Amended And Restated Manufacturing And Technical Support Agreement

Exhibit 10.96


REDACTED

AMENDED and RESTATED

MANUFACTURING and TECHNICAL SUPPORT

AGREEMENT

This Amended and Restated Manufacturing and Technical Support Agreement (the " Agreement" ) is entered into as of the 11 th of June, 2004, by and between RF Monolithics, Inc., a corporation duly organized under the laws of the State of Delaware, having its principal place of business at 4441 Sigma Road, Dallas, TX, 75244, U.S.A. (hereinafter referred to as " Company" ) and Morioka Seiko Instruments Inc. (" MSI" ) a corporation duly organized and existing under the laws of Japan with its principal place of business at 61-1, Aza Itabashi Shizukuishi-cho Iwate-gun, Iwate 020-0596 Japan (hereinafter referred to as " Contractor" ), amends and restates in its entirety that certain Manufacturing and Technical Support Agreement entered into as of June 11, 2001 by and between Company and Contractor, as heretofore amended (the " Original Agreement" ), and shall extend the term of such Original Agreement, as herein stated. When this Agreement becomes effective, it shall control all transactions in effect under the Original Agreement as well as all future transactions covered hereby, and the Original Agreement shall be terminated.


RECITALS

WHEREAS , Company and Contractor desire to extend the term and release certain other provisions of the Original Agreement for certain manufacturing and production services for Products (defined below), whereby Contractor will Manufacture (as defined below) for Company certain Products at the Factory (as defined below) in accordance with the Specifications and instructions of Company;


WHEREAS , Contractor is willing to Manufacture the Products for Company and provide such services under the terms and conditions set forth below; and

WHEREAS, the parties hereto desire to make other changes to the Original Agreement sufficiently extensive that they agree that the Original Agreement should be entirely amended and restated herein.


NOW THEREFORE , in consideration of the premises and mutual promises, covenants and agreements hereinafter set forth, the parties hereto agree to amend and restate the Original Agreement as follows:

1. General Definitions. The terms set forth below in this Section 1 shall have the meanings ascribed to them below:


Allowable Assembly Yield: means the yield below which yield Contractor may be required to pay Company for 50% of the standard cost of Materials supplied by Company, not including Die, for the number of failed units below the Allowable

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Assembly Yield. The circumstances determining when payment is required are defined in Section 2.1(e) (ii). The Allowable Assembly Yield is determined by the Assembly Yield monthly average for the first three months following Production Start Up of a Generic Product Family.

Affiliate: with respect to any Person, means any Person that directly or indirectly controls, is controlled by or is under common control with such Person.


Annual Review Process: means the process conducted by Company and Contractor to review commitments for the coming year concerning Product pricing, production levels, quality and service levels. This process normally occurs during Company' s first fiscal quarter (the three months ended November 30), to review the previous year' s performance.


Approved Vendor: means a supplier of Materials that Company has qualified and approved, and has placed on the Approved Vendor List.

Approved Vendor List: shall have the meaning defined in Section 2.1(d) hereof.


Assembly Outs: means the number of Units, of a specified Product, which pass from the last operation of the assembly process, typically at the completion of the Gross Leak Test, to the first operation of the test portion of the manufacturing process, typically 100% Electrical Test. The exact completion of the assembly portion of the manufacturing process and the initiation of the test portion of the manufacturing process may be altered by Schedules that might be appended to this Agreement in the future to cover existing or additional Products. If the parties hereto agree to add any additional inspection or assembly operations to the assembly flow at any time, whether addressed in this Agreement or not, any defective units of the specified Product found at these additional steps will also be deducted in the determination of Assembly Outs.


Assembly Yield: means the ratio, expressed as a percentage, of the number of Assembly Outs to the number of Products (Units) started in the assembly flow (typically at Die mount or Wafer Sawing).

AY = AO/AS

Where: " AY" is the Assembly Yield;

" AS" is the number of products (Units) started in the assembly flow; " AO" is the number of Assembly Outs;

Best Efforts: means a party' s efforts in accordance with reasonable commercial practice and/or consistent with its past practice.

Cofired: means that the ceramic material and the metal pattern of a ceramic package or substrate is fired (sintered or cured) at the same time.


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Consignment: means property, including but not limited to equipment, Die and Materials, that is owned by Company that is used by Contractor to fulfill the purposes of this Agreement.


Defective Unit: means Products returned from Company' s customers that do not meet specification due to assembly processing problems. Reference Section 2.2(b).

