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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is entered into effective as
of August 1, 1999 by and between ▇▇▇▇▇▇.▇▇▇, a California corporation, with
principal offices at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("Buyer") and ESS Technology, Inc., a California corporation, with principal
offices at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and any of its
subsidiaries (collectively referred to as "Seller").
1. PURPOSE
A. The purpose of this Agreement is to set forth the terms and
conditions under which Buyer may purchase Products (as defined below) from
Seller. Buyer intends to enter into a long-term relationship with Seller. As
such, Seller agrees to use reasonable commercial efforts to cooperate with Buyer
to further mutual long-term goals by sharing product road map and technology
directions. Buyer also expects Seller to cooperate to achieve Buyer's long term
program goals such as shortening product lead-times, increasing volume
flexibility, achieving Just-in-Time delivery, achieving ongoing cost reductions,
specific quality goals, and continuous quality improvement.
B. This Agreement is not a requirements contract and does not
obligate Buyer to purchase any minimum quantity or product, but only establishes
the terms and conditions for such purchases if and when they occur. Seller is
not obligated to accept any orders from Buyer under the terms hereof.
2. PRODUCTS AND PURCHASE ORDERS
A. This Agreement covers the sale by Seller to Buyer of all
products, hereinafter referred to as ("Products"), as will be indicated on
purchase orders issued by Buyer to Seller.
B. Buyer will purchase Products only by issuing purchase orders
(hereinafter referred to as an "Order" or "Orders") to Seller. Each Order shall
include information regarding Product quantities, part numbers (including
identification of revision levels where relevant), prices and desired delivery
dates.
C. Seller agrees that all Buyer sites, subsidiaries, affiliate
companies and subcontractors, wherever located, shall be entitled to make
purchases under the terms and conditions of this Agreement. Seller agrees to
drop-ship Products to subcontractor sites as specified by Buyer in the Order.
3. PRICING
A. Buyer shall hold "most favored customer" status which means that
during the term of this Agreement, the terms and conditions for Products sold to
Buyer, including the prices for which such Products are offered, shall be no
less favorable than those accorded by Seller to any of its other customers. In
the event Seller provides prices and/or terms and conditions for Products to
another of its customers that are more favorable than those set forth in
Order(s), Buyer shall be entitled to a reduction or amendment of such prices and
terms retroactive to the date such prices and/or terms were made available to
such other customer.
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B. Seller shall maintain a vigorous cost reduction program to
ensure that pricing is competitive at all times. In the event that Buyer does
not consider Seller's pricing aggressive relative to the market, Buyer shall
have the right to request an immediate meeting with the Seller to re-negotiate
pricing.
4. TERM OF AGREEMENT
A. This Agreement shall continue in force for a fixed term of one
(1) year from the date hereof. At the end of the fixed term, this Agreement
shall renew automatically for additional one (1) year terms, without notice,
unless prior to that time one party provides thirty (30) days' written notice of
non-renewal to the other party.
B. The terms and conditions of this Agreement shall remain in full
force and effect and shall be applicable to any Order(s) issued by Buyer to
Seller during the term of this Agreement until any and all obligations of the
parties under such Order(s) have been fulfilled.
5. DELIVERY
A. All sales are F.O.B. Point of Shipment. Title and risk of loss
shall pass to Buyer upon Seller's delivery of Product purchased hereunder to
carrier authorized by Buyer.
B. Buyer has the option to reschedule any scheduled delivery by
giving Seller thirty (30) calendar days notice. The Buyer, however, can not
reschedule the delivery beyond 90 days from the original requested delivery
date.
6. QUALITY
A. Seller agrees to deliver defect-free material to Buyer at all
times. A product shall be deemed defective to the extent that it does not comply
with Seller's published specification with regard to that product. Seller agrees
that the Products will be free of defects for 12 months from the original date
of Product shipment to Buyer or of any replacement thereof. This warranty shall
run in favor of Buyer only, and is contingent upon proper use of the Product for
which it was intended. Buyer's sole remedy shall be limited to the repair or
replacement of defective products.
