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EXHIBIT 10.2
EQUIPMENT PURCHASE AND ENGINEERING TEST SERVICES AGREEMENT
This EQUIPMENT PURCHASE AND ENGINEERING TEST SERVICES AGREEMENT (the
"Agreement") is entered into on this 29th day of September, 1999 by and among
Fairchild Semiconductor Corporation ("Fairchild") and Artest Corporation
("Artest").
I. RECITALS
Whereas, Fairchild is in the business of designing, manufacturing and
marketing high performance semiconductors for multiple end market uses; and
Whereas, Artest is, among other things, in the business of performing test
services for semiconductors; and
Whereas, Artest desires to purchase from Fairchild backend test equipment
used by the Fairchild Mixed Signal Business Unit ("MBU") (such equipment
collectively referred to as "TEST") and to provide engineering services and
production testing of products for MBU; and
Whereas, Fairchild desires to subcontract to Artest all or a significant
portion of the MBU backend production test and shipping functions it currently
performs for itself, providing Artest can do so at competitive prices for this
service;
Now, Therefore, Fairchild and Artest hereto agree as follows:
II. DEFINITIONS
1. The definitions set forth below shall apply wherever they appear in
this Agreement and all exhibits hereto.
1.1 "Confidential Information" shall mean any information written or
otherwise disclosed in any medium by one party to the other under this
Agreement which is marked or otherwise designated as "Confidential" or is
clearly by its nature confidential. Confidential Information shall include,
but is not limited to, confidential information of subcontractors and
suppliers to either party.
1.2 "Engineering Test Services" shall mean those services Artest
agrees to perform for Fairchild pursuant to this contract including, but
not limited to providing Fairchild employees access to the TEST, and
providing Fairchild with final test and shipping for Fairchild products
listed in the Old 26MM Table of Exhibit 3.
1.3 "Retention Amount" shall mean an amount of money to be paid over
time by Fairchild to Artest, which agrees to pay such amounts to the TEST
Personnel in order to assure the retention of necessary TEST Personnel. The
Retention Amount shall be
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equal to the sum of Fairchild's current identified severance program for
each of the TEST Personnel as specified in Exhibit 2 (for a total of [*]).
Any part of the Retention Amount, which has not been paid to the TEST
Personnel at the end of twelve (12) months following the effective date of
this Agreement, shall be returned to Fairchild.
1.4 "TEST" shall mean the backend test equipment of the Fairchild
Mixed Signal Business Unit which is listed in Exhibit 1.
1.5 "TEST Facilities" shall mean the current location of TEST until
June of 2000. After June of 2000, the location of the TEST Facilities shall
be moved to another facility agreed upon by Fairchild and Artest.
1.6 "TEST Personnel" shall mean the operators and test personnel
listed in Exhibit 2, Table I who are currently employed by Fairchild and
work with the TEST equipment.
III. EQUIPMENT PURCHASE, FACILITIES AND PERSONNEL
2. Sale of TEST Equipment. Artest shall purchase from Fairchild, in
accordance with and subject to the terms, covenants and conditions hereinafter
set forth, the TEST equipment.
2.1 Purchase Price. Upon execution of the Agreement, Artest shall pay
to Fairchild for TEST the sum of [*] in cash or readily available funds,
which price the parties agree is fair and reasonable. The purchase price
shall be paid on the date of the execution of this Agreement. At receipt of
payment, Fairchild will deliver good title of equipment free of all liens
and security interest and documentation that identifies that testers are in
working condition and meeting manufacturers specifications.
2.2 Finality of Sale. The sale of the TEST equipment shall be final
upon execution of this Agreement regardless of whether the Engineering Test
Services portion of the Agreement is terminated for cause or otherwise.
