Exhibit 10.28

CONFIDENTIAL TREATMENT REQUESTED – EDITED COPY
**** Certain confidential information contained in this document has been
omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
Omissions are designated as [****].
Endwave Procurement Private
MASTER MANUFACTURING SERVICES
AND SUPPORT AGREEMENT
Between
Endwave Corporation and Hana Microelectronics Limited
October 15, 2006

 

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Table of Contents

                      Page No. Opening and Recitals            
 
        Agreement Terms         Article 1.  
Effective Term
    3   Article 2.  
Scope
    3   Article 3.  
Structure
    4   Article 4.  
Definitions of Terms
    4   Article 5.  
Engagement of Manufacturer
    4   Article 6.  
Responsibilities
    5   Article 7.  
Order Management Process
    7   Article 8.  
Quality
    7   Article 9.  
Engineering Change Notices
    9   Article 10.  
Factory Returns
    10   Article 11.  
New Product Introduction Process
    10   Article 12.  
Property Management & Control
    10   Article 13.  
Intellectual Property
    11   Article 14.  
Contractual Changes
    11   Article 15.  
Reporting and Liaison
    12   Article 16.  
Reviews
    12   Article 17.  
Payment Terms
    13   Article 18.  
Product Warranties & Disclaimers
    13   Article 19.  
Indemnification
    14   Article 20.  
Insurance
    15   Article 21.  
Limitation of Liability
    15   Article 22.  
Confidentiality
    16   Article 23.  
Termination
    17   Article 24.  
Disputes
    17   Article 25.  
General Provisions
    17  

Exhibit 1: Definitions of Terms and Acronyms
Exhibit 2: Service Pricing
Exhibit 3: Hana Provided Manufacturing Material & Supplies
Exhibit 4: Equipment Loan Agreement of January 2005
Appendix A: Logistics Matters
Appendix B: New Product Introduction (“NPI”) Process
Appendix C: Factory Return Process and Procedures

 

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Endwave Procurement Private
Master Manufacturing Services Support Agreement
          This Master Manufacturing Services & Support Agreement, hereinafter
referred to as the “Agreement” or alternately “MMSSA,” is made by and between
Endwave Corporation, With principal offices at 776 Palomar Avenue, Sunnyvale,
California 94085 (“Buyer”) and Hana Microelectronics Ltd. with principal offices
at 10/12 Moo 4, Chiangmai-Lampang Road, T. Baanklang, Lamphun 51000, Thailand
(“Manufacturer”), and is effective on and after October 15,2006.
Recitals
          Whereas, Buyer’s addressable world-wide market has expanded in terms
of numbers of customers, unit volume, and variants of microelectronic
transceiver designs since 2002; and
          Whereas, the previous contractual arrangements only address and
regulate [****] products; and
          Whereas, the parties each desire to update their contractual
arrangements to more completely and clearly reflect current and projected
business needs for new product introduction, build-to-forecast procedures,
single-piece flow manufacturing, annual cost reduction and continuous
improvement;
          Now Therefore, in exchange for their mutual promises and other good
and valuable consideration, the sufficiency of which is acknowledged, Buyer and
Manufacturer do hereby agree to a revised contractual relationship as more
particularly set forth below.
Terms of Agreement
     1. Effective Term. The parties agree to a fixed term of 2 years commencing
October 15, 2006 (the “Effective Date”) and concluding, unless earlier
terminated or extended by mutual agreement, on October 14. 2008. Additionally,
the parties agree that the contract relationship established hereunder shall
automatically continue without interruption for successive one year terms, on
the same contractual terms and conditions, if neither party gives the other
party at least 365 days advance written notice of its intention not to renew.
     2. Scope. This Agreement is intended by the parties to comprehensively
define and document the business relationship now subsisting between them, and
to create a flexible framework for accommodating unknown future changes in
business requirements and prices in a mutually beneficial way. Accordingly, this
Agreement intentionally describes and endorses voluntary commercial behavioral
rules that are aimed at establishing, protecting, and improving a vital
commercial relationship built on trust, respect, and goodwill.
**** Certain confidential information contained in this document has been
omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
Omissions are designated as [****].

 

