exv10w3



 







Exhibit 10.3



[NOTE: CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN MARKED TO INDICATE THAT CONFIDENTIAL
INFORMATION HAS BEEN OMITTED. CONFIDENTIALITY HAS BEEN REQUESTED FOR THIS CONFIDENTIAL INFORMATION.
THE CONFIDENTIAL PORTIONS HAVE BEEN PROVIDED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION]




Manufacturing Services Agreement




Between




Volcano Corporation




And




Endicott Interconnect Technologies, Inc.




Page 1 of 29









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	1.0
	 	SCOPE OF AGREEMENT	 	 	3	 
	 
	 	 	 	 	 	 
	2.0
	 	DEFINITIONS	 	 	4	 
	 
	 	 	 	 	 	 
	3.0
	 	DESIGN, DEVELOPMENT AND PROTOTYPES	 	 	9	 
	 
	 	 	 	 	 	 
	4.0
	 	OWNERSHIP	 	 	9	 
	 
	 	 	 	 	 	 
	5.0
	 	PRODUCT PURCHASES	 	 	10	 
	 
	 	 	 	 	 	 
	6.0
	 	DELIVERY AND ACCEPTANCE	 	 	12	 
	 
	 	 	 	 	 	 
	7.0
	 	PRICES AND PAYMENT TERMS	 	 	12	 
	 
	 	 	 	 	 	 
	8.0
	 	COMPONENT PROCUREMENT	 	 	12	 
	 
	 	 	 	 	 	 
	9.0
	 	WARRANTIES	 	 	13	 
	 
	 	 	 	 	 	 
	10.0
	 	INVENTORY MANAGEMENT	 	 	13	 
	 
	 	 	 	 	 	 
	11.0
	 	PERFORMANCE EXPECTATIONS AND QUALITY STANDARDS	 	 	14	 
	 
	 	 	 	 	 	 
	12.0
	 	CHANGE NOTIFICATION	 	 	14	 
	 
	 	 	 	 	 	 
	13.0
	 	INTELLECTUAL PROPERTY	 	 	15	 
	 
	 	 	 	 	 	 
	14.0
	 	CONFIDENTIAL INFORMATION	 	 	16	 
	 
	 	 	 	 	 	 
	15.0
	 	FORCE MAJEURE EVENTS	 	 	16	 
	 
	 	 	 	 	 	 
	16.0
	 	EVENTS OF DEFAULT	 	 	16	 
	 
	 	 	 	 	 	 
	17.0
	 	TERMINATION	 	 	17	 
	 
	 	 	 	 	 	 
	18.0
	 	LIMITATION OF LIABILITY	 	 	18	 
	 
	 	 	 	 	 	 
	19.0
	 	LIABILITY CAP	 	 	19	 
	 
	 	 	 	 	 	 
	20.0
	 	MISCELLANEOUS	 	 	19	 
	 
	 	 	 	 	 	 
	ATTACHMENT A	 	 	22	 
	 
	 	 	 	 	 	 
	     VOLCANO Product Pricing	 	 	22	 
	 
	 	 	 	 	 	 
	ATTACHMENT B	 	 	23	 
	 
	 	 	 	 	 	 
	     Administration and Notices	 	 	23	 
	 
	 	 	 	 	 	 
	STATEMENT OF WORK (SOW)	 	 	24	 






Page 2 of 29









 






MANUFACTURING SERVICES AGREEMENT



THIS MANUFACTURING SERVICES AGREEMENT (the “Agreement”) is entered into and is effective as of the
date of execution by both parties, (the “Effective Date”) by and between Volcano Corporation
(“VOLCANO”), a Delaware corporation with a principal place of business at 2870 Kilgore Road, Rancho
Cordova, CA and Endicott Interconnect Technologies Incorporated (“EI”), a New York company with a
principal place of business at 1701 North Street, Endicott, NY, singularly or collectively referred
to as a Party or the Parties.



The Parties hereby agree as follows:





	1.0	 	Scope of Agreement






	 	1.1	 	EI General Obligations. This Agreement specifies the terms and
conditions under which EI agrees to manufacture and sell Products described in this
Agreement, based on the requirements provided by VOLCANO. Without limiting any specific
obligation specified in this Agreement, EI will:






	 	1.1.1	 	Maintain one or more manufacturing processes and production
lines, purchase or procure Tools, and source Components and materials as needed
to fulfill EI’s obligations to manufacture the Products in accordance with the
Specifications set forth in SOW and the other Product Requirements provided by
VOLCANO.
	 
	 	1.1.2	 	Manufacture, verify, pack, ship and sell all Products in
accordance with the terms of this Agreement.
	 
	 	1.1.3	 	Meet the Supplier Performance Expectations described in
Section 11 below, and develop and maintain quality control standards
consistent with those standards described in that Section.
	 
	 	1.1.4	 	VOLCANO will obtain all necessary approvals and certifications
to enable EI to manufacture the Products under this Agreement and make all
necessary safety standard changes as appropriate hereunder.
	 
	 	1.1.5	 	On VOLCANO’s request, provide all Technical Assistance, for a
fee to be agreed upon by both Parties pursuant to this Agreement.
	 
	 	1.1.6	 	EI will perform Component Manufacturing per VOLCANO’s direction.






	 	1.2	 	VOLCANO General Obligations. Without limiting any specific obligation
required under this Agreement, VOLCANO will provide to EI, Product Requirements
consisting of, but not necessarily limited to:






	 	a)	 	SOW
	 
	 	b)	 	Product numbers;
	 
	 	c)	 	BOM;
	 
	 	d)	 	AVL;




Page 3 of 29









 












	 	e)	 	Board placement data (Gerber files);
	 
	 	f)	 	Raw Flex information required to manufacture the Flex;
	 
	 	g)	 	Schematic drawings, if test required;
	 
	 	h)	 	Assembly drawings;
	 
	 	i)	 	Packaging requirements, workmanship and quality specifications;
	 
	 	j)	 	General Technical Specifications;
	 
	 	k)	 	Consigned Component List.
	 
	 	l)	 	Design file;
	 
	 	m)	 	General and technical Specification in attachments.






	 	1.2.1	 	VOLCANO is the Finished Device Manufacturer. VOLCANO is responsible
for all requirements of the finished device under FDA regulations.
	 
	 	1.2.2	 	VOLCANO is responsible for all testing including but not limited to
interconnect, functional, and final product validation.






	 	1.3	 	Term of Agreement. This Agreement will commence as of the Effective Date
and will continue for the initial Term of three (3) years unless otherwise indicated in
the terms of this Agreement. One (1) month prior to the end of the initial Term and each
subsequent Term, if any, the Parties shall conduct a review of the terms of this
Agreement and the business relationship between the Parties and, where mutually agreed,
may make any changes and renew the Agreement for a Term.






	2.0	 	Definitions
	 
	 	 	The following capitalized terms will have the meanings given for the purposes of this
Agreement:






	 	2.1	 	“Approved Vendor List” also referred to as “AVL”, refers to the
list of VOLCANO approved vendors who are qualified Component Suppliers authorized by
VOLCANO for use in the manufacture of Products. “Vendor” and “Manufacturer” shall mean
the same.
	 
	 	2.2	 	“Bill of Material” also referred to as “BOM”, means the list of
all Components, VOLCANO Part Numbers, quantity per assembly, and EI’s part number where
applicable, that is used to assemble each Product.
	 
	 	2.3	 	“Change Order” also referred to as a “CO”, is the written
notification provided to EI by VOLCANO to modify the delivery of a Product, as further
described in Section 12.2 VOLCANO Proposed Changes below.
	 