2.3 No Warranties; Limited Liability. ARTEST PURCHASES THE TEST
EQUIPMENT FROM FAIRCHILD IN ITS PRESENT CONDITION, AS IS AND WITH ALL
FAULTS. ARTEST ACKNOWLEDGES THAT IT HAS HAD THE OPPORTUNITY TO INSPECT THE
TEST EQUIPMENT AS FULLY AS IT DESIRES. THE PARTIES ACKNOWLEDGE THAT
FAIRCHILD MAKES NO WARRANTY, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE
WITH RESPECT TO THE TEST EQUIPMENT, AND THERE IS EXPRESSLY EXCLUDED ALL
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
FAIRCHILD SHALL HAVE NO LIABILITY UNDER THIS AGREEMENT FOR ANY DAMAGES
SUFFERED BY ARTEST OR ANY THIRD PARTY INCLUDING BUT NOT LIMITED TO DAMAGES
FOR PERSONAL
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INJURIES OR LOSS OF PROFITS, OR CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL
DAMAGES.
3. Facilities Usage. Artest will take over the facilities of TEST and
maintain TEST at the current Fairchild location for the benefit of Fairchild
(the "TEST Facilities") and pay Fairchild a user fee for the space at the full
service rate listed in Exhibit 2, Table 2. Artest agrees to comply in all
respects with any requirements imposed on Fairchild under its Master Lease with
Naoto Ohtsuki. Fairchild will notify Naoto Ohtsuki of Artest's usage of the TEST
facilities.
3.1 User Fee. As specified in Exhibit 2, Table 2, the user fee
for the TEST Facilities shall be [*] which rate the parties agree is fair
and reasonable. The user fee shall be payable on or before the third day of
each month.
3.2 Default. Artest shall be in default of its obligations under the
Facilities Usage portion of this Agreement if it fails to pay the monthly
user fee as specified in Exhibit 2, Table 2 when due, or takes any other
action inconsistent with Fairchild's Master Lease, and such failure is not
cured within three business days after Artest's receipt of written notice.
In the event of Artest's default, Fairchild shall have the following rights
and remedies, in addition to all other rights and remedies provided by law:
(1) Fairchild may keep the Facilities Usage portion of this Agreement in
effect and recover unpaid rents, (2) Fairchild may release the TEST
Facilities to another tenant, (3) Fairchild may terminate the Facilities
Usage portion of this Agreement by written notice to Artest.
3.3 Utilities. Fairchild will provide phone system access and
separate billing of phone usage. Artest will pay all charges for Artest's
phone usage while at the current Fairchild facilities. All other utilities
and building maintenance services are included in the full service rate
listed in Exhibit 2, Table 2.
3.4 Length of Usage. Artest will sublease from Fairchild the space
described in Exhibit 2, Table 2, from the date of the execution of this
Agreement until June 30, 2000.
3.5 Relocation of TEST. Upon the expiration of the term of the
sublease, but in no event later than June 30, 2000, Artest shall relocate
TEST at its own cost to a new facility that allows full access by Fairchild
product and test engineering personnel. Notwithstanding the foregoing,
Artest shall ensure the continuous operation of TEST during the relocation
with uninterrupted access by Fairchild employees. The TEST Facilities after
June of 2000 shall be of the same quality and proximity to Fairchild's
product and test engineering personnel as are the current TEST Facilities.
Artest and Fairchild shall use their best efforts to jointly seek new space
to allow for a coordinated move to the new facilities. All facility items
purchased by Artest will remain the property of Artest after the expiration
of the current lease and not part of Facility left behind for landlord.
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4. Personnel. Artest shall offer employment, at comparable pay and
benefits, to the operators and test personnel listed in Exhibit 2, Table I who
are currently employed by Fairchild, to maintain continuity and knowledge of
Fairchild products (the "TEST Personnel"). The TEST Personnel shall become
employees of Artest and shall be the sole responsibility of Artest. In addition
to the personnel listed in Exhibit 2, Artest shall provide to the TEST Personnel
team two additional positions to be filled from current Artest personnel or to
be newly hired by Artest at its discretion. These two positions shall be a
shipping clerk and a supervisor of the TEST Personnel.