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Endwave Procurement Private
     3. Structure. This Agreement is Structured as a relationship “frame
agreement”, with legally and operationally significant commercial terms and
conditions applicable the entire relationship expressed in the main body of the
Agreement. Logistical process and procedure describing the recurring mainstream
planning-forecasting-ordering-build-ship cycle of activity is the subject of
Appendix A to this Agreement. Subsequent Appendices shall be modular in
construction, and address Buyer end-user customer specific requirements, such as
Appendix B. New Product Introduction. In this regard, any Exhibit or Appendix
referred to in the main body of this Agreement is considered to be incorporated
by reference into the Agreement, and is regarded as integral to the whole.
Lastly, as the commercial nature and volume of business changes, additional
Appendices may be amended to this Agreement by written amendment in accordance
with the Changes clause below.
     4. Definitions of Terms. To the extent that this Agreement uses words,
terms or phrases that have specialized meaning to the parties that are not
defined in the body of this MMSSA. they shall be defined in Exhibit 1 to this
Agreement, which Exhibit is incorporated by reference.
     5. Engagement of Manufacturer.
          5.1 Manufacture of Products for Buyer. Buyer hereby engages, hires and
retains Manufacturer on a non-exclusive basis to manufacture, assemble, test,
inspect, pack, ship, and repair Buyer designed Products in accordance with the
terms of this Agreement, including applicable exhibits and appendices, solely
for sale to Buyer. Manufacturer acknowledges and agrees that Buyer shall retain
the right, either on its own or through the use of a third party, to obtain the
same services as provided by Manufacturer hereunder. Unless otherwise agreed.
Manufacturer is not responsible for the design of Buyer products.
          5.2 Manufacturing Facility. Manufacturer shall fulfill its obligations
under this Agreement solely at a facility designated and approved in writing by
Buyer (the “Manufacturing Facility”). Initially, it is agreed by the parties
that all manufacturing service will be performed by Manufacturer at its existing
facility in the free trade zone at Lamphun, Thailand.
          5.3 Exclusivity of Production. Manufacturer herby undertakes to supply
Products to Buyer, and to allocate sufficient labor, facility, capital
equipment, tools, and other resources as may be required to manage and control
manufacturing operations in accordance with delivery schedules and orders placed
under the provisions of Appendix A. Manufacturer will manufacture the Products
exclusively for Buyer and will not sell or otherwise provide covered Products,
in sample form or otherwise, to any other person, firm, company, or government
without Buyer’s prior written approval. Except as provided in Article 19
(Indemnification), nothing in this MMSSA is intended to grant to Manufacturer a
license to the Products or to any Buyer Technology or Intellectual Properly by
virtue of the services to be performed.
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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Endwave Procurement Private
          5.4 Non-Delegable Responsibility. Manufacturer acknowledges that Buyer
has elected to contract with Manufacturer on a preferred basis due to Buyer’s
understanding of and belief in Manufacturer’s unique skill in concurrent
manufacturing of high volume products of varying design and complexity.
Therefore, Manufacturer’s rights and obligations under this MMSSA may not be
subcontracted or assigned to any third party or successor entity without the
express written consent of Buyer. In the event that Buyer provides such written
consent, Manufacturer shall remain wholly responsible to Buyer for the acts or
omissions of any approved third party or successor entity.
          5.5 Covenant Not To Compete. As an integral part of its engagement,
and in consideration of the service prices to be paid by Buyer under this
Agreement, Manufacturer agrees not to compete with Buyer in the design,
manufacture, selling or reselling of micro-electronics devices for the worldwide
telecommunications, defense, national security, or homeland security markets.
This covenant not to compete is expressly limited to the following two
situations: (a) where Manufacturer acts as [****] ; and b) where Manufacturer
enters into [****] . This Agreement does not preclude [****] , provided that
Manufacturer does not [****] .
     6. Responsibilities.
          6.1 Manufacturer’s Responsibilities. Throughout the period described
by this MMSSA. and any extensions thereto, the Manufacturer shall be responsible
for the following performance obligations:
               (a) manage the manufacturing process, through the daily planning,
organization and supervision of material flow, personnel assignment and
rotation, and machine performance, including the provision of consumable
manufacturing material and supplies as listed in Exhibit 3;
               (b) comply with the operational provisions and procedures
described by Appendix A to this Agreement;
               (c) maintain a Kanban supply of finished goods equal to or less
than [****]in secure storage between 15-30 degrees C, and 25-75% relative
humidity;
               (d) monitor and maintain Buyer supplied Exhibit 4 Automated Test
Equipment in good working order, and report ATE defects as discovered or
suspected;
               (e) reduce raw component scrap rate to a goal of [****] Buyer
supplied raw material, through an active program including the reporting of
results at least weekly in a mutually agreed format;
               (f) detect, report and follow-up with component vendors on RMI
components that are judged by Manufacturer to require a Return To Vendor (“RTV”)
for quality reasons;
               (g) make progress towards a goal of [****]yields on finished
goods for products not in NPI;
               (h) collaborate with Buyer in the development of a plan for
Continuous Improvement, including the commission of Kaizen teams as appropriate;
               (i) report on weekly Quality data as detailed in Article 8 below;
               (j) provide Buyer’s staff, including local RO members, with
Facility access as required and reasonably requested;
               (k) provide Buyers customers with Manufacturing Facility access,
as reasonably requested in advance, and on a not-to-interfere basis;
               (l) to support the conduct of Buyer’s evaluation of
manufacturability, provide a small space near the designated manufacturing line
for the
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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Endwave Procurement Private
conduct of Buyers engineering evaluation of engineering prototype or engineering
production unit testing and evaluation on Buyer supplied test equipment;
               (m) report perceived problems as encountered or suspected to
Buyer’s designated representatives for prompt mutual resolution;
               (n) ensure that all discrepant material and assemblies are
identified, placed into Material Review Board (“MRB”) approved storage, and are
visibly identified and linked to a Consigned Material Disposition Report
(“CMDR”), or a NCRB, or a CDR ticket number, or any non-conforming item report
ticket number system;
               (o) when specified by Buyer, ensure that all manufacturing
materials provided by Manufacturer are lead-free and handled compliant with EU
Directives addressing RoHS and WEEE- requirements no later than July 1, 2006,
specifically EU RoHS Directive 2002/95/EC and IPC/JEDEC J-STD-033A.
               (p) periodically meet and confer with Buyer in evaluating and
revising prices upwards or downwards based upon changed conditions, performance
trends, or market conditions.
          6.2 Buyer’s Responsibilities. Throughout the period described by this
MMSSA, and any extensions thereto, the Buyer shall be responsible for the
following performance obligations:
               (a) actively collaborate and support the Manufacturer’s execution
of its responsibilities detailed in Article 6.1 immediately above;
               (b) comply with the operational provisions and procedures of
Appendix A;
               (c) provide all manufacturing raw material and components to the
Manufacturer, except for manufacturing solder, solder paste, and epoxy;s
               (d) provide manufacturing technical support as requested or
required, including the provision of replacement ATF, if required;
               (e) exercise effective configuration control over all designs
released to Manufacturer;
               (f) train Manufacturer’s personnel in new designs, associated
tooling, and software as necessary to release new products to full Manufacturing
after Production Validation testing;
               (g) collaborate with Manufacturer’s designated representatives in
continuous improvement efforts aimed at reducing scrap, attrition, and cost;
               (h) perform on-site lot sampling as required on a
not-to-interfere basis in order to validate Manufacturer’s compliance with the
provisions of Article 8 (Quality);
               (i) actively participate in weekly production progress reviews
and quarterly management reviews;
               (j) host Buyer’s customer visits to the Manufacturing Facility on
a not-to-interfere basis:
               (k) timely pay Manufacturer for its services;
               (l) ensure timely MRB-directed disposition of discrepant material
through written CMDRs and CDRs:
               (m) be responsible for material scrapped during the NPI process;
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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Endwave Procurement Private
               (n) [****]meet and confer with Manufacturer in evaluating and
revising prices upwards or downwards based upon changed conditions, performance
trends or market conditions, including the mutual determination of the [****],
if any, based upon the most recently concluded [****], which [****]shall be
billed and made payable as a [****]
     7. Order Management Process. The parties agree that Appendix A shall govern
their respective day-to-day procedures and activities comprising the
manufacturing cycle. Accordingly, Appendix A shall define the parties respective
and coordinated actions in staging materials (Buyer), issuing kit launch orders
per updated forecast (Buyer), kitting pre-fabrication bins (Manufacturer), and
manufacturing assembly, test, inspect, pack and ship tasks (Manufacturer) within
the prescribed cycle. The order issuance and management process supporting the
described manufacturing cycle shall also be as stated in Appendix A as of the
Effective Date, or as that Appendix may be updated from time to time in the form
of an amendment to this Agreement.
     8. Quality. In fulfilling its obligations under this MMSSA, Manufacturer
shall comply at all times with the quality control provisions of this Article 8,
as more specifically addressed herein.
          8.1 Quality Warranty. Manufacturer warrants that it shall manufacture
the products strictly in accordance with the Buyer’s individual product
Specifications, Quality requirements and notes, and utilizing Buyer’s approved
Workmanship standards published in manual [****] .
          8.2 Supplier Quality. If applicable, the Manufacturer shall exercise
appropriate control and oversight of any sub-suppliers it may choose to utilize,
provided that the Manufacturer shall [****] provide to Buyer’s Quality Director
a list of sub-supplier component and service vendors it is using to support the
Objectives of this Agreement. The Manufacturer may assume that any vendor
material procured by Buyer for use by Manufacturer originates from an approved
Buyer source, and that Manufacturer is authorized to deal direct with Buyer
vendors on Return To Vendor items that are found or judged to be deficient.
          8.3 Facility. Manufacturer shall not transfer the manufacture of
Products, in whole or part, to another facility without the prior written
consent of Buyer.
          8.4 New Designs. As part of the New Product Introduction (“NPI”)
process discussed elsewhere in this MMSSA (Article 11 and Appendix B),
Manufacturer shall provide [****] finished goods quality manufacturing samples
of new Product designs to Buyer’s Quality Assurance representative for the
purposes of qualifying the manufacturing process with respect to that new
Product. Once the Product and the process are judged to be stable and repeatable
by Buyer’s Quality Assurance Director, or his designee, then Production
Validation is complete and that manufacturing process shall be considered
baselined under Manufacturer’s control.
          8.5 Quality System Standard. Manufacturer agrees that at all times
during the effective period of this MMSSA, and any extensions thereto,
Manufacturer shall maintain a quality assurance system that is equal to or
superior to ISO 9002. Any formal
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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Endwave Procurement Private
change in the Manufacturer’s certified ISO status shall be reported to Buyer
within thirty (30) days, whether the change in status was planned or unplanned.
          8.6 Environmental Management System. Manufacturer agrees that at all
times during the effective period of this MMSSA, and any extensions thereto,
Manufacturer shall maintain an environmental management system that is equal to
or superior to ISO Standard 14001. Any formal change in the Manufacturer’s
certified ISO status–whether planned or unplanned–shall be reported to Buyer
within [****] .
          8.7 Site Visits and Surveys. Manufacturer shall permit Buyer, its
authorized employees and/or its customers, to enter the Manufacturing Facility
at all reasonable times and with advance notice to the Manufacturer’s
supervisory representative, for the purposes of facility and product audits, or
inspecting and testing the Products and their conformance to Specifications.
Such site visits or surveys shall be informal in nature, and shall properly
extend to the checking of materials and methods of manufacture, assembly,
labeling, testing, line “traveler” documentation, manufacturing line inventory
control, product traceability, RoHS compliance and packaging of Product.
