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Exhibit 10.3  

  
 

    FORM OF
  REGISTRATION RIGHTS AGREEMENT    
  

    Registration Rights Agreement, dated as of            , 200      , by and among Suntek Corporation, a Delaware
corporation (the "Company"),
Thayer-BLUM Funding, L.L.C. ("TBF"), and Thayer-BLUM Funding III, L.L.C. ("TBF III"). 

 
 

W I T N E S S E T H:    

    WHEREAS,
the Company, EFTC Corporation, a Colorado corporation ("EFTC"), K*TEC Electronics Holding Corporation, a Delaware corporation ("K*TEC"), and Thayer-BLUM Funding
II, L.L.C., a Delaware limited liability company ("TBF II"), entered into that certain Amended and Restated Agreement and Plan of Merger, dated as of May 3, 2001 (the "Merger Agreement"); 

    WHEREAS,
the terms of the Merger Agreement provided that (i) EFTC Acquisition Corp., a wholly-owned subsidiary of the Company, would merge with and into EFTC (the "EFTC
Merger") and cease to exist, causing EFTC to remain as the surviving corporation after such merger and to be a wholly-owned subsidiary of the Company, and (ii) K*TEC Acquisition Corp., also a
wholly-owned subsidiary of the Company, would merge with and into TBF II (the "K*TEC Merger") and cease to exist, causing TBF II to remain as the surviving corporation after such merger and to be a
wholly-owned subsidiary of the Company; 

    WHEREAS,
the EFTC Merger and the K*TEC Merger became effective as of            , 200      (the "Effective Time"), at which time TBF, as majority stockholder of
EFTC, and TBF III, as sole membership interest holder in TBF II, became stockholders of the Company; and 

    WHEREAS,
Section 5.16 of the Merger Agreement provided that at the Effective Time, the Company shall enter into a Registration Rights Agreement (the "Agreement") substantially
similar to the Registration Rights Agreement dated as of March 30, 2000, as amended, by and among EFTC and TBF (the "EFTC Registration Rights Agreement"), pursuant to which the Company will
provide registration rights to TBF and TBF III with respect to all shares of the Company Common Stock issued in the EFTC Merger or the K*TEC Merger, or to be issued upon exercise or conversion of any
securities of
EFTC issued in the EFTC Merger, on account of the EFTC securities covered by the EFTC Registration Rights Agreement. 

    NOW,
THEREFORE, in consideration of the premises and the covenants hereinafter contained, it is agreed as follows: 

    1.  Definitions.  The following shall have (unless otherwise provided elsewhere in this Registration
Rights Agreement) the following respective meanings (such meanings being equally applicable to both the singular and plural form of the terms defined): 

    "Agreement"
shall mean this Registration Rights Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall
refer to the Agreement as the same may be in effect at the time such reference becomes operative. 

    "Business
Day" shall mean any day that is not a Saturday, a Sunday or a day on which banks are required or permitted by law, rule and regulation to be closed in the State of New York. 

    "Common
Stock" shall mean the common stock par value $.01 per share of the Company. 

    "Commission"
shall mean the Securities and Exchange Commission or any other federal agency then administering the Securities Act and other federal securities laws. 

    "Demanding
Security Holders" has the meaning set forth in Section 3. 

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    "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same
shall be in effect from time to time. 

    "Holder"
or "Holders" shall mean TBF, TBF III, or a permitted transferee or assignee thereof holding Registrable Securities. 

    "NASD"
shall mean the National Association of Securities Dealers, Inc., or any successor corporation thereto. 

    "RCBA"
means RCBA Strategic Partners, L.P. 

    "Registrable
Securities" shall mean the shares of Common Stock issued to TBF or TBF III in connection with the EFTC Merger or the TBF II Merger, together with any shares of Common
Stock acquired by TBF or TBF III or which TBF or TBF III obtains the right to acquire. 

    "Securities
Act" shall mean the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall
be in effect from time to time. 

    "Thayer"
means, collectively, Thayer Equity Investors IV, L.P. and TC Manufacturing Holdings, L.L.C. 

    2.  Required Registration.  After receipt of a written request from the Holders of Registrable Securities
requesting that the Company effect a registration under the Securities Act covering at least 375,000 of the Registrable Securities, and specifying the intended method or methods of disposition
thereof, the Company shall promptly notify all Holders in writing of the receipt of such request and each such Holder, in lieu of exercising its rights under Section 3 may elect (by written
notice sent to the Company within 10 Business Days from the date of such Holder's receipt of the aforementioned Company's notice) to have Registrable Securities included in such registration thereof
pursuant to this Section 2. Thereupon the Company shall, as expeditiously as is possible, use its best efforts to effect the registration under the Securities Act of all shares of Registrable
Securities which the Company has been so requested to register by such Holders for sale, all to the extent required to permit the disposition (in accordance with the intended method or methods
thereof, as aforesaid) of the Registrable Securities so registered; provided, however, that the Company shall not be required to effect more than five (5) registrations at the request of any
such Holder of any Registrable Securities pursuant to this Section 2 unless the Company shall be eligible at any time to file a registration statement on Form S-3 (or
other comparable short form) under the Securities Act, in which event there shall be no limit on the number of such registrations pursuant to this Section 2. Except as otherwise provided in
Section 5, all expenses of such registration shall be borne by the Company. 

    3.  Incidental Registration.  If the Company at any time proposes to file on its own behalf and/or on
behalf of any of its security holders (the "Demanding Security Holders") a Registration Statement under the Securities Act on any form (other than as a demand registration under Section 2, a
registration of securities in connection with a merger, an acquisition, an exchange offer or other business combination or a Registration Statement on Form S-4 or S-8 or
any successor form for securities to be offered in a transaction of the type referred to in Rule 145 under the Securities Act or to employees of the Company pursuant to any employee benefit
plan, respectively) for the registration of securities, it will
give written notice to all Holders at least 30 days before the initial filing with the Commission of such Registration Statement, which notice shall set forth the intended method of disposition
of the securities proposed to be registered by the Company. The notice shall offer to include in such filing the aggregate number of shares of Registrable Securities as such Holders may request. 

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    Each Holder desiring to have Registrable Securities registered under this Section 3 ("Demanding Security Holder"), shall advise the Company in writing within 10 Business Days
after the date of receipt of such offer from the Company, setting forth the amount of such Registrable Securities for which registration is requested. The Company shall thereupon include in such
filing the number of shares of Registrable Securities for which registration is so requested, subject to the next sentence, and shall use its best efforts to effect registration under the Securities
Act of such shares. If the managing underwriter of a proposed public offering shall advise the Company in writing that, in its opinion, the distribution of the Registrable Securities requested to be
included in the registration concurrently with the securities being registered by the Company or such Demanding Security Holder would materially and adversely affect the distribution of such
securities by the Company or such Demanding Security Holder, then the Company shall give priority for inclusion in such registration (a) first, to the Registrable Securities requested to be
included in such registration (or to such lesser number of Registrable Securities that is equal to the number that, in the opinion of the managing underwriters, can be sold,  pro rata, among the holders
thereof based on the number of Registrable Securities owned), (b) second, to the securities, if any, requested to be
included in such registration pursuant to warrants or options issued to the representatives of the underwriters with respect thereto, (c) third, to the securities the Company proposes to
include in such registration, (d) fourth, to the securities that the Company is otherwise obligated to include in such registration, and (e) fifth, to other securities that the Company
may desire to include in such registration. Except as otherwise provided in Section 5, all expenses of such registration shall be borne by the Company. 

    Notwithstanding
anything to the contrary in this Section 3, if, at any time after receiving such requests and prior to the effective date of the Registration Statement filed in
connection with such registration, the Company for any reason decides not to register securities of the Company, the Company will give written notice of its decision to the holders of Registrable
Securities and thereupon be relieved of its obligation to register any Registrable Securities in connection with such registration and (b) if the Company determines for any reason to delay such
registration, the Company may do so by giving written notice of its decision to the holders of Registrable Securities. 

    4.  Registration Procedures.  If the Company is required by the provisions of Section 2 or 3 to
use its best efforts to effect the registration of the Registrable Securities under the Securities Act, the Company will, as expeditiously as possible: 

    (a) prepare
and file with the Commission a Registration Statement with respect to such Registrable Securities and use its best efforts to cause such Registration
Statement to become and remain effective until the earlier of such time as all of the Registrable Securities have been disposed of in a public
offering or 90 days (plus such period of time that the use of a Registration Statement and prospectus has been suspended pursuant to Section 7(c) hereof); 

    (b) prepare
and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all securities covered by such
Registration Statement until the earlier of such time as all of such securities have been disposed of in a public offering or the expiration of 90 days; 

    (c) furnish
to such selling security holders such number of copies of a summary prospectus or other prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents, as such selling security holders may reasonably request; 

    (d) use
its commercially reasonable efforts to register or qualify the securities covered by such Registration Statement under such other securities or blue sky laws of
such jurisdictions within the United States and Puerto Rico as each Holder shall request (provided, however, that the Company shall not be obligated to
qualify as a foreign corporation to do business under the laws of any jurisdiction in 

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which it is not then qualified or to file any general consent to service of process or take any other action which would subject it to taxation in any jurisdiction where it is not so subject), and do
such other reasonable acts and things as may be required of it to enable such holder to consummate the disposition in such jurisdiction of the securities covered by such Registration Statement; 

    (e) furnish,
at the request of any Holder requesting registration of Registrable Securities pursuant to Section 2, on the date that such shares of Registrable
Securities are delivered to the underwriters for sale pursuant to such registration or, if such Registrable Securities are not being sold through underwriters, on the date that the Registration
Statement with respect to such shares of Registrable Securities becomes effective, (1) an opinion, dated such date, of the independent counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and if such Registrable Securities are not being sold through underwriters, then to the Holders making such request, in customary form and covering
matters of the type customarily covered in such legal opinions; and (2) a comfort letter dated such date, from the independent certified public accountants of the Company, addressed to the
underwriters, if any, and if such Registrable Securities are not being sold through underwriters, then to the Holder making such request and, if such accountants refuse to deliver such letter to such
Holder, then to the Company, in a customary form and covering matters of the type customarily covered by such comfort letters and as the underwriters or such Holder shall reasonably request. Such
opinion of counsel shall additionally cover such other legal matters with respect to the registration in respect of which such opinion is being given as such Holders may reasonably request. Such
letter from the independent certified public accountants shall additionally cover such other financial matters (including information as to the period ending not more than five
Business Days prior to the date of such letter) with respect to the registration in respect of which such letter is being given as the Holders of a majority of the Registrable Securities being so
registered may reasonably request; 

    (f)  enter
into customary agreements (including an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite
or facilitate the disposition of such Registrable Securities; and 

    (g) otherwise
use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as
reasonably practicable, but not later than 18 months after the effective date of the Registration Statement, an earnings statement covering the period of at least 12 months beginning
with the first full month after the effective date of such Registration Statement, which earnings statement shall satisfy the provisions of Section 11 (a) of the Securities Act. 