4.1 Retention of TEST Personnel. Artest, with the cooperation of
Fairchild, shall use its best efforts to jointly develop a retention
program to assure employment continuity of the TEST Personnel to be hired
by Artest from Fairchild. Fairchild shall pay to Artest a Retention Amount
to foster this continuity. The Retention Amount shall be paid in four (4)
quarterly retainer payments to Artest during the twelve (12) months
following the effective date of the Agreement. Any additional retention
program to either new personnel or to personnel listed in Exhibit 2 is the
sole responsibility of Artest. The Retention Amount shall be intended to
meet any severance obligation of Fairchild to the TEST Personnel and they
shall be notified of this fact. Any other obligations to employees of TEST
prior to the transfer are the sole responsibility of Fairchild.
IV. ENGINEERING TEST SERVICES
5. Engineering Test Services. Fairchild agrees to contract with Artest
for production test and shipping services (the "Engineering Test Services").
Artest shall provide these services to Fairchild in the same manner as they are
currently done by Fairchild. Artest shall use commercially reasonable efforts to
perform its obligations under this Engineering Test Services Agreement and
Fairchild agrees to cooperate in good faith to allow Artest to perform the
Engineering Test Services.
6. Relationship of the Parties. For all purposes of this agreement Artest
shall be acting as an independent contractor and not as an employee or agent of
Fairchild. Artest further understands that, except as specifically provided in
this Agreement, Fairchild is under no obligation to contract for any work
exclusively from Artest, and Artest is free to contract to supply work to
others.
7. Access to Teradyne and Trillium Equipment. Artest will provide access
to TEST for Fairchild product and test engineers for test development and yield
enhancement during the daytime shift (8 A.M - 5 P.M., Monday - Friday). Artest
shall provide to Fairchild at the request of Fairchild, up to [*]. The Teradyne
and Trillium equipment that Fairchild may use is described in Exhibit 1.
Fairchild's time on said machines shall be allocated evenly throughout each
month.
7.1 Notice of Change in Usage. Fairchild shall notify Artest if it
doesn't need the minimum guarantee time and will release any unused machine
time to Artest for its use. Conversely, Artest will notify Fairchild if it
doesn't need the machine time
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beyond the minimum time listed above and release to Fairchild the right to
use the machines beyond the agreed to hours.
7.2 User Fee. For the use of the Teradyne and Trillium machines
described in Exhibit 1, Fairchild shall pay to Artest a user fee in the
amount of [*] payable in equal monthly installments beginning on the date
of the execution of this Agreement. The user fee shall be payable on or
before the third day of each month. Any hours used in excess of the amounts
listed in section 7 shall be billed at "most favorable price" offered by
Artest to other customers but in no event are to exceed [*].
7.3 License. Artest and Fairchild shall use their best efforts to
work to transfer to Artest any Fairchild "right to use" license on the
Teradyne or any other piece of the TEST equipment. Artest and Fairchild
shall use their reasonable best efforts to minimize the cost of this
transfer but any costs associated with the transfer of the license shall be
born by Artest alone and Fairchild shall have no obligation to assure the
transfer.
8. Eagle Test System. Artest shall purchase an Eagle test system and
related interface hardware satisfactory to Fairchild to be located at the TEST
Facilities. The Eagle test system and interface hardware shall be satisfactory
to Fairchild and shall enable both production test and test development.
Fairchild will use its best efforts to negotiate with the Eagle Test Company to
allow Artest access to Fairchild's favorable price, but Fairchild shall not be
obligated to obtain such price for Artest.
8.1 Access to Eagle Test System. Artest will provide access to the
Eagle Test system to Fairchild product and test engineers for test
development and yield enhancement during the daytime shift (8 A.M - 5 P.M.,
Monday - Friday). Artest shall provide to Fairchild at Fairchild's request
up to 90 hours per month of machine during the daytime shift each month.
Fairchild's time shall be allocated evenly throughout each month.
8.2 Notice of Change in Usage. Fairchild shall notify Artest when it
doesn't need the minimum guarantee time and will release any unused machine
time to Artest for its use. Conversely, Artest will notify Fairchild if it
doesn't need the Eagle machine beyond the minimum time listed above and
release to Fairchild the right to use the machines beyond the agreed to
hours.
