Document:

exv10w11

EXHIBIT 10.11

SUMMARY SHEET: 2008 PERFORMANCE GOALS AND PAYOUT AMOUNTS

	1.	 	Executive Officers’ Payout Amounts:

	 	•	 	Nigel J. Lovett, President and Chief Executive Officer: $120,000 cash and 90,250
shares of restricted stock.
	 
	 	•	 	Michael J. FitzGerald, Executive Vice President – Exploration and Production:
$188,000 cash and 58,500 shares of restricted stock.
	 
	 	•	 	Edward Ramirez, Senior Vice President – Exploration and Production: $154,000 cash
and 48,000 shares of restricted stock.
	 
	 	•	 	Charles J. Campise, Senior Vice President – Finance: $141,000 cash and 50,000 shares
of restricted stock.

	2.	 	Performance Goals:
	 
	 	 	Toreador Resources Corporation (“Toreador”) notes that the following performance goals are
part of Toreador’s incentive program and do not correspond to any financial or performance
guidance that Toreador has proved or will provide and should not be considered as statements
of Toreador’s expectations or estimates:

	 	•	 	Oil and Gas Reserves – Toreador is to replace 110% of its 2008 oil and gas
production with additional proved reserves on a barrels of oil equivalent (“BOE”)
basis;
	 
	 	•	 	Oil and Gas Production – 2008 oil and gas production is to be at least 1 million
BOE;
	 
	 	•	 	General and Administrative Expenses – 2008 general and administrative expenses are
to be not greater than $13.6 million, subject to modification for additional
expenditures subsequently approved by the board of directors;
	 
	 	•	 	Sarbanes-Oxley Compliance – Toreador will be in full compliance with the
requirements of the Sarbanes-Oxley legislation for the 2007 audit; and
	 
	 	•	 	Stock Price Performance – Toreador’s stock price performance in 2008 shall exceed
the average stock price performance of its peer group as determined by Longnecker &
Associates.

	 	 	Each of these five performance goals will be associated with 15% of the cash bonus amount
and 15% of the equity bonus amount set forth above. If only a portion of a performance goal
is met, the Compensation Committee may award a portion of the 15% cash bonus amount and/or
equity bonus amount associated with the performance goal The remaining 25% of the cash
bonus amount and equity bonus amount will be a discretionary bonus pursuant to the 2008
Discretionary Employee Bonus Policy to reflect individual and/or corporate performance. The
payout amounts set forth above are based on meeting all five performance criteria and
receiving the 25% discretionary bonus.exv10w12

EXHIBIT 10.12

SUMMARY SHEET: 2008 NON-EMPLOYEE DIRECTOR COMPENSATION PLAN

	1.	 	Each director shall receive an aggregate annual cash stipend of $15,000 to be paid in
quarterly installments.
	 
	2.	 	Each director shall receive $2,000 cash for each face-to-face meeting of the Board
attended.
	 
	3.	 	Each director shall receive $1,500 cash for each telephonic meeting of the Board
attended.
	 
	4.	 	Each board committee member shall receive $500 cash for each board committee meeting
attended in conjunction with a face-to-face board meeting.
	 
	5.	 	Each board member shall receive $1,500 cash for each board committee meeting attended,
whether stand alone, telephonic or face-to-face, except as noted in paragraph (4) above.
	 
	6.	 	The audit committee chairman shall receive an additional aggregate cash stipend of
$50,000 to be paid in quarterly installments and an additional 1,000 shares of restricted
stock.
	 
	7.	 	The chairman of each other committee shall receive an additional aggregate cash stipend
of $3,000 to be paid in quarterly installments.
	 
	8.	 	Each director shall receive annually an aggregate of $60,000 in shares of immediately
vested common stock with the number of shares to be issued being determined by the closing
price on the date of the 2008 annual meeting.exv10w13

EXHIBIT 10.13

May 7, 2008

Toreador Resources Corporation

Toreador Turkey Ltd.

Toreador Romania Ltd.

Madison Oil France SAS

Toreador Energy France S.C.S.

Toreador International Holding Limited Liability Company

13760 Noel Road

Suite 1100

Dallas, Texas 75240-1383

Attention: Mr. Charles J. Campise, Senior Vice President and Chief Accounting Officer

Dear Gentlemen,

Re:     Southern Europe Region – Toreador Resources Corporation

                               Maintenance Ratio Temporary Waiver

	 	1.	 	Reference is made to the Loan and Guarantee Agreement dated December 28, 2006 (the
“Loan and Guarantee Agreement”) between Toreador Resources Corporation (“Toreador” or the
“Company”), Toreador Turkey Ltd., Toreador Romania Ltd., Madison Oil France SAS, Toreador
Energy France SCS, Toreador International Holding Limited Liability Company, and
International Finance Corporation (“IFC”). Unless otherwise defined in this letter, terms
defined in the Loan and Guarantee Agreement shall have the meanings ascribed thereto when
used in this letter.
	 
	 	2.	 	We also refer to your request, dated April 29, 2008, of a temporary waiver in respect
of Section 6.01(m)(iii) of the Loan and Guarantee Agreement.
	 
	 	3.	 	In furtherance of the above, IFC consents to the following:

	 	(i)	 	the temporary waiver of the requirement in Section 6.01(m)(iii) that
the Company maintain an Adjusted Financial Debt to EBITDA1 Ratio of not
more than 3.0:1.0.
	 
	 	(ii)	 	the waiver is granted on the condition that the Company maintains the
Adjusted Financial Debt to EBITDA ratio in each quarter of the financial year 2008
of not more than the following:

	 	i.	 	Q1 2008 – 4.5:1.0;
	 
	 	ii.	 	Q2 2008 – 4.0:1.0;
	 
	 	iii.	 	Q3 2008 – 3.5:1.0;
	 
	 	iv.	 	Q4 2008 – 3.25:1.0.

 

			
	1	 	as per the waiver granted in May 2007, EBITDAX is used a a proxy to EBITDA in the
Adjusted Financial Debt to EBITDA Ratio calculation until July 2, 2008.

 

 

	 	(iii)	 	The Company is to be compliant with original requirement of Adjusted
Financial Debt to EBITDA of not more than 3.0:1.0 starting from the first quarter
of 2009 (end of quarter March 31, 2009).

The waiver
is effective for the period of one year and one day, covering the
period from March 31, 2008 until April 1, 2009.

	 	4.	 	No provision of this letter shall be deemed (i) to be a consent, waiver of
modification of any term or condition of the Loan and Guarantee Agreement or the
Transaction Documents, except as expressly provided in paragraph 3 above, or (ii) to
prejudice any rights or remedies which IFC may have now or in the future under or in
connection with any of the Loan and Guarantee Agreement and/or the Transaction Documents.

Sincerely,

INTERNATIONAL FINANCE CORPORATION

/s/ Somit Varma

Somit Varma

Director

Oil, Gas, Mining & Chemicals Department

Waiver Accepted and Agreed to this

8th day of May 2008:

/s/ Charles J. Campise

TOREADOR RESOURCES CORPORATION

Name: Charles J. Campise

Title: Senior VP Finance and Accounting

/s/ Charles J. Campise

TOREADOR TURKEY LTD.

Name: Charles J. Campise

Title: Senior VP Finance and Accounting

/s/ Charles J. Campise

TOREADOR ROMANIA LTD.

Name: Charles J. Campise

Title: Senior VP Finance and Accounting

 

 

/s/ Charles J. Campise

MADISON OIL FRANCE SAS

Name: Charles J. Campise

Title: Senior VP Finance and Accounting

/s/ Charles J. Campise

TOREADOR ENERGY FRANCE S.C.S.

Name Charles J. Campise:

Title: Senior VP Finance and Accounting

/s/ Charles J. Campise

TOREADOR INTERNATIONAL HOLDING

LIMITED LIABILITY COMPANY

Name: Charles J. Campise

Title: Senior VP Finance and Accountingexv10w57

Exhibit 10.57

MANUFACTURING AGREEMENT

This manufacturing agreement (the “Agreement”) is made and entered into on April 11, 2008
(‘Effective Date”) by and between Photon Dynamics, Inc. (“PDI”), a Delaware corporation, having its
principal office at 5970 Optical Drive, San Jose, California 95138, and C SUN Manufacturing LTD, a
corporation organized and existing under the laws of Taiwan having its principal office at 2-1,
kung 8 Rd, 2nd industrial Park, Lin Kou, Taipei, Taiwan and its affiliates (Collectively
“the “Manufacturer”). PDI and Manufacturer are each individually referred to herein as the “Party”
and collectively as the “Parties.”