Die: means the individual SAW devices, inductors, or custom integrated circuit devices that Company provides Contractor, either in diced or wafer form.


Electrical Test: means a verification of the electrical functions of Products.

Engineering Change Procedure: means Company' s documented and controlled procedure for making revisions to drawings, process procedures, test specifications and other official documents used to Manufacture Product.


FCA: shall mean Free Carrier as defined in Incoterms 2000 as published by the International Chamber of Commerce.

Factory: means Contractor' s manufacturing facility for Products located 61-1, Aza Itabashi Shizukuishi-cho Iwate-gun, Iwate 020-0596 Japan.


Final Electrical Test: means the last Electrical Test defined in the test flow to determine the electrical performance of a specific unit of Product to Specifications.

Final Lot Acceptance Testing: means that testing performed by Company' s representatives, after Contactor completes the Product' s Manufacturing and testing process steps at Contractor' s Factory, to determine the compliance of Product to Specifications and customer requirements.

Fine and Gross Leak Test: means the tests done to determine the hermetic compliance of a specific Unit of Product to Specifications.

Finished Goods: means any Product that is 100% complete, tested, and packed in a shipping carton awaiting shipment to Company.


Finishing Materials: means Tubes, tape-and-reel, labels, tickets and shipping cartons used to ship Finished Goods per Company Specifications.

Generic Product Family: means all Products assembled by the same process and test sequence.


Improvements: shall mean any invention, information, development, technology or modification, of any nature or form, and any part or combination of parts, or method of using or manufacturing such part or combination of parts, developed during


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the term of this Agreement, which would improve a Product, including, without limitation, any development that use of which affects the Products in any of the following ways:


reduces Product cost;

improves Product performance; improves Product handling, yields or productivity in the manufacturing process; broadens Product applicability;

increases Product marketability, or

improves Product appearance.


Joint Intellectual Property: shall have the meaning defined in Section 15.3 hereof.

Manufacture: shall mean the complete process of assembly and test of the Products into Finished Goods as required under this Agreement.


Manufacture Defect: means any defect which is attributable to the Manufacture of a Product by Contractor under this Agreement.

Manufacturing Data: means all data prepared in connection with the performance of services under this Agreement, including, but not limited to, any reports, drawings, sketches, formulas, designs, analyses, graphs, notes, memoranda and notebooks.

Manufacturing Process: means the sequence of steps beginning at Wafer Dicing and continuing through Final Lot Acceptance Test that is used by Contractor to Manufacture Product.


Materials: shall mean all raw materials, Finishing Materials and Die/wafers required by Contractor to Manufacture the Products.

New Products: means new items or variations of current Products that Company and Contractor have agreed in writing to be covered by this Agreement.


Opens: means units of Product that have undergone electrical performance testing and have been found to have no response and infinite AC and/or DC resistance.

Order: means Purchase Order issued by Company.

Other Support Services: shall have the meaning defined in Section 2.3 hereof.


Overall Yield (OY): means the ratio, expressed as a percentage, of the number of Test Outs to the number of units of a specific Product started in the assembly flow (typically at die mount or wafer sawing).


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OY = TO/AS

Where:

" OY" is the overall process yield;

" TO" is the number of units that successfully pass all performance tests and inspections as defined in the test flow, and

" AS" is the number of units started into the assembly flow


Package: means with reference to Manufacture of Product, a container for a designated and specified set of Piece Parts that upon completion of Manufacture can become a Unit of Product.

Person: means any individual, firm, corporation, partnership, Limited Liability Company, joint venture, association, trust, unincorporated organization, government or agency or subdivision thereof or any other entity.

Piece Parts: means the individual components such as headers, lids, substrates and Die that are used to Manufacture a Product.

Product: means the Products manufactured pursuant to this Agreement and according to process and test flows provided from time-to-time by Company. From time-to-time the description of Products may be amended by change requests and the introduction of New Products agreed to by Company and Contractor in accordance with Section 2.1(c) of this Agreement.


Production Start Up: means the time of initial-shipments of a Generic Product Family as requested by the Weekly Start Schedule furnished to Contractor by Company for that Generic Product Family, and after qualification testing for a specific Product or a Product Family has been successful.


