1
EXHIBIT 10.30
The Registrant has requested confidential treatment of portions of this
Agreement. Those portions have been redacted from the Agreement.
CONFIDENTIAL
--------------------------------------------------------------------------------
Manufacturing and Supply Agreement
Between AIWA Co., Ltd. and Ecrix Corporation
--------------------------------------------------------------------------------
This Agreement is made by and between AIWA Co., Ltd. ("AIWA"), a
Japanese corporation and Ecrix Corporation ("Ecrix"), a Delaware
corporation. This Agreement is entered into as of this 31st day of
March, 1999.
BACKGROUND
AIWA and Ecrix desire to create and perpetuate a mutually beneficial,
long-term, cooperative strategic relationship for the development,
manufacture, and distribution of computer products utilizing each
party's expertise and capability.
AIWA has development and manufacturing expertise in low cost, helical
scan/DDS tape drives and autoloaders, and significant procurement and
manufacturing resources.
Ecrix has expertise in the design of advanced, proprietary variable
speed technology and in low cost helical scan tape drives. specifically
in the areas of system architecture and data formats, as well as
significant marketing and sales expertise in low cost tape drives.
AIWA and Ecrix have been cooperating in the development of, and are in
process of completing the design of a new helical scan tape drive for
application as a disk backup device attached to workstations and
network file servers. This work has proceeded according to the terms of
a Joint Development Agreement entered into by AIWA and Ecrix in
November and December of 1997.
Ecrix proposed a program to AIWA for sales of more than [Confidential
Information Redacted] units. Both companies mutually understand the
success of this program depends on close cooperation between the
companies and continued product improvement and product cost
reductions.
Ecrix wishes to contract with AIWA to manufacture and sell to Ecrix
such product, and AIWA is willing to manufacture and sell such product
to Ecrix. AIWA and Ecrix also wish to make agreements defining the
rights of each party to market and sell such product to other parties.
The initial term of this Agreement is two (2) years from the date of
initial delivery of the Products as stated in Section 27.1.
AGREEMENT
In consideration of the mutual covenants and promises in this
Agreement, AIWA and Ecrix agree as follows:
1 Roles
1.1 AIWA
AIWA shall have those responsibilities as more particularly set forth
in the Joint Development Agreement entered into between the parties as
of the 4th day of December, 1997.
2
CONFIDENTIAL
Page 2
1.2 ECRIX
Ecrix shall have those responsibilities as more particularly set forth
in the Joint Development Agreement entered into between the parties as
of the 4th day of December, 1997.
1.3 COOPERATIVE ROLES
AIWA and Ecrix intend that sound cooperation will result from the
contributions of each party and this division of responsibilities. Both
parties understand, however, that full cooperation is necessary to
fully develop this business and achieve the potential opportunities in
this new market.
1.4 FUTURE JOINT DEVELOPMENT
The parties agree to enter into good faith negotiations to reach
agreement for the joint development of the next generation of the
Products which are the subject of this Manufacturing and Supply
Agreement.
2 DEFINITIONS
2.1 PRODUCTS
Those products listed in Exhibit A to this Agreement and as defined by
their associated Product Specifications.
2.2 COMPONENTS
Specially designed parts by Ecrix or AIWA that are used in the
manufacture or repair of the Products and whose use is limited by this
Agreement.
2.3 SPARE PARTS
All parts for the Products as set forth on the Spare Parts List
attached as Exhibit B.
2.4 UNIQUE CUSTOMER CONFIGURATIONS
Products based upon the Product Specification but incorporating changes
that may include electrical, hardware interface, firmware and/or form
factor made pursuant to the terms of this Agreement. The specifications
of such products will be mutually confirmed in writing on an as-needed
basis and each product will utilize a unique designator (i.e., part
number).
2.5 ENGINEERING CHANGE ORDER- DESIGN
Any electrical or mechanical changes to the Products, sub-assemblies,
or component parts proposed by Ecrix, AIWA, or AIWA's suppliers that
affect form, fit or functionality, reliability, performance, quality,
cost, or which result in a departure from the agreed upon Product
Specifications.
3
CONFIDENTIAL
Page 3
2.6 ENGINEERING CHANGE ORDER- MANUFACTURING PROCESS
Any changes to the manufacturing process, proposed by Ecrix, AIWA, or
AIWA's suppliers that affect form, fit or functionality, reliability,
performance, quality, cost, or which result in a departure from the
agreed upon Product Specifications.
2.7 PRODUCT SPECIFICATION
The specifications for the Product provided by Ecrix to AIWA detailing
the requirements for the manufacture and test of each Product. Such
specifications will be mutually confirmed between Ecrix and AIWA in
advance.
2.8 PURCHASE ORDER
The written or electronically transmitted order from Ecrix to AIWA for
the Products covered by this Agreement, stating the product part/model
number, quantity, price, delivery date, special packaging or other
requirements and any other information required to enable the delivery
of the Products.
2.9 FIRMWARE CODE
The internal micro-code that controls the operation of the tape drive.
2.10 INTERFACE TYPE
Defines the SCSI standard. For example, narrow single ended, narrow
differential, wide differential, etc.
2.11 ACCEPTABLE QUALITY LEVEL
Will be a criteria used by Ecrix to determine whether AIWA is
satisfactorily meeting its obligations under this agreement. The
baseline to make such a decision on whether something is accepted or
rejected will be Ecrix's Product Specification and the test tools and
matrix defined by the two companies. The acceptable quality levels are
defined in Exhibit E. The parties recognize that it will be necessary
to implement a program to meet the quality levels as set forth in
Exhibit E based on anticipated OEM customer quality standards.
2.12 NO TROUBLE FOUND
Product initially rejected by Ecrix at incoming test or inspection or
rejected at a customer site, which is subsequently tested by either
AIWA or Ecrix and found to contain no defects.
2.13 EXCLUSIVE
Sole rights excluding all other parties.
2.14 DEVELOPMENT COSTS
All expenditures associated with Product Development until the
completion of drawings and associated documents defining the
requirements and design of the Product up to the stage that such
Product can be put into pre-production manufacturing by AIWA.
4
CONFIDENTIAL
Page 4
2.15 MANUFACTURING EXPENDITURES
Includes all costs of the design, development and construction of the
manufacturing hardware for the Product, including tooling design,
equipment acquisition, and on-going maintenance.
2.16 APPLICATION PRODUCT
A product which may be developed for a certain application and which
utilizes the Tape Format and incorporates an additional feature and/or
hardware specifically designed for that application. Such product
cannot compete in the same market segment as is contemplated with this
joint project, which primary function is in the classical role of a
tape device in the computer data storage hierarchy. In addition, the
value of such Application Product should be in the additional feature
and/or hardware that has been added, and not the basic functionality of
a back up device.
2.17 TAPE FORMAT
A certain tape streamer data storage format which Ecrix has proposed
based upon 8mm tape storage products, including a Physical
Specifications and a Logical Specifications for the 8mm data storage
drive and the 8mm data cartridge media (the "Format"). If a logo type
for the Format will be made, such logo type will be deemed as part of
Format.
2.18 SALES TERRITORY
Is defined as where the end-user installs the Product or where the
Product is consumed.
2.19 AIWA
"AIWA" shall include any corporation, business organization or other
legal entity which AIWA owns or controls, directly or indirectly, an
interest of at least fifty percent (50%) of the voting stock.
2.20 ECRIX
"Ecrix" shall include any corporation, business organization or other
legal entity which Ecrix owns or controls, directly or indirectly, an
interest of at least fifty percent (50%) of the voting stock.
5
CONFIDENTIAL
Page 5
3 MANUFACTURING RIGHTS
3.1 AIWA MANUFACTURING RIGHTS
AIWA shall have the Exclusive worldwide rights to manufacture the
Products during the term of this Agreement, subject to the provisions
listed in Section 3.3 and 3.4. AIWA shall not have the right to grant
to other parties the rights to manufacture or have manufactured the
Product without receipt of written consent from Ecrix to any such
arrangements.
3.2 MANUFACTURING DECISIONS
AIWA will have complete responsibility and control over the development
of manufacturing processes, acquisition and maintenance of production
equipment and the construction and location of facilities. All costs of
financing the development and construction of the manufacturing
facilities will be borne by AIWA.
3.3 ECRIX MANUFACTURING
(a) AIWA and Ecrix understand that the assurance of continued
production of the Product in a high quality, low-cost manner is
critical to the business success of Ecrix, and that Ecrix is relying
on AIWA as the sole source of the Product. Both parties recognize that
laws existing in certain countries, unforeseen political or economic
events, or contractual conditions contained in OEM agreements (which
Ecrix will use its best efforts to avoid) may arise which would either
limit or prevent AIWA from manufacturing the Products in Japan or in
other countries or from satisfying Ecrix's purchase requirements. In
the event that any legal, political, economic, or contractual
restrictions or provisions; any event described in Section 31.7; or a
material breach of this Agreement by AIWA as determined by arbitration
pursuant to Section 30, prevent or limit the supply of products from
AIWA to Ecrix or its customers, Ecrix and AIWA will immediately
cooperate to find a method otherwise to allow AIWA to continue
supplying the Products for Ecrix. In the event that no mutually
acceptable and feasible method is found, Ecrix shall have the right to
manufacture the Products and utilize the manufacturing processes and
know-how developed by AIWA but only to the extent necessary to
manufacture Products that AIWA is not otherwise able to supply taking
into account the factors detailed above. In such event, subject to
Japanese governmental approval (if applicable), AIWA shall provide
Ecrix with Technical Information of AIWA in a way to be mutually
agreed upon, including appropriate compensation which may include a
royalty, to establish manufacturing by Ecrix or third parties selected
by Ecrix to manufacture the Products for Ecrix. Should Ecrix desire to
acquire any equipment of AIWA used in the manufacture of any Products
pursuant to this Section 3.3, the terms of such acquisition shall be
as mutually agreed.
6
CONFIDENTIAL
Page 6
(b) AIWA shall have the unrestricted rights to sell Application
Products world-wide, however for the initial two (2) years AIWA will
pay Ecrix compensation in an amount and on terms to be mutually agreed
upon for sales of Application Products in Ecrix's sales Territories as
described in the agreement titled "Aiwa's Response" dated 9 December
1998.
(c) AIWA shall not manufacture and sell any product which utilizes the
Format and directly competes in Ecrix's Sales Territories (referred to
in Section 4.1) with the Products supplied to Ecrix pursuant to this
Agreement.
3.4 THIRD PARTY MANUFACTURING
AIWA recognizes that part of Ecrix's sales strategy is to establish
purchase agreements with customers who are original equipment
manufacturers ("OEM's") who will incorporate the Products into their
products and systems. Certain OEM's may require as part of such
purchase agreements assurances of the supply of such Products and the
right to manufacture the Products under specified circumstances (which
Ecrix will use its best efforts to avoid). Subject to AIWA's prior
written consent and to Japanese governmental approval (if applicable),
Ecrix shall have the right and authority to grant OEM's the
nontransferable right to manufacture such Products only for the
purpose of incorporating them into the OEM's own products. systems, or
subsystems, to the limited extent which Ecrix considers it necessary
to obtain the purchase agreement with the OEM. OEM's who are granted
such rights may obtain drawings and schematics of the Products
purchased by the OEM for its manufacture thereof. OEM's who are
granted rights will not be entitled to receive Technical Information
of AIWA without AIWA's written consent. AIWA and Ecrix will mutually
agree on the royalties to be paid by the OEM and the sharing of
royalties between Ecrix and AIWA, if such limited manufacturing rights
are granted to the OEM.
4 MARKETING AND SALES RIGHTS
This section has been superseded by the agreements titled "Aiwa's
Response" dated 9 December 1998 and "Clarification of Aiwa's Response"
dated 24 December 1998.
7
CONFIDENTIAL
Page 7
4.1 AIWA AND ECRIX RIGHTS
(a) The parties respective Sales Territories shall be as follows:
Ecrix: The Americas, Europe, Australia, and Israel.
AIWA: Japan, Asia, Middle East, and South Africa
Each party will evaluate and determine the distribution methods, the
organization to be established, the customers to whom the Products will
be sold and the strategy to be utilized. Each party shall further be
responsible for planning and reviewing marketing opportunities and is
responsible for all costs incurred in the sale and marketing of the
Product within their defined territories.
(b) In the event one party introduces a customer to the other party who
sells Products in the other party's Sales Territory, the other party
shall pay the introducing party a sales commission and other sales
costs in consideration for such introduction in such amount and terms
to be mutually agreed upon provided that the other party will be
entitled to retain any revenue for such sales in its Sales Territory.
Furthermore, the other party has ownership of that customer and is
responsible for providing service and support.
(c) In the event a party (the "First Party") indirectly sells or
otherwise distributes Products in the Sales Territory of the other
party (the "Second Party") as a result of sales to customers who
ultimately re-sell or distribute the Products into the Second Party's
Sales Territory, the First party shall pay to the Second Party
compensation on such terms and in such amount as shall be agreed upon
by the parties. Further, the parties shall meet and determine the most
appropriate method of resolving the issue of the sale and distribution
of such Products into the Second Party's Sales Territory having regard
to the Second Party's marketing and distribution strategies for that
particular Territory.
(d) In the spirit of item (c) above, both parties shall have
unrestricted rights to sell Application Products worldwide upon a sixty
(60) day prior notice to the other party. Each party will pay the other
party compensation in an amount and on terms to be mutually agreed upon
(within the 60 day notice period) for sales of Application Products
into the other party's Sales Territories.
(e) For all Product requirements of SONY America and/or AIWA America,
Ecrix shall be the exclusive supplier of such Products. Prices for
Products will be in accordance with Ecrix's standard pricing policy.
(f) As each party signs an agreement with an OEM customer, the two
parties shall review the amount of sales that will go into the other
party's Sales Territories and agree in good faith to negotiate
reasonable compensation payable in accordance with paragraph (c) and/or
(d) above for these lost revenues and the costs associated to service
this OEM customer.
8
CONFIDENTIAL
Page 8
5 EXPENSES
5.1 DEVELOPMENT COSTS
(a) Ecrix shall be responsible and pay for all its costs associated
with the development activities described in the Joint Development
Agreement dated December 4, 1997.
(b) AIWA shall be responsible and pay for all its costs associated with
the development activities described in the Joint Development Agreement
dated December 4, 1997. AIWA shall amortize such costs in a manner that
minimizes the impact of such costs on the Product sales price to Ecrix
and stays within the cost targets established within the Joint
Development Agreement.
5.2 MANUFACTURING EXPENDITURES
(a) AIWA agrees to pay for all Manufacturing Expenditures.
(b) The parties agree that AIWA will, for the purposes of this
Agreement, capitalize and amortize all of the Manufacturing
Expenditures incurred under this Section. AIWA shall amortize such
costs in a manner that minimizes the impact of such costs on the
Product sales price to Ecrix and stays within the cost targets
established within the Joint Development Agreement. It is understood
between the parties that all manufacturing processes of AIWA, equipment
and facilities, excluding test software programs supplied by Ecrix
without charge, for the Products, shall continue to be property of AIWA
and that they may be used for any other purposes, subject to Section 29
hereof.
5.3 TECHNOLOGY EXCHANGE COSTS
AIWA and Ecrix will be exchanging engineering personnel as part of the
initial and ongoing technology exchange described in Section 22. Each
party will be solely responsible for the costs and expenses (including
but not limited to airfares, accommodation transport and incidental
expenses) of its own engineering personnel whilst engaged in such
visits at the other's facilities. If such costs become burdensome for
one of the parties or the visit is to resolve a technical or quality
deficiency, both companies agree to negotiate in good faith a
satisfactory cost sharing settlement.
6 OEM REQUIREMENTS
(a) AIWA understands that after the Products are introduced into the
marketplace by Ecrix any subsequent changes may affect the design of
the system into which an OEM has incorporated such Product. Requests
for enhancements and modifications to the Product design will be
submitted from time to time by either party. Changes to Product design
and the manufacturing process shall be dealt with in accordance with
the provisions of Section 20.
(b) Without limiting the above, both parties shall provide each other
with such cooperation and assistance as may be necessary in order to
conclude agreements with OEM customers. This may involve modifications
to firmware design by Ecrix and the modification of the Product's
hardware by AIWA. The costs and expenses associated with the
implementation of such modifications shall be principally borne by the
party who concludes an agreement with the OEM customer and in such
amount as shall be agreed upon by the parties in the spirit of this
paragraph.
9
CONFIDENTIAL
Page 9
7 PURCHASE ORDERS
7.1 ORDERS
(a) The purchase and sale of Products and Spare Parts shall be made
against specific Purchase Orders placed by Ecrix to AIWA and accepted
by AIWA during the term of this Agreement in accordance with the
provisions hereof, provided that such acceptance shall not be
unreasonably withheld. Purchase Orders may be placed by fax, or e-mail.
All Purchase Orders shall be deemed to incorporate by reference the
terms and conditions of this Agreement which shall supersede all terms
and conditions contained in Ecrix's Order or in AIWA's acknowledgement.
Any Purchase Order issued for any firm commitment of purchase of
Products hereunder shall be non-cancelable and may not be modified in
any respect once accepted by AIWA, subject to the provisions of
Sections 9, 13.3 or 31.7.
(b) Purchase Orders shall be placed no later than the fifth (5th) day
of the month that is [Confidential Information Redacted] prior to the
month in which shipment is requested (example: for shipment in October
the relevant P/O must be received by AIWA no later than the 5th of
July). Orders received after the 5th will be scheduled according to
AIWA's standard lead-time.
(c) The minimum order quantity for the Ecrix drive in each Purchase
Order shall be [Confidential Information Redacted] Drives for each of
the Model Numbers listed in Exhibit A.
(d) Ecrix may at its option delay the delivery of any amount of
Products contained in a Purchase Order for a maximum period of four (4)
months from the scheduled date of delivery upon the giving of written
notice to AIWA at any time prior to the delivery of the relevant
Products.
7.2 CONFIRMATION
AIWA will notify Ecrix of the receipt of a Purchase Order within two
(2) working days after its receipt. AIWA will notify ECRIX of AIWA's
acceptance or otherwise of the relevant Purchase Order on or before the
fifteenth (15th) day of the month of its receipt. Confirmation of
receipt and acceptance or otherwise by AIWA may be by fax or e-mail. No
individual Purchase Order shall be binding upon AIWA unless and until
accepted in writing by AIWA, but such acceptance shall not be
unreasonably withheld. AIWA shall be obliged to accept Purchase Orders
for the quantity of the Products provided such quantity fall within the
range of the relevant forecast schedule provided pursuant to Section
8.1 below and otherwise comply with the terms of this Agreement.
10
CONFIDENTIAL
Page 10
7.3 CONTENTS
All Purchase Orders for Products and Spare Parts submitted by Ecrix
shall state the following: (a) price, (b) quantities ordered, (c) the
month of delivery (d) destination, and (e) Product model/part number or
Spare Part number, (f) special packaging requirements and (g) any other
information required to enable delivery of the relevant Products in
accordance with the terms and conditions hereof.
7.4 EMERGENCY ORDERS/DEMAND UPSIDE
If there is an increase in actual requirements above and beyond the
forecast, AIWA shall make every reasonable effort to service an
increase and shall advise Ecrix of its efforts. AIWA and Ecrix shall
jointly work together to ensure that an adequate supply of long lead
components are available at all times to cover these potential
requirements. In the event that an OEM customer requires Ecrix to
commit to a specific upside capability and/or capacity priority, AIWA
agrees to work in good faith with Ecrix to execute such a plan.