Although it is not intended that Buyer perform 100% finished goods inspection
prior to shipment, all Products supplied hereunder are subject to on-site
inspection and test by Buyer to the extent specific circumstances warrant doing
so.
          8.8 Disaster Planning. The Manufacturer shall propose a disaster
recovery plan of its own composition within [****] of the Effective Date of this
MMSSA. Local Buyer representatives may be consulted at no cost to aid
Manufacturer’s construction of such a Plan. The Plan shall describe in
reasonable detail what recovery, or relocation, or work-around steps the
Manufacturer shall take in the event of natural or man-made disasters (such as
loss of regional Internet or other utility service). The Plan shall be finalized
with Buyer’s approval, and reviewed annually thereafter for continued currency.
          8.9 Manufacturing Metrics. Manufacturer shall establish and use a
standard set of manufacturing metrics (“Metrics”) through which Manufacturer
will accurately discover data to guide continuous improvement in [****] . At a
minimum, Metrics shall be collected on a weekly basis concerning: (a) [****]
(defined as the sum of [****] ); (b) [****] (at [****] ); (c) [****] ; (d)
[****] ( [****] ); (e) [****] ( [****] ); (f) [****] ( [****] ) along with
written improvement plan(s) for any step indicating an out-of-control or
degrading condition.
          8.10 Access to Information and Corrective Action. In order to provide
the objective evidence that Quality requirements under this Agreement are being
fully met, Manufacturer shall maintain records of the quality information
required by this Article 8 at its Manufacturing Facility in Lamphun for a period
of not less than [****] years. Manufacturer will provide Buyer with access to
such information, either through secure electronic data interchange, or through
on-site visits during normal working hours with reasonable advance notice. In
the event that Buyer concludes from a review of the available data that
Manufacturer is not meeting its quality control obligations under this MMSSA,
Buyer shall promptly inform the Manufacturer’s designated representative in
writing. Thereafter, but in no event longer than [****] days, Manufacturer shall
comment upon Buyer’s conclusions and findings, and within a commercially
reasonable time, take appropriate corrective action.
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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Endwave Procurement Private
     9. Engineering Change Notices (ECNs). The contractual relationship
described by this Agreement can be characterized as a “build-to-print”
arrangement whereby Manufacturer produces products designed by Buyer. Given the
number of models and variants that Manufacturer is qualified to produce, as well
as the dynamic market forces characterizing Buyer’s competitive market, it is
expected that the Buyer (as designer) will have many engineering changes to make
over the lifetime of any released product. This section is intended to describe
the stable and repeatable Engineering Change process incumbent upon the parties,
from first notice to Manufacturer through release into mass production.
          9.1 The Engineering Change process affecting Manufacturers obligations
under this Agreement shall be as follows:
                    i. Buyer shall post Buyer-released Engineering Change
Notices electronically to Manufacturer’s ftp website in an agreed upon formal,
along with e-mail notice that an ECN has been posted;
                    ii. Buyer’s Document Control Service shall indicate via
e-mail whether each ECN is to be treated by Manufacturer as a “Routine” or
“Emergent” ECN, and shall copy each ECN posting concurrently to the Buyer’s
in-country RO staff engineer;
                    iii. Manufacturer shall acknowledge receipt of all ECN’s
within [****] of receipt via e-mail to Buyer’s Document Control Services
personnel, including their assessment as to whether the ECN increases or
decreases cost or time of performance;
                    iv. In the event that Manufacturer believes in good faith
that the ECN represents an increase or decrease in scope, they shall notify the
local Buyer RO Staff Engineer for consultation, clarification, and written
contractual direction;
                    v. In the expected event that the Manufacturer understands
and accepts the ECN and its technical requirements, the Manufacturer shall
commence the incorporation of the change through its engineering Document
Control Service, and publish a revised Bill of Material (‘“BOM”) via [****] , or
equivalent, back to Buyer’s Document Control Services personnel;
                    vi. Manufacturer’s implementation of accepted ECNs shall be
on a [****] basis for “Emergent” changes, and on a [****] basis for Routine
changes; exceptional cases shall be handled on a case by case basis;
                    vii. Upon receipt of the Manufacturer’s revised BOM, the
Buyer’s Document Control Service shall fully and finally release and implement
the ECN into production, whereby new units built after that date must
incorporate the newly released ECN;
                    viii. In the event that the Manufacturer cannot implement
the ECN, or believes it to be in error, the Manufacturer shall notify both the
local Buyer RO staff engineer and Buyer’s Document Control Service, whereupon
Buyer’s Document Control Service will cause the ECN to be re-examined by Buyer’s
Engineering group;
                    ix. Both Buyer and Manufacturer shall maintain on ECN log
record, and use the log to brief the implementation status of all ECNs at the
quarterly review meeting discussed elsewhere in this Agreement.
          9.2 ECN Process Review. The parties shall from time-to-time also
review the adequacy and effectiveness of the ECN process, and shall revise it as
necessary to accomplish the objectives of this MMSSA.
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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Endwave Procurement Private
     10. Factory Returns. Because of its on-going importance in the conduct of
business under this MMSSA, the subject of Factory Returns, also called and known
as “RMA Process and Procedures.” is made the subject of a separate Appendix to
this Agreement (Appendix C), incorporated by reference as if fully set out
herein.
     11. New Product Introduction (“NPI”) Process. Although this Agreement
predominantly addresses itself to the standard manufacture of released products,
the parties contemplate that during the life of this MMSSA, newly designed Buyer
products will be introduced for low-rate or high-volume production. The
transition from Production Validation (“PV”) to Pull Production is a crucial
period, so much so that the parties have agreed to make it the subject of a
separate Appendix to this Agreement (Appendix B), incorporated by reference as
if fully set out herein.
     12. Property Management & Control. In view of the Buyer’s considerable
financial investment in procuring and providing raw materials to enable
“turn-key” manufacturing, Manufacturer shall implement a Material Control Plan
that effectively receives, tracks, and accounts for component material used,
consumed or scrapped in the manufacturing process. Such a Material Control Plan
shall also include provisions for the environmentally protected protection and
storage of work-in-process, finished goods inventory, and kanban buffer stock.
The Material Control Plan shall include provisions for monthly inventory of
piece parts recorded in the [****] management system, and a confirming physical
inventory at least [****] , at times and in a manner as the Manufacturer deems
appropriate. The Manufacturer’s Material Control Plan shall be furnished to
Buyer’s local representatives within [****] of the Effective Date of this
Agreement. Lastly, the Manufacturer shall procure adequate insurance against
risk of casualty loss for Buyer furnished materials, work-in-process, finished
goods, and property in Manufacturer’s custody as required under Article 20
(Insurance) of this MMSSA.
     13. Intellectual Property.
          13.1 Buyer’s IP Rights. Product designs, selected microwave monolithic
integrated circuit (“mmic”) designs, design documentation, hardware, software.
Buyer designed special tooling, fixtures, firmware, Automated Test Equipment
(ATE), Specifications and Buyer Work Instructions representing manufacturing
know-how constitute Buyer Technology. At all times hereunder, Buyer shall retain
and exclusively enjoy all ownership rights in Buyer Technology. All Buyer
Technology included in the license granted to Manufacturer immediately below in
Article 13.2 shall be licensed without fee or royalty. In consideration of this,
Manufacturer shall assign to Buyer all ownership rights in any improvements and
developments funded by Buyer, or co-funded by the parties, in derivatives of
and/or modifications to the Products or the underlying Buyer Technology,
including all related Intellectual Property, that is created by either party
during the term of this Agreement.
          13.2 Manufacturer’s IP Rights. Subject to the terms and conditions of
this Agreement, including but not limited to Manufacturer’s Confidentiality
obligations under Article 22, Buyer hereby grants to Manufacturer a revocable,
royalty-free, non-exclusive, fully paid and non-transferable license in and to
the Buyer Technology, solely as necessary to permit Manufacturer to perform its
obligations under this MMSSA.
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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Endwave Procurement Private
          13.3 Limitations on Rights. The following operational considerations
constitute limitations on the Intellectual Property rights exercisable under
this Agreement:
               (a) the design of all Products under this Agreement is
proprietary to Buyer;
               (b) Manufacturer does not acquire any right to manufacture and/or
sell Products passing under this Agreement to any third parties;
               (c) Buyer retains all copyrights in drawings, specifications,
data, software and other material represented in fixed tangible media;
               (d) Manufacturer shall not mention or present information to
unaffiliated third parties concerning this Agreement or the engagement it
controls without the express written consent of Buyer;
               (e) Buyer acknowledges that the Manufacturer may be required to
declare Buyers name for customs, export, or other governmental purposes;
               (f) Buyer does not assert intellectual property rights over
Manufacturer’s pre-existing Intellectual Property know-how respecting the
manufacturing process.
     14. Contractual Changes. Buyer may from time to time issue written changes
to this contract as may be required to account for revised business
requirements. Such changes include, but are not limited to, place of
manufacturing, method of shipment, and modification of express responsibilities
delineated in Article 6, above. In the event Buyer issues a written change to
this contract under the authority of this Article 14, Manufacturer shall have
[****] to assert a claim for equitable adjustment in the prices to be paid for
Products, or for service fees not previously within the scope of the contract. A
failure to assert a claim for equitable adjustment within the prescribed [****]
period shall be conclusive as to whether the ordered change is reimbursable or
not by Buyer. Moreover, in the event that Buyer’s conduct (including contractual
direction by authorized Buyer representatives) under this MMSSA is deemed to
constitute a material or cardinal change in Manufacturer’s existing obligations,
Manufacturer may assert a unilateral claim for equitable adjustment for the
Buyer’s consideration prior to performing the allegedly changed work. In such a
case, the parties shall immediately meet and confer as to whether the changed
requirement shall be the subject of a formal, written contract amendment. A
failure to agree shall be treated as a dispute under the provisions of the
Disputes clause (Article 24).
     15. Reporting and Liaison. Regular reporting and close professional liaison
on a [****] basis is considered critical by the parties to maintaining a
commercially vibrant and mutually beneficial relationship. In the service of
this objective, Buyer has established an in-country Representative Office,
principally to facilitate regular, rapid and accurate exchange of information
concerning new orders, work in process, engineering, and quality concerns. Both
Buyer and Manufacturer commit to exert best efforts in meeting reporting and
liaison objectives as follows:
                    (a) [****] telephone calls and e-mail correspondence as
circumstances require;
                    (b) [****] electronic data exchange (“EDI”);
                    (c) [****] Production Progress reviews at Factory or the RO
facility
                    (d) [****] Quality metrics reporting and physical inventory
reporting, within 5 days of the conclusion of the prior month;
                    (e) Quarterly Management Reviews at Factory or the RO
facility in accordance with Article 16, below;
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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                    (f) Periodic Executive Management meetings as requested by
either party;
                    (g) Periodic Kaizen Team meetings, as required, to enable
mutually selected manufacturing or business process improvement efforts.
     16. Reviews. The Quarterly Management Review (“QMR”) shall be treated by
the parties as the primary method for clear communications and refreshing of
contract objectives. In light of the volume of supporting communications
occurring in a typical week, month or quarter, QMRs shall be treated by the
parties as action-oriented reviews of progress, problems, and plans. The QMR
shall be convened no later than the [****] of a new quarter, and shall be closed
to non-Buyer and non-Manufacturer personnel. The QMR shall nominally be held
either at the Manufacturing Facility, or at Buyer’s RO, or at such other
mutually agreeable place as the parties shall select. The QMR shall be chaired
by [****] , or in his absence, the Buyer’s [****] . Although either party may
propose additional topical discussion, the standard QMR agenda shall be as
follows:

