Document:

Exhibit

10.31

 

NON-EMPLOYEE

DIRECTORS STOCK PLAN OF

GRANITE BROADCASTING CORPORATION

as amended through December 2, 2002

 

1.                                       Purpose.  The purpose of this Non-Employee Directors

Stock Plan (the “Plan”) of Granite Broadcasting Corporation (the “Company”), is

to advance the interests of the Company and its stockholders by providing a

means to attract and retain highly qualified persons to serve as non-employee

directors of the Company and to enable such persons to acquire or increase a

proprietary interest in the Company, thereby promoting a closer identity of

interests between such persons and the Company’s stockholders.

 

2.                                       Definitions.  In addition to terms defined elsewhere in

the Plan, the following are defined terms under the Plan:

 

(a)                                  “Code”

means the Internal Revenue Code of 1986, as amended from time to time.  References to any provision of the Code

shall be deemed to include regulations thereunder and successor provisions and

regulations thereto.

 

(b)                                 “Disability”

means a permanent physical or mental incapacity which, in the reasonable

determination of the Board, renders the Participant unable to perform his

duties as a director of the Company.

 

(c)                                  “Fair

Market Value” of a Share on a given date shall mean the closing price

reported on the Nasdaq Small Cap Market or the principal securities exchange on

which the Common Stock (Nonvoting) may then be traded, as the case may be, or,

if there is no such sale on the relevant date, then on the last previous day on

which a sale was reported.

 

(d)                                 “Participant”

means a person who, as a non-employee director of the Company, has been granted

Shares under the Plan.

 

(e)                                  “Share”

means a share of Common Stock (Nonvoting), $.01 par value, of the Company and

such other securities as may be substituted for such Share or such other

securities pursuant to Section 8.

 

3.                                       Shares

Available Under The Plan. 

Subject to adjustment as provided in Section 8, as of any date, the

total number of Shares issuable under the Plan shall be 600,000.  Such Shares

may be authorized but unissued Shares, treasury Shares, or Shares acquired in

the market for the account of the Participant. 

If there are not enough Shares remaining under the Plan to fully satisfy

any of the awards contemplated under Section 6 of the Plan, then each

Participant’s award shall be proportionately reduced unless the Share reserve

is increased to account for such awards.

 

4.                                       Administration

Of The Plan.  The Plan

will be administered by the Board of Directors of the Company (the “Board”).

 

5.                                       Eligibility.  Only directors of the Company who are not

employees of the Company or any subsidiary of the Company shall participate in

the Plan.

 

6.                                       Grant Of

Shares.

 

(a)                                  Grants to

Existing Directors Prior to December 2, 2002.  On April 29, 1997, April 28, 1998, January

1, 1999 and on January 1 of each subsequent calendar year during the term of

the Plan that occurs prior to December 2, 2002, each Participant shall receive

a 

 

 

number of Shares equal to $20,000 divided by the Fair Market Value per

Share on the date of grant.

 

(b)                                 Grants to Existing Directors

Following December 2, 2002.  On January

1, 2003 and on each January 1 thereafter during the term of the Plan, each

Participant shall receive a number of Shares equal to $50,000 divided by the

Fair Market Value per share on the date of grant (a “Grant”); provided, that,

any Participant may elect prior to the grant date to be paid up to $30,000 of

such Grant in cash in lieu of Shares having an aggregate Fair Market Value

equal to the amount of such cash payment.

 

(c)                                  Grants to

New Directors Prior to December 2, 2002.   As of January 1, 1999, if a person first

becomes a director of the Company at any time after January 1 of any calendar

year prior to December 2, 2002, and such person is eligible to participate in

the Plan under Section 5 hereof, such person shall receive on the date such

person is first elected a director of the Company a number of Shares equal to

(x) $5,000 multiplied by the number of regular board meetings scheduled from

the date of his or her commencement of service as a director until December 31

of such calendar year divided by (y) the Fair Market Value per Share on the

date of grant.

 

(d)                                 Grants to New Directors

Following December 2, 2002.  As of

December 2, 2002, if a person first becomes a director of the Company at any

time after January 1 of any calendar year and such person is eligible to

participate in the Plan under Section 5 hereof, such person shall receive on

the date such person is first elected a director of the Company a number of

Shares equal to (x) $12,500 multiplied by the number of regular board meetings

scheduled from the date of his or her commencement of service as a director

until December 31 of such calendar year divided by (y) the Fair Market Value

per Share on the date of grant; provided, that, prior to the date of grant, any

such Participant may elect to receive up to 60% of the value of such grant in

cash in lieu of Shares having an aggregate Fair Market Value equal to the

amount of such cash payment.

 

(e)                                  Grants to Existing Committee

Chairs Following December 2, 2002.  On

January 1, 2003 and on each January 1 thereafter during the term of the Plan,

each Participant shall receive a number of Shares equal to $5,000 divided by

the Fair Market Value per Share on the date of grant for each committee of the

Board such Participant chairs, if any; provided, that, prior to the date of

grant, any such Participant may elect to receive such grant in cash in lieu of

Shares having an aggregate Fair Market Value equal to the amount of such cash

payment.

 

(f)                                    Grants to New Committee

Chairs Following December 2, 2002.  As

of December 2, 2002, if a person first becomes a chair of any committee of the

Board at any time after January 1 of any calendar year and such person is

eligible to participate in the Plan under Section 5 hereof, such person shall

receive on the date such person first becomes chair of such committee a number

of Shares equal to (x) $5,000 divided by (y) the Fair Market Value per Share on

the date of grant multiplied by (z) a fraction, the numerator of which is the

number of regularly scheduled meetings of such committee from the date of his

or her commencement of service as chair until December 31 of such calendar year

and the denominator is the total number of regularly scheduled meetings of such

committee for the calendar year; provided, that, prior to the date of grant,

any such Participant may elect to receive such grant in cash in lieu of Shares

having an aggregate Fair Market Value equal to the amount of such cash payment.

 

7.                                       Deferral

Of Shares.  Each director

of the Company may elect to defer the payment of Shares by submitting an

election form to the Board, in accordance with this Section 7.

 

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(a)                                  Elections.  Each director who elects to defer the

payment of Shares for a given calendar year must file an irrevocable written

election with the Secretary of the Company no later than December 31 of the

year preceding such calendar year; provided, that, any newly elected or

appointed director may file an election for any year not later than 30 days

after the date such person first became a director, and a director may file an

election for the year in which the Plan became effective not later than 30 days

after the date of effectiveness of the Plan. 

An election by a director shall be deemed to be continuing and therefore

applicable to subsequent Plan years unless the director revokes or changes such

election by filing a new election form by the due date for such form specified

in this Section 7(a).  The election must

specify the following:

 

(i)                                     A

percentage or number of Shares to be deferred under the Plan; and

 

(ii)                                  The

date on which the commencement of payments of Shares should begin, which date

shall not be later than 10 years from the date the Shares originally were

payable;

 

provided,

however, that, notwithstanding an election pursuant to this Section

7(a), all Shares of a Participant for which payment has not otherwise occurred,

shall be paid upon death, Disability or termination of directorship of the

Participant.

 

(b)                                 Deferral

of Shares.  The Company

will establish a deferral account for each Participant who elects to defer

Shares under this Section 7.  At any

date Shares are payable to a Participant who has elected to defer Shares, the Company

will credit such Participant’s deferral account with a number of Shares so

deferred.

 

(c)                                  Crediting

Of Dividend Equivalents. 

Whenever dividends are paid or distributions made with respect to

Shares, a Participant to whom Shares are then credited in a deferral account

shall be entitled, on the dividend payment date, as dividend equivalents, to an

amount equal in value to the amount of the dividend paid or property

distributed on a single Share multiplied by the number of Shares credited to

his or her deferral account as of the record date for such dividend or

distribution.  Such dividend equivalents

shall be credited to the Participant’s deferral account by payment to such

account of a number of Shares determined by dividing the aggregate value of such

dividend equivalents by the Fair Market Value of a Share at the payment date of

the dividend or distribution.

 

(d)                                 Settlement

Of Deferred Shares.  The

Company will settle the Participant’s deferral account by delivering to the

Participant (or his or her beneficiary) a number of Shares equal to the number

of whole Shares then credited to his or her deferral account (or a specified

portion in the event of any partial settlement), together with cash in lieu of

any fractional Share remaining at a time that less than one whole Share is

credited to such deferral account.  Such

settlement shall be made at the time or times specified in the Participant’s

election filed in accordance with Section 7(a); provided, however, that a

Participant may further defer settlement of Shares if counsel to the Company

determines that such further deferral likely would be effective under

applicable federal income tax laws and regulations.

 

(e)                                  Nonforfeitability.  The interest of each Participant in any

Shares (and any deferral account

relating thereto) at all times will be nonforfeitable.

 

(f)                                    Unsecured Obligation.  The obligations of the Company to make

payments hereunder shall be contractual only and all such payments shall be

made from the general assets of the Company. 

Each Participant and any other person(s) claiming a right to payments

hereunder shall rely solely on the unsecured promise of the Company, and

nothing 

 

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herein shall be

construed to give a Participant or any other person(s) any right, title,

interest or claim in or to any specific asset, fund, reserve account or

property of any kind whatsoever owned by the Company or in which it may have

any right, title or interest now or in the future.

 

8.                                       Adjustment

Provisions.  In the event

any dividend or other distribution (whether in the form of cash, Shares or

other property), recapitalization, forward or reverse split, reorganization,

merger, consolidation, spin-off, combination, repurchase, exchange of Shares or

other securities of the Company, extraordinary dividend (whether in the form of

cash, Shares, or other property), liquidation, dissolution, or other similar

corporate transaction or event affects the Shares such that an adjustment is

appropriate in order to prevent dilution or enlargement of each Participant’s

rights under the Plan, then an adjustment shall be made, in a manner that is

proportionate to the change to the Shares and otherwise equitable, in (i) the

number and kind of Shares remaining reserved and available for issuance under

Section 3, and (ii) the number and kind of Shares to be issued upon settlement

of deferred Shares under Section 7.  In

addition, the Board is authorized to make such adjustments in recognition  of unusual or non-recurring events (including,

without limitation, events described in the preceding sentence) affecting the

Company or any subsidiary or the financial statements of the Company or any

subsidiary, or in response to changes in applicable laws, regulations or

accounting principles.  The foregoing

notwithstanding, no adjustment may be made hereunder except as will be

necessary to maintain the proportionate interest of the Participant under the

Plan and to preserve, without exceeding, the value of outstanding deferred

Shares.

