EXHIBIT 10.87
SUBCONTRACT MANUFACTURING AGREEMENT
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This is an agreement made on the 29th day of July in the year 1993 between
Microelectronic Packaging Inc. (herein referred to as MPI) with its corporate
office at 11065 Roselle Street, San Diego, California 92121 and the Innoventure
(S) Pte Ltd (herein referred to as Innoventure) with its corporate office at 133
New Bridge Road #17-08 Chinatown Point, Singapore 0105.
RECAPULATION
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WHEREAS it is the intention of MPI to sub-contract its pressed ceramic
production including all cerdips to Innoventure in order to reduce manufacturing
costs verses current Singapore prevailing rates, and to make available existing
MPI Singapore facilities and infrastructure for new products on a timely basis.
WHEREAS it is the intention of Innoventure to set up a factory in Jakarta
Indonesia, to manufacture pressed ceramic production including all cerdips on
behalf of mPI for sales exclusively by MPI.
WHEREAS further, MPI and Innoventure have agreed to enter into certain mutual
commitments and to requlate these rights in accordance with such agreements in
he manner appearing below.
THE PARTIES HERETO AGREE AS FOLLOWS:
1.1) This is a partnership program between MPI and Innoventure to make the
subcontract manufacturing operation of Innoventure at Jakarta successful
for both companies, and treat each as if they were partners in a single
cooperative venture.
1.2) MPI has technical know how and committed volume requirements for pressed
ceramic production including cerdips which MPI desires to transfer to
Innoventure's sub-contract facility in Jakarta.
1.3) Innoventure will set up a factory with appropriate facilities selective
start up equipment, provide labor, and management to produce required MPI
pressed ceramic products including cerdips to meet MPI's quality and
quantity requirements.
1.4) MPI will insure that all of its current pressed ceramic production
equipment and cerdip equipment will be made available to Innoventure's sub-
contract facility, contingent upon availability of funds to finance the one
third of net book value required by the DBS Bank for release of such
equipment from Singapore to Innoventure's Jakarta facility.
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However, Innoventure is responsible for capital and any additional
equipment including replacement beyond what MPI now requires for the current
level of business.
1.5) MPI will support Innoventure in the start up of the sub-contract operations
in Jakarta with machinery and equipment, technology, engineering support,
and a fully paid up license to manufacture pressed ceramic products and
cerdips using MPI's technology currently available as well as those
developed fro such manufacturing in the future.
1.6) MPI will provide Innoventure with raw materials and other consumables as
required for the start up of production and until a smooth transfer of
direct purchasing from approved MPI suppliers can be taken over by
Innoventure. MPI will assure that Innoventure receives all the negotiated
volume pricing and trade terms from all its suppliers.
1.7) MPI will buy back all of the output scheduled from the sub=contract
manufacturing agreement and Innoventure agrees to sell to MPI all of the
output manufactured by Innoventure unless otherwise agreed to in writing
by MPI.
1.8) Both parties agree to work together to expedite the start up and saving
benefits of this sub-contract manufacturing agreement/
THE PARTIES FURTHER AGREE TO THE FOLLOWING FINANCIAL TERMS:
2.1) Innoventure will provide the necessary financing to establish and operate
the sub-contract manufacturing facility in Jakarta for producing MPI's
pressed ceramic and cerdip products which is estimated to require
approximately US $3.5M in equity and another US $3.5M in working capital.
2.2) Innoventure will provide MPI the following payments for technology/license
fees and prepayment for equipment lease costs:
a) US $100,000 by August 31, 1993 to MPI/USA
b) US $400,000 by October 31, 1993 to MPI/USA
c) US $500,000 by December 31, 1993 to MPI/Singapore
2.3) MPI agrees to have Innoventure obtain full payback of its equity investment
in this subcontract manufacturing project within five years of project
start up. The initial technology/license fee and prepayment for equipment
lease totaling US $1,000,000 will be included as equity investment for
purposes of payback.
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2.4) During the first five years of this agreement and/or until the equity
investment by Innoventure is fully repaid by MPI, Innoventure and MPI
will mutually agree upon a repayment schedule that will assist both
companies to achieve their financial objectives. After repayment of
equity investment, Innoventure and MPI will share 50/50 on all savings
derived on manufacturing cost transfer from Singapore to Indonesia.
2.5) While it is MPI's responsibility to provide production equipment for the
transfer of sub-contract manufacturing from Singapore to Indonesia,
Innoventure will help MPI in satisfying DBS Bank requirements to secure
the release of equipment necessary to meet planned production build up
at Jakarta.
2.6) MPI will pay for the products from Innoventure by letter of credit or
alternatively by telegraphic transfer on a net ten days basis.
2.7) Both parties agree to provide each other financial information on an open
book basis to insure fair and equitable performance on he financial
agreements, herein agreed to between Innoventure and MPI.
2.8) MPI agrees to provide Innoventure colateral in MPI shares and/or other
agreed upon legal instruments to provide Innoventure security for the
initial payments of section 2.2.
THE PARTIES CONFIRM THIS BINDING AGREEMENT:
3.1) Upon approval of this agreement by the Board of Directors of MPI and the
Board of Directors of Innoventure it shall become binding on both parties.
3.2) Signing of this agreement by representatives of each party listed below
indicates that they have received all required approvals to execute this
agreement for their respective companies.
3.3) This overall agreement as written will be the basis for
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all other necessary legal documents required to fully transact
details of this subcontract manufacturing agreement.
3.4) This agreement shall be governed by the laws of Singapore.
Sign on behalf of MPI Sign on behalf of Innoventure
/s/ TIMOTHY DA SILVA 7/29/93 /s/ ENG SENG CHEW 7/29/93
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Timothy da Silva/Date Eng Seng CHEW/Date
President and CEO Vice President and
Managing Director