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Exhibit 10.9
EXCLUSIVE DISTRIBUTION AGREEMENT
This Distribution Agreement ("Agreement") is entered into as of May 8,
2001 between Phoenix Semiconductor, Inc. an Arizona corporation with its
principal place of business located at 1706 West 10th Place, Tempe, AZ 85281,
("Supplier") and National Scientific Corporation, a Texas corporation with its
principal place of business located at 4455 East Camelback Road, Phoenix, AZ.
("Distributor").
BACKGROUND
The Supplier manufactures certain "Thyristor" and "Schottky" wafer
related products (as more fully defined below, the "Products"), and as described
on Exhibit A, attached.
The Distributor wishes to purchase up to 100% of the Supplier's
production of the Products and to distribute and sell the Product to retailers,
wholesalers and other customers under the name of the Distributor.
The Distributor wishes to obtain from the Supplier, and the Supplier is
willing to grant to the Distributor, the exclusive right to distribute the
Products for resale.
In consideration for the mutual promises, covenants, and agreements
made below, the parties, intending to be legally bound, agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms will have the
indicated definitions:
"AGREEMENT" as defined in the preamble, above.
"CONFIDENTIAL INFORMATION" as defined in Section 13.
"END-USER" means any person or entity that obtains the Products from
Distributor.
"INTELLECTUAL PROPERTY RIGHTS" means the intangible legal rights or
interests evidenced by or embodied in (1) any idea, design, concept, technique,
technology, software, firmware, configuration files, drivers or hardware,
invention, discovery, or improvement regardless of patentability, but including
patents, patent applications, trade secrets and know-how, trade name, trademark,
service mark, trade or business secret; (2) any work of authorship, regardless
of copyrightability, but including copyrights and any moral rights recognized by
law; and (3) any other similar rights, in each case on a worldwide basis.
"LOSS" shall mean any and all dues, penalties, fines, costs, amounts
paid in settlement, liabilities, obligations, taxes, liens, losses, expenses and
fees, including court costs and reasonable attorneys' fees and expenses arising
out of any actions, suits, proceedings, hearings, investigations, charges,
complaints, claims, demands, injunctions, judgments, orders, decrees or rulings.
"PRODUCTS" means the Thryistor and Schottky products developed and
manufactured by the Supplier, as set forth on Exhibit A, attached.
"TERRITORY" means anywhere in the world.
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"DISTRIBUTOR PROJECT MANAGER" is defined as the NSC Director of Global
Sales and Marketing, Mr. Graham Clark.
"SUPPLIER PROJECT MANAGER" is defined as the PSI Chief Executive
Officer, Mr. John Rhee.
2. TERM
2.1 TERM. This Agreement shall be for a term of one year,
commencing on the date first written above (the "Term"), and is renewable for
successive one-year terms by mutual agreement.
2.2 CANCELLATION. This Agreement may be terminated by either party
giving the other party at least sixty day's written notice.
2.3 CONTINUATION OR SURVIVAL OF CERTAIN SECTIONS. Certain
sections, as indicated below, will survive and remain effective even after the
termination of this Agreement. All other rights and obligations of each party to
the other shall terminate upon the termination of this Agreement.
3. DISTRIBUTION RIGHTS.
3.1 EXCLUSIVITY
3.1.1 The Supplier hereby grants the Distributor a
transferable, exclusive right and license to distribute the Products in the
Territory during the Term.
3.1.2 The Distributor may resell or distribute the Products to
any customer in the Territory without restriction.
3.2 PRODUCTS. The Supplier shall not sell any products with
specifications comparable to those of the Products in the Territory The Supplier
has a semiconductor product development program and as such will offer other
products to the to the Distributor, who shall have first right of refusal to
sell such newly developed products. Should the Distributor either refuse this
offer or fail to commercialize the offered product within six month, then the
Supplier can market these products through different marketing channels.
3.3 MANUFACTURING AGREEMENT. Distributor wishes to obtain
manufacturing rights to Thyristor products and related technology and Sckottky
products and related technology on a global basis, for which Supplier will
obtain a royalty that will be commensurate with industry standard rates for
similar technology licensing arrangements. Both Distributor and Supplier agree
to negotiate in good faith toward such an agreement during the first six months
of this Agreement.