 

9.                                       Changes

To The Plan.  The Board

may amend, alter, suspend, discontinue, or terminate the Plan or authority to

grant Shares under the Plan without the consent of stockholders or

Participants, except that any amendment or alteration will be subject to the

approval of the Company’s stockholders at or before the next annual meeting of

stockholders for which the record date is after the date of such Board action

if such stockholder approval is required by any federal or state law or

regulation or the rules of any stock exchange or automated quotation system as

then in effect, and the Board may otherwise determine to submit other such

amendments or alterations to stockholders for approval; provided, however,

that, without the consent of an affected Participant, no such action may

materially impair the rights of such Participant with respect to any previously

granted Shares.

 

10.                                 General

Provisions.

 

(a)                                  Agreements.  Any right or obligation under the Plan may

be evidenced by agreements or other documents executed by the Company and the

Participant incorporating the terms and conditions set forth in the Plan,

together with such other terms and conditions not inconsistent with the Plan,

as the Board may from time to time approve.

 

(b)                                 Compliance

With Laws And Obligations. 

The Company will not be obligated to issue or deliver Shares in a

transaction subject to the registration requirements of the Securities Act of

1933, as amended, or any other federal or state securities law, any requirement

under any listing agreement between the Company and any stock exchange or

automated quotation system, or any other law, regulation, or contractual

obligation of the Company, until the Company is satisfied that such laws,

regulations, and other obligations of the Company have been complied with in

full.  Certificates representing Shares

issued under the Plan will be subject to such stop-transfer orders and other

restrictions as may be applicable under such laws, regulations, and other

obligations of the Company, including any requirement that a legend or legends

be placed thereon.

 

(c)                                  Limitations

On Transferability. 

Deferred Shares under the Plan will not be transferable by a Participant

except by will or the laws of descent and distribution or to a beneficiary in

the event of the Participant’s death. 

Deferred Shares may not be pledged, 

 

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mortgaged, hypothecated or otherwise encumbered, and shall not be

subject to the claims of creditors of the Participant.

 

(d)                                 No Right

To Continue As A Director. 

Nothing contained in the Plan or any agreement hereunder will confer

upon any Participant any right to continue to serve as a director of the

Company.

 

(e)                                  No

Stockholder Rights Conferred. 

Nothing contained in the Plan or any agreement hereunder will confer

upon any Participant (or any person or entity claiming rights by or through a

Participant) any rights of a stockholder of the Company unless and until Shares

are in fact issued to such Participant (or person).

 

(f)                                    Nonexclusivity

Of The Plan.  Neither the

adoption of the Plan by the Board nor its submission to the stockholders of the

Company for approval shall be construed as creating any limitations on the

power of the Board to adopt such other compensatory arrangements for directors

as it may deem desirable.

 

(g)                                 Governing

Law.  The validity,

construction, and effect of the Plan and any agreement hereunder will be

determined in accordance with the laws of the State of New York, without giving

effect to principles of conflicts of laws, and applicable federal law.

 

11.                                 Stockholder

Approval, Effective Date, And Plan Termination.  The Plan will be effective as of the date of

its adoption by the Board, subject to stockholder approval if necessary or

appropriate, and, unless earlier terminated by action of the Board, shall

terminate at such time as no Shares remain available for issuance under the

Plan and the Company and Participants have no further rights or obligations

under the Plan.

 

5Exhibit 10.25

 

PURCHASE AGREEMENT FEI - ETG

 

DSB-63-PVB-02/ 1582

 

This Purchase Agreement (“Agreement”) is effective as of November 1,
2002 (“Effective Date”) and is made by and between FEI Company, an Oregon
corporation having its principal place of business at 7451 NW Evergreen
Parkway, Hillsboro, OR 97124, and its Affiliates (collectively “FEI”) and
Philips Enabling Technologies Group Nederland BV, Zwaanstraat 1, Eindhoven,
organised under the laws of The Netherlands and having its principal place of business
at Acht and its Affiliates (collectively “ETG”).

 

WHEREAS, ETG is engaged in the business of,
inter alia, manufacturing and selling of mechanics and mechatronic modules and
represents that it has the ability and expertise to supply the Products to FEI
and perform certain associated services on a continuing basis;

 

WHEREAS, FEI desires to purchase from ETG
the Products and certain associated services;

 

WHEREAS, FEI desires ETG to participate in
specified development projects and ETG is willing and capable to perform
development services;

 

WHEREAS, the parties agree that it is their
mutual interest to provide quality products and services on a timely basis and
are committed to continuous improvement in cost, quality, productivity and
technology;

 

WHEREAS, ETG agrees to manufacture, sell
and deliver to FEI and FEI agrees to purchase from ETG the Products on the
terms and conditions set forth herein.

 

NOW, THEREFORE, in
consideration of the mutual covenants and promises contained herein, the
parties hereto have agreed as follows:

 

1.              DEFINITIONS

 

1.1                                 “Affiliates” shall mean any
Person that now or hereafter is directly or indirectly Controlled by,
Controlling or under Common control with FEI or
ETG, as the case may be.

 

1.2                                 “Combination Agreement” shall mean the
agreement between FEI, Philips
Industrial Electronics International BV and Koninklijke Philips Electronics NV dated November 15, 1996.

 

1.3                                 “Combination Date” shall mean the effective
date February 21, 1997 of the Combination Agreement.

 

1.4                                 “Control” of a Person shall mean direct or
indirect ownership of 50% or more of the outstanding voting securities of a
Person with the right to vote for the election of directors or the equivalent
thereof and shall also mean the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person.
The terms “Controlling” and “Controlled” shall have correlative meanings.

 

1.5                                 “Development Agreement” shall mean the development agreement between the
parties dated January 23, 1998 and amended on March 9, 1998 (“Development
Agreement”).

 

1.6                                 “Development Services” shall mean any
development projects performed by ETG as requested by FEI, described in a
Statement of Work.

 

 

1.7                                 “Epidemic Failure” shall mean a failure of Products to function in
accordance with the applicable Specifications for the same cause of more than three (3) out of
ten (10) sequentially delivered Products, unless such failure is caused by a
design specification or requirement of FEI or a FEI Appointed Supplier.

 

1.8                                 “ETG Information” shall mean any Information arising after the
Combination Date from work done by ETG and relating to manufacturing and
engineering processes for the Products, including Information relating to
manufacturing and engineering processes for the Products embodied in the
equipment used to perform these processes, but excluding any Information
relating to Products as such, provided however that this Section 1.8 does not
address ownership of Tools (which is provided for below).

 

1.9                                 “ETG IPR’s” shall mean (a) any IPR’s arising from work done by ETG after
the Combination Date which relate to manufacturing and engineering processes
for the Products and (b)
any IPR’s owned by ETG pursuant to the terms of
this Agreement. ETG IPR’s do not include any IPR’s relating to the Products, as
such.

 

1.10                           “FEI Appointed Supplier” shall mean the suppliers set forth in
Schedule 2.4.

 

1.11                           “FEI Information” shall mean any Information arising from the Products or
the Specifications, excluding ETG Information. However, Information generated
solely by ETG is subject to prior commitments of the Royal Philips Electronics
group of companies.

 

1.12                           “FEI IPRs” shall mean any (a) IPR’s arising from the Products or the Specifications,
excluding ETG IPR’s, but including any IPR’s arising from work done for FEI by
ETG since the Combination Date, and (b) any IPR’s owned by FEI pursuant to the
terms of this Agreement. However, IPR’s generated solely by ETG is subject to
prior commitments of the Royal Philips Electronics group of companies.

 

1.13                           “FEI Tools” shall mean (a)
those Tools which were purchased by ETG but paid for by FEI; (b) tools
purchased and/or built by FEI which FEI has loaned to ETG, and (c)
Qualification Tools.

 

1.14                           “Forecast-driven Product”
shall mean any Product listed in the monthly forecast issued by FEI.

 

1.15                           “Information” shall mean drawings, specifications, samples, models,
processes, procedures, instructions, technology, applied development
engineering data, reports, forecasts, schematics and all other technical or
commercial information, data and documents of any kind whatsoever, to the
extent not covered by IPR’s.

 

1.16                           “Intellectual Property Rights” or “IPR’s” shall mean any form of
protection afforded by law to procedures, inventions, discoveries, models,
designs, know-how, trade secrets or similar type technical information other
than trademarks or trade names, such as patents (including reissues, divisions,
continuations and extensions thereof), utility models, registered and unregistered
designs including mask works, copyrights as well as applications for any such
intellectual property rights.

 

1.17                           “Person” shall mean any company, firm
company, firm, joint venture, partnership or other business, organization or
entity.

 

1.18                           “Product” shall mean any
products, articles, and items that are agreed upon by parties to be supplied
from ETG to FEI including, but not
limited to, Forecast-driven Products, Spare Parts, Services and Development
Services. Product shall also mean all items that (a) are agreed upon in the
then-current price list attached to this Agreement or (b) Have been previously
supplied by ETG, and the last supply has not been longer than 3 years ago.

 

1.19                           “Purchase Order” shall mean a purchase order for
Products placed by or on behalf of FEI or any other ordering entity as may be
permitted to place Purchase Orders hereunder detailing the Products ordered,
whether or not this Agreement or its terms are explicitly referred to in the
purchase order.

 

2

 

1.20                           “Purchase Order Line” shall
mean a single position on a Purchase Order.

 

1.21                           “Prototype” shall mean any engineering sample of the Product which ETG
will supply to FEI for design validation and ultimate production release purposes.

 

1.22                           “Qualification Tools” shall
mean those Tools which are used to verify whether the Products comply with the
Specifications.

 

1.23                           “Separation Agreement”
shall mean the agreement between FEI, Philips Industrial Electronics
International BV and Koninklijke Philips Electronics NV with effective date
December 31, 2000.

 

1.24                           “Spare Parts” shall mean
all spare parts used in the manufacture or repair of the Products as FEI may
desire to purchase from ETG from time to time.

 

1.25                           “Specifications” shall mean
the functional requirements, specifications and other requirements in respect
of the Products as the parties may agree from time to time in writing, as well
as any testing specifications.

 

1.26                           “Statement of Work” shall
mean a document that shall, as a minimum, describe the Development Services to
be performed pursuant to such Statement of Work, and which shall typically
include a development schedule, description of deliverables, the Specifications
for the product to be developed pursuant to such Development Services and the
financial terms pertaining to such Development Services.

 

1.27                           “Services” shall mean the
services as defined in Schedule 8.1, excluding Development Services.

 

1.28                           “Tools” shall mean
equipment and all APRs therein developed, built or acquired by ETG for use in
manufacturing, developing or testing the Product including
Tools from work done for FEI by ETG since the Combination Date.

 

2.              SCOPE

 

2.1                                 Subject to the terms and conditions set forth in this Agreement, ETG
agrees to manufacture, sell and deliver to FEI, and FEI agrees to purchase and
take delivery of such quantities of Products as FEI may order from time to time
hereunder. ETG also agrees to perform such Services as ETG shall be required to
perform under this Agreement. ETG agrees to deliver the Products, perform the
Services and other obligations hereunder in accordance with the terms and
conditions of this Agreement. ETG acknowledges and agrees that time is of the
essence for the purpose of ETG’s obligations hereunder.