  (a)   [****];     (b)   [****];     (c)   [****];     (d)   [****];     (e)  
[****];     (f)   [****];     (g)   [****];     (h)   [****];     (i)   [****].

Buyer shall be responsible for composing and publishing QMR meeting minutes
within [****] of the conclusion of the meeting for appropriate distribution via
electronic means.
     17. Payment Terms.
          17.1 Payments. Provided that Manufacturer is in compliance with the
terms and conditions of this Agreement, Buyer shall pay Manufacturer as full and
complete compensation the Product prices stated in Exhibit 2 Product Pricing,
attached hereto and incorporated by reference. Such amount shall be payable in
United States dollars (“USD”) within [****] of receipt of a conforming
Manufacturer’s invoice. If Buyer shall dispute any portion of any invoice, then
Buyer shall promptly pay the undisputed portion according to this Agreement,
while concurrently informing Manufacturer of the nature of the dispute. The
parties shall use their best efforts to promptly resolve the discrepancy. A
failure to do so shall be handled under the Disputes clause of this MMSSA.
          17.2 Payment Conditions. All payments made by Buyer are conditional on
the following: (i.) Manufacturer has delivered the full quantities of the
Products ordered, or has received Buyers written permission to make a partial
delivery, and (ii.) the delivered Products conform to the Product Specifications
and Workmanship standards in all material respects. Buyer is entitled to
withhold payment for any unapproved partial deliveries. Lastly, undisputed
payments owed by Buyer to Manufacturer shall be deemed late after [****] from
receipt of a proper invoice, and shall thereafter bear simple interest at a rate
of [****] per annum.
          17.3 Taxes and Duties. Except as otherwise provided in this Agreement,
all Product prices are net of any taxes and duties. Buyer agrees that it is
responsible for and
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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shall reimburse Manufacturer for any sales, use, import, export, value-added or
similar tax or duty relating to any Product pursuant to the terms of this MMSSA,
paid by Manufacturer on Buyer’s behalf, other than those based on Manufacturer’s
net income. If a resale certificate or other certificate or document of
exemption is required in order to exempt manufactured Product from such
liability, Manufacturer agrees to promptly execute and furnish such document or
certificate to Buyer and relevant taxing authorities. In the event that The
Manufacturing Facility is relocated from the Lamphun Free Trade Zone, or
otherwise loses its free-trade status, the parties agree to renegotiate this
provision.
     18. Product Warranties & Disclaimers.
          18.1 Product Warranty. Manufacturer warrants to Buyer that (a) upon
delivery, each unit of Product will he free and clear of any lien or
encumbrance; (b) each unit of Product will conform in all material respects to
the Specifications and Quality criteria; (c) be made entirely of new or unused
material, and (d) each unit of Product will be free from defects in workmanship
and materials under ordinary and proper use for [****] from the date
Manufacturer ships the Product to Buyer or Buyer’s designated customer (the
“Product Warranty”). For the avoidance of doubt, the following elements are
included in this Product Warranty: (i.) all Product tendered for delivery shall
be new, unused, and in good working order; (ii.) be free from defects in
materials and workmanship, excluding design defects or Buyer supplied RMI
material; (iii.) strictly conform to the Specifications and Quality Requirements
in all material respects; and (iv.) unless a particular Manufacturer’s Failure
Analysis Report determines beyond reasonable doubt that a returned product is
defective because of customer or Buyer mishandling or abuse, Manufacturer shall
pay for all costs of repair or replacement of defective Product.
          18.2 Warranty Service. If any unit of Product breaches the Product
Warranty, Manufacturer shall promptly either repair or replace, at
Manufacturer’s option, or by mutual agreement, credit Buyer for, Buyer’s sale
price of the breaching unit(s). The [****] Product Warranty shall also apply to
all Products supplied by Manufacturer in replacement of defective Products.
Whether Manufacturer elects to repair or replace defective product, the
Manufacturer shall comply with the RMA unit cycle-time requirements delineated
in Article 10 (Factory Returns) above.
          18.3 Latent Defects. Notwithstanding any time limitations set forth in
this Article 18, Manufacturer shall repair or replace, at its expense, any unit
of Product that contains a defect that existed at the time of manufacture but
without being then active or discernible or evident, such that the defect could
not have been discovered through the exercise of ordinary manufacturing
diligence under acceptance test methods then customary in the industry.
          18.4 Repair/Replacement System. Manufacturer shall be solely
responsible for establishing an effective system for receiving,
trouble-shooting, discovering, and repairing previously delivered Products
returned by Buyer or Buyer’s customer within the [****] Product Warranty period,
as described in Article 10. The parties agree that their mutual manufacturing
excellence goal is to keep factory warranty returns [****] of total units
delivered.
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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          18.5 Non-Warranty Returns. (Reserved).
          18.6 Reporting. Consistent with the provisions of Article 10 and
Article 8 (Quality Requirements), Manufacturer shall provide Buyer with a
standard monthly report containing data relating to all units of Product
returned to Manufacturer for repair or replacement. Such unit specific reporting
data shall include: (i.) the serial number(s) of the received unit(s); (ii.) a
description by serial number of the actions taken to repair or replace; (iii.)
an indication whether such repair or replacement action is made under the
Product Warranty; (iv.) the price charged for such repair or replacement if not
made under the Product Warranty. Such data, and past reports containing data,
shall be retained by Manufacturer and available for on-site inspection by
authorized Buyer Representatives.
     19. Indemnification.
          19.1 Infringement Indemnification by Manufacturer. Subject to the
terms and conditions of this Agreement, Manufacturer will indemnify, defend and
hold Buyer harmless from and against any damages, liabilities, costs and
expenses (including reasonable attorney’s fees) actually paid by Buyer in
settlement of, or held against Buyer arising out of, a claim that (a) the use or
sale of any Product infringes a patent, copyright, trade secret or other
proprietary right of a third party (a “Third Party Proprietary Right”), to the
extent such claim is based upon modifications to the Product, Specifications, or
Product Quality Criteria made by Manufacturer, or (b) the manufacturing process
used by Manufacturer to produce the Product infringes any Third Party
Proprietary Right.
          19.2 Infringement Indemnification by Buyer. Subject to the terms and
conditions of this Agreement, Buyer will indemnify, defend and hold Manufacturer
harmless from and against any damages, liabilities, costs and expenses
(including reasonable attorney’s fees) actually paid by Manufacturer in
settlement of, or held against Manufacturer arising out of, a claim that the
manufacture or use of any Product infringes a Third Party Proprietary Right, to
the extent such claim is based upon the manufacture of a Product made in
accordance with the Specifications and/or Product Quality Criteria.
          19.3 Product Liability. Subject to the terms and conditions of this
Agreement, Manufacturer will indemnify, defend and hold Buyer harmless from and
against any damages, liabilities, costs and expenses (including reasonable
attorney’s fees) actually paid by Buyer in settlement of, or held against Buyer
arising out of, a claim by a third party for personal injury or property damage
which arises out of (a) a [****] , or (b) the [****] , provided that the
personal injury or properly damage was not caused by use of products outside of
their intended usage. Any settlement or compromise of claims effecting this
indemnification shall be coordinated and mutually agreed upon between the
parties before being finalized with any third party claimants.
          19.4 Indemnification Procedure. A party seeking indemnification under
this Agreement (the “Indemnified Party”) will (a) give the other party (the
“Indemnifying Party”) notice of such claim; (b) cooperate with the Indemnifying
Party, at the Indemnifying Party’s expense, in the defense of such claim; and
(c) give the Indemnifying Party the right to control the defense and settlement
of any such claim, except that the Indemnifying Party will not enter into any
settlement that affects the Indemnified Party’s rights or interest without the
Indemnified Party’s prior written consent. The Indemnified
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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Party shall have no right or authority to settle any claim on behalf of the
Indemnifying Party.
     20. Insurance. Manufacturer shall at all times maintain “all risk” or
similar insurance (including coverage for damage caused by earthquake, fire.
flooding and construction defects) in an amount equal to [****] . Within [****]
of the Effective Date, Manufacturer shall provide written proof of commercial
casually loss or self insurance coverage in a minimum amount of [****] with a
reputable insurance or re-insurance company of its own choosing, naming Endwave
Corporation as an Additional Insured party.
     21. Limitation of Liability. TO THE EXTENT PERMITTED BY APPLICABLE LAW, IN
NO EVENT SHALL EITHER PARTY BE LIABLE UNDER THIS AGREEMENT FOR ANY INDIRECT,
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PROFITS,
INCURRED BY THE OTHER PARTY, WHETHER IN AN ACTION IN CONTRACT, TORT, OR BASED ON
WARRANTY, EVEN IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
THE FOREGOING LIMITATIONS SHALL NOT APPLY TO MANUFACTURERS LIABILITY UNDER
SECTIONS 19 (Indemnification) OR TO A BREACH BY MANUFACTURER OF ITS OBLIGATIONS
UNDER SECTION 22 (Confidentiality).
     22. Confidentiality.
          22.1 Restrictions on Use and Disclosure. Recipient agrees to hold the
Discloser’s Confidential Information in strict confidence, and to use such
reasonable precautions to protect such Confidential Information as it employs to
protect its own Confidential Information, but in no case shall such protective
actions be less than a reasonable standard of care as practiced in the
competitive microelectronics manufacturing industry. Except as expressly set
forth herein, Recipient may not disclose Discloser’s Confidential Information or
any information derived therefrom to any third party. Recipient agrees not to
use Discloser’s Confidential Information for any purpose other than as necessary
to fulfill Recipient’s obligations or exercise its rights under this MMSSA.
Recipient will limit access to Discloser’s Confidential Information to
Recipients employees and authorized directors, agents or representatives who are
bound by pre-existing obligations of confidentiality substantially similar to,
and no less restrictive than, those contained herein. Recipient agrees to take