RECITALS

WHEREAS, PDI designs and manufactures yield-enhancing test and repair equipment for flat-panel
display manufacturers;

WHEREAS, PDI desires to engage Manufacturer to develop, manufacture, and sell, according to PDI’s
Specifications (defined below), the Product(s) (defined below) to PDI exclusively;

WHEREAS, Manufacturer desires to obtain from PDI a non-exclusive right and license to manufacture
and sell to exclusively to PDI the Product(s); and

WHEREAS, PDI wishes to grant the aforementioned non-exclusive right and license to Manufacturer and
to purchase the Product(s) from Manufacturer.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the Parties hereby
agree as follows:

SECTION 1

DEFINITIONS

	1.1	 	“Affiliate” shall mean with respect to either Party, any other party directly or indirectly
controlling, controlled by, or under common control with such Party. For purposes of this
definition, “control” when used with respect to either Party, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management and policies of
such Party, whether through the ownership of voting securities, by contract or otherwise. The
terms “controlling” and “controlled” as used herein have meanings correlative to the
foregoing.
	 
	1.2	 	“Authorized Third Party” any PDI-approved third party that desires to purchase Product(s) or
Materials and whose credit-worthiness is reasonably acceptable to Manufacturer.
	 
	1.3	 	“Consigned Materials” shall mean any materials, components, and other supplies necessary for
the manufacture of the Product(s) by Manufacturer pursuant to this Agreement which are
supplied by PDI pursuant to that certain consignment

 

 

	 	 	agreement between the parties dated April 11, 2008.
	 
	1	 	“End of Life” shall mean that a period endingn on the fifth anniversary from the date the
last item is purchased by PDI.
	 
	1.4	 	“Epidemic Failure” shall mean those substantial deviations from the Specifications within the
warranty period which seriously impair the use of the Product(s) existing at the time of
delivery but which are not reasonably discernible at that time and which are evidenced by an
identical, repetitive defect due to the same cause and occurring in the same series of the
Product(s).
	 
	1.5	 	“Hazardous Substances” shall include, but not be limited to, any substances, materials or
wastes that are regulated by any local governmental authority of each State of the United
States or any other country, including Taiwan China and Korea where the Product(s) is
manufactured by Manufacturer or Sold because of toxic, flammable, explosive, corrosive,
reactive, radioactive or other properties that may be hazardous to human health or the
environment, including, without limitation, above or underground storage tanks, flammables,
explosives, radioactive materials, radon, petroleum and petroleum Product(s), asbestos, urea
formaldehyde, foam insulation, methane, lead-based paint, polychlorinated biphenyl compounds,
hydrocarbons or like substances and their additives or constituents, pesticides and toxic or
hazardous substances or materials of any kind, including, without limitation, substances now
or hereafter defined as “hazardous substances,” “hazardous materials,” “toxic substances” or
“hazardous wastes” in rules and regulations promulgated pursuant to any applicable federal,
state or local law, common law, code, rule, regulation, order, policy or ordinance, presently
in effect or hereafter enacted, promulgated or implemented, or any other applicable
governmental regulation imposing liability or standards of conduct concerning any hazardous,
toxic or dangerous substances, waste or material, now or hereafter in effect.
	 
	1.6	 	“Intellectual Property” shall mean any idea, concept, know-how, technique, invention,
discovery, improvement, document, product, system, practice, procedure, means, method, design,
device, program, software, drawings and sketches, and trade secrets relating to the design,
development, implementation, use, maintenance and upgrading of the Product(s). Intellectual
Property includes, but is not limited to, subject matter that falls within the definition of
patentable subject matter under the laws of the United States or any other country, or within
the definition of copyrightable materials under the laws of the United States or any other
country
	 
	1.7	 	“IP Licenses” shall mean permission granted to Manufacturer by third parties that claim a
proprietary right in any utility patent, design patent, copyright or other intellectual
property right in the Product(s) or the method of manufacturing the Product(s) to use, sell,
modify, and copy the same.

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	1.8	 	“Manufacturer’s Intellectual Property” shall mean all of Manufacturer’s designs, logos,
technical descriptions, specifications, trade secrets, and product descriptions, regardless
of registration, which are protected by patents, copyrights, trademarks or other proprietary
rights as provided in Exhibit *.
	 
	1.9	 	“Materials” shall mean raw materials, components (except Consigned Materials), and other
supplies necessary for the manufacture of the Product(s) by Manufacturer pursuant to this
Agreement.
	 
	1.10	 	“Non-Binding Forecasts” means the minimum shipment numbers listed in Exhibit B and used in
conjunction with procedures outlined in Sections 4.3.
	 
	1.11	 	“PDI Intellectual Property and Patents” shall mean all of PDT’s designs, logos, technical
descriptions, product descriptions, or other proprietary rights, regardless of registration,
which are protected by patents, copyrights, trademarks or other proprietary rights provided in
Exhibit *.
	 
	1.12	 	“PDI Trademarks” shall mean the trademarks specified by PDI or its Affiliate, as applicable,
that are to be used in connection with the manufacturing and packaging of  the
Product(s).
	 
	1.13	 	“Product” shall mean the Product, all related Software Programs and Intellectual Property,
and Materials to be manufactured by Manufacturer under this Agreement, in accordance with the
Specifications, as amended from time to time by written agreement or as otherwise agreed upon
in writing by the Parties. The “Products” shall include any updates to or enhancements of the
Product.
	 
	1.14	 	“Project” or “Projects” means the Project or Projects and related plans as identified in
Section 9.3, or as agreed to by the Parties from time to time.
	 
	1.15	 	“Project Manager” means that certain manager referenced in Section 9.2 and identified in Exhibit C.

	 
	1.16	 	“Purchase Order” or “Purchase Orders” shall have the meaning provided in
Section 4.2.

	 
	1.17	 	“Software Programs” means firmware embedded in the Product(s).
	 
	1.18	 	“Specifications” shall mean the Product and design and manufacturing specifications
which are set forth in Exhibit D.
	 
	1.19	 	“Technical Evaluation” shall mean the testing and evaluation of Manufacturer’s test product
for compliance with specification, quality, and suitability in accordance with the process and
dates outlined in the Specifications or Project Plan.
	 
	1.20	 	“Warranty Period” shall mean sixteen (16) months after shipment to PDI’s

-3-

 

end-user.

SECTION 2

DEVELOPMENT OF THE PRODUCTS

	2.1	 	Develop Products to Specifications. The Products shall be designed and developed by
Manufacturer in accordance with the agreed-upon Specifications listed in Exhibit A, the
Project Plans and in accordance with Technical Evaluation document (Exhibit *)
	 
	2.2	 	Exclusive Rights to NRE and the Products. Manufacturer acknowledges and hereby
agrees that PDI shall solely and exclusively have the rights to the NRE, the Products and the
Intellectual Property in and to the Products. Manufacturer shall not, without PDI’s prior
written consent, sell or otherwise use the NRE and the Intellectual Property in and to the
Products for any other products without the prior written consent of PDI. Manufacturer hereby
agrees to assign and does hereby expressly assign to PDI all Intellectual Property in and to
the NRE and the Products unless the Parties agree otherwise in writing prior to the
commencement of the design of such Products. Manufacturer shall assist PDI in every
reasonable way, at PDI’s expense, to secure, perfect, register, maintain, and defend for
PDI’s ownership and benefit in and to the NRE and the Products. Manufacturer hereby
irrevocably agrees not to assert against PDI, its Affiliates, direct or indirect customers,
assignees or sublicensees, any claim of intellectual property rights of Manufacturer
affecting the NRE or the Products. This Section 2.2 shall survive the termination of the
Agreement. Manufacturer shall not reverse engineer any products of intellecutal property
provided by PDI.

SECTION 3

MANUFACTURE OF PRODUCTS

	3.1	 	Manufacture and Purchase. Subject to Manufacturer meeting and passing the Technical
Evaluation Exhibit *as shown in the Project Plan Exhibit B, Manufacturer hereby agrees to
manufacture and sell to PDI such quantities of the Product(s) for which PDI issues Purchase
Orders (defined herein) pursuant to this Agreement. Manufacturer shall manufacture the
Product(s) in accordance with the Specifications. Manufacturer further agrees that it shall
not, without PDI’s prior written consent, sell or otherwise use the PDI Intellectual Property
for any other Product(s).