8.3 User Fee. For the use of the Eagle Test system as listed above,
Fairchild shall pay to Artest a user fee in the amount of [*] payable in
equal monthly installments beginning on the date of the execution of this
Agreement. The user fee shall be payable on or before the third day of each
month. Any hours used in excess of the amounts listed in section 8 shall be
billed at "most favorable price" offered by Artest to other customers but
in no event are to exceed [*].
9. Production Test Services. Fairchild agrees to use Artest to perform
all final test and shipping responsibilities for all currently sold Fairchild
products listed in the Old 26MM Table of Exhibit 3 for a period of at least
three (3) years, provided that Artest can maintain
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competitive costs, service and quality for test and shipping. While the costs
for the production test services supplied by Artest must be competitive with
equivalent services provided in the semiconductor industry, the costs shall not
exceed the costs for test and shipping listed in Exhibit 3. The parties agree to
meet from time to time during the course of the term of this agreement to
discuss the services and quality for the testing provided by Artest to Fairchild
under this agreement. If Fairchild determines that Artest's services are in any
way non-competitive, then Fairchild shall give Artest written notice of such
inadequacy and Artest shall have reasonable time to correct the deficiency. If
Artest shall fail to correct then Fairchild can upon written notice obtain
services from another source.
9.1 Test Services for Fairchild's Mixed Signal Business Unit.
Fairchild shall endeavor to use Artest as its subcontractor for all final
test and shipping for any new products Fairchild develops at its Mixed
Signal Business facility provided that Artest's costs, service and quality
are competitive with equivalent services provided in the semiconductor
industry and meet Fairchild's needs; provided, however that nothing herein
is intended to delay Fairchild with its business planning or ability to
sell products. Exhibit 3, Table 2 lists some of these new products, along
with estimated final test revenue. Fairchild is not bound by the
projections listed in Exhibit 3, Table 2.
9.2 Test Services at Other Fairchild Owned Facilities. Artest agrees
that any products developed by Fairchild that can be assembled at its other
owned facilities (usually products with less than 20 pins) will be tested
by Fairchild and not Artest.
9.3 Yearly Run Rates. Fairchild agrees to provide Artest yearly run
rates of its products for all Engineering and Test Services set forth in
Section IV of this Agreement, that can meet or exceed [*]. In addition,
Fairchild does not guarantee any specific product mix. If at the end of
each 12-month period from the execution of this agreement, Fairchild has
not met the minimum guaranteed production revenue, then Fairchild shall pay
[*].
10. Term of Services Contract. Unless otherwise specified, the term of
the Engineering Test Services part of the Agreement shall be for a minimum of
three (3) years from the date of the execution of this Agreement.
11. Termination and Renewal. At least 90 but not more that 180 days
before the expiration of this Agreement, the parties shall notify each other in
writing whether the Agreement will terminate. If the parties do not provide such
notification, the Agreement will automatically renew for a period of one year at
prices to be agreed upon. Thereafter, the agreement will automatically renew
each year until the parties provide written notice of its termination.
12. Termination for Cause. If either party materially breaches a
provision and fails to cure such breach within the thirty (30) days after
receiving written notice from the other party, such other party shall have the
right at its option to terminate the Engineering Test Services portion of this
Agreement. Upon termination of the Engineering Test Services portion of this
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Agreement for cause, the parties shall pay to each other any fees or rents due
at the time of the termination.
13. Bankruptcy. Should either party: (i) become insolvent, (ii) make an
assignment for the benefit of creditors; (iii) file or have filed against it a
petition in bankruptcy or reorganization; (iv) have a receiver, manager,
administrator, or administrative receiver appointed; or (v) institute any
proceedings for liquidation or winding up; then the other party may, in addition
to other rights and remedies it may have, terminate this Agreement immediately
by written notice.
14. Property Upon Termination. Upon expiration or termination of this
Agreement, both parties will deliver to the other all property of the other
party that they may have in their possession or control.