 

2.2                                 FEI shall have the right to promote,
lease, rent, resale, distribute or otherwise make available world-wide,
directly or indirectly through its distribution channels, the Products
purchased hereunder under such trade name and trademark as FEI may elect.

 

2.3                                 ETG
irrevocably agrees that FEI’s Affiliates may place Purchase Orders directly
with ETG under this Agreement. Any Purchase Order issued under this Agreement
shall constitute a contract between the ordering entity (i.e. FEI or any FEI
Affiliate, as the case may be) and ETG, and shall be governed by the terms of
this Agreement. If such Affiliate places a Purchase Order under this Agreement,
the term “FEI” as used herein shall, where the context so requires, mean or
include (as the case may be) such ordering entity, provided that ETG shall look
only to the ordering entity for the performance of such entity’s obligations
under any Purchase Order. Any breach by a party’s Affiliate under any Purchase
Order or otherwise under this Agreement, shall be deemed to constitute a breach
by such Party under this Agreement. All purchases of Products ordered by FEI or
any Affiliate, as the case may be, hereunder shall be cumulative for purposes
of determining, except as expressly otherwise indicated by FEI: (1) credits which
may be applicable; (2) any forecasts, volume commitments and the like (if any);
and (3) the level of

 

3

 

discount
which shall apply to, and any other requirements or incentives based upon, the
volumes or amount of any purchase of Products hereunder.

 

2.4                                 ETG
acknowledges and agrees that it remains solely responsible for the performance
of its obligations under this Agreement regardless of whether: (a) ETG
subcontracts portions of the work hereunder; (b) ETG acquires certain Products
or components from third party suppliers; or (c) FEI was involved in the
selection of a particular subcontractor or supplier. ETG’s responsibility with
respect to the FEI Appointed Suppliers listed in Schedule 2.4 will be limited
by the conditions in the contract between FEI and such FEI Appointed Supplier
which are explicitly applicable to the business relationship between ETG and
such FEI Appointed Supplier.

 

2.5                                 ETG agrees to discuss with FEI if it
has an opportunity to do business with any competitor of FEI listed on Schedule
2.5 (“FEI Competitor”). FEI may update Schedule 2.5 by providing notice to ETG
in writing. ETG agrees that any services provided or manufacturing of
goods for FEI Competitors
shall be performed in a separate location from the location where work is
performed for FEI, or on any other solution mutually agreed upon to
sufficiently protect the FEI interest

 

2.6                                 From
time to time, FEI may request ETG to develop new Products. When the parties
agree on such proposed Development Services, the parties will execute a
Statement of Work which will describe additional Development Services to be
provided by ETG to FEI and such Statement of Work shall be made a part of this
Agreement. ETG agrees to develop the Product in conformance with the applicable
Specifications and development schedule, the Statement of Work and the other
requirements of this Agreement. To the extent there is any conflict between the
terms and conditions of any Statement of Work and the terms and conditions of
this Agreement, the terms and conditions of this Agreement shall control,
unless expressly agreed to otherwise by the parties in writing. The developed
Products shall be subject to acceptance testing in accordance with the test
procedure set forth in Section 5.3.

 

3.              PLANNING AND ORDER
PROCEDURES

 

3.1                                 It
is expressly understood that terms which are pre-printed or otherwise in
standard form on the face and reverse side of a Purchase Order or any Purchase
Order confirmation or any other document sent with or subsequent to a Purchase
Order or Purchase Order confirmation shall be for convenience only and shall
have no legal effect and the terms and conditions of this Agreement shall
control.

 

3.2                                 Written
representations made by ETG under any Purchase Order(s) or in contemplation of
any Purchase Order(s), shall be binding upon ETG for purposes of those Purchase
Order(s).

 

3.3                                 FEI
may modify or terminate Purchase Order(s), in whole or in part, at any time
prior to ETG’s acceptance thereof without liability. For Forecast-driven
Products, Schedule 3.4 prevails.

 

3.4                                 FEI
will provide ETG with a monthly rolling forecast (the “Rolling Forecast”) for
its annual estimated need of Forecast-driven Products on a Product-by-Product
basis via mail, facsimile or other mutually agreed means. For Forecast-driven
Products, it is expressly understood that FEI’s commitment towards the Rolling
Forecast shall be limited to the extent specified in Schedule 3.4. FEI assumes
no liability for any actions taken by ETG on the basis of the Rolling Forecast
except as provided herein.  ETG agrees to reserve production capacity
equal to the quantities forecasted in the Rolling Forecast and the maximum
variable allowance as set forth in this Section 3.4. FEI and ETG may agree on
ETG keeping stock of specified Products, to accommodate unforeseen demand or
emergency orders. In such case, cost for the account of FEI will be agreed
upon.

 

3.5                                 FEI
shall purchase Products by issuing Purchase Orders. All Purchase Orders shall
be issued in writing or electronically and each Purchase Order shall specify
the following information: (a) quantity and type of Product(s) ordered; (b)
Product price, (c) required delivery dates (or, if appropriate, delivery
schedule) and delivery

 

4

 

requirements;
(d) destination of Product(s); (e) reference number and date; and (f) any
additional information deemed reasonably necessary by FEI.

 

3.6                                 FEI
shall place Purchase Orders by the number of calendar days prior to the delivery
dates (lead-time) as agreed by the parties, and as adjusted from time to time
as mutually agreed to by both parties in writing, provided that orders for
Forecast-driven Products will be issued before these products enter the fixed
period (see Schedule 3.4). Order lead time for orders for Forecast-driven
Products will be re-discussed between FEI and ETG to support the Ship-to-Line
concept for ETG deliveries.  For
emergency (e.g. down systems) Spare Parts, ETG will make every reasonable
effort to make shipment available for such emergency Spare Parts within two
working days. ETG agrees to make every commercially reasonable effort to meet
delivery dates specified on Purchase Orders placed on shorter notice. See also
Schedule 8.1, section 2a.

 

3.7                                 Within ten (10) business days of
receipt of a Purchase Order or Rolling Forecast, ETG shall notify FEI in writing of ETG’s acceptance or rejection of such Purchase Order
or Rolling Forecast. ETG’s acceptance of Purchase Orders or
Rolling Forecasts may not be conditioned on any terms inconsistent with or in
addition to those set forth in this Agreement and ETG may not reject a Purchase
Order or Rolling Forecast unless such Purchase Order or Rolling Forecast does
not conform to the requirements of this Agreement. Failure by ETG to provide
FEI with such notice of non-acceptance within such period shall constitute
ETG’s acceptance of the Purchase Order or Rolling Forecast. ETG’s notice of
non-acceptance shall state the modifications necessary to make it acceptable. The
proposed modifications shall not be binding on ETG until accepted by FEI in
writing.

 

3.8                                 FEI may reschedule, in whole or in
part, the original scheduled delivery date or the quantities of Products,
excluding Forecast-driven Products, scheduled for a particular delivery time
for a particular Purchase Order at any time without liability to ETG, provided
FEI has notified ETG thereof ultimately four (4) weeks prior to the original
scheduled delivery date, and provided further that FEI cannot reschedule the delivery
of Products, excluding Forecast-driven Products, beyond four (4) months from
the original delivery date. ETG shall accommodate a request to expedite the
delivery date, if reasonably able to do so.

 

3.9                                 (a) Cancellation of Purchase
Orders for Convenience. FEI may cancel for its convenience, in whole or in
part, a Purchase Order upon written notice to ETG. In the event of such notice,
ETG shall immediately cease all work related to the relevant Purchase Order. If
the cancelled Purchase Order is for Forecast-driven Products, the terms in Schedule 3.4 apply.
In other cases, FEI shall have no liability for such cancellation if it
cancelled the Purchase Order prior to an agreed or actual and reasonable needed
lead time period (“Lead Time”) before the scheduled delivery date. In the event
FEI cancels any Purchase Orders within the agreed upon Lead Time, then FEI’s
liability shall be limited to the actual and reasonable direct costs
substantiated by ETG for procuring materials for and manufacturing of
the Products which are subject to such cancellation, and to purchase all
components, parts of materials purchased by ETG for the manufacture of such
Products at the purchase price to the extent such components, parts of
materials are not: (i) usable in ETG’s other operations, or (ii) cancelable by
ETG vis-à-vis its vendors, and provided,
however, that in no event FEI’s liability shall exceed the total outstanding
balance of the purchase price of the Products which are subject to such
cancellation. Upon payment, FEI shall be entitled to all work and materials
paid for. FEI may inspect ETG’s work in progress after 24 hours notice to
ETG, and audit all relevant
documents to verify ETG’s invoice.

 

(b) Cancellation of Purchase Orders or Delays. If ETG has
knowledge that it fails or it threatened to fail to deliver Products on the
committed delivery date, ETG shall promptly notify FEI of such (threatened)
delay, stating the reasons for delay, and providing a projected delivery date (the
“Projected Date”). If the Projected Date would result in a delay of more than
five (5) days, then FEI is entitled to reschedule the Purchase Order and/or
Purchase Order Line up to a maximum of twelve months as of the delivery date.
If the Projected Date or the actual delivery would result in a delay of more
than 30 (thirty) days, FEI shall be entitled to cancel the Purchase Order
and/or Purchase Order Line without liability to ETG.

 

3.10                           Notwithstanding
ETG’s obligations hereunder, in the event ETG is no longer able to or envisages
that it shall not be
able to supply Products to FEI due to shortage of components or spare parts,
ETG shall notify FEI as soon as

 

5

 

possible.
ETG and FEI shall mutually agree upon a solution, and implement such change in
order to ensure continued availability of the Products in accordance with the
applicable ECO procedure.

 

3.11                           In the event FEI decides to
reallocate whole or part of the Products, FEI shall notify ETG in advance and
start negotiations to
accommodate the envisaged reallocation taking the volume and complexity of the
envisaged reallocated Products into account.

 

4.              PRICES; TAXES; DELIVERY

 

4.1                                 The
prices for the Products shall be set forth in separate written agreements and
can be adjusted yearly as mutually agreed to by both parties in writing. All
prices are based on the terms as set forth in Section 4.5 and, unless otherwise
specified, are complete and no additional charges as far as required under the
applicable Incoterm (including without limitation to transportation (based on
delivery as set forth in the foregoing sentence), packaging, labeling,
insurance, storage, etc.) shall be added without FEI’s prior written consent.
The prices are also inclusive of, and ETG shall be responsible for payment of,
all taxes, customs, duties and the like excluding value added taxes except to
the extent the same are to be borne by FEI pursuant to the applicable rights
and terms. Where no prices have been agreed to by the parties in writing, the
prices for Spare Parts shall be ETG’s cost plus 11.5 %. There shall be no
charges for Services performed by ETG hereunder as fas as required under the
applicable Incoterm, except as expressly otherwise performed herein. All
non-recurring expenses shall be approved in advance in writing by FEI.