    (h)  (i)  It shall be a condition precedent to the obligation of the Company to take any action pursuant
to this Agreement in respect of the Registrable Securities which are to be registered at the request of any Holder that such Holder shall furnish to the Company such information regarding the
Registrable Securities held by such Holder and the intended method of disposition thereof as the Company shall reasonably request and as shall be required in connection with the action taken by the
Company. If the Holders fail to provide the information required under this Agreement, the Company may delay the registration until the information is provided. During the effectiveness of a
registration statement hereunder, the Holders will notify the Company of the occurrence of any material change in the information provided by them that is contained in the prospectus included in the
Registration Statement, as then in effect. Whenever in the Company's reasonable judgment it is necessary, the Company will prepare a supplement or amendment to the prospectus so that, as thereafter
delivered to the proposed purchasers of the Registrable Securities, the prospectus will not contain, to the Company's knowledge, any untrue statement of material fact or omit to state any fact
necessary to make the statements in it not misleading, and the Holders will discontinue disposition of the Registrable Securities until the Holders are advised in writing by the Company that the use
of the prospectus may be resumed and are furnished with a supplement or amendment to the prospectus. If 

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the Company shall give any notice to suspend the disposition of Registrable Securities pursuant to the prospectus, the Company shall extend the period of time during which the Company is required to
maintain the Registration Statement effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of such notice through and including the date
the holders are advised by the Company that the use of the prospectus may be resumed or receive the copies of the supplement or amendment to the prospectus. 

    (ii) The
Holders will comply in all material respects with all rules and regulations of the SEC and applicable state securities laws governing the manner of sale of
securities in connection with the disposition of any Registrable Securities pursuant to any Registration Statement. 

    (iii) No
Holder of Registrable Securities may participate in any underwritten offering hereunder unless such Holder (i) agrees to sell such Holder's securities
on the basis provided in any underwriting arrangements approved, subject to the terms and conditions hereof, by the Holders of a majority (by number of shares) of Registrable Securities to be included
in such underwritten offering and (ii) completes and executes all questionnaires, indemnities, underwriting agreements and other documents (other than powers of attorney) reasonably required
under the terms of such underwriting arrangements. 

    5.  Expenses.  All expenses incurred in complying with this Agreement, including, without limitation, all
registration and filing fees (including all expenses incident to filing with the NASD), printing expenses, fees and disbursements of counsel for the Company, the reasonable fees and expenses of
counsel for the selling Holders (selected by those holding a majority of the shares being registered), expenses of any special audits incident to or required by any such registration and expenses of
complying with the securities or blue sky laws of any jurisdiction pursuant to Section 4(d), shall be paid by the Company, except that: 

    (a) all
such expenses in connection with any amendment or supplement to the Registration Statement or prospectus filed more than 90 days after the effective date
of such Registration Statement because any Holder has not effected the disposition of the securities requested to be registered shall be paid by such Holder; and 

    (b) the
Company shall not be liable for any fees, discounts or commissions to any underwriter or any fees or disbursements of counsel for any underwriter in respect of
the securities sold by such Holder. 

    6.  Indemnification and Contribution.  

    (a) In
the event of any registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless
the Holder of such Registrable Securities, such holder's directors and officers, and each other person (including each underwriter) who participated in the offering of such Registrable Securities and
each other person, if any, who controls such Holder or such participating person within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to
which such Holder or any such director or officer or participating person or controlling person may become subject under the Securities Act or any other statute or at common law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any alleged untrue statement of any material fact contained, on the effective date
thereof, in any Registration Statement under which such securities were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein, or any amendment or
supplement thereto, or (ii) any alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading, and shall reimburse such holder or such director, officer or participating person or controlling person for any legal
or any other expenses reasonably incurred by such holder or such director, officer, or participating person or controlling person in connection with investigating or defending any such loss, claim,
damage, liability 

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or action; provided, however, that the Company shall not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon (i) any actual or alleged untrue statement or actual or alleged omission made in such Registration Statement,
preliminary prospectus, prospectus or amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Holder specifically for use therein or (in
the case of any registration pursuant to Section 2) so furnished for such purposes by any underwriter; provided,  further, that with respect to any
preliminary prospectus, such indemnity shall not inure to the benefit of any such indemnified person if the person
asserting any such claims against such indemnified person purchased the securities that are the subject thereof and if such person was not sent or given a copy of the final prospectus at or prior to
confirmation of the sale of such securities to such person in any case where such sending or giving is required by the Securities Act and the untrue statement or omission of a material fact contained
in such preliminary prospectus was corrected in the final prospectus or (ii) by any Holder's failure to comply with any legal requirement applicable to such holder and not contractually assumed
by the Company to deliver a copy of the Registration Statement or prospectus or any amendments or supplements thereto within a reasonable time after the Company has furnished the holder with a
sufficient number of copies of the same. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or such director, officer or
participating person or controlling person, and shall survive the transfer of such securities by such Holder. 

    (b) Each
Holder, by acceptance hereof, agrees to indemnify and hold harmless the Company, its directors and officers and each other person, if any, who controls the
Company within the meaning of the Securities Act against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director or officer or any such person may
become subject under the Securities Act or any other statute or at common law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon
(i) material misstatements in or omissions from information in writing provided to the Company by such Holder specifically for use, and contained on the effective date thereof, in any
Registration Statement under which securities were registered under the Securities Act at the request of such Holder, any preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto or (ii) by any Holder's failure to comply with any legal requirement applicable to such holder and not contractually assumed by the Company to deliver a copy of the
Registration Statement or prospectus or any amendments or supplements thereto within a reasonable time after the Company has furnished the holder with a sufficient number of copies of the same.
Notwithstanding the provisions of this paragraph (b) or paragraph (c) below, no Holder shall be required to indemnify any person pursuant to this Section 6 or to contribute
pursuant to paragraph (c) below in an amount in excess of the amount of the aggregate net proceeds received by such Holder in connection with any such registration under the Securities Act. 

    (c) If
the indemnification provided for in this Section 6 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified
parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred
to 

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above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. 

    The
parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(c) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11 (f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 

    7.  Certain Limitations on Registration Rights.  Notwithstanding the other provisions of this Agreement: 

    (a) The
Company shall not be obligated to register the Registrable Securities of any Holder if, in the opinion of counsel to the Company reasonably satisfactory to the
Holder and its counsel (or, if the Holder has engaged an investment banking firm, to such investment banking firm and its counsel), the sale or other disposition of such Holder's Registrable
Securities, in the manner proposed by such Holder (or by such investment banking firm), may be effected without registering such Registrable Securities under the Securities Act. 

    (b) The
Company shall have the right to delay the filing or effectiveness of a registration statement required pursuant to Section 2 hereof during one or more
periods aggregating not more than 60 days in any twelve-month period in the event that (i) the Company would, in accordance with the advice of its counsel, be required to disclose in the
prospectus information not otherwise then required by law to be publicly disclosed and (ii) in the judgment of the Company's Board of Directors, there is a reasonable likelihood that such
disclosure, or any other action to be taken in connection with the prospectus, would materially and adversely affect any existing or prospective material business situation, transaction or negotiation
or otherwise materially and adversely affect the Company. 

    (c) If,
on or after the effective date of any such Registration Statement, any event shall occur as a result of which the prospectus as then amended or supplemented
includes any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading, or if it shall be necessary at any time to amend the Registration Statement or supplement the prospectus to comply with the Securities Act, the Company
shall notify the Holders whose shares are covered thereby and prepare and file with the Commission an appropriate post-effective amendment to the Registration Statement or supplement to
such prospectus (in form and substance reasonably satisfactory to such Holders) that will correct such statement or omission and shall use its best efforts to have any such post-effective
amendment to the Registration Statement declared effective as soon as possible. The use of such Registration Statement and prospectus shall be suspended until such post-effective amendment
has been declared effective or such prospectus supplement has been filed, as the case may be. 

    8.  Selection of Managing Underwriters.  The managing underwriter or underwriters for any offering of
Registrable Securities to be registered pursuant to Section 2 shall be selected by the Company and shall be reasonably acceptable to the Holders of a majority of the Registrable Securities to
be registered in such Registration Statement and pursuant to Section 3 shall be selected by the Company. 

    9.  Restrictions on Sale After Public Offering.  Except for transfers made in transactions exempt from
the registration requirements under the Securities Act (other than Rule 144 thereunder), the Company and each Holder hereby agree not to offer, sell, contract to sell or otherwise dispose of
any Common Stock within 90 days after the date of any final prospectus relating to any public offering of 

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Common Stock, if underwritten, except pursuant to such prospectus or with the written consent of the managing underwriter or underwriters for such offering. 

    10.  Miscellaneous.  

    (a)  No Inconsistent Agreements.  The Company will not hereafter enter into any agreement with respect to
its securities which is inconsistent with the rights granted to the Holders in this Agreement. 

    (b)  Rule 144.  So long as the Company is subject to the reporting requirements under the Exchange
Act, it shall comply with such requirements so as to permit sales of Registrable Securities by the holders thereof pursuant to Rule 144 under the Securities Act. 

    (c)  Remedies.  Each Holder, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. In any
action or proceeding brought to enforce any provision of this Agreement or where any provision hereof is validly asserted as a defense, the successful party shall be entitled to recover reasonable
attorneys' fees in addition to any other available remedy. 

    (d)  Amendments and Waivers.  Except as otherwise provided herein, the provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to departure from the provisions hereof may not be given unless the Company has obtained the written consent of Holders or a majority
of the Registrable Securities. 

