Exhibit 10.13
Confidential
Equipment Procurement Agreement
     This Equipment Procurement Agreement (the “Agreement”) is made and entered
into as of this 31st day of August, 2006 (the “Effective Date”) by and between
OmniVision Trading (Hong Kong) Co. Ltd., a company duly incorporated and
existing under the laws of the Hong Kong, having its registered office at Unit
1-2, 8F, Ever Gain Plaza Tower 1, 88 Container Port Rd. Kwai Chung, N.T., Hong
Kong, (hereinafter, “OmniVision”), and XinTec Inc., a company duly organized and
existing under the laws of the Republic of China, having its principal business
address at 4F, No. 25, Ji-Lin Road, Chung-Li Industry Park, Tao Yuan Hsien,
Taiwan, R.O.C., (“XinTec”). OmniVision and XinTec are each sometimes referred to
as a “Party” or collectively as the “Parties.”
RECITALS
     WHEREAS, OmniVision and its affiliates are in the business, among others,
of design, development and manufacturing of certain CMOS Image Sensor (“CIS”)
products;
     WHEREAS, XinTec is in the business, among others, of providing certain
Wafer Level Packaging (“WLP”) services;
     WHEREAS, XinTec desires to provide the WLP services to OmniVision on the
terms and conditions of a manufacturing agreement (the “Manufacturing
Agreement”) to be negotiated by the Parties, and OmniVision desires to procure
certain equipment to be placed at XinTec, solely for XinTec to provide the WLP
services to OmniVision.
     NOW THEREFORE, in consideration for XinTec to provide WLP services to
OmniVision, and for mutual covenants and promises contained herein, the Parties
hereto agree as follows:
1 SCOPE AND CONDITIONS OF PROCUREMENT
     1.1 The Equipment. Subject to the terms and conditions of this Agreement,
OmniVision agrees to procure, through XinTec, certain equipment (each
individually or collectively, the “Equipment”)for purpose of setting up the CSP2
and CSP3 production lines at XinTec for the WLP services, and XinTec agrees to
place orders, accept and install or have installed such Equipment.
     1.2 Purchase Procedures. XinTec shall submit for acknowledgement and
approval by OmniVision the list or lists of such Equipment as required for
setting up the production lines contemplated by both Parties, along with i) the
purchase schedule in line with the Clean Room progress set forth in Section 1.4
below; and ii) the quotations from suitable equipment vendors. Upon confirmation
by OmniVision, XinTec may place the purchase orders to the pre-approved
equipment vendors. Equipment purchased and to be purchased shall be attached
hereto as Exhibit A, and may be modified from time to time as necessary and as
agreed by both Parties. OmniVision and XinTec shall negotiate in good faith and
finalize the complete list of Equipment and purchase schedules within
 

***   Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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three (3) months after Effective Date. Subject to written approval of
OmniVision, any advance payment made by XinTec on behalf of OmniVision towards
the procurement of the Equipment will be reimbursed by OmniVision pursuant to
the provisions set forth herein.
     1.3 Purchase Fund. Subject to the terms and conditions of this Agreement,
OmniVision agrees to remit fund to XinTec periodically (each a “Purchase Fund”)
for the procurement of the Equipment in accordance with the approved list(s) and
schedule(s) pursuant to Section 1.2 above. The Purchase Fund shall be held in a
separate account and in trust for the benefit of OmniVision. The Purchase Fund
will be disbursed and replenished from time to time for the payment of the
Equipment or reimbursement of the advance payments made by XinTec. All
disbursements and reimbursements shall be properly documented against duly
issued invoices of the equipment vendors, together with packing lists, bills of
ladings, and/or other commercial papers. In no event shall the Purchase Fund or
any portion of it be used for any other purpose whatsoever. XinTec shall keep
detailed records of such account and submit to OmniVision for review at least
once a month, or sooner upon receipt of each shipment of Equipment pursuant to
Section 1.5. Notwithstanding any provisions to the contrary, the aggregate
purchase prices, inclusive of all shipping costs, labor costs, taxes, duties,
insurances and installation fees, of the Equipment shall not exceed Fifty
Million US Dollars ($50,000,000) (the “Maximum Purchase Price”). XinTec agrees
that any amount over the Maximum Purchase Price shall be XinTec’s sole
obligation. Upon disbursement and reimbursement of the complete list of the
Equipment permitted herein, any balance of Purchase Fund, if any, shall be
returned promptly to OmniVision.
     1.4 Clean Room Construction. In conjunction with and conditional to the
Equipment procurement and continuing procurement, XinTec shall, at its own
expenses and costs, build up the clean room or rooms (together, the “Clean
Room”) , including all equipment and facilities required therefor, at the
following fabrication facilities, in accordance with the construction schedule
agreed between the Parties.
          Fab 1: No. 25, Ji-Lin Road, Chung-Li Industry Park
          Fab 2: (to be filled in)
     1.5 Acknowledgement of Receipt. XinTec shall inform OmniVision promptly
(but no later than 48 hours upon receipt of each Equipment shipment), and
acknowledge the receipt of the Equipment by providing OmniVision with one set of
receipts, together with final invoices and commercial papers, if available. Any
invoices and commercial papers not timely submitted shall be produced to
OmniVision with the monthly reports as required in Section 1.3.
     1.6 Installation. It is the sole responsibility of XinTec to have the
Equipment properly installed at the fabrication facilities specified in
Section 1.4. XinTec shall inspect and test the Equipment to ensure it meets all
engineering and technical specifications and requirements within sixty (60) days
after receipt of the Equipment.
 

