* Confidential treatment has been granted or requested with respect to
portions of this exhibit, and such confidential portions have been deleted and
separately filed with the Securities and Exchange Commission pursuant to Rule
24b-2 or Rule 406.
MANUFACTURING AGREEMENT
THIS MANUFACTURING AGREEMENT is entered into as of May 26, 2000 ("Effective
Date"), by and between ENHANCED MEMORY SYSTEMS, a Delaware corporation ("EMS")
and HEWLETT-PACKARD COMPANY, a Delaware corporation ("HP").
The parties hereby agree as follows:
1. Scope Of Agreement
1.1 General. This Agreement specifies the terms and conditions under
which EMS agrees to manufacture and sell the HP Products described in
Exhibit A to this Agreement, based on the Specifications provided by
HP. EMS will establish separate agreements with HP subcontractors to
reflect the terms and conditions agreed to in this document, including
Sections: 1.1; 2.3, 2.7, 2.10, 2.13, 2.14; 5.1-5.3.1; 5.4-5.6;
5.7-5.16; 6.1-6.3; 6.5; 7.1; 7.2; 8.1; 8.2; 12.1; 12.2, 16, 17, 18,
19, 20.1, 20, 24.
1.2 Eligible Purchasers. This Agreement enables HP, HP Subsidiaries and
HP subcontractors or channel partners (listed in Exhibit B) to
purchase the HP Products on behalf of HP from EMS under the terms set
forth below. Additionally, this Agreement enables other EMS
customers, new or existing, to purchase HP Products from EMS.
1.3 Term of Agreement. This Agreement will commence as of the Effective
Date and continue for a 5 (five) year period (the "Term"), unless
terminated earlier under the terms of this Agreement.
2. Definitions
The following capitalized terms will have these definitions for the purposes of
this Agreement:
2.1 "Agreement Coordinator" means the person designated by a party in
Exhibit C to act as an overall coordinator for activities performed by
that party under this Agreement.
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2.2 "Deliverables" mean the Design Documentation, Prototypes, HP Products,
Test Reports, Documentation and any other deliverable, specified in
Exhibit D, that is delivered by one party to the other under this
Agreement.
2.3 "Delivery Date" means the date specified in an Order for the delivery
of HP Products by HP's designated carrier to the destination required
under the Order.
2.4 "Delivery Schedule" means the detailed schedule of milestones with
corresponding delivery dates for the design, development and
manufacture of the Deliverables, as specified in Exhibit D to this
Agreement.
2.5 "Design Documentation" means the implementation of the design
information provided by HP that will be used to create a physical
layout of the HP Product as agreed to by both HP and EMS. Design
Documentation may include, as applicable and permissible under the
terms of EMS confidentiality agreements, Mask Works, Topography and
any schematic circuits embodied in software, known as "Verilog Code."
2.6 "Forecast" means HP's monthly estimate of its manufacturing
requirements for the HP Products over a twelve month period.
2.7 "HP Products" means each of the products described in Exhibit A to be
manufactured by EMS based on the Specifications provided in Exhibit A.
2.8 "Intellectual Property Rights" means all rights in patents, patent
applications, copyrights, moral rights, trade secrets, mask works and
other similar rights.
2.9 "Lead Time" means the minimum time between the date an Order is
received and the Delivery Date, as set forth in Exhibit E.
2.10 "Marks" means the trademarks, service marks, trademark and service
mark applications, trade dress, trade names, logos, insignia, symbols,
designs or other marks identifying a party or its products.
2.11 "Mask Work" means lithographic embodiments of semiconductor chip
designs which are created by HP or derived solely from information
disclosed by HP, protectable in accordance with the Semiconductor Chip
Protection Act of 1984 as amended (17 U.S.C. Section 901, et seq.),
but only to the extent that such designs are implemented in the
metalization layers of the HP Products, and provided, however, that
the term "Mask Works" shall not include designs implementing any one
or more base cells or arrays, library elements and cores, test
elements, or kerf patterns supplied or licensed by EMS; custom cells;
a power distribution network; one or more chip I/O pads, or any
modification or combination of the aforesaid supplied or licensed by
or for EMS.
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2.12 "Nonconforming Products" means any HP Product received by HP that does
not comply with the applicable Specifications in Exhibit A.
2.13 "Orders" means a written or electronic purchase order or release
issued by HP to EMS for purchase of the HP Products.
2.14 "Pre-Existing Intellectual Property" means any trade secret,
invention, work of authorship, mask work or protectable design that
has been conceived or developed prior to, or outside the performance
of, this Agreement.
2.15 "Prototype" means the pre-production unit of an HP Product, packaged
in a production package, and manufactured to a subset of the
Specifications.
2.16 "Requirements" means the HP supplied design and technical information,
drawings, concepts, schematics, software and other related material,
excluding Specifications, which will be used by EMS in the
manufacturing of the HP Product.
2.17 "Specifications" means those specifications for a HP Product as set
forth in Exhibit A and modified in the future by written agreement of
both parties.
2.18 "Subsidiary" means any entity controlled by or in common control with
a party to this Agreement, through ownership or control of more than
50% of the voting power of the shares or other means of ownership or
control, provided that such entity will be considered a subsidiary of
a party only as long as such control continues to exist.
2.19 "Technical Manufacturing Information" means the manufacturing
information, manufacturing strategy, process and technology used by
EMS or third parties under its control to test or manufacture the HP
Products including, but not limited to: (i) specifications, software,
schematics, designs, patterns or drawings or other materials pertinent
to the most current revision level of manufacturing of the HP
Products, [including any Mask Work and Topography information]; (ii)
copies of all inspection, manufacturing, test and quality control
procedures (iii) jig, fixture and tooling designs; (iv) EMS history
files; (v) support documentation; and (vi) any additional technical
information or materials.
2.20 "Test Reports" means the documentation prepared by EMS that includes
records of tests conducted and results obtained with respect to
Prototypes.
2.21 "Topography" means the three-dimensional pattern, fixed or encoded,
formed by the metallic, insulating and semiconductor material
contained in a HP Product.
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3. Statement Of Work
3.1 Statement of Work. EMS shall perform the development and
manufacturing services set forth in the Statement of Work, Exhibit F.
HP shall perform its obligations as set forth in the Statement of
Work, Exhibit F.
3.2 Development Checklists. EMS's development checklists
** shall document the
development of the HP product.
3.2.1 **
3.2.2 **
3.2.3 **
3.2.4 **
3.2.5 **
3.2.6 **
3.2.7 Appendix A contains the starting point for the Specification.
All additions and changes to the Specification will require
written agreement of both parties, which agreement shall not be
unreasonably withheld. A complete Specification will be
jointly developed by the "EMS Specification" milestone
described in Section 3.2.1. Production parts will be delivered
to the Specification current at the time the purchase order is
placed.
3.3 Changes. HP may, reasonably, at any time and from time to time, by
written notice to EMS, request changes to the part numbers,
Specifications, or work scope. EMS will submit a written report to HP
setting forth the probable effect, if any, of such requested change on
price, payment or delivery. EMS shall not proceed with any change
until authorized in writing by HP. The parties shall promptly amend
the appropriate attachment to incorporate any agreed changes.
3.4 Prototypes. Upon HP' s approval of the Specifications during
** as defined in section 3.2 herein:
3.4.1 EMS will manufacture Prototypes for the HP Product, as defined
in Exhibit A.
3.4.2 EMS will test Prototypes to the level of performance agreed to
** as defined in section 3.2 herein, and
document the test conducted and the results obtained. The
testing will be a subset of the Specifications.
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3.4.3 EMS will deliver Prototypes of the HP product the quantity of
which is specified in Exhibit D or HP's accepted Purchase
Order.
3.4.4 EMS will deliver to HP complete Test Reports, subject to
obligations of confidentiality as set forth in Section 19.
3.4.5 EMS will process split lots that are targeted to represent the
manufacturing process variation. EMS will provide documentation
on each lot, which will include parametric data and electrical
characterization of the product. This data will compare the
process parameter to the key performance parameters.