    (e)  Notice Generally.  Any notice, demand, request, consent, approval, declaration, delivery or other
communication hereunder to be made pursuant to the provisions of this Agreement shall be sufficiently given or made if in writing and either delivered in person with receipt acknowledged or sent by or
by facsimile transmission with confirmation received, addressed as follows: 

    (i)  If
to any Holder, at its last known address appearing on the books of the Company maintained for such purpose, which initially shall be: 

Thayer-BLUM
Funding, L.L.C.

c/o Thayer Equity Investors IV, L.P.

1455 Pennsylvania Avenue, N.W., Suite 350

Washington, DC 20004

Attention: Jeffrey W. Goettman

Facsimile: (202) 371-0391 

and:

Thayer-BLUM
Funding, L.L.C.

c/o RCBA Strategic Partners, L.P.

909 Montgomery Street, Suite 400

San Francisco, CA 94133

Attention: Murray A. Indick

Facsimile: (415) 434-3130 

and 

Thayer-BLUM
Funding III, L.L.C.

c/o Thayer Equity Investors IV, L.P.

1455 Pennsylvania Avenue, N.W., Suite 350

Washington, DC 20004

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Attention: Jeffrey W. Goettman

Facsimile: (202) 371-0391 

and: 

Thayer-BLUM
Funding III, L.L.C.

c/o RCBA Strategic Partners, L.P.

909 Montgomery Street, Suite 400

San Francisco, CA 94133

Attention: Murray A. Indick

Facsimile: (415) 434-3130 

with
a copy to: 

Latham &
Watkins

555 Eleventh Street, N.W., Suite 1000

Washington, D.C. 20004-1304

Attention: Eric A. Stern, Esq.

Facsimile: (202) 637-2201 

(ii)  If
to the Company, at 

Suntek
Corporation

2501 West Grandview Rd.

Phoenix, AZ 85023

Attention: James K. Bass

Facsimile: (602) 282-8794 

with
a copy to: 

Greenberg
Traurig, LLP

2375 East Camelback Rd., Suite 700

Phoenix, AZ 85016

Attention: Bruce E. Macdonough, Esq.

Facsimile: (602) 445-8100 

or
at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice.
Every notice, demand, request, consent, approval, declaration, delivery or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, transmitted by facsimile with confirmation of receipt or one Business Day after the same shall have been sent by overnight delivery service. 

    (f)  Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto including any person to whom Registrable Securities are transferred in a transaction exempt from the registration requirement of the Securities
Act, but only, in the case of any such transfer, to the extent that such securities are not saleable under Rule 144(k) under the Securities Act. Each Holder shall give prompt notice to the
Company of any transfer to which this Section 7(f) applies. Upon the request of Thayer or RCBA, the rights granted to TBF or TBF III under this Agreement shall be assigned or transferred to the
requesting party to the extent of their ownership interests in TBF or TBF III; provided, that such assignment shall not be effective until the permitted
transferee or assignee shall have executed an amendment, and become party, to this Agreement. 

    (g)  Headings.  The headings in this Agreement are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof. 

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    (h)  Governing Law; Jurisdiction.  This Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of New York without giving effect to the conflict of laws provisions thereof. Each of the parties hereby submits to personal jurisdiction and waives any objection
as to venue in the courts of the County of New York, State of New York or of the United States of America for the Southern District of New York. Service of process on the parties in any action arising
out of or relating to this Agreement shall be effective if mailed to the parties in accordance with Section 10(e) hereof. The parties hereto waive all right to trial by jury in any action or
proceeding to enforce or defend any rights hereunder. 

    (i)  Severability.  Wherever possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 

    (j)  Entire Agreement.  This Agreement, together with the Merger Agreement, represents the complete
agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. This Agreement supersedes all prior agreements and understandings between the parties
with respect to the subject matter hereof. 

    (k)  Term; Effect of Expiration or Termination.  This Agreement shall be effective as of the date hereof,
and unless earlier terminated in accordance with this Agreement, shall expire on the earliest of: (a) 10 years from the date of this Agreement or (b) such time as all Registrable
Securities have been sold pursuant to an effective Registration Statement under the Securities Act. Moreover, the obligation of Company to register its securities under this Agreement as to any Holder
shall terminate at such time as such Holder can then publicly sell all of its Registrable Securities without registration under the Securities Act pursuant to Rule 144 under the Securities Act
or otherwise without regard to time or sales limitations. In the event of termination or expiration of this Agreement, this Agreement shall forthwith become void and there shall be no liability or
obligation on the part of the parties hereto, except the provisions of Section 6 shall remain in full force and effect and survive any termination of this Agreement. 

11

 

    IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. 

	

 	
 	

SUNTEK CORPORATION
	

 	
 	

By:	
 	

  
 Name:

Title:
	

 	
 	

THAYER-BLUM FUNDING, L.L.C.
	

 	
 	

By:	
 	

  
 Name:

Title:
	

 	
 	

THAYER-BLUM FUNDING III, L.L.C.
	

 	
 	

By:	
 	

  
 Name:

Title:

12

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Exhibit 10.6  

 
 

MODULE SUPPLIER AGREEMENT    
  

This
Module Supplier Agreement ("Agreement") dated February 2, 2000, is by and between Applied Materials, Inc., ("Applied"), a Delaware corporation, having places of business in Santa
Clara, California and Austin, Texas and K*Tec Electronics Corporation ("Supplier") a Delaware corporation, having places of business in Sugar Land, Texas and Milpitas, California. 

In
consideration of the mutual promises and consideration provided for in the Agreement, the parties agree as follows: 

Definitions  

The
following capitalized terms will have the following meanings: 

"Agreement"
means this Module Supplier Agreement and all Exhibits or Attachments, as amended from time to time, all Applied Purchase Order Forms and other Authorized Demand Signals that may be issued
for the purchase of Items, and all NDAs (as defined below). 

"Applied's
Standard Terms and Conditions of Purchase" means all the terms and conditions contained in Exhibit 1 to this Agreement. 

"Applied"
means Applied Materials, Inc., including all of its domestic and international divisions and subsidiaries. 

"Applied's
Forecasts" means Applied's most current 13 week rolling forecast (prepared in the format as set forth in Attachment 4) and all other forecasts prepared by Applied for the manufacture
of Items, as provided by Applied to Supplier. 

"Authorized
Demand Signal" means a fax or EDI transmission or Purchase Order Form containing Applied's supply requirements information that is sent by Applied to Supplier for Blanket Order or Purchase
Order purchases, as described in Section 2.1.5. 

"Blanket
Order" means one of two order methods, also known as "Bus Route" (the other method being Purchase Order, e.g., Spot Buy, defined below) which
may be used by Applied in ordering Items from Supplier, as described in Section 2.1.5. 

"Commercial
Off-The-Shelf" means Items that have been manufactured to the original equipment manufacturer's specifications versus Items manufactured to customer or Applied
build-to-print specifications. 

"Components"
means piece parts which are intended for use in Modules or piece parts which are provided by Supplier to Applied separately from any Modules. 

"Confidential
Information" means (a) Confidential Information, as defined by the NDA, or by any other agreement that constitutes an NDA, and (b) Confidential Information, as defined in
Article 2 of Exhibit 1 to this Agreement or in any other provision of this Agreement. 

"Configurable
Modules" means those configurable products identified by a non-repeating part numbering system established by Applied (in which a Module part numbering follows a particular
convention, i.e., XXXX-cont.). A Configurable Module may contain a number of Components, devices or subassemblies or a combination thereof
which are electrically and/or mechanically connected and performs a specific function. 

"Contract
Price" means the price for an Item as established by or in accordance with Attachment 1. 

"ECO"
means Engineering Change Orders. 

"ERS
Program" shall mean Applied's Evaluated Receipts Settlement Program, which is a system for payment of invoices. 

 

"FGI" means Finished Goods Inventory. 

"First
Article" means a new Item, an Item with revised drawings, or an Item manufactured after a change in Supplier's manufacturing location or other change, which must first be evaluated and accepted
by Applied. 

"Global
Support" means the ability to ship product to any appropriate destination around the world, and technical support via telephone, fax, electronic mail (e-mail), and teleconference
in English. 

"Internal
Applied Data" means planning data, product engineering data, forecasts or specifications from any source on Applied's internal databases. 

"ISS"
means Inspection Standard Sheets that are maintained as part of Supplier's quality system records. 

"Item"
or "Items" means Component(s), Module(s) and any other good(s), software or service(s) that (a) Supplier is to provide to Applied under this Agreement or pursuant to any Applied Purchase
Order and/or related agreements that are governed by this Agreement, as specified from time to time by Applied and (b) are identified in, or have pricing terms determined as set forth in,
Attachment 1 and any amendments to Attachment 1. Items shall be deemed and shall qualify as goods under the Uniform Commercial Code as adopted in Texas. 

"Manufacturing
Information" shall mean all information available to K*Tec related to the manufacture, testing or shipment of any Item(s), including without limitation the Specifications, test data
information, list of suppliers, and all other documentation and information relevant to the Item(s). 

"Modules"
means both Standard Modules and Configurable Modules. 

"NDA"
means any and all agreements between Applied and Supplier for confidentiality, nondisclosure or limitation on use of confidential or other information and includes Article 2 of
Exhibit 1 to this Agreement. 

"Purchase
Order" means one of two order methods, also known as "Spot Buy" (the other method being Blanket Order, defined above) which may be used by Applied in ordering Items from Supplier, as
described in Section 2.1.5. 

"Purchase
Order Form" means Applied's purchase order form, except that Applied's Standard Terms and Conditions of Purchase contained in Exhibit 1 to this Agreement will supersede the terms and
conditions stated on the reverse side of the purchase order form. 

"Source
Inspections" shall mean that term as defined in the Quality Framework (Attachment 15). 

"Specifications"
means authorized drawings, designs, specifications and product requirements applicable to the Items. 

"Standard
Modules" means those products discretely identified by a single Applied part number. A Standard Module may contain a number of Components, devices or subassemblies or a combination thereof
which are electrically and/or mechanically connected and performs a specific function. 

"Subassembler"
means a third party selected by Applied for outsourcing of an assembly or module. 

"Supplier"
means K*Tec Electronics Corporation, including all of its divisions, subsidiaries and affiliates. 

"Supplier
Performance Plan" means a formal quality plan for Supplier developed jointly by Supplier and Applied which complies with the requirements of Attachment 16. 

"Will"
or "shall" have the same meaning and are used to convey an affirmative duty or obligation (i.e., a requirement). 

2

 

"WIP" means work-in-process. 