all reasonable steps to ensure that the Discloser’s Confidential Information is
not disclosed or distributed by its employees, directors, agents or authorized
representatives in violation of the terms of this Agreement. Recipient agrees to
promptly advise the Discloser if Recipient is aware or suspects that the
security of the Discloser’s Confidential Information has been or may be
compromised in any way.
          22.2 Required Disclosure. The restrictions of Article 22.1 will not
operate to prevent disclosures of Confidential Information required by any law
or regulation, or in response to a valid order by a court of competent
jurisdiction or other governmental authority; provided however, that:
(a) Recipient provides the Discloser with prompt written notice of such pending
disclosure, if reasonable under the circumstances, in order to provide the
Discloser (at its own expense) to object to the disclosure, or to seek
confidential treatment or other protective measures to preserve to the extent
possible the
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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confidentiality of the Confidential Information and (b) Recipient reasonably
cooperates with Discloser in connection therewith, at Discloser’s expense.
          22.3 Injunctive Relief. The recipient acknowledges that the
Discloser’s Confidential Information constitutes valuable trade secrets of the
Discloser. Recipient acknowledges that any unauthorized use or disclosure of
Discloser’s Confidential Information would cause Discloser irreparable harm, for
which Discloser’s remedies at law would be inadequate. Accordingly. Recipient
acknowledges and agrees that if any such unauthorized use or disclosure occurs,
the Discloser will be entitled, in addition to any other remedies available to
it at law or in equity, to seek the issuance of injunctive or equitable relief.
          22.4 No Rights Granted. Except as otherwise provided in this MMSSA,
the Recipient acquires no license or other rights to any Confidential
Information of the Discloser, including, without limitation, any right that has
issued or may issue based upon such Confidential Information. All Confidential
Information and materials furnished to the Recipient by the Discloser, and all
copies thereof made by the Recipient, will remain the property of the Discloser.
          22.5 Survival of Rights. Discloser’s rights to the protection of its
own Confidential Information shall survive this Agreement, and are not
diminished in any way by the suspension, termination, assignment, or completion
of other executory obligations under the contract.
     23. Termination.
          23.1 Termination for Convenience. Either party may terminate this
MMSSA without cause and for its own convenience upon the giving of at least
365 days written notice to the other party.
          23.2 Termination for Cause. Either party may terminate this Agreement
upon written notice to the other for the breach of any material provision of
this Agreement. For a material breach that is capable of being cured in the
reasonable judgment of the non-breaching party, the non-breaching party shall
first serve the breaching party with written notice describing the nature of the
breach and demanding a cure within the next thirty (30) calendar days. If after
the passage of such period the noticed breach has not been cured, the
non-breaching party may terminate this contract and immediately seek all legal
and equitable remedies available to it.
          24. Disputes. In the event of a dispute between the parties to this
Agreement affecting their respective rights and obligations, the following four
tier process shall be triggered:
               (a) the aggrieved party shall report the existence, nature and
scope of the dispute to the other in writing by the fastest means, and the
parties shall locally attempt to settle the dispute through negotiation and
accommodation;
               (b) if after [****] from the commencement of local negotiations
the matter is not mutually resolved, either party may refer the matter for more
formal meet-and-confer discussions and negotiations between their respective
senior executive representatives;
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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               (c) if, after [****] from the first commencement of management
negotiations the matter is not mutually resolved, either party may refer the
matter to non-binding mediation under the International Chamber of Commerce
(“ICC”) Rules for Commercial Mediation, before a single mediator in Honolulu,
Hawaii, U.S.A.;
               (d) if the parties are unable to reach a settlement with the aid
of the ICC mediator, the parties agree to authorize the mediator to arbitrate
the dispute in accordance with ICC Rules, and to render a binding,
non-appealable decision in the form of a written arbitral award. In such an
event, the prevailing party shall be entitled to recover its reasonable costs
and fees, including attorney’s fees, from the non-prevailing party. If the
nature of the award is such that a prevailing party cannot reasonably be
identified, the parties agree to bear their own costs of mediation and
arbitration.
     25. General Provisions. The following General Provisions shall govern the
parties conduct and relationship under this MMSSA.
          25.1 Governing Law/Venue. This Agreement shall be governed by and
construed in accordance with the laws of the United States and the State of
California as applied to agreements entered into and to be performed wholly
within California between California residents, notwithstanding the actual
residence of the parties, and without resort to those jurisdiction’s rules
respecting conflicts of laws. Any legal action, suit or proceeding arising out
of or relating to this Agreement not settled by the Disputes process described
in Article 24 above, shall be instituted exclusively in a court of competent
jurisdiction, state or federal, located in the Stale of California, County of
Santa Clara, and in no other jurisdiction. The parties hereby irrevocably
consent to personal jurisdiction and venue in, and agree to service of process
authorized by, such courts. In any such action, suit or proceeding, the
prevailing party (by final and non-appealable order or judgment in its favor)
shall be entitled to recover from the non-prevailing party its reasonable legal
fees and expenses incurred in connection with such action, suit or proceeding.
The parties expressly agree that no part of this MMSSA shall be governed by or
interpreted under the United Nations Convention for the International Sale of
Goods (“CISG”).
          25.2 Notices. All notices under this Agreement must be delivered in
writing by courier, electronic facsimile, electronic mail, or by certified or
registered mail (postage pre-paid and return receipt requested) to the other
party at its address set forth on the first page above or as amended by notice
pursuant to this Article 25.2. If not received sooner, notice by mail shall be
deemed received five (5) days after deposit in the U.S. or Royal Thai mail
system. Notices to Buyer shall be addressed to Buyers Director of Supply Chain
Management at 776 Palomar Avenue, Sunnyvale, California 94085. Notices to
Manufacturer shall be addressed to the address in the introductory paragraph of
this Agreement.
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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          25.3 Relationship of the Parties. The parties hereto are independent
contractors, acting on their own account. Nothing in this Agreement shall be
deemed to create an agency, employment, partnership, fiduciary or joint venture
relationship between the parties. Neither party (nor any agent or employee of
that party) is the representative of the other party for any purpose, and
neither party has the power or authority to act as agent or employee in order to
represent, act for, bind or otherwise create or assume any obligation on behalf
of the other party for any purpose whatsoever.
          25.4 No Third Party Beneficiaries. No party shall be deemed as a
third-party beneficiary to this Agreement.
          25.5 Assignment. Manufacturer may not assign this MMSSA, nor assign
its rights or delegate its obligations under this Agreement, by operation of law
or otherwise. without Buyer’s prior written consent. Any attempted assignment in
violation of this Article 25.5 shall be null and void and without effect.
Subject to the foregoing, this Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective successors and permitted
assigns.
          25.6 Force Majeure. Except with respect to payment obligations, any
delay in or failure of performance by either party to this Agreement shall not
be considered a breach of this Agreement, and shall be excused, to the extent
such delay or failure is caused by any events in the nature of earthquakes,
famines, epidemics, other natural disasters, acts of God, war, riots, civil
unrest, or other similar causes beyond the reasonable control of such party. A
party subject to a force majeure event shall be obligated to (i) give prompt
notice to the other party, (ii) use best efforts to mitigate the effects of such
causes on its performance of obligations, and (iii) resume full performance with
notice to the other party as soon as is practicable under the circumstances.
          25.7 Waiver and Amendments. All waiver requests (and approvals) to the
terms and conditions of this MMSSA must be in writing. Any waiver by either
party to enforce a provision of this Agreement on one occasion shall not be
deemed a waiver by that party of any other provision or such provision on any
other occasion, nor shall a single waiver be deemed a continuing waiver of that
term or condition. This Agreement may only be amended by a written document
expressly identified as an amendment and signed by both parties.
          25.8 Construction. The following rule shall govern construction of
this Agreement: (a) article and sub-article headings are for reader convenience
only and are not to be used in interpreting this Agreement: (b) as used in this
Agreement, the words “including” means “including but not limited to”; (c) in
constructing the terms of this Agreement, no presumption shall operate in favor
of or against any party as a result of its counsel’s role in drafting the terms
and provisions thereof; (d) all references to Articles or sub-Articles shall be
deemed to be references to those within this Agreement unless otherwise
indicated; (e) all capitalized terms defined herein apply equally to the
singular and plural forms of such terms; (f) all monetary amounts refer to U.S.
dollars unless otherwise indicated.
          25.9 Entire Agreement. This MMSSA with associated Exhibits and
Appendices constitute the entire agreement between the parties regarding the
subject
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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mailer hereof and supersedes all prior or contemporaneous agreements,
understandings and communications, whether written or oral, regarding the
subject matter hereof.
          25.10 Counterparts. This Agreement may be signed in several
counterparts, each of which shall constitute an original.
          In Witness Whereof, the parties hereto have caused this Agreement to
he executed by their duly authorized representatives as of the Effective Date.