3.4.6 HP will provide EMS written notification upon its completion of
Prototype design verification "Statement of Functionality,"
based on performance to the Specifications.
3.4.7 In the event a Prototype is rejected by HP, EMS will use
commercially reasonable efforts to remedy the reasons for
rejection in a timely fashion consistent with milestones
specified in the Delivery Schedule.
4. Ownership
4.1 General. Each party will maintain all right, title and interest in
Pre-Existing Intellectual Property, subject to any licenses granted in
this Agreement. Ownership of Intellectual Property Rights in any
intellectual property developed under this Agreement will be owned by
the party or parties whose employees, agents or contractors conceive
and either first reduce to practice, author or otherwise create such
intellectual property. Neither party will have any duty to account to
the other for profits with respect to property jointly owned under
this Agreement, and EMS and HP will mutually agree on whether and how
to pursue patent protection for any such joint inventions.
4.2 EMS Rights.
4.2.1 HP will retain all right, title, and interest, including all
Intellectual Property Rights, in and to HP's Requirements for
the HP Products.
4.2.2 EMS will retain all right, title and interest, including all
Intellectual Property Rights, in and to EMS's Technical
Manufacturing Information for the HP Products. To the extent
Requirements are provided by HP, but expressly excluding any
portion thereof supplied or created by EMS, and expressly
excluding any portion used by EMS to create base cells or
arrays, library elements, cores, test elements, kerf patterns
supplied or licensed by EMS; custom cells; power distribution
networks; one or more chip I/O pads, or any modification or
combination of the aforesaid, such Requirements will be treated
in accordance with the confidentiality agreement referenced in
Section 18, Confidential Information.
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4.2.3 HP grants to EMS, under HP's Intellectual Property Rights, a
non-exclusive, non-transferable (except as defined in section
4.5), worldwide, royalty-free license to use the Requirements
to design, develop, test and manufacture the HP Products for
the term of this Agreement. EMS agrees to maintain the
confidentiality of the Requirements under the terms specified
in Section 18 below.
4.2.4 HP grants to EMS, under HP's Intellectual Property Rights, a
non-exclusive, non-transferable (except as defined in section
4.5), worldwide, royalty-free license to manufacture, have
manufactured, use, sell, or otherwise dispose of HP Products.
4.2.5 In the event that EMS fails to deliver the HP product according
to the terms of this Agreement, EMS hereby grants, within the
limits of any licenses or confidentiality agreements with third
parties, an automatic license to HP under EMS' Intellectual
Property Rights for a non-exclusive, non-transferable,
worldwide, royalty-free license to make, have made, and use the
HP product for HP's sole and exclusive use. In the event that
HP must use this license, EMS shall pay the reasonable NRE
costs for getting the HP product designed into a third party
process. The actual NRE costs paid by EMS shall be determined
by good faith mutual agreement between the parties based upon
EMS' milestone completion at the time of breach. In no event
shall EMS pay NRE costs in excess of those NRE payments made to
EMS by HP pursuant to this Agreement.
4.2.6 In the event that EMS fails to deliver the HP product according
to the terms of this Agreement and at HP's request, EMS hereby
agrees to negotiate in good faith the terms of a nonexclusive,
non-transferable, worldwide, royalty-bearing license to HP
under EMS' Intellectual Property Rights to sell or otherwise
dispose of the HP product to third parties. The license fee
shall not exceed ** and the royalty shall not
exceed ** of the unit price for each unit sold.
4.2.7 At HP's request, EMS agrees to escrow the Design Documentation
for HP's benefit and at HP's expense. The parties agree to
negotiate the terms of the escrow in good faith.
4.3 Trademark Usage. Nothing in this Agreement implies the grant
of any license from one party to the other to use any Marks.
Notwithstanding the foregoing, HP grants to EMS the non-
exclusive, limited right to reproduce any designated HP Marks
on HP Products. All HP trademark reproductions must be
approved by HP and must be in accordance with HP's then current
Corporate Identity Trademark booklet, a copy of which will be
furnished by HP to EMS.
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4.4 Rights Not Granted. Except as expressly set forth herein, and except
that an implied patent license may arise by operation of the First
Sale Doctrine and/or the Doctrine of Patent Exhaustion, no license,
immunity or other right is granted herein to either party whether
directly or by implication, estoppel or otherwise with respect to any
patent, trademark, copyright, mask work, trade secret, utility model,
know-how, or other intellectual property right of the other party.
4.5 **
5. Order and Shipment of HP Products
5.1 Orders. Each delivery of HP Products will be initiated by an Order
issued to EMS by HP. Each Order will include: (i) unit quantity;
(ii) unit price; (iii) shipping destination; (iv) Delivery Date; and
(v) other instructions or requirements pertinent to the Order. Orders
must specify quantities of HP Products and must meet ship pack
quantity (SPQ) and minimum order quantity (MOQ) as defined in Exhibit
H. HP may schedule regular intervals for deliveries by an appropriate
Order setting forth the intervals, provided each of the interval
deliveries is in a quantity that is an integer multiple of the ship
pack quantity. To the extent of any inconsistency between the terms
of an Order and the terms of this Agreement, the terms specified in
this Agreement will control and take precedence. EMS and HP will
work together to establish the mechanics of Prototype Orders and
shipments.
5.2 Purchase and Sale of Products. HP shall purchase and EMS shall sell
the HP Products pursuant to the terms of this Agreement.
5.3 Order Acknowledgment. An Order will be deemed to have been placed as
of the date of receipt of the Order by EMS. EMS will promptly review
and confirm and acknowledge the receipt of an HP order in its entirety
electronically or through facsimile to HP within three (3) working
days, for orders within the latest accepted Forecast. Orders shall be
accepted upon receipt by EMS if they meet the following criteria:
**
**
5.3.1 Supply Constraint. If EMS's supply of the HP Product,
Prototype and/or services ordered hereunder becomes
constrained, EMS will reduce the quantities of HP Product,
Prototypes and/or services to be supplied to HP in proportion
to the reduction in quantities of products, prototypes and/or
services of the same technology or utilizing the same
manufacturing process to be supplied to satisfy others. Receipt
of such allocated supply and later delivery of all undelivered
ordered quantities shall constitute HP's exclusive remedy in
the event of such a supply constraint EMS shall provide
written notification to HP within two (2) weeks of beginning
and ending a supply constraint period that effects HP Products.
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5.3.2 Upon written request from HP, EMS will arrange to have its
independent auditor complete a review of relevant EMS records
to determine whether EMS has complied with its obligations
under this supply constraint provision. The auditor shall be
subject to the terms of an EMS confidentiality agreement and
shall issue a EMS confidential report to both EMS and HP. The
report shall only specify whether EMS did or did not comply
with its obligations and, to the extent EMS did not comply,
identify the amount of HP Products, Prototype and/or services
EMS should have provided to HP during the constraint. No other
information will be provided in the report. For the avoidance
of doubt, in no event shall the report provide, or be based
upon, any information that is confidential to any third party.
If EMS's independent auditor is unable to determine compliance
because necessary information is restricted by third party
confidentiality agreements, the report shall so state, and
EMS's reporting and auditing obligations shall thereafter be
deemed fully discharged. HP shall only be entitled to request
an audit within thirty (30) days after EMS has invoked its
rights under this supply constraint provision. The audit will
be conducted at HP's expense. However, if it is determined
that EMS has not complied with its obligations, then EMS shall
be responsible for the costs of the audit. If an audit reveals
that EMS has not complied with its obligations, then EMS shall
discuss with HP the rescheduling dates for providing the
quantity of Product identified by the auditor. Such compliance
and correction shall be HP's sole and exclusive remedy for
EMS's non-compliance with the supply constraint provisions of
this Section 5.3.1.
5.4 Emergency Orders. If HP deems it necessary, HP may order HP Products
by facsimile on an emergency basis (Emergency Order) subject to the
availability of such HP Products in inventory. EMS will use
reasonable efforts to ship the Emergency Order to HP's stipulated
destinations within forty-eight (48) hours after the receipt by EMS.