Products, Quantity and Price Schedule: for each Product or Product Family, a schedule is attached to this Agreement setting forth the name of the Product(s) to be subject hereto, its quantity and its price per unit. Such Schedules may include additional information, such as quantity estimates, special pricing, and specifications. When approved by both parties as provided herein, such Schedule shall become part of, and constitute an amendment to, this Agreement.


Provided Equipment: means any equipment, including but not limited to, manufacturing and test equipment; supplies, Materials, and documentation which Company provides to Contractor for use in providing services under this Agreement and for which Company retains title of ownership.


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Purchase Order: the ordering document provided by Company that specifies the Product, services, prices and Product quantities that Contractor is to Manufacture.


Purchased Materials: means Materials that were originally consigned by Company to Contractor, and that Company has now given written approval to Contractor to purchase. Examples of Purchased Materials are package lids, package bases and substrates. Materials not included in Purchased Materials are Die, adhesives, bonding wire, solvents, chemicals and gasses used to Manufacture the Product.

Quality Standards: means the body of information contained in Company quality documents and procedures such as Company' s " Workmanship and Quality Standards" that describe Product' s fitness for sale.


Quarterly Operations Reviews: means the process conducted by Company and Contractor to review yields, cycle times, delivery performance, quality metrics and cost reduction roadmaps. This process normally occurs within 3 weeks of the end of Company' s fiscal quarter (Nov. 30, Feb. 28, May 31, Aug. 31).


SAW: means a Surface Acoustic Wave device.


Shorts: means units of Product that have undergone electrical performance testing and that have been shown to have an AC or DC resistance, either by direct or indirect measurement means, lower than the minimum allowed by Specifications.

Specifications: shall mean drawings, criteria, and documented specifications including but not limited to Process Flow Chart, test specifications, bills of material, Test Flow Chart and mount-bond diagram, process procedures, Product marking, Product packaging and shipping specifications and materials specification. Additional Specifications will be issued by Company in similar form as additional Products are added to this Agreement.

Substrate: with reference to Manufacture of Product, a single, thin, flat, cofired ceramic piece that contains a multiplicity of replicated circuit patterns arranged in rows and columns on its two planar surfaces.


Technical Information: means any information which relates to the design, structure, functions, operation, manufacture, use, lease, sale or other disposition of Product or of Provided Equipment, and which is owned, developed, discovered or otherwise acquired by Company at any time prior to the expiration or termination of the term of this Agreement, and which is disclosed or transferred by Company to Contractor, or which Contractor has access to or obtains, or which becomes known to Contractor, under or pursuant to this Agreement.


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Technical Data: means any tangible medium embodying Technical Information, which is owned, developed, discovered or otherwise acquired by Company at any time prior to the expiration or termination of the term of this Agreement, including but not limited to plans, Specifications, material lists, machine drawings, software and instructions, whether in human or machine readable form.


Test Final Visual Inspection: means a quality control visual inspection that is normally done immediately after Fine and Gross Leak Test.

Test Outs: means the number of Units of a specific Product that successfully pass all electrical and other performance tests, including Test Final Visual Inspection, that are defined in the test flow for the Product Family. If any additional inspection or testing operations are added to the test flow at any time, whether addressed in this Agreement or not, any defective units of a specific Product found at these additional operations will also be counted in the determination of Test Outs.


Test Yield: means the ratio, expressed in percentage, of the number of Units of a specific Product meeting Specifications after Electrical Test and all further inspections and performance tests to the number thereof introduced into the Electrical Test process (Assembly Outs). Both Contractor and Company understand that the condition of the Materials and the precision of execution of the assembly process strongly influence the yield at test. Both Contractor and Company will work together to maximize Test Yield. Test Yield shall include Fine and Gross Leak Test, Electrical Test and Test Final Visual Inspection.

TY = (AO S O TR FI)/AO

Where:

" TY" is the Test Yield; " AO" is the number of Assembly Outs; " S" is the number of units found to be shorted during electrical test;

" O" is the number of units found to be open during electrical test;

" TR" is the number of units found to be non-conforming to electrical performance specifications during electrical testing that are defective for reasons other than being shorted or open (no response), and

" FI" is the number of units failing Test Final Visual Inspection.

If any additional inspection or testing operations are added to the test flow at any time, any defective Product units found at these additional steps, whether addressed in this Agreement or not, will also be counted in the determination of Test Yield.

Tooling and Fixtures: means holding, locating or interfacing aids that are necessary to facilitate the assembly, testing, inspection, packing and shipping of Product. Typical Tooling and Fixtures includes, but is not limited to test fixtures, sealing fixtures, wire bonding fixtures and Die mounting fixtures.