	 	2.4	 	“Component” means the piece parts, subassemblies, software, OEM
components and products, and all other materials incorporated by EI into Products built
for VOLCANO.




Page 4 of 29









 












	 	2.5	 	“Component Lead Time” means the number of workdays that sub-tier
suppliers plan to build a Component from start to finish.
	 
	 	2.6	 	“Component Supplier” means the qualified suppliers authorized by
VOLCANO for use in the manufacture of VOLCANO Products.
	 
	 	2.7	 	“CDA” means that certain 5-party Non-Disclosure Agreement Agreement,
dated July 28, 2005, by and between EI and VOLCANO.
	 
	 	2.8	 	“Consigned Components” refers to those Components provided to EI for
assembly into Products where VOLCANO retains all ownership interest and obligations in
those Consigned Components.
	 
	 	2.9	 	“Deliverables” refers to Products, Components, Developments,
Prototypes, Test Software, exclusive of EI Intellectual Property and other work
provided by EI to VOLCANO as applicable hereunder.
	 
	 	2.10	 	“Delivery Date” means the date specified in an Order for the delivery
of Products.
	 
	 	2.11	 	“Developments” means any new inventions, discoveries, technologies,
processes, or materials (whether or not patentable) developed in connection with EI’s
performance under this Agreement relating to a Product’s Requirements or design.
	 
	 	2.12	 	“Developed Technology” means all technical information, know-how,
ideas, concepts, processes, procedures, designs, schematics, works of authorship,
inventions and discoveries (patentable or unpatentable, copyrightable, registrable as a
mask work, protectable as a trade secret or otherwise protectable as an Intellectual
Property Right), conceived by personnel of one or both the parties hereto, following
commencement and in furtherance of the work performed by EI for VOLCANO pursuant to
this Contract.
	 
	 	2.13	 	“Eligible Buyer” means a party authorized and approved by VOLCANO to
purchase under the terms of this Agreement.
	 
	 	2.14	 	“Engineering Changes” means any material, electrical, mechanical or
chemical changes to the Products proposed by VOLCANO or EI that would affect, but not
be limited to, Product performance, reliability, safety, environmental compatibility,
serviceability, appearance, dimensions, tolerances, or composition.
	 
	 	2.15	 	“EOL” means end of life of the component. This component will no longer be
supplied by the manufacturer.
	 
	 	2.16	 	“ESD” means Electrostatic Discharge.




Page 5 of 29









 












	 	2.17	 	“Excess Components” means components on hand or on-order at EI that
exceed the quantity required to meet open “Orders”
	 
	 	2.18	 	“Forecast” means VOLCANO’s rolling estimate of its purchase
requirements over a twelve (12) month period as further described in Section
5.3 below, or such other period designated by the Parties.
	 
	 	2.19	 	“Flex” means a flexible printed circuit board.
	 
	 	2.20	 	“Finished Device Manufacturer” the provider of a finished, packaged,
and labeled device as defined by FDA 21 CFR 820.
	 
	 	2.21	 	“Intellectual Property” means technical information, computer programs,
algorithms, source code, object code, inventions (whether or not patentable),
discoveries, improvements, concepts or methods, works of authorship fixed in any medium
of expression, and any and all Intellectual Property Rights pertaining thereto.
	 
	 	2.22	 	“Intellectual Property Rights” means all copyrights, patents or patent
applications, mask registered designs or registered design applications, Marks
(registered or not), Mask Works, inventions, trade secrets, proprietary technical
information (including but not limited to specifications, designs, plans, computer
programs in source and object code, flowcharts, diagrams, drawings and other
information), and manufacturing processes, and other similar proprietary information.
	 
	 	2.23	 	“Manufacturing Changes” means any material design changes, or
outsourcing of the manufacturing of sub-processes.
	 
	 	2.24	 	“Manufacturing Lead Time” means the number of workdays that are planned
to build a Product from start to finish.
	 
	 	2.25	 	“Marks” means the trademarks, service marks, trademark and service mark
applications, trade dress, trade names, logos, insignia, symbols, designs or other
marks identifying a Party or its products.
	 
	 	2.26	 	“Mask Work” means the pattern used to transfer design and technical
information from the Product Requirements onto a Product or Component.
	 
	 	2.27	 	“Minimum Buys” means the minimum quantities of Components that certain
suppliers may require of EI to purchase as defined in SOW.
	 
	 	2.28	 	“NDA/CDA” means the NDA and the CDA.
	 
	 	2.29	 	“NDA” means that certain Mutual Nondisclosure Agreement, dated July 14
2005, by and between EI and VOLCANO.




Page 6 of 29









 












	 	2.30	 	“NRE” means non-recurring engineering expenses.
	 
	 	2.31	 	“Obsolete Components” means Components or Materials on-hand or on order
at EI made obsolete by Change Orders, or deletion from the AVL.
	 
	 	2.32	 	“Order” means a written or electronic purchase order (including any
attachments thereto) issued to EI by VOLCANO or an Eligible Buyer containing part
number, unit quantity, unit price, shipping destination and instructions, Delivery
Date, and other instructions or requirements pertinent to the Order.
	 
	 	2.33	 	“Package or Packaging” refers to the material used in the protection of
Products and Components while at EI’s facility and in transit.
	 
	 	2.34	 	“Pre-Existing Intellectual Property” means any Intellectual Property
conceived or developed prior to performance of this Agreement.
	 
	 	2.35	 	“Product Requirement” means any requirement, for the development or
manufacture of Products, provided by VOLCANO to EI, including this Agreement, SOW, and
Specifications, and part number drawing.
	 
	 	2.36	 	“Products” or “Product” means those assemblies, sub-assemblies,
systems, and other products manufactured by EI. Products may be added to this Agreement
or from time to time by agreement of the Parties. For the purpose of this agreement,
“Products” or “Product” shall also be known as “component” as defined by FDA 21 CFR
820.3 (c) as “any raw material, substance, piece, part, software, firmware, labeling,
or assembly which is intended to be included as part of the finished, packaged, and
labeled device.”
	 
	 	2.37	 	“Prototype” means the pre-production unit of a Product, packaged in a
production package, and manufactured in accordance with the Product Requirements with
partial or no test verification.
	 
	 	2.38	 	“Shipping Dock” means the shipping dock at EI’s manufacturing facility.

  
	 
	 	2.39	 	

“RMA” means a return material authorization as described in Section 6.4 below.
	 
	 	2.40	 	“SOW” means statement of work.
	 
	 	2.41	 	“Specifications” means the technical and quality requirements for the
Product as defined by VOLCANO and listed in SOW.
	 
	 	2.42	 	“Supplier Performance Expectations” means those quality standards and
metrics that EI must meet as further described in Section 11.1 Quality
Standards and SOW hereto.
	 
	 	2.43	 	“Technical Manufacturing Information” means the manufacturing
information, process and technology used by EI or third parties under its control to
design,




Page 7 of 29









 












	 	 	 	develop, test or manufacture the Products including, but not limited to: (i)
specifications, software, schematics, drawings, designs, or other materials pertinent
to the most current revision level of manufacturing of the Products; (ii) copies of all
inspection, manufacturing, test and quality control procedures and any other work
processes; (iii) jig, fixture and tooling designs; (iv) EI history files; and (v)
support documentation.
	 