HP shall be advised by EMS in advance of shipment of any additional
expenses related to such emergency orders, which shall be subject to
HP prior approval. EMS's fulfillment of such request shall be
contingent on receiving HP's acceptance to pay the additional expenses
prior to shipment.
5.5 Forecasts. HP will provide a rolling twelve (12) month Forecast for
Products, updated quarterly, of its projected quantities. The initial
Forecast is provided in Exhibit I. All subsequent Forecasts shall
follow this same format. EMS shall acknowledge in writing the HP
Forecast within ten working days of its receipt. HP may revise any
forecasts in its sole discretion and EMS shall use commercially
reasonable efforts to accept such revised Forecast. EMS will
accept, at a minimum, the following quantities in the HP Forecast for
Products:
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Month 1: **
Month 2: **
Month 3: **
Month 4: **
Month 5: **
Month 6: **
Month 7 and beyond: **
5.6 Lead Time. Without HP's prior written consent within a twelve
(12) month rolling Forecast, the maximum Lead Time between the date of
Order placement and the Delivery Date shall in no event exceed the
guidelines set forth in Exhibit E. In the event that Lead Time is
shortened, EMS shall use reasonable efforts to adjust the process
described above so that HP can benefit from the shortened Lead Time.
5.7 Buffer Inventory Requirement. EMS will maintain a single buffer
inventory for the HP Product, including any related to HP
subcontractors authorized hereunder, at EMS's site based initially on
an average ** weeks worth of HP Products from the most recent
twelve (12) month rolling Forecast accepted by EMS. Thereafter, the
quantity of buffer inventory will be reviewed and mutually agreed to
by both parties on a quarterly basis. If the buffer inventory
associated with HP Products is depleted, and EMS has sufficient
capacity to do so, EMS will replenish the depleted inventory to the
current agreed upon level within ** weeks. If the parties
cannot agree on the quantity of buffer inventory to be held, EMS will
cease to maintain a buffer inventory for HP Products and deplete the
existing inventory against existing Orders. EMS will rotate its
supply of buffer inventory used to make the HP Product on a first in
first out basis. HP agrees to purchase all remaining inventory at the
expiration or early termination, for any reason, of this Agreement.
The parties agree to work together to deplete inventory levels against
existing Orders for HP Products by the end of each calendar year, and
to replenish that inventory as soon as commercially reasonable after
the start of the next calendar year.
5.8 Order Changes. HP may decrease or cancel any Order by written notice
to EMS prior to wafer start. If HP decreases or cancels an Order at
or after wafer start, EMS shall be entitled to be reimbursed by HP as
set forth below:
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(a) **
(b) **
HP may increase an Order subject to EMS's reasonable ability to meet
the increased amount.
5.8.1 Rescheduling. HP may request a one-time deferral of the
committed Delivery Date for HP Product or services by providing
written notice to EMS at least thirty (30) days in advance of the
original Delivery Date. Delivery Dates can be rescheduled up to 90
days later than the original Delivery Date, but not beyond the
expiration of this Agreement, with no cancellation charge imposed.
However, if the rescheduled Order is subsequently deferred or
cancelled, then the cancellation charges specified above will become
immediately due and payable.
5.9 Shipments. All Orders are required to be shipped complete. However,
if EMS is unable to ship a complete Order, Manufacturer will give HP
notice, within three (3) business days, if it knows that it cannot
meet a Delivery Date or that only a portion of the HP Products will be
available for shipment to meet a Delivery Date. For partial
shipments, EMS will ship the available HP Products unless directed by
HP to reschedule shipment.
If EMS ships any HP Products by a method other than as specified in
the corresponding Order, EMS will pay any resulting increase in the
cost of freight. HP may utilize drop shipment options to any HP
designated delivery destination.
If HP designates a drop shipment location outside the country in which
the Order is placed, HP agrees to pay any additional costs associated
with the shipment.
5.10 Meeting Delivery Dates. If due to EMS's failure to make a timely
shipment, the specified method of transportation would not permit EMS
to meet the Delivery Date, the HP Product affected will be shipped by
air transportation or other expedient means acceptable to HP. EMS
will pay for any resulting increase in the freight cost over that
which HP would have been required to pay by the specified method of
transportation.
EMS's delivery performance shall be measured against the goal of one
hundred percent (100%) On-Time Delivery. In the event that EMS fails
to make an On-Time Delivery on three or more occasions per quarter, to
HP or its authorized subcontractors, EMS shall submit a corrective
action plan to HP upon HP's request. HP and EMS shall then meet to
determine the corrective action measures which will be implemented by
EMS, at EMS's request. HP will adjust reported On-Time Delivery
performance data to account for HP's actions that contribute to late
deliveries by EMS.
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5.11 No Advance Shipment. If HP Products are delivered more than three days
in advance of the Delivery Date, HP may, at its option, either return
the HP Products pursuant to Section 8 (Return of Products) below or
keep the HP Products with payment due as provided in Section 6.3
(Payment Procedure) below.
5.12 Overshipments/Undershipments/Partial Shipments. EMS shall make every
reasonable attempt to ship all orders complete for the exact order
quantity. If EMS ships in excess of the quantity ordered, the amount
of the over shipment may, at HP's discretion, be kept by HP, with HP
and EMS initiating change orders to either add a line item for the
excess quantity on the Order in question or initiating a change order
to net against a future order. HP, at its sole discretion, may delay
processing of invoices for over shipped HP Product until the Delivery
Date set forth on such future Order.
At HP's discretion the amount in excess may be returned to EMS,
pursuant to Section 8 (Return of Products), below. EMS will be
responsible for freight costs for all excess quantities returned.
If EMS under ships an Order, EMS and HP shall work together to resolve
the under shipment by either initiating change orders to close the
Order short or initiating change orders to reschedule the shortage
quantity to a new Delivery Date. This reschedule would be considered
a late shipment by EMS.
5.13 Drop Shipments. HP may use the option to drop ship Products to any
destination specified by HP.
5.14 Title and Risk of Loss. Unless otherwise specified in writing by HP,
shipments will be F.O.B. origin. If HP designates the carrier,
shipments will be F.O.B. carrier, except for HP Products shipped
outside the United States which will be shipped Ex Works as defined by
ICC Incoterms of 1990. Title to HP Products and media ordered under
this Agreement and risk of loss or damage will pass from EMS to HP
upon EMS's delivery of the HP Products to the common carrier specified
by HP, subject to the provisions below with respect to packing and
handling.
5.15 Packing List. Each delivery of HP Products to HP must include a
packing list that contains at least:
5.14.1 The Order number and the HP part number;
5.14.2 The quantity of HP Products shipped; and
5.14.3 The date of shipment.
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5.16 Packaging. EMS must preserve, package, handle, and pack all HP
Products so as to protect the HP Products from loss or damage, in
conformance with good commercial practice and government regulations.
Special static protection must be provided for HP Products requiring
such packaging.
5.17 Responsibility for Damage. EMS will be liable for any loss or damage
due to its failure to properly preserve, package, handle, or pack HP
Products. HP will not be required to assert any claims for such loss
or damage against the common carrier involved. Further, HP will not be
liable for any loss or damage due to a release of chemicals or other
hazardous materials to the environment prior to HP's actual receipt of
the corresponding HP Products.
6. Prices and Payment Terms
6.1 HP Product Prices. EMS's prices for the HP Products are listed in
Exhibit J, in U.S. currency unless otherwise stated, and may not be
increased without HP's consent. The prices for HP Products will be
EMS's published prices, less any applicable discounts, unless the
parties agree to a price schedule for HP Products. EMS and HP agree
to review HP Product prices quarterly.
6.2 Changed Prices. If during the Term changed prices or price formulas
are put in effect by mutual agreement of HP and EMS, or reduced prices
or price formulas are otherwise put in effect by EMS, such prices or
price formulas (if resulting in lower prices than the then current
price) will apply to all Orders issued by HP after the effective date
of such prices or price formulas and to all unshipped Orders;
provided, however, that such prices or pricing formulas shall not
apply to any unshipped orders that include order backlogs of greater
than ** weeks.