***   Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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XinTec shall issue certificate of acceptance (the “Certificate of Acceptance”)
and notify OmniVision in writing at the end of such inspection and test. If more
time is needed to test the Equipment, XinTec shall promptly provide OmniVision
with a written notice with explanation, and obtain OmniVision’s consent,
provided that such consent shall not be unreasonably withheld.
2 OWNERSHIP AND CUSTODY
     2.1 Title of Ownership. OmniVision shall take the title (the “Title”) to
the Equipment as soon as practicable after the Equipment is installed at each
XinTec fab but no later than the delivery of the Certificate of Acceptance
pursuant to Section 1.6 above. Upon such delivery, Title shall be transferred
and pass unto OmniVision at the location where the Equipment is installed. Prior
to the Title transfer unto OmniVision, the Title of the Equipment shall be held
by XinTec and in trust for the benefit of OmniVision. XinTec shall use due care
and ensure that the Equipment will not be subject to any claim made by a
creditor of XinTec or any other party.
     2.2 Covenants. XinTec shall take the necessary steps in order to safeguard
OmniVision’s right, title, interest and ownership in the Equipment. XinTec
agrees and covenants not to sell, assign, donate, transfer, or pledge by way of
security or otherwise the Equipment to third parties under whatsoever
conditions, or in any way transfer its rights to use to any other party.
     2.3 Duty of Care. XinTec shall be responsible for the custody of the
Equipment during the term of this Agreement. XinTec agrees to exercise all due
and reasonable care in the handling, operation and maintenance of the Equipment.
          2.3.1 Distinctive Label. XinTec shall identify the Equipment so as not
to confuse with other equipment in the possession of XinTec. This identification
shall be done by distinctive labeling or marking as reviewed and agreed by
OmniVision.
          2.3.2 Insurance and Loss and Damage. XinTec shall be liable for all
risks of loss or damage of or to the Equipment prior to the Title transfer to
OmniVision pursuant to Section 2.1. XinTec shall subscribe to an insurance
policy and XinTec hereby represents to OmniVision that it does have such policy
in place, covering the Equipment at full value and for the benefit of
OmniVision, up to the point when the Title is properly transferred unto
OmniVision pursuant to Section 2.1. XinTec agrees to produce such proof of
insurance upon requested by OmniVision. It is responsibility of OmniVision to
subscribe and have in place proper insurance policy covering the Equipment from
the point Title passes unto OmniVision. In case of loss or damage, XinTec shall
i) report to OmniVision in writing immediately; ii) provide necessary assistance
for OmniVision to file the insurance claims; and iii) promptly remit to
OmniVision the proceeds received by it, if any, under any and all insurance
policy.
3 OPERATION AND MAINTENANCE
 