"Year
2000 Compatible" means that upon the occurrence of the year 2000, all information systems or items that store, process, record, incorporate or present calendar dates shall lose no functionality,
shall continue to operate without error, and shall accurately and automatically process all data pertaining to the introduction of any and all dates and date related data. 

	 	1.  Scope
	

 	

1.1	
 	
Intention / Description of Agreement Principles
	

 	

 	
 	

This Agreement defines the relationship and requirements between Applied and Supplier to ensure a consistent supply of Items that meet Applied's Specifications. Decisions regarding future purchases from Supplier will be based in part upon Supplier's
performance under this Agreement as stated in Supplier's Performance Plan as shown in Attachment 16 and Supplier's achievement toward Applied's business objectives.
	

 	

1.2	
 	
Addresses and Contact Persons
	

 	

 	
 	

Supplier:
	

 	

 	
 	

K*Tec Electronics

1111 Gillingham Lane

Sugar Land, Texas 77478

Phone: 281-243-5000

Fax: 281-243-5440
	

 	

 	
 	

Executive Vice President: Mike Gibbons (e-mail address: gibbonsm@ktecelec.com)

General Manager: Karla Sanford (e-mail address: karla@ktecelec.com)

Director Quality: Kevin Sauer (e-mail address: sauerk@ktecelec.com)
	

 	

 	
 	

Applied:
	

 	

 	
 	

Applied Materials, Inc.

9700 U.S. Hwy. 290 East

Austin, Texas 78724

Phone: 512-272-6376

Fax: 512-272-3908

Attn: Giovanni Ghisletti (email address is GiovanniGhisletti@AMAT.com)
	

 	

 	
 	

Each party shall advise the other in writing of any change to such party's contact persons.
	

 	

 	
 	

 

3

 

	

 	

1.3	
 	
Entire Agreement
	

 	

 	
 	

This Agreement, including any Exhibits or Attachments which are incorporated by reference into this Agreement, sets forth the entire understanding and agreement of the parties as to the subject matter of this Agreement and supersedes all prior
agreements, understandings, negotiations and discussions between the parties as to the subject matter. No amendment to or modification of this Agreement will be binding unless in writing and signed by a duly authorized representative of each party,
except for amendments or modifications which Applied is permitted to initiate by posting or notice under the third paragraph of this Section 1.3. In the event of any conflict between or among any documents which are part of this Agreement,
precedence shall be given first to the text of this Agreement and then to its Attachments, second to Applied's Standard Terms and Conditions of Purchase (Exhibit 1), and third to any Specifications or other technical documents. The following
specific change is made to Article 7 of Exhibit 1:
	

 	

 	
 	

Supplier shall have no obligation to maintain or furnish to Applied the records and information referred to in Article 7 of Exhibit 1 unless Applied so requests in writing. If Applied so requests, it will meet with K*Tec and if maintaining
or furnishing such information and records cause K*Tec more than an insubstantial increase in costs, then Applied will agree to a reasonable reimbursement of such increased costs.
	

 	

 	
 	

In the event of any termination or expiration of this Agreement, the provisions of Articles 2, 3, 4, 5, 9,11, 17, 20, 21, 22, and applicable provisions of 25, 26 and 27 of Exhibit 1 and Sections 1.2, 1.3, 2.3, 2.9, 4.2, 4.5, 4.8, applicable
provisions of 4.10, 5.1, 5.2, 7, 8 and 9 of this Agreement will remain in full force and effect until specifically terminated by mutual written agreement between the parties.
	

 	

 	
 	

The Attachments to this Agreement which are identified on the List of Attachments at the end of this Agreement as subject to modification or amendment by Applied upon notice, will be deemed to be the most current versions of such Attachments, as
updated and revised from time to time by Applied in accordance with this paragraph. Applied will post updates or revisions to current versions of Attachments on an Applied website which shall be made available to Supplier or will provide other notice
to Supplier. If Supplier fails to object within thirty (30) days after the date on which such Attachment has been updated or revised on Applied's website or other notice provided to Supplier, then such new Attachment, as updated or revised,
shall be deemed to be accepted by Supplier as the Attachment to this Agreement.
	

 	

1.4	
 	
Items Covered
	

 	

 	
 	

All Items supplied to Applied by Supplier (and all other Items which may be sold by Supplier to Applied during the term of this Agreement, even if sold via a separate Purchase Order) will be covered by this Agreement. The list of Items covered by
this Agreement is shown in Attachment 1. New Items may be added to Attachment 1 upon mutual agreement of Applied and Supplier from time to time.
	

 	

1.5	
 	
Duration of Agreement
	

 	

 	
 	

This Agreement commences on and as of the date of the later of the two signatures shown in Section 10, provided each party shall have executed and delivered one or more counterparts of this Agreement to the other (the "Effective
Date").

4

 

	

 	

 	
 	

This Agreement will remain in effect for a term from the Effective Date through August 2, 2003 (the "Initial Term") unless earlier terminated in accordance with its provisions. Upon termination or expiration of the Initial Term, Applied may, at
Applied's option, extend this Agreement subject to all other provisions of this Agreement for an additional period of up to 6 months, by notifying Supplier in writing of such extension. Any subsequent extension after an extension effected by
Applied under the preceding sentence, may be granted upon the mutual agreement of both parties.
	

 	

1.6	
 	
Covenant of Manufacturing Location
	

 	

 	
 	

Supplier shall manufacture the Items in the Supplier's Houston, Texas area manufacturing facility or in a location, within the United States, not farther from the Buyer's facilities in Austin, Texas than such Houston, Texas area manufacturing
facilities and of quality and manufacturing capacity reasonably determined by Applied to be acceptable, unless Applied otherwise agrees in writing. Additionally, Supplier further agrees to establish and maintain throughout the term of this Agreement,
technical, distribution and support facilities in the Austin, Texas area to supply and support Items to Applied's Austin manufacturing facilities and establish and maintain throughout the term of this Agreement, technical, distribution and support
facilities in the Milpitas, California area to provide technical and manufacturing support to Applied's Santa Clara, California engineering and pilot manufacturing operations.
	

 	

1.7	
 	
Supplier Termination
	

 	

 	
 	

Supplier may terminate this Agreement only pursuant to this Section 1.7. Supplier may terminate this Agreement in whole, but not in part, with or without cause pursuant to the following procedure:

	

 	
 	

(a)	
 	

Supplier shall notify Applied in writing of its intention to terminate stating the reasons for taking such action. Following Applied's receipt of such notice, Supplier and Applied shall continue to perform their respective obligations under this
Agreement, but shall also consult to determine if a mutually acceptable basis exists for Supplier to rescind such notice of intention to terminate.
	

 	
 	

(b)	
 	

If Supplier does not rescind such notice of intention to terminate by the 180th day after Applied received such notice of intention to terminate, Supplier may then give Applied notice of termination, which notice must be in writing and
must specify an effective date of termination that may not be any earlier than the 180th day after Applied receives the notice of termination.

	

 	

1.8	
 	
Wind Down Provisions
	

 	

 	
 	

As used herein, the term "Wind Down Period" means the 6 month period (or such longer time as may be mutually agreed) between the issuance by Supplier of a notice of termination pursuant to Section 1.7(b), and the date on which termination
becomes effective.
	

 	

 	
 	

During the Wind Down Period, Supplier shall continue to supply Items to Applied on the terms and conditions of this Agreement. During the Wind Down Period, Supplier shall cooperate with Applied to train those who will take over the manufacturing of
Items and to implement the provisions of this Agreement relating to transition activities in connection with termination, including without limitation the following:

	

 	
 	

(a)	
 	

The parties shall comply with Article 27 of Exhibit 1.

5

 

	

 	
 	

(b)	
 	

Applied's payment obligation in connection with a Supplier termination pursuant to Section 1.7 for materials, parts and Items (both FGI and work-in-process) shall be governed by Article 26 of Exhibit 1.
	

 	
 	

(c)	
 	

Without limiting the foregoing, Supplier will take any and all steps necessary to place Applied in the same position as Supplier with respect to the manufacturing, servicing and other activities above mentioned relating to materials, parts and
Items.

	 	2.  Logistics Framework
	

 	

2.1	
 	
Operation of Agreement
	

 	

 	
 	

2.1.1	
 	

Operating Calendar & Holidays
	

 	

 	
 	

 	
 	

This Agreement operates by Applied's fiscal year calendar, shown in Attachment 2. Recognized holidays are those holidays shown on Applied's fiscal year calendar. Should any discrepancies between the operating calendars of Applied and Supplier
arise, Supplier will adjust its operations so that Applied's operations are unaffected. Applied reserves the right to modify its operating calendars as needed.
	

 	

 	
 	

2.1.2	
 	

Forecasts
	

 	

 	
 	

 	
 	

Supplier's production of Items will be guided by Applied's Forecasts. Supplier will plan, manufacture, and stock inventory to meet Applied's Forecasts, and Supplier will keep each of Applied's Forecasts for audit purposes for a minimum of twelve
(12) months as verification of authorized inventory levels. All of Applied's Forecasts are Confidential Information to be used only by Supplier to meet its obligations to Applied under this Agreement and handled by Supplier as Confidential
Information of Applied.
	

 	

 	
 	

2.1.3	
 	

Accelerated Deliveries
	

 	

 	
 	

 	
 	

Applied may require Items on an accelerated basis, either in addition to or in place of Items forecast for delivery or scheduled for delivery at a later date. If feasible, as determined by Applied and Supplier, such Items will be provided by Supplier
on such accelerated basis, in accordance with the pricing terms of Attachment 1 except for accelerated deliveries that are in excess of the Flexibility Requirements of Section 2.5. As to accelerated deliveries of Items that exceed the quantity
variances determined under Section 2.5, and upon prior written approval of Applied, Supplier may incur and charge Applied for (i) expenses or expedited delivery or freight expenses incurred in making accelerated delivery and (ii) costs,
 in excess of normal cost of operations of Supplier, for overtime operation in manufacturing the Items for accelerated delivery. Unless otherwise agreed to by Applied, such accelerated deliveries will not affect the delivery schedule of any Items
currently allocated for forecast requirements. Lead times for each accelerated delivery will be agreed upon by both parties. If Supplier fails to deliver any such Item at the scheduled time, then, at Applied's request, Supplier shall use expedited
delivery methods to complete the shipment at Supplier's expense.
	