6.3 Payment Procedure. Payment for HP Products will be net (30) days,
after the latest of: (i) receipt by HP of an appropriate invoice from
EMS; (ii) receipt by HP of the corresponding HP Products; or (iii) the
Delivery Date. Except as otherwise provided in this Agreement,
associated freight expenses and duties will be paid directly by HP.
HP will not be liable for any costs related to or payments for
unordered HP Products. In addition, if HP's account balance exceeds
its credit limit with EMS, or becomes delinquent, EMS may stop
shipments to HP or ship to HP on a prepaid basis until the account is
current again.
6.4 **
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6.5 Sales Taxes and Duties. Prices are exclusive of all taxes or duties
after delivery to the common carrier at the plant of manufacture
(other than taxes levied on EMS's income) that EMS may be required to
collect or pay upon shipment of the HP Products. Any such taxes or
duties must appear as a separate item on EMS's invoice. HP agrees to
pay such taxes or duties unless HP is exempt from such taxes or
duties. Where applicable, HP will provide EMS with an exemption
resale certificate.
7. Nonconforming Products
7.1 Repair, Replacement, or Credit. Subject to the limitations in Section
12.2, HP may elect in its sole discretion, subject to the provisions
of Section 8 (Return of Products) below, to return a Nonconforming
Product for repair, replacement (subject to EMS's reasonable ability
to repair or replace) or credit at EMS's expense. Title to returned
Nonconforming Products will pass to EMS upon delivery to the carrier.
EMS will return replacement or repaired HP Products as soon as
possible but in no event later than ten (10) work days after receipt
of the Nonconforming Product from HP, or provide credit if unable to
repair or replace within this time period.
7.2 Nonconforming Product Remedy. In the event that the HP Products are
identified by HP as Nonconforming Products and are within warranty, HP
will use EMS's Return Material Authorization (RMA) process to return
suspected Nonconforming Products to EMS. Upon receipt of suspected
Nonconforming Product, EMS agrees to retest the HP Products to
determine whether HP Product is Nonconforming Product. If a no defect
found situation occurs, EMS and HP will cooperate and use joint
resources to find a solution to remedy the problem. When a solution
is achieved, EMS and HP will use commercially reasonable efforts to
incorporate the solution for all future HP Products manufactured and
delivered to HP, with financial responsibility for such
implementations assigned based on the level of responsibility each
party has for the Nonconforming Product. In the event a solution
cannot be agreed upon within 60 days from the date the HP Products are
returned to EMS, both parties agree to escalate disputes to the proper
level of management for resolution.
7.3 Incremental Expenses. In addition to the remedy in Section 12, if, as
a result of receiving Nonconforming Product from EMS, HP incurs non-
recoverable incremental expenses directly related to EMS's
Nonconforming Product, EMS and HP agree to meet, within thirty (30)
days after HP identifies the non-compliance and associated expenses,
to discuss with best efforts the appropriation of fault for the
Nonconforming Products and fairly apportion the resulting financial
liability. Any EMS sharing would take the form of an HP Product
credit to HP. If EMS and HP come to any agreement, they will do so in
writing signed by each party. Neither party is under any obligation
unless and until an agreement is so documented.
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Unless HP and EMS agree otherwise, the maximum timeframe allowed for
financial resolution of any agreements made between EMS and HP for
liability issues shall not exceed the actual lead-time of the HP
Product plus thirty (30) days from the date of such an agreement.
8. Return of Products
8.1 Return Materials Authorization. All HP Products returned by HP to EMS
must be accompanied by a Return Materials Authorization ("RMA").
Unless further verification is reasonably required by EMS, EMS will
supply an RMA within two working days of HP's request.
8.2 Return Charges. All Nonconforming Products returned by HP to EMS, and
all replacement or repaired HP Products shipped by EMS to HP to
replace Nonconforming Products, will be at EMS's risk and expense,
including transportation charges (round trip charges for replacement
or repaired HP Products).
8.3 Duty Regarding Nonconforming Products. EMS agrees not to represent
that rejected, returned, or unpurchased HP Products are built for HP
or to HP specifications.
9. Engineering Process Or Design Changes
9.1 Notice of Change. Except for Safety Standard Changes, below, EMS will
give HP ** days notice of any proposed changes affecting
form, fit, function, reliability, site of manufacture or part number
and shall provide evaluation samples, if requested by HP, at least
** days prior to the first proposed shipment of any HP Products
involving such a proposed change. Regardless of whether HP approves
such a proposed change, Lead Time will not be changed except as
provided in Lead Time Section 5.6 above. With the exception of
changes in site of manufacture, there shall be no implementation of
any proposed changes without the written consent of HP, which consent
shall not be unreasonably withheld.
9.2 Proposed Changes. HP may change HP-supplied drawings, designs, or
other Specifications at any time prior to manufacture of corresponding
released HP Products. If any such change affects prices or delivery
schedules of HP Products, an equitable adjustment will be made,
provided that EMS shall make a written claim for an adjustment within
** from the date HP gives notice to EMS of the change. EMS shall
not be obligated to make changes until equitable adjustment is agreed
upon.
9.3 Option To Terminate. If the parties are unable to agree upon any
adjustment pursuant to Section 9.2 above, HP may terminate this
Agreement as to the HP Products affected and shall pay EMS NRE
incurred up to the point of cancellation, on a pro-rata basis, based
on the amounts set forth in Exhibit K and/or cancellation charges
specified in Section 5.8.
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9.4 Safety Standard Changes. EMS will give reasonable notice to HP if any
upgrade, substitution or other change to an HP Product is required to
make that HP product meet applicable safety standards or other
governmental statutes, orders or regulations, even those that are not
defined as changes affecting form, fit, function, reliability, site of
manufacture or part number.
10. Migration To New Or Supplemental Manufacturing Process
10.1 Migration To New Process. Other than planned process migrations, as
described or outlined in Exhibit K, during the term of this
Agreement, in the event that EMS decides to stop production of the
manufacturing process used to manufacture HP Products ("End of
Life"), EMS agrees to provide for migration of the HP Products to the
new EMS process that replaces the existing process and to provide HP
with one year's advance notice of EMS's intent to replace the
existing process with a new process for continued manufacture of HP
Product at EMS. In such event, EMS and HP will meet to discuss
whether to migrate the HP Products to the new process, or continue
manufacturing under the current process and maintain support stock of
the HP Products for the remainder of the HP product life. Upon
agreement, EMS agrees that services covered as part of EMS's standard
NRE charges, as identified in Exhibit K, or those, which are
substantially similar, as agreed by the parties, shall not be charged
to HP for such process migration during the term of this contract
period. Such services shall apply only to the migration of the
existing design as described by the net list used for manufacture of
the existing design, without HP modification. EMS's financial
obligation with respect to NRE for such process migration shall be
limited to the NRE required to perform those services. HP shall
provide resources for the migration effort at a level no less than
what was needed to perform HP tasks and produce HP deliverables for
the existing design.
10.2 Samples. Other than planned process migrations, as described or
outlined in Exhibit K, during the initial term of this Agreement, in
the event that any of the HP Products will be migrated to the new
process, EMS will fabricate and deliver at no charge to HP up to
** samples of affected HP Product for evaluation. For
purposes of qualification of the HP Product, HP may request samples
of one or more Prototypes at least six (6) months prior to
discontinuing production with the existing process. EMS may, at a
price to be negotiated, provide skew parts representing slow, fast
and normal process variation.
10.3 Performance. If Prototypes of the HP Product produced using the new
process fail to meet the performance of the HP Product produced with
the existing process as agreed to by the parties, EMS will continue
to manufacture such HP Products using the existing process for a
period of one (1) year, or as otherwise reasonably agreed, from the
date the parties determine that EMS cannot produce Prototypes of such
HP Product using the new process and must provide for a last time buy
as provided in Section 13.
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11. Quality
11.1 Quality Program. EMS agrees to maintain an objective quality program
for all technologies it supplies to HP, or uses in connection with
manufacturing of HP Products. EMS's program will be in accordance
with the current revision of HP's EMS Quality System Requirements,
attached as Exhibit L, and, if applicable, any additional or
substitute quality requirements agreed to by the parties.