7.5 DELIVERY REPORTS
AIWA will supply Ecrix a monthly delivery report for all Products
delivered during the past month. The report shall specify the quantity,
model/part number (including revision or configuration level), delivery
date, serial number and/or date code of each Product in accordance with
the form and method to be mutually agreed upon between the parties.
In the event that Ecrix consigns any Parts to AIWA, AIWA will supply
ECRIX with a monthly report detailing the beginning balance, quantity
received, quantity consumed in production, quantity scrapped, and
ending balance.
8 FORECASTS
8.1 PROJECTIONS
Ecrix will provide AIWA a rolling forecast containing four months
purchase orders and eight (8) months of forecast. Each month as month
five (5) becomes a purchase order, such order may be increased or
decreased by 100% from the forecasted level. In addition, at the same
time, month six (6) may be increased from the previous forecast by 200%
or decreased by 100%.
11
CONFIDENTIAL
Page 11
8.2 DISCONTINUANCE OF MODEL
Ecrix shall promptly notify AIWA of Ecrix's decision to discontinue to
order any specific model of Product. Notwithstanding any such notice,
Ecrix shall remain obligated to purchase the specific model of Product
pursuant to the application of Sections 7.1. In addition to the
foregoing, ECRIX acknowledges that the discontinuance of orders for
specific models of the Products may result in an additional liability
for AIWA with respect to components ordered or purchased by AIWA for
intended use with the discontinued models of the Product.
9 CONFIGURATION CHANGES
(a) It is expected that a portion of Ecrix's business will require
special configuration of the Products. Some may be as minor as firmware
code changes while others may require special bezels or other hardware
changes. Ecrix's customers also will change the mix of the interface
types with virtually no lead-time. Ecrix and AIWA will work together to
establish a mutually agreeable procedure for changing the configuration
and mix of Products and Unique Customer Configurations. If any of this
work is performed at Ecrix's facility, AIWA agrees to provide Ecrix on
an ordinary commercial basis the necessary parts and training to allow
this effort to be accomplished in a satisfactory manner.
(b) Notwithstanding any other provision of this Agreement (including
without limitation the warranty provisions set forth in Section 17
hereof), in no event shall AIWA be liable for any claims, suits,
demands, loss, damage, cost or expense (including reasonable legal
fees) arising out of or connected with the workmanship associated with
any changes, modifications or additions made to the Products by or on
behalf of Ecrix in accordance with this Section or the use of any parts
not acquired or approved by AIWA. Ecrix hereby indemnifies and holds
AIWA harmless with respect to such liability.
12
CONFIDENTIAL
Page 12
(c) Ecrix agrees to maintain at its own cost and expense a buffer stock
of necessary parts and components at AIWA's production facility to
facilitate configuration changes. At any time prior to the first day of
the month immediately preceding the scheduled month of delivery, Ecrix
may request that AIWA change the configuration of the relevant
Products. Subject to the receipt of such a request and to the extent
that the buffer stock inventory is sufficient, AIWA agrees to build
product as requested.
10 PRICING
10.1 PRICE
The purchase price to Ecrix for each model/part number of the Product
sold to Ecrix shall be set forth in Exhibit C attached hereto. Prices
for Unique Customer Configured Products shall be mutually agreed upon
on a case by case basis and the Exhibit will be updated to reflect
these configurations.
The parties acknowledge that the purchase price for the Products,
Unique Customer Configured Products and Spare Parts (or any components
thereof) sold to Ecrix hereunder may be subject to Japanese Consumption
Tax. In such event, ECRIX shall be liable for the payment of the amount
of such consumption tax which shall be added to the respective purchase
price for the Products, Unique Customer Configured Products or Spare
Parts payable by ECRIX hereunder. Ecrix shall be solely responsible for
making any applications for the refund of such consumption tax at its
own cost and expense. Upon request, however AIWA will provide Ecrix
with all reasonable assistance in connection with any application for
the refund of such consumption tax however assumes no liability in
relation to the outcome of such an application.
10.2 PRICE REVISIONS
The parties shall in good faith negotiate and review prices on a
quarterly basis. Such revisions may incorporate variations in product
cost, competitive market prices, changes in sales volumes, and currency
fluctuations, as explained later in this agreement. The parties will
use their best efforts to maintain the Product's competitiveness in the
market.
10.3 FORWARD PRICING
In order to obtain business from strategic large volume OEM customers
identified by Ecrix and deemed to be in the mutual best interests of
Ecrix and AIWA, both companies shall work together in good faith to
establish a mutually agreeable price for sales of the Product to such
strategic large volume OEM customer. Such pricing which may reflect the
potential sales volume and unique configuration and may be documented
with a separate model/part number in Exhibit C.
13
CONFIDENTIAL
Page 13
10.4 PRICE REDUCTION PROGRAM
AIWA and Ecrix understand that market pressures will continuously push
the price of the Product lower and in order for both companies to
maintain a reasonable profit margin, they must work together to reduce
the cost of the Product. In the spirit of this effort, both parties
agree to implement an immediate program that will help cost reduce the
Product and result in an overall reduction in the price AIWA charges
Ecrix. The overall guideline is that the initiating party will benefit
from sixty percent (60%) of the cost savings with the balance of forty
percent (40%) going to the other party.
11 CURRENCY
11.1 CURRENCY BASIS
The prices for the Products and Spare Parts that Ecrix pays to AIWA
under this agreement shall be in US dollars.
11.2 CURRENCY FLUCTUATIONS
(a) The price in Section 10.1 hereof is based on a Japanese Yen to US
dollar exchange rate relationship. The prices during the term of this
agreement may be modified in accordance with this Section in order to
reflect a proportionate share of the change in the Yen to Dollar
relationship as measured in the Wall Street Journal. It is agreed that
the parties will average the daily changes of the Yen/Dollar exchange
rate as reported during each quarter. This average will be used to
establish the price adjustment as per listed on the attached chart that
will be prepared when Ecrix receives the first commercial delivery of
the Products. The timing for such price change is as described in
Section 10.2 above (i.e., on a quarterly basis).
(b) It is understood that AIWA will potentially move sub-components of
the drive to a US based economy. It is agreed that the parties will use
the Currency Fluctuation Price Adjustment table in a proportional basis
as sub-components are produced in the US based economy. That is to say,
dollar sourced components will not be adjusted for a Yen/Dollar
exchange rate.
(c) The parties will use their best efforts to minimize currency
fluctuation risks which may involve the shifting of production offshore
depending upon the volume of production required or the sourcing of
components from alternate markets. The issue of currency fluctuation
risks and any proposals to minimize such risks may be discussed by the
parties in the quarterly price revisions referred to in Section 10.2 of
this Agreement.
12A. TAXES
The Price for the Products includes all taxes necessary to pass title
to the Products to Ecrix. All taxes based on income shall be borne by
the party that incurs them. In the event any additional taxes, duties
or levies (other than those in existence at the date hereof) are
introduced by any competent authority during the term of this Agreement
and are payable by AIWA in connection with the manufacture and supply
of the Products hereunder, the price of the Products shall be adjusted
to take into account such additional taxes, duties or levies.
12 PAYMENT TERMS
(a) At its option, Ecrix shall pay for all Products shipped by AIWA to
Ecrix hereunder by either of the following methods;
14
CONFIDENTIAL
Page 14
(i) an unconditional Confirmed and Irrevocable Documentary Letter
of Credit ("L/C") at sight issued without recourse by an
internationally reputable bank acceptable to AIWA. The amount of
each L/C shall be equivalent to the purchase price of the relevant
shipment as set out in the Ecrix Purchase Order. Each UC shall be
issued at least two (2) weeks before the commencement of the
scheduled month of shipment; or
(ii) [Confidential Information Redacted] in immediately available
funds made no later than [Confidential Information Redacted] prior
to the scheduled delivery date of the Products for which payment is
being made; or
(iii) wire transfer to the account designated by AIWA within
[Confidential Information Redacted] of the date of delivery of the
relevant Products to the Ex Works point PROVIDED THAT ECRIX, (at
its sole cost and expense) maintains and provides AIWA with a
written bank guarantee in favor of AIWA guaranteeing the due and
punctual payment of any and all amounts payable to AIWA hereunder
and in a form satisfactory to AIWA (the "Bank Guarantee").
(b) The Bank Guarantee or Standby Letter of Credit referred to in
sub-paragraph (iii) of paragraph (a) above shall at a minimum comply
with the following:
(i) be issued by an internationally reputable bank acceptable to
AIWA;
(ii) an original copy of the Bank Guarantee or Standby Letter of
Credit must be received by AIWA no later than five (5) days before
the commencement of each successive calendar quarter during the
term of this Agreement;
(iii) the Bank Guarantee or Standby Letter of Credit must be issued
for an amount which is greater than or equal to the highest monthly
amount of Purchase Orders scheduled for delivery in the immediately
succeeding calendar quarter;
(iv) the Bank Guarantee or Standby Letter of Credit must be
unconditionally payable by the bank immediately upon the default by
ECRIX in the payment of any amounts due to AIWA under this
Agreement;
(v) the Bank Guarantee or Standby Letter of Credit must be
exercisable upon the written demand from AIWA, which demand may be
given at any time within 12 months from the date any amounts became
payable by ECRIX to AIWA pursuant to the terms of this Agreement;
(vi) shall be reviewed quarterly and amended or substituted where
necessary to comply with the terms hereof.