 

4.2                                 ETG
and FEI agree to discuss, at least on an annual basis, market conditions and
possible price reductions and anything else considered relevant by either
party. The prevailing prices will remain to be in effect until the parties have
reached an agreement on new prices. If no agreement on new prices is reached
within 2 months, ETG and FEI will jointly agree on a process to re-allocate the
Products concerned as soon as possible, but in any case within 12 months. ETG
agrees to use commercially reasonable efforts to maximize efficiencies and
realize costs reductions. Notwithstanding the foregoing, ETG shall target
continuous price reductions. To understand cost drivers and to mutually search
for cost reduction possibilities, ETG will provide FEI with actual material and
labor costs upon FEI’s request and allow FEI access to purchase orders, time
sheets and similar documents. ETG commits to continuous cost reduction, and to
achieve targeted cost reductions needed for developments in the FEI markets. In
the event that the price/performance ratio of Products deteriorates as compared
to competitive products, the parties will jointly review the situation and
attempt to find a solution reasonably acceptable to both parties.

 

4.3                                 ETG
shall issue invoices in a format acceptable to FEI. Invoices shall include:
purchase agreement number, Purchase Order number, description of Products,
quantities, listing of dates, unit prices and extended totals and identify the
bank account to which payment has to be made and such other information as FEI
may reasonably request. ETG shall issue invoices to such address as FEI may
furnish from time to time.

 

4.4                                 All
invoices furnished hereunder by ETG,
if approved by FEI, are due and payable thirty (30) days after such invoice was
received or thirty (30) days following the date of delivery of the Products to
which the invoice relates, whichever occurs later. Payment of an invoice shall
not constitute acceptance or approval of the Products or services or a waiver
by FEI to require fulfillment of all terms and conditions of this Agreement.
All claims for monies owing by one party to the other party or any of its
Affiliates whether under this Agreement or otherwise shall be subject to set
off by the other party against any monies owed by the other party or any of its
Affiliates to the first party whether under this Agreement or otherwise
(irrespective of the currencies of such monies).

 

4.5                                 Unless
otherwise agreed upon, ETG shall deliver the Products ‘EXW Eindhoven’, as that term
is defined in the Incoterms 2000, issued by the International Chamber of
Commerce, Paris, France. Title to the Products will pass to FEI on delivery.

 

6

 

4.6                                 FEI’s production and marketing
schedules are based on, and FEI relies on, timely delivery and performance.
Accordingly, ETG acknowledges that timely delivery and performance is important
to FEI obtaining the benefit of this Agreement.

 

4.7                                 ETG
shall pack, mark and ship the Products hereunder in packages, containers, or
other enclosures in a manner which prevents damage during transport and
facilitates unloading, handling and
storage and which is in accordance with FEI specifications and requirements and consistent with reasonable commercial practice

 

4.8                                 Packaging and Products shall be
labelled by ETG in accordance with this Agreement and such instructions FEI may
give from time to time. New instructions will be implemented after a mutually
agreed implementation period.

 

4.9                                 ETG shall make no partial deliveries
under a Purchase Order unless mutually agreed upon in advance in writing on a
per case basis. In any event, any additional costs resulting from partial
deliveries shall be at the expense of ETG, unless such partial delivery is made
at the request of FEI.

 

4.10                           ETG shall be responsible for
obtaining the appropriate licenses or permits necessary to import Products. ETG
shall furnish FEI or its designee with the information and all reasonable
assistance necessary for FEI to timely obtain all required import and export
licenses.

 

5.              ENGINEERING CHANGES; ACCEPTANCE; QUALITY ASSURANCE

 

5.1                                 The
parties recognize that from time to time ETG may request or may be requested by
FEI to implement Engineering Change Orders (each, an “ECO”) to existing
Products. ETG agrees to
work with FEI in good faith to upgrade or change the Products to meet changing
technical, market or other requirements of FEI. ECO’s shall be subject to
procedures as used and documented by FEI. FEI shall inform ETG of the procedures that apply and
indicate per ECO if ETG is required to make a sample, Prototype or the like.

 

5.2                                 Each
Party shall appoint one Project Coordinator, who is authorised to represent
that Party in the context of a Statement of Work.

 

The
tasks of the Project Coordinators shall be, inter alia, to regularly discuss
and co-ordinate the development and design related matters, to co-ordinate
visits, to keep a complete file of documents such as discussion notes
throughout the duration of this Agreement and to agree upon minutes of meetings
of representatives of both parties.

 

During
the course of the development and design activities ETG shall submit interim
progress reports at intervals to be agreed upon, as well as at FEI’ s
reasonable request.

 

5.3                                 FEI
and ETG will agree upon and specify in each Statement of Work the individual
tests for each Prototype or developed or newly released Products (which, for
the purpose of this Section 5.3, include any new releases of already released
Products unless FEI waives such tests) or other deliverables which are subject
to acceptance by FEI, in addition to the following procedure, which shall also
be applicable to releases of Products not covered by a Statement of Work:

 

(a)                                  During
all phases of the development FEI shall have the right to make suggestions,
proposals and changes to the Specifications, but such suggestions, proposals
and changes shall be binding on ETG and FEI only as and when confirmed in a
document signed by authorized representatives of both Parties.

 

(b)                                 FEI
shall have thirty (30) days or another period to be agreed upon after receipt
of a Prototype of such newly released Product or such other deliverable to
perform such tests on the Prototypes as agreed upon in advance in the Statement
of Work or other applicable document in order to satisfy itself that the
Prototypes meet the Specifications concerned. ETG shall give FEI a reasonable
opportunity to be present at said tests.. Except as

 

7

 

otherwise approved by
FEI, each Prototype shall be a fully operational sample of such Product
conforming with the Specifications and made of materials identical to the used
for the Product to be commercially distributed. Within the thirty (30) day
acceptance period, FEI shall provide ETG with a written statement of errors or
other non-compliance with the applicable specifications or other requirements.

 

(c)                                  In
the event that FEI rejects such Prototype or deliverable, ETG shall have ten (10) business days,
or another period to be agreed upon taking the time schedule of the Statement
of Work into account, from receipt of FEI’s written notice of such rejection,
and receipt of the rejected Prototype to correct any errors or non-conformities
and to resubmit such Prototype or deliverable. FEI will provide ETG with any
recommendations it may have in order to achieve full and unconditional
compliance with the Specifications as yet. Such recommendations may include
proposals to eliminate faulty or substandard workmanship and/or material used.
In such event ETG will make the necessary modifications at no additional cost
to FEI. FEI will accommodate engineering changes proposed by ETG if ETG proves
that they will enable the Specifications to be met.

 

(d)                                 It
is understood that if, as a result of the tests mentioned in this Article or,
if applicable, the Statement of Work, FEI desires modifications or enhancements
of the Product, which go beyond the Specifications, ETG shall not unreasonably
withhold its consent to such modifications or enhancements. However, such
modifications or enhancements will only be implemented by ETG upon acceptance
by FEI of a new quotation and a revised time schedule. On that basis FEI will
then submit a separate purchase order setting forth the additional works to be
performed by ETG.

 

(e)                                  After
receipt of such resubmitted sample or deliverable FEI shall have ten (10)
business days or another period to be agreed upon, to re-test such sample or
deliverable in order to determine whether such sample or deliverable passes
acceptance testing.

 

(f)                                    The
process shall be repeated until the sample or deliverable passes acceptance
testing, or until mutual agreement on terminating the acceptance test procedure
or until this Agreement is terminated in accordance with Section 11.

 

(g)                                 FEI
will have no obligation to accept such sample or deliverable that does not
fully conform to the applicable Specifications and other requirements of this
Agreement. In the event that FEI decides to accept any sample or deliverable
notwithstanding the fact that such sample or deliverable does not meet the
applicable Specifications and other requirements, ETG will remain obligated to
correct any such nonconformance with the applicable Specifications and other
requirements.

 

(h)                                 Any samples or other deliverables
shall de delivered in accordance with the delivery terms as set forth in
Section 4.

 

(i)                                     If
applicable, upon the successful completion of each milestone of the Statement
of Work FEI shall make the corresponding payment within (30) days of receipt of
invoice.

 

(j)                                     Upon
successful completion of the final acceptance testing pursuant to this Article
5, proving to FEI’s satisfaction that the Prototypes conform to the
Specifications, FEI shall provide ETG with a type-approval certificate or
similar document and, if applicable, shall make the final payment within (30)
days of receipt of invoice.

 

5.4                                 Any Product delivered under this
Agreement shall be identical to the accepted sample of such Product and ETG shall not make any changes or
modifications to the Product other than any changes authorized by FEI in writing.

 

5.5                                 ETG
acknowledges that it will institute and maintain appropriate quality controls
at the factory to stop any defective Product from shipping to FEI and in
accordance with FEI’s reasonable requirements. A complete record of the
specified and agreed upon by ETG test performed on each Product shall be
maintained by ETG for a period of

 

8

 

eleven
(11) years from the date of delivery of such Product and measurement reports
shall be maintained for a period of five (5) years from the date of delivery of
such Product and copies thereof shall be made available to FEI upon request.
FEI may have its representatives participate or be present at such quality
controls, as it deems necessary. FEI’s intent is not to inspect each shipment
coming from ETG, however, FEI reserves the right, but is not obligated, to test
and inspect incoming Product deliveries. Without limiting the generality the
foregoing, ETG will test each Product in accordance with applicable test
specifications and will provide evidence that the Product has successfully
passed such test, (e.g. test results) together with the delivery of the
relevant Product. Notwithstanding FEI’s other rights and remedies available
under this Agreement, including, without limitation, under Section 6, FEI shall
have the right to reject any nonconforming Product and to cancel the Purchase
Order, in whole or in part, to which such rejected Products are subject.

 

ETG shall, at FEI’s option, (i) provide FEI free of charge with
replacement parts for the rejected Product or part, or (ii) repair the rejected
Product or part. In
case the rejected Product or part, as the case may be, is (part of) a
forecast-driven product, ETG will make every reasonable effort to replace the
rejected Product or part within 2 working days after notification of failure
and after receipt of the rejected Product, unless differently mutually agreed
upon. ETG shall be responsible for all cost expenses associated with
transportation, repair or replacement of the non-conforming Product replacement parts. ETG shall be
liable for all shipping charges that relate to such rejected Products.

 

5.6                                 FEI
shall have the right to inspect, after 24 hours notice to ETG, ETG’s FEI
related manufacturing facilities and manufacturing processes to perform vendor
qualifications and on-site (source) inspections and to otherwise verify
compliance with this Agreement at ETG’s facilities and ETG shall reasonably
cooperate with FEI in that regard at no cost.