11.2 HP's Right To Inspect. HP has the right to inspect, at EMS's plant,
the HP Products and may, upon reasonable notification (minimum of 2
weeks) and justification, conduct an audit of the associated
manufacturing, assembly and test processes used to produce the HP
Product. The scope, duration and agenda of such audits shall be
agreed to in advance by the Parties a minimum of 2 weeks prior to the
audit. Information that is non-proprietary and non-confidential that
is agreed upon by HP and EMS to be reasonably critical to the success
of the audit shall be provided to HP a minimum of 1 week in advance.
For information that is proprietary or confidential to EMS (and
expressly excluding third party proprietary or confidential
information, which is hereafter referred to as Third Party
Information) and where such information is agreed upon by HP and EMS
to be reasonably critical to the success of the audit, EMS shall
provide for HP's review of such information at EMS's premises in
advance of the audit. EMS personnel agreed upon to be critical to
the success of the audit shall be identified in advance as part of
the agenda discussions and shall be reasonably available to HP for
review of relevant information during the audit. In the event that
such personnel are not reasonably available, EMS shall provide a
competent alternative representative. During such audits, EMS will,
upon HP's request, provide HP with reasonable amounts of relevant
documentation and data (and expressly excluding Third Party
Information) that allows HP to evaluate EMS's compliance with its
quality program. HP shall abide by EMS's site security procedures
and the terms of a valid confidential disclosure agreement, or
equivalent, must be in place for HP to inspect HP Product at EMS's
facility or audit EMS's manufacturing, assembly and test processes
used to produce the HP Product. To the extent review of Third Party
Information is requested by HP in connection with an inspection, EMS
shall use reasonable efforts to secure agreement from the third party
for disclosure subject to appropriate confidential disclosure
agreements. Notwithstanding any provision of such confidential
disclosure agreement or this Agreement, HP agrees that all
information that it observes during such inspection will be deemed
EMS's confidential information to be protected in accordance with
Section 19, Confidential Information. If determined as necessary by
EMS, HP personnel will cooperate in receiving clean room training
before entering clean rooms. HP's inspection may be for reasons
reasonably related to this Agreement, including to assure EMS's
compliance with HP's Specifications. HP's right of inspection will
apply as well to any vendor or subcontractor of EMS, subject to
vendor or subcontractor approval. EMS will inform such vendors or
subcontractors of HP's right to inspect, and, if necessary, use
reasonable efforts to secure such rights for HP Audits must be
mutually agreed to by the Parties.
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11.3 Device Quality. EMS will manufacture HP Product to the quality level
specified in Exhibit M.
12. Warranties
12.1 Product Warranty. EMS warrants that all HP Products will:
12.1.1 Be manufactured, processed, and assembled by EMS or by third
parties under EMS's direction.
12.1.2 Conform substantially to the Specifications and other
criteria referred to in this Agreement or agreed to by the
parties.
12.1.3 Be new and will contain only new HP Products, except as
otherwise agreed by the parties, and except for HP Products
repaired under Warranty.
12.1.4 Be free from defects in material and workmanship.
12.1.5 Be free and clear of all liens, encumbrances, restrictions,
and other claims against title or ownership.
12.1.6 Except for 12.1.5, the Warranty period shall be 13 months
from date of shipment, inclusive of 12 months, plus 1 month
acceptance period. For paragraph 12.1.5, the warranty
period shall be 5 years from the date of shipment.
12.2 DISCLAIMER. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, EMS
MAKES NO OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED, REGARDING ANY
HP PRODUCTS, OR REGARDING THEIR MERCHANTABILITY OR THEIR FITNESS FOR
ANY PARTICULAR PURPOSE. ALL PROTOTYPES ARE DELIVERED AS IS.
13. End of Life
End of Life. In the event that EMS plans to discontinue the manufacture of any
HP Product prior to the expiration of this Agreement, EMS will provide an end
of life notice to HP in writing one year prior to such discontinuance of
manufacture. Except in the event that EMS terminates due to breach by HP, HP
has the right for one final purchase under the following terms: 1.) HP shall
place the last time buy order before the expiration of six months or before the
expiration date of the contract, whichever occurs earlier 2.) orders are non-
cancelable 3.) requested delivery dates shall be within 1 year of the date of
notice of EMS's intent to discontinue manufacture, 4.) volumes are not limited
by the forecasting provisions of Section 5.5. Delivery Dates are subject to
EMS's ability to manufacture the product.
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14. Intellectual Property Defense
14.1 EMS's Indemnification. EMS agrees to indemnify HP against al
attorney fees, costs, and settlement costs assessed against HP as a
result of a final judgment of a court of competent jurisdiction
holding that any Product sold or Service provided by EMS to HP
hereunder infringes a mask work, patent or copyright or
misappropriates a trade secret of a third party in any country in
which EMS sells or provides similar products or services; provided
that HP:
14.1.1 promptly notifies EMS in writing, of the charge of
infringement or misappropriation; and
14.1.2 allows EMS to control and cooperates with EMS in the defense
and any related settlement action; and upon the written
request of EMS:
(a) allows EMS to modify or replace the HP Product to make
it non-infringing or remove any misappropriated trade
secret, or
(b) returns the HP Product to EMS for a credit equal to
HP's purchase price for the HP Product, provided HP has
followed generally accepted accounting principles. In
no event will HP be required to recall the HP product
from HP customers.
14.1.3 EMS has no obligation regarding any claim of infringement to
the extent such claim is based on any of the following:
(a) HP's modification of a HP Product;
(b) the combination operation or use of a HP Product with
any product, data, or apparatus that EMS did not
provide;
(c) infringement by a non-EMS product alone, as opposed to
its combination as part of a system of Products that
EMS provides; or
(d) EMS's manufacture or modification of a Product in
compliance with HP's Requirements.
14.2 HP's Indemnification. HP agrees to indemnify EMS against all
attorney fees, costs, and settlement costs resulting from a claim of
infringement as described in section 14.1.3; provided that EMS:
14.2.1 promptly notifies HP in writing, of the charge of
infringement; and
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14.2.2 allows HP to control and cooperates with HP in the defense
and any related settlement action.
14.2.3 HP has no obligation regarding any claim of infringement to
the extent such claim is based on any EMS process or product
other than the HP Product.
14.3 Intellectual Property Warranty. Each party warrants that it has no
knowledge, that any of its Technical Manufacturing Information
misappropriates any trade secrets of a third party. Each party's
warranty is limited to its own Technical Manufacturing Information
supplied by the warranting party to the other party hereunder, and
expressly excludes any subject matter supplied by the other party.
14.4 Entire Obligation and Exclusive Remedy. The foregoing provisions of
this Section 14 state the entire obligation and exclusive remedy of
EMS and HP regarding any claim of mask work, patent or copyright
infringement or trade secret misappropriation relating to any Product
sold or Service provided hereunder.
15. Country of Manufacture
15.1 Country Of Origin Certification Upon HP's request, EMS will provide
HP with an appropriate certification stating the country of origin
for HP Products, sufficient to satisfy the requirements of the
customs authorities of the country of receipt and any applicable
export licensing regulations, including those of the United States.
15.2 Country Of Origin Marking EMS will mark each HP Product, or the
container if there is no room on the HP Product, with the country of
origin. Manufacturer will, in marking HP Products, comply with the
requirements of the customs authorities of the country of receipt.
15.3 Duty Drawback. If HP Products delivered under this Agreement are
imported, EMS will when possible allow HP to be the importer of
record. If HP is not the importer of record and Manufacturer obtains
duty drawback rights to HP Products, Manufacturer will, upon HP's
request, provide HP with documents required by the customs
authorities of the country of receipt to prove importation and to
transfer duty drawback rights to HP.