In the event of a substitution of the Bank Guarantee or Standby
Letter of Credit in accordance with paragraph (vi) above, AIWA
shall simultaneously deliver to ECRIX the Bank Guarantee or Standby
Letter of Credit provided no amounts are outstanding at the
relevant time and the amount of the substituted Bank Guarantee or
Standby Letter of Credit calculated pursuant to paragraph (iii)
above is greater than the purchase price of any Products delivered
in the immediately previous calendar quarter for which payment has
not been received by AIWA at the time of substitution.
15
CONFIDENTIAL
Page 15
(c) AIWA shall be under no obligation to deliver the Products in
accordance with the terms of Ecrix's Purchase Order in the absence of
receipt of the L/C, advance payment or a Bank Guarantee covering the
amount of the relevant delivery together with the purchase price of any
Products delivered but for which payment has not been received by AIWA
at the relevant time.
(d) In addition to any other remedies available to it in the event of
default in payment, AIWA may in its sole discretion suspend or cancel
future delivery of Products without liability.
(e) AIWA shall be entitled to interest on all unpaid sums from the due
date at the rate of 1% per month or where the aforementioned rate
exceeds the maximum rate permitted by law, the maximum rate permitted
by law.
13 DELIVERY AND SHIPMENT
13.1 DELIVERY COSTS AND SHIPMENT
(a) AIWA shall at its own cost deliver the Products to Ecrix at the Ex
Works point in Japan designated by AIWA. Ecrix shall arrange and be
responsible for all shipment and transportation costs (including
insurance) from the Ex Works point in Japan to the ultimate delivery
destination requested by Ecrix in its Purchase Order ("Ecrix's Ultimate
Delivery Point").
13.2 PACKAGING
The Method of packaging shall be as specified in Exhibit D. The cost of
packaging for shipment is included in the price. Each delivery shall
include a packing list containing: (i) Purchase Order number, (ii)
Product Model Number/Part Number, or Spare Part number, (iii) quantity
and (iv) serial numbers and/or date codes of shipped Products, or Spare
Parts. Ecrix shall indemnify and hold harmless AIWA from and against
any and all liabilities, cost, expenses, loss and damages, arising out
of or relating to the method and packaging for the Products provided
that the Products and Spare Parts are packed in conformity with Exhibit
D.
13.3 DELIVERY TIMES
(a) Delivery to Ecrix at the Ex Works point will be made by AIWA no
later than the 21st day of the fourth month following the placement of
an accepted Purchase Order, provided ECRIX has placed such Purchase
Order before the 5th day of the order month (e.g. Products ordered in
Purchase Orders placed by July 5th will be delivered to the Ex Works
point on or before October 21st). If AIWA has knowledge that it will
not meet the scheduled shipment date it shall notify Ecrix in writing
of this situation, along with a schedule to remedy the delinquency.
Ecrix shall provide written acceptance or rejection of the proposed
revision to the shipment schedule within five (5) days. If Ecrix
rejects AIWA's remedy schedule, such rejection shall constitute a
notice of default. During the period of default or delinquency by AIWA,
it agrees to deliver all Products in the most expeditious manner, the
difference in the costs of delivery to be at AIWA's expense.
(b) In addition, at any time prior to the 21st day of the month
preceding the scheduled month of delivery, AIWA (in its discretion) may
notify Ecrix of an earlier anticipated delivery date than that referred
to in paragraph (a) above. In such event, AIWA shall deliver the
relevant Products to the Ex Works point in Japan on such date, or
within one (1) day thereof.
16
CONFIDENTIAL
Page 16
(c) Consistent failure to deliver product on the delivery date as
described herein (or within (1) day thereof) shall be a material breach
of the contract, subject to the remedies in Section 27.
14 TITLE
Title and Risk of Loss or damage (other than the loss and damage
referred to in Section 13.2 above) to the Product shall pass from AIWA
to Ecrix upon delivery to Ecrix at the designated Ex Works point.
15 INSPECTION, ACCEPTANCE AND RELIABILITY TESTING
15.1 AIWA INSPECTION
AIWA shall provide and maintain an inspection procedure and quality
assurance program as described in Exhibit E for the Products and their
production processes. Any records of inspection work done by AIWA in
accordance with Exhibit E, including equipment calibration, shall be
maintained for a period of one (1) year from the date of inspection and
made available to Ecrix upon its request at reasonable times during the
term of this Agreement. Further, AIWA agrees to forward
(electronically) all final Product test results from the common test
tool referred to in Section 16 with each unit that is shipped in order
that Ecrix can compile a history database to plot Product trends.
15.2 SOURCE INSPECTION
Ecrix is authorized to perform source inspection and quality assurance
audits at AIWA's manufacturing facilities upon the giving of reasonable
prior written notice. Such source inspection shall not relieve AIWA of
its obligation to deliver conforming Products in accordance with the
terms of this Agreement or waive Ecrix's right of incoming inspection
and acceptance at Ecrix's Ultimate Delivery Point.
15.3 INCOMING INSPECTION
All Products or Unique Customer Configured Products ordered by Ecrix
under this Agreement shall comply with the Product Specifications or
other mutually agreed written specifications and shall be subject to an
incoming inspection and acceptance by Ecrix upon its receipt of the
Products or Unique Customer Configured Products at Ecrix's Ultimate
Delivery Point utilizing the common test tool referred to in Section
16.
15.4 NOTICE OF REJECTION
Products or Unique Customer Configured Products which fail to pass any
Incoming Inspection conducted by Ecrix in accordance with Section 15.3
above may be rejected by Ecrix by the giving of written notice to AIWA
by facsimile identifying the rejected Products and specifying in detail
the reasons for their rejection (the "Notice of Rejection"). In the
event AIWA does not receive a Notice of Rejection within ten (10) days
from the date of delivery of the Products or Unique Customer Configured
Products to Ecrix's Ultimate Delivery Point, they shall be conclusively
deemed accepted by ECRIX.
17
CONFIDENTIAL
Page 17
15.5 CORRECTION OF MANUFACTURING DEFECTS
During the Agreement term and subject to the agreement of the parties,
AIWA shall provide technical personnel at Ecrix's facility for the
purpose of analyzing and correcting manufacturing defects that may be
found during Incoming Inspection. The costs for such visits will be
handled on a case by case basis.
15.6 REJECTED PRODUCTS
Rejected Products may be returned by Ecrix for either repair and/or
replacement subject to the terms set out herein. When returning
rejected Products ECRIX shall attach the Notice of Rejection and such
rejected products shall be delivered strictly in accordance with AIWA's
written instructions. The liability for the costs associated with the
repair and/or replacement of such rejected products shall be determined
as follows:
(i) where the defect relates solely to a manufacturing defect
which cannot be corrected within a reasonable number of
working days by AIWA's technical personnel in accordance
with Section 15.5 above, AIWA shall be responsible for all
repair and/or replacement costs together with all
transportation and delivery costs incurred in replacing the
rejected products;
(ii) where there is No Trouble Found, Ecrix shall be responsible
for all transportation and delivery costs incurred in
returning the rejected products to AIWA and subsequent
re-delivery;
(iii) where the defect relates solely to an Ecrix design defect
or firmware, ECRIX shall be responsible for ail repair
and/or replacement costs together with all transportation
and delivery costs incurred in replacing the rejected
products;
(iv) where the nature of the defect is unclear, repair and/or
replacement costs together with all transportation and
delivery costs incurred in replacing the rejected products
shall be borne 50% by Ecrix and 50% by AIWA.
18
CONFIDENTIAL
Page 18
15.7 REPLACEMENT PRODUCTS
Replacement Products, Unique Customer Configured Products shall be
delivered to Ecrix's Ultimate Point within forty-five (45) days after
the date of receipt of the rejected products by AIWA at its designated
facility. Should AIWA fail to repair and/or replace rejected Products,
Unique Customer Configured Products to Ecrix within the said forty-five
(45) days period, Ecrix shall have the option to cancel without cost or
liability the purchase of such replacement Products, Unique Customer
Configured Products and where the defect is solely attributable to
AMA's manufacturing defect receive, at Ecrix's option, a credit or
rebate if payment has been made.
15.8 NON-CONFORMING ACCEPTANCE
Ecrix may choose to accept Products, Unique Customer Configured
Products which fail to conform in a minor aspect to the specifications
established by this Agreement without prejudice to its right to reject
nonconforming items in the future. If Ecrix so chooses, Ecrix will
notify AIWA in writing by means of facsimile of its intent to accept
non-conforming items within ten (10) days from the date of their
arrival at Ecrix's Ultimate Delivery Point. AIWA agrees to negotiate in
good faith a price reduction for such items based upon Ecrix's added
expenses to correct such deficiencies provided that the basis for
non-conformance is not the result of an Ecrix design defect. Upon
agreement on price, ECRIX may accept such items.
15.9 ECRIX CORRECTIONS
Ecrix may attempt to correct deficiencies with Products or Spare Parts
either consigned or purchased under this Agreement. Such correction by
Ecrix shall neither invalidate nor act as a waiver of Ecrix's rights to
satisfaction under Section 15.3 above nor affect any other terms of
this Agreement, including, but not limited to, the warranty under
Section 18 provided that Ecrix provides AIWA with written notice within
ten (10) days of the relevant Products/Spare Parts arrival at Ecrix's
ultimate delivery point detailing the nature of the defects and the
proposed method of correction and obtains AIWA's prior written consent
(which may not be unreasonably withheld) to proceed with the proposed
method of correction. The act of payment for Products or Spare Parts
shall not of itself signify acceptance by Ecrix of the Products or
Spare Parts.
15.10 SAMPLING INSPECTION
If a lot fails the agreed upon sampling inspection criteria that is
implemented by AIWA at the time of delivery of the Products as set
forth in Exhibit E, Ecrix may reject the entire incoming lot and
require AIWA technical personnel to verify individual products in the
lot as acceptable, provided that the basis for failure of quality yield
level is not the result of an Ecrix design defect.