3.4 DISTRIBUTOR'S DISCRETION TO MARKET AND SELL PRODUCTS. The
Distributor may incorporate, combine, or integrate the Products and sell them
either alone or in combination with other Products. All aspects of the
distribution and marketing of the Products by the Distributor shall be in the
Distributor's sole control, including without limitation the methods of
marketing, pricing, and advertising, and the terms and conditions of any sale,
unless and except as otherwise provided for in this Agreement. The Distributor
may sell the Products to any person or entity.
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4. PURCHASE ORDERS; PACKAGING; SHIPPING.
4.1 PROCEDURES FOR PLACING ORDERS. Distributor will deliver to
Supplier purchase orders that will specify the Product being purchased, quantity
ordered, and the terms of payment, delivery and any other information that
Supplier and Distributor may mutually negotiate with customers. Supplier and
Distributor may mutually negotiate purchase orders from customers.
4.2 INVOICES. Upon fulfillment of a purchase order by Supplier,
and delivery of the Products in accordance with the purchase order, Supplier
will forward to Distributor a correct invoice for the Products delivered.
4.3 PACKAGING. The Supplier agrees to provide appropriate
packaging, as agreed between the Distributor and Supplier, in order to permit
the Products to be shipped directly to the customers or the Distributor's
distribution system without reopening the boxes or otherwise re-handling the
finished goods. The Distributor will distribute Products with all packaging,
warranties, disclaimers, and end-user Agreements if any, intact as shipped by
the Supplier.
4.4 DIRECT SHIPPING. The Distributor may request that the Supplier
ship directly to any location designated by the Distributor. The Supplier agrees
to comply with these requests at no additional charge other than transportation.
5. PRODUCT AVAILABILITY. Supplier represents and warrants that it has
the capacity to produce and deliver processed silicon wafers in the following
amounts:
Monthly Wafer Start Monthly Wafer Out Monthly Yield
Date Capability Capability Target
---- ---------- ---------- ------
May, 2001 500
June, 2001 1000
July, 2001 1000 500 85%
August, 2001 1000 700 85%
September, 2001 1000 1000 85%
October, 2001 1000 1000 92%
November, 2001 1250 1000 92%
December, 2001 1250 1000 92%
January, 2002 1500 1250 95%
February, 2002 1500 1250 95%
March, 2002 1500 1500 95%
April, 2002 1500 1500 95%
May, 2002 2000 1500 95%
5.1 Supplier will make up any deficiency in yield with additional product
supplied FOC.
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6. PREPAYMENTS BY DISTRIBUTOR; PAYMENT BY DISTRIBUTOR .
6.1 PREPAYMENTS BY DISTRIBUTOR. Upon the execution of this
agreement and the execution of a confirmed purchase order from a valid customer
(as determined by Distributor) issued to Distributor for approximately 1000
wafers per month for a period of 12 months, Distributor will pay Supplier a
prepayment toward the purchase of Products of $50,000 plus accrued interest
which is represented by an existing note receivable from Supplier to Distributor
and $95,000 in the form of a cashiers check and, subject to the other provisions
of this Section 6.1, will continue to make continuing $95,000 monthly
prepayments. These payments will be referred to as "PrePayments" and will be
accrued as prepayments against any obligations by Distributor to make payments
pursuant to Section 6.3 below. When the aggregate amount of payments to be made
to Supplier pursuant to Section 6.3 below have exceeded the sum total of all
PrePayments, this Section 6.1 will no longer apply and no further PrePayments
will be made. The note receivable for $50,000 will be so that it is no longer in
default, but instead in a current status that is payable on request by
Distributor due, and this note receivable will be canceled when all Prepayments
as well as the $50,000 of this note and accrued interest on the note have been
paid to Distributor. Until such time, any and all payments due to Supplier
pursuant to Section 6.1, will be retained by Distributor and applied against the
then outstanding balance of PrePayments. On the date this Section 6.1 no longer
applies, Supplier will pay Distributor a one-time PrePayment advance charge of
one percent of the aggregate amount of PrePayments made.
6.2 CHANGES TO PREPAYMENT AMOUNT. Should the Supplier and
Distributor agree that the monthly prepayments require to be altered due to a
change in business conditions, then the prepayment amount or schedule can be
revised, subject to the following guidelines:
6.2.1 Where increases to the prepayment amount are suggested
due to increases in volume of production, such changes shall be approximately
proportional to the change in direct variance cash expense to achieve the
desired production increase. Variance cash expense increases shall include
incremental direct labor and incremental direct materials.