 

5.7                                 ETG
warrants that it is ISO 9001 registered and that it will maintain such ISO 9001
registration or equivalent during the term of this Agreement. Should ETG lose
such ISO 9001 certification, then it will immediately notify FEI thereof. Any
failure to maintain such ISO 9001 registration or equivalent shall constitute a
material breach under this Agreement.

 

5.8                                 To
avoid doubt, any inspection or acceptance pursuant to this Section 5 shall not
relieve ETG of any of its obligations under Section 6 (“Warranty”) or any other
provision of this Agreement, nor shall any such inspection or acceptance
constitute acceptance or approval of any Product or service delivered by ETG
hereunder or a waiver of any defect, nonconformity or other FEI’s rights or
remedies available under this Agreement or at law.

 

6.              WARRANTY

 

6.1                                 ETG expressly warrants that the Products will be free from
defects in design (when and to the extent such design is the responsibility of
ETG), materials and workmanship and will conform in all material respects to the Specifications,
approved samples and all other requirement of the Agreement, and conform to the
Specifications for the Product for
a period of eighteen (18) months from date of delivery of the Product by ETG to FEI.

 

Should any Product fail to conform to the above
warranty, then ETG shall, after mutual agreement, (i) provide FEI with
replacement parts for the non-conforming Product free of charge, (ii) replace
the non-conforming Product or part, or (iii) repair the non-conforming Product or part. The non-conforming Product
or part, as the case may be, shall be repaired or replaced and returned to FEI or the third party
designated by FEI
within ten (10) days from date of notification of failure. Upon the parties
agreeing to the appropriate remedy, ETG shall be responsible for all cost
expenses associated with transportation, repair or replacement of the
non-conforming Product
replacement parts. ETG shall pay for all reasonable costs and expenses made or
incurred by FEI in
connection with such non-conforming Product (including without limitation costs
of gathering, handling and redistributing such Product).

 

6.2                                 In
addition to the standard Product warranty set forth in Section 6.1, in the
event of a Epidemic Failure, ETG shall immediately propose a corrective action
plan to remedy the Epidemic Failure of any Products subject, or which are

 

9

 

likely
to be subject, to such Epidemic Failure acceptable to FEI and to promptly implement
such action plan upon acceptance by FEI. The corrective action plan shall
include, at a minimum, that (a) all Products that are, or in FEI’s reasonably
opinion are likely to be, subject to the Epidemic Failure shall be repaired or
replaced upon a mutually agreed upon schedule; and (b) the cost and expense of
such repair and replacement shall be born by ETG; and (c) the costs of
transportation and all reasonable costs and expenses incurred by FEI in
connection with such non-conforming Products (including without limitation
costs of gathering, handling and redistributing the Products) shall be promptly
reimbursed to FEI by ETG.

 

6.3                                 Notwithstanding ETG’s warranty
obligations hereunder, if ETG is not the original manufacturer or licensor of a
Product or portion thereof, ETG shall pass along to FEI any warranties in respect of any materials from
such original manufacturer or licensor which are more favourable than the
warranties provided in this Agreement. For FEI Appointed Suppliers listed in Schedule 2.4, the warranty
conditions in the contract between FEI and such FEI Appointed Suppliers
which are explicitly applicable to the business relationship between ETG and
such supplier shall prevail.

 

6.4                                 ETG warrants that the Products shall
comply with all the applicable laws, regulations and standards, including,
without limitation electro-magnetic safety and environmental laws, regulations
and standards. Notwithstanding the foregoing, ETG shall use in accordance with
commercially reasonable practice to provide environmentally preferable energy
efficient products and products that eliminate or reduce the generation of
hazardous materials and substances. ETG will be responsible for performing
necessary government or other (quasi-) regulating authority compliance testing
and for obtaining and maintaining any approvals and certifications necessary
for the Products.

 

6.5                                 ETG acknowledges and agrees that,
with respect to its role as supplier of FEI and in relation to any interaction
of ETG with an employee of FEI, ETG’s compliance with applicable laws and
regulations establishes the minimum standards by which ETG is obligated to
conduct its affairs and more specifically its relationship with FEI.
Accordingly, ETG represents that it will conduct its business affairs to high
standards, to interact with FEI and its employees in a manner that will not
create the appearance of impropriety and not to solicit or accept any
favouritism (including gifts and benefits) from any employee of FEI.

 

7.              INTELLECTUAL PROPERTY

 

7.1                                 At
ETG’s expense, ETG shall provide FEI with documentation of all test results. On
FEI’s request, ETG shall provide FEI with documentation for work done
hereunder. Documentation for end users shall be provided as agreed by the
parties.

 

7.2                                 Any Information, tools, dies, masks, test equipment,
software and any other
proprietary information and materials of every description furnished by FEI or
funded or paid for in whole or in part by FEI since the Combination Date shall,
except as set forth in Section 1.8 and Section 7.10,  (i) remain or become FEI’s property and all IPR’s and other
proprietary rights therein or thereto shall vest in FEI and are hereby assigned
to FEI; (ii) be used by ETG exclusively for the purposes of this Agreement;
(iii) be clearly marked as FEI’s property; (iv) be segregated when not in use
and conspicuously marked as FEI property; (v) be properly used, maintained and kept in good working condition
at ETG’s expense; (vi)
be available for inspection by FEI after minimal 24 hours notice; and (vii) be
delivered to FEI promptly on FEI’s demand or upon termination or expiration of
this Agreement. ETG shall
be liable for any loss or damage of FEI’s property while in ETG’s possession or control. ETG shall
execute any documents deemed necessary by FEI to evidence its ownership rights
in such materials upon FEI’s request. At FEI’s request, ETG shall provide FEI
with a complete inventory list of FEI’s property in ETG’s possession or control. ETG shall maintain sufficient insurance
coverage for FEI’s property in ETG’s possession or control.

 

7.3                                 ETG
grants an implied non-exclusive, free and unrestricted license for embedded
software and firmware incorporated in the Products to FEI and end-users of the
Products.

 

10

 

7.4                                 All documents that FEI submits or
has submitted to ETG (e.g. documents which contain specifications, drawings or
procedures) since the Combination Date are owned by FEI and shall be considered
FEI’s information and FEI shall own all IPR’s therein. ETG agrees not to use
such documents or the Specifications for any purpose other than for the
purposes of this Agreement. At the request of FEI, ETG shall promptly provide, at its expense, a copy
of all documentation relating to the Products to FEI.

 

7.5                                 (a) All IPR’s and Information that
belong to a party or its Affiliates prior to the date of this Agreement or
which are not
generated, first reduced to practice, conceived or developed for the purposes
of this Agreement (collectively, “Pre-existing Rights”) shall remain with such
party or its Affiliates, unless such Pre-existing Rights were first reduced to
practice, conceived or developed by ETG in work done for FEI by ETG since the
Combination Date, in which case such Pre-existing Rights shall be the sole and
exclusive property of FEI.

 

(b) Excluding ETG Information and ETG IPR’s,
ETG agrees that any Information, in any medium or form (including on
paper, electronically, on magnetic media, orally or otherwise), and any ideas, designs, concepts,
techniques, improvements, discoveries, developments, inventions, technologies
and other work products generated, first reduced to practice, conceived or
developed in anticipation of, or in the course of, work performed under
this Agreement, or work performed by ETG for FEI since the Combination Date by
ETG and any IPR’s and other
proprietary rights therein or thereto shall vest in FEI.

 

(c) FEI IPR’s shall vest in FEI and FEI
shall be owner of FEI Information. ETG agrees to (and, as appropriate, will in
the future) (i) assign or cause to be assigned to FEI all right, title and
interest to any FEI IPR’s, and (ii) assist FEI and to execute all papers
(including assignments) and do all things required in order to protect the
interests of FEI (iii) FEI shall, at its discretion, file, prosecute and
maintain the FEI IPR’s or applications thereof and bear all costs. Any FEI
IPR’s shall be promptly disclosed and furnished to FEI.

 

(d) ETG IPR’s shall vest in ETG and ETG
shall be owner of ETG Information. FEI agrees to (and, as appropriate, will in
the future) (i) assign or cause to be assigned to ETG all right, title and
interest to any ETG IPR’s, and (ii) assist ETG and to execute all papers
(including assignments) and do all things required in order to protect the
interest of ETG (iii) ETG shall file, prosecute and maintain the ETG IPR’s or
applications thereof and bear all costs. Any ETG IPR’s shall be promptly
disclosed and furnished to ETG.

 

7.6                                 To
the extent the right to use, make, have made, lease, sell, service, performance,
display, distribution or
otherwise making available) of any products or services based on or
incorporating all or any portion of the Products requires the use of any Pre-existing Rights and/or
Information of ETG or its Affiliates, and/or any ETG IPR’s and/or Information, ETG hereby is prepared to
grant FEI a license, under commercially reasonable terms and conditions.

 

7.7                                 FEI
hereby grants to ETG, for the
term of this Agreement, a limited non-exclusive, non-transferable and
royalty free license, without the right to sublicense, under its IPR’s in or any Information
or other materials provided by FEI hereunder to the extent such rights are
required by ETG solely for the purposes of performing its obligations under
this Agreement.

 

7.8                                 ETG
agrees that the packing and the Products will bear those FEI’s trademarks,
trade names and other indications (“FEI Markings”) and in a form, location and
manner as may be specified by FEI from time to time. ETG acknowledges and
accepts that it may use such FEI Markings solely for the purposes of this
Agreement and that such use will not create in it, nor will it represent it has
any right, title or interest in or to the same other than the right to use
expressly granted in this Section 7.8. ETG shall immediately terminate use of
the FEI Markings upon FEI’s demand. Except as expressly provided otherwise
herein, ETG shall not affix any ETG or third party trademarks, trade names,
logos or other indications to any Product or packing unless and to the extent
specifically approved by FEI in writing.

 

7.9                                 ETG
acknowledges and agrees that this Agreement does not grant ETG any exclusive
privileges or rights and FEI may contract with other suppliers for the
procurement of products comparable or competitive with the Products.

 

11

 

7.10                           (a) FEI shall be the sole owner of
the FEI Tools. All other Tools shall be jointly owned (“Joint Tools”) unless
otherwise agreed upon. Joint Tools may be used only in accordance with
the terms and conditions set forth in Agreement. Each party shall protect the
IPR’s embodied in the Joint Tools to the same extent as it protects its most
valuable IPR’s.  Neither Party shall use
the Joint Tools for any other purpose than this Agreement, or allow any other
party to use the Joint Tools, without the other party’s permission, such as is
contemplated under 7.10(b) and 7.10(c) below.

 

(b)
FEI shall not allow suppliers of goods substantially similar to the Products to
use the Joint Tools without ETG’s permission.

 

(c) In
addition to ETG’s obligations under Section 2.5, ETG shall not use the Joint
Tools for performing services or manufacturing goods for other customers
without FEI’s permission. In no event shall ETG use FEI Tools for third
parties.