16. Governmental Compliance
16.1 Duty To Comply. The parties agree to comply with all federal, state,
local and foreign laws, rules and regulations applicable to its
performance of this Agreement or to HP Products, including any
approvals necessary to allow for HP's sale and customers' use of the
HP Products. Without limiting the generality of the foregoing
sentence, EMS represents that:
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16.1.1 EMS will comply with all equal employment opportunity and
non-discrimination requirements prescribed by Presidential
Executive Orders, including the requirements of Executive
Order 11246, the Vocational Rehabilitation Act, and the
Vietnam Era Veterans' Readjustment Assistance Act;
16.1.2 Each chemical substance contained in HP Products is on the
inventory of chemical substances compiled and published by
the Environmental Protection Agency pursuant to the Toxic
Substances Control Act;
16.1.3 All HP Products will be Delivered to the common carrier as
specified in each order in conformance with government or
freight regulations and requirements applicable to chemicals;
and
16.1.4 EMS will provide complete and accurate material safety data
sheets prior to shipping any HP Product.
16.2 Procurement Regulations. For HP Products purchased under
this Agreement for incorporation into products to be sold
under a federal contract or subcontract, those applicable
procurement regulations that are required by federal statute
or regulation to be inserted in contracts or subcontracts
will upon notice to EMS be deemed incorporated in this
Agreement and made to apply to all Orders.
16.3 Ozone Depleting Substances. EMS certifies that, to the best
of its knowledge, no HP Product nor any component of any HP
Product:
16.3.1 Contains any "Class 1 Substance", or "Class 2
Substance", as those terms are defined in 42 USC
Section 7671 and implementing regulations of the
United States Environmental Protection Agency at 40
CFR Part 82, as now in existence or hereafter
amended; or
16.3.2 Has been manufactured with a process that uses any
Class 1 or Class 2 Substance within the meaning of 42
USC Section 7671 and implementing regulations of the
United States Environmental Protection Agency at 40
CFR Part 82, as now in existence or hereafter
amended.
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17. Force Majeure Events
17.1 Delaying Causes. Subject to the provisions of this Section, neither
party will be liable for any delay in performance under this
Agreement caused by any "act of God" or other cause beyond that
party's control and without that party's fault or negligence (a
"delaying cause"). Notwithstanding the above, neither party will be
relieved of any liability for any delay or failure to perform its
defense obligations with respect to third party Intellectual Property
Rights or furnish remedies for Infringing Products as described in
Sections 4 and 15 above, nor shall HP be relieved of its obligations
for payment due EMS. Each party experiencing a delaying cause will
immediately give the other notice of such delaying cause and an
estimate of its duration, and the other party may act in its sole
discretion to terminate this Agreement or any part hereof or suspend
this Agreement in whole or in part for the duration of the delaying
cause.
17.2 Resumption Of Agreement. The parties may resume performance under
this Agreement once the delaying cause ceases and extend the Term up
to the length of time the delaying cause endured. Unless a party
gives notice of termination as provided above within 30 days after
notice of the delaying cause, that party will be deemed to have
elected to suspend this Agreement for the duration of the delaying
cause.
17.3 Disaster Recovery. EMS shall put in place and submit to HP a
disaster recovery plan prior to the formal award of any business.
The disaster recovery plan should enable EMS to resume production of
forecasted quantities within a reasonable time frame.
18. Confidential Information
18.1 Confidential Information. If it is necessary for the parties to
exchange confidential information under this Agreement, it shall be
done under the terms of the confidentiality agreement executed
between the parties dated ** , as may be amended from time
to time, and which is incorporated herein by reference as Exhibit G
In the event the provisions of this Agreement specified in Section
1.1, above, are incorporated as terms and conditions in any agreement
contemplated therein between EMS and any HP subcontractor, a
confidentiality agreement of substantially similar nature to that of
Exhibit G shall be entered into between the parties to that
agreement. The Confidentiality Period shall be extended until five
years after the termination of this Agreement.
18.2 Publicity. All notices to third parties and all publicity concerning
the terms and conditions of this Agreement shall be jointly planned
and coordinated by the parties. HP and EMS shall mutually agree upon
a press release regarding the subject matter of this Agreement, and
which press release shall be issued within ten (10) days following
the execution of this Agreement.
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18.3 Third-Party Disclosure. The parties must mutually agree to the time
and nature of any public disclosure of the Specifications.
Notwithstanding the foregoing, EMS may unilaterally publicly disclose
the Specifications upon completion of ** under section
3.2.3 of this Agreement. Further, EMS shall also have the right to
privately disclose the Specifications to select third parties
prior to the ** provided such third parties
agree to and execute a standard non-disclosure agreement relating to
the Specifications.
19. Limitation Of Liability
19.1 UNLESS OTHERWISE STATED IN THIS AGREEMENT, NEITHER PARTY WILL BE
LIABLE FOR ANY SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING LOST
PROFITS OF THE OTHER ARISING OUT OF ANY PERFORMANCE OF THIS AGREEMENT
OR IN FURTHERANCE OF THE PROVISIONS OR OBJECTIVES OF THIS AGREEMENT,
REGARDLESS OF WHETHER SUCH DAMAGES ARE BASED ON TORT, WARRANTY,
CONTRACT OR ANY OTHER LEGAL THEORY, EVEN IF ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING THE ABOVE, MANUFACTURER
AND HP WILL BE RESPONSIBLE FOR ANY DAMAGES OF ANY KIND INCLUDED IN AN
AWARD OR SETTLEMENT OF A THIRD PARTY CLAIM UNDER ARTICLES 17 OR 18
ABOVE.
19.2 Exceptions. Any dollar limitation on liability agreed to by the
parties does not apply to: (1) payments referred to in Sections 14,
Intellectual Property Defense, (2) payments referred to in Section
12, Warranties (3) payments referred to in Section 7.3, Incremental
Expenses and (4) damages for bodily injury (including death) and
damage to real property and tangible personal property caused by
either parties' negligence.
19.3 Additional Limitations. Under no circumstances is EMS liable for any
of the following: (A) third party claims against HP for losses or
damages other than those above; or (B) loss of, or damage to, HP's or
another parties' records or data; or (C) when the Products and/or
services are used in conjunction with medical devices or nuclear
materials.
20. Escalated Dispute Resolution
The parties' Agreement Coordinators agree to negotiate in the attempt to
resolve disputes regarding all material obligations specified in this Agreement
before the commencement of litigation. If such negotiations and meetings do not
resolve the dispute within ten days of written communication of the dispute,
then each party will nominate one senior officer of the rank of Vice President
for EMS and HP, or higher, as its representative. These representatives will
meet within ten days of their nomination to attempt to resolve such dispute.
If the dispute is not resolved to the satisfaction of these representatives
within 30 days from the date of the original communication, then either HP or
EMS may terminate this Agreement in whole or in part and/or pursue all
available legal remedies.
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Agreement Coordinators at the time of execution of this Agreement:
Business Issues
EMS: Director of Worldwide Sales
Technical Issues
EMS: VP of Marketing and Applications
21. Insurance Requirements
Representations. Each party will maintain adequate insurance or will be
adequately self-insured in relation to its responsibilities under this
Agreement.
22. Events Of Default
22.1 Notice Of Breach. If either party is in breach of any provision of
this Agreement, the nonbreaching party may, by notice to the
breaching party, except as otherwise prohibited by the United States
bankruptcy laws, terminate the whole or any part of this Agreement or
any Order, unless the breaching party cures the breach within 30 days
after receipt of notice.
22.2 Causes Of Breach. For purposes of Section 22.1 above, the term
"breach" includes without limitation any:
22.2.1 Proceeding, whether voluntary or involuntary, in bankruptcy
or insolvency by or against a party;
22.2.2 Appointment, with or without a parties consent, of a receiver
or an assignee for the benefit of creditors;
22.2.3 Failure by EMS to make a delivery of HP Products in
accordance with the requirements of this Agreement;
22.2.4 Failure by EMS to replace or repair Noncomplying Products in
a timely manner as required by Article 9 above; or
22.2.5 Other failure by a party to comply with any material
provision of this Agreement with additional failure to
provide the nonbreaching party, upon request, with reasonable
assurances of future performance.
