EXHIBIT 10.37
DOCUMENT OF UNDERSTANDING
DIODES, INC MICROSEMI WATERTOWN, INC.
3050 East Hillcrest Drive 580 Pleasant Street
Westlake Village, California 91362-3154 Watertown, Massachusetts, 02472-2408
Attn: Mr. Mark King, Attn: Mr. Angelo Santamaria,
V.P. Sales & Marketing V.P. & General Manager
Tel: 805-446-4800 Fax: 805-381-3837 Tel: 617-926-0404 Fax: 617-924-1376
E-mail: Mark_King@diodes.com E-mail: asantamaria@microsemi.com
THIS DOCUMENT OF UNDERSTANDING by and between Diodes Inc (hereafter
DIODES), and Microsemi Corporation (hereafter MSC), shall have an Effective Date
of July 6, 2001.
WHEREAS, the parties desire to utilize their unique expertise and
capabilities for their mutual benefit by establishing a Cooperative Business
Arrangement (the "CBA") between their respective organizations in order to
provide the most effective management and technical approach for cooperatively
achieving new and improved processes, product designs and product performance
for selected products; and
WHEREAS, the parties met in Watertown, Massachusetts on April 26, 2001
(the "MEETING"), and identified certain Action Items, which they believed needed
to be resolved to their mutual satisfaction, and where appropriate, incorporated
into formal Agreements.
WHEREAS, it is contemplated at this time that the CBA will be
coordinated and performed in various design, engineering and manufacturing sites
respectively owned or controlled by the parties in both the United States and in
foreign geographies; and
WHEREAS, MSC owns and controls a proprietary automated manufacturing
facility in its Watertown facility, where it makes a family of products sold
under its POWERMITE(R)3 trademark.
WHEREAS, DIODES desires to obtain a non-exclusive license under certain
MSC intellectual property rights for the manufacture of products utilizing the
novel POWERMITE(R)3 package design containing silicon rectifier die, and to
market such products under the POWERMITE(R)3 trademark.
WHEREAS, the parties desire to cooperatively establish marketing
strategies for ensuring the availability of reliable POWERMITE(R)3 products; for
establishing a competitive additional source of such POWERMITE(R)3 products; for
maintaining the quality of such POWERMITE(R)3 products; for cost effectively
serving the market requirements in the geographies of consumption; and for
cooperatively establishing POWERMITE(R)3 product improvements that dynamically
respond to market demands
NOW THEREFORE, the parties desire at this time to summarize the mutual
understandings they have made at the Meeting, and more particularly specify the
Action Items required to complete the documentation for the CBA, such mutual
agreements and Action Items are as follows:
1. The parties agree to negotiate in good faith for nontransferable,
nonexclusive, worldwide, irrevocable, royalty bearing licenses to make
(but not have made) and to use, to lease and to sell, or to otherwise
dispose of products that are made pursuant to any and all intellectual
property rights ("IPR") owned or controlled by MSC, that comprehend the
manufacturing of products sold by MSC under its POWERMITE(R)3 trademark.
An exemplary IPR License Agreement is attached hereto as EXHIBIT A, and
by this reference is made a part hereof.
The royalty rates under such license shall be as follows:
1. Year 1 - [CONFIDENTIAL] of Net Revenues.
2. Year 2 - [CONFIDENTIAL] of Net Revenues.
3. Year 3 - [CONFIDENTIAL] of Net Revenues.
4. Thereafter - [CONFIDENTIAL] of Net Revenues.
The parties agree that Year 1 for the initial calculation of royalties,
shall commence on the first month following the day that DIODES receives
a bone fide qualification by one of its customers of the first Licensed
Product produced in its Shanghai facility, utilizing the IPR licensed
hereunder, or, the first Licensed Product made, used or otherwise
disposed of by DIODES under the MSC trademark POWERMITE(R)3.
In the event MSC hereafter grants to any third party licenses
substantially the same in scope and duration as the licenses granted to
DIODES regarding POWERMITE(R)3, as contemplated herein, MSC warrants
that the royalty rates under such third party licenses shall be
substantially the same as, or greater than, the royalty rates specified
in the licenses granted to DIODES, taking into reasonable evaluation the
mutual considerations under which such DIODES licenses were granted,
vis-a-vis, the mutual considerations under which such third party
licenses were granted.