	 	2.44	 	“Technology” means all technical information, know-how, ideas,
concepts, processes, procedures, designs, schematics, works of authorship, inventions
and discoveries (patentable or unpatentable, copyrightable, registrable as a mask work,
protectable as a trade secret or otherwise protectable as an Intellectual Property
Right), owned or licensed (with a right to sublicense) by a party hereto and all
Intellectual Property Rights pertaining thereto.
	 
	 	2.45	 	“Termination Inventory” means Components on order, Component inventory,
work-in-process, and finished Product inventory at the discontinuance or termination of
this Agreement or upon receipt of a Change Order from VOLCANO, or at the complete or
partial termination or cancellation of an Order or of a Product.
	 
	 	2.46	 	“Test Fixtures” means electrical test equipment tooling, including
software applications or programs, provided to EI from VOLCANO for the purpose of
testing completed printed circuit board assemblies or systems manufactured by EI, where
VOLCANO retains all ownership interest and obligations in such Test Fixtures.
	 
	 	2.47	 	“Test Software” means any programs or code to perform test verification
for Prototypes, Components or finished Products.
	 
	 	2.48	 	“Tools” means equipment, jigs and fixtures that may be used by EI in
the manufacture of Products.
	 
	 	2.49	 	“Purchase Order Lead Time” means the period of time, expressed in hours
or days, from when an Order or Release is received by EI to when the Product is
delivered to the VOLCANO.
	 
	 	2.50	 	“VOLCANO Agreement” means that certain Indemnification, Insurance, and
Limits of Liability Agreement, dated August 29, 2005, by and between VOLCANO and EI.
	 
	 	2.51	 	“VOLCANO Part Number” refers to the unique, VOLCANO or VOLCANO-assigned
reference number for a particular assembly or Component.
	 
	 	2.52	 	“VOLCANO Property” will mean all property that VOLCANO may provide to
EI for assembly into Products, such as Consigned Component inventories, as well as any
designs, documentation, Product Requirements, Tools, Test Fixtures, Test Software, and
other test equipment and other materials that VOLCANO may furnish to EI or
that VOLCANO may pay for in connection with this Agreement for EI’s use in performing
any of its obligations hereunder.




Page 8 of 29









 












	3.0	 	Design, Development and Prototypes






	 	3.1	 	Prototype Services. EI will design and develop Prototypes for each Product
and will perform the additional services set forth below or as otherwise agreed per this
agreement.
	 
	 	3.2	 	Return of Prototypes. Any Prototypes rejected may be returned at the option
of the VOLCANO Business Unit Manager using the return processes or otherwise agreed
between the VOLCANO Business Unit Manager and the EI Program Manager.
	 
	 	3.3	 	Additional Services. The Parties may agree to add additional services from
time to time. Prior to commencing any such services, EI will provide VOLCANO a written
proposal that will include a description of the services to be performed and the total
estimated fees. EI agrees to propose fee rates on both a time and material or fixed price
basis at VOLCANO’s request. The parties will enter into a SOW signed by both Parties to
initiate each service referencing this Agreement and becoming subject to its terms and
conditions. However, to the extent of any conflict between the terms of a SOW and these
terms, the terms of the SOW will control and take precedence, except for terms and
conditions relating to rights of Intellectual Property which shall be governed entirely
by this Agreement and not any SOW, including if said SOW is incorporated with this
Agreement or otherwise made part thereof.






	4.0	 	Ownership






	 	4.1	 	Pre-Existing Intellectual Property. Each Party will maintain all right,
title and interest in its Pre-Existing Intellectual Property, subject to any licenses
granted below.
	 
	 	4.2	 	Developed Intellectual Property. Except for Intellectual Property in
Product Requirements and Deliverables, which shall be owned by VOLCANO, ownership of
Intellectual Property conceived or developed under this Agreement will be owned by the
Party or Parties whose employees, agents or contractors conceive, author or otherwise
create such Intellectual Property. Any Intellectual Property that may be developed
jointly will be jointly owned, with no accounting requirement by one Party to the other.
	 
	 	4.3	 	VOLCANO Rights.






	 	4.3.1	 	VOLCANO will own all right, title and interest, including all
Intellectual Property Rights, in and to the Product Requirements and the
Deliverables.
	 
	 	4.3.2	 	Should VOLCANO elect to pay EI to develop Technical Manufacturing
Information for the purpose of manufacturing Products, which Technical
Manufacturing Information is unique to Products as defined herein, VOLCANO will
expressly state as such and EI will identify the cost VOLCANO will pay to
cover such development. Such cost will be in addition to the cost of
Deliverables. If EI agrees to develop such Technical Manufacturing Information
at this price, EI shall own such EI-developed Technical




Page 9 of 29









 












	 	 	 	Manufacturing
Information, and VOLCANO will receive a non-exclusive, royalty-free, worldwide,
transferable, perpetual license under said EI-developed Technical Manufacturing
Information to make, sell, offer for sale, use, reproduce, modify, adapt,
display, distribute, and make other versions of Products using said
EI-developed Technical Manufacturing Information. This grant shall include the
right of VOLCANO to sublicense to system integrators, re-seller and other
parties at VOLCANO’s sole discretion.






	 	4.4	 	EI Rights.






	 	4.4.1	 	EI will own all right, title and interest, including all
Intellectual Property Rights, in and to Intellectual Property related to EI’s
manufacturing process of the Products that EI develops solely on its own, without
assistance or input from VOLCANO, excluding jointly developed Intellectual
Property, including EI’s Technical Manufacturing Information for the Products,
subject to VOLCANO’s license of EI-developed Technical Manufacturing Information
under Section 4.3.2 above. VOLCANO agrees to maintain the confidentiality
of EI’s Technical Manufacturing Information under the terms specified in
Section 14 below and in accordance with the terms and conditions of the
NDA/CDA.
	 
	 	4.4.2	 	VOLCANO grants to EI, a non-exclusive, non-transferable, worldwide,
royalty-free license under VOLCANO’s Intellectual Property Rights to use the
Product Requirements to design, develop, test and manufacture the Deliverables for
the term of this Agreement. EI agrees to maintain the confidentiality of the
Product Requirements under the terms specified in Section 14 below and in
accordance with the terms and conditions of the NDA/CDA.






	 	4.5	 	Trademark Usage. Nothing in this Agreement implies the grant of any
license from one Party to the other to use any Marks. Notwithstanding the foregoing,
VOLCANO grants to EI the non-exclusive, limited right to reproduce any designated VOLCANO
Marks on VOLCANO Products.






	5.0	 	Product Purchases






	 	5.1	 	Non-Exclusive. VOLCANO or any Eligible Buyer shall only have a right to
manufacture Products internally or through third parties, purchase Products from other
sources or enter into a similar agreement with any third party, as specifically defined
under the terms and conditions of this Agreement and subject to the Intellectual Property
Rights and any other rights of EI.
	 
	 	5.2	 	Order Acknowledgment. Purchase of Products will be initiated by an
issuance of an Order by VOLCANO. EI will acknowledge the Order with a delivery date. If
an Order exceeds the Forecast or shortens the Purchase Order Lead Time, EI will use its
commercially reasonable efforts to fill such excess or accommodate such shorter Purchase
Order Lead Time. Any expedite fees associated with an order in excess of
Forecast will be agreed by both Parties in advance of any action or work to fulfill the
Order.




Page 10 of 29









 












	 	5.3	 	Forecasts. VOLCANO will provide a 12 month rolling forecast quarterly. The
Forecast is intended for visibility as a planning tool of future demand but is not
intended to be a binding order or commitment.
	 