V. MISCELLANEOUS
15. Invoices. Unless otherwise provided in this Agreement, Artest and
Fairchild shall invoice each other for fees for any Engineering Test Services
provided pursuant to this agreement. All invoices shall be due and payable when
invoiced, and shall be deemed overdue if they remain unpaid thirty (30) days
after they become payable. Overdue amounts shall accrue interest at the rate of
two (2) percent per month, or at the highest legal interest rate, if less.
16. Confidential Information. During the term of this Agreement and
subsequent thereto, the receiving party will keep all Confidential Information
of the other party in confidence and will not, without prior written consent of
the disclosing party, publish, disclose or otherwise make available, directly or
indirectly, any item of Confidential Information to any person other than those
of the receiving party's employees, agents or contractors who need to know the
same in the performance of their duties for the receiving party.
17. Dispute Resolution. The parties shall attempt in good faith to
resolve any dispute arising out of this Agreement, including but not limited to
any dispute regarding the interpretation of or performance under said Agreement,
promptly by negotiations. If these negotiations should fail, the parties shall
resolve any dispute by submitting it to binding arbitration in San Jose,
California under the rules of the American Arbitration. Notwithstanding the
foregoing, either party shall have the right to seek preliminary injunctive
relief at any time. The prevailing party shall have all reasonable legal fees
reimbursed.
18. Governing Law. This Agreement shall be governed in all respects by
the laws of the United States of America and the State of California. The
parties agree that the United Nations Convention on Contracts for the
International Sale of goods is specifically excluded from application to this
Agreement.
19. Notices. Any notices required or permitted hereunder will be given to
the appropriate party at the address specified below or at such other address as
the party may specify
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in writing. Such notice shall be deemed given upon personal delivery to the
appropriate address or, if sent by certified or registered mail, three (3) days
after the date of mailing.
As to: Fairchild Semiconductor
Sam Lee
Fairchild Semiconductor
350 Ellis Street
Mountain View, CA 94043
with a copy to
Joel Pond
Fairchild Semiconductor
333 Western Ave.
South Portland, ME 04106
Artest Corporation:
Jen Kao
Artest Corporation
678 Almanor Ave.
Sunnyvale, CA 94086
20. Counterparts. This Agreement may be signed in counterparts, each of
which shall be deemed an original, and all of which shall together constitute
one and the same Agreement.
21. Complete Understanding and Modification. This Agreement and the
Exhibits attached hereto constitute the full and complete understanding and
agreement of the parties relating to the subject matter hereof and supersedes
all prior understandings and agreements relating to such subject matter. Any
waiver, modification, or amendment of any provision of this Agreement shall be
effective only if in writing and signed by each of the parties hereto.
22. Waiver. The failure of either party to insist upon strict compliance
with any of the terms, covenants or conditions of this Agreement by the other
party shall not be deemed a waiver of that term, covenant or condition, nor
shall any waiver or relinquishment of any right or power at any one time be
deemed a waiver or relinquishment of that right or power for all or any other
time.
23. Force Majeure. The parties shall not be liable for any delay or
failure to perform, in whole or in part, caused by the occurrence of any
contingency beyond its reasonable control, including but not limited to, war,
sabotage, insurrection, rebellion, riot or other act of civil disobedience, act
of public enemy, failure or delay in transportation, act of any government or
any agency or subdivision thereof, judicial action, labor disputes, shortages of
materials, fire, accident, explosion, epidemic, quarantine restrictions, storm,
flood or earthquake.
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In Witness Whereof, the duly authorized representative of the parties has
executed this Agreement as of the effective Date.
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FAIRCHILD SEMICONDUCTOR ARTEST CORPORATION
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Signed: /s/ Michael Hollabaugh Signed: /s/ Jen Kao
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Printed Name: Michael Hollabaugh Printed Name: Jen Kao
Title: V.P., Mixed Signal Business Unit Title: President & CEO
Date: September 28, 1999 Date: September 30, 1999
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Exhibit 1
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Exhibit 2
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Exhibit 3
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