***   Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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     3.1 Use of Equipment. XinTec agrees and covenants that the Equipment will
be only used for manufacturing of the products of OmniVision and/or its
designated entities or licensees, or, subject to OmniVision’s prior written
consent, of such limited amount of products of other party as reasonably
necessary for purposes of fab maintenance and operational adjustment, provided
that such consent shall not be unreasonably withheld by OmniVision. XinTec
agrees to permit OmniVision or its representative to enter its premises at any
time during the XinTec’s usual business hours, for the purpose of examining and
inspecting the Equipment.
     3.2 Maintenance. XinTec shall at its cost and expense follow the operation
instruction and maintenance schedule as suggested by the equipment manufacturer
at the time of delivery and such procedures as the equipment manufacturer may
from time to time establish in writing. XinTec shall bear all the costs for the
repair and maintenance.
     3.3 Indemnification. OmniVision shall not be liable for any damages or
losses including any bodily injury, damages to property and other losses
sustained by XinTec, its employees, or any other third parties as a result of
the use of the Equipment. XinTec agrees to indemnify, defend and hold OmniVision
and its affiliated companies and their directors, officers, employees, and
agents harmless from and against any and all claims (including those for
personal injury or death) and liabilities (including without limitation
attorneys’ fees and other costs) arising out of or attributable to the use of
the Equipment.
     3.4 Location. XinTec shall not move the Equipment, in whole or in part, to
any location other than the locations specified in Section 1.4 without prior
written approval by OmniVision.
4 FURTHER UNDERSTANDINGS AND COVENANTS
     4.1 Agreement to Manufacture. Both Parties shall negotiate in good faith
and enter into as soon as applicable, but no later than three (3) months after
this Agreement, the Manufacturing Agreement consistent with the provisions
contained herein, as well as common industrial practices.
          4.1.1 Capacity Commitment. Upon installation of the Equipment, XinTec
agrees to ramp up the production capacity to process at minimum [***] (including
Fab 1 and Fab 2) and shall dedicate such capacity to fulfill the orders placed
by OmniVision.
          4.1.2 Per Wafer Price. The prices for the WLP services charged by
XinTec to OmniVision shall be negotiated by both Parties in good faith, taking
into consideration of contributions of OmniVision’s Equipment and then market
conditions as well as cost reduction measures available. However, in no event
shall the price exceed [***].
     4.2 Confidentiality. Each of the Parties hereto agrees not to disclose to
any third party the terms or conditions of this Agreement without the prior
written consent of
 

***   Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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the other Party hereto, except (i) to accountants, consultants, and insurance
company on a need-to-know basis under conditions which reasonably ensure the
confidentiality thereof; (ii) as required by any court or other governmental
body; (iii) as otherwise required by law; (iv) in confidence to legal counsel of
such parties; (v) in confidence, in connection with the enforcement of this
Agreement or rights under this Agreement; (vi) in confidence, in connection with
a merger, acquisition of stock or assets, proposed merger or acquisition, or the
like; or (vii) as advisable or required in connection with any government or
regulatory filings, including without limitation filings with the SEC and
disclosures reasonably recommended by financial advisors. The obligations of
confidentiality provided in this shall survive the expiration or termination of
this Agreement, and for three (3) years thereafter.
5 TERM AND TERMINATION
     5.1 Term. This Agreement shall commence on the Effective Date, and unless
early terminated pursuant to this Section 5 , shall remain in full force and
effect until the expiration or termination of the Manufacturing Agreement, plus
any necessary negotiation period immediately preceding the execution of the
Manufacturing Agreement as set forth in 4.1. The Agreement shall be
automatically extended in conjunction with the Manufacturing Agreement.
     5.2 Termination for Cause. In the event of a material breach of this
Agreement, or any major terms of the Manufacturing Agreement, then the
non-defaulting party may give a written notice to the defaulting party to cure
the deficiency. If the default is not cured within 30 days, the non-defaulting
party may terminate this Agreement immediately after that period. For purpose of
clarification, time is of essence to OmniVision and any breach of such, and
among others, breach of the Clean Room construction as set forth in Section 1.4
and capacity commitment set forth in Section 4.1.1, shall be material breach
contemplated herein.
     5.3 Termination for Convenience. OmniVision may terminate this Agreement
for any or for no reason upon ninety (90) days prior written notice to XinTec.
     5.4 Insolvency. OmniVision shall have the right to terminate this Agreement
immediately upon (i) a petition or other application or resolution being filed
or passed by or against XinTec in a bankruptcy proceeding or any other
proceeding for the protection of creditors, or notice of its intention to
propose or file such a resolution, application, or petition, (ii) the winding
up, liquidation or dissolution of the XinTec or any material portion of its
assets; or (iii) the appointment of a receiver, or manager, for all or any
material part of XinTec’s assets.
     5.5 Effect of Termination.
          5.5.1 No Release. Termination or expiration of this Agreement for any
reason shall not release either Party hereto from any liability which at the
time of such termination or expiration has already accrued to the other Party.
 