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Unit: means in reference to Product successfully completing Manufacture, a single individual Product that is indistinguishable from any other individual Product by virtue of it having passed all inspections and performance tests. In reference to Product just starting into Manufacture, a Unit is an individual segment of a Substrate, or a single Package, which can become an individual Product upon completion of Manufacture.


Value Added: means the price for Materials and assembly/test services for the Product supplied by Contractor.

Wafer Dicing: means an operation that Contractor performs as part of the Manufacturing process that is done to saw quartz based wafers provided by Contractor into individual Die. This operation is limited to the Dies for Contractor to produce Product.

Weekly Starts Schedule: means the document that Company periodically sends Contractor indicating the number of Units of Product to start into the production process at the beginning of each Workweek over a certain period of time, and the expected ship dates of the number of Units of Product produced over a certain period of time. Typically, the Weekly Starts Schedule will cover a period of one month (four weeks), but may cover a longer or shorter period of time.


WIP Inventory: means the work-in-progress inventory of Product (the number of Units of Product at various stages of the Manufacturing process flow) at Contractor.

Workweek: shall be seven (7) calendar days beginning on Monday and ending on Sunday. For planning purposes each Workweek is assigned a consecutive number for the entire year.

Yield Evaluation Lot: means a small quantity of Product, or a small quantity of a subset of Product, that is Manufactured by Contractor with concurrence of Company, prior to starting Manufacture of a larger quantity of Product pursuant to Order(s) placed by Company. Such Yield Evaluation Lots are typically run to identify root causes of problems previously experienced in Manufacture of Product (see Section 2.8)


2. Services.

2.1 Contract Manufacturing Services:

(a) General. Contractor covenants and agrees to Manufacture the Products that Company requests it to Manufacture at the Factory utilizing the tools,


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machinery, equipment, fixtures and computer systems of Contractor and/or Materials and Provided Equipment Company consigns to Contractor. Contractor agrees that the Manufacture of Products hereunder shall be carried out in a good and workmanlike manner in compliance with the Specifications and instructions of Company provided to Contractor in writing from time to time as specified herein. Contractor shall have available to Manufacture the Products all facilities, employees, equipment, spare parts, computer systems and any other items required to Manufacture the Products. Company shall provide to Contractor all Specifications, manuals and other relevant documentation. Technical Information, and any special equipment, Tooling, Fixtures, jigs, etc., (Provided Equipment) necessary to initially Manufacture the Products.

(i) Contractor may use its standard processes, so long as they conform to Company' s Specifications and quality requirements and are approved in writing by Company prior to their introduction into the manufacturing process.

(ii) Contractor shall assemble and test Product using Material procured from suppliers on the Approved Vendor List or provided on a Consignment basis from Company, and Die provided on a Consignment basis from Company and under manufacturing processes approved by Company. During the initial period of Product qualification and production, Company may consign Materials to Contractor. If Company initially consigns Material, six months following the Production Start Up for Product(s), Company and Contractor will review the opportunity to allow Contractor to procure all Materials except Die. Approval to purchase Materials for use in Manufacture must be given in writing to Contractor by Company prior to Contractor purchasing any Materials. Any change to Manufacturing Processes, Materials, or outsourcing services directly affecting Products shall be approved in writing by Company prior to implementation by Contractor.


(iii) Contractor agrees to provide manufacturing and production services to meet Company' s Manufacture requirements in accordance with Section 2.6 and 2.7. Changes to forecast shall not affect Product pricing, unless mutually agreed in writing by the parties hereto.


(iv) Contractor shall obtain, at its own expense, capital equipment and tooling required to manufacture the Product. The parties shall work together to specify and identify appropriate equipment and tools. However, Contractor, at its sole discretion, shall determine the final configuration and quantity of equipment and tooling obtained, so long as such decisions are consistent with meeting Company' s specifications and performance criteria.

(b) Change Requests. Company shall have the right at any time to make changes in drawings, designs, Specifications, Materials, packaging, quantities, time and place of delivery and method of transportation. If any such changes cause an increase or decrease in the cost or the time required for performance of the order, Contractor shall notify Company in writing (stating the amount of the increase or decrease), within five (5) days, after receipt of such notice. There will be no change in manufacturing and


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production service until accepted, in writing, by Contractor. If such notice is timely given, an equitable adjustment shall be made, and the Purchase Order shