Parties shall endeavor to resolve disputes through the procedures of
Sections 19.2.1 and 19.2.2.
FormFactor Confidential 14
19.2.1 Each Party will make reasonable best efforts to resolve amicably any
disputes or claims under this Agreement among the Parties. These
efforts shall include the escalation to negotiations between senior
officers or principals of the Parties ("Designated Executives"), in
which case the disputing Party will give the other Party written notice
of the nature of the dispute and proposed resolution. Within seven (7)
days after receipt of such notice, the responding Party shall submit a
written response, and counter resolution. The Designated Executives
shall then meet at a mutually acceptable time and place (or San
Francisco, California, if no such place can be agreed upon) within ten
(10) business days of the date of the responding Party's response, to
conduct good faith negotiations to resolve amicably the dispute. If the
matter has not been resolved pursuant to the aforesaid negotiation
procedure within thirty (30) days, the matter will be resolved pursuant
to Section 19.2.2, below.
19.2.2 Except for claims regarding the infringement, validity or scope of
either Party's Patent Rights, to which this Section will not apply, in
the event that a resolution is not reached among the Parties within
thirty (30) days after written notice by any Party of the dispute or
claims through the procedures of Section 19.2.1, the dispute or claim
shall be finally settled by binding arbitration in San Francisco,
California, in accordance with the then in effect Commercial Dispute
Rules of the American Arbitration Association ("AAA"). The arbitration
shall be administered out of the local San Francisco Office of the AAA.
Three (3) arbitrators shall be appointed in accordance with the AAA
rules. Depositions may be taken and discovery may be obtained, subject
to time period restrictions set by the arbitrator; the arbitrator will
give active, attentive case management to the scope, form, cost
effectiveness and scheduling of all discovery. Notwithstanding the
foregoing, it is agreed that the arbitral proceedings will be conducted
in such a manner that the substantive merit of the Claim is ruled upon
by the arbitrator within sixty (60) days after the selection of the
arbitrator. In the event of any conflict between the Rules of the AAA,
the provisions of this Section will govern. In any arbitral proceeding
under this paragraph, each Party will bear its own attorneys' fees and
expenses; except that the losing Party will bear the reasonable costs
and expenses of the prevailing Party, and the costs and expenses of the
arbitrator, in connection with such proceedings. The award of
arbitration shall be final and binding upon both Parties, and judgment
on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. Any monetary award shall be payable in
United States dollars.
19.3 Injunctive Relief and Infringement Claims. Each of the Parties acknowledges
that unauthorized disclosure or use of the other Party's Confidential
Information or infringement or misappropriation of the other Party's
intellectual property rights could cause irreparable harm and significant injury
that would be difficult to ascertain and may not be compensable by damages
alone. Accordingly, the Parties agree that, in addition to any and all legal
remedies, claims regarding: (i) Intellectual Property Rights, including Patent
Rights; (ii) Confidential Information; or (iii) a violation of the obligations
of Section(no section 4.6), may be remedied by specific performance, injunction
or other appropriate equitable relief. For all claims regarding the
infringement, validity or scope of either Party's Patent Rights, such claims
shall be brought before and take place in the U.S. Federal Courts in and for the
Northern District of California, except for any claim based upon a complaint
filed with the International Trade Commission under Section 337 of the Tariff
Act of 1930.
19.4 Assignment. Neither Party may assign any or all of its rights and/or
obligations under this Agreement without the prior written consent of the other
Party which will not be unreasonably withheld or delayed. Notwithstanding the
foregoing, Seller or Buyer may assign its rights and obligations under this
Agreement: (i) to a Subsidiary; or (ii) in connection with a merger,
reorganization or sale of all or substantially all of Seller or Buyer's assets
which relate to the business pertinent to the license under this Agreement. Any
assignment permitted hereunder will be subject to the written consent of the
assignee to all of the terms and provisions of this Agreement. Any attempted
assignment in derogation of this Section 19.4 will be null and void.
FormFactor Confidential 15
19.5 Modification and Waiver. Any delay of failure by Buyer to pursue any and
all of its remedies upon a breach by Seller, or to insist upon Seller's
performance of any provision of this Agreement, shall not be construed as a
waiver of Buyer's rights under the terms and conditions outlined herein and/or
of applicable state law. No modification to this Agreement, nor any waiver of
any rights, will be effective unless assented to in writing by the Party to be
charged, and the waiver of any breach or default shall not constitute a waiver
of any other right hereunder or any subsequent breach or default.
19.6 Force Majeure. Neither Party shall be liable for delay or failure in
performance, in whole or in part, caused by any government act, law, regulation,
order or decree, war (whether an actual declaration thereof is made or not),
sabotage, insurrection, riot or other act of civil disobedience, act of public
enemy, power failures, or by fire, flood or other natural disasters or by other
causes beyond its reasonable control, nor shall any such delay or failure be
considered to be a breach of this Agreement. In any such event, performance
shall take place as soon thereafter as is reasonably feasible. If delivery of
Items or the performance of Services is to be delayed by such contingencies,
Seller shall immediately notify Buyer in writing. If the delay is greater than
fourteen (14) days from the date of the notice, Buyer will have the option, in
its sole discretion, to either (i) extend time of delivery or performance, or
(ii) terminate the uncompleted portion of the order at no cost of any nature to
Buyer.
19.7 Independent Contractors. In performing their respective duties under this
Agreement, each of the Parties will be operating as an independent contractor.
Nothing contained herein will in any way constitute any association,
partnership, or joint venture between the Parties hereto, or be construed to
evidence the intention of the Parties to establish any such relationship. Seller
shall be responsible for any withholding taxes, payroll taxes, disability
insurance payments, unemployment taxes and other similar taxes or charges on the
payments received by Seller hereunder. Absent the other Party's prior written
consent, neither Party has any right or authority to assume or create any
obligations of any kind or to make any representation or warranty on behalf of
the other Party, whether express or implied, or to bind the other Party in any
respect whatsoever.
19.8 Severability. In the event that it is determined by a court of competent
jurisdiction or under arbitration under Section 19.2 that any provision of this
Agreement is invalid, illegal, or otherwise unenforceable, such provision will
be enforced as nearly as possible in accordance with the stated intention of the
Parties, while the remainder of this Agreement will remain in full force and
effect and bind the Parties according to its terms. To the extent any provision
cannot be enforced in accordance with the stated intentions of the Parties, such
provisions will be deemed not to be a part of this Agreement.
19.9 Headings. The headings of the Sections of this Agreement are for
convenience only and will not be of any effect in construing the meanings of the
Sections.
19.10 Counterparts. This Agreement may be executed in multiple counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
19.11 Entire Agreement. This Agreement, the Schedules (including these Terms and
Conditions) attached hereto, and the CNDA referenced on the executed cover page,
constitute the entire and exclusive agreement between the Parties hereto with
respect to the subject matter hereof and supersede any prior agreements between
the Parties with respect to such subject matter.
19.12 Specific Performance. Notwithstanding anything to the contrary contained
in this Agreement, the parties agree that the failure of the Seller to deliver
an Item or perform a Service in accordance with the terms and conditions
contained in this Agreement after the acceptance of a Purchase Order would cause
irreparable damage to Buyer for which monetary damages would not provide an
adequate remedy. Accordingly, it is agreed that, in addition to any other remedy
to which Buyer may be entitled, at law or in equity, Buyer shall be entitled to
injunctive relief to prevent
FormFactor Confidential 16
breaches of the provisions of this Agreement by Seller, and an order of specific
performance to compel performance of such obligations in any action instituted
in any court of the United States or any state thereof having subject matter
jurisdiction.
19.13 Survival. The rights and obligations of the parties as contained in
Sections 8, 11 - 14 and 16-19 shall survive the termination or expiration of
this Agreement along with any other right or legal obligation of a party created
by a term or condition in any Addendum or Product Specification, which term or
condition by its nature would survive the termination or expiration of the
Agreement.
19.14 Notice. All notices and other communication required or permitted in
connection with this Agreement shall be in writing and shall be sent to a party
at its addres set forth on the first page of this Agreement, or to such address
as may be specified in writing, by first class mail, postage prepaid, by
facsimile transmission or by overnight courier.
FormFactor Confidential 17
SCHEDULE A
ITEMS AND SERVICES
1. Items:
Ceramic substrates * * *.
2. Services:
(a) Design services for custom substrates.
* * * Confidential treatment has been requested for portions of this exhibit.
The copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
FormFactor Confidential 18
SCHEDULE B
PRODUCT SPECIFICATION FOR CERAMIC SUBSTRATES
FormFactor Confidential 19
Form Factor
P06-XXXX
FFI PN SPECIFICATION FOR
SPACE TRANSFORMERS
FormFactor Confidential 20
1. Document Number: P06-XXXX
2. FFI Procurement Specification for Space Transformers
[*** 17 pages redacted]
- -------------
*** Confidential treatment has been requested for portions of
this exhibit. The copy filed herewith has been marked to indicate the
information subject to the confidentiality request. Omissions are designated as
*****. A complete version of this exhibit has been filed separately with the
Securities and Exchange Commission.