***   Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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          5.5.2 Return / Disposal of Equipment. Upon expiration or termination
of this Agreement, XinTec shall immediately stop using the Equipment and
promptly ship or cause to ship at the cost of OmniVision, the Equipment to
OmniVision designated location. All the Equipment will be shipped “AS IS” except
for the loss and damages for which XinTec is responsible. At its sole
discretion, OmniVision may otherwise dispose the Equipment and XinTec shall
fully cooperate with such disposal. XinTec may purchase the Equipment at a price
based on the then fair market value of the Equipment.
          5.5.3 Survival. Sections 2.1 (Title of Ownership), 3.3
(Indemnification), 4.2 (Confidentiality), 5.5 (Effect of Termination), and 6
(General), together with any and all outstanding balance of Purchase Price set
forth in Section 1.3 or insurance proceeds set forth in Section 2.3.2 due and
payable to OmniVision, shall survive any termination or expiration of this
Agreement. All other terms and conditions of this Agreement shall terminate, and
have no further force or effect, at such time.
6 GENERAL
     6.1 No Agency. The parties do not intend that any agency or partnership
relationship be created between them by this Agreement.
     6.2 Modification. This Agreement may be amended or modified only in writing
signed by both parties.
     6.3 Governing Law; Jurisdiction and Venue. This Agreement shall be governed
by and construed in accordance with the laws of the State of California without
giving effect to its conflict of laws principles. OmniVision and XinTec agree
that all dispute and litigation regarding this Agreement shall be subject to the
exclusive jurisdiction and venue of the federal or state courts located in
County of Santa Clara, State of California.
     6.4 Notices. Any notice required or permitted hereunder shall be in writing
and shall be deemed effectively given upon personal delivery, three days after
deposit in the United States mail, by certified mail, postage prepaid, return
receipt requested, or the day after delivery to a recognized overnight courier,
to the following addresses:

         
 
  If to OmniVision:   OmniVision Trading (HK) Co. Ltd.
 
      Unit 1-2, 8F, Ever Gain Plaza Tower 1
 
      88 Container Port Rd. Kwai Chung, N.T.
 
      Hong Kong,
 
      Attn: Director
 
       
 
  With a copy to:   OmniVision Technologies, Inc.

 

***   Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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      1341 Orleans Drive
 
      Sunnyvale, CA94089
 
      Attn: General Counsel
 
       
 
  If to XinTec:   XinTec, Inc.
 
      4F, No. 25, Ji-Lin Road
 
      Chung-Li Industry Park
 
      Tao Yuan Hsien, Taiwan, R.O.C.
 
      Attn: President

Such addresses may be changed, from time to time, by means of a notice given in
the manner provided in this Section 6.4.
     6.5 Severability. If all or part of any section, paragraph or provision of
this Agreement is held invalid or unenforceable, it shall not have any effect
whatsoever on any other section, paragraph or provision of this Agreement, nor
on the remainder of the said section, paragraph or provision, unless otherwise
expressly provided for in this Agreement.
     6.6 Headings. The headings in this Agreement have been inserted solely for
ease of reference and shall not modify, in any manner whatsoever, the meaning or
scope of the provisions hereof.
     6.7 No Waiver. Under no circumstances shall the failure, negligence or
tardiness of a Party as regards the exercise of a right or a recourse provided
for in this Agreement be considered to be a waiver of such right or recourse.
     6.8 Cumulative Rights. All rights set forth in this Agreement shall be
cumulative and not alternative. The waiver of a right shall not be interpreted
as the waiver of any other right.
     6.9 Entire Agreement. This Agreement constitutes the entire understanding
between the Parties concerning the subject matter hereof, and shall supersede
any and all prior communications, representations, promises or understandings.
     6.10 No Right to Transfer. Neither of the Parties may, in any manner
whatsoever, assign, and transfer nor convey its rights in this Agreement to any
third party, without the prior written consent of the other Party.
     6.11 Successors. This Agreement shall bind the Parties hereto as well as
their respective successors, heirs and assigns.
 

***   Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute this Agreement on the date first written above.

                  XinTec Inc.:       OmniVision Trading (Hong Kong) Co. Ltd.:
 
                         
 
               
By:
          By:    
 
               
 
               
Title:
          Title:    
 
               

 

***   Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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Confidential
EXHIBIT A
EQUIPMENT LIST AND PURCHASE SCHEDULE
Fab 1, Equipment List, see, Attachment I; [***]
Fab 2, Equipment List, see, Attachment II (to be completed and finalized
3 months after, pursuant to Section 1.2). [***]

                  XinTec:       OmniVision:
 
                         
 
               
By:
          By:    
 
               
 
               
Title:
          Title:    
 
               
 
               
Date:
          Date:    
 
               

 

***   Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

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