19
CONFIDENTIAL
Page 19
15.11 ONGOING RELIABILITY TESTING
AIWA shall perform ongoing reliability testing per Exhibit F and will
share the results with Ecrix. Ecrix will follow a similar test plan and
agrees to share its results with AIWA.
15.12 OEM CUSTOMER INSPECTION
From time to time certain OEM customers, or other customers, may
request a tour of facilities where Product development, manufacturing,
test, repair, and technical support activities are conducted. Such
customers may request detailed information about the processes employed
in these activities in order to complete vendor qualification and/or
evaluation surveys. AIWA and Ecrix will, upon receipt of prior notice,
make every reasonable effort to obtain any necessary approvals for a
reasonable number of such visits and provide assistance to customers
and to each other in order to complete these surveys in a timely and
efficient manner. The OEM customer is to be accompanied by an
employee(s) of the respective company sponsoring the visit. The
approval for such visits referred to in this Section may be conditional
upon the execution of an appropriately worded confidentiality and/or
non-disclosure agreement by the OEM customer.
16 TEST EQUIPMENT
AIWA and Ecrix will work together to develop a common test tool and
"pass/fail" test criteria, it being agreed however that Ecrix will
develop the software for the common test tool. AIWA shall confirm that
the proposed common test tool is exercising the mechanism correctly.
After the common test tool and "pass/fail" test criteria have been
agreed upon in writing by both parties, one copy of the tool will be
used by AIWA to test all Product before it ships and another copy will
be used by Ecrix to test Product at incoming inspection. Both companies
agree to share their results so that a common database can be developed
to analyze product trends.
17 WARRANTY
17.1 AIWA WARRANTY
AIWA warrants for a period of [Confidential Information Redacted] from
the date of delivery of Products to the Ex Works point, that all
Products, Unique Customer Configured Products or Spare Parts furnished
under this Agreement will be free from defects in materials and
workmanship, and will conform to applicable Product Specifications,
drawings and/or samples provided or incorporated in this Agreement.
Software/firmware and product interface supplied by Ecrix and critical
components and parts listed on Exhibit G are excluded from this
warranty clause. These warranties shall survive any inspection,
delivery, payment and termination or expiration of this Agreement, and
shall extend to Ecrix, or its
20
CONFIDENTIAL
Page 20
successors and assigns. Notwithstanding the aforesaid, the
warranty period may be extended by mutual agreement. In any event,
Ecrix and AIWA agree that they will negotiate in good faith to extend
the warranty period in order to provide warranty coverage granted with
respect to similar or competitive products.
17.2 ECRIX WARRANTY
Ecrix warrants the electrical/electronics including the mechanic
firmware developed by Ecrix and incorporated in the Product to be free
from defects in design. These warranties shall survive any inspection,
delivery, payment and termination or expiration of this Agreement, and
shall extend to AIWA, or its successors and assigns.
17.3 REMEDY
Correction of warranty defects hereunder shall be performed at either
Ecrix's or AIWA's facility, as AIWA and Ecrix shall agree. AIWA shall,
with the mutual agreement of Ecrix, repair or replace all defective
Products, Unique Customer Configured Products, and Spare Parts within
forty-five (45) days of receipt of defective Products returned to it by
Ecrix. In the event AIWA is unable to repair warranty defects within
the said forty-five (45) day period, AIWA shall either replace such
defective Products/Spare Parts within such period or grant Ecrix a
credit for the amount of the price paid for such Product/Spare Part.
During the term of this Agreement, and if mutually agreed between Ecrix
and AIWA, AIWA shall provide, at Ecrix's facility, technical personnel
for the purpose of analyzing and repairing defects in the Products,
Unique Customer Configured Products and Spare Parts.
17.4 WARRANTY COSTS
(a) Costs of all work performed pursuant to the warranty set out in
Section 17.1, including costs for labor, material, inspection and/or
shipping from whichever facility shall be borne exclusively by AIWA.
Costs of all work performed pursuant to the warranty set out in Section
17.2, including costs for labor, material, inspection and/or shipping
from whichever facility shall be borne exclusively by Ecrix. In the
event that it cannot be clearly determined whether the warranty repairs
are required solely pursuant to Section 17.1 or solely pursuant to
Section 17.2, then the costs for all work performed pursuant to the
warranty covered by this Section 17, including costs for labor,
material, inspection and/or shipping from whichever facility shall be
borne 50% by Ecrix and 50% by AIWA.
(b) Ecrix shall exclusively bear all costs associated with any shipping
damages resulting to Products, Unique Customer Configured Products or
Spare Parts transported from AIWA to Ecrix provided that the method of
packing the items meets Ecrix's specifications, otherwise AIWA shall
exclusively bear all these costs.
(c) The parties shall review on a semiannual basis the procedures for
warranty repairs and allocation of warranty expenses as well as the
reimbursement policy for such warranty repairs as hereinafter set
forth. Initially, a report shall be prepared by AIWA and Ecrix on a
calendar quarterly basis indicating the warranty costs incurred by the
parties pursuant to this Section 17. Within thirty (30) days after a
warranty cost report is submitted, the owing party shall reimburse the
owed party. Any disputes pursuant to this Section 17 shall be resolved
by arbitration in the manner established by Section 30 below.
21
CONFIDENTIAL
Page 21
17.5 EXCLUSIVE REMEDY
The warranty stated above constitutes the sole and exclusive remedy of
AIWA and Ecrix. Except as herein above provided, Ecrix and AIWA make no
warranties, express or implied, including any warranty of
merchantability or fitness for a particular purpose. Neither AIWA nor
Ecrix shall be liable to one another for consequential damages arising
out of a breach of the warranties referred to in this Section.
17.6 THIRD PARTY CLAIMS
(a) Should either party become aware of any claim, suit or demand made
by a third party with respect to the Products and/or Unique Customer
Configured Products or the performance of any acts contemplated by this
Agreement (including but not limited to claims for personal injury,
property damage or loss of data), that party shall immediately notify
the other party of the details and the nature of such alleged claim,
suit or demand whereupon both parties shall firstly discuss and
determine the most appropriate, economical and equitable method of
resolving same.
(b) Each party (the 'Indemnifying Party") shall indemnify and hold
harmless the other party together with its officers, directors,
shareholders, employees, agents, successors and permitted assigns (the
"Indemnified Party") against any cause of action, loss, liability,
damage, cost or expense (including but not limited to attorney's fees
and costs irrespective of the institution of proceedings) to the extent
that such liability arises out of or relates to a breach of the
Indemnifying Party's obligations under this Agreement or as are implied
by law and any negligent act or omission made during the term hereof.
The Indemnified Party shall promptly notify the Indemnifying Party of
the commencement of any such action or suit, or threats thereof, and
the Indemnifying Party shall be afforded the opportunity to determine
the manner in which such action or suit should be handled or otherwise
disposed of. Notwithstanding the foregoing, if the Indemnified Party is
a named party in any action or suit, it may participate in any such
action or suit by its own counsel without affecting the indemnity
granted pursuant to this paragraph. The Indemnified Party shall not
undertake to settle, or agree to any settlement herein, without first
obtaining the written consent of the Indemnifying Party.
(c) The provisions of this Section shall survive the expiration or
termination of this Agreement.
18 CUSTOMER REPAIRS AND UPGRADES
18.1 CUSTOMER REPAIRS
(a) Products may fail at a customer site while either in or out of
warranty. In order for the Product to be brought up to working
condition, it may have to have a part or series of parts replaced.
Additionally, the parties may have an inventory of spare parts that
become obsolete because of an Engineering Change Order regarding Design
or Manufacturing Process. All of the above scenarios require a cost to
be incurred by either or both parties to remedy the situation. AIWA and
Ecrix agree to work together to minimize this cost and ensure that the
customer is serviced in the highest possible manner. Such activities
will include training technicians to do repairs, implementing a
consignment stock of parts to service in-warranty repairs, initiating a
pool of hot spares, and a spare parts stock rotation program.
22
CONFIDENTIAL
Page 22
(b) AIWA agrees to be responsible for costs associated with the
performance of the activities referred to in the above paragraph to the
extent that they relate solely to the repair or replacement of Products
in connection with the warranty given in Section 17.1. ECRIX agrees to
be responsible for costs associated with the performance of the
activities referred to in the above paragraph to the extent that they
relate solely to the repair or replacement of Products in connection
with the warranty given in Section 17.2. Any activities undertaken by a
party other than in discharge of its warranty obligations set out
herein shall be done on a ordinary commercial charge basis, or as may
be otherwise agreed upon in writing by the parties.
18.2 UPGRADES
A customer may return a working Product and request that the Product be
upgraded to the latest configuration or latest feature sets. AIWA and
Ecrix agree to work together to minimize this cost and ensure that the
customer is serviced in the highest possible manner provided that any
activities undertaken by a party other than in discharge of its
warranty obligations set out herein shall be done on a ordinary
commercial charge basis, or as may be otherwise agreed upon in writing
by the parties.
19 VENDOR SELECTION AND ASSISTANCE
(a) It is contemplated by AIWA and Ecrix, that the majority of
components and parts used for the Products or Unique Customer
Configured Products will be sourced by AIWA's procurement group. During
the term of this Agreement, Ecrix agrees to supply AIWA with or assist
AIWA in procuring critical parts or components for the Products
(including but not limited to those referred to in Exhibit G hereto as
amended from time to time) which are necessary to meet AIWA's
production requirements.
(b) In the event that Ecrix must directly purchase components or parts
on the behalf of AIWA, Ecrix shall only purchase in strict accordance
with the price, quantities and delivery dates as may be requested by
AIWA in written purchase orders submitted to Ecrix. Ecrix will either
sell or consign these parts to AIWA. AIWA's purchase price or Product
credit to Ecrix for all such components and parts will be Ecrix's
purchase price, plus all related transportation, insurance, packing,
export charges and taxes. Payment will be made [Confidential
Information Redacted] after shipment of product, as long as a letter of
credit or bank guarantee has been obtained. Otherwise, cash in advance
of shipment will be required. Payment is subject to and conditional
upon an incoming inspection of the relevant components and acceptance
within 10 days of arrival of the relevant goods at AIWA's facility in
Japan.
