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EXHIBIT 10.42
The Registrant has requested confidential treatment of portions of this
Agreement. Those portions have been redacted from the Agreement.
AIWA - ECRIX
SUMMARY OF AGREED POINTS
DATE: 20 DECEMBER 2000
With respect to issues discussed at various meetings held between
representatives from Aiwa Co., Ltd ("Aiwa") and Ecrix Corporation ("Ecrix"), the
following points have been agreed to by Aiwa and Ecrix:-
1. As and from date hereof, the payment terms under the Manufacturing and
Supply Agreement ("MSA") shall be amended to provide that payments for all
product ordered by Ecrix shall be made as follows:-
(a) 15% of the price of all parts, components and materials necessary to
manufacture the products ordered in each P/O shall be paid to Aiwa by
way of telegraphic transfer of cleared funds prior to or
simultaneously with the submission of the P/O (such parts, components
and materials costs currently being the agreed amounts of US$284.64
for the LVD model respectively); and
(b) the balance of the purchase price (i.e. the total unit price less the
costs received by Aiwa under clause (a) above) shall be made by way of
telegraphic transfer of cleared funds no later than 2-weeks after the
date of shipment provided that prior to the date of such shipment
Ecrix opens and delivers to Aiwa a Standby Letter of Credit covering
the total amount owing for the immediately following 2-weeks of
shipments; or
(c) the balance of the purchase price (i.e. the total unit price less the
costs received by Aiwa under clause (a) above) shall be paid by way of
telegraphic transfer of cleared funds immediately prior to the date of
such shipment.
2. Aiwa will ship products ordered in accepted P/O's with a lead-time of
70-days from the date of P/O's (the parties agreeing to further discuss in
good faith the reduction of such lead time based upon requirements of
specific OEM customers). Ecrix will assist Aiwa by; (a) providing
consistent purchase orders; (b) providing accurate forecasts and giving
Aiwa notice of any possible changes to quantities as far in advance as
possible; (c) conducting factory inspections in a timely and expeditious
manner; and (d) supplying any consigned parts as promptly as possible.
3. Ecrix will accept delivery of the current inventory of overdue completed
products specified below as soon as Aiwa is in a position to effect
shipment (but in no event later than 9 JANUARY 2001) at the price
calculated as follows:-
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<Table>
<Caption>
MODEL NO. UNITS PRICE AMOUNT
----- --------- ----- ------
LVD 1855 $335 $ 621,425
SEN 1000 $385.03 $ 385,030
SUB-TOTALS: 2,855 $1,006,455
</Table>
Payment for the above products shall be made on or before the 8TH DAY OF
JANUARY 2001 by way of a telegraphic transfer of cleared funds into the
account nominated in writing by Aiwa.
4. Within 7 days from the date hereof Ecrix will place a binding,
non-revocable and non-amendable P/O with Aiwa for the following products in
sufficient quantities so as to completely exhaust the current inventory of
parts (estimated as constituting 19,500 LVD units after deduction of
binding P/O's already issued up until and including January '01) at an
agreed unit price of $370.58 for both LVD and IDE models in accordance with
the fixed delivery and payment times, unit numbers (per model) and prices
set forth in the table below:-
<Table>
<Caption>
DELIVERY & PAYMENT NO. OF UNITS TOTAL PRICE
------------------ ------------ -----------
February `01 LVD - 1500 $ 555,870
March `01 LVD - 1800 $ 741,160
IDE - 200
April `01 LVD - 2600 $1,111,740
IDE - 400
May `01 LVD - 3400 $1,482,320
IDE - 600
June `01 LVD - 3860 $1,482,320
IDE - 140
July `01 LVD - 4000 $1,482,320
August `01 LVD - 2340 $ 867,157.20
</Table>
Payment for the products to be ordered by Ecrix pursuant to this paragraph
4 shall be made in accordance with the following:-
(a) Ecrix shall pay the sum of US$1,000,000.00 (one million US dollars) on
accounts of the costs of the parts, components and materials for the
total number of LVD units above on or before the 31ST OF DECEMBER,
2000;
(b) The purchase price (or balance purchase price in the case of LVD
units) shall be paid in accordance with paragraph 1 (b) or (c) of this
Summary.
5. Ecrix shall only be entitled to delay shipment of products ordered in
accepted P/O's for a maximum period of 70 days from the scheduled date of
shipment specified in the P/O (other than those products referred to in
paragraphs 3 & 4 above which may not be delayed).
6. Notwithstanding any provision to the contrary, the prices for products
referred to in paragraphs 3 & 4 herein shall be fixed with respect to those
models and
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quantities that are expressly set forth therein. Prices and the terms and
conditions regarding the manufacture and supply for any additional units
shall be determined in accordance with the provisions of the then current
MSA (as may be amended from time to time, including as amended pursuant to
the provisions of paragraph 7 below).
7. Aiwa and Ecrix agree to hold good faith negotiations regarding achieving
reduced "target" pricing based on volume for any additional units in excess
of the 4000 units per month set forth in paragraph 4 above. The parties
have indicated a "target" price of [Confidential Information Redacted] for
volumes of [Confidential Information Redacted] units per month.
8. Aiwa and Ecrix agree to negotiate in good faith the terms regarding the
future development of the next-generation VXA2 drives on the understanding
that Ecrix will be responsible for costs associated with the development of
the active drum and Aiwa will be responsible for costs associated with the
development of the mechanism.
9. The parties agree that Ecrix may place purchase orders for large assemblies
(including bezels, PWBA's [Barkley, Bert, Sparky] and such other parts as
may be reasonably requested by Ecrix) which Aiwa will ship as soon as
possible at the price and upon the terms and conditions as may be
separately agreed upon between the parties.
10. The current MSA shall be deemed amended to the limited extent required to
give effect to paragraphs 1, 2, 5, 7 and 9 of this Summary as and from the
date hereof, provided that all other terms and conditions of the MSA (and
all related agreements) shall continue in full force and effect.
11. Aiwa confirms the 9-month prior written notice requirement regarding the
non-renewal of the MSA under Section 27.1 thereof.
Accepted and agreed to by the parties to take effect from on the date first
written above:-
AIWA CO., LTD. ECRIX CORPORATION
/s/ Katsuichi Yamaguchi /s/ Juan A. Rodriguez
--------------------------------- ------------------------------
Name: Katsuichi Yamaguchi Name: Mr. Juan A Rodriguez
Title: Senior General Manager Title: Chairman and CEO
Date: December 26, 2000 Date:
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