                      BUYER       MANUFACTURER    
 
                   
By:
  /s/ Steve Layton Oct. 18, 2006       By:   /s/ W.K. Chow Oct. 18, 2006    
 
 
 
Steve Layton          
 
W.K. Chow    
Name:
          Name:        
 
 
 
Vice-President & General Manager          
 
Vice President, Sales    
Title:
          Title:        
 
 
 
         
 
   

Exhibits:

      1: Definitions of Terms and Acronyms         2: Service Pricing         3:
Hana Provided Manufacturing Materials & Supplies         4: Equipment Loan
Agreement of January 2005

Appendices

      A: Logistics Matters         B: New Product Introduction (“NPI”) Process  
      C: Factory Return Process and Procedures

**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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EXHIBIT 1
Definitions of Terms and Acronyms
“ATE” means Automated Test Equipment, generally furnished by Endwave and
maintained by Manufacturer under this Agreement.
“Buyer” means Endwave Corporation, or any of its authorized subsidiaries and
affiliates.
“Buyer Technology” means all physical device designs, drawings, manufacturing
process instructions, test equipment and software, and Bill of Material items
used under this MMSSA, whether reduced to a physical medium form or not, and
regardless of whether patented, trademarked, or copyrighted.
“CDR” means Contact Discrepancy Report
“CMDR” means Consigned Material Disposition Report
“ECN” means Engineering Change Notice, whereby an engineering design change is
fully disclosed along with its affected documentation
“EU” means the multi-national confederation of European Union nations, currently
numbering 24
“FGI” means Finished Goods Inventory, describing goods that have completed the
manufacturing process, have not shipped, and are still in the physical custody
of the Manufacturer
“Intellectual Property” means any and all original works or derivatives of
original works that are lawfully owned or in the possession of the party,
whether categorized as patents, copyrights, trademarks, service marks, trade
secrets or general know-how, whether or not represented in a physical medium, or
reduced to actual practice
“Kanban” means the designated holding bin for finished goods that are used as
buffer stock in ensuring post-manufacturing order fulfillment
“Manufacturer” means Hana Microelectronics Ltd. of Bangkok, Thailand, wherever
situated, and including subsidiaries, affiliates, subcontractors and vendors
“Manufacturing Facility” means the Manufacturer’s facility in the Lamphun
free-trade zone. Thailand
“MMSSA” means this multi-year Agreement and all exhibits and appendices, known
as the Master Manufacturing Supply & Service Agreement
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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“MRB” means Material Review Board, a Buyer entity that reviews allegedly
defective or outdated material in order to exercise configuration control over
physical designs
“NCRB” means Non-Conforming Receipts Board
“NPI” means New Product Introduction, a multi-gate Buyer process for
transitioning a new design into full production; per Appendix B, NPI is complete
at the end of Product Validation (“PV” or “Gate 4”), wherein [****]
“Products” means any and all models or variants of Buyer designed devices
manufactured under this Agreement by Manufacturer
“RMA” means Returned Material Authorization, a Buyer documented and controlled
system for accepting field returns for rework, repair or scrap at the
Manufacturers Facility
“RMI” means Raw Material Inventory, usually provided by Buyer, and physically
stored at Manufacturer’s Facility in secure storage
“RTV” means Buyer provided RMI components that are deficient in Manufacturer’s
reasonable judgment, and must be returned to vendor by Manufacturer.
“RoHS” means the European Union legislation regulating, among other things, the
permitted lead content of products intended for use within the EU countries
“STE” means Special Test Equipment, whether automated or not
“WEEE” means the Asian continent equivalent of the EU RoHS rules regarding
lead-free manufacturing processes and products.
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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EXHIBIT 2
Service Pricing