21
SCHEDULE C
PRICING SCHEDULE
[* * * 3 pages redacted]
* * * Confidential treatment has been requested for portions of this exhibit.
The copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
22
SCHEDULE D
LEAD TIME MATRIX
[* * * 1 page redacted]
* * * Confidential treatment has been requested for portions of this exhibit.
The copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
FormFactor Confidential 23
SCHEDULE E
CANCELLATION COST FOR CUSTOM ITEMS
PERCENT OF PURCHASE PRICE
STAGE NOT TO EXCEED NOTES
- ----- ------------- -----
* * * * * * * * *
* * * * * * * * *
* * * * * * * * *
* * * * * * * * *
* * * Confidential treatment has been requested for portions of this exhibit.
The copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
FormFactor Confidential 24
SCHEDULE F
ALTERATIONS
1.3 "DELIVERY POINT" means NTK Komaki, Japan facility.
2.2 Manufacturing Capability. During the Term, Seller agrees to establish and
have in place facilities, manufacturing, test equipment and labor necessary to
manufacture Items as required by Buyer consistent with the terms and conditions
of this Agreement. Seller shall exercise its commercially reasonable best
efforts to manufacture Items in a timely manner in accordance with the
applicable Product Spec in such quantities as required by Buyer.
2.3 Manufacturing Capability. During the Term, Seller agrees to establish and
have in place facilities, manufacturing, test equipment and labor necessary to
manufacture Items as required by Buyer consistent with the terms and conditions
of this Agreement. Seller shall exercise its commercially reasonable best
efforts to manufacture Items in a timely manner in accordance with the
applicable Product Spec in such quantities as required by Buyer.
3.1 Pricing. Prices for Items and Services are as set forth in Schedule C.
Seller and Buyer agree that after the first * * * months of the agreement, and
after each subsequent * * * month period thereafter while this agreement is in
still in effect, the parties will renegotiate prices in good faith.
3.3 Inspection Right. Buyer has the right, once per year, to appoint an
independent third party of it's choice and it's expense, to inspect and audit
Seller's records to ensure compliance with this Agreement. Buyer's choice of
independent third party must be approved by Seller.
4.2 Purchase Order Acknowledgement. Seller agrees to acknowledge and accept each
Purchase Order to Buyer within three (3) business days after receipt of the
Purchase Order ("Purchase Order Acknowledgment"). Lack of a written Purchase
Order Acknowledgement by Seller to Buyer within three (3) business days shall be
deemed acceptance of the Purchase Order.
4.3 Forecasts. By the tenth (10th) day of each month, Buyer shall supply to
Seller a forecast setting forth Buyer's anticipated purchases of Items in each
month for the proceeding * * * month period ("Rolling Forecast"). The Rolling
Forecast is provided to Seller for planning purposes only and neither
constitutes a firm commitment from Buyer to purchase a specific number of Items,
nor a Purchase Order. Buyer shall modify the Rolling Forecast in the event it
determines that it is not a reasonably accurate forecast of Buyer's anticipated
purchases of Items, but Buyer shall have no obligation to and may, at its sole
discretion, issue Purchase Orders under this Agreement. Buyer shall be
responsible only for Items or Services for which it has issued Purchase Orders
hereunder.
5.3 Payments. All payments shall be * * * percent (* * *%) net * * * days from
the receipt of Invoice, Items, or Services, whichever is later. Payment is made
when Buyer's check is mailed or EDI funds transfer initiated. Payment of an
invoice shall not constitute acceptance of the Item or Service. Product shall be
subject to appropriate adjustment for failure of Seller to meet the Purchase
Order requirements. Buyer may set off any amount owed by Seller or any of its
affiliated companies to Buyer against any amount owed by Buyer under the
Purchase Order.
- ------------------
*** Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
FormFactor Confidential 25
6.2 Shipping Terms. All Items shall be delivered Free Carrier At (FCA) the
Delivery Point as specified in the Definitions. Title and risk of loss shall
pass to Buyer upon delivery of Items to the Delivery Point ["FCA"; ICC Incoterms
2000].