23. Termination and Rights Upon Termination
23.1 Outstanding Orders. All Orders issued prior to the expiration or
termination of this Agreement must be fulfilled in accordance with
the terms of this Agreement, even if the Delivery Dates fall are
after expiration. Upon termination of this Agreement for EMS's
breach, HP may cancel any outstanding Order or require Orders to be
fulfilled even if a Delivery Date is after the date of termination.
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23.2 Return Of HP Property And Requirements. EMS must return all HP
Property to HP upon expiration or termination. All such property
must be in good condition, normal wear and tear excepted. HP will
determine the manner and procedure for return. HP will bear all
return freight costs if return is due to HP convenience or an uncured
breach by HP. Otherwise, EMS will bear all such costs. In addition,
upon termination, EMS will cease to use any Requirements provided by
HP or on its behalf, and either return to HP or destroy, as directed
by HP, the original and all copies of the Requirements.
23.3 Surviving Provisions. Notwithstanding the expiration or early
termination of this Agreement, the provisions regarding Warranties in
Article 12, Intellectual Property Defense in Article 14, Confidential
Information in Article 18, Limitation of Liability in Article 19,
Escalated Dispute Resolution in Article 20, Insurance under Article
21, and the Miscellaneous provisions below will each survive in
accordance with their terms.
23.4 EMS Termination. If EMS terminates this Agreement or an Attachment
hereto due to HP's breach under this Section 23, EMS shall be
entitled to treat any or all applicable outstanding purchase orders
as if cancelled by HP and HP shall pay (i) all applicable EMS
procurement costs for materials purchased prior to termination
notice, except to the extent that such materials may reasonably be
used for other customers, (ii) the quoted price applicable for any
affected Products and/or services delivered, ready for shipment, or
in inventory, and (iii) NRE charges as set forth in Exhibit K. EMS's
ownership, as described in section 4 will remain in effect without
expiration. HP shall pay any such charges pursuant to Section 6.3.
If EMS terminates this Agreement for any reason other than due to
HP's breach under this Section 23, HP shall retain the rights
provided in Section 23.5.
23.5 HP Termination. If HP terminates this Agreement or an Attachment
hereto due to EMS's breach under this Section 23, EMS will fill all
applicable previously accepted purchase orders for Products, but EMS
shall not be obligated to accept further applicable purchase orders
after receiving notice. HP may cancel any previously accepted
purchase orders. HP may procure, upon such terms and in such manner
as HP reasonably deems appropriate, products similar to the HP
Product as to which this Agreement is terminated. EMS agrees to
reimburse HP upon demand for additional costs incurred by HP in
purchasing, qualifying and testing such similar products pursuant to
Section 4.2.5. In no event, shall EMS pay mutually agreed upon NRE
costs in excess of those NRE payments made to EMS by HP. EMS further
agrees to continue the performance of this Agreement to the extent
not terminated under the provisions of this Section.
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EMS also agrees to provide all Deliverables, in their then current
state, as defined in section 23.6 below and provide continuing IP
rights as defined in this document for HP's exclusive use during the
life of the HP Product. HP's ownership, as described in Section 4
and for HP's exclusive use will remain in effect without expiration
If HP terminates this Agreement for any reason other than due to
EMS's breach under this Section 23, EMS shall retain the rights
provided in Section 23.4. HP will pay EMS for actual NRE charges
incurred by EMS, not to exceed NRE charges defined in Exhibit K.
23.6 Transfer Of Deliverables. EMS acknowledges that, upon termination of
this Agreement, all Deliverables designed, developed or manufactured
under this Agreement, but not delivered as of the effective date of
termination, and belonging exclusively to HP must be transferred to
HP within 30 days after the effective date of termination, except as
required by surviving provisions. HP acknowledges that, upon
termination of this Agreement, all Deliverables belonging to EMS and
still in the possession of HP and not returned to EMS as of the
effective date of termination must be transferred to EMS within 30
days after the effective date of termination, except as required by
surviving provisions. Payments due EMS for the Deliverables will be
subject to the terms of Section 6.3. Unless otherwise mutually
agreed, or as defined herein, any licenses granted by either party to
the other with respect to the Deliverables will terminate upon the
effective date of termination of this Agreement.
24. Miscellaneous
24.1 Notices. All notices to be given under this Agreement must be in
writing addressed to the receiving party's designated Agreement
Coordinator. Notices are validly given upon the earlier of confirmed
receipt by the receiving party or three days or seven days, for
international notices after dispatch by courier or certified mail,
postage prepaid, properly addressed to the receiving party. Notices
may also be delivered by telefax and will be validly given upon oral
or written confirmation of receipt. Either party may change its
address for purposes of notice by giving notice to the other party in
accordance with these provisions.
24.2 Finacial Statements: EMS shall provide to HP, EMS's finacial
statements upon HP's request.
24.3 Exhibits. Each Exhibit attached to this Agreement is deemed a part
of this Agreement and incorporated herein wherever reference to it is
made.
24.4 Independent Contractors. The relationship of the parties established
under this Agreement is that of independent contractors and neither
party is a partner, employee, agent or joint venturer of or with the
other.
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24.5 Assignment. Neither this Agreement nor any right, license, privilege
or obligation provided herein may be assigned, transferred or shared
by either party without the other party's prior written consent, and
any attempted assignment or transfer is void, except for payments due
EMS and change of ownership as defined in section 4.5. Any merger,
consolidation, reorganization, transfer of substantially all assets
of a party, or other change in control or ownership will be
considered an assignment for the purposes of this Agreement, unless
the surviving entity is a wholly owned subsidiary of a party. This
Agreement will be binding on the successors and permitted assignees
of the parties and the name of the party appearing herein will be
deemed to include the names of such party's successors or permitted
assigns to the extent necessary to carry out the intent of this
Agreement.
24.6 No Waiver. The waiver of any term, condition, or provision of this
Agreement must be in writing and signed by an authorized
representative of the waiving party. Any such waiver will not be
construed as a waiver of any other term, condition, or provision
except as provided in writing, nor as a waiver of any subsequent
breach of the same term, condition, or provision.
24.7 Reference To Days. All references in this Agreement to "days" will,
unless otherwise specified herein, mean calendar days.
24.8 Headings. The Section headings used in this Agreement are for
convenience of reference only. They will not limit or extend the
meaning of any provision of this Agreement, and will not be relevant
in interpreting any provision of this Agreement.
24.9 No Publication. Neither party may publicize or disclose to any third
party, without the written consent of the other party, the terms of
this Agreement. Without limiting the generality of the foregoing
sentence, no press releases may be made without the mutual written
consent of each party.
24.10 Severability. If any provision in this Agreement is held invalid or
unenforceable by a body of competent jurisdiction, such provision
will be construed, limited or, if necessary, severed to the extent
necessary to eliminate such invalidity or unenforceability. The
parties agree to negotiate in good faith a valid, enforceable
substitute provision that most nearly effects the parties' original
intent in entering into this Agreement or to provide an equitable
adjustment in the event no such provision can be added. The other
provisions of this Agreement will remain in full force and effect.
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24.11 Entire Agreement. This Agreement comprises the entire understanding
between the parties with respect to its subject matters and
supersedes any previous communications, representations, or
agreements, whether oral or written. For purposes of construction,
this Agreement will be deemed to have been drafted by both parties.
No modification of this Agreement will be binding on either party
unless in writing and signed by an authorized representative of each
party.
24.12 Governing Law. This Agreement will be governed in all respects by
the laws of New York without reference to any choice of laws
provisions. Both parties agree to waive their right to a jury trial
in any dispute arising out of this Agreement and agree any action
concerning this Agreement shall be brought in a court of competent
jurisdiction in the State of New York. The prevailing party in any
legal action hereunder shall be entitled to reimbursement by the
other party for its expenses, including without limitation,
reasonable attorney's fees.
24.13 Non-Restrictive Agreement. Each party agrees that this Agreement
will not restrict the right of either party to enter into agreements
with other parties for same or similar work, or to make, have made,
use, sell, buy, develop, market or otherwise transfer any products or
services, now or in the future, so long as confidential information
is not disclosed. EMS shall not sell, market or otherwise transfer
to any third party any HP Products using the trademark or trade name
of HP without prior written consent.