 	

 	
 	

 	
 	

 

6

 

	

 	

 	
 	

2.1.4	
 	

Delivery Guidelines
	

 	

 	
 	

 	
 	

Supplier will manufacture, sell and deliver Items to Applied for which an Authorized Demand Signal has been issued (subject to the other provisions of this Agreement) and will meet Applied's delivery requirements on time. Shipments to Applied or to
other locations specified by Applied by Supplier will be delivered in the correct quantities ordered by Applied.
	

 	

 	
 	

 	
 	

For Items ordered via Purchase Order, deliveries will be accepted on the requested date or up to two (2) days before the requested date. For Items ordered via Blanket Order (Bus Route), deliveries will be timely only if made within the times and
at the location specified.
	

 	

 	
 	

2.1.5	
 	

Type of Orders for Items

	

 	

 	
 	

 	
 	

2.1.5.1	
 	

Mechanics for Ordering
	

 	

 	
 	

 	
 	

 	
 	

Supplier agrees to supply Items to Applied pursuant to orders delivered to Supplier using one of the two following order systems:
	

 	

 	
 	

 	
 	

 	
 	
Blanket Order (e.g., Bus Route): At least daily, Applied will send via EDI transmission an Authorized Demand Signal to Supplier containing Applied's material requirements, which will be
organized according to part numbers and will represent Applied's daily purchase from the Supplier.
	

 	

 	
 	

 	
 	

 	
 	
Purchase Order (e.g., Spot Buy): As needed, Applied will send via fax or EDI transmission or in written form an Authorized Demand Signal to Supplier containing Applied's material
requirements information, which will be organized according to part numbers and will represent an order from Applied for a one-time purchase from Supplier.
	

 	

 	
 	

 	
 	

2.1.5.2	
 	

Delivery Mechanics
	

 	

 	
 	

 	
 	

 	
 	

The specific mechanics for delivery of Items to Applied are outlined on Attachment 3. Applied may request that Supplier manufacture and deliver Items on a lean manufacturing system; if so, the requirements and specifics for such system shall be
included in Attachment 3.

	 	 	 	2.1.6	 	Electronic Commerce
	 	 	 	 	 	Supplier is required to communicate with Applied using EDI ANSI X.12 standards and encouraged to use either GEIS or EDICT software.
	 	 	 	2.1.7	 	Changes to Logistics
	 	 	 	 	 	Applied may on occasion change any aspect of any logistics requirement; such changes shall be governed by the provisions of the third paragraph of Section 1.3 above, or may, as Applied determines to be necessary, be
governed by Article 24 of Exhibit 1.

7

 

	 	2.2	 	Inventory Levels and Tracking
	

 	

 	
 	

Supplier shall maintain FGI of the Items on Attachment 1 in order to manage demand fluctuations. Unless stated otherwise in Attachment 1, for each Item identified in Attachment 1 which requires FGI, Supplier will maintain a minimum FGI of one
(1) week of supply and a maximum of two (2) weeks of supply of each Item, based on the most recent of Applied's Forecasts.
	

 	

 	
 	

Supplier shall monitor, track, and report its WIP inventory. In the future, Applied will implement regular reporting mechanisms in which Supplier will participate if requested by Applied.
	

 	

2.3	
 	
Excess and Obsolete Items

	 	 	 	2.3.1	 	Settlement Amount
	

 	

 	
 	

 	
 	

Applied will not be responsible for excess Items or obsolete Items other than as described in this Section 2.3. No claim shall be made under this Section 2.3 arising out of any termination by Applied pursuant to Article 25 or 26 of
Exhibit 1.

	

 	
 	

(a)	
 	

An Item, subassembly or Component will be considered "obsolete" if Applied issues an ECO that renders the Item, subassembly or Component not usable in manufacturing Items for Applied, but only, in the case of subassemblies or Components, if the same
cannot be resold to others or incorporated into other saleable products. If Supplier receives an ECO that causes an Item, subassembly or Component to be obsolete, Supplier shall within five (5) days after receipt of such ECO notify Applied in
writing of the quantities and costs of the obsolete Items, subassemblies or Components in inventory, specifying the stage of completion of Items that are part of work in process and the number of Items in FGI. With such notice, Supplier shall provide
Applied with all necessary documentary support for such conclusions, including evidence that Items then in work-in-process or FGI were manufactured in accordance with this Agreement and Applied's Forecasts, and evidence that subassemblies and
Components purchased from third parties were purchased in compliance with Supplier's obligations under this Agreement and Applied's Forecasts. For purposes of this Section 2.3.1 (a), the manufacture or purchase of an Item, subassembly or
Component will not be deemed authorized by an Applied Forecast unless such forecast called for the delivery of the Item to Applied within four weeks after the date manufacture was completed or, in the case of purchases, the Supplier received such
Item, subassembly or Component in support of such forecast. The four week period referred to in the preceding sentence will be extended for long lead time Items identified in Attachment 1 to the period applicable to such long lead time Item as stated
in such Attachment. Upon receipt of such notice, Applied shall review the matter with Supplier. If directed by Applied, Supplier shall disassemble any obsolete Items that are FGI or work in process inventory so that the Component parts and
subassemblies may be sold to others or incorporated into saleable products. Supplier will not however sell those subassemblies or Components to Applied competitors or Applied customers. If the ECO is not delayed or modified to avoid such obsolescence,
 Applied shall purchase any such obsolete FGI Items or subassemblies at the Contract Price, and Applied shall purchase at Supplier's out-of-pocket cost any obsolete materials or parts that Supplier acquired from third parties that cannot be resold by
Supplier to others, or incorporated into other saleable products.

8

 

	

 	
 	

(b)	
 	

Within 30 days after each fiscal quarter of Applied, the Parties will review excess Items (including subassemblies and Components), as follows:

	 	 	(i)	 	Supplier will evaluate and report to Applied in writing the quantity of FGI, subassemblies and Components on hand to determine what quantities are "Excess", which, subject to paragraph (ii) below, shall be those that
as of the evaluation date have been manufactured or purchased in accordance with Applied's Forecasts and that have not been ordered via Authorized Demand Signals and are not scheduled to be ordered based on the most recent Applied's Forecast (for the
next 13 weeks of demand). For purposes of this Section 2.3.1(b) FGI, subassemblies and Components will be deemed ordered and shipped on a first-in-first-out or first-manufactured- first-out basis.
	 	 	(ii)	 	All such FGI, subassemblies and Components that Supplier believes are in excess must be validated by Applied by reference to Applied's Forecasts. For purposes of this Section 2.3.1(b), the manufacture or purchase of
an Item, subassembly or Component will not be deemed authorized by an Applied Forecast unless such forecast called for the delivery of the Item to Applied within four weeks after the date manufacture was completed or, in the case of purchases, the
Supplier received such Item, subassembly or Component in support of such forecast. The four week period referred to in the preceding sentence will be extended for long lead time Items identified in Attachment 1 to the period applicable to such long
lead time Item as stated in such Attachment. Applied may direct Supplier to disassemble any Items that are FGI or work-in-process inventory so that the Components and subassemblies may be sold to others or incorporated in other saleable products.
Should Supplier incur costs in excess of its normal cost of operations for the disassembly activity, the Supplier may submit such charges to Applied for concurrence of payment by Applied prior to the disassembly activity. Supplier will not, however,
sell those subassemblies or Components to Applied competitors or Applied customers. Those subassemblies and Components which can be handled in such fashion will not be included in determining excess subassemblies and Components.
	 	 	(iii)	 	FGI, subassemblies and Components that are determined to be Excess in accordance with paragraphs (a) and (b) above must be held by Supplier for a minimum of two consecutive quarterly review periods before
Applied incurs any obligation to make payment. At each quarterly review period, the parties will identify those Excess FGI, subassemblies and Components which are eligible for payment, and for those Applied will pay Supplier a cost of carrying equal
to 12% annualized rate (payable at 3% per quarter) of the mutually agreed inventory value until such time as they are consumed or scrapped as authorized by Applied. Applied shall cease to be obligated to pay carrying costs if and when Applied
terminates the Agreement pursuant to Article 25 of Exhibit 1.

9

  

	

 	
 	

(iv)	
 	

At each quarterly review, the parties will identify the Excess inventory for which Applied has paid a carrying charge for at least two quarters and which has a forward quarterly demand (based on the most recent Applied's Forecast) of zero. Applied
will either authorize such Excess inventory to be scrapped or shipped to Applied, and will pay Supplier the Contract Price for any FGI Items or subassemblies and will pay Supplier its out-of-pocket costs for any subassemblies or Components that
Supplier acquired from third parties.

	

 	
 	

 	
 	

2.3.2	
 	

Disposal of Excess and Obsolete Items
	

 	
 	

 	
 	

 	
 	

Supplier agrees to physically dispose of all excess and obsolete Items as directed by Applied's authorized purchasing representative. Should Supplier incur costs in excess of its normal cost of operations for the disposal activity, the Supplier may
submit such charges to Applied for concurrence of payment by Applied prior to the disposal activity. Items or parts that are to be delivered to Applied's facilities must be delivered in accordance with the requirements of this Agreement and/or any
supplemental instructions provided by Applied's authorized purchasing representative. In lieu of delivery to Applied, Applied may elect to request that Supplier destroy or otherwise scrap these Items or parts such that they are non-functional.
Supplier agrees to destroy or otherwise scrap these Items or parts in a manner that is satisfactory to Applied and to provide Applied with a certification of destruction and/or evidence of proper disposal of such Items or parts.
	

 	
 	

2.4	
 	
Response Requirements
	

 	
 	

 	
 	

Supplier shall provide an initial response (via telephone or electronically) to inquiries of Applied within one business day, except when a shorter period of time for a response may be required to support Applied's production requirements. Supplier
agrees to timely implement changes required by Applied or implement a plan to resolve problems raised by Applied and to expeditiously pursue completion of the same.
	