	 	5.4	 	Materials/Inventory Management. The intent is for EI and VOLCANO to
jointly define and optimize opportunities to reduce both the risk and the liability of
procuring components to forecasted requirements. Unless otherwise agreed to the
following materials/inventory management processes will apply:






	 	5.4.1	 	Material Procurement. EI is authorized to purchase
Components pursuant to Orders for Products. VOLCANO shall submit Orders on a
quarterly basis. EI will follow prudent procurement practices to ensure supply
while minimizing total inventory exposure. VOLCANO may provide input to EI
regarding prudent supply chain practices, and EI will in good faith take such
input into account. “Prudent Procurement Practices” are hereby
defined to include, but are not limited to, the following:






	 	5.4.1.1	 	following EI’s ABC classifications;
	 
	 	5.4.1.2	 	utilizing minimum order quantities as defined by Component
Suppliers and economic order quantities as approved by VOLCANO;
	 
	 	5.4.1.3	 	ordering and buying Components as appropriate to meet
Manufacturing Lead Times, taking into account Component Lead Times
and EI’s internal manufacturing lead times; prior to procurement, EI
shall provide VOLCANO a list of those components that have
procurement lead times greater than 3 months.; VOLCANO shall review
and provide written authorization for procurement of such components
	 
	 	5.4.1.4	 	exercising return and cancellation privileges as allowed by
agreements with Component Suppliers.






	 	5.4.2	 	Materials Liability. VOLCANO will pay EI for
Component and/or Product inventory excess of open Orders for: (i) purchased
Components bought within the Component Lead-Times to meet Orders, (ii) Minimum
Buys , (iii) any buffer Component inventory approved in writing by VOLCANO,
(iv) negotiate EOL buy of Components with VOLCANO. If EI agrees to purchase
Components then VOLCANO will be liable for these Components.
	 
	 	5.4.3	 	Excess & Obsolete Materials. EI will also provide
VOLCANO excess and obsolete reports at the end of every month. Excess reports
shall include materials approved by VOLCANO that extend beyond Order
requirements
and for minimum order quantities.




Page 11 of 29









 












	6.0	 	Delivery and Acceptance






	 	6.1	 	Delivery. The Parties agree to use the logistics processes defined in the
purchase order. All Product shipments will be FOB Shipping dock at EI’s manufacturing
facility.
	 
	 	6.2	 	Title and Risk of Loss. Title to and risk of loss or damage to the Product
will pass to VOLCANO upon EI’s tender of the Product to the VOLCANO carrier.
	 
	 	6.3	 	Acceptance. Acceptance of the Product shall occur no later than twenty
(20) business days after receipt of Product and shall be based solely on whether the
Product passes a mutually agreeable Acceptance Test Procedure or Inspection designed to
demonstrate compliance with the Product Requirements and Technical Manufacturing
Information. Product shall be deemed accepted if not rejected within this twenty (20)
business day period.
	 
	 	6.4	 	Rejected Products. Prior to returning any rejected Product, VOLCANO will
obtain a RMA number from EI, and will return such Product in accordance with EI’s
instructions. VOLCANO will specify the reason for such rejection in all requested RMAs.
In the event a Product is rejected, EI will at EI’s option, repair the Product if it is
repairable, provide a replacement if stock is available, or refund the purchase price.






	7.0	 	Prices and Payment Terms






	 	7.1	 	VOLCANO Product Pricing. Specific Product prices, Volumes, currency and
any exchange rate sharing will be agreed upon by EI and VOLCANO and set forth in
Attachment A to this Agreement.
	 
	 	7.2	 	Adjusted Pricing. The Parties agree to implement the following pricing
methodology to implement new pricing or price adjustments, whether for a new product or
existing Products. To introduce new pricing, EI will issue a quotation to VOLCANO
listing the Product, pricing, and delivery schedule of the Product. EI will identify the
cost driver for all price increases. Material price increases from suppliers will be
passed through to VOLCANO in EI’s Adjusted Price.
	 
	 	7.7	 	Payment Terms. VOLCANO and EI agree to payment terms of net forty five
(45) days from the date of invoice. Payment will be made in US dollars.






	8.0	 	Component Procurement






	 	8.1	 	Approved Vendor Lists. EI agrees to buy all Components from suppliers on
the AVL or distributors or distributed coming from those manufactures. In the event that
EI is unable to procure a Component(s) as a result of the AVL restrictions set forth
herein, VOLCANO and EI agree to negotiate changes to the AVL.
	 
	 	8.2	 	Consigned Components. VOLCANO reserves the right to supply through
consignment, at its discretion and upon EI’s consent, any Components to EI related to the
production of Product. VOLCANO will retain all rights, title, interest, and obligation
(including but not limited to, warranty related issues) in the Components




Page 12 of 29









 












	 	 	 	furnished to EI
as consigned inventory. VOLCANO will retain ownership of all such Consigned Components
including during the time such Components are used by EI in the manufacturing of
VOLCANO’s Products. EI will manufacture the Product using its normal manufacturing
practices. EI will care for VOLCANO consigned materials in the same manner as it own
materials. Each party shall bear the financial loss of its materials that are yielded,
consumed, or damaged during the manufacturing process at EI. EI will provide VOLCANO with
inventory reports on a monthly basis or as requested for all consigned materials.
	 
	 	8.3	 	EI’s production yield, scrap or lost of Consigned Components used by EI production
is at VOLCANO’s risk. EI shall provide monthly status on yields, scrap, and consigned
material loss.






	9.0	 	Warranties






	 	9.1	 	EI warrants all Products delivered hereunder to be free from defects of EI
materials and workmanship excluding Components for a period of one (1) year from the date
of shipment. EI will pass on to VOLCANO all Component Suppliers’ warranties to the extent
that they are transferable. EI agrees to ensure that all Components used in the Product
are manufactured by suppliers on VOLCANO’s AVL. VOLCANO acknowledges that the design
based functionally of Products is contingent on VOLCANO’s designs and, therefore, such
warranty does not apply to the design based functionality of Products fabricated under
this Agreement.
	 
	 	9.2	 	EXCEPT AS PROVIDED IN THIS AGREEMENT, ALL EXPRESS OR IMPLIED CONDITIONS,
REPRESENTATIONS AND WARRANTIES INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF DESIGN,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT, ARE DISCLAIMED BY
EACH PARTY, EXCEPT TO THE EXTENT THAT SUCH DISCLAIMERS ARE HELD TO BE LEGALLY INVALID.
	 
	 	9.3	 	No course of dealing, course of performance, usage of trade, or description of
Product, Prototype or service shall be deemed to establish an expressed or implied
warranty.
	 
	 	9.4	 	If VOLCANO claims that any Products and any incidental services are nonconforming,
VOLCANO shall (i) promptly notify EI, in writing, of the basis of such nonconformity;
(ii) follow EI’s instructions for the return of the Products; and (iii) return such
Products to EI’s designated facility with the RMA identified. EI will, at its option,
repair or replace the defective Products, or issue a credit or rebate for the purchase
price.
	 
	 	9.5	 	EI’s sole liability and VOLCANO sole remedy for breach of warranty shall be limited
as stated in Section 9 Warranties.






	10.0	 	Inventory Management






	 	10.1	 	Obsolete Component Inventory. Obsolete Components will be communicated to
VOLCANO as soon as possible after purchase order demand is removed. For Obsolete




Page 13 of 29









 












	 	 	 	Components inventory, provided that EI has demonstrated Prudent Procurement Practices in
purchasing such Components, VOLCANO has the option of: (i) purchasing the Obsolete
Components from EI, at EI’s current quoted price and having the Obsolete Components
returned to VOLCANO, or a location indicated by VOLCANO; (ii) authorizing EI to sell
Obsolete Components internally or externally and VOLCANO, upon review and agreement, pays
the difference between EI’s current quoted price and selling price; or (iii) scrapping
and disposing of the Obsolete Components at EI’s current quoted price. VOLCANO will
advise EI in writing within thirty (30) calendar days which option VOLCANO has selected to
disposition the Obsolete Components. EI shall provide VOLCANO obsolete reports monthly.
	 
	 	10.2	 	Excess Component Inventory. EI shall provide VOLCANO excess reports
monthly. Excess reports shall include materials approved by VOLCANO that extend beyond
quarterly requirements and for minimum order quantities.
	 
	 	10.3	 	Component Discontinuances. If EI receives notice from a Component supplier
that a Component will be discontinued, EI will notify VOLCANO in writing within five (5)
business days and will use commercially reasonable efforts to identify a form, fit and
function replacement and in a reasonable period of time, notify VOLCANO by submitting in
writing a list of alternatives. The VOLCANO Global Account Manager or, as appropriate, the
Business Unit Managers and EI will develop an appropriate action plan, including all
sample requirements, product qualifications, updates to the AVL, and schedule changes
necessary to reaching a mutually agreeable resolution of the discontinuance. EI will use
commercially reasonable efforts to ensure all such suppliers are obligated to provide a
minimum of ninety (90) days notification of any potential discontinuance to EI.
	 
	 	10.4	 	Component Life-time Buys. In the event that VOLCANO cannot identify a form,
fit and function replacement, or does not approve a replacement identified by EI, VOLCANO
may purchase the LTB inventory and consign or Buy/Sell such LTB inventory to EI for use in
manufacturing Products. At its discretion, VOLCANO may also request EI purchase the LTB
inventory. EI has the right to refuse this request or require a PO from VOLCANO to cover
these LTB components.






	11.0	 	Performance Expectations and Quality Standards






	 	11.1	 	Quality Standards. EI agrees to meet the quality standards and performance
metrics defined in the Products Specification. In addition to these standards and
metrics, Products shall pass the test plan specified for the Product.
	 
	 	11.2	 	Quarterly Business Reviews. EI and VOLCANO shall conduct quarterly business
reviews. Following such review, EI shall provide a written report that details quarterly
yields, scrap, costs, inventory status, and cost reduction efforts and other such data as
may be discussed and agreed to in writing by EI and VOLCANO.






	12.0	 	Change Notification






	 	12.1	 	EI Proposed Changes. No Engineering or Manufacturing Changes to form, fit or




Page 14 of 29









 












	 	 	 	function may be made to, or incorporated into, Products without the prior written approval
of the VOLCANO. EI will provide VOLCANO written notice of any proposed Engineering or
Manufacturing Changes to form, fit, or function and provide evaluation samples and other
appropriate information as may be specified by the VOLCANO. Such information may include
possible effects on price, performance, reliability, manufacturing capacity, lead and
delivery times, or appearance, and any Obsolete or other Components changes. VOLCANO must
provide written approval of the Impact Proposal prior to any implementation of the
Engineering or Manufacturing Change.
	 
	 	12.2	 	VOLCANO Proposed Changes. EI acknowledges that VOLCANO may need to change the
Product or processes during the Term for contractual, engineering or Product related
reasons. These changes will be communicated through a Change Order (CO) request. EI is
only to take action when given change instructions in writing from VOLCANO. After receipt
of the CO, EI will provide to VOLCANO, any delivery impact, an implementation date,
potential scrap or material exposure and the impact on the price of the Product due to CO
changes. If acceptable, VOLCANO will notify the EI and provide specific instructions to EI
on CO implementations.
	 
	 	12.3	 	Financial Responsibility from Proposed Changes. If VOLCANO accepts EI’s Impact
Proposal, VOLCANO will assume liability for any material made obsolete due to a CO
implementation per the terms and conditions described in Section 10.2 Component
Discontinuances of this Agreement. In addition, VOLCANO will be responsible for increased
labor or material charges and any reasonable rework or expedite charges for labor,
materials and test resulting from a CO.






	13.0	 	Intellectual Property






	 	13.1	 	Intellectual Property Indemnification. Each party agrees to indemnify, defend
and hold harmless the other party from all liability, causes of action, demands, losses,
damages, costs and expenses (including attorneys’ fees) arising out of any third party
claims that the Deliverables manufactured by EI or the processes performed by EI in the
performance of this Contract infringe a patent, copyright, trade secret, or other
intellectual property right, foreign or domestic, of said third party, to the extent that
said third party claims are based on Deliverables and processes incorporating designs,
specifications or other documentation of said indemnifying party and the other party’s
compliance therewith. Notwithstanding the above, VOLCANO agrees to indemnify, defend and
hold harmless EI from all liability, causes of action, demands, losses, damages, cost and
expenses (including attorney’s fees) arising out of any third party claims that VOLCANO
Property or Product Requirements infringe a patent, copyright, trade secret, or other
Intellectual Property Right, foreign or domestic, of said third party.
	 
	 	13.2	 	Background Technology. Except as otherwise expressly set forth in this
Agreement, (a) each party is and will be the sole and exclusive owner of all right, title,
and interest
in and to its own background Technology and neither party acquires any interests under
this Contract to the other’s background Technology and (b) nothing in this Contract




Page 15 of 29









 












	 	 	 	shall be construed to limit or restrict any right of either party to register,
encumber, transfer, license, access, reference, use, or practice any of its own
background Technology in any way for any purpose or use, including without limitation,
the use in connection with the development, manufacture, distribution, marketing,
promotion, and/or sale of any products. Background Technology of a particular party
shall mean all Technology owned or licensed by said party prior to commencement of this
Contract and shall not include Derivative Work Developed Technology and Pre-Existing
Intellectual Property.






	14.0	 	Confidential Information






	 	14.1	 	Proprietary Information. During the Term, a Party (the “Recipient”) may
receive or have access to certain information of the other Party (the “Discloser”) that
is marked or otherwise expressly designated as “Confidential,” including information or
data concerning the Discloser’s Intellectual Property, products or product plans,
business operations, strategies, customers and related information. The Parties will be
bound by the terms of the NDA and/or the CDA and any information designated as
Confidential under this Section 14.1 shall also be considered “Proprietary Information”
as such term is defined in the NDA/CDA. To the extent any term of this Agreement
conflicts with any term in the NDA/CDA, the terms of this Agreement will control and take
precedence. Proprietary Information, as defined in the NDA/CDA, may only be used by
those employees or temporary employees of the Recipient who have a need to know such
information for purposes related to this Agreement. The AVL, Bill of Material,
Forecasts, Orders, Product Requirements and other information identified in this
Agreement as VOLCANO confidential must be held in confidence by EI under the terms of the
NDA/CDA. Notwithstanding the foregoing, EI may provide VOLCANO’s Proprietary Information
to EI’s subcontractors or suppliers, provided that EI binds such third parties to
substantially similar confidentiality obligations.






	15.0	 	Force Majeure Events






	 	15.1	 	Force Majeure. Neither party shall be liable hereunder by reason of any
failure or delay in the performance of its obligations hereunder on account of acts of
God or other cause which is beyond the reasonable control of such party and could not
have been avoided by the exercise of reasonable prudence. In the event of the occurrence
of any force majeure event, the affected party shall notify the other party immediately
in writing of the invocation of this Section 16.1 Notice of Breach, and each party’s
obligations hereunder to the other shall be suspended for the duration of such force
majeure event; provided, however, that the affected party shall be obligated to use its
commercially reasonable efforts to restore performance hereunder as soon as reasonably
practicable, and provided, further, that if such event continues for more than thirty
(30) days in the aggregate in any six (6) month period, the non-affected party shall have
the right to terminate this Agreement at any time upon written Notice to the other party.