B. Seller agrees to establish and/or maintain a quality improvement
plan reasonably acceptable to Buyer. Seller agrees to provide relevant outgoing
inspection, quality and reliability data upon Buyer's request, but not more
frequently than once per month.
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C. The express warranties set forth herein specifically exclude and
do not apply to defects: (a) caused through no fault of SELLER during shipment
to or from Buyer, (b) caused by the use or operation of Products in an
application or environment other than that intended or recommended by SELLER,
(c) caused by modifications or alterations made to the Products by Buyer or any
third party, (d) caused by maintenance performed on the Products by Buyer or any
third party, (e) caused by failure of Buyer to comply with any of the return
procedures specified in this Agreement, (f) caused by subjecting the Product to
unusual physical or electrical stress, or (g) defects caused by misuse, theft,
vandalism, fire, water or other peril. EXCEPT AS STATED HEREIN, THERE ARE NO
OTHER WARRANTIES WITH RESPECT TO THE PRODUCTS, INCLUDING, BUT NOT LIMITED TO,
ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
D. Seller agrees to advise Buyer of any material changes to its
processes, materials, or sources of supply and agrees to ensure that such
changes do not compromise specifications, quality, or reliability of the
Products purchased by Buyer and subsequently incorporated into Buyer's products.
7. TERMINATION
A. TERMINATION FOR CONVENIENCE. This Agreement may be terminated by
either party for any reason or no reason, whether or not extended beyond the
first year, by giving written notice 60 days in advance of the termination to
the other party.
B. TERMINATION FOR CAUSE. If either party materially defaults in
its performance or breaches any of the terms or conditions of this Agreement,
then the other party may give written notice to the breaching or defaulting
party that if the breach or default is not cured within 30 days that the
Agreement will be terminated. If such notice is given and the breach or default
is not cured during the 30-day period, then the Agreement shall automatically
terminate at the end of that notice period.
C. TERMINATION FOR INSOLVENCY. This Agreement shall terminate
immediately without notice: (i) upon the institution by or against Buyer or
Seller of insolvency, receivership or bankruptcy proceedings or any other
proceedings for the settlement of Buyer's or Seller's debts; (ii) upon Buyer's
or Seller's making an assignment for the benefit of creditors; or (iii) upon
Buyer's or Seller's dissolution or liquidation.
8. LIMITATION ON LIABILITY
BUYER'S AND SELLER'S LIABILITY ARISING OUT OF THIS AGREEMENT SHALL
BE LIMITED TO THE FULFILLMENT OF OPEN ORDERS BY SELLER AND THE PAYMENTS OF SUCH
ORDERS BY BUYER. IN NO EVENT SHALL BUYER OR SELLER BE LIABLE TO THE OTHER PARTY
OR ANY OTHER ENTITY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR INDIRECT
DAMAGES HOWEVER CAUSED, ON ANY THEORY OF LIABILITY, AND NOTWITHSTANDING ANY
FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
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9. CONFIDENTIALITY
Buyer and Seller each acknowledge that by reason of its
relationship with the other party hereunder it may have access to certain
information and materials concerning such other party's business, plans,
customers, technology, and products that are confidential and of substantial
value to Buyer or Seller, as the case may be, which value would be impaired if
such information were disclosed to third parties. Buyer and Seller each agree
that they shall not use in any way for their own account or the account of any
third party, nor disclose to any third party, any such confidential information
revealed to it by the other party. Buyer and Seller shall each take every
reasonable precaution to protect the confidentiality of such information,
including, at the request of the other party, the entry by Buyer's or Seller's
agents and employees into confidentiality agreements in a form approved by the
other party, prohibiting any disclosure to third parties of confidential
information provided by Buyer or Seller, as the case may be. In the event of
termination or expiration of this Agreement, there shall be no use or disclosure
by Buyer or Seller, their agents, or employees of any confidential information
of the other party. Each party shall deliver to the other party all copies
within its possession or within its control of all documents and data relating
to the conduct of Buyer's or Seller's business.