In the event DIODES agrees to transfer to MSC any of its IPR for the
manufacture, use and/or sale of products covered by any DIODES IPR, the
parties agree to negotiate in good faith for a non-exclusive, worldwide,
irrevocable, royalty bearing license under such DIODES IPR, which
license shall be substantially similar to the terms and conditions set
forth in the IPR License Agreement between the parties regarding
POWERMITE(R)3
Notwithstanding anything to the contrary herein stated, or in any other
agreement between the parties, sales made by one party to the other
party of products that are covered by such one parties IPR shall not be
subject to the payment of royalties, and shall be deemed excluded from
the definition of Net Revenues.
2. The parties also agree to negotiate in good faith for a limited license
which grants to DIODES the right to market and sell POWERMITE(R)3
packaged products under MSC's POWERMITE(R)3 trademark. ("TML"). An
exemplary TML Agreement is attached hereto as EXHIBIT B, and by this
reference is made a part hereof.
3. From the Effective Date hereof until December 31, 2003, or such other
date as the parties may hereafter agree upon, DIODES agrees to buy from
MSC its requirements of POWERMITE(R)3 packaged products, and MSC, to the
extent it has the available capacity, agrees to sell to DIODES.
POWERMITE(R)3 packaged products. During such period, the parties agree
to negotiate in good faith the terms and conditions of a Technology
Transfer and Technical Training Agreement ("TTA") whereby the
manufacturing technology reasonably required to manufacture
POWERMITE(R)3 packaged products will be strategically and effectively
transferred to DIODES. An exemplary TTA is attached hereto as EXHIBIT C,
and by this reference is made a part hereof.
4. It is contemplated at this time that the licensed automated
POWERMITE(R)3 manufacturing line will be located by DIODES in its
Shanghai facility. Accordingly, Microsemi shall provide the required
technical support within the purview of the TTA, at DIODES expense.
5. Prior to the successful installation of the POWERMITE(R)3 product line
in DIODES Shanghai facility, or in any other licensed facility as may
hereafter be installed, all sales of POWERMITE(R)3 packaged products by
MSC to DIODES pursuant to paragraph 3 hereof shall be oN a "MOST FAVORED
CUSTOMER" basis under a Manufacturing Services Agreement ("MSA"). The
parties agree to negotiate in good faith the terms and conditions of the
MSA. An exemplary MSA is attached hereto as EXHIBIT D, and by this
reference is made a part hereof.
6. Upon the successful installation of the POWERMITE(R)3 product line in
DIODES Shanghai facility, or in any other licensed facility as may
hereafter be installed, MSC shall have the option right to purchase up
to
thirty percent (30%) of the capacity thereof on a Most Favored Customer
basis under a MSA. The parties agree to negotiate in good faith the
terms and conditions of the MSA. An exemplary MSA is attached hereto as
EXHIBIT E, and by this reference is made a part hereof.
7. Upon the successful installation of the POWERMITE(R)3 product line in
DIODES Shanghai facility, or in any other licensed facility as may
hereafter be installed, MSC shall have the option right to purchase any
wafer made by or for DIODES that is used in such POWERMITE(R)3 product
line on a Most Favored Customer basis under a MSA. The parties agreE to
negotiate in good faith the terms and conditions of the MSA. An
exemplary MSA is attached hereto as EXHIBIT E.
The parties agree that the sale of wafers by DIODES to MSC does not
require DIODES to transfer to MSC any of its IPR relating to the
manufacture of such wafers, and that such sales may be best defined
under a standard purchase agreement comprehending the specific wafers.
In such event, the parties agree to negotiate in good faith the terms
and conditions of a mutually acceptable Purchase Agreement.
Notwithstanding the foregoing, MSC's option right to purchase wafers
made by DIODES shall not extend to any wafers manufactured by DIODES, or
any of its Subsidiaries, utilizing or pursuant to an intellectual
property license from a third party, which license expressly prohibits
the sale of such wafers to MSC or entities similarly situated.
8. During the performance of any CBA, or any other Agreement between the
parties, whereby an invention, improvement or other intellectual
property right, whether patentable or not, is conceived by employees or
agents of one party, which relates to or comprehends the POWERMITE(R)3
products or the POWERMITE(R)3 manufacturing processes, such one party
agrees TO grant to the other party an irrevocable, worldwide right and
license to make, use, sell or otherwise dispose of products covered by
such inventions or other intellectual property rights. The terms and
conditions of such license shall be negotiated in good faith within the
scope and spirit of this Document of Understanding.
9. During the performance of any CBA, or any other Agreement between the
parties, whereby an invention, improvement, or other intellectual
property right, whether patentable or not, is jointly conceived by
employees or agents of each party shall be jointly owned with each party
having an undivided equal share of such invention, or other intellectual
property right, and of any patents issued thereon.
10. In consideration of the technical and financial obligations of each
party as set forth herein, and in each CBA between the parties that are
hereafter negotiated in good faith, the parties agree to grant to the
other party a "MOST FAVORED CUSTOMER" status regarding the purchase and
sale of the products and services made and provided to them by the other
party. The terms and conditions of such CBA or other Agreement between
the parties shall be negotiated in good faith, and shall comprehend, but
not be limited to, quantity, price, delivery, quality, reliability,
warranty, indemnity, availability, and allocation of capacity, taking
into reasonable consideration the technical and financial contributions
respectively provided by the parties hereto.
11. Any news release authorized or distributed by either party pertaining to
this Document of Understanding, or any other agreement hereafter
consummated by the parties, shall be reviewed and approved by the other
party prior to its release, which approval shall not be unreasonably
withheld.
12. All fees and expenses of any kind whatsoever respectively incurred by
each party in connection with this Document of Understanding shall be
respectively borne by each party.
13. Each party shall maintain confidential all information disclosed to it
by the other party that is identified as "CONFIDENTIAL", and shall not
disclose such confidential information to any person, firm or
corporation without prior written consent from the disclosing party. The
parties agree that this Document of Understanding is confidential and is
not to be disclosed by one party to any 3rd party without the express
approval of the other party. The parties agree to negotiate in good
faith the terms and conditions of a mutually acceptable
Confidential Disclosure Agreement (CDA), which shall be deemed to be
incorporated into any agreement hereafter between the parties. An
exemplary CDA is attached hereto as EXHIBIT F, and by this reference
made a part hereof.
14. Each party shall perform its responsibilities under this Document of
Understanding as an independent contractor, and shall not be considered
a partner, joint venture, subsidiary, affiliate, agent or employee of
the other party for any purpose whatsoever, and shall have no right or
authority to make or undertake any promise, warranty or representation,
to execute any contract, or otherwise to assume any obligation or
responsibility in the name of or on behalf of the other party except to
the extent specifically authorized in writing by such other party.
15. This Document of Understanding shall be construed and interpreted, and
its performance shall be governed, by the laws of the State of
California.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS DOCUMENT OF
UNDERSTANDING TO BE EXECUTED BY THEIR DULY AUTHORIZED REPRESENTATIVES AS OF THE
EFFECTIVE DATE, SUBJECT TO THE APPROVAL OF THE BOARD OF DIRECTORS OF BOTH
PARTIES AND ANY NECESSARY THIRD PARTY APPROVAL.
DIODES, INC. MICROSEMI WATERTOWN, INC
BY: /s/ MARK KING BY: /s/ ANGELO SANTAMARIA
MARK KING ANGELO SANTAMARIA
TITLE: VICE PRESIDENT, SALES & MARKETING TITLE: V.P. & GENERAL MANAGER
DATE: JULY 12, 2001 DATE: JULY 18, 2001
LIST OF EXHIBITS
TO THE
DOCUMENT OF UNDERSTANDING
BETWEEN
DIODES, INC
AND
MICROSEMI CORPORATION
DATED JULY 6, 2001
EXHIBIT A INTELLECTUAL PROPERTY RIGHTS LICENSE (IPR)
EXHIBIT B TRADEMARK LICENSE AGREEMENT (TML)
EXHIBIT C TECHNOLOGY TRANSFER AND TECHNICAL TRAINING AGREEMENT (TTA)
EXHIBIT D MANUFACTURING SERVICES AGREEMENT (MSA WITH DIODES AS BUYER)
EXHIBIT E MANUFACTURING SERVICES AGREEMENT (MSA WITH DIODES AS SELLER)
EXHIBIT F CONFIDENTIAL DISCLOSURE AGREEMENT (CDA)