 

8.              SERVICES; SPARE PARTS; LAST TIME BUY

 

8.1                                 ETG
agrees to provide the services as described in Schedule 8.1 in accordance with
the terms and conditions thereof and this Agreement. ETG warrants that all
services to be provided by ETG hereunder shall be performed at a level of
accuracy, quality and timeliness and in a first class, competent and
professional manner and in accordance with or exceeding generally accepted
industry standards.

 

8.2                                 In
the event that this Agreement is terminated, then FEI shall have an opportunity
to place a last time buy Purchase Order for Products in such quantity as FEI
may reasonably require. Upon termination of this Agreement ETG shall fulfill
all Purchase Orders even if the delivery term extends beyond the date of
termination of this Agreement except to the extent such Purchase Orders are
terminated or cancelled by FEI in accordance with this Agreement. ETG is
allowed to deny requests for rescheduling Purchase Orders for which the
delivery term extends beyond the date of termination of this Agreement.

 

8.3                                 Notwithstanding
anything to the contrary, during the period of this Agreement and eleven (11)
years thereafter, or eleven years after the last delivery of a Product, ETG
shall supply FEI with Spare Parts necessary for the maintenance of the Products.
After the termination of this Agreement, ETG shall supply such Spare Parts at
the terms and conditions in effect at the date of such termination. ETG shall
use its best efforts to furnish a second source vendor who can supply the Spare
Parts if ETG can no longer supply Spare Parts beyond such eleven-year period.

 

8.4                                 Notwithstanding Section 8.2 hereof,
it is agreed that in the event ETG wishes to stop production and/or if a vendor
or sub-supplier of ETG wishes to stop production of one or more Spare Parts,
ETG shall immediately
inform FEI thereof in writing but at least twelve (12) months prior to the date
of envisaged production
stop and FEI shall then have an opportunity to place a last time buy Purchase
Order for such Spare Parts in such quantity as FEI may reasonably require and
ETG shall accept such Purchase Order at the then prevailing price.

 

9.              INDEMNIFICATION; LIABILITY

 

9.1                                 FEI
shall indemnify and hold ETG harmless against all fines, losses, damages, costs
and expenses, whether directly or indirectly arising from a claim brought by a
third party claiming that the manufacture, sale or use of any Product developed
or manufactured hereunder due to use of FEI IPR’s constitute(d) infringement of
one or more of the patent rights or other IPR’s of such third party, together
with the actual costs and expenses incurred by ETG in connection with such a
claim by such third party and that ETG will give FEI full authority to, at the
option of FEI, either settle or defend such claim, suit or proceeding and all
reasonable co-operation and assistance in case FEI decides to defend such a
claims, suit or proceeding and provided further that ETG will refrain from any
activity that

 

12

 

can jeopardise or
harm the defence of any such claim made by a third party. FEI shall have no
liability for any claim of infringement of IPR’s based on the use of a
combination of the manufacture, sale or use of the Product with other materials
not provided by FEI. FEI shall not, without the consent of ETG, enter into any
settlement or agree to any disposition that imposes any conditions or
obligations on ETG other than the payment of monies that are readily measurable
for purposes of determining the monetary indemnification or reimbursement
obligations of FEI.

 

9.2                                 ETG
shall indemnify and hold FEI harmless against all fines, losses, damages, costs
and expenses, whether directly or indirectly arising from a claim brought by a
third party claiming that the sale or use of any Product developed or
manufactured hereunder due to use of ETG IPR’s constitute(d) infringement of
one or more of the patent rights or other IPR’s of such third party, together
with the actual costs and expenses incurred by FEI in connection with such a
claim by such third party and that FEI will give ETG full authority to, at the
option of ETG, either settle or defend such claim, suit or proceeding and all
reasonable co-operation and assistance in case ETG decides to defend such a
claims, suit or proceeding and provided further that FEI will refrain from any
activity that can jeopardise or harm the defence of any such claim made by a
third party. ETG shall not, without the consent of FEI, enter into any
settlement or agree to any disposition that imposes any conditions or
obligations on FEI other than the payment of monies that are readily measurable
for purposes of determining the monetary indemnification or reimbursement
obligations of ETG.

 

9.3                                 Both
Parties agree that neither Party is aware of any such infringement set forth in
9.1 or 9.2 for Products currently developed or manufactured under this
Agreement. The Parties shall inform each other at the earliest opportunity of
any possible infringement in so far as they are aware or could reasonably be
aware of such infringement.

 

9.4                                 In
the event that a Product is held in any suit or proceeding, or in FEI’s
reasonable opinion is likely, to infringe, violate or misappropriate a third
party’s intellectual property right or other proprietary right, ETG will, at
its option and expense, do one of the following: (a) replace the Product,
without additional charge, with a compatible, functionally equivalent and
non-infringing product with an equivalent or greater performance, (b) modify
the Product so that it will be free of the infringement, violation or
misappropriation provided that such modified Product complies with the
Specifications and all other applicable requirements, or (c) procure for FEI
the right to continue to purchase and distribute and, for FEI and its customers,
the right to (continue to) use the Product as contemplated by this Agreement.

 

9.5                                 ETG
shall have no obligation under Section 9.1or 9.4 to the extent technical claim
of infringement, violation or misappropriation results from FEI IPR’s or
compliance of the Product with Specifications furnished by FEI in writing, but
only if the infringement, violation or misappropriation would not have occurred
but for such compliance.

 

9.6                                 ETG agrees to indemnify and hold FEI and its Affiliates
harmless from and against all direct liabilities, claims, fines, losses,
damages, costs and expenses (including reasonable attorney’s fees), arising
from, relating or in connection with (i) ETG’s or its officers, employees,
subcontractors or agents’ failure to comply with the terms or other
requirements of this Agreement or otherwise any acts or omissions to act
arising from, related to or in connection with this Agreement by ETG, its
employees, subcontractors or agents or (ii) any death, personal injury or loss
or damage to property caused by the Products or the use thereof or by ETG, its
officers, employees, subcontractors or agents, regardless of whether such
damages were foreseeable or ETG was advised of the possibility of such damages
up to a maximum of €2,500,000 per annum.

 

9.7                                 IN NO EVENT SHALL FEI OR ITS
AFFILIATES OR ITS OR THEIR OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS BE LIABLE
HEREUNDER FOR ANY ECONOMIC LOSSES OR DAMAGES, LOSS OF BUSINESS, PROFITS OR
REVENUE, GOODWILL AND
ANTICIPATED SAVINGS,
LOSS OF CORRUPTION TO DATA OR LOSS OF OPERATION TIME OR ANY OTHER INDIRECT,
EXEMPLARY, SPECIAL, INCIDENTAL, PUNITIVE OR INCONSEQUENTIAL LOSS OR DAMAGE,
EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES.
THE DAMAGE LIMITATIONS SET OUT IN THIS PARAGRAPH SHALL NOT APPLY TO THE IPR OR
CONFIDENTIALITY INDEMNIFICATION OBLIGATIONS OF THE PARTIES HEREUNDER.

 

13

 

9.8                                 IN
NO EVENT SHALL ETG OR ITS AFFILIATES OR ITS OR THEIR OFFICERS, DIRECTORS,
EMPLOYEES OR AGENTS BE LIABLE HEREUNDER FOR ANY ECONOMIC LOSSES OR DAMAGES,
LOSS OF BUSINESS, PROFITS OR REVENUE, GOODWILL AND ANTICIPATED SAVINGS, LOSS OF CORRUPTION TO DATA OR LOSS OF OPERATION TIME OR
ANY OTHER INDIRECT, EXEMPLARY, SPECIAL, INCIDENTAL, PUNITIVE OR INCONSEQUENTIAL
LOSS OR DAMAGE, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH
LOSSES OR DAMAGES. THE DAMAGE LIMITATIONS SET OUT IN THIS PARAGRAPH SHALL NOT
APPLY TO THE IPR OR CONFIDENTIALITY INDEMNIFICATION OBLIGATIONS OF THE PARTIES
HEREUNDER.

 

10.       CONFIDENTIALITY

 

10.1                           A
party receiving Confidential Information in connection with this Agreement
agrees (i) not to disclose or use the Confidential Information for any other
purpose except as necessary for the purposes of and consistent with the terms of this Agreement, (ii) to give
access to Confidential Information only on a need to know/use basis to, in the
case of ETG, its employees, or in the case of FEI, to its employees or the
employees of its Affiliates, consultants, advisors and agents, and (iii) not to
sell, transfer, publish, disclose or otherwise make available the whole or any
part of the Confidential Information to any third party or persons not
permitted by the terms of and pursuant to the terms contained in this Agreement
without the disclosing party’s prior written consent. To avoid doubt, FEI may
disclose any Confidential Information of ETG to any of its Affiliates or FEI
Contractors subject to compliance with the confidentiality undertakings
contained herein.

 

Each
party agrees that it shall protect the Confidential Information by using the
same degree of care as it uses to protect its own confidential information of
alike nature from unauthorized disclosure, but no less than a reasonable degree
of care.

 

10.2                           For
the purpose of this Agreement “Confidential Information” of a party means
information of a confidential and/or proprietary nature, provided in whatever
form or medium, which relates to such party’s products (hardware and software),
technology, business plans, product plans, customers, customer information,
specifications, schematics, designs, costs, prices, business opportunities,
know-how, trade secrets, inventions, techniques, processes, algorithms,
software programs and any other business or technical information, provided
that any information shall not be deemed “Confidential Information” unless (a)
if delivered in writing or in other tangible form is prominently marked as
“confidential” or “proprietary” (or words with similar import) in writing by
the disclosing party on any tangible manifestation of the information
transmitted in connection with the disclosure or if the confidential or
proprietary nature is reasonably apparent under the circumstances, or (b) if
provided or disclosed in other than in tangible form, the disclosing party
advises the receiving party before or at the time of disclosure that it will be
disclosing “Confidential Information” or if the confidential or proprietary
nature is reasonably apparent under the circumstances. Confidential Information
shall not include information that: (i) is now or subsequently becomes
generally available to the public through no fault or breach of the receiving
party, (ii) the receiving party can demonstrate to have it rightfully in its
possession prior to disclosure without being bound by similar confidentiality
obligations; (iii) the receiving party rightfully obtains it from a third party
who is not known (after reasonable investigation) by the receiving party to be
subject to another confidentiality undertaking or other obligation of secrecy
pertaining to such information or (iv) is independently developed by the
receiving party without use of or reference to the Confidential Information. To avoid doubt, ETG acknowledges and agrees that the Specifications
shall constitute Confidential Information of FEI.