10. GENERAL PROVISIONS
A. GOVERNING LAW AND JURISDICTION. This Agreement shall be governed
by and construed under the laws of the State of California, as applied to
contracts made and to be fully performed entirely within that state between
residents of that state. All disputes arising out of this Agreement shall be
subject to the exclusive jurisdiction and venue of the California State courts
of Santa ▇▇▇▇▇ County, California (or, if there is federal jurisdiction, the
United States District Court for the Northern District of California). Buyer and
Seller hereby expressly consent to (i) the personal jurisdiction and venue of
these courts and (ii) service of process being effected by registered airmail
sent to the address set forth in Section 7(c) below.
B. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
and understanding of the parties relating to the subject matter herein and
merges all prior discussions between them. No modification of or amendment to
this Agreement, nor any waiver of any rights under this Agreement, shall be
effective unless in writing signed by the party to be charged.
C. NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed given if sent by prepaid registered or
certified airmail, return receipt requested (if available), or sent by telex,
facsimile or similar communication, and confirmed by such airmail, postage
prepaid, addressed to the other party at the address shown at the beginning of
this Agreement or at such other address for which such party gives notice
hereunder.
D. FORCE MAJEURE. Nonperformance of either party shall be excused
to the extent that performance is rendered impossible by strike, fire, flood,
governmental acts, orders or restrictions, or any other reason where failure to
perform is beyond the control and not caused by the negligence of the
non-performing party, provided that the non-performing party uses its reasonable
best efforts to promptly resume performance once it is possible to do so.
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E. NON-ASSIGNABILITY AND BINDING EFFECT. Neither party shall,
without the prior written consent of the other party, assign this Agreement in
whole or in part or delegate any right or duty hereunder to any third party,
sub-agent, representative or consultant. Any attempted assignment not having
such consent shall be void and without effect.
F. LEGAL EXPENSES. The prevailing party in any legal action brought
by one party against the other and arising out of this Agreement shall be
entitled, in addition to any other rights and remedies it may have, to
reimbursement for its expenses, including court costs and reasonable attorneys'
fees.
G. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original.
H. SEVERABILITY. If any term, provision, covenant or condition of
this Agreement is held invalid or unenforceable for any reason, the remaining
provisions shall continue in full force and effect as if the Agreement had been
executed with the invalid portion eliminated, so long as the Agreement continues
to express, without material change, the original intent of the parties.
11. INDEMNIFICATION
A. Seller shall defend, at its expense, any claim against Buyer
alleging that Products furnished under this Agreement infringes any patent,
copyright or trademark and shall pay all costs and damages awarded provided
Seller is notified in writing of such claims promptly when Buyer becomes aware
of such and Seller is permitted to control, defend and compromise such claim.
Sellers shall use commercially reasonable efforts to obtain for Buyer the right
to continue using the Products if an injunction against Buyer's use of the
Products is resulted. In the event that Seller can not obtain such right for
Buyer, Seller shall repurchase all such Products from Buyers at the purchase
price.
B. Seller agrees to protect, defend, indemnify and hold Buyer
harmless from all sums, costs and expenses which Buyer may incur or be obligated
to pay as a result of any and all loss, expenses, damages, liabilities, claims,
demands resulting personal injury or damages from the use of any product sold to
Buyer by Seller hereunder provided Buyer provides Seller notice of any such
loss, expenses, damages, liabilities, claims or demands. Seller shall be liable
only to the extent required by applicable law and only where such claims,
expenses, damages and demands are held by the court of law to be the result of
Products provided by Seller hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
▇▇▇▇▇▇.▇▇▇ ESS TECHNOLOGY, INC.
By: /s/ ▇▇▇▇ ▇. ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: CEO Title: CEO
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