	3.2	 	Support and Training. Manufacturer shall provide PDI employees, consultants or
agents with such training related to the manufacturing, operation and any other technical
information relating to the Product(s) as PDI may reasonably deem

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	 	 	necessary to assist PDI in the integration and assembly of the Product(s) with other
components. Without limiting the foregoing, Manufacturer can provide for each Product a
detailed manufacturing process or instructions at a predetermined cost agreed to by
both Parties. Manufacturer is willing to provide field support upon PDI’s request,
subject to agreed cost.
	 
	3.3	 	Compliance with Laws. Manufacturer’s performance under this Agreement shall comply
with all applicable standards, provisions and stipulations of Taiwan and the United States
(including federal, state and local) laws, rules, regulations and ordinances applicable to
performance under this Agreement. Manufacturer shall submit to PDI on a timely basis all
information concerning the existence, if any, of Hazardous Substances contained within the
Product(s) in a form and content as required by PDI.
	 
	3.4	 	Changes to Specifications. PDI may from time to time request that modifications,
alterations or changes be made to the design of the Product(s) as reflected in the
Specifications. Such modifications, alterations or changes may originate with PDI or may
be recommended by Manufacturer. Within thirty (30) days following Manufacturer’s receipt
of a written request for modifications, alterations or changes from PDI, Manufacturer
shall provide PDI a binding estimate of the cost of such modifications, alterations or
changes and a total increase or decrease in the price of the Product(s). If PDI approves
the binding estimate, Manufacturer shall make such modifications, alterations or changes
as soon as practicable upon receipt of such written consent from PDI. Manufacturer shall
not make any modifications, alterations or changes to the Specifications without the
prior written consent of PDI.
	 
	3.5	 	Other Changes. Manufacturer shall advise PDI in writing of any material changes
to manufacturing processes, Materials, sources of supply, process chemistries, test
procedures, quality reporting or other major processes, and ensure that any such changes
do not compromise the Specifications, quality, or reliability of Product(s) ordered
pursuant to this Agreement. In the case of changes to Materials or sources of supply,
Manufacturer shall make best efforts to notify PDI at least sixty (60) days prior to the
effectiveness of such change; provided, however, that in any event, the notice shall not
occur later than twenty-four (24) hours following Manufacturer’s determination of the
same. If such change concerns any major components or involves a substantial change,
Manufacturer shall notify PDI while the change is under consideration by Manufacturer.
Manufacturer may not make any such changes without prior written consent from PDI. To the
extent the Specifications need to be changed to comply with a license or to avoid a valid
utility patent, design patent, copyright or other intellectual property right,
Manufacturer shall advise PDI in writing of such “Necessary Patent-Related Changes”
including the circumstances giving rise to such changes, and await PDI’s written consent
before proceeding further.
	 
	3.6	 	Subcontracting. Manufacturer may engage subcontractors or vendors to
provide components or subassemblies for the Product(s), provided that Manufacturer

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	 	 	provides PDI with written notice of such subcontractors or vendors at least twenty-four (24)
hours prior to such engagement. Manufacturer shall not engage any subcontractor to
manufacture the Product(s) without PDI’s consent.
	 
	3.7	 	Tooling and Non-Recurring Expenses. If PDI provides non-Product and
Product-specific tooling at its own expense, all Product-specific tooling and molds shall be
the exclusive personal property of PDI, and Manufacturer hereby assigns all right, title and
interest in same to PDI. In the event of termination, in accordance with Section 15.2, all
tools and molds which are the property of PDI shall be delivered to PDI at Manufacturer’s
sole cost and expense.

SECTION 4

SUPPLY AND ORDER FOR PRODUCTS

	4.1	 	Forecasts. PDI shall use reasonable efforts to provide Manufacturer with reasonable
estimates of its forecast of anticipated orders for the Product(s) on a monthly basis showing
monthly quantities for a maximum of 12 months. Forecast information shall be non-binding, for
planning purposes only, and shall not represent PDI’s commitment to purchase any or all units,
except as otherwise specifically agreed in writing by PDI.

PDI will also provide Manufacturer with a master schedule showing (a) type information
for Materials and Consigned Materials (i.e. stage, lens and laser payload assemblies),
(b) arrival dates for Consigned Materials (i.e. stage and payload assemblies), (c)
customer acceptance test procedure dates, and (d) shipment dates for the Product(s).
	 
	4.2	 	Purchase Orders. PDI shall submit purchase orders (“Purchase Orders”) to Manufacturer
for the Product(s) at least 14 weeks prior to required shipment and will include, at a
minimum, the following information: (a) identification of the Product(s) ordered; (b)
quantity; (c) delivery date; and (d) shipping instructions and shipping address. PDI does not
guarantee any particular sales volume with respect to the Product(s). In the event of any
conflict between the terms and conditions of this Agreement and any Purchase Order, the terms
and conditions of this Agreement shall control.
	 
	4.3	 	Product and Materials Lead Times; Inventory Report.

	 	4.3.1	 	Lead times for Purchase Orders shall be agreed to by the Parties. Manufacturer
shall provide timely written notice to PDI in the event that a change is necessary to
lead time requirements.
	 
	 	4.3.2	 	Manufacturer shall give PDI written notice, from time to time, of any desired
change in the order quantities, order lead time, cancellation lead time or cancellation
terms. Manufacturer shall continue to manufacture under the new order lead time,
cancellation lead time or terms, if and only if, a written agreement is provided to
Manufacturer by PDI. Such written

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	 	 	 	agreement shall also obligate PDI to the revised cancellation lead time or
cancellation terms.
	 
	 	4.3.3	 	If requested by PDI, Manufacturer shall provide PDI with a bi-weekly
inventory report for all finished goods, work in progress, Materials and other
component parts (e.g., Consigned Materials) in its possession. Failure to provide such
report shall relieve PDI from any liability it would otherwise have hereunder for
canceling Purchase Order commitments, failing to issue Purchase Orders consistent with
agreed Non-Binding Forecasts, or otherwise upon termination of this Agreement for any
reason.

	4.4	 	Acceptance of Orders. All Purchase Orders issued in accordance with this Agreement
shall give rise to a binding contract between Manufacturer and PDI for the sale of the
Product(s) ordered subject to and governed by the terms of this Agreement. Purchase Orders
shall become binding on the Parties upon acceptance thereof by Manufacturer. Manufacturer
shall be deemed to have accepted a Purchase Order if Manufacturer fails to reject the Purchase
Order by notifying PDI in writing within forty-eight (48) hours of its receipt thereof, not
including weekends and the nationally recognized holidays of the United States or the country
of manufacture. PDI may cancel a Purchase Order without penalty or liability if PDI reasonably
determines in its sole and absolute discretion that delivery to PDI shall be delayed beyond
thirty days (30) from the date of the acceptance of the Purchase Order or Manufacturer is
otherwise unable to make delivery in conformance with the Purchase Order, Specifications, or
performance or quality standards.
	 
	4.5	 	Rescheduling of Delivery Dates. PDI may reschedule delivery of units of Product(s) up
to one (1) month after the delivery date specified on a Purchase Order, unless shipment has
already occurred, by sending Manufacturer a written change order or by canceling the old
Purchase Order and sending a new Purchase Order(s). Rescheduling of delivery of Product(s)
beyond this one (1) month limitation shall only be made with the written approval of each of
the Parties. Rescheduling of delivery of Product(s) earlier than the delivery date specified
on a Purchase Order shall only be made with the written approval of each of the Parties.
	 
	4.6	 	Purchase Order Cancellations. If PDI wishes to cancel (as opposed to reschedule a
delivery) a certain quantity of units of Product(s) ordered pursuant to a Purchase Order,
Manufacturer, upon receipt of such written notice of such cancellation, shall immediately stop
work on such units of Product(s) to the extent specified therein. PDI’s liability for a
cancellation shall be limited to the following:

4.6.1 Manufacturer shall make its reasonable best effort to manage the disposition and
liability of all industry standard Materials to limit expense or liability to PDI
(i.e., all non-Unique Materials).

4.6.2 PDI shall be liable to Manufacturer if a Purchase Order is cancelled-for the

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	 	 	cost of unique materials related to such a Purchase Order at Manufacturer’s cost and without
any overhead or profit markup.
	 
	4.7	 	Shipment. All Product(s) sold by Manufacturer to PDI shall be prepared for
shipment in accordance with PDI’s instructions as set forth in the Purchase Orders.