                          Hana Program   Part   Description   Price [****]  
[****]   [****]   [****]              

**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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APPENDIX A
BUSINESS LOGISTICS
     1.0 Introduction. This Appendix A is intended by the parties to the MMSSA
to define their respective roles, responsibilities, and control actions in
establishing and maintaining an efficient manufacturing cycle. The processes
described herein and pictured in Figure 1 are designed to minimize material
waste, rework, interruption of work, and late deliveries. The success of the
contractual relationship largely hinges upon each party’s commitment of human
and machine resources to make the described processes effective on a daily
basis, and to openly collaborate when necessary to modify them.
     2.0 Overview. Figure 1 pictorially represents what the parties logistically
intend to do to establish a vibrant, best-in-class manufacturing relationship.
The actions depicted are informed by an Endwave provided, non-binding,
periodically updated, [****] forecast of future orders expected to be issued
under the authority of this Agreement. While the forecast is non-binding more
than [****] prior to actual delivery against firm kit launch orders, the
forecast is provided so that the Manufacturer can independently detect trends
and engage in longer range resource planning. In general, the binding order
process described by this Appendix A can be summarized as follows: the parties
will act in concert to pre-stage sufficient material to initiate parts kitting
against firm orders a full [****] prior to the required shipment date, while
maintaining sufficient (“Kanban”) stores of finished goods to account for
ordinary failures, fluctuations, or delays in manufacturing.
     3.0 Material Staging. Informed by its own Material Requirements Planning
(“MRP”) system, Endwave will procure required parts, components, and
sub-assemblies at its direct expense, and will cause them to be shipped to
Manufacturer for pre-kitting receipt as Raw Material Inventory (“RMI”). On a
regular and recurring basis, Endwave and Manufacturer shall engage in an
Electronic Data Interchange (“EDI”) whereby [****] and what [****]. Initially,
the common system to enable EDI shall be the Buyer’s [****], but the parties are
free to choose an alternative system at a later date. Endwave shall [****] that
100% of all parts required are physically present in Manufacturer’s stores
[****]. For its part, Manufacturer agrees that it shall [****] commence
manufacturing against Orders with less than 100% pre-positioned parts in hand,
provided that it has at least [****] of all parts necessary to begin kitting.
     4.0 RMI Stores. Manufacturer shall maintain so-called RMI material in
secure, weather-proof storage at its own expense. Manufacturer shall be
responsible for ensuring material receipts are accurately and timely recorded in
electronic records on a daily basis, and shall make its material inventory
records supporting Endwave RMI inventory available to designated, approved, and
authorized Endwave personnel. Manufacturer shall conduct a physical inventory of
FGI, WIP, and RMI stores on a monthly basis, and report results to authorized
Endwave personnel. In the event that Manufacturer detects deficiencies in
vendor-supplied RMI, Manufacturer shall be authorized direct liaison with
Buyer’s approved vendor in arranging RTV and replacement parts of conforming
quality.
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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     5.0 Kit Launch Orders (“Orders”). [****], Endwave will issue a Kit Launch
Order against firm requirements needed to be shipped [****]. The Order type and
quantity may not be changed by Endwave by more than [****] up or down once
given, although successive Orders not yet issued may be influenced by mutual
assessments of changed needs and work in progress. However, even successive
Orders outside the [****] window that are yet to be issued by Endwave and
accepted by Manufacturer may not be changed up or down by more [****] of the
[****] for the most recently completed [****]. Each [****] launch Order will
contain a specific mix of models by part number and common name, as well as a
firm quantity for each model comprising the Order. In any given calendar
quarter, [****] Orders will be electronically issued, usually on [****] of
[****], addressing the [****] production kit starts.
     6.0 The Manufacturing Sequence and Cycle Time. While Manufacturer shall be
solely responsible for ensuring proper flow and sequencing of individual kits
into finished goods, the parties agree that the following are performance
activity targets for any single kit launch Order:

  a.   [****]: kit assembly from RMI, and launch into production;     b.  
[****]: fabrication into final assemblies     c.   [****]: final assembly test,
seal, and documentation     d.   [****]: ship from FGI, or from Kanban, or to
Kanban, as required.