 

10.3                           In
the event that the receiving party is required to disclose all or part of the
disclosing party’s Confidential Information under the terms of a valid and
effective subpoena, court order governmental rule or regulation or other
judicial requirement, the receiving party agrees to immediately notify the
disclosing party of the existence, terms and circumstances surrounding such a
request or requirement so that the disclosing party may seek an appropriate
protective order or waive compliance by the receiving party with the
appropriate provisions of this Agreement. 
If

 

14

 

the
receiving party is compelled to disclose any of the disclosing party’s
Confidential Information, it will disclose only the portion thereof which it is
compelled to disclose.

 

10.4                           The
parties agree that disclosure or use of Confidential Information in violation
of this Agreement could cause immediate and irreparable harm to the disclosing
party for which monetary damages may be difficult to ascertain or an inadequate
remedy. The receiving party therefore agrees that the disclosing party will
have the right, in addition to its other rights and remedies, to seek and obtain
injunctive relief for any violation of this Agreement.

 

11.       TERM AND
TERMINATION

 

11.1                           This Agreement is effective as of
the Effective Date and shall continue until two (2) years from the
Effective Date. Thereafter
this Agreement shall be automatically renewed for additional successive periods
of one (1) year each unless terminated as of the end of the then-current period
by either party on 12 (twelve) months’ prior notice in writing.

 

11.2                           Each party may terminate this
Agreement and/or any Purchase Orders, in whole or in part, immediately by
notice to the other party upon the material breach of any obligations
(including a payment obligation) under this Agreement (including under any
Purchase Order) by the other party, which breach is incapable of cure or which,
if capable of cure, has not been cured within sixty (60) days after the other
party has been put on notice with reasonable specificity of such breach such
without prejudice to any other rights accruing under this Agreement or at law.
Failure of a sample or deliverable to pass acceptance testing two (2)
consecutive times shall be deemed a material breach by ETG of this Agreement
for which FEI may terminate in whole or part this Agreement by giving written
notice thereof to ETG. The foregoing shall be without prejudice to any right of
FEI to terminate or cancel any Purchase Order as provided in Section 3 or
elsewhere herein.

 

11.3                           This Agreement and/or any Purchase
Orders may be terminated, in whole or in part, immediately by either Party in
the event that the other is dissolved, ceases to carry on business in the
normal course, becomes insolvent or is unable to pay its debts, institutes or
has instituted any proceeding seeking a judgement of insolvency or bankruptcy
or any other relief under insolvency or bankruptcy law or any other similar law
effecting creditor’s rights, is declared bankrupt, makes a general assignment
for the benefit of its creditors, suffers or permits the appointment of a
receiver or a manager for its business assets or avails itself or becomes
subject to any proceeding under bankruptcy laws or any other statute or laws
relating to the insolvency of protection of the right of creditors, is subject
to any levy, seizure or attachment or sale for or by any creditor or cause, is
subject to any event with respect to it which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the foregoing events.

 

11.4                           Upon
termination of this Agreement, a party may request the other party to return
all Confidential Information provided to the other party, together with any
copies of the same, which the receiving party has in its possession or control.
In the event of such a request, all documents and other writings prepared by
the other party based on or reflecting the information contained in any
Confidential Information of the requesting party will be destroyed by the other
party and the other party will certify in writing to the requesting party by a
duly authorized officer of the other party that such information has been destroyed
or returned. Notwithstanding the return of the Confidential Information, the
parties will continue to be bound by the confidentiality undertaking and
restrictions on use contained herein.

 

12.       GENERAL

 

12.1                           Independent Contractor. ETG shall not for any purpose, be
deemed or represent itself to be an agent or representative of FEI and the
relationship between the parties shall only be that of independent contractors.
ETG shall have no right or authority, express or implied, to assume or create
any obligations on behalf of FEI or to bind FEI in any respect whatsoever.

 

15

 

12.2                           Force Majeure. Neither party shall be liable for
any failure to perform solely caused by a Force Majeure Event and in the event
that either party is prevented from performing or is unable to perform any of
its obligations under this Agreement due to a Force Majeure Event, its
performance shall be excused, and the time for performance shall be extended
for the period of delay or inability to perform due to such Force Majeure
Event, provided that such party shall give prompt written notice thereof to the
other party describing (i) the Force Majeure Event, (ii) the obligations
which it is unable to perform due to such Force Majeure Event, and (iii) giving a projection of the expected
period of delay or inability to perform due to such Force Majeure Event, and
such party shall have used reasonable commercial efforts to mitigate its
effects use and to cure any non-performance. Regardless of the excuse of a
Force Majeure, if a party is not or is not expected to be able to perform any
material obligation under this Agreement due to a Force Majeure Event for a
period of sixty (60) days or more, the other party may terminate this Agreement
without liability. Regardless of the foregoing, FEI shall be entitled to cancel
any affected Purchase Orders if the Force Majeure Event would result in a delay
of more ten (10) days without liability. For the purpose of this Agreement, a
“Force Majeure Event” shall mean an Act of God, government order, earthquake,
flood, fire, riot, war, embargo or any other cause or event, unforeseeable and
beyond the reasonable control of a party. The failure of a supplier or
subcontractor to perform under its agreement with ETG, a strike or similar type
of event or materials shortage shall not constitute a Force Majeure Event.

 

12.3                           Modification.
This Agreement may be
amended or modified only by a written agreement by both parties.

 

12.4                           Waiver.
No waiver by FEI of any breach of any condition, covenant or term of this
Agreement shall be effective unless it is in writing and no failure or delay by FEI in insisting
upon strict performance of any of the terms or conditions of this Agreement or in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any of FEI’s other right, power or privilege hereunder.

 

12.5                           Survival. All terms and conditions of this Agreement
which are destined, whether expressed or not, to survive the expiration
or termination of this Agreement for any reason whatsoever, including without limitation the Sections 2, 6, 7, 8,
9, 10, 11 and 12.

 

12.6                           Notices. All notices, requests, instructions, claims, demands,
consents and other communications required or permitted to be given hereunder
shall be in writing and shall be deemed to have been duly given on the date
delivered by hand or by overnight courier service, or by other messenger (or,
if delivery is refused, upon presentment) or upon receipt by facsimile
transmission, or upon delivery by registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following addresses:

 

	
  If to ETG:

  
	
   

  	
  Achtseweg Noord 5 / Building AK

  
	
   

  	
  P.O. Box 218

  
	
   

  	
  5600 MD Eindhoven, the Netherlands

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
  Philips Enabling Technologies Group Nederland BV

  
	
   

  	
  Zwaanstraat 1

  
	
   

  	
  Eindhoven

  
	
   

  	
  Attn: CEO

  
	
   

  	
  Cc: Corporate Legal Department

  
	
  If to FEI:

  
	
   

  	
  FEI Company

  
	
   

  	
  Building AAE, Achtseweg Noord 5

  
	
   

  	
  P.O. Box 80066, 5600 KA Eindhoven

  
	
   

  	
  Attn: Purchasing department

  
			

 

16

 

	
   

  	
  With a copy to:

  
	
   

  	
  FEI Company

  
	
   

  	
  7451 NW Evergreen Parkway

  
	
   

  	
  Hillsboro, OR 97124

  
	
   

  	
  Attn: Legal Department

  
			

 

or to
such other persons or addresses as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).

 

12.7                           Export
Control. ETG agrees to notify FEI in writing should the ETG become aware
that any Product or portion thereof is subject to the Export Control
regulations of the United States Department of State and/or the United States
Department of Commerce or any foreign export laws.

 

12.8                           Entire Agreement. This Agreement, including all Exhibits, Schedules,
annexes and other documents incorporated herein by reference constitutes
the final and complete expression of their agreement and understanding with
respect to the subject matter herein and supersede all other prior agreements,
undertakings, obligations, promises, arrangements, communications, negotiations
and understandings whether oral or written (including but not limited to the
Development Agreement and the 300mm logistic agreement DSB-63-PVB-01-1164), by
the parties with respect to the subject matter hereof.  Notwithstanding the foregoing, this
Agreement shall not in anyway alter, amend or supercede the terms of the
Combination Agreement or the Separation Agreement.

 

12.9                           Non-Assignment. Neither party hereto shall assign
any of its rights or obligations under this Agreement to any third party
(whether by merger, consolidation, sale of assets, reorganization or otherwise
by operation of law or contract) without the prior written consent of the other
party which consent shall not be unreasonably withheld, provided however, that
no consent is required for an assignment or transfer of any of its rights or
obligations under this Agreement by FEI or ETG to any of its Affiliates.

 

12.10                     Severability. In the event that anyone or more of
the provisions contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect, such provision or provisions
shall be ineffective only to the extent of such invalidity, illegality or
unenforceability, without invalidating the remainder of such provision or
provisions or the remaining provisions of this Agreement, and such invalid,
illegal or unenforceable provision or portion thereof shall, to the maximum
extent possible, be substituted by (an) enforceable provision(s) that
preserve(s) the original intentions and economic position of the parties.

 

12.11                     Governing Law. This Agreement shall be deemed to be made in accordance
with and governed by the laws of The Netherlands without regard to the conflict
of law principles thereof. The UN Convention on the International Sale of Goods
shall not apply to this Agreement.

 

12.12                     Competent Court. 
All disputes arising out of, relating to or in connection with
this Agreement or any of the other agreements to be entered into pursuant to
this Agreement shall be resolved by the competent court of the City of ‘s-Hertogenbosch, The Netherlands.

 

12.13                     Advertising; Publicity. ETG shall not use the name,
logo, trademark, or any reference of or to FEI either direct or indirect in
publicity releases, advertising, case studies, sales literature or references nor disclose, advertise or publish the existence or the
terms and conditions of this Agreement, financial or otherwise, without
the prior written consent of FEI. ETG understands that FEI does not contemplate
providing any such consent and that any decision to give such consent shall be
exclusively with FEI at its sole discretion.

 

12.14                     Descriptive Headings. The
descriptive headings herein are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning, construction or
interpretation of, this Agreement.

 

17

 

12.15                     Counterparts. For the
convenience of the parties hereto, this Agreement may be executed in any number
of counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute one and the
same agreement.

 

 

IN
WITNESS WHEREOF this Agreement has been signed by both parties in a manner duly binding
upon them.