6.5 Missed Delivery Date. Delete entire section 6.5.
7.1 Assured Quantity. Seller acknowledges that a reliable and continuing source
of Items and Custom Items is essential to Buyer. As a material inducement to
Buyer's execution of this Agreement, Seller hereby covenants that it shall
reserve capacity of its manufacturing facility to assure supply of Items to
Buyer up to the quantity of * * * of Buyer's average monthly requirements per
the Buyer's Rolling Forecast.
7.3 Expedited Shipping Reserve. Delete entire Section 7.3.
7.5 Cessation of Manufacturing. Seller must notify Buyer in writing * * * prior
to any determination it makes to stop manufacturing Items and/or Custom Items
for Buyer. During the * * * period, Buyer may issue and Seller shall continue to
accept, all Purchase Orders for Items and/or Custom Items provided the Purchase
Orders conform to the terms and conditions in this Agreement.. In the event that
at the end of the * * * period Seller has not fulfilled all of the Buyer's open
Purchase Orders with the Seller, Seller shall nonetheless be obligated to meet
the Purchase Order requirements. Any deliveries of Items that are delivered to
the Delivery Point after the Delivery Date specified in the Purchase Order shall
be subject to the late delivery provisions and penalties included in Section 6
to this Agreement.
7.6 Early Delivery. Delete entire section 6.6.
7.7 Packaging. Add the following sentence to Section 6.8 Packaging: Lifting,
handling, and unpacking markings shall indicate "This side up", "Fragile, Handle
with Care", "Open this End" and any additional instructions that will ensure the
safe unpacking of the items.
7.3 Expedited Shipping Reserve. At Buyer discretion, Seller will make available
up to * * * of the average monthly volume in the Buyer's Rolling Forecast for
shipment within * * * of contractual Lead-time as described in Schedule D.
8.2 Source Inspection. Buyer shall have the right to inspect the Product(s) at
Seller's facility prior to shipment. Buyer agrees to give Seller at least five
(5) business days notice that it wishes to exercise this right. If Buyer does
exercise this right, Seller agrees to provide all reasonable assistance with the
inspection at no charge to Buyer. Source inspection requirements are described
in the Product Specification unless agreed otherwise in writing by the parties.
8.3 Acceptance Inspection Right. Add the following sentence to Section 8.3
Acceptance Inspection Right: Section 8.3 is subject to all non-conforming
product being verified and agreed to by seller's QA department.
8.3.1 If an Item is identified as a Defective Item, due to no fault of Buyer,
within * * * days of delivery, then Buyer must provide a Defective
Material Report and sample of Defective Item to Seller. All Defective
Items must be verified and agreed to by Seller's QA department. If
Seller does not replace or repair the Defective Item with an Item that
meets the Final Acceptance Criteria within * * * days of such notice,
Buyer may, at Buyer's option; (a) return the Item for * * *, (b) have
the Item replaced with a new Item from Seller or repaired by Seller
within ten (10) business days of Buyer's written election of option
(b), or (c) accept such Defective Items at an * * * in price, agreed to
by both parties.
- ------------------
*** Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
FormFactor Confidential 26
8.4.1 Delete from Section 8.4.1: "and will bear the risk of loss of such
Items while in transit and any other costs reasonably associated with a
nonconforming Item"
9.3 Delete section 9.3. In place of Section 9.3, a separate Letter
Agreements covering * * * shall be executed.
10.2 Termination Charges. Delete entire Section 10.2 "Termination Charges".
10.5 Failure of Seller to Perform. If (i) Seller fails to make any delivery or
perform any service in accordance with the specified delivery dates or otherwise
fails to comply with the Purchase Order and does not remedy such failure within
ten (10) days after receipt of written notice thereof from Buyer, (ii) Seller
fails to make progress to such an extent that performance of the Purchase Order
is endangered, (iii) any proceedings is filed by or against Seller in bankruptcy
or insolvency, or for appointment for the benefit of creditors, or (iv) Seller
is in any way in any other breach of the Purchase Order then Buyer may (in
addition to any other right or remedy provided by the Purchase Order or by law)
terminate all or any part of the Purchase Order by written notice to Seller
without any liability. If the Purchase Order is terminated or cancelled by Buyer
consistent with this section, Buyer, in addition to any other rights provided in
this clause, may require Seller to transfer title and deliver to Buyer: (i) any
completed supplies, and (ii) such partially completed supplies and materials,
parts, plans, drawings, information, and contract rights as Seller has
specifically produced or specifically acquired for the performance of such
Purchase Orders as have been terminated. Buyer will pay for the lesser of
invoice or current market value of these items and any partial payments made by
the Buyer on the terminated Purchase Order will be used to reduce the amount
owed by the Buyer to the Seller.