	16.0	 	Events of Default






	 	16.1	 	Notice of Breach. If either Party is in “Material” Breach of any provision
of this Agreement, the non-breaching Party may, by notice to the breaching Party, except
as




Page 16 of 29









 












	 	 	 	otherwise prohibited by the United States bankruptcy laws, terminate the whole or any
part of this Agreement or any Order, unless the breaching Party cures the Breach within
thirty (30) calendar days after receipt of notice.
	 
	 	16.2	 	Causes of Breach. For purposes of this Agreement, the term “Breach”
includes any:






	 	a)	 	proceeding, whether voluntary or involuntary, in bankruptcy or
insolvency by or against a Party;
	 
	 	b)	 	appointment, with or without a Party’s consent, of a receiver or an
assignee of a Party for the benefit of creditors;
	 
	 	c)	 	other failure by a Party to comply with any material provision of
this Agreement with additional failure to provide the non-breaching Party, upon
request, with reasonable assurances of future performance.






	17.0	 	Termination






	 	17.1	 	Termination For Convenience. Either party may terminate this Agreement
hereunder for any reason at its convenience upon one hundred eighty (180) calendar days
prior written notice to the other party.
	 
	 	17.2	 	Effect of Expiration or Termination. Upon expiration or termination of
this Agreement, the Parties agree to the following terms regarding the relevant VOLCANO
Property and Termination Inventory:






	 	a)	 	All Orders issued prior to the effective date of the termination or
expiration will be fulfilled pursuant to and subject to the terms of this
Agreement, even if the Delivery Dates of Products under such Orders are after the
effective date of expiration or termination; and
	 
	 	b)	 	All licenses granted by VOLCANO to EI to any VOLCANO Property or
Intellectual Property or by EI to VOLCANO to any EI Intellectual Property will
automatically terminate upon earlier termination or expiration of this Agreement
if such termination is for convenience.






	 	17.3	 	Survival. The rights and obligations under the following Sections of this
Agreement will survive any expiration or earlier termination of this Agreement in
accordance with their terms: Section 2 (“Definitions”); 4 (“Ownership”); 7 (“Prices
and Payment Terms”); 9 (“Warranties”); 13 (“Intellectual Property Defense”); 14
(“Confidential Information”); 17 (“Termination”); 18 (“Limitation of Liability”); and 20
(“Miscellaneous”).
	 
	 	17.4	 	VOLCANO Obligations upon Complete or Partial Termination. In the event of
a complete or partial termination of this Agreement by either Party, VOLCANO will
reimburse EI for any mutually agreed non-amortized EI costs associated with Product
not originally funded through Non-Recurring Engineering (NRE) charges. In addition, in
the event of a complete or partial termination of this Agreement (i) by EI for cause as
provided in Section 16.1 above (ii) by VOLCANO, for convenience as provided in
Section 17.1 above, or for cause as provided in Sections 16.1 above; or
(iii) by either




Page 17 of 29









 












	 	 	 	party in the event of a force majeure event as described in Section
15.1 above, the Parties agree to take the following actions:






	 	17.4.1	 	EI will identify any Components in inventory, and VOLCANO will have the right of
first refusal to purchase such Components;
	 
	 	17.4.2	 	EI will use commercially reasonable efforts to cancel its purchase commitments
or return for credit or find other use for all Components intended for use in the
Product (including all Components rendered excess/obsolete by Engineering Changes
or Manufacturing Changes, or COs);
	 
	 	17.4.3	 	EI will cancel all cancelable, pending orders to Component Suppliers from the
date of notification by VOLCANO of the complete or partial termination of this
Agreement.
	 
	 	17.4.4	 	VOLCANO will reimburse EI for all validated actual costs, charges and fees
incurred to return any portion of the Termination Inventory to Component
Suppliers. All costs will be justified by appropriate documentation; and
	 
	 	17.4.5	 	VOLCANO will reimburse EI for Termination Inventory remaining after EI has taken
those steps required above. Any such reimbursement will be: (i) at EI’s quoted
price for Components to VOLCANO; (ii) the purchase price in effect at the date of
cancellation for finished Products.






	 	17.5	 	VOLCANO’s Rights Upon Termination. In the event of termination by VOLCANO,
EI will provide VOLCANO the following:






	 	a)	 	All VOLCANO Property (unless sold to EI pursuant to the terms of this
Agreement or otherwise agreed to in writing)
	 
	 	b)	 	Developments, excluding those made by EI.






	18.0	 	Limitation of Liability
	 
	 	 	NEITHER PARTY WILL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES TO THE
OTHER (INCLUDING LOSS OF PROFITS) ARISING OUT OF ANY PERFORMANCE OF THIS AGREEMENT OR IN
FURTHERANCE OF THE PROVISIONS OR OBJECTIVES OF THIS AGREEMENT, REGARDLESS OF WHETHER SUCH
DAMAGES ARE BASED ON TORT, WARRANTY, CONTRACT OR ANY OTHER LEGAL THEORY, EVEN IF ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING THE ABOVE, EACH PARTY WILL BE RESPONSIBLE FOR
ANY DAMAGES LOSSES, ETC. INCLUDED IN AN AWARD OR SETTLEMENT OF A THIRD PARTY INTELLECTUAL
PROPERTY CLAIM IN ACCORDANCE WITH SECTION 13 ABOVE, OR ANY DAMAGES ARISING FROM DEATH
OR BODILY INJURY. IN ADDITION, EACH PARTY WILL BE RESPONSIBLE FOR ALL DAMAGES, OF ANY KIND,
SUFFERED AS A RESULT OF
ANY UNAUTHORIZED DISCLOSURE OF THE OTHER PARTY’S TRADE SECRETS WHERE SUCH DISCLOSURE RESULTS
IN ACTUAL DAMAGES.




Page 18 of 29









 












	19.0	 	Liability Cap
	 
	 	 	IN NO EVENT WILL EI’S TOTAL LIABILITY UNDER THIS AGREEMENT EXCEED $100,000.00 PER CALENDAR
YEAR. NOTWITHSTANDING THE ABOVE, EACH PARTY WILL BE RESPONSIBLE FOR ANY DAMAGES, LOSSES, ETC.
INCLUDED IN AN AWARD OR SETTLEMENT OF A THIRD PARTY INTELLECTUAL PROPERTY CLAIM IN ACCORDANCE
WITH SECTION 13 HERIN ABOVE, OR ANY DAMAGES ARISING FROM DEATH OR BODILY INJURY,
PROVIDED THAT SUCH DAMAGES ARISE OUT OF THE RESPONSIBLE PARTY’S INTENTIONAL MISCONDUCT OR
GROSS NEGLIGENCE. IN ADDITION, EACH PARTY WILL BE RESPONSIBLE FOR ALL DAMAGES, OF ANY KIND,
SUFFERED AS A RESULT OF ANY UNAUTHORIZED DISCLOSURE OF THE OTHER PARTY’S TRADE SECRETS WHERE
SUCH DISCLOSURE RESULTS IN ACTUAL DAMAGES, PROVIDED THAT SUCH DAMAGES ARISE OUT OF THE
RESPONSIBLE PARTY’S INTENTIONAL MISCONDUCT OR GROSS NEGLIGENCE SUBJECT TO THE ABOVE LIABILITY
CAP OF $100,000.00 PER CALENDAR YEAR.
	 