 

 

	
  Philips
  Enabling Technologies

  Group Nederland BV

  	
   

  	
  FEI
  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Name:

  
	
  Title:

  	
   

  	
  Title:

  
	
  Date:

  	
   

  	
  Date:

  
					

 

18

 

Schedule
2.4

FEI
Appointed Suppliers

 

FEI controlled suppliers/items in the
ETG supply base

 

	
  Supplier

  	
   

  	
  Items

  	
   

  	
  Productline

  
	
  Heidenhain

  	
   

  	
  Encoders

  	
   

  	
  300mm

  
	
  Hositrad

  	
   

  	
  Feedthroughs

  	
   

  	
  300mm

  
	
  Nanomotion

  	
   

  	
  Motors Ceramic parts

  	
   

  	
  300mm

  
	
  IDE

  	
   

  	
  Anti vibration systems

  	
   

  	
  200/300mm

  
	
  Nyquist

  	
   

  	
  Motion controllers

  	
   

  	
  200/300mm

  
	
  Edwards

  	
   

  	
  Vacuum pumps

  	
   

  	
  200/300mm

  
	
  FEI EO

  	
   

  	
  Final lenses

  	
   

  	
  200/300mm

  

 

19

 

Schedule 2.5

FEI Competitors

 

Applied Materials

KLA-Tencor

JEOL

Leo

Hitachi

Seiko

Orsay Physics

Schlumberger

Physical Electronics

VG

 

20

 

Schedule
3.4

Rolling Forecasts for Forecast-driven Products

 

FEI shall provide ETG
with the Rolling Forecast for Forecast-driven Products subject to the following
terms and conditions:

 

a)              For the purpose of this Schedule 3.4, ‘N’ shall be the current month.
Ultimately the last week of month N, FEI will provide ETG with a forecast for
the months N+1 to N+12, signed by an authorised FEI person.

 

b)             Notwithstanding
any other provision in this Agreement, ETG agrees to reserve production
capacity, and commits
to deliver FEI’s forecasted needs of Product until the contractual lead-time established herein and to allow FEI for
flexibility in requiring delivery of Products as described in this section. On FEI’s request, ETG agrees
to use commercially reasonable efforts to supply additional Products outside
the Rolling Forecast.

 

c)              FEI shall be committed only to take delivery of the
quantity of Products forecasted for the month N+1 (the “Fixed Products”), and
N+2 and N+3 (the “Committed Products”) as follows and as set forth in Exhibit B
to this Schedule 3.4, attached hereto and incorporated herein by this reference:

 

(i)                                     FEI is committed to take delivery of
the quantity of Fixed Products during in month N+1.

 

(ii)                                  FEI is committed to take delivery of
the Committed Products of which it has not requested delivery in the months N+2
or N+3, as applicable, (the “Non-Delivered Committed Products”)
ultimately in month N+7 during the term of this Agreement. Any Products
delivered in the month N+4 or any following months shall be deemed to include
any such Non-Delivered Committed Products. FEI remains liable for Committed
Products which are rescheduled on FEI’s request.

 

(iii)                               FEIs commitment towards LLI shall be
as set forth in section (f) of this Schedule.

 

d)             FEI may cancel for its convenience,
in whole or in part, any forecasted Product need upon written notice to ETG. In
the event of such notice, ETG shall immediately cease all work related to the
relevant forecasted Products. In the event FEI cancels any fixed or committed
Products then FEI’s liability shall be limited to the actual and reasonable
direct costs substantiated by ETG for procuring materials for and
manufacturing of the Products which are subject to such cancellation, and to
purchase all components, parts of materials purchased by ETG for the
manufacture of such Products at the purchase price to the extent such components, parts of materials
are not: (i) usable in ETG other operations, (iii) cancelable by ETG vis-à-vis
its vendors, and provided,
however, that in no event FEI’s liability shall exceed the total outstanding
balance of the purchase price of the Products which are subject to such
cancellation. Upon payment FEI shall be entitled to all work and materials paid
for. FEI may inspect ETG work in progress and audit all relevant documents to
verify ETG invoice.

 

e)              Apart from the agreed long
lead-time components (refer to
section (f)) and as set forth in Exhibit B to this Schedule 3.4, FEI shall have
no commitment to purchase any quantity of Products forecasted for the months N+4 or any following
months.

 

f)                Long
lead-time components
for Forecast-driven Products.

 

i.                  ETG
will undertake necessary efforts to bring component lead-times within the scope
of three months. Nevertheless,
ETG may be required to purchase or manufacture certain long lead-time
components in order to achieve the quantity of Forecast-driven Products as
forecasted in the Rolling Forecast. For the purposes of this Schedule, the
following terms shall have the meaning set forth below:

 

1.               “Components” shall mean components, sub assemblies,
materials and supplies used for Forecast-driven Products.

 

21

 

2.               “A-Components” shall mean Components with long lead-times
and as listed as such in Exhibit A to this Schedule, attached hereto and
incorporated herein by this reference.

 

3.               “B-Components” shall mean Components with long lead-times as
listed as such in Exhibit A to this Schedule.

 

ii.               ETG
may reasonably purchase or start manufacturing of Components as necessary to
fulfil the Rolling Forecast as provided in the table below for the relevant
period.

 

	
  Type of Components

  	
   

  	
  Relevant Period

  
	
  A-Components

  	
   

  	
  4 months from
  current date

  
	
   

  	
   

  	
   

  
	
  B-Components

  	
   

  	
  5 months from
  current date

  

 

For
illustration purposes: On 1 March (the “current date” in this example), ETG may
purchase or start manufacturing of A-Components in a quantity necessary to
fulfill the quantity of products forecasted in the Rolling Forecast for the
period of 4 months commencing on 1 March and B-Components in a quantity
necessary to fulfill the ordered Products for the period of 5 months commencing
on 1 March.

 

iii.            For
FEI Appointed Suppliers listed in Schedule 2.5, the
conditions in the contract between FEI and such supplier which are
explicitly applicable to long leadtime items supplied to ETG prevail.

 

iv.           In
the event that any Components purchased or manufactured by ETG in accordance
with the foregoing for the relevant period are no longer useable in the
manufacturing or repair of Products as a result of a termination of this
Agreement (other than on the basis of a breach by ETG or other event to which
ETG is accountable) or discontinuation of the relevant Product, then FEI’s
commitment in relation to such Components shall be limited to purchase such
Components at the price for which ETG has actually purchased such Components
(provided that in no event such price shall be higher than the purchase price
which may have been agreed between FEI and ETG for such Components and only to
the extent such Components are not: (a) usable in ETG other operations or (c)
cancellable by ETG vis-à-vis its vendors and provided always that FEI’s
liability shall only extend to such quantities of Components as are needed to
fulfil the previously forecasted need. ETG shall use every reasonable effort to
mitigate FEI’s liability under this Schedule.

 

g)             Exhibit A may be updated by the parties upon mutual agreement.

 

22

 

Schedule
3.4 – Exhibit A

Specific
Components

 

23

 

Schedule
3.4 – Exhibit B

Implementation Schedule of Schedule
3.4. Conditions

 

	
  Commodity
  group

  	
   

  	
  Start phase

  	
   

  	
  Contract applicable

  
	
   

  	
   

  	
  FEI commitment

  overall untill due date

  	
   

  	
  Fixed

  	
   

  	
  Variable

  	
   

  	
  LLI

  	
   

  	
  Due date

  	
   

  	
  Remarks

  	
   

  	
  Due date

  overall

  
	
  200mm

  	
   

  	
  FEI
  commitment for total actual leadtime per Product (unless otherwise agreed upon)

  	
   

  	
  Production
  only based on fixed orders

  	
   

  	
  September
  1, 2003

  	
   

  	
  Product
  is becoming EOL (2003-2004) ?! LLI-list

  	
   

  	
  September 1, 2003 or another date mutual agreed upon (e.g.
  TEM accessories & Miscellaneous)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  300mm

  	
   

  	
   

  	
  Total
  actual leadtime dec ’02: 38 weeks

  	
   

  	
  September
  1, 2003

  	
   

  	
  LLI-list

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CLM

  	
   

  	
   

  	
  Previous
  production only based on fixed orders

  	
   

  	
  Januari
  1, 2003

  	
   

  	
  “Faulenbach-issue”
  & LLI-list

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TEM kits

  	
   

  	
   

  	
  Total
  actual leadtime

  	
   

  	
  Januari
  1, 2003

  	
   

  	
  Commitment
  for “Ship-to-line” delivery, not item-leadtime <3 months

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TEM accessories

  	
   

  	
   

  	
  Total
  actual leadtime; applicable items to be agreed upon per mid Jan 2003

  	
   

  	
  t.b.d.
  (ultimately Sep.1, 2003

  	
   

  	
  Input
  from FEI w.r.t. applicable items

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Stages

  	
   

  	
   

  	
  Total
  actual leadtime; applicable items to be agreed upon

  	
   

  	
  April
  1, 2003

  	
   

  	
  depending
  on final allocation-decision FEI/ETG

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Miscellaneous

  	
   

  	
   

  	
  Total
  actual leadtime; applicable items to be agreed upon per mid Jan 2003

  	
   

  	
  t.b.d.
  (ultimately Sep. 1, 2003)

  	
   

  	
  Input
  from FEI w.r.t. applicable items & also depending on the current
  reallocation programm

  	
   

  
															

 

General remarks:

If Products on the forecast-list become End Of Life (EOL) and/or will
be re-allocated (in advance to be communicated by FEI). Products will disappear
from the forecast-list and ordering of Products will be via fixed orders (e.g.
200mm systems).

 

Per mid Januari 2003, FEI to give input for content of TEM Accessories
and TEM Miscellaneous

 

Actual leadtimes in the
start phase will be reduced according to the progress of the Faith project

 

24

 

Schedule 8.1

Services

 

ETG shall be obliged to
perform and FEI shall be entitled to receive, the following services:

 

1.                                       Continuous
Improvement. FEI may require ETG to participate in any program to integrate
the Products in any of FEI’s equipment or systems, support in FEI prototype
production requirements, including necessary engineering/technical support, and
participate in concurrent engineering reviews, including ETG’s input regarding
design changes and manufacturability. ETG commits to continuously improving the
cost of ownership and performance of the Products. ETG will actively collect,
monitor and analyze data as needed for such continuous improvement process. ETG
commits to continuously improve its supply performance and the lead times for
the Products. ETG will provide these continuous improvement services at no
additional charge.

 

2.                                       Spare
parts.

a.               ETG and FEI shall agree on a list of Spare Parts to
accommodate any unforeseen service demand or emergency orders, in a format
acceptable to FEI. The list will include a part number, original manufacturer
and manufacturer part number, land-time, price (repair and/or new), part
description and minimum monthly quantities to anticipate on. ETG shall maintain
the ability to deliver these Spare Parts in the agreed quantities. Upon FEI’s
request, ETG will deliver these Spare Parts within 2 working days or another
period mutually agreed upon.

b.              ETG will offer Spare Parts in kits for specific preventive
maintenance routines. The price of such lists shall not exceed the total price
of the individual Spare Parts within the kits.

 

3.                                       Technical
Support and Repair Services. The parties acknowledge that FEI shall be
responsible to provide first line support in respect of the Products. ETG shall
provide second line support services to support FEI’s first line technical
support. As part of the foregoing, ETG will provide: (i) telephone support
services during working days, and (ii) maintenance for Products which are
out-of-warranty. If a technical problem pertaining to the Products cannot be
resolved by telephone technical support, then ETG will, at the request of FEI,
provide on-site technical support at any location indicated by FEI. ETG will
provide these technical support and repair services at an agreed upon rate.

 

25

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