	 	4.7.1	 	Time is of the Essence. TIME IS OF THE ESSENCE OF THIS AGREEMENT
WITH RESPECT TO THE SPECIFIED DELIVERY DATES.
	 
	 	4.7.2	 	Risk of Loss. PDI assumes all risk of loss and damage upon
Manufacturer’s shipment of the Product(s) to PDI or its designated carrier or agent.
	 
	 	4.7.3	 	Packaging and Labeling. Manufacturer shall package and label the
Product(s) and prepare the Product(s) for shipment in accordance with all applicable
laws, regulations and industry standards in the countries of manufacture and
distribution. Such laws, rules and industry standards include, but are not limited to,
the laws, rules and industry standards of country of origin designation and include the
rules and regulations promulgated by the government of taiwan, the U.S. Customs and
Border Protection, the U.S. Department of Homeland Security, all requirements under the
U.S. Fair Packaging and Labeling Act, U.S. Federal Communication Commission, U.S. Food
and Drug Administration and other applicable government agencies of the U.S., and other
countries, including Korea, of intended distribution.

4.8 Quality Acceptance.

	 	4.8.1	 	Inspections at Manufacturer’s Facility. PDI shall have the right to
perform vendor qualifications and/or on-site source inspections at Manufacturer’s
manufacturing facilities and Manufacturer shall reasonably cooperate with PDI in such
inspection. In the event that an inspection or test is required to be made by PDI on
Manufacturer’s manufacturing facilities, Manufacturer shall provide PDI’s inspectors
with reasonable facilities and assistance at no additional charge.
	 
	 	4.8.2	 	Epidemic Failure. In the case of an Epidemic Failure of Materials,
Manufacturer shall, within five (5) business days, propose an action plan to fix the
failure of any affected Product(s) and to implement this action plan immediately upon
PDI’s acceptance thereof. If the action plan is not acceptable to PDI, PDI can require
Manufacturer to repair or replace, at Manufacturer’s option, the affected Product(s).
The repair or replacement shall be done at mutually agreed-upon location(s); provided,
however, that costs of repair or replacement, together with the shipping,
transportation

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and other costs of gathering and redistributing the Product(s), shall be borne by
Manufacturer. In addition to bearing the costs associated therewith, if requested by
PDI, Manufacturer shall support and provide at Manufacturer’s expense a sufficient
number of parts[cl] to permit the field exchange or “hot swap” of Product(s) at
customer sites. The Parties agree to make all reasonable efforts to complete the
repair or replacement of all of the affected Product(s) within twenty (20) business
days after written notice of Epidemic Failure by PDI to Manufacturer. Manufacturer
agrees that PDI shall be supported with accelerated shipments of replacement
Product(s) to fulfill PDI’s supply requirements.

	4.9	 	Inspection and Acceptance. PDI or a PDI representative shall conduct any
incoming inspection tests on the Product(s) prior to authorizing shipment from
Manufacturer’s facility. Such inspection shall occur no later than 48 hours from the
time Manufacturer declares the product complete and ready for inspection. PDI
shall have the right to reject any Product that does not meet the Specifications
(“Nonconforming Product”) and shall provide Manufacturer with information as to
the reason for the rejection of the Nonconforming Product. At PDI’s option,
Manufacturer shall either (a) promptly replace the Nonconforming Product without
additional cost to PDI, permit PDI to issue a debit memorandum to Manufacturer
for the purchase price of the Nonconforming Product, and shall re-invoice PDI for
the Product shipped to replace the Nonconforming Product at the time of shipment
of the replacement product; or (b) credit PDI for the purchase price of the
Nonconforming Product and related shipping charges after receipt of PDI’s debit
memorandum related to such Nonconforming Product. At Manufacturer’s request
and expense, PDI shall return all rejected Product(s) to Manufacturer.

	 	4.9.1	 	Upon inspection and acceptance by PDI, products shipped by Manufacture from
Manufacturer’s facility will become responsibility of PDI for loss, damage, or any
quality issues.

	4.10	 	Purchase by PDI’s Authorized Third Parties or Affiliates. Manufacturer hereby agrees
that all of the PDI’s Authorized Third Parties or Affiliates, wherever located, shall be
entitled to make purchases under this Agreement (at the same price and in accordance with same
terms negotiated by PDI, as applicable), and all such purchases shall apply to the purchase
commitments hereunder, if any. With respect to any purchases made by Authorized Third Parties
or Affiliates, the terms and conditions of this Agreement shall govern provided that all
references to “PDI” contained in this Agreement shall refer to the Authorized Third Party or
Affiliate, as applicable.
	 
	4.11	 	Programming, Operating Systems, Software. If applicable, procurement of all computer
programming, operating systems, or other software shall be the responsibility of Manufacturer.
Including any third party software embeded in the and part of Product. Any restrictions or
payment obligations imposed by the

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original source on Manufacturer’s or PDI’s use or handling of such programming shall be
approved in writing by PDI. There shall be no payment or reimbursement obligation on PDI’s
part for programming obtained or provided by Manufacturer unless such payments or
reimbursements are approved in writing by PDI which indicates that PDI has accepted such
obligation.

SECTION 5

PRICES AND PAYMENTS

Prices. The pricing model for all Product(s) sold by Manufacturer to PDI shall be as set
forth in Exhibit B or as otherwise agreed in writing by the Parties from time to time. Prices may
be decreased at any time upon agreement by the Parties. A price increase can only take effect if
Manufacturer gives at least ninety (90) days’ prior written notice of the effective date of such
increase. In no event, however, shall a price increase affect (a) a Purchase Order accepted by
Manufacturer prior to the effective date of such price increase; or (b) a prior agreement between
the Parties concerning Purchase Orders to be placed by PDI during a period in which prices are to
remain firm. All transactions shall be valued and paid in United States currency and shall be
invoiced and payment remitted in the United States.

	5.1	 	Most Favored Nation Requirement. Manufacturer warrants that the prices for the
Product(s) do not, and at all times shall not, exceed Manufacturer’s price to any other
customer for a substantially similar product in substantially similar volumes, and under
commercial terms and conditions similar to those of this Agreement.
	 
	5.2	 	Additional Payments. If additional payments shall be or have been made to
Manufacturer by PDI in connection with this Agreement for items such as assists (e.g.,
tooling, molds, dies, Materials, or components provided for incorporation in or manufacture of
the Product(s)), royalties, packing, selling commissions, or other incidental charges, such
additional value(s) shall be separately itemized and identified on Manufacturer’s commercial
invoice. Manufacturer’s invoices shall not indicate a nominal value for Product(s), but shall
indicate the invoice price charged to PDI, or if shipment is one of multiple shipments
required under a single Purchase Order, the value shall be stated as the actual value of the
Product(s) with respect to each shipment. If Manufacturer ships sample goods to PDI, a fair
market value shall be stated on the commercial invoice for customs purposes.
	 
	5.3	 	Payment Terms. Manufacturer shall invoice PDI for the Purchase Order upon PDI
acceptance of Product(s). PDI shall pay amounts due in each such invoice within thirty (30)
days.
	 
	5.4	 	Taxes. Manufacturer’s prices do not include any goods and services taxes or
any sales, use, excise, or similar taxes unless expressly indicated in writing.
	 
	5.5	 	Right to Make Offset. If Manufacturer’s fails to resolve any invoice or payment
related issues with PDI after 30 days from receipt of a written claim by PDI, PDI

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may offset from Manufacturer’s invoice any current or future indebtedness of Manufacturer to
PDI. Manufacturer agrees to not contest PDI’s deduction if Manufacturer fails to send a
written denial thereof, including all supporting documentation, to PDI within sixty (60)
days of the date of deduction (PDI’s check date). Such written denial shall be made by
Manufacturer by submitting notice to PDI under the notice provisions of this Agreement.

	5.6	 	Statement of Account. From time to time upon request by PDI, Manufacturer shall
provide a complete statement of account that shall include, but not be limited to, unpaid
invoices and disputed deductions. Such statement of account shall also disclose all credit
memos issued and outstanding. The statement of account shall be forwarded by electronic mail
in spreadsheet format or by regular mail per PDI’s instructions. Statements for
merchandising/inventory accounts shall be separate from any statement of account for parts
purchased by PDI for Product service and out-of-warranty repairs.