23
CONFIDENTIAL
Page 23
20 ENGINEERING CHANGES
20.1 AIWA CHANGES
(a) AIWA shall notify Ecrix of any Engineering Change Order as defined
in Sections 2.5 and 2.6 hereof proposed to be made by AIWA to the
Product, sub-assemblies, components, or manufacturing process and shall
supply a written description of the expected effect of the Engineering
Change Order on the Product, including the effect on performance, all
test results of the proposed change, reliability, quality and
serviceability and any cost changes expected by the Engineering Change.
The implementation of an Engineering Change Order shall be subject to
the prior approval of ECRIX, which may not be unreasonably withheld. In
deciding whether or not to give its consent to the inclusion of AIWA's
proposed Engineering Change, Ecrix may elect to evaluate parts and/or
designs, specified as part of the proposed change. Ecrix agrees to
approve or disapprove AIWA's proposed changes or respond with alternate
proposals within 60 working days of receipt of a written request
including all necessary documentation and materials to correctly
evaluate the requested change for changes requiring customer approval
and 20 working days for changes requiring only Ecrix approval.
(b) Notwithstanding the above, AIWA may in its sole discretion
implement changes to the manufacturing processes for the Products which
do not affect functionality, reliability, performance, quality, cost,
or result in a departure from the agreed upon Product Specifications
however shall provide ECRIX with five (5) days prior written notice of
such changes. In the event that any changes implemented by AIWA in
accordance with this paragraph are subsequently proven to have required
the prior consent of Ecrix in accordance with paragraph (a) above, the
implementation of such changes shall be at AIWA's risk.
20.2 ECRIX CHANGES
(a) Ecrix may request, in writing, that AIWA incorporate an Engineering
Change into the Product or Manufacturing Process. Such request will
include a description of the proposed change sufficient to permit AIWA
to evaluate its feasibility and the proposed effect on quality,
reliability, performance, cost, and serviceability. Within 20 working
days of receipt of such a request by Ecrix, AIWA will advise Ecrix of
the terms and conditions under which it would make the Engineering
Change requested by Ecrix. AIWA's evaluation shall be in writing and
shall further state the cost savings or increase, if any, expected to
be created by the Engineering Change, and its effect on the
performance, quality, reliability, safety, appearance, dimensions,
tolerance, inventory cost, lead time.
(b) The implementation of any Engineering Change requested by ECRIX in
accordance with paragraph (a) above shall be subject to the prior
approval of AIWA, which may not be unreasonably withheld and the
agreement of the parties as to a commensurate increase or decrease in
the purchase price or revision of shipment schedule provided that ECRIX
shall be liable for the costs of the purchase and delivery of any
additional components that are required in order to effect the
Engineering Change which are unable to be otherwise used by AIWA or
returned to the supplier of same. If Ecrix requests AIWA in writing to
incorporate an Engineering Change into the Product or Manufacturing
Process and it is agreed to by AIWA, the Product Specifications will be
amended as required.
(c) ECRIX shall maintain a record of and promptly provide AIWA with
written notice of any manufacturing firmware changes made which relate
to the Products, including the revision number and a description of
such change.
21 SPARE PARTS
21.1 SPARE PARTS DURING PRODUCT MANUFACTURE
During the manufacture of the Products Ecrix shall have the right to
order all piece parts for the purpose of providing service on the
Products by Ecrix or any authorized third party service organization.
AIWA shall supply the spare parts ordered by Ecrix as soon as is
practicable and in no event later than ninety (90) days from receipt of
the relevant order.
24
CONFIDENTIAL
Page 24
21.2 PRICES OF SPARE PARTS DURING PRODUCT MANUFACTURE
The prices of all piece parts or subassemblies that compose the Product
shall not exceed [Confidential Information Redacted] that of the total
Product price to Ecrix.
21.3 SPARE PARTS AFTER TERMINATION OF PRODUCT MANUFACTURING
Ecrix shall have the right to purchase the recommended Spare Parts
(Exhibit B) and AIWA agrees to supply these Spare Parts (Exhibit B) for
a period of five (5) years after written notice of discontinuance of a
relevant Model/Part Number of the Product. Ecrix shall also have the
right to purchase all mutually agreed upon individual piece parts from
AIWA or their vendors during this time period so that AIWA is not
required to stock every individual piece part. AIWA will assist Ecrix
in purchasing and obtaining the best prices from their suppliers and
will further notify Ecrix of receipt of a notice of discontinuance of
the supply of Spare Parts from any vendor in order that Ecrix may place
a final order for such Spare Parts to cover the anticipated demand for
the period referred to herein.
21.4 PRICES FOR SPARE PARTS AFTER TERMINATION OF PRODUCT MANUFACTURING
Prices for the Spare Parts shall be mutually agreed upon, however, the
parties agree to negotiate commercially reasonable prices for said
Spare Parts. At Ecrix's option certain Spare Parts of U.S. manufacture
may be purchased directly from the manufacturers.
21.5 WARRANTY AND PAYMENT TERMS
Warranty for AIWA supplied Spare Parts will be the same as the Product
under Section 17. Payment terms for Spare Parts shall be the same as
for the Product under Section 12.
22 EXCHANGE OF TECHNICAL INFORMATION
(a) The Technical Information exchange will be an ongoing process
during the Agreement term. Each party shall have full access to the
other's facilities and production processes for the Products and full
cooperation will be provided by all parties. The parties recognize,
however, that it is intended that information transfer shall be
efficiently accomplished and not impede the business of any party.
Ecrix agrees to make available to AIWA design information relating to a
Product, as it is developed by Ecrix, and to compile the product
documentation to facilitate transfer. AIWA agrees to retain and create
documentation for its manufacturing processes for the Products to the
extent that it is possible and practical. Ecrix recognizes that it may
be expensive and impractical for AIWA to assemble complete information
relating to AIWA's manufacturing processes for the Products. However,
Ecrix shall have full access to all information relating to AIWA's
manufacturing processes for the Products upon reasonable request.
(b) Subject to the express prior written consent of the owner of such
Technical Information, either party may use the Technical Information
of the other disclosed hereunder for the purpose of manufacturing
Products as defined in this contract. Both parties recognize that
continued access to the Technical Information of the other party,
including such information deemed irrelevant by the disclosing Party,
is necessary for broad business planning, which includes implementing
Product designs and changes and assisting the other party in overcoming
problems.
25
CONFIDENTIAL
Page 25
23 USE OF BRANDS
23.1 ECRIX'S BRANDS
(a) Ecrix grants to AIWA the right to apply such of Ecrix's Brands to
the Product to be manufactured and delivered to Ecrix pursuant to this
Agreement, as Ecrix shall direct upon reasonable written notice.
Ecrix's Brands shall not be used in combination with any other
tradenames, trademarks, characters, figures or marks by AIWA without
the prior written approval of Ecrix. Ecrix represents and warrants that
it is the sole and exclusive owner of Ecrix's Brands and that the use
thereof on the Product will not infringe the rights of any third party.
(b) Ecrix's Brands shall be affixed to each Unit of the Product, in
such manner as described in Product artwork provided by Ecrix to AIWA,
and any change of such manner shall be determined by both parties in
writing but at the sole expense of Ecrix.
(c) Ecrix shall indemnify and hold harmless AIWA from any claims,
suits, demands, loss, damage and expense (including reasonable counsel
fees) arising out of or connected with the use of Ecrix's Brands or any
claim relating to any artwork, labeling and other printed matters
supplied by or included at the direction of Ecrix. AIWA shall promptly
notify Ecrix of the commencement of any such action or suit, of threats
thereof, and Ecrix shall be afforded the opportunity to determine the
manner in which such action or suit should be handled or otherwise
disposed of. Notwithstanding the foregoing, if AIWA is a named party in
any action or suit, AIWA may participate in any such action or suit by
its own counsel without affecting the indemnity granted pursuant to
this paragraph. AIWA shall not undertake to settle, or agree to any
settlement herein, without first obtaining the written consent of
Ecrix.
Ecrix represents and warrants the originality of any of its items to be
delivered to AIWA hereunder and that no portion of such items, or their
use or distribution, violates or is protected by any copyrights,
registration or similar right of any third party.
24 INTELLECTUAL PROPERTY RIGHTS
(a) Each party agrees to file applications for and pursue the issuance
of United States, European and Japanese patents that arise out of each
party's activities in connection with development and manufacturing of
the Product in accordance with the Joint Development Agreement and this
Agreement.
(b) The ownership of any intellectual property rights including, but
not limited to, patents, copyrights, mask works, and trade secrets,
that may arise out of each party's activities carried out under this
Agreement shall be as follows:
(i) where the intellectual property rights arise out of work
carried out solely by one party and independent of the Confidential
Information (specified in Section 29) of the other party, the
rights shall belong solely to the party performing such work. The
presumption for this purpose is that Ecrix will own all rights in
the electronic design and trademarks or copyrights associated with
the Product marketed under the Ecrix name, and that AIWA will own
all rights in the mechanical design. Each Party shall give written
notice of any work that may give rise to ownership of rights that
is inconsistent with this presumption;
(ii) where the rights arise out of work carried out jointly by both
parties or by one party using any Confidential Information of the
other party, the rights shall be jointly owned by the parties
subject to the limitations set forth in this Agreement.
26
CONFIDENTIAL
Page 26
The parties agree to cooperate with each other to file applications for
patents or other intellectual property rights arising out of such work.
All expenses and charges necessary for the filing and prosecution of
such applications, issuance and maintenance fees for such rights shall
be equally borne by the parties.