 	
 	

2.5	
 	
Flexibility Requirements
	

 	
 	

 	
 	

Supplier agrees to perform regular capacity planning and to demonstrate upside/downside manufacturing flexibility in accordance with changes in demand volume at Applied. For Blanket Order Items, Supplier shall be capable of manufacturing to unplanned
sustained increases/decreases in demand above/below Applied's Forecasts as indicated below. Supplier allows the following minimum increases/decreases to Purchase Order Item quantities above/below the quantities originally requested:

	Weeks until Delivery Date
 
	 	< 1 weeks
	 	< 2 weeks
	 	< 4 weeks
	 	< 8 weeks
	 	16 + weeks

	
 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	Flexibility +/-	 	0%	 	25%	 	50%	 	100%	 	200%

	

 	
 	

2.6	
 	
On-Site Support Requirements
	

 	
 	

 	
 	

As determined by Applied, Supplier may be asked to provide appropriate or necessary personnel reasonably required to support on-site operations at Applied's facilities. On-site representatives will comply with all Applied facilities requirements.
Applied, at its sole discretion, may require Supplier to execute an On-site Representative Agreement, in the form set forth in Attachment 18, and may require the On-site Representative to execute an NDA, prior to issuing a building badge to
Supplier's representative(s).

10

 

	

 	
 	

 	
 	

In the event that Supplier's personnel will provide such support at the premises of a customer of Applied, Supplier agrees to comply with the requirements and restrictions imposed by such customer for access to its premises (in addition to the terms
of any On-site Representative Agreement executed by Supplier).
	

 	
 	

2.7	
 	
Global Support
	

 	
 	

 	
 	

Upon request by Applied, Supplier will provide Global Support to Applied and Applied's customers for all Items that Supplier provides to Applied.
	

 	
 	

 	
 	

Supplier shall provide technical assistance and product support services to Applied, seven days a week, 24 hours a day, at no additional charge. Supplier agrees to have an established and deployed Global Support capability. Supplier may utilize
a Supplier distributor or other qualified entity designated by Supplier to meet this requirement. Supplier is expected to use best efforts to provide a resolution to requests for assistance.
	

 	
 	

2.8	
 	
Turn-Around Time For Repairs
	

 	
 	

 	
 	

At Applied's request and direction, Supplier will provide those Items and all support necessary to perform repairs and/or replacement of defective or damaged Items within the time period necessary to comply with Applied's U.S. based production
requirements and Applied's Global Support requirements. In response to a request for support for Applied's U.S. based production, Supplier will contact Applied and acknowledge the request for support within one hour and will complete the repair
and/or replacement within four (4) hours, as requested by Applied. In response to a request for support for Global Support requirements, Supplier will contact Applied and acknowledge the request for support within one hour and will complete the
repair and/or replacement within twenty-four (24) hours.
	

 	
 	

2.9	
 	
Information
	

 	
 	

 	
 	

2.9.1	
 	

Applied Planning Systems and Databases
	

 	
 	

 	
 	

 	
 	

Supplier may be given electronic access to Internal Applied Data, and such access may, at Applied's sole discretion, be subject to certain further limitations and requirements on Supplier, including without limitation Supplier-provided employee
control lists, audit rights and requiring Supplier's employees to execute an NDA with Applied. This access, if granted, shall only be used by Supplier to facilitate Supplier's production and delivery of Items to support Applied's requirements.
Supplier's access to, and utilization of, all Internal Applied Data is subject to the confidentiality terms of this Agreement and any NDA between the parties. Applied may terminate Supplier's access to Internal Applied Data at any time at the
discretion of Applied.
	

 	
 	

 	
 	

2.9.2	
 	

Applied New Product Plans
	

 	
 	

 	
 	

 	
 	

Supplier will, on occasion and at Applied's discretion, be invited to forums in which Applied's new product plans are shared. Any Applied new product plans provided to Supplier are subject to the confidentiality provisions of this Agreement and any
NDA between the parties.
	

 	
 	

 	
 	

 	
 	

 

11

 

	

 	
 	

 	
 	

2.9.3	
 	

Compliance with Securities Laws.
	

 	
 	

 	
 	

 	
 	

Supplier agrees that all Internal Applied Data and Applied new product plans are Confidential Information of Applied, and that this Confidential Information is material, non-public information, the possession of which prohibits Supplier and its
employees, contractors, representatives and agents from (1) buying or selling Applied's securities (stock, options, etc.) ("insider trading") until after the information has been disclosed to the public and absorbed by the market (usually three
business days), and (2) passing the Confidential Information on to anyone who may buy or sell Applied securities ("tipping"). Supplier shall comply with all federal and state securities laws prohibiting insider trading and tipping, and shall
immediately notify Applied if Supplier or any of its employees, contractors, agents or representatives violates any such laws. Supplier also agrees to execute additional NDAs or other agreements as may be required to comply with applicable securities
laws.
	

 	
 	

2.10	
 	
Packaging and Transportation
	

 	
 	

 	
 	

2.10.1	
 	

Packaging and Shipment
	

 	
 	

 	
 	

 	
 	

Supplier will have all Items packaged "ready for use" in accordance with Applied's packaging specification (Attachment 6). Supplier will mark and identify every Item in compliance with Applied's part identification specifications and requirements. In
addition, Applied may require specific fit-for-use packaging for certain Items and/or deliveries and costs for fit-for-use packaging will be negotiated between Supplier and Applied prior to implementation.
	

 	
 	

 	
 	

2.10.2	
 	

Bar Coding
	

 	
 	

 	
 	

 	
 	

All shipment of Items shall be bar coded to Applied's specifications in Attachment 5.
	

 	
 	

 	
 	

2.10.3	
 	

Transportation Requirements
	

 	
 	

 	
 	

 	
 	

Items identified as POU Items on Attachment 1 will be transported FOB Destination, Freight Collect, (the designated "ship to" location which is identified by Applied) in accordance with Attachment 3. Items not identified as POU Items on Attachment 1
will be transported, FOB Destination Freight Prepaid in accordance with Attachment A to Applied's Corporate Transportation Routing Guide (Attachment 7) to this Agreement. The risk of loss during transportation for Items not identified as POU
Items on Attachment 1 shall be governed by Article 14 of Exhibit 1.
	

 	
 	

2.11	
 	
Payment
	

 	
 	

 	
 	

2.11.1	
 	

Invoices
	

 	
 	

 	
 	

 	
 	

Invoices shall contain the following information: Purchase Order number, Item number, description, sizes, quantities, unit prices, and extended totals in addition to any other information requested. Applied's payment of an invoice does not represent
unconditional acceptance of Items and will be subject to adjustment for errors, shortages, or defects. Applied may at any time set off any amount owed by Applied to Supplier against any amount owed by Supplier to Applied.
	

 	
 	

 	
 	

 	
 	

 

12

 

	

 	
 	

 	
 	

 	
 	

All invoices must be sent directly to Applied's Accounts Payable Department in Austin:
	

 	
 	

 	
 	

 	
 	

            Accounts Payable

            Applied Materials

            9700 US Highway 290 East M/S 4200

            Austin, TX 78724-1199
	

 	
 	

 	
 	

 	
 	

Applied is authorized by Supplier to make payments under this Agreement by either check or electronic funds transfer. Supplier will provide Applied with the required bank routing coordinates and other information that may be required by Applied to
establish electronic funds transfer capability.
	

 	
 	

 	
 	

 	
 	

If Supplier participates in Applied's ERS Program, Supplier will be paid based on the quantity of the Items received by Applied and the Purchase Order or Contract Price, as applicable, and Supplier will not provide invoices to Applied. Supplier will
be responsible for the verification of all prices and quantities prior to shipment. All applicable sales and use tax will be remitted to Supplier with payment by Applied. Supplier must include a valid packing slip number or package ID on each package
or shipment.
	

 	
 	

 	
 	

2.11.2	
 	

Payments
	

 	
 	

 	
 	

 	
 	

Payment will be made net thirty (30) days from receipt of:

	

 	
 	

 	
 	

 	
 	

 	
 	

(a)	
 	

invoice, in form and substance acceptable to Applied, or
	

 	
 	

 	
 	

 	
 	

 	
 	

(b)	
 	

delivery and acceptance of the invoiced Item(s), whichever is later.

	

 	
 	

 	
 	

2.11.3	
 	

Payment Upon Consumption Model
	

 	
 	

 	
 	

 	
 	

Payment Upon Consumption means a payment process by which Supplier would retain title of all inventory in transit to Applied and until such time as Applied has fully integrated such inventory into the manufacturing process. At such point, Applied
would acquire title to the inventory and would be obligated to pay Supplier for the inventory. Supplier would be paid for such inventory upon the full integration of such inventory into the manufacturing process or within a minimum period of time
from the commencement of the integration process.
	

 	
 	

 	
 	

 	
 	

Implementation of the Payment Upon Consumption process will be by mutual agreement of the parties. Supplier will not unreasonably withhold acceptance of a Payment Upon Consumption model.
	

 	
 	

2.12	
 	
Disaster Recovery Plan and Year 2000 Compliance
	

 	
 	

 	
 	

Supplier shall develop and provide to Applied, upon request, reasonable information describing or evidence of a disaster recovery plan that includes emergency back up capacity, escrow of information as set forth in Section 4.10, and appropriate
record protection and recovery. Furthermore, Supplier represents that its information systems are Year 2000 Compatible and hereby grants Applied the right to verify Supplier's internal processes for ensuring compliance with this provision. Supplier
agrees to include this same requirement in its purchase orders to its supply base and to provide reasonable efforts to verify that its supply base is compliant with the requirements herein.
	

 	
 	

 	
 	

 	
 	

 

13

 

	

 	
 	

2.13	
 	
Performance Constraints
	

 	
 	

 	
 	

2.13.1	
 	

Constraints
	

 	
 	

 	
 	

 	
 	

Supplier is responsible for anticipating (1) any inability on its part to perform its obligations and (2) any limitations in meeting the objectives of this Agreement with regard to manufacturing, delivery and other required performance.
Supplier is also responsible for informing Applied when such constraints will occur and initiating action plans to resolve them. Typical constraints might include, but are not limited to:

	

 	
 	

 	
 	

 	
 	

 	
 	

(a)	
 	

Consumption over forecast
	

 	
 	

 	
 	

 	
 	

 	
 	

(b)	
 	

Consumption under forecast
	

 	
 	

 	
 	

 	
 	

 	
 	

(c)	
 	

Quality problems
	

 	
 	

 	
 	

 	
 	

 	
 	

(d)	
 	

Capacity/production problems
	

 	
 	

 	
 	

 	
 	

 	
 	

(e)	
 	

Sub-tier supplier supply-chain management problems
	

 	
 	

 	
 	

 	
 	

 	
 	

(f)	
 	

Other business issues

	

 	
 	

 	
 	

2.13.2	
 	

Resolution of Performance Constraints
	

 	
 	

 	
 	

 	
 	

Supplier will notify the Supplier Account Team Lead as soon as a constraint is identified and promptly advise Applied of an action plan to resolve the constraint. Applied will work with Supplier to determine the impact of the identified constraint
and to approve and execute or disapprove the action plans.
	