	5.7	 	Debit Balances. If Manufacturer is indebted to PDI but there is no outstanding
balance due to Manufacturer, Manufacturer shall pay the amount due to PDI via check or wire
transfer in full within thirty (30) days of receipt of notification thereof from PDI. If the
amount in question is disputed, the Parties agree to work in good faith to reconcile the
matter so that payment to PDI of any undisputed amount shall be made within sixty (60) days of
PDI’s original notice to Manufacturer. In no event shall PDI be obligated to take a credit
against future purchases.

	5.8	 	Cost Reduction Plans. Manufacturer shall develop a cost reduction plan for all
products based on material and labor cost reductions. Such plans shall be reviewed by both
Parties and mutually agreed upon twice a year, The goal for cost reduction is 5% (five
percent) annually, but Manufacturer does not guarantee that such 5% cost reductions can be
achieved annually.

SECTION 6

WARRANTIES

	6.1	 	Representations and Warranties of Manufacturer. Manufacturer represents and
warrants to PDI as follows:

	 	6.1.1	 	Manufacturer has the authority to enter into this Agreement and to manufacture
and sell the Product(s) to PDI and that the persons signing this Agreement on behalf of
Manufacturer are authorized to sign;
	 
	 	6.1.2	 	Manufacturer possesses all necessary permits, licenses, or clearances required
to perform its obligations hereunder, including Taiwan and other governmental approvals
required to perform its obligations under this Agreement;
	 
	 	6.1.3	 	the Product(s) shall be free and clear of all liens, charges, encumbrances, or

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	 	 	 	other restrictions;

	 	6.1.4	 	the Product(s) shall be free from defects in design manufacture, materials and
workmanship for a period equal to the lesser of (i) the warranty period provided to
end-users by PDI, plus one (4) month; or (ii) maximum warranty not to exceed
twenty-four (24) months from agreed upon PO shipment date.
	 
	 	6.1.5	 	the Product(s) shall be fit and safe for the use(s) normally and reasonably
intended;
	 
	 	6.1.6	 	the Product(s) are of merchantable quality and shall perform in conformance
with Specifications (including any identified “Useful Life”) and Manufacturer samples;
	 
	 	6.1.7	 	Manufacturer shall comply with all applicable laws and regulations in
performing its obligations under this Agreement, including but not limited to laws and
regulations pertaining to product design, manufacture, packaging and labeling and, if
applicable, importation and the Foreign Corrupt Practices Act;
	 
	 	6.1.8	 	the Product(s) and all Materials provided to PDI under this Agreement are new
Product(s) and do not contain anything used, refurbished or reconditioned;
	 
	 	6.1.9	 	all Product(s), unless specifically exempted under the applicable customs laws
and regulations, shall be marked in a conspicuous place as legibly, indelibly, and
permanently as the nature of the article (or container) shall permit, with the country
of origin;
	 
	 	6.1.10	 	the Product(s) are not supplied by the use of forced labor, convict labor or forced
or illegal child labor and that the Product(s) were not trans-shipped for the purpose
of mislabeling, evading quota or country of origin restrictions or for the purpose of
avoiding compliance with forced labor, convict labor or child labor laws;

	6.2	 	Representations and Warranties of PDI. PDI represents and warrants to
Manufacturer as follows:

	 	6.2.1	 	the Specifications and other intellectual property provided by PDI to
manufacturer do not infringe the intellectual property rights of any third party,
including without limitation, any utility patent, design patent, trade secret or other
intellectual or proprietary rights; and
	 
	 	6.2.2	 	that the persons signing this Agreement on behalf of PDI are authorized to
sign on its behalf.

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	6.3	 	Warranty Exclusions:

	 	6.3.1	 	MANUFACTURER MAKES NO WARRANTIES, GUARANTEES OR REPRESENTATIONS, EXPRESS OR
IMPLIED, WITH RESPECT TO ANY PRODUCT(S) SOLD TO PDI EXCEPT AS EXPRESSLY SET FORTH IN
THIS AGREEMENT. ALL OTHER WARRANTIES ARE EXPRESSLY WAIVED AND EXCLUDED, INCLUDING, BUT
NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
	 
	 	6.3.2	 	MANUFACTURER SHALL HAVE NO WARRANTY RESPONSIBILITY FOR CONSIGNED MATERIALS,
BUT MANUFACTURER AGREES TO COOPERATE IN PROCESSING APPLICABLE THIRD-PARTY WARRANTY
CLAIMS AND IN TAKING ADVANTAGE OF REMEDIES, IF ANY, AVAILABLE FROM THE ORIGINAL SOURCES
OF SUCH CONSIGNED MATERIALS.
	 
	 	6.3.3	 	PDI MAKES NO WARRANTIES, GUARANTEES, OR REPRESENTATIONS, EXPRESS OR IMPLIED,
WITH RESPECT TO THE SPECIFICATIONS, AND EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTIES
RELATING TO THE SPECIFICATIONS OR THE PRODUCT(S) INCLUDING ANY WARRANTY AGAINST
INFRINGEMENT.
	 
	 	6.3.4	 	IN NO EVENT SHALL THE PARTIES BE LIABLE FOR ANY INDIRECT, SPECIAL,
CONSEQUENTIAL (INCLUDING, WITHOUT LIMITATION, LOST REVENUES OR PROFITS), PUNITIVE, OR
EXEMPLARY DAMAGES, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

	 	 	EXCEPT FOR ITS OBLIGATIONS UNDER THIS SECTION, AND EXCLUDING ANY THIRD-PARTY CLAIM OF ANY
KIND RELATED TO THIS AGREEMENT, THE PARTIES’ LIABILITY TO EACH OTHER, WHETHER FOR BREACH OF
CONTRACT OR WARRANTY, STRICT LIABILITY, NEGLIGENCE OR OTHERWISE SHALL NOT EXCEED FIFTY
PERCENT (50%) OF THE AGGREGATE OF INVOICED COSTS PAID BY PDI TO MANUFACTURER FOR ALL
PRODUCTS FOR THE IMMEDIATE TWELVE (12) MONTH PERIOD.

SECTION 7

INDEMNIFICATION

	7.1	 	Indemnification by Manufacturer. Manufacturer shall indemnify, defend and hold
harmless PDI, its parent and each of its Affiliates, subsidiaries, officers, directors,
employees, consultants, agents and shareholders from and against and in

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	 	 	respect of any and all demands, claims, actions or causes of action, assessments, losses,
damages, liabilities, interest and penalties, costs and expenses (including, without
limitation, reasonable legal fees and disbursements incurred in connection therewith and in
seeking indemnification therefore, and any amounts or expenses required to be paid or
incurred in connection with any action, suit, proceeding, claim, appeal, demand, assessment
or judgment) (“Indemnifiable Losses”), resulting from, arising out of, or imposed upon or
incurred by any person to be indemnified under this Section 7.1 by reason of (a) any breach
of representation, warranty, covenant or agreement on the part of Manufacturer under this
Agreement; (b) acts or omissions of Manufacturer relating to the Product(s) which includes,
but is not limited to, claims that the Product(s), or use thereof, caused personal injury,
death, or real or personal property damage to the extent not attributable to Consigned
Materials or PDI Proprietary Specifications; (c) a Product recall, whether or not initiated
by Manufacturer to the extent not attributable to Consigned Materials or PDI Proprietary
Specifications; (d) an allegation that any Product constitutes an infringement of any patent
or any other intellectual property right protected under the laws of the United States, any
State of the United States, or any other country, including Taiwan, to the extent not
attributable to PDI Proprietary Specifications; (e) the negligence or willful misconduct of
Manufacturer; (f) any retroactive antidumping duties payable by PDI; and (g) acts or
omissions that cause difficulty, delay or inability of PDI to import the Product(s) into the
United States or other country of importation and/or to comply with applicable import
regulations; provided that in no event shall Manufacturer be liable for PDI’s lost profits,
consequential, punitive or exemplary damages.
	 
	7.2	 	Indemnification by PDI. PDI shall indemnify, defend and hold harmless Manufacturer
and each of its Affiliates, subsidiaries, officers, directors, employees, consultants, agents
and shareholders from and against and in respect of any and all Indemnifiable Losses resulting
from, arising out of, or imposed upon or incurred by any person to be indemnified under this
Section 7.2 by reason of (a) any breach of representation, warranty, covenant or agreement on
the part of PDI under this Agreement; or (b) the gross negligence or willful misconduct of
PDI; provided that in no event shall PDI be liable for Manufacturer’s lost profits,
consequential, punitive or exemplary damages.
	 