     7.0. Kanban. The parties agree that Kanban stored finished goods are to
approximate no more [****] of manufacturing activity. In the event that a
drawdown of Kanban units is required to fulfill any [****] shipment order, the
Manufacturer will inform Endwave of such facts by model number and quantity.
Thereafter, Endwave may adjust its next consecutive [****] kit launch orders to
reflect the need to replenish Kanban units. The Manufacturer is expressly NOT
authorized to build additional units beyond those in Orders explicitly ordered
by the Endwave Master Scheduler on its own, in order to replenish Kanban unit
drawdown. This operational rule exists and must be strictly observed to avoid
ambiguity in Order issuance or production planning, as well as miscounting of
available units for shipment. However, the Manufacturer shall be entitled. but
not obliged, to advise Endwave on how fast Kanban drawdown can be replenished
without work-force disruption.
     8.0 Manufacturer Supplied Items. The special materials that Manufacturer
shall procure in order to support the manufacturing process are agreed to be
solder, solder paste, and epoxy. In addition, Manufacturer shall provide its own
tools, machinery, and human resources to fulfill its Order obligations.
     9.0 Special Test Equipment. Endwave shall provide Special Test Equipment
(“STE”) to Manufacturer in order to support the manufacturing process. STE shall
be used, maintained, and repaired in accordance with the provisions of
Exhibit 4, Equipment Loan Agreement (January 2005).
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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     10.0 Periodic; Review. The operational logistics described by this
Appendix A are at the heart of the parties” day-to-day relationship, and will
determine the success of the strategic engagement. In view of this, the
continued viability and suitability of the Appendix A process shall be a
mandatory review and discussion item at any monthly or quarterly progress review
by the parties. If, as a result of experiences reported at such reviews, the
parties mutually conclude that changes are required, such changes shall be made
the subject of an amendment to this MVISSA. Additionally, [****] the parties
shall review [****] to determine the amount of the [****], owed by Buyer to
Manufacturer for [****]. Any accumulated difference will be billed and paid
[****].
     Figure 1
[****]
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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Figure 1A
[****]
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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APPENDIX B
NEW PRODUCT INTRODUCTION PROCESS
     1.0 Introduction. This Appendix B is intended by the parties to document
their respective and coordinated actions in managing the introduction of newly
designed Buyer products into full-scale production. Hard won experience
establishes that Manufacturer cannot reliably integrate new designs into their
fleet of customized Buyer product production without an orderly, phased,
controlled process for learning the new designs. It is foreseeable during the
term of this MMSSA that Buyer will require Manufacturer to commence full-scale
production of many new products, and Manufacturer’s ability to do so will
substantially influence Buyer’s actual time to market. As a consequence, this
Appendix is and shall continue to be a vital part of the commercial
relationship.
     2.0 Overview. In designing new microelectronic products for commercial use,
Buyer executes a multi-phase, sequential, “gate controlled” product development
process, Gate No. 4 is known as Production Validation (“PV”). As planned, PV
entails production team familiarization with the product design, the creation of
precise work instructions, and the build of production prototype units in small
quantities to validate process, documentation, and test equipment prior to
full-scale production. This Appendix describes those required steps in detail,
and shall be rigorously followed by both Buyer and Manufacturer.
     3.0 PV Initialization. Production Validation begins with the Buyer’s
delivery of as built documentation from the end of the Design Validation (“DV”)
phase of development. As built documentation includes, but is not necessarily
limited to, drawing packages, parts lists, and test plans and procedures that
are applicable to the new design. To the extent the new product requires
different or altered test software to be properly tested with ATE, as built
documentation includes such test software in source code format, installed by
Buyer on the ATE in Manufacturers facility. As built documentation shall be
submitted to Manufacturing in sufficient time to permit understanding and
foreseeable obstacles or limitations. The Manufacturer shall be permitted to
follow-up its initial review of as-built documentation with questions of the
Buyer’s technical and QA staff members, in essence performing a Production
Readiness Review (“PRR”). Once the Manufacturer is satisfied that the
documentation is complete and feasible, it shall compose detailed work
instructions for its team in their native language.
     4.0 Pre-Production Units. Upon the creation of detailed work instructions,
the Manufacturer shall commence the kitting and building of the first production
line units in limited quantities as agreed upon by the parties. Concurrently,
the Buyer shall install any new or revised ATE software on the test suite
hardware in Manufacturers facility. Once the initial units are produced, they
shall be subjected to the same ATE controlled testing as shall be used during
full production in order to prove conformance with specification. Pre-production
units shall also be visually inspected to assure that workmanship is acceptable,
and that form and fit have been maintained.
     5.0 Buyer Validation. Upon successful completion of ATE and visual testing;
the Manufacturer shall tender the pre-production units to the Buyer for
engineering and Quality Assurance validation. If such units pass, the Buyer
shall report the result along with formal written authority to commence full
production on a stated date in the future. If the units do not pass Buyer’s
examination, or pass with such small margin as to impair future large-scale
production pass rates, then the Buyer shall return the units with its report on
the nature of the failure(s) and the recommended corrective action. After
receiving the units back with the error report, Manufacturer shall rework the
units (or start new pre-production units, if circumstances warrant), and repeat
the process all the way through Buyer acceptance of pre-production units.
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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     6.0 Low Rate Initial Production (“LRIP”). Upon successful passage of the
pre-production unit inspection and testing steps, and Manufacturer’s receipt of
Buyer’s written order to proceed with limited quantity production release.
Manufacturer shall assemble sufficient kits with Buyer procured parts as to
enable Low Rate Initial Production. LRIP shall be considered the last stage of
Production Validation, and is structured to prove that production process and
methods are stable and repeatable for that new model. Manufacturer and Buyer
shall agree in advance as to what number of units constitutes a statistically
significant LRIP run of products. It shall be Manufacturer’s responsibility to
kit, release, build, and test LRIP units in exactly the same way as it intends
to apply to mass production units. Upon the successful conclusion of LRIP unit
build. Buyer shall review test results, and either grant or withhold grant (with
reasons stated) of authority to begin full production per the Appendix A
forecast and ordering procedures. From that moment, the new product is
considered released to full production.
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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APPENDIX C
FACTORY RETURN PROCESS & PROCEDURES
     1.0 Introduction. This Appendix C is intended by the parties to document
their respective and coordinated actions in dealing with fielded units returning
to the factory for repair, rework, or scrapping. Because the process entails
important sequential steps on a time-scale that directly bears on and influences
customer satisfaction, it is important that the process be clearly stated,
executable, and reliably repeatable.
     2.0 Overview. The factory return process, sometimes called the “RMA
Process,” is by its nature an interruption in the normal Manufacturing
single-piece flow contemplated by this Agreement. Under this Agreement, factory
returns may be handled by Buyer or Manufacturer, as further defined below, in
Buyer’s reasonable discretion. This Appendix is intended to define the factory
return process in those cases where Manufacturer actions are required to
complete repairs. The factory return process begins with unscheduled notice to
Buyer by Buyer’s customer, followed by physical movement of the returning
item(s) to Thailand, followed in rapid succession by noticed receipt,
assessment, Buyer authorization, repair action, and return shipment. In this
sequence of actions, both parties have responsibilities to each other that are
described in detail below.
     3.0 Initial Report. The Buyer will be contacted by customers on an
unscheduled basis when a fielded unit problem implicating factory repair is
encountered. The Buyer will interact with the customer as necessary to determine
what the problem description is, whether the serialized item(s) is in or out of
warranty, and what the appropriate action should be. If the Buyer concludes that
a return to factory is warranted, the Buyer will give the customer a Returned
Material Authorization (RMA) number with shipment instructions. The
authorization shall be documented with the customer via electronic mail, with a
copy to Manufacturer’s factory return coordinator if the item is coming back to
Manufacturer. This will permit work-flow planning to a limited degree.
Ordinarily, [****] will be borne by [****], especially for [****]. However, the
downstream results of [****] may cause the [****].
     4.0 Receipt. For those items returned under Buyer RMA to the Manufacturer,
the Manufacturer will acknowledge receipt to Buyer within [****] of receipt,
[****]. Incoming items shall be recorded in Manufacturer’s factory return log by
RMA number and date/time of receipt.
     5.0 Analysis. Buyer shall be responsible for the official evaluation and
analysis of factory return items, unless Buyer has authorized a field return
direct to Manufacturer’s site. Buyer will conduct themselves in such a way that
cause and corrective action (“C&CA”) is promptly determined by Buyer, with or
without outside assistance.
          In the case where C&CA results objectively suggest that the root cause
of an in-warranty return is a failure in Manufacturer’s compliance with
workmanship standards, such determination shall be electronically communicated
by Buyer’s factory return representative to Manufacturer, together with the
objective evidence supporting that conclusion. Concurrently, Buyer’s factory
return representative shall cause a debit memorandum to be issued and processed.
A failure to agree on financial responsibility shall be handled as a dispute
with the meaning of the Disputes provisions of this MMSSA. Out-of-warranty
factory returns assigned to Manufacturer for repair shall be compensated by
Buyer without regard to root cause responsibility and shall be treated as a
credit billing on the next regularly occurring invoice for services.
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].

 

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     6.0 Confirmation. Manufacturer shall confirm physical receipt of all
factory return units within [****] of actual receipt, [****].
     7.0 Repair Action. Immediately upon receipt of a confirming message from
Buyer authorizing repair, Manufacturer shall repair the item in accordance with
then current product model documentation, fully restoring the returned item to
operational status. It is contemplated that repair action will include updating
a repair item for approved ECNs that have been released since the item was first
manufactured. If repair without intervening ECN incorporation is desired, Buyer
must affirmatively say so in the confirmation message required by Section 6
immediately above. Manufacturer shall endeavor to complete all repairs of
authorized, confirmed items within [****] of first attempting repair (thus
excluding evaluation, recommendation and repair authorization periods described
above). The parties agree that the cycle-time goal for completed repair from
authorization to shipment is [****], in those instances where a) no new
technical issues arise during repair to interrupt or delay work; b) all repair
material is available during the course of the repair work; and c) the
corrective action is of the same scope as the Buyer’s authorization. In those
cases where the above three conditions do not exist. Buyer and Manufacturer will
mutually agree on a revised RMA unit completion date that may require greater
than [****] cycle-time.
     8.0 Shipment. Upon completion of repair, the Manufacturer shall report
completion in a standard Repair Action Report (RAR) formal, and electronically
inform Buyer’s factory return coordinator, with a copy to Buyer’s local RO staff
engineer. Upon completion of the RAR, Manufacturer shall be authorized to ship
the repaired item at Buyer’s expense, unless otherwise informed. If the item has
been scrapped, or failed to survive the repair process, Manufacturer shall
similarly report that fact to the Buyer. RAR data and C&CA data shall be kept by
the Manufacturer for a period of [****] years.
     9.0 Financial Responsibility. The nature of the reported Held item failure
ultimately determines who is financially responsible for the repair and shipment
actions to be made in rapid succession. In general, the financial responsibility
rules to be applied under this Agreement are as follows:
     a. where the cause of the return is a defect in design within the warranty
period or any extensions, it shall be Buyer’s responsibility to pay for shipment
and repair;
     b. where the cause of the return is a defect in manufacturing,
serialization, or as-built documentation, it shall be Manufacturer’s
responsibility to pay for shipment and repair;
     c. where the cause of the return is abnormal wear and tear, or product
abuse, or a condition that cannot be duplicated or proven, Buyer’s customer
shall be financially responsible for shipment and repair activity.
**** Certain confidential information contained in this doc been omitted and
filed separately with the Securities and Exchange Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omissions are
designated as [****].