(c) AIWA and ECRIX hereby acknowledge that AIWA, ECRIX and SONY
CORPORATION jointly own the Format as defined in Section 2.17 hereof
and AIWA may freely use the Format, manufacture and have manufactured
and sell the products conforming to the Format without any compensation
to the other parties. Further, upon request, the other party/ies will
grant a license of its/their patents which cover the requesting party's
products conforming to the Format on reasonable terms and conditions.
25 MUTUAL LICENSE
Each party grants to the other party a non-exclusive and paid-up
license under its intellectual property rights (including pre-existing
rights) to conduct the activities under the terms of and during the
term of this Agreement.
26 PATENT INDEMNIFICATION
(a) AIWA warrants that it has the full right to use the pre-existing
intellectual property described in Exhibit H without any royalty
obligations or liabilities. AIWA further warrants that it has the right
to use and the right to permit Ecrix to use such intellectual property
with respect to the Products manufactured by AIWA, pursuant to the
licenses granted in this Agreement.
(b) Ecrix will indemnify and hold harmless AIWA from any claims, suits,
demands, loss, damage and expense (including reasonable counsel fees)
arising out of or connected with any claim that a Product manufactured
by AIWA and/or any software/firmware and product interface supplied by
Ecrix infringes any trade secret, copyright patent or any other
intellectual property rights with the exception of those patents listed
on Exhibit H. AIWA shall promptly notify Ecrix of the commencement of
any such action or suit, of threats thereof, and Ecrix shall be
afforded the opportunity to determine the manner in which such action
or suit should be handled or otherwise disposed of. Notwithstanding the
foregoing, if AIWA is a named party in any action or suit, AIWA may
participate in any such action or suit by its own counsel without
affecting the indemnity granted pursuant to this paragraph. AIWA shall
not undertake to settle, or agree to any settlement herein, without
first obtaining the written consent of Ecrix.
(c) Notwithstanding anything in this Section 26 to the contrary, Ecrix
shall have no liability for any claim of patent, trade secret, or
copyright, if the alleged infringement arises from (i) changes and
modifications to the Product by AIWA other than those provided in
Section 20.2 hereof; or (ii) the manufacturing process by which the
Product is manufactured unless the product design provided by Ecrix
requires the manufacturing process or the manufacturing process which
is the subject of such claim is originated with Ecrix and has been
performed by AIWA in compliance with Ecrix engineering drawings.
27
CONFIDENTIAL
Page 27
(d) AIWA shall defend such action or suit to the extent it is liable
pursuant to paragraph (c) above at its expense, by reputable counsel
selected by AIWA and shall pay any and all fees, costs or damages that
may be awarded in such action or in settlement thereof, provided Ecrix
gives AIWA full information and assistance to defend and/or settle such
action or suit or threats thereof. Settlement shall be at the option of
AIWA. In the event that a judicial determination of infringement of a
patent, trade secret or copyright is made or a final injunction is
obtained against Ecrix prohibiting usage of the Product purchased
hereunder or any part thereof by reason of such infringement, AIWA
shall have the right upon written notice to Ecrix, to either (A) at its
expense, procure for Ecrix the right to continue using the Product or
replace or modify the Product, or (B) modify the manufacturing process
for the Product so that it is non-infringing so long as such
modification does not affect the Products functioning, or (C) direct
Ecrix to return such Product to AIWA at AIWA's expense. In case of (C)
above this Agreement shall be terminated with respect to the affected
Product. If any Product is so returned to AIWA, AIWA shall not be
liable for the result thereof except that if AIWA has been paid for the
products by Ecrix AIWA shall pay to Ecrix the original purchase price
for such Product which does not contain any part originated with
Ecrix's request and involving possible infringement upon the Patent,
trade secret or copyright in question.
(e) Without prejudice to the parties rights and obligations set out in
paragraphs (a) through (d) above, if an action is brought against both
AIWA and Ecrix based on a claim that the Product manufactured by AIWA
and/or any software/firmware and product interface supplied by Ecrix
infringes any trade secret, copyright patent or any other intellectual
property rights, the parties agree to work together to resolve such a
claim. The first attempt will be to work with the alleging party in an
attempt to come to a satisfactory solution for both sides. If this
effort fails, upon mutual agreement, the parties may select a reputable
counsel to defend their position and share the costs of such counsel
and all fees, costs or damages that may be awarded in such action or in
settlement thereof.
27 TERM AND TERMINATION
27.1 TERM
Subject to the receipt of any necessary government approvals and or
consents as referred to in Sections 28.1 and 28.2, this Agreement shall
commence on the date first written above and shall continue for a term
of two (2) years from the date of the initial delivery of Products to
Ecrix hereunder unless earlier terminated pursuant to this Section 27.
This Agreement shall be automatically renewed upon expiration for
additional one (1) year terms unless a) either party elects not to
renew this Agreement by giving written notice to the other party of
such intention at least nine (9) months prior to the expiration of the
then current term, or b) the parties have renegotiated this contract.
28
CONFIDENTIAL
Page 28
27.2 TERMINATION
(a) The default by one party in the performance of a material
obligation of such party under this Agreement shall entitle the other
party to give the party in default written notice describing such
default and requiring it to remedy such default. If such default is not
fully remedied within sixty (60) days after the date of such notice,
the notifying party shall be entitled to terminate this Agreement.
(b) Either party may terminate this Agreement at any time upon or after
the entry of an order for relief in respect of any petition against the
other party under Chapter 7 of Title 11 of the United States Code, or
the entry of a decree or order by a court having competent jurisdiction
in the premises in respect of any petition filed or action taken
against the other party looking to reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief
under any other present or future federal or state statute, law or
regulation, resulting in the appointment of a receiver, liquidation,
sequestrator or other similar official of the other party or of any
substantial part of its property, or resulting in the winding-up or
liquidation of its affairs, provided such decree or order is unstayed
and in effect for a period of 60 consecutive days; or at any time upon
or after the filing of a petition for relief under Chapter 7 of Title
11 of the United States Code by the other party or the consent,
acquiescence or taking of an action by the other party or in support of
a petition filed by or against it looking to reorganization
arrangement, composition, readjustment, liquidation, dissolution, or
similar relief under any other present or future federal or state
statute, law or regulation, or the appointment, with the consent of the
other party, of any receiver, liquidation, custodian, assignor,
trustee, sequestrator or other similar official of the other party or
of any substantial part of its property, or the making by it of an
assignment for the general benefit of all creditors, or the admission
by it in writing of its inability to pay its debts generally as they
become due, or the taking of corporation action by the other party in
furtherance of any such action.
27.3 RIGHTS UPON TERMINATION
(a) In the event of any termination of this Agreement under Section
27.2(b), neither party shall have any rights and obligations except as
otherwise provided herein under this Agreement.
(b) In the event of any valid termination of this Agreement by AIWA
under Section 27.2(a) due to a material breach by Ecrix, the following
provisions shall apply;
(i) AIWA shall be entitled to manufacture, have manufactured, sell
and distribute Products and/or Application Products worldwide; and
(ii) AIWA shall be entitled to the continued supply of any critical
parts or components for the Products and/or Application Products
(including but not limited to those referred to in Exhibit G
hereto, as amended from time to time) for a period not to exceed 6
(six) months, at mutually agreed to terms and conditions; and
(iii) in addition to the specific rights conferred in this Section,
AIWA shall be entitled to those additional remedies as may be
awarded by arbitration pursuant to Section 30.
(c) In the event of any valid termination of this Agreement by Ecrix
under Section 27.2(a) due to a material breach by AIWA, the following
provisions shall apply;
(i) ECRIX shall be entitled to manufacture, have manufactured, sell
and distribute Products and/or Application Products worldwide; and
(ii) ECRIX shall be entitled to the continued supply of any
critical parts or components for the Products for a period of time
not to exceed 6 (six) months, at mutually agreed to terms and
conditions; and
(iii) in addition to the specific rights conferred in this Section,
ECRIX shall be entitled to those additional remedies as may be
awarded by arbitration pursuant to Section 30.
(d) Other than as expressly provided for in this Agreement, this
Section sets forth the sole remedy of a party in the event of a
material breach of this Agreement by the other party.
29
CONFIDENTIAL
Page 29
28 GOVERNMENTAL CONSENTS
28.1 U.S. REQUIREMENTS
AIWA recognizes that the transfer of technology from Ecrix may be
subject to compliance with United States export laws. Ecrix agrees to
use its best efforts to promptly obtain necessary consents to carry out
this agreement. The performance of this Agreement shall be subject to
and conditional upon the receipt or waiver of such consents.
28.2 JAPAN REQUIREMENTS
Ecrix recognizes that approval of the government of Japan may be
required prior to this Agreement becoming effective. AIWA agrees to use
its best efforts to promptly obtain such approval if necessary. The
performance of this Agreement shall be subject to and conditional upon
the receipt or waiver of such approval.
28.3 COMPLIANCE WITH LAWS
All parties agree during the term of this Agreement to comply with all
applicable laws of any country or governmental authority. The parties
recognize that the Products are subject to restrictions on re-export
imposed by the US Department of Commerce.
29 CONFIDENTIALITY
29.1 CONFIDENTIALITY
All parties acknowledge that, in the course of performing their
respective obligations, they will be receiving information which is
confidential and proprietary to the disclosing Party and which the
disclosing party wishes to protect from public disclosure.
'Confidential Information' means any information that has been or will
be disclosed between the parties relating to their respective
businesses, customers, products, marketing plans, financial status and
the like and to Technical Information. The parties agree that
regardless of the date of termination of this Agreement, each will keep
confidential any `Confidential Information' of the other party for a
period of three (3) years following the date of such termination and
any extension hereof.