	7.3	 	Third Party Claims. If a claim by a third party is made against an indemnified Party
and if the indemnified Party intends to seek indemnity with respect thereto under this Section
7, such indemnified Party shall promptly notify the indemnifying Party of such claim;
provided, however, that failure to give timely notice shall not affect the rights of the
indemnified Party so long as the failure to give timely notice does not adversely affect the
indemnifying Party’s ability to defend such claim against a third party. The indemnifying
Party shall be entitled to assume the defense thereof, with counsel selected by the
indemnifying Party and reasonably satisfactory to the indemnified Party. The indemnifying
Party shall have control of the defense of any such action, including any appeals and
negotiations for the settlement or compromise thereof and shall have full authority

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	 	 	to enter into a binding settlement or compromise; provided that, the indemnifying Party
shall not enter into any settlement or compromise which may adversely affect the indemnified
Party without the indemnified Party’s consent, which consent shall not be unreasonably
withheld. If the indemnifying Party assumes the defense of such claim, the indemnifying
Party shall not be responsible for any legal or other expenses subsequently incurred by such
indemnified Party in connection with the defense thereof. The indemnified Party may
participate, at its own cost and expense, in the defense of any such claim; provided that
such defense shall be controlled by the indemnifying Party.
	 
	7.4	 	Cooperation as to Indemnified Liability. Each Party hereto shall cooperate fully
with the other Party with respect to access to books, records, or other documentation within
such Party’s control, if deemed reasonably necessary or appropriate by any Party in the
defense of any claim which may give rise to indemnification hereunder.

SECTION 8

RETURNS & DEFECTIVE MATERIALS

	8.1	 	General. PDI shall have the right to return at Manufacturer’s expense, and for full
credit or refund of PDI’s cost, any Products other than provided in 8.1.1 that (a) are
not developed, manufactured, supplied, packaged, or labeled in accordance with
the Specifications and all applicable laws, rules, regulations and industry standards;
(b) are shipped in error or in non-conformance with PDI’s Purchase Order; (c) have
caused injury to person or property; (d) are damaged; (e) are supplied in breach of
Manufacturer’s warranty as provided herein; or (g) are returnable as a defective
Product, subject to the terms of Section 8.2 below.
	 
		 	8.1.1 Consigned Materials. Consigned Materials shall not be capable of being returned for
credit. Any Consigned Materials which are damaged after acceptance by Manufcaturer and
before acceptance by PDI in the finished product shall the repsonsibility of the
Manufacturer
	 
	8.2	 	Return Procedures. If a Manufacturer Return Authorization (“MRA”) is first required
by either Party prior to PDI’s return of Product(s) to Manufacturer, Manufacturer agrees to
provide a unique MRA number to PDI within forty-eight (48) hours of PDI’s request.
Manufacturer shall allow delivery of the return Product(s) as of the day the MRA is issued to
PDI. If Manufacturer requires that PDI make an appointment to deliver returned Product(s),
such appointment shall be provided by Manufacturer within three (3) days of the carrier’s
expected arrival time. See Exhibit G for MRA procedures.
	 
	8.3	 	Returns; Defective Products. The Parties agree that returns shall be governed by a
“Return” and “Defective Allowance” procedures with respect to the handling and responsibility
of end-user returns and defective Product(s) as specified in Exhibit G.

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	8.4	 	Return. Unless otherwise agreed to in writing, for a period not to exceed the
warranty period specified in Section 8.2 hereof, PDI may return to Manufacturer any
Product(s) either determined by PDI to be defective or claimed by an end-user to be
defective (returns to Manufacturer may therefore include Product(s) that are not, in fact,
defective). PDI may seek credit or exchange for such returned Product(s) upon mutual
agreement that Manufacturer is at fault.
	 
	8.5	 	At the request of PDI or its designated agent, Manufacturer shall ship parts and
assemblies for the Product(s) that are the equivalent in specifications and quality to the
original parts supplied with the Product(s). At the request of PDI, Manufacturer shall
maintain an inventory of general replacement parts or special parts as forecasted by PDI.
During such time, Manufacturer shall supply parts to PDI or its designated agent at
reasonable, competitive rates as may be necessary to perform out-of-warranty repairs for
systems deemed not “End of Life”. As required, the Parties will enter into separate
agreement(s) covering spare parts and refurbished assemblies.

SECTION 9

CONSULTING DESIGN AND ENGINEERING SERVICES

PDI may engage Manufacturer to render consulting, design or engineering services in connection
with Product(s) to be manufactured hereunder. In the event that PDI desires to engage Manufacturer
to render such services, the Parties shall execute a Project Plan which shall include a
description of the services to be rendered, any milestones or delivery dates, payment terms or
other terms relevant to such engagement. To the extent the results of Manufacturer’s performance
of such services may constitute “work made for hire” for PDI under the USA Copyright Revision Act
of 1976, as amended from time to time, then such work shall be considered “work made for hire” by
the Parties.

SECTION 10

ADDENDA: SUPPLY CHAIN SECURITY REQUIREMENTS

	10.1	 	Addenda. PDI and Manufacturer may agree upon certain business terms from time to
time concerning matters such as Product(s), pricing, market, invoice credit terms, and the
like. Such terms shall be contained in one or more written addenda to this Agreement, each of
which shall be considered an addendum hereto and may be identified as Exhibits to this
Agreement. In the event of conflict between business terms of any addendum and this
Agreement, the business terms contained in such addendum shall control.
	 
	10.2	 	Supply Chain Security. PDI supports the U.S. Customs and Border Protection (“CBP”)
Customs-Trade Partnership Against Terrorism, commonly referred to as “C-TPAT” and similar
programs in Taiwan promulgated by the Taiwan

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	 	 	government. PDI requires foreign suppliers of imported goods to scrutinize, and, where
necessary, develop sufficient security measures within, their own supply chain. More
information about C-TPAT can be found at www.cpb.gov. In particular, Manufacturer agrees to
implement Customs’ Security Recommendations for manufacturers as set forth as part of the
Supplier Compliance Standards attached hereto as Exhibit H.

SECTION 11

INTELLECTUAL PROPERTY; TRADEMARKS

	11.1	 	Intellectual Property. It is acknowledged and hereby agreed by the Parties that all
rights to sell, price, market, license, distribute, or manufacture the Products or any
Intellectual Property related thereto remain, as between Manufacturer and PDI, wholly and
exclusively owned by PDI. Notwithstanding the foregoing, PDI acknowledges that the Products
are assembled using common industry modular assembly methods and that PDI has no proprietary
rights in such methods and that Manufacturer may continue to use such methods in constructing
other products.
	 
	11.2	 	Use of Trademarks. PDI hereby grants to Manufacturer, and Manufacturer hereby
accepts, a nonexclusive, nontransferable and royalty-free right and license to use PDI’s
trademarks in connection with the manufacturing and packaging of the Products for so long as
the PDI’s trademarks are used by Manufacturer in accordance with PDI’s standards,
specifications and instructions, but in no event beyond the term of this Agreement.
Manufacturer shall acquire no right, title or interest in PDI’s trademarks other than the
foregoing limited license, and Manufacturer shall not use any PDI Trademarks as part of
Manufacturer’s corporate or trade name or on products not specifically authorized by PDI in
writing or permit any third party to do so.
	 
	11.3	 	Termination of Use. Manufacturer acknowledges PDI’s proprietary rights in and to
PDI’s trademarks and Manufacturer hereby waives in favor of PDI ail rights to any trademarks,
trade names and logotypes now or hereafter originated by PDI. Manufacturer shall not adopt,
use or register any words, phrases or symbols that are identical to or confusingly similar to
any of PDI’s trademarks or trade names in the United States and internationally. Upon
termination of this Agreement, Manufacturer shall cease and desist from use of PDI’s
trademarks and trade names in any manner.
	 
	11.4	 	Change in Specifications. To the extent the Specifications need to be changed,
altered or modified, as provided in Section 3.5 above, to comply with a license or to avoid a
valid utility patent, design patent, copyright or other intellectual property right,
Manufacturer shall advise PDI in writing of such “Necessary Patent-Related Changes” including
the circumstances giving rise to such changes.
	 
	11.5	 	Programming, Operating Systems, Software. If applicable, procurement of all

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	 	 	computer programming, operating systems, or other software shall be the responsibility of
Manufacturer, or PDI upon PDI’s written consent thereof. Restrictions or payment obligations
may be imposed by the original source on Manufacturer’s or PDI’s use or handling of such
programming. There shall be no payment or reimbursement obligation on PDI’s part for
programming obtained or provided by Manufacturer unless such payments or reimbursements are
approved in writing by PDI which indicates that PDI has accepted such obligation.