	20.0	 	Miscellaneous






	 	20.1	 	Notices. See Attachment B.
	 
	 	20.2	 	Reference to Days. All references in this Agreement to “business days (M-F
excluding holidays)” will, unless otherwise specified herein, mean calendar days.
	 
	 	20.3	 	Independent Contractors. Each Party represents and warrants to the other
that its relationship with the other under this Agreement will be as an independent
contractor and neither Party is a partner, employee or agent of or with the other.
	 
	 	20.4	 	Severability. If any provision of this Agreement is determined by a court
of competent jurisdiction to be invalid or unenforceable in any respect, such
determination will not impair or affect the validity, legality or enforceability of the
remaining provisions hereof, and each provision is hereby declared to be separate,
severable and distinct. To the extent that any such provision is found to be invalid,
illegal or unenforceable, the Parties hereto will negotiate in good faith to substitute
for such provision, to the extent possible, a new provision that most nearly effects the
Parties’ original intent in entering into this Agreement or to provide equitable
adjustment in the event no such provision can be added. The other provisions of this
Agreement will remain in full force and effect.
	 
	 	20.5	 	VOLCANO Agreement.  The VOLCANO Agreement (Indemnification, Insurance, and
Limits of Liability) signed by VOLCANO on 26 August, 2005 and EI on 29 August 2005 is
hereby incorporated herein and made a part hereof. Purchase orders under the Insurance
section in the VOLCANO Agreement executed on 26 August, 2005 shall include this
Manufacturing Services Agreement
	 
	 	20.6	 	Hierarchy of Documents/Order of Precedence. Unless otherwise specifically
agreed to by the Parties, in the event of any conflict between the provisions of this
Agreement and SOWs negotiated either prior to or subsequent to this Agreement, the order
of




Page 19 of 29









 












	 	 	 	precedence is as follows:






	 	(i)	 	the VOLCANO Agreement;
	 
	 	(ii)	 	this Agreement;
	 
	 	(iii)	 	the NDA/CDA;
	 
	 	(iv)	 	a SOW;
	 
	 	(v)	 	any Addendum; and
	 
	 	(vi)	 	the front of each Order that is acknowledged by EI. Unless otherwise
specifically agreed, the Parties acknowledge that any terms and conditions of any
such quotation, Order, acknowledgment or invoice will be deemed deleted and of no
effect whatsoever.






	 	20.7	 	Entire Agreement. This Agreement constitutes the entire agreement between
the Parties with respect to the subject matter hereof and supersedes all prior agreements
(excluding the VOLCANO Agreement and the NDA/CDA), understandings, negotiations and
discussions, whether written or oral; for purposes of construction, this Agreement will
be deemed to have been drafted by both Parties. No modifications, amendments, or waiver
of any term, condition, or provision of this Agreement will be binding on either Party
unless in writing and signed by an authorized representative of each Party.
	 
	 	20.8	 	Governing Law. This Agreement will be governed in all respects by the laws
of the State of New York without reference to the conflict of laws provisions.
	 
	 	20.9	 	Assignment. Neither this Agreement nor any right, license, privilege or
obligation provided herein may be assigned, transferred or shared by either Party without
the other Party’s prior written consent, and any attempted assignment or transfer is
void.
	 
	 	20.10	 	No Publication. Neither Party may publicize or disclose to any third
party, without the written consent of the other Party, the terms of this Agreement.
Without limiting the generality of the foregoing sentence, no press releases may be made
without the prior written mutual consent of each Party.
	 
	 	20.11	 	Headings. The section headings in this Agreement are for convenience of
reference only. The headings will not limit or extend the meaning of any provision of
this Agreement, and will not be relevant in interpreting any provision of this Agreement.
The plural will be deemed to include the singular, and the singular will be deemed to
include the plural.
	 
	 	20.12	 	Dispute Resolution. Prior to any Party pursuing legal remedies hereunder,
the Parties
agree to negotiate in good faith to resolve any disputes arising during the performance
of the Agreement. If such negotiations and meetings do not resolve the dispute within
five (5) business days after notice of the dispute, then a Senior Vice President from




Page 20 of 29









 












	 	 	 	each Party will meet face to face within thirty (30) business days or as mutually
agreed between them to attempt to resolve such dispute. If the dispute is not resolved
to the satisfaction of these executives, then either VOLCANO or EI may terminate this
Agreement in whole or in part and pursue all available legal remedies.




IN WITNESS WHEREOF, the Parties have executed this Manufacturing Services Agreement as of the date
first written above.




	 	 	 	 	 	 	 	 	 
	VOLCANO CORPORATION	 	ENDICOTT INTERCONNECT 

TECHNOLOGIES, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	Date:

	 	 	 	Date:	 	 	 	 
	By:

	 	 

	 	By:
	 	 

	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	John Dahldorf
	 	Name:
	 	Wade Phalen	 	 
	Title:

	 	CFO
	 	Title:
	 	VP and GM of Complex Assembly	 	 






Page 21 of 29









 






Attachment A




VOLCANO Product Pricing



1) The Development NRE cost for the build of VOLCANO’s Flex carrier in EI facility in Endicott, NY
is $40,000. The deliverable for this item is five (5) frames of Flex product. Delivery date is 13
weeks from receipt of PO.



2) If VOLCANO and EI enter into a two (2) year production contract for the turnkey Flex and
assembly, EI will refund/rebate the Flex development NRE.



3) The pricing for the turnkey Flex and assembly will be [CONFIDENTIAL]* for the
first [CONFIDENTIAL]* pieces on a frame at [CONFIDENTIAL]* pieces
per week minimum. EI will be responsible to capitalize the specialized placement and dispensing
equipment required for the build. The placement equipment is currently under development at
Universal Instruments and VOLCANO has directed EI to purchase, lease or acquire such equipment.
VOLCANO has directed EI to purchase, lease, or acquire from Asymtek, the dispensing equipment to
manufacture this product.



4) The pricing for the turnkey Flex and assembly will be [CONFIDENTIAL]* for
follow-on orders in 2007 and 2008, at a minimum of [CONFIDENTIAL]* per week, for a
total of [CONFIDENTIAL]* pieces.



5) VOLCANO will purchase from EI, product at the price and minimum quantities per week as defined
in sections 3 and 4 above. The price and minimum quantities are for good parts delivered by EI to
Volcano. Good parts are those that meet the requirements as defined in the SOW, its referenced
prints and specifications, and pass an outgoing electrical test at EI. This electrical test will be
performed using equipment and test programs provided by VOLCANO. EI will manufacture the Product
using its normal manufacturing practices. EI will care for VOLCANO consigned materials in the same
manner as it own materials. Each party shall bear the financial loss of its materials that are
yielded, consumed, or damaged during the manufacturing process at EI.



6) Assemblies that are found to be nonconforming to the requirements as defined in the SOW, its
referenced prints and specifications, and that do not pass an outgoing electrical test at EI or
fail incoming verification at VOLCANO, shall be deemed nonconforming product. Nonconforming product
that can not be repaired or accepted under agreement by both parties shall be deemed as scrap or
yielded product. Each party shall bear the financial loss of its portion of the materials and value
add in the total value of nonconforming assemblies. Neither party shall hold the other liable for
losses of its material or value add content.