3.  Pricing Framework
	

 	
 	

3.1	
 	
Contract Prices
	

 	
 	

 	
 	

Attachment 1 contains (i) Contract Prices for certain Items; (ii) the cost elements of Supplier (e.g., labor, material, overhead, burden) by which the Contract Prices for Modules have been determined; (iii) the pricing models by which
Contract Prices for certain Items may be established on an ongoing basis; and (iv) committed cost reductions by Supplier during the term of the Agreement. Any modifications to the Contract Prices and/or the pricing models must be made in
accordance with Section 8 of this Agreement. Supplier shall price and sell all Items in accordance with Attachment 1.
	

 	
 	

 	
 	

The Contract Prices of additional and/or revised Modules will be at least as favorable as Contract Prices would be if such Contract Prices had been based upon the cost elements of Supplier and the pricing models which are attached hereto and
incorporated into Attachment 1.

14

 

	

 	
 	

 	
 	

The Items subject to this Agreement on the Effective Date will be set out on Attachment 1. As to Items that are also subject to Applied purchase orders outstanding on the Effective Date, the parties will determine the extent to which the remaining
balance of undelivered Items on all such open purchase orders will become subject to this Agreement and pricing for such Items as to the quantities moved to this Agreement from purchase orders will be the Contract Prices in Attachment 1. With respect
to goods, products or services that are added to this Agreement by inclusion on Attachment 1 after the Effective Date, the parties shall determine at such time the extent to which such added goods, products or services that are then subject to other
outstanding Applied purchase orders will continue under such outstanding purchase order and the extent to which the remaining balance of undelivered Items on the affected open purchase orders will become subject to this Agreement and pricing for such
Items (as to the quantities moved to this Agreement from purchase orders) will be the Contract Prices in Attachment 1.
	

 	
 	

 	
 	

Specific circumstances may result in a review of Agreement terms, including Contract Prices. These circumstances include, but are not limited to:

	(a)
	Volume
increases resulting in an increase in the value of the Agreement value of over 20% (subsequent to completion of negotiations on the existing prices);

	(b)
	Addition
of Items to the Agreement increasing the value of the Agreement over 20%;

	(c)
	Cost
reductions/savings over and above those committed in Supplier's performance plan;

	(d)
	Price
reductions in accordance with Article 6 of Exhibit 1; and

	(e)
	Changes
in market prices for equivalent materials and services.

	(f)
	Reductions
in the market price for semiconductor capital equipment necessitating concessions for Applied's customers. 

	

 	
 	

3.2	
 	
Volume
	

 	
 	

 	
 	

Applied does not commit to buy a specific volume of any part number or Item from Supplier, and Applied may buy the same or similar part number or Item from multiple sources.
	

 	
 	

3.3	
 	
Export
	

 	
 	

 	
 	

Applied may require, from time to time, the Supplier to ship Items to locations outside of the U.S. Supplier will prepare the export paperwork and be the exporter of record for such shipments. Supplier must utilize Applied's preferred carriers for
the export of the Items. Applied will pay the freight charges based on Applied's rates with its preferred carriers. Applied will be responsible for importing the goods into the destination country.
	

 	
 	

3.4	
 	
Currency
	

 	
 	

 	
 	

All prices shall be quoted by Supplier and paid by Applied in US dollars; prices for foreign manufactured Items will not be adjusted to reflect changes in any exchange rate. Supplier is encouraged to obtain any necessary currency exchange protection
which it deems appropriate.
	

 	
 	

 	
 	

 	
 	

 

15

 

	

 	
 	

3.5	
 	
Prototypes
	

 	
 	

 	
 	

Supplier is committed to price all Items consistent with Contract Prices.
	

 	
 	

 	
 	

Supplier agrees to provide prototype Items priced at a value which takes into consideration the total value of Applied's business with Supplier. This may be accomplished in several ways, including:

	

 	
 	

 	
 	

 	
 	

(a)	
 	

a specific number of prototype Items may be provided free of charge; or
	

 	
 	

 	
 	

 	
 	

(b)	
 	

Items may be priced at or near volume pricing.

	
4.  Technical Framework
	

 	
 	

4.1	
 	
Engineering Change Orders
	

 	
 	

 	
 	

Applied may change its drawings, design, and Specifications at any time and generate a proposed ECO therefor in accordance with Article 24 of Exhibit 1. An Applied supplier engineer will review with Supplier all proposed ECO's that affect
the form, fit, or function of Items. Applied will provide, in writing, approved ECO's (Attachment 12), indicating the effective dates of all changes. Unless otherwise notified, Applied's receiving inspection will inspect to the latest revision in
effect per the Authorized Demand Signal.
	

 	
 	

 	
 	

Supplier will be provided twelve (12) time periods during the calendar year when Supplier will be allowed to submit requests for engineering changes to an Item. Such changes may include without limitation changes in Component parts, testing or
manufacturing procedures or cosmetic changes. Notwithstanding the foregoing, Supplier may request an engineering change related to a safety, quality or delivery issue at any time.
	

 	
 	

 	
 	

Supplier shall request any such engineering changes via a Supplier Problem Sheet (Attachment 13) and shall submit such request to Applied's designated buyer and designated Supplier Problem Sheet administrator.
	

 	
 	

 	
 	

Changes shall not be implemented by Supplier (and Supplier shall not ship any Items with any such changes) until written permission to proceed is given by Applied's authorized purchasing representative and the Agreement is modified accordingly.
Applied will consider Supplier's request to modify the terms of this Agreement relating to a requested change order if such request is made before the implementation by Supplier of the requested engineering changes.
	

 	
 	

4.2	
 	
Tooling
	

 	
 	

 	
 	

Unless otherwise agreed to by the parties in writing, dies, tools, patterns and drawings used in the manufacture of Items shall be furnished by and at the expense of Supplier.
	

 	
 	

 	
 	

Any tooling which is built or procured by Supplier and which is unique to the Modules and/or relevant to the manufacture, testing, maintenance, repair or troubleshooting of Modules will, upon Applied's request, be sold to Applied by Supplier at the
net book value of such tooling at the time of request.
	

 	
 	

 	
 	

If applicable upon Applied's request, Supplier agrees to provide a separate line item quote for tooling. Applied will, upon agreement to a quote for tooling, pay for the tooling cost separately, and title to the tooling and cost for the tooling will
not be amortized into the Contract Prices of the purchased Items. Supplier will establish appropriate accountability and tracking of the tooling, as title to the tooling will belong to Applied.

16

 

	

 	
 	

 	
 	

Except as expressly permitted by Applied in writing, Supplier shall not at any time use the tools (including test fixtures) furnished by or purchased from Applied for the production of goods for persons other than Applied or in any manner other than
in performance of this Agreement. Supplier will use commercially reasonable best efforts to maintain the tooling in good condition and repair and to provide all necessary calibration services for the tooling. Applied and Supplier shall enter into an
agreement with respect to such tooling in the form of Attachment 19 attached hereto, and Supplier will be responsible for obtaining the requisite insurance coverage and conducting appropriate inspections in accordance with Attachment 19.
	

 	
 	

4.3	
 	
Design Changes and Resolution
	

 	
 	

 	
 	

For the term of this Agreement, Supplier will not make changes to the design of any Item that may alter the form, fit, function or manufacturing process of such Item, without first submitting a Supplier Problem Sheet, as set forth in Attachment 13,
to Applied's authorized representative. Supplier may make such authorized design changes only upon obtaining prior written approval from Applied's authorized purchasing representative and modification of this Agreement.
	

 	
 	

 	
 	

If Applied's design changes made pursuant to Section 4.1 affect the pricing, delivery, lead-time, or other terms and conditions of this Agreement and the parties cannot agree upon alternate terms, then Applied may remove the affected Items from
this Agreement without affecting the remaining Items.
	

 	
 	

4.4	
 	
Process Changes and Resolution
	

 	
 	

 	
 	

Supplier agrees to inform Applied of any process changes to Items that affect form, fit or function prior to the implementation of such change(s), including without limitation any changes in the manufacturing process of a sub-tier supplier, even when
Specifications are being met. Supplier must receive approval in writing from Applied before implementing such changes. Any source change of a sub-tier supplier requires prior written approval by Applied prior to implementation. If applicable,
Supplier must use special process suppliers from the list of approved special process suppliers which is set forth in Attachment 14.
	

 	
 	

4.5	
 	
Supplier's Right to Subcontract
	

 	
 	

 	
 	

Supplier shall not subcontract for parts, processes or completed or substantially completed Items supplied to Applied without prior written approval from Applied. Supplier will ensure that all sub-tier suppliers of Supplier who have access (directly
or indirectly) to Applied's Specifications or Internal Applied Data or other Confidential Information will sign and be governed by a nondisclosure agreement that is similar in form and substance to Applied's NDA with Supplier. Approval by Applied of
a subcontractor selected by Supplier shall not alter Supplier's obligations to Applied.
	

 	
 	

4.6	
 	
First Articles and Source Inspections
	

 	
 	

 	
 	

First Article and Source Inspections shall be conducted in compliance with Section 3 of Attachment 15 (Quality Framework).
	

 	
 	

 	
 	

 	
 	

 

17

 

	

 	
 	

4.7	
 	
Applied's Right to Subcontract
	

 	
 	

 	
 	

Applied may at its discretion elect to subcontract an assembly or module to a Subassembler. If the selected assembly or module for subcontracting includes any Item under this Agreement (an "affected Item"), Applied will advise Supplier of the
Subassembler, unless precluded from doing so by confidentiality or other requirements. Supplier understands that the selection and responsibility for sourcing any affected Items will generally be the responsibility of the Subassembler. If Supplier is
not selected as the source for an affected Item, any affected Items or applicable quantities of affected Items may, at Applied's discretion, be removed from this Agreement.
	

 	
 	

4.8	
 	
Product Support
	

 	
 	

 	
 	

Supplier agrees to maintain capability to provide Items and technical and service support to Applied for all of the Items for a minimum of ten years from the date of final shipment of an Item to Applied. Alternatively, the parties may agree to
establish a product support period of less than ten years, provided that Supplier agrees to grant to Applied as part of such alternative a non-exclusive, royalty free, worldwide and transferable license of intellectual property to make, have made,
use, sell, and support the Items, in a form and on terms acceptable to Applied. Applied will not unreasonably withhold agreement to such product support alternative.
	