SECTION 12

CONFIDENTIALITY

	12.1	 	Confidentiality. Each Party agrees, during the term of this Agreement and for a
period of three (3) years thereafter, it shall not use any Confidential Information (as
defined below) for any purpose other than as permitted or required for performance by such
Party under this Agreement, nor shall it disclose or provide any Confidential Information to
any third party. Each Party shall take all necessary measures to prevent any such disclosure
by its employees, agents, contractors or consultants. Upon request of the other Party or upon
termination of this Agreement, each Party shall return all such Confidential Information to
the other Party.

	12.2	 	Confidential Information. This Agreement and any information marked as confidential
or, regardless of form (written/electronic/oral) or marking, is of the nature that a
reasonable person would understand its owner would not want it disclosed to the public shall
be considered to be Confidential Information. Further, Confidential Information shall also
include (a) any document or data transaction between the Parties; (b) matters of a technical
nature such as trade secret processes or devices, know-how, data, formulas, inventions
(whether or not patentable or copyrighted), specifications and characteristics of Product(s)
or services planned or being developed, and research subjects, methods and results; (c)
matters of a business nature such as information about costs, profits, pricing, policies,
markets, sales, PDI’s customers (e.g., names and addresses), Product plans, and marketing
concepts, plans or strategies; (d) matters relating to project initiatives and designs; (e)
matters of a human resources nature such as employment policies and practices, personnel
information, including individual names, addresses, and telephone numbers, compensation, and
employee benefits; and (f) other information of a similar nature not generally disclosed to
the public. Confidential Information shall not include information that:

	 	12.2.1	 	was already in the possession of the Receiving Party prior to its receipt
from the Disclosing Party (provided that the Receiving Party is able to
provide the Disclosing Party with reasonable documentary proof thereof);
	 
	 	12.2.2	 	is or becomes part of the public domain by reason of acts not attributable
to the Receiving Party;

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	 	12.2.3	 	is or becomes available to the Receiving Party from a source other than the
Disclosing Party which source, to the best of the Receiving Party’s knowledge, has
rightfully obtained such information and has no obligation of non-disclosure or
confidentiality to the Disclosure Party with respect thereto;
	 
	 	12.2.4	 	is made available on an unrestricted basis by the Disclosing Party to a third party
unaffiliated with the Disclosing Party; and
	 
	 	12.2.5	 	has been or shall be publicly disclosed by reason of legal, accounting or regulatory
requirements beyond the reasonable control, and despite the reasonable efforts of the
Receiving Party.

	12.3	 	Manufacturer Information. Any unpatented knowledge or information concerning
Manufacturer’s manufacturing processes for the Product(s) that Manufacturer may disclose to
PDI or its employees shall, unless specifically agreed in writing, be deemed to have been
disclosed as a part of the consideration for this Agreement. Manufacturer agrees not to assert
any claim against PDI by reason of any use or alleged use to which any such information or
knowledge may be put by PDI. Manufacturer hereby assigns to PDI all of its right, title and
interest in and to any technology, concepts, data, information or knowledge relating to
modifications of, or enhancements to, the Product(s) or the process by which it is
manufactured and assembled developed by Manufacturer in response to a request by PDI during
the term of this Agreement.
	 
	12.4	 	Privacy. Manufacturer shall respect and preserve the strict confidentiality and
privacy of all personally-identifiable information in respect of any customer, employee or
other identifiable individual related to PDI (“Personal Information”). Personal Information
shall be considered Confidential Information for purposes of this Section 12. Manufacturer
shall comply with, and shall co-operate with and assist PDI to comply with, all provincial,
state, federal and other laws applicable to the Personal Information as amended from time to
time and PDI’s privacy policy. Manufacturer shall only use the Personal Information for lawful
and legitimate business purposes associated with the performance of Manufacturer’s obligations
under this Agreement or as otherwise consented to in writing and in advance by PDI. Without
limiting the generality of the foregoing, Manufacturer shall:

12.4.1 not sell, trade, lend or otherwise voluntarily disclose any Personal Information
to any entity other than PDI; and

12.4.2 establish and maintain adequate security safeguards to ensure that Personal
Information is not vulnerable to unauthorized access and use and is not disclosed or used in
a manner contrary to this Agreement or applicable law.

	12.5	 	PDI may immediately terminate, cancel and revoke Manufacturer’s right to use any

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or all of the Personal Information at any time and for any reason in PDI’s sole discretion,
with or without cause, and without any liability to Manufacturer or any other person
whatsoever, by giving notice of that cancellation to Manufacturer. Upon receipt of such
notice, Manufacturer shall immediately cease use of the Personal Information, and shall
comply with any request by PDI to transfer the Personal Information to PDI or a third party
designated by PDI and thereafter permanently delete and destroy any or all of the Personal
Information and certify through a notary public that the Personal Information has been
permanently deleted and destroyed.

SECTION 13

AUDITS: INSPECTIONS

	13.1	 	PDI, or its designated third-party agent, may audit the Manufacturer’s production and
quality records and inspect the Manufacturer’s facilities and procedures. Any audit or
inspection may be conducted at any time at Manufacturer’s facilities, with at least four (4)
week’s notice at PDI’s sole cost. The audit shall not exceed twice per year. Manufacturer
shall provide PDI’s designated audit or inspection team with access to the relevant
Manufacturer’s production and quality records, facilities and procedures.
	 
	13.2	 	In the event that the audit reveals that Manufacturer is not performing in material
compliance with the terms of this Agreement, then, in addition to any other rights and
remedies PDI shall have under this Agreement and applicable laws, Manufacturer shall reimburse
PDI for the costs of the audit and cure any and all defects within five (5) days of receipt of
notice from PDI.

SECTION 14

ARBITRATION AND GOVERNING LAW

	14.1	 	Disputes. Any controversy or claim arising out of or relating to this Agreement shall
be determined by arbitration administered by HKIAC in accordance with HKIAC Procedures for
Arbitration in force at the date of this contract including such additions to the UNCITRAL
Arbitration Rules as are therein contained (“Rules”). Such arbitration shall be conducted
before an arbitral tribunal consisting of three (3) arbitrators appointed in accordance with
the Rules. The arbitration shall be conducted in the English language. The place of
arbitration shall be Hong Kong International Arbitrations Center(“HKIAC”). Any decision
rendered by the arbitration tribunal shall be final and binding on the Parties, and judgment
thereon may be entered by any court of competent jurisdiction. The Parties expressly agree
that the arbitration tribunal shall be empowered to award and order equitable or injunctive
relief with respect to matters brought before it.
	 
	14.2	 	Governing Law. This Agreement shall be governed by, and interpreted and construed in
accordance with, the laws of the State of California, without reference

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	 	 	to principles of conflicts of laws or to the United Nations Convention on Contracts for the
International Sales of Goods.

SECTION 15

TERM AND TERMINATION

	15.1	 	Term. This Agreement shall take effect as of the date first mentioned above and shall
continue in force for a period of three (3) years from that date. Thereafter, the Agreement
shall automatically renew on an annual basis unless either Party provides written notice to
the other of its intent not to renew at least ninety (90) days prior to the end of the then
current term.
	 
	15.2	 	Termination. Notwithstanding the provisions of Section 15.1, this Agreement may be
terminated in accordance with the following provisions:

	 	15.2.1	 	Either Party may terminate this Agreement at any time by giving notice in writing to
the other Party, which notice shall be effective reciept, should the other Party cease
operations, file a petition of any type as to its bankruptcy, be declared bankrupt,
become insolvent, make an assignment for the benefit of creditors, go into liquidation
or receivership, or otherwise lose legal control of its business.
	 
	 	15.2.2	 	Either Party may terminate this Agreement by giving notice in writing to the other
Party in the event the other Party is in material breach of this Agreement and fails to
cure such breach within fifteen (15) days of receipt of written notice thereof from the
non-breaching Party.
	 
	 	15.2.3	 	PDI may terminate this Agreement in its sole discretion without cause upon giving
sixty (60) days’ advance written notice to Manufacturer.

	15.3	 	Rights and Obligations on Termination. In the event of termination of this
Agreement for any reason, the Parties shall have the following rights and
obligations:

	 	15.3.1	 	Termination of this Agreement shall not release either Party from the
obligation to make payment of all amounts then or thereafter due and payable.
	 