10.6 Termination For Breach. In the event of a material breach of this Agreement
by a Party, the complaining Party shall give the breaching Party written notice
of the breach. If the breach is not cured within thirty (30) days of the written
notice, the complaining Party may immediately terminate this Agreement. Seller
shall exercise its best efforts to cure any breach item, and submit frequent
updates, reports and/or meetings in a timely manner as required.
11.1 Ownership. Add to Section 11.1 "Ownership": Any tools, dies, patterns,
masks, gauges, test equipment or other materials paid by Buyer that contains
Seller's know how and are considered confidential by Seller may by destroyed by
Seller instead of being furnished to Buyer so long as (i) An agent of the Buyer
witnesses the destruction, or (ii) Seller provides proof of destruction
sufficient to Buyer.
12.1 Confidentiality Obligation. Modify the last sentence of Section 12.1
"Confidentiality Obligation" to read: Seller shall not use any of the
confidential information provided by Buyer or created exclusively for Buyer, for
any other customer other than for Buyer.
15.2 Compliance Obligation. Throughout the term of this Agreement and any
extension thereto, Seller shall comply, at its sole cost and expense, with all
applicable statutes, regulations, rules, ordinances, codes and standards (Laws)
governing the manufacture, transportation or sale of Items or the performance of
Services covered by this Agreement. Without limiting the foregoing, in the
United States (U.S.) this includes all applicable commerce, environmental,
occupational safety, transportation and securities Laws and all employment and
labor Laws governing Seller's personnel providing Services to Buyer.
16.2 Workers' Compensation Coverage. Seller shall also maintain statutory
Workers' Compensation coverage, including a Broad Form All States Endorsement in
the amount required by law, and Employers' Liability Insurance in the amount of
$1,000,000.00 per occurrence.
16.3 Professional Liability Service. Delete entire section 16.3.
- ------------------
*** Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
FormFactor Confidential 27
18.1.1 Delete entire paragraph 18.1.1. Development Services, if and when
provided, will be covered under a separate Development Services Agreement.
18.1.2 Buyer acknowledges and agrees that Seller shall retain sole and
exclusive ownership of any invention, improvement, development,
concept, discovery, or other proprietary information owned by Seller or
in which Seller has an interest ("Seller IP"). Notwithstanding the
foregoing, Seller agrees that if in the course of providing Products to
or performing Services for Buyer, Seller incorporates any Seller IP
into any Development developed hereunder, Buyer is hereby granted and
shall have a nonexclusive, royalty free, perpetual, irrevocable,
worldwide license to sell, use, import, display, offer to sell, or
otherwise distribute Products containing said Seller IP.
19.2.1 Each Party will make reasonable best efforts to resolve amicably any
disputes or claims under this Agreement among the Parties. These
efforts shall include the escalation to negotiations between senior
officers or principals of the Parties ("Designated Executives"), in
which case the disputing Party will give the other Party written notice
of the nature of the dispute and proposed resolution. Within ten (10)
business days after receipt of such notice, the responding Party shall
submit a written response, and counter resolution. The Designated
Executives shall then meet at a mutually acceptable time and place (or
San Francisco, California, if no such place can be agreed upon) within
ten (10) business days of the date of the responding Party's response,
to conduct good faith negotiations to resolve amicably the dispute. If
the matter has not been resolved pursuant to the aforesaid negotiation
procedure within thirty (30) days, the matter will be resolved pursuant
to Section 19.2.2, below.
19.6 Force Majeure. Neither Party shall be liable for delay or failure in
performance, in whole or in part, caused by any government act, law, regulation,
order or decree, war (whether an actual declaration thereof is made or not),
sabotage, insurrection, riot or other act of civil disobedience, act of public
enemy, power failures, or by fire, flood or other natural disasters or by other
causes beyond its reasonable control, nor shall any such delay or failure be
considered to be a breach of this Agreement. In any such event, performance
shall take place as soon thereafter as is reasonably feasible. If delivery of
Items or the performance of Services is to be delayed by such contingencies,
Seller shall immediately notify Buyer in writing. If the delay is greater than
fourteen (14) days from the date of the notice, Buyer will have the option, in
its sole discretion, to either (i) extend time of delivery or performance, or
(ii) terminate the uncompleted portion of the order with cancellation costs not
to exceed those documented in Appendix E.
FormFactor Confidential 28