 




			
	*	 	CONFIDENTIAL MATERIAL REDACTED AND
FILED SEPARATELY WITH THE SECURITIES & EXCHANGE COMMISSION




Page 22 of 29









 










Attachment B




Administration and Notices





	1.	 	Notices:






	 	1.1	 	Any notice or other communication required or permitted to be given hereunder will
be in writing. Notices may be delivered in person, by an email with return verification
from the receiving party, reputable courier with delivery confirmation, transmitted by
fax with confirmation, or sent by certified mail return receipt requested.
	 
	 	 	 	Either Party may change its designated contact and address for purposes of notice by
giving notice to the other Party in accordance with these provisions.





Coordinators




Technical Coordinators:




[CONFIDENTIAL]*




Contract Coordinators:




[CONFIDENTIAL]*



The Coordinators for the respective companies will determine designated points of contact for
specific issues where not specified in this Agreement.






 




			
	*	 	CONFIDENTIAL MATERIAL REDACTED AND
FILED SEPARATELY WITH THE SECURITIES & EXCHANGE COMMISSION




Page 23 of 29









 










STATEMENT OF WORK (SOW)




FOR THE DELIVERY OF FLEX AND ASSEMBLY




OF




VOLCANO p/n [CONFIDENTIAL]*






 




			
	*	 	CONFIDENTIAL MATERIAL REDACTED AND
FILED SEPARATELY WITH THE SECURITIES & EXCHANGE COMMISSION




Page 24 of 29









 











	1.0	 	SCOPE






	 	1.1	 	Introduction






	 	 	The work identified in this Statement of Work (SOW) is to be performed for VOLCANO by EI. This
document identifies the product description, scope of work to be performed and quality
considerations to be observed during the processing of this product. All exceptions and/or
deviations to any requirements defined herein shall have prior approval from VOLCANO. This SOW
may be amended by mutual agreement of both parties.






	 	1.2	 	Summary of Tasks
	 
	 	 	 	EI shall be responsible for performing the following tasks:
	 
	 	•	 	Develop the Flex substrate to the specifications defined on the applicable prints and
specifications
	 
	 	•	 	Manufacture the Flex
	 
	 	•	 	Assemble the (Consigned Components) [CONFIDENTIAL]* and
[CONFIDENTIAL]* to the Flex
	 
	 	2.0	 	APPLICABLE DOCUMENTS






	 	 	Unless stated otherwise, the most recent version of these documents shall apply. VOLCANO is
responsible to notify EI of updates to VOLCANO documents. The documents listed form a part of
this Statement of Work.






	 	2.1	 	VOLCANO Documents:
	 
	 	 	 	[CONFIDENTIAL]*
	 
	 	2.2	 	Industry/Other Documents:






	 	 	 	ISO 9001:2000
	 
	 	 	 	IPC-A-610 Rev D – Acceptability of electronic assemblies
	 
	 	 	 	ANSI/ESD S20.20-1999 – Protection of electrical and electronic parts, assemblies, and







 




			
	*	 	CONFIDENTIAL MATERIAL REDACTED AND
FILED SEPARATELY WITH THE SECURITIES & EXCHANGE COMMISSION




Page 25 of 29









 











	 	 	 	equipment (Excluding Electrically Initiated Explosive Devices)






	3.0	 	PRODUCTS AND SERVICES




EI shall procure all materials, develop the process to fabricate and manufacture the Flex circuit.
Five frames of Flex circuits shall be delivered to VOLCANO as prototypes for initial testing. Upon
VOLCANO’s acceptance of the prototype units, EI shall manufacture substrates for three (3)
consecutive weeks (~25 frames per week) to be used for qualification of the EI Flex substrate. Upon
successful qualification of the Flex circuit, EI shall manufacture, as a turnkey product the Flex
and assembly of the surface mount components. The assembly shall be comprised of the solder and
underfill of the [CONFIDENTIAL]* and [CONFIDENTIAL]*. The
[CONFIDENTIAL]* and [CONFIDENTIAL]* components will be consigned
by VOLCANO. All Product will be delivered to VOLCANO in a multi-up format, with multiple pieces on
a frame. EI will perform an electrical test of product using Volcano furnished test and test
equipment.





	4.0	 	PURCHASE ORDER




VOLCANO shall place a PO with EI for the amount of $40,000 for the cost of tooling and a portion of
the development cost of the Flex circuit manufacturing process.





	5.0	 	QUALITY REQUIREMENTS




Manufacturing Readiness Review – To be scheduled within 30 days of delivery of the 5 qualification
frames of Flex circuits



Quality and Inspection System per ISO 9001:2000





	6.0	 	PACKAGING/SHIPPING REQUIREMENTS




Static protection is required of the assembled Flex and the components.



Product is to be packaged to ensure proper protection during shipment and handling.





	7.0	 	ADMINISTRATIVE/PROGRAM MANAGEMENT REQUIREMENTS






	 	•	 	Weekly status by COB every Thursday
	 
	 	•	 	Any changes or contractual correspondence shall be coordinated through the Coordinators
identified below.






	8.0	 	PROGRAM SCHEDULE






	 	•	 	The delivery of 5 frames of Flex circuits to VOLCANO shall occur in 13 weeks from
receipt of PO.







 




			
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	 	•	 	VOLCANO will perform testing, analysis and approve/disapprove the delivered
qualification parts in 3 weeks or less from receipt.
	 
	 	•	 	Upon approval of qualification, but no sooner than 6 weeks from delivery of the
1st 5 frames, EI shall produce and deliver Flex circuits of
[CONFIDENTIAL]* pieces on a frame per week for 3 weeks to validate
manufacturing capacity. This may include a ramp to get to [CONFIDENTIAL]*
per week.
	 
	 	•	 	Manufacturing of Flex circuits shall continue at the rate of
[CONFIDENTIAL]* units per week minimum through December 2008.






	9.0	 	DELIVERABLES  — VOLCANO To EI






	 	•	 	Documents as noted above.
	 
	 	•	 	Artwork Gerber Files.
	 
	 	•	 	Consigned Components.
	 
	 	•	 	[CONFIDENTIAL]* Wafer Prober and Test programs






	10.0	 	DELIVERABLE — EI to VOLCANO






	 	•	 	The Flex shall be delivered in a multi-up frame.
	 
	 	•	 	Flex images mounted on frames.
	 
	 	•	 	Flex assemblies mounted on frames.






	11.0	 	CHANGES




VOLCANO may, at any time, from time to time, by written notice to EI, request changes to the part
numbers, specifications, or work scope, including engineering changes. EI shall submit a written
report to VOLCANO setting forth the probable effect, if any, of the requested change in regard to
the work and the effect of any change on prices, payment and delivery. EI shall not proceed with
any such change until authorized in writing by VOLCANO.





	12.0	 	ENGINEERING CHANGE ORDER (ECO) PROCESSING.




EI will process ECO’s submitted by VOLCANO based on the following criteria.



Minimum documentation requirements from VOLCANO:






 




			
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	1)	 	An ECO cover sheet stating purpose of the EC, the Product affected classification as
“emergency” or “standard”;
	 
	2)	 	The description of the change i.e., functional or nonfunctional;
	 
	3)	 	Marked up drawings, BOMs, AVL, Logic Schematics, specifications, or other document
based on the previous approved control copy sent to EI;
	 
	4)	 	Disposition if all levels of Products and Components affected (on order, stock and
work-in- process).




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Coordinators




Technical Coordinators:




[CONFIDENTIAL]*




Contract Coordinators:




[CONFIDENTIAL]*






 




			
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