	 	15.3.2	 	The terminating Party shall have the right, at its option, to cancel any or all
Purchase Orders, which provide for delivery after the effective date of termination.
	 
	 	15.3.3	 	Notwithstanding anything to the contrary contained herein, in no event shall either
Party be obligated to issue or accept Purchase Orders during the notice period(s)
specified in this Section 15, except to the extent that the Parties have agreed to
binding forecasts or other written agreement between

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          the Parties.

	 	15.3.4	 	Upon termination of the Agreement by PDI, if Manufacturer has an inventory of the
Product(s) in its possession or control, Manufacturer shall timely inform PDI regarding
the quantity of the Product(s) in its inventory. PDI shall purchase these Product(s)
under the terms of this Agreement. Manufacturer shall not sell the Product(s) to a
third party unless PDI provides its express written consent authorizing such sale.
	 
	 	15.3.5	 	The expiration or termination of this Agreement shall not terminate vested rights of
either Party from any liabilities or obligations incurred under this Agreement prior to
or which by their nature are intended to survive expiration or termination, including
but not limited to, provisions relating to confidentiality, warranties,
indemnification, returns, and proprietary rights.

	15.4	 	No Renewal, Extension or Waiver. Acceptance of the Product(s) by PDI after the
date of termination of this Agreement shall not be construed as a renewal or extension hereof,
or as a waiver of termination by PDI.

SECTION 16

MISCELLANEOUS

	16.1	 	Regulatory Approvals. The Parties shall cooperate with each other in obtaining all
regulatory approvals necessary for the importation of the Product(s) in the country of
destination.
	 
	16.2	 	Force Majeure. Neither Party shall be liable for any direct, indirect, special,
incidental or consequential damages arising out of total or partial failure to perform
hereunder, or delay in such performance, by reason of acts of God, wars, acts of a public
enemy, acts of the governments of any state or political subdivision or any department or
regulatory agency thereof or entity created thereby (whether or not valid), quotas, embargoes,
acts of any person engaged in subversive activity or sabotage, riots, fires, floods,
explosions, or other catastrophes, epidemics or quarantine restrictions, strikes, lockouts or
other labor stoppages, slowdowns or disputes. If a force majeure event shall prevent timely
delivery of Product(s), then PDI may, without liability to Manufacturer, by written notice
cancel its Purchase Order for the delayed Product(s).
	 
	16.3	 	Relationship. This Agreement does not make either Party the employee, agent or legal
representative of the other for any purpose whatsoever. Neither Party is granted any right or
authority to assume or to create any obligation or responsibility, express or implied, on
behalf of or in the name of the other Party. In fulfilling its obligations pursuant to this
Agreement, each Party shall be acting as an independent contractor.

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	16.4	 	Assignment.

	 	16.4.1	 	Assignment. Neither Party shall assign or otherwise transfer its rights and
obligations under this Agreement without the prior written consent of the other Party,
except as provided in this Section 16 or in the event that either Party may assign any
or all of its rights and obligations under this Agreement to any successor in interest
of all or substantially all of the business of such Party by merger, operation of law,
assignment, purchase or otherwise or to any of its affiliates. Any prohibited
assignment shall be null and void. All terms and conditions of this Agreement shall be
binding on and inure to the benefit of the successors and permitted assigns of the
Parties.
	 
	 	16.4.2	 	Assignment of Accounts Receivable. If Manufacturer assigns payments to an
assignee/factor, Manufacturer understands and agrees that Manufacturer and the
assignee/factor shall be required to sign PDI’s standard acknowledgment form to assure
PDI that the assignee/factor understands the rights and obligations being assigned,
including the right of PDI to make offsets.
	 
	 	16.4.3	 	Assignment of Duty Drawback Rights. All drawback of duties and rights thereto
related to import duties paid by Manufacturer or PDI upon importation of the Product(s)
into the customs territory of the United States or other countries of importation, as
applicable, shall accrue to the exclusive benefit of PDI. Manufacturer agrees to
promptly provide PDI with all documents, records, and other supporting information
necessary to obtain any eligible duty drawback for Product(s) purchased by PDI from
Manufacturer under this Agreement.

	16.5	 	Notices. All notices, requests, demands and other communications that are
required or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given if hand-delivered or by a nationally recognized
overnight courier service, receipt confirmed. In the case of notices courier service,
notices shall be deemed effective upon the date of receipt. Notices shall be
addressed to the Parties as set forth below, unless either Party notifies the other of a
change of address, in which case the latest noticed address shall be used.

	 	 	 
	Notices to Manufacturer:	 	Notices to PDI:
	 
	 	 
	C SUN Manufacturing LTD

	 	Photon Dynamics, Inc.
	2-l, Kung 8 Rd,

	 	5970 Optical Drive
	2nd Industrial Park, Lin Kou,

	 	San Jose, CA 95138
	Taipei, Taiwan
	 	 
	Attn: General Manager

	 	Attn: Vice President Operations
	 
	 	 
	Copy to: President

	 	Copy to: CFO

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	Notices to Manufacturer:	 	Notices to PDI:
	Copy to: CFO

	 	Copy to: General Counsel, Legal Dept.

	16.6	 	Entire Agreement. This Agreement, including the exhibits incorporated as an
integral part of this Agreement, constitutes the entire agreement of the Parties with
respect to the subject matter hereof, and supersedes all previous proposals, oral or
written, and all negotiations, conversations or discussions heretofore between the
Parties related to this Agreement. The following exhibits are hereby incorporated
into this Agreement by reference:

Exhibit
A: Specifications and Technical Evaluation

Exhibit B: Price List and Non-Binding Forecasts;

Exhibit C:

Exhibit D:

Exhibit E: Product Acceptance Criteria

Exhibit F: Project Plan;

Exhibit G: Return Material Authorization Procedures; and

Exhibit H: Supplier Compliance Standards.

	16.7	 	Amendment. This Agreement shall not be deemed or construed to be modified, amended,
rescinded, canceled or waived, in whole or in part, other than by written amendment signed by
the Parties hereto, except as expressly provided in this Agreement.
	 
	16.8	 	Severability. In the event that any of the terms of this Agreement are in conflict
with any rule of law or statutory provision or otherwise unenforceable under the laws or
regulations of any government or subdivision thereof, such terms shall be deemed stricken from
this Agreement, but such invalidity or unenforceability shall not invalidate any of the other
terms of this Agreement and this Agreement shall continue in force, unless the invalidity or
unenforceability of any such provisions of this Agreement substantially violates, comprises an
integral part of, or is otherwise inseparable from the remainder of this Agreement.
	 
	16.9	 	Counterparts. This Agreement shall be executed in two or more counterparts, and each
such counterpart shall be deemed an original hereof.
	 
	16.10	 	Waiver. No failure by either Party to take any action or assert any right hereunder
shall be deemed to be a waiver of such right in the event of the continuation or repetition of
the circumstances giving rise to such right.

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	16.10	 	Waiver. No failure by either Party to take any action or assert any right hereunder
shall be deemed to be a waiver of such right in the event of the continuation or repetition of
the circumstances giving rise to such right.

	16.11	 	Draftsmanship. Each of the Parties hereto has been represented by its own counsel.
In the event of a dispute, no provision of this Agreement shall be construed in favor of one
Party and against the other by reason of the draftsmanship of this Agreement.

	16.12	 	Non-Compete. Manufacturer agrees not to compete with PDI for the Product worldwide
in the LCD Repair Market hereunder the cooperation of this Agreement.

	16.13	 	Non-Exclusivity. Nothing in the Agreement shall be construed as creating an
exclusive purchase arrangement or requirements contract between PDI and Manufacturer. PDI
shall have the right to obtain similar Product(s) from any other manufacturer.

 16.14  Translation. This Agreement is drafted in the English language.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first
above written.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PDI:	 	 	 	 	 	 	 	MANUFACTURER:
	 
	Signature:	 	/s/ JAY CHO	 	 	 	Signature:	 	/s/ Stone Shi
	 	 	 	 	Printed Name: JAY CHO

	 	 	 	 	 	 	 	Printed Name: Stone Shi

	 	 	 	 	Title:  VP/GM, LCD Business Group
	 	 	 	 	 	 	 	Title:  GM / HSP Branch
	 	 	 	 	Date:  4/11/08	 	 	 	 	 	 	 	Date:  04/11/2008

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