24.14 UN Convention on Contracts. The UN Convention on Contracts for the
International Sale of Goods shall not apply to this Agreement.
AGREED AND APPROVED:
EMS HEWLETT-PACKARD COMPANY
By: /S/ L.David Sikes By: **
---------------------- ------------------------
Name: L. David Sikes Name: **
Title: President Title: **
By: /S/ Craig W. Rhodine By: **
---------------------- ------------------------
Name: Craig W. Rhodine Name: **
Title: VP/General Manager Title: **
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EXHIBIT A
Product Description
**
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EXHIBIT B
Eligible Purchasers
**
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EXHIBIT C
Agreement Coordinators
The parties designate the following persons as their Agreement Coordinators.
HP: **
MANUFACTURER: **
**
Unless otherwise agreed by the parties, notices concerning this Agreement will
be provided to the appropriate Agreement Coordinator and addressed as follows:
HEWLETT-PACKARD COMPANY
**
Phone:
Fax:
MANUFACTURER
Enhanced Memory Systems, Inc.
1850 Ramtron Drive
Colorado Springs, CO 80921
Attn: Director of Worldwide Sales
Phone: 1-719-481-7000
Fax: 1-719-488-9095
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EXHIBIT D
Deliverables, Delivery Schedule
**
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EXHIBIT E
Lead Time
**
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EXHIBIT F
Statement of Work
4.1 STATEMENT OF WORK
**
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EXHIBIT G
CONFIDENTIAL DISCLOSURE AGREEMENT
In order to protect certain confidential information, HP and the Participant
identified below, agree to the following:
1. Definitions. A Discloser is a party disclosing confidential information.
A Recipient is a party receiving disclosed confidential information. An
Associate is a subsidiary, parent or corporate affiliate of Recipient, or a
third party contractually bound to Recipient in accord with this Agreement.
2. Agreement Coordinator. Each party designates the following person, if
any, as its Agreement Coordinator for coordinating the disclosure or receipt
of confidential information:
**
Participant: Craig Taylor phone 719-481-7023
3. HP Confidential Information.
(a) Confidential information, if any, disclosed by HP is described as
product design; proto/mfg schedules; introduction timelines;
performance specifications and requirements.---------------
----------------------------- (be specific; write "none" or leave
blank if nothing confidential is disclosed).
(b) and may be used by the Recipient and its Associates, if any, only for
the following purpose and subject to the obligations under Section 5:
product design; technology roadmaps; time to market schedules.-------
-------------------------------------- (for example, "developing
future products", "evaluation for possible licensing", "providing
user support for product xyz", integration of products abc with xyz",
or "any purpose").
4. Participant Confidential Information.
(a) Confidential Information, if any, disclosed by Participant is
described as EMS and subcontractor design documentation; delivery
schedules; intellectual property; mask works; technical manufacturing
information; and product topography. -------------------------------
------------- (be specific; write "none" or leave blank if nothing
confidential is disclosed).
(b) and may be used by the Recipient and its Associates, if any, only for
the following purpose and subject to the obligations under Section 5;
to support HP product design; technology roadmaps; time to market
schedules. --------------------------------------------- (for
example, "developing future products", "evaluation for possible
licensing", "providing user support for product xyz", integration of
products abc with xyz", or "any purpose").
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5. Recipient's Obligations.
(a) Recipient will protect, and will ensure its participating Associates
will protect, the disclosed confidential information by using the
same degree of care, but no less than a reasonable degree of care, to
prevent the unauthorized use, dissemination or publication of the
confidential information as Recipient uses to protect its own
confidential information of a like nature. Recipient may reassign
its employees. Recipient will provide reasonable prior notice to
Discloser if Recipient is required to disclose the confidential
information under operation of law.
(b) Recipient will comply with all applicable export laws.
6. Disclosure and Protection Periods. The Disclosure Period and the
Protection Period start on the Begin Disclosure Date unless a different start
date is specified. Recipient's obligations under Section 5(a) only apply to
confidential information disclosed during the Disclosure Period. Recipient's
obligations under Section 5(a) stop at the end of the Protection Period. The
Disclosure Period will be one month, and the Protection Period will be six
months, if not specified below.
The Begin Disclosure Date is ** (for example, the date confidential
information is first disclosed)
The Disclosure Period ends on the following date or at the end of the
following time period: ** (specify a date or a time period, for example,
soon after the confidential information is last disclosed and preferably less
than one year from the Begin Disclosure Date.)
The Protection Period ends on the following date or at the end of the
following time period: ** (specify a date or time period, for example, soon
after the confidential information is to become public, preferably less than
three years from the Begin Disclosure Date).
7. Marking. Recipient's obligations under this Agreement extend only to
confidential information that is
(a) itemized in Section 3(a) or 4(a); or
(b) both described generally in Section 3(a) or 4(a) and
(i) marked at the time of disclosure to show its confidential
nature, or
(ii) unmarked (for example, orally or visually disclosed) but treated
as confidential at the time of disclosure, and designated to
show its confidential nature in a written message sent to
Recipient's Agreement Coordinator within thirty days after
disclosure, summarizing the disclosed confidential information
sufficiently for identification.
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8. Exclusions. This Agreement imposes no obligation upon Recipient with
respect to information that (a) was in Recipient's possession before receipt
from Discloser, (b) is or becomes publicly known without breach by Recipient,
(c) is rightfully received by Recipient from a third party without a duty of
confidentiality, (d) is disclosed by Discloser to a third party without a duty
of confidentially on the third party, (e) is independently developed or
learned by Recipient or (f) is disclosed by Recipient with Discloser's prior
written approval.
9. Residuals.
(a) Recipient and its Associates, if any, may use and disclose any
Residuals for any purpose, except that no license to any Discloser
patent or copyright is granted under this Section 9. Residuals means
disclosed confidential information remembered by those individuals
within the scope of Recipient's obligations under this Agreement who
no longer have access to the disclosed confidential information.
However, Residuals does not include any detailed financial or
personnel data, or the identity of the Discloser.
(b) If initialed here by both parties, then Section 9(a) does not apply.
HP ** Participant CT
10. Choice of Law. Without regard to choice of law provisions, this
Agreement is governed and will be construed in accordance with the laws of the
State of New York and the USA.
11. Warranty. Each Discloser warrants that it has the right to make the
disclosures under this Agreement. Each Recipient warrants that its
participating Associates will protect disclosed confidential information in
accordance with the terms of this Agreement. NO OTHER WARRANTIES ARE MADE BY
EITHER PARTY UNDER THIS AGREEMENT, ANY CONFIDENTIAL INFORMATION DISCLOSED
UNDER THIS AGREEMENT IS PROVIDED "AS IS."
12. Miscellaneous. Neither party acquires any intellectual property rights
under this Agreement except the rights granted in Section 3, 4 and 9. This
Agreement imposes no obligation on either party to purchase, sell, license,
transfer or otherwise dispose of any technology, services or products. This
Agreement does not create any agency or partnership relationship. All
additions or modifications to this Agreement must be made in writing and must
be signed by both parties. This Agreement may be signed in duplicate
originals, or in separate counterparts, which are effective as if the parties
signed a single original. A facsimile of an original signature transmitted to
the other party is effective as if the original was sent to the other party.
HEWLETT-PACKARD PARTICIPANT
** Enhanced Memory Systems
1850 Ramtron Drive
Colorado Springs, CO 80921
By: /S/ Craig Taylor
Name: Craig Taylor
Title: Director of Worldwide Sales
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EXHIBIT H
Order Quantity
Minimum Order Quantity (MOQ)/Ship Pack Quantity (SPQ)
**
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<PAGE>
EXHIBIT I
Forecasts
HP's Initial Forecast is as follows:
**
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<PAGE>
EXHIBIT J
PRICE (Based on Average Monthly Shipments)
**
Page-57
<PAGE>
EXHIBIT K
NRE CHARGES
**
Page-58
<PAGE>
EXHIBIT L
Hewlett-Packard Supplier Quality System Requirements
**
Page-59
<PAGE>
EXHIBIT M
Device Quality and Reliability
**
Page-60
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