 	
 	

4.9	
 	
Commodity Specific Issues
	

 	
 	

 	
 	

[Intentionally Left Blank]
	

 	
 	

4.10	
 	
Escrow of Manufacturing Information
	

 	
 	

 	
 	

Upon the request of Applied, Applied and Supplier will establish an escrow account in which Supplier will deposit all Manufacturing Information. In any event, Supplier will maintain and have available for direct delivery to Applied (on the terms and
conditions of this Agreement), the Manufacturing Information.
	

 	
 	

 	
 	

Applied and Supplier will execute a mutually agreeable three party escrow agreement, to be attached as Attachment 20 to this Agreement, with an escrow agent, who will hold the Manufacturing Information and undertake the escrow arrangement only in
accordance with the terms and conditions of the escrow agreement. The terms of the escrow agreement shall provide, among other things, the following:

	

 	
 	

 	
 	

(a)	
 	

The Manufacturing Information in escrow at any time shall be sufficient and in usable form so as to allow Applied (or persons contracting with Applied) to manufacture Items without any material delay, To that end, Supplier shall deposit all updates,
enhancements and revisions to the Manufacturing Information at regular intervals as determined by Applied, which shall be at least two (2) times a year and upon the occurrence of particular events (e.g., the addition of Items to Attachment
1).
	

 	
 	

 	
 	

(b)	
 	

The escrow agreement will contain a confidentiality provision which shall prohibit the escrow holder from disclosing to any third party any Confidential Information of Applied or Supplier.
	

 	
 	

 	
 	

(c)	
 	

Upon a Release Event (as hereafter defined), the Manufacturing Information shall be released to Applied for use in accordance with the terms of Attachment 20 as attached and also under the license set out in Exhibit 1,
Article 4.

18

 

	

 	
 	

 	
 	

(d)	
 	

The cost of establishing the escrow account and the annual escrow fees or other escrow expenses shall be borne by Supplier.
	

 	
 	

 	
 	

The term "Release Event" shall mean the occurrence of one or more of the following events:
	

 	
 	

 	
 	

(a)	
 	

Supplier has ceased business operations generally, becomes insolvent or is the subject of a petition in bankruptcy or for reorganization or receivership, or ceases to function as a going concern or to conduct its operation in the normal course of
business;
	

 	
 	

 	
 	

(b)	
 	

Supplier has ceased to manufacture or provide warranty support for the Items;
	

 	
 	

 	
 	

(c)	
 	

Any breach by Supplier of any term or condition of this Agreement, including without limitation Supplier's inability to meet committed delivery dates set forth in this Agreement resulting from any force majeure event;
	

 	
 	

 	
 	

(d)	
 	

Supplier incurs a change of control, which will be specifically defined in the escrow agreement, but which will include any merger, sale of stock, sale of all or substantially all assets, or any change in the voting control of Supplier;
or
	

 	
 	

 	
 	

(e)	
 	

Supplier fails consistently to deliver Items to Applied meeting the applicable warranty and quality standards in the quantities required in accordance with the capacity requirements agreed upon;
	

 	
 	

 	
 	

(f)	
 	

The termination of this Agreement by Applied under Article 25 of Exhibit 1 or the commencement of a "Wind Down Period" under Section 1.8 and delivery by Applied to the escrow agent of Applied's written statement that the Manufacturing
Information is required by Applied to manufacture Items affected by the applicable termination.

	
5.  Nonconformance
	

 	
 	

5.1	
 	
Supplier Warranty, Nonconformance and Corrective Action
	

 	
 	

 	
 	

All Items are warranted to meet all applicable Specifications as stated in this Agreement (including all Attachments, technical Specifications and manufacturing work instructions). Supplier will replace or repair defective Items at Supplier's expense
within the time period necessary to meet Applied's production requirements. Supplier is required to use the most expeditious manner possible to effect the corrections, including the use of overnight delivery services for shipment of Items at
Applied's request. In certain circumstances, Suppliers may be asked to provide new Items in lieu of repairing a part to ensure immediate corrective action or credit for the failed part.
	

 	
 	

 	
 	

Applied will complete a "Corrective Action Form" (Attachment 10) and notify Supplier of defects. Upon receipt of a corrective action form, Supplier will promptly respond appropriately. A corrective action process to resolve nonconformance will
be documented and used by the parties. In addition, Supplier will participate in continuous improvement plans and programs as defined by Applied and Supplier.

19

 

	

 	
 	

 	
 	

Should any Item fail to conform to the Specifications established in this Agreement, in addition to any other remedies in this Agreement, Applied may purchase comparable Items in the open market as necessary to meet its requirements. Applied may at
its option charge Supplier with any reasonable cost differential between the Contract Price and the price paid in the open market. This cost may include premium costs for expedited delivery and administrative costs incurred to process replacement
Purchase Order Forms.
	

 	
 	

5.2	
 	
Applied Nonconformance and Corrective Action
	

 	
 	

 	
 	

Applied will, at its option, return Items at Applied's expense that do not conform to Applied's requirements due to Applied errors. These Items will be returned to Supplier for repair or potential rework. Applied and Supplier will agree in advance of
repairs on "standard" repair costs (labor, Items and freight) for items not covered under warranty; the standard repair costs will be identified in the Items list (Attachment 1).
	

 	
 	

 	
 	

To the extent that a "standard" repair cost has not been established, Supplier will assess rework costs and timing using a cost basis not different from the Supplier's normal manufacturing processes and structure. Supplier will inform Applied of such
cost and receive written authorization prior to initiating such repairs.
	

 	
 	

 	
 	

Supplier agrees to repair and/or replace all Items within five (5) business days after Supplier's receipt of damaged Item and a repair authorization from Applied. Applied shall have the right to designate certain Items for "Same Day" or
"24-Hour" repair turnaround provided any and all required material is readily available.
	

 	
 	

 	
 	

Prior to Supplier's return of a repaired Item to Applied, Supplier will mark such Item with Applied's part number, serial number, range and gas (if applicable). Applied shall bear the risk of loss or damage during transit of repaired or reworked
Items whether or not the Items meet warranty or other requirements.
	
6.  Supplier Performance Plan
	

 	
 	

 	
 	

As part of this Agreement, Applied and Supplier agree to jointly develop a Supplier Performance Plan to be updated as needed. Attachment 16 outlines the required elements of the Supplier Performance Plan.
	

 	
 	

 	
 	

 	
 	

 

20

 

	
7.  Warranty
	

 	
 	

 	
 	

Supplier warrants that, for a period of 24 months from delivery to Applied, all Items (other than sub-tier material) delivered to Applied (i) will be free from defects in workmanship, material, and manufacture, (ii) will comply with
the requirements of this Agreement, and (iii) to the extent design is Supplier's responsibility, will be free from defects in design. For all sub-tier material procured by the Supplier, material warranties will be not less than 12 months or
the contracted sub-tier supplier warranty, which ever is longer. All services will be performed in a competent, professional and workmanlike manner, free from defects and in accordance with the best professional practices in the industry. Supplier
further warrants that all Items purchased or repaired (I) will consist of new materials (not used, recycled or of such age as to impair its usefulness or safety, except as may be approved in advance by Applied), and (II) will be of
merchantable quality and will, but only for products designed by the Supplier, be fit and suitable for the purpose intended by Applied. These warranties are in addition to all other warranties, whether expressed or implied, and will survive any
delivery, inspection, acceptance, or payment by Applied. If any Items delivered by Supplier do not meet the warranties specified herein or otherwise applicable, Applied may, at its option, take one or more of the following actions and/or any other
action permitted by law or equity:

	

 	
 	

(i)	
 	

require Supplier to correct at no cost to Applied any defective or nonconforming Items by repair or replacement; or
	

 	
 	

(ii)	
 	

return such defective or nonconforming Item at Supplier's expense to Supplier and recover from Supplier the purchase price thereof; or
	

 	
 	

(iii)	
 	

correct the defective or nonconforming Item itself and charge Supplier with the cost of such correction if Supplier fails to meet the response requirements of Section 2.8; or
	

 	
 	

(iv)	
 	

cancel the balance of the undelivered nonconforming Items and/or terminate this Agreement in accordance with Article 25 of Exhibit 1.

	 	 	 	 	All warranties will run to Applied and to its customers. Applied's approval of Supplier's material or design will not relieve Supplier of the warranties established in this Agreement. In addition, if Applied waives any
drawing or specification requirement for one or more of the Items, it will not constitute a waiver of all requirements for the remaining Items to be delivered unless stated by Applied in writing.
	
8.  Amendments and Modifications; Captions and Construction
	

 	
 	

 	
 	

Subject to Section 1.3 above, amendments or revisions to this Agreement must be in writing, signed by both Applied and Supplier duly authorized representatives, traced by revision numbers and attached to this original Agreement. A change to one
Attachment of this Agreement will constitute a revision level change. The master copy of this Agreement and any revisions are to be maintained by Applied. Captions in this Agreement are for the convenience of the parties only and shall not affect the
interpretation or construction of this Agreement. The provisions of this Agreement (including Exhibits and Attachments) shall be construed as a whole, each supplementing the other, except for instances of conflict which shall be governed by
Section 1.3 as to precedence. In the event any provision of this Agreement is held to be invalid or unenforceable, such provision shall be severed from the remainder of this Agreement, and such remainder will remain in force and
effect.
	

 	
 	

 	
 	

 	
 	

 

21

 

	
9.  Notices
	

 	
 	

 	
 	

Revisions, updates or other amendments or modifications to this Agreement (including Exhibits and Attachments) may be communicated via memos sent by mail, fax or e-mail to the individuals listed in Section 1.2 of this Agreement.

Accepted:
 

	
 	
 	

 	
 	

 	
 	

 
	

Applied Materials, Inc.	
 	

K*Tec Electronics Corporation
	

By:	

 	

/s/ TOM ROHRS   
 Name: Tom Rohrs

Title: Group Vice President,

          Global Operations

Date: February 2, 2000	

 	

By:	

 	

/s/ LARRY OLSON   
 Name: Larry Olson

Title: President

Date: February 2, 2000

22

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MODULE SUPPLIER AGREEMENT

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