29.2 RESTRICTIONS
Each party (a) agrees to use Confidential Information only for the
purposes described herein except as otherwise provided in Section 24
and not to disclose Confidential Information given to it by the other
party to any person, real or legal, except as authorized in this
Agreement, (b) shall require a third party to whom disclosure of
Confidential Information is authorized to sign a confidentiality
agreement in form mutually acceptable to the parties, (c) shall
exercise the same degree of care to safeguard the confidentiality of
such Confidential Information as it would exercise in protecting the
confidentiality of similar property of its own, and (d) agrees to use
its diligent efforts to prevent inadvertent or unauthorized disclosure,
publication or dissemination of any Confidential Information. The
obligations to avoid publication or dissemination of Confidential
information will not apply to any information which a party can show:
(i) is already in the possession of such party;
30
CONFIDENTIAL
Page 30
(ii) is or becomes publicly available without breach of this
Agreement by such party or through ordinary marketing or sale
of the Products,
(iii) is rightfully received by such party from a third party not
under an obligation of confidence to the other party with
respect thereto;
(iv) is released for disclosure by the other party with its
written consent;
(v) is disclosed Pursuant to the requirement of a governmental
agency or operation of law, provided that such party is
obligated to use its best efforts to prevent disclosure or
seek confidential treatment as requested by a party under
such circumstances; or
(vi) is independently developed by such party.
29.3 NON-DISCLOSURE AGREEMENT
Ecrix and AIWA have entered into a Non-Disclosure Agreement dated
August 7, 1996. The parties agree that the purpose of the parties'
disclosures under that Non-Disclosure Agreement is hereby expanded to
include all activities of both parties contemplated by this Agreement
and that the provisions of that Non-Disclosure Agreement shall be
applicable to all Confidential Information disclosed by either party in
connection with such activities.
30 ARBITRATION
If any dispute or difference shall arise between the parties concerning
the construction of this Agreement or the rights or obligations of
either party, the parties shall strive to settle the same amicably. If
they are unable to do so, the dispute or difference shall be finally
settled by arbitration pursuant to the Japan-American Trade Arbitration
Agreement of September 16, 1952 by which each party is bound, and the
award of the arbitration shall be final. The place of arbitration shall
be determined by the identity of the party demanding arbitration. If
AIWA demands arbitration, the place of arbitration shall be Boulder,
Colorado, USA. If Ecrix demands arbitration, the place shall be Tokyo,
Japan. Once venue has been established under this process, the other
party will allow the process to proceed. On all matters and procedures
concerned with arbitration other than selection of the place of
arbitration, as agreed above, the provisions of the Japan-American
Trade Arbitration Agreement of September 16, 1952 shall apply. The
award of the arbitration shall be final and may be entered into any
court having jurisdiction. The cost of the arbitration proceeding and
attorney's fees and expenses of the parties shall be allocated as
directed by the arbitrators.
Anything in this Agreement to the contrary notwithstanding, in no event
shall the failure to agree upon the prices of the Products be subject
to arbitration.
30 MISCELLANEOUS
31
CONFIDENTIAL
Page 31
31.1 NONASSIGNABILITY
Except as specifically permitted by the Agreement, neither AIWA nor
Ecrix may assign, transfer or sublicense any of the rights or
obligations arising under this Agreement other than to a successor to
its entire business by reason of merger or sale of assets. In such
case, either party shall receive written notice of any proposed merger
or sale of assets and the intended successor in interest of such
proposed merger or sale of assets shall acknowledge in writing to be
bound by the terms and conditions of this Agreement. Any attempted
assignment, transfer, or sublicense grant without the prior written
consent of the other party shall be void and without effect.
31.2 FAILURE TO ENFORCE
The failure of either party to enforce at any time or for any period of
time the provisions of the Agreement shall not be construed to be a
waiver of such provisions or of the right of such party to enforce each
and every such provision. Any waiver of the provisions of this
Agreement shall be of no force and effect unless in writing and signed
by the party's duly authorized representative.
31.3 GOVERNING LAW
This Agreement is deemed entered into and shall in all respects be
governed by and construed under the laws of the State of Colorado,
United States of America.
31.4 SEVERABILITY
In the event that any of the provisions of this Agreement shall be held
by a court or other tribunal of competent jurisdiction to be
unenforceable, the remaining portions of this Agreement shall remain in
full force and effect.
32
CONFIDENTIAL
Page 32
31.5 NOTICES
Unless otherwise expressly provided in this Agreement, any notice which
any party desires or is obligated to give to the other shall be given
in writing and sent to the appropriate address shown below or to such
other address as the party to receive the notice may have last
designated in writing in the manner herein provided. A notice shall be
deemed to have been received on the earlier of the date when actually
received or seven (7) days after being deposited in the mail, postage
prepaid, registered or certified mail properly addressed as follows:
ECRIX: Attention: Craig G. Lamborn
ECRIX CORPORATION
5525 Central Avenue,
Boulder, CO 80301
Facsimile: 303-245-7267
AIWA: Attention: Mr. Junsaku Ueda, Managing Director.
Data Products Division
AIWA CO., LTD.
11-6 Higashi Nakano 1-chome
Nakano-ku, Tokyo, 164-0003
Facsimile: 03-3371-7929
31.6 ENTIRE AGREEMENT
This Agreement (together with the Joint Development Agreement and the
Supplemental Agreements referred to in Section 31.13 below) constitute
the entire agreements between the parties pertaining to the subject
matter hereof, and any and all other written or oral agreements
existing between the parties are expressly cancelled. Any modifications
of this Agreement must be in writing and signed by the duly authorized
officers of both parties and make specific reference to this Agreement.
31.7 FORCE MAJEURE
In the event of any delay in performance or failure of performance of
obligations under this Agreement by either party due to any causes
arising from acts of God, war, mobilization, riot, strike, fire,
earthquake, flood, embargo, delay of carrier, power failure or
attributable to acts, events, or omissions beyond the reasonable
control of the party concerned, such delay or failure of performance
shall not be deemed a default and the party so delayed or prevented
shall be under no liability for loss or injury suffered by the other
party.
31.8 LIMITATION OF LIABILITY
Other than as expressly provided in this Agreement, in no event and
under no circumstances shall any party under this Agreement be liable
for any special or consequential damages or loss of profits of the
other party or any expenditures, costs or investments made or insured
by the other party as provided herein.
31.9 AGENCY
This Agreement does not create a principal to agent, employer to
employee partnership, joint venture, or any other relationship except
that of independent contractors between AIWA and Ecrix.
31.10 HEADINGS
Headings to Sections and Paragraphs of this Agreement are to facilitate
reference only, do not form a part of this Agreement, and shall not in
any way affect the interpretation hereof.
31.11 BUSINESS DAYS
Where the due date for the performance of any act contemplated by this
Agreement falls on a Saturday, Sunday or Public Holiday in the location
of the party required to perform such act, for the purposes of this
Agreement the due date for performance shall be deemed to be the next
business day.
Where a date or day is specified for the performance of any act or the
submission of any document under this Agreement, such act shall be
performed or document shall be submitted on or before the close of
business (local time) on the specified date or day in the territory
where the act is to occur or the recipient of the document is located.
33
CONFIDENTIAL
Page 33
31.12 CHANGES IN CONTROL AND MANAGEMENT
In the event that there is a change in control of either AIWA or Ecrix,
i.e. a person or entity acquires more than 50% of the voting control of
either AIWA or Ecrix, with the exception of an initial public offering
by Ecrix, or that there is a significant management change at the
senior level of either AIWA or Ecrix then, for a period of eighteen
(18) months, unless this Agreement terminates sooner by its own terms
or other provisions contained herein, the parties shall continue to
perform their respective obligations under this Agreement, during which
time the parties shall mutually attempt to resolve problems created by
any such change in control or management. If after such eighteen (18)
month period the parties are unable to resolve any material difficulty,
or if either party finds it substantially impractical to continue
performance of this Agreement, then this Agreement may be terminated by
either party by giving nine (9) months written notice to the other
party of such intention to terminate this Agreement.
31.13 SAVING AND INCONSISTENCY
(a) The parties agree that the terms and conditions of the Joint
Development Agreement entered into between the parties as of the 4th
day of December, 1997 (the "JDA") shall continue in full force and
effect for the term of this Agreement and shall terminate
simultaneously with the expiration or termination of this Agreement. In
the event of inconsistency with the terms of the JDA and this
Agreement, the terms of this Agreement shall prevail to the extent that
they are inconsistent.
(b) The parties hereby acknowledge having entered into a separate
written agreement dated the 9th day of December, 1998 entitled "AIWA's
Response" which agreement was clarified in the document entitled
"Clarification of Aiwa's Response" dated 24 December 1998 (the
"Supplemental Agreements"). To the extent they are inconsistent with
the terms hereof, the terms of the Supplemental Agreements shall
prevail over the terms of this Agreement.
IN WITNESS WHEREOF, the parties or their duly authorized
representatives have executed this Agreement as of the date first set
forth above.
AIWA CO., LTD. ECRIX CORPORATION
/S/ YOSHIO ISHIGAKI /S/ JUAN A. RODRIGUEZ
----------------------------------- -----------------------------
NAME: YOSHIO ISHIGAKI NAME: MR. JUAN A. RODRIGUEZ
TITLE: PRESIDENT AND REPRESENTATIVE TITLE: CHAIRMAN AND CEO
OFFICER
34
EXHIBIT 10.30
The Registrant hereby agrees to furnish supplementally a copy of the following
omitted Exhibits (we may request confidential treatment of portions of the
exhibits):
Exhibit A Products
Exhibit B Spare Parts
Exhibit C Pricing
Exhibit D Packaging Specifications
Exhibit E Minimum Quality Levels
Exhibit F Ongoing Reliability Testing
Exhibit G Parts to be Procured/Consigned by Ecrix
Exhibit H Pre-Existing Intellectual Property