6.2.2 Where changes are made for reasons other than increasing
manufacturing volume, the Distributor and the Supplier agree that the
Distributor Project Manager may authorize a monthly alteration in the
prepayment, subject solely to his discretion.
6.3 PAYMENTS FOR PRODUCTS. Distributor will make payments to the
Supplier for the Products supplied and delivered by Supplier equal to the
collected accounts receivable for Product sales less
o 8% of such collections for processed wafers delivered
in the first 4 months of this Agreement; 10% for
deliveries in the subsequent 4 months; and 11%
thereafter on all products delivered to the named
Customer Protek Devices.
o 11% of collections on all other processed wafers over
$150 selling price.
o 17% of collections for Products encapsulated by or on
behalf of Supplier.
6.4 PAYMENT DATE. Payments will be made by the fifteenth day
following the last day of the calendar month in which the Products were
delivered, subject to the provisions of Section 6.1 above.
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6.5 DISTRIBUTOR PRICING. The Distributor is free to determine its
own resale prices for the Products. Although the Supplier may suggest list
prices, these are suggestions only and are not binding in any way. The
Distributor will not use price to jeopardize the commercialization of the
product.
6.6 DEMAND PAYMENT. Notwithstanding Section 6.1, Supplier will pay
Distributor any then outstanding PrePayment amount that has not been offset by
payments to be made by Distributor under Section 6.2, at any time requested by
the Distributor.
6.7 RIGHT TO REVIEW RECORDS. The Supplier will provide the
Distributor's Project Manager with a written monthly report by the 10th day of
each month showing an accounting for the distributions of all prepayments made
by Distributor to Supplier. The Supplier will agree to have these project
records promptly reviewed for accuracy and completeness by an outside accounting
firm acceptable to and paid for by the Distributor, if so requested by the
Distributor.
7. SHIPMENT.
7.1 SHIPMENT. All Products will be shipped by the Supplier F.O.B.
from their shipping point. Shipments will be made to the Distributor's
identified facilities, freight forwarder or directly to the customer, as set
forth in the purchase order. The Distributor shall select the mode of shipment
and the carrier. The Distributor shall be responsible for and shall pay all
shipping, freight, and insurance charges.
7.2 DELIVERY SCHEDULE. The Supplier shall use its best efforts to
meet the Distributor's requested delivery schedules for the Products.
8. GRANT OF SECURITY INTEREST. As security against the obligation of
Supplier to repay any Prepayments, Supplier hereby grants a first priority
security interest in and to the equipment and property set forth on Exhibit B.
9. PRODUCT LIABILITY
9.1 SUPPLIER INDEMNIFICATION. The Supplier shall indemnify and
hold harmless the Distributor for damages or expenses resulting from any claim,
suit or proceeding brought against the Distributor on the issue of product
liability related to the Products or any part thereof. The Distributor agrees
that the Supplier has the right to defend, or at its option to settle, and the
Supplier agrees, at its own expense, to defend or at its option to settle, any
claim, suit or proceeding brought against the Distributor or its Customer on the
issue of product liability, subject to the limitations set forth in this
Agreement. The Supplier shall have sole control of any such action or settlement
negotiations, and the Supplier agrees to pay, subject to the limitations of this
Agreement, any final judgment entered against the Distributor or its customer on
such issue in any such suit or proceeding defended by the Supplier.
9.2 DISTRIBUTOR INDEMNIFICATION. The Distributor shall indemnify
and hold harmless the Supplier for damages or expenses resulting from any claim,
suit or proceeding brought against the Supplier as a result of representations
or warranties made by the Distributor that are different from those made by the
Supplier to the Distributor or any method of marketing, pricing, labeling, or
advertising not authorized by the Supplier.
9.3 ENTIRE LIABILITY. The foregoing provisions of this Section 9
state the entire liability and obligations of the Supplier and the exclusive
remedy of the Distributor and its Customers, with respect to any alleged product
liability suit related to the Products or any part thereof.
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10. OWNERSHIP WARRANTY AND INDEMNIFICATION
10.1 SUPPLIER OWNERSHIP WARRANTY. The Supplier represents and
warrants to the Distributor that: (1) the Products do not infringe upon any
patent, Copyright, trade secret or other proprietary rights of others; (2) the
Supplier has full power and authority to grant the rights granted within this
Agreement to the Distributor; and (3) the Supplier has not previously or
otherwise granted any other rights in the Products to any third party that
conflict with the rights in this Agreement granted to the Distributor.
10.2 INDEMNIFICATION. The Supplier agrees to defend at its expense
and hold the Distributor harmless from any claim, demand, or suit against the
Distributor resulting from a breach of any of the warranties set forth above in
Section 10.1 and to pay any damages arising from any such claim, demand, or
suit. The Supplier shall have sole control of the defense of such action and all
negotiations for its compromise or settlement. However, no defense, compromise
or settlement may be made without the prior written consent of the Distributor
if it could result in a Loss to Distributor, whether or not such Loss is the
obligation of Supplier under this Section 10. The Distributor shall timely
notify the Supplier in writing of any such claim, demand, or suit, and, at the
Supplier's request, provide the Supplier with all available information,
assistance and authority to enable the Supplier to defend the same. The Supplier
shall indemnify the Distributor for all such costs and damages as they are
incurred.
10.3 LIMITED WARRANTY.
10.3.1 Subject to the terms and conditions of this Agreement,
Supplier warrants that the Products, when and as delivered to Distributor,
conform to their specifications in all material respects, most particularly that
they meet or exceed specified holding current and surge current, and are free
from defects in materials and workmanship.
10.3.2 Supplier agrees to honor all commercially reasonable
requests for repair or replacement made by Distributor.
10.3.3 If, within any twelve-month period, two percent (2%) or
more of the Products, while within the warranty period specified above, exhibit
defects of the same kind and nature, and such defects are the result of faulty
design or workmanship by Supplier or defects in materials arising from any cause
for which Supplier is responsible, then Supplier agrees to give compensation, or
render assistance, at Supplier's sole expense, to Distributor as specified
below:
10.3.3.1 Delivery of replacement Products found to be
defective to the place designated by Distributor;
10.3.3.2 Field service for the replacement of such
defective Products or reimbursement to Distributor of Distributor's labor costs
in replacing such defective Products at such rates as may be mutually agreed
upon from time to time; and
10.3.3.3 Redesign or reprogramming of the Products to
the extent necessary to cure such defects.
10.4 WARRANTY CONDITIONS. The warranty provided in this section
shall be subject to Distributor's satisfaction of the following conditions:
(1) a description of the failure of the Products alleged or found to be
defective shall be furnished to Supplier in writing within fifteen (15) days of
discovery by Distributor of such defect; (2) the defects so described shall be
subject to Supplier's
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verification; (3) no Products alleged or found to be defective shall be disposed
of by Distributor for at least sixty (60) days after Supplier receives such
description in writing; and (4) such defective Products shall forthwith be
returned to Supplier by Distributor, freight payable at destination, if Supplier
so requests.
10.5 REPORT OF WARRANTY CLAIMS. Distributor shall provide Supplier
a written report of all warranty claims at least once every six (6) months if
one is requested.
10.6 CONTINUED USE. Following a final determination that a Product
infringes the Intellectual Property Rights of a third party, the Supplier shall
immediately, at its own expense, procure for the Distributor the right to
continue to distribute the Products subject to such claim, demand or suit, or,
having failed to obtain such right, replace or modify such Products to make them
non-infringing, or, having failed to replace or modify the Products, refund to
the Distributor the purchase price of all unsold Products.
10.7 SURVIVAL OF WARRANTIES. The warranties and indemnities stated
in this Section 10 shall survive the expiration or termination of this
Agreement.
10.8 NOTIFICATION. The Distributor shall promptly notify the
Supplier and the Supplier shall notify the Distributor of (1) any claims,
allegations, or notification that its marketing, licensing, support, or service
of the Products may or will infringe the Intellectual Property Rights of any
other person or entity; and (2) any determination, discovery, or notification
that any person or entity is or may be infringing the Intellectual Property
Rights of the Supplier. The Distributor shall not take any legal action relating
to the protection or defense of any Intellectual Property Rights pertaining to
the Products without the prior written approval of the Supplier, except if the
Supplier fails to react in a timely fashion to a claim, in which case the
Distributor retains the right to defend itself at the sole cost and expense of
the Supplier. The Distributor shall assist in the protection and defense of such
Intellectual Property Rights but is not liable for the cost of defense of such
intellectual property rights.
11. TERMINATION
11.1 TERMINATION EVENTS. It is in the best interest of both parties
not to terminate this agreement. However, recognition must be given to the fact
that Distributor is advancing funds to Supplier in order to finance production
of Products, and that Supplier has sole control of funds received. To prevent
advancing funds from Distributor to Supplier that for whatever reason are not
deployed in a productive way for mutual benefit under this agreement,
Distributor may terminate this contract upon Supplier failing to deliver
Products on the agreed upon date. In addition, this Agreement may be terminated
by either party upon written notice of termination given by registered or
certified mail, in which event this Agreement shall terminate 60 days from the
date of mailing of the notice or upon the occurrence of any of the following
circumstances.
11.1.1 Any assignment for the benefit of the creditors, or any
bankruptcy, reorganization, or other proceeding under any bankruptcy or
insolvency law is initiated by the other party, or is initiated against the
other party and not dismissed or stayed within 60 days;
11.1.2 A material breach by the other party of any of the
terms of this Agreement, which breach is not remedied by the other party within
60 days of the other party's receipt of written notice of such breach.
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11.2 FULFILLMENT OF OBLIGATIONS. The termination of this Agreement
shall not otherwise release either party from its obligation to pay any sum that
may be then or thereafter owing to the other party nor operate to discharge any
liability that had been incurred by either party prior to any such termination.
Except as qualified by the preceding sentence, neither party shall, by reason of
the termination of this Agreement, be liable to the other for any damages
(whether direct, consequential or incidental to and including loss of profit or
prospective profits of any kind) sustained or arising out of any such
termination.
11.3 EFFECT OF TERMINATION AND SURVIVAL. Upon termination of this
Agreement, the Distributor may continue to dispose of its existing inventories
of Products, but the Distributor shall otherwise discontinue all further
promotion, marketing, and support of the Products. Upon termination of this
Agreement, the due date of all outstanding invoices for the Products shall
automatically be accelerated and all such invoices shall become due and payable.
All orders or portions thereof remaining unshipped as of the effective date of
termination may be canceled by the Supplier, at its option, to the extent they
call for delivery more than 60 days after the date of termination. Upon
termination of this Agreement by Supplier other than a for a material breach by
Distributor, the Supplier will repurchase all of the entire remaining inventory
of the Products held by the Distributor, and Products in transit to the
Distributor, at the Distributors sole discretion. The Supplier shall pay the
Distributor for all Products so repurchased an amount equal to the landed cost
paid by the Distributor. Upon receipt of any Products so reacquired from the
Distributor, the Supplier shall issue a check to the Distributor within 10 days
of the receipt of the returned goods.
11.4 RETURN OF PROPERTY. Upon termination of this Agreement, the
Distributor must return to the Supplier all property of the Supplier then in the
Distributor's possession other than inventory to be sold to End-Users including,
without limitation, all advertising, marketing, and promotional materials.
12. TRADEMARKS, TRADE NAMES AND TRADE DRESS. The Supplier shall have and
retain sole ownership of the Trademarks, including the goodwill pertaining
thereto, as described in Exhibit C. Subject to the Distributor's compliance with
the Supplier's standard cooperative advertising policies, the Supplier hereby
grants to the Distributor a license to use and display the trademarks set forth
in Exhibit C, along with related trade names and trade dress, solely in
connection with and solely to the extent reasonably necessary for the marketing,
distribution, and support of the Products within the Territory in accordance
with the terms and conditions of this Agreement. The Distributor shall not
remove or alter the Products' copyright notices, trademarks, color schemes,
fonts, designs and logos, or packaging, but may apply its own. To protect and
preserve the goodwill and image of the Products, the Distributor shall (1)
conduct business in a manner that reflects favorably at all times on the
Products and the reputation of the Supplier; (2) avoid deceptive, misleading, or
unethical practices that are or might be detrimental to the Supplier, the
Products, Dealers, or the public, including any disparagement of the Supplier or
the Products; (3) make no false or misleading representations with regard to the
Supplier or the Products; (4) refrain from publishing or employing any
misleading or deceptive advertising material; and (5) refrain from making any
representations, warranties, or guarantees to Customers or to the trade with
respect to the specifications, features, or capabilities of the Products that
are inconsistent with the literature distributed by the Supplier, including all
warranties and disclaimers contained in such literature.
13. CONFIDENTIALITY Each party agrees that during the course of this
Agreement, information that is confidential or proprietary may be disclosed to
the other party, including, but not limited to software, technical processes and
formulas, source codes, product designs, sales, cost and other unpublished
financial information, product and business plans, advertising revenues, usage
rates, advertising relationships, projections, and marketing data ("Confidential
Information"). Confidential Information
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shall not include information that the receiving party can demonstrate (a) is,
as of the time of its disclosure, or thereafter becomes part of the public
domain through a source other than the receiving party, (b) was known to the
receiving party as of the time of its disclosure, (c) is independently developed
by the receiving party, or (d) is subsequently learned from a third party not
under a confidentiality obligation to the providing party. Except as provided
for in this Agreement, each party shall not make any disclosure of the
Confidential Information to anyone other than its employees who have a need to
know in connection with this Agreement. Each party shall notify its employees of
their confidentiality obligations with respect to the Confidential Information
and shall require its employees to comply with these obligations. The
confidentiality obligations of each party and its employees shall survive the
expiration or termination of this Agreement for a period of three years.
14. GENERAL PROVISIONS.
14.1 ASSIGNMENT. Except as set forth in this section, neither this
Agreement nor any rights under this Agreement, in whole or in part, shall be
assignable or otherwise transferable by either party without the express written
consent of the other party. Any attempt by either party to assign any of its
rights or delegate any of its duties under this Agreement without the prior
written consent of the other party shall be null and void. Subject to the above,
this Agreement shall be binding upon and take effect for the benefit of the
successors and assigns of the parties to this Agreement.
14.2 SUPPLIER AND DISTRIBUTOR AS INDEPENDENT CONTRACTORS. The
Supplier and the Distributor agree that their relationship is that of the seller
and the buyer and not that of joint venturers, principals or agents, or
franchiser and franchisee. Both are independent contractors acting for their own
accounts, and neither is authorized to make any commitment or representation,
express or implied, on the other's behalf unless authorized to do so by the
other in writing.
14.3 WAIVER, AMENDMENT, MODIFICATION. No waiver, amendment or
modification, including those by custom, usage of trade, or course of dealing,
of any provision of this Agreement will be effective unless in writing and
signed by the party against whom such waiver, amendment or modification is
sought to be enforced. No waiver by any party of any default in performance by
the other party under this Agreement or of any breach or series of breaches by
the other party of any of the terms or conditions of this Agreement shall
constitute a waiver of any subsequent default in performance under this
Agreement or any subsequent breach of any terms or conditions of that Agreement.
Performance of any obligation required of a party under this Agreement may be
waived only by a written waiver signed by a duly authorized officer of the other
party, that waiver shall be effective only with respect to the specific
obligation described in that waiver.
14.4 FORCE MAJEURE. Neither party will be deemed in default of this
Agreement to the extent that performance of its obligations, or attempts to cure
any breach, are delayed or prevented by reason of circumstance beyond its
reasonable control, including without limitation fire, natural disaster,
earthquake, accident or other acts of God ("Force Majeure"), provided that the
party seeking to delay its performance gives the other written notice of any
such Force Majeure within 15 days after the discovery of the Force Majeure, and
further provided that such party uses its good faith efforts to cure the Force
Majeure. If there is a Force Majeure, the time for performance or cure will be
extended for a period equal to the duration of the Force Majeure. This section
shall not be applicable to any payment obligations of either party.
14.5 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the United States of
America and the State of Arizona, without regard to conflict of laws provisions
of that state. As between the parties hereto, the United Nations convention
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related to the sale of goods shall not apply to any sale of goods deemed to
arise under or related to this Agreement. This Agreement is entered into in the
United States of America; all funds shall be paid to Supplier in U.S. dollars in
the United States of America.
14.6 ENTIRE AGREEMENT. The parties acknowledge that this Agreement
expresses their entire understanding and Agreement, and that there have been no
warranties, representations, covenants or understandings made by either party to
the other except such as are expressly set forth in this section. The parties
further acknowledge that this Agreement supersedes, terminates and otherwise
renders null and void any and all prior Agreements or contracts, whether written
or oral.
14.7 SEVERABILITY. If any provision of this Agreement is found
invalid or unenforceable under judicial decree or decision, the remainder shall
remain valid and enforceable according to its terms. Without limiting the
previous, it is expressly understood and agreed that each and every provision of
this Agreement that provides for a limitation of liability, disclaimer of
warranties, or exclusion of damages is intended by the parties to be severable
and independent of any other provision and to be enforced as such. Further, it
is expressly understood and agreed that if any remedy under this Agreement is
determined to have failed of its essential purpose, all other limitations of
liability and exclusion of damages set forth in this section shall remain in
full force and effect.
We have carefully reviewed this contract and agree to and accept its
terms and conditions. We are executing this Agreement as of the day and year
first written above.
Supplier Distributor
Phoenix Semiconductor National Scientific Corporation
By: /s/ John Rhee By: /s/ L.L. Ross
----------------------------- ------------------------------------
President Chairman, CEO
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Exhibit A
Description of Products
THYRISTOR
Thyristor is a semiconductor device that can be turned on via a gate signal. By
way of example and not of limitation, the thyristor model is simulated as a
resistor (Ron), an inductor (Lon), and a DC voltage source (Vf), connected in
series with a switch. The switch is controlled by a logical signal depending on
the voltage Vak, the current Iak and the gate signal (g).
The Thyristor block also contains a series Rs-Cs snubber circuit that can be
connected in parallel with the thyristor device.
The static VI characteristic of this model is shown in figure below.
The thyristor device turns on when the anode-cathode voltage is greater than Vf
and a positive pulse signal is applied at the gate input (g>0). The pulse height
must be greater than zero and last long enough to allow the thyristor anode
current to become larger than the latching current Il.
The thyristor device turns off when the current flowing in the device becomes
zero (Iak=0) and a negative voltage appears across the anode and cathode for at
least a period of time equal to the turn-off time Tq. If the voltage across the
device becomes positive within a period of time less than Tq, the device will
turn on automatically even if the gate signal is low (g = 0) and the anode
current is less than the latching current. Furthermore, if during turn on, the
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device current amplitude stays below the latching current level specified in the
dialog box, the device turns off after the gate signal level becomes low (g =
0).
The turn-off time Tq represents the carrier recovery time: it is the time
interval between the instant the anode current has decreased to zero and the
instant when the thyristor is capable of withstanding positive voltage Vak
without turning on again.
Supplier produces Thyristors on 4" silicon wafers with a variety of different
holding current and surge current capabilities.
SCHOTTKY DIODES
Schottky diode is a special type of diode with a very low forward-voltage drop.
When current flows through a diode, it has some internal resistance to that
current flow, which causes a small voltage drop across the diode terminals. A
normal diode has between 0.7-1.7 volt drops, while a Schottky diode voltage drop
is between approximately 0.15-0.45 - this lower voltage drop translates into
higher system efficiency.
Supplier produces Schottky diodes on 4" silicon wafers with a variety of
different holding current and surge current capabilities
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13
EXHIBIT B
SUPPLIER GRANTING OF SECURITY INTEREST
QUANTITY EQUIPMENT $ VALUE
1 MRC-903 Sputer System $ 40,000.00
1 Sputer Films Inc Sputer System $ 25,000.00
3 Evaporators- $10,000 each $ 30,000.00
1 PECVD System $ 12,500.00
3 700 series Tegal Plasma Etchers- $9,500 $ 28,500.00
1 Edwards Evaporator $ 15,000.00
1 STI Single Station Rinser/Dryer $ 3,700.00
1 Gaertner Ellipsometer L-117 $ 15,000.00
1 Taylor-Hobson Talley-Step $ 4,500.00
6 Ovens - $2K each $ 12,000.00
1 FSI Developer $ 3,000.00
2 Cabilt Contract Aligner Model 800 - $5K each $ 10,000.00
6 3 stack Thermo Furnaces with Gas Cabinets - $15K each $ 90,000.00
1 4 stack Thermo Furnaces with Gas Cabinets - $50K each $ 50,000.00
2 AMT-1200 Epi Reactors - $5K each $ 10,000.00
10 Wet Chemical Stations - $5K each $ 50,000.00
1 1034 Electro-Glass Probe $ 9,500.00
1 576 Curve Station $ 1,200.00
1 2 Track Cobilt Coater/Developer $ 3,000.00
Subtotal: $412,900.00
FACILITIES IMPROVEMENT
1 Liquid Nitrogen system with Evaporator $ 50,000.00
1 Deionized Water System $ 25,000.00
1 Chiller & HVAC $ 25,000.00
1 Electrical Service & Distribution $ 50,000.00
1 Neutralization System $ 50,000.00
1 Scrubber $ 20,000.00
1 O2 Distribution $ 10,000.00
1 Deionized Water Distribution $ 10,000.00
1 Hydrogen Distribution $ 10,000.00
Subtotal: $250,000.00
Total: $ 662,900.00
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14
Exhibit C
No Supplier Trademarks, trade names, or trade dress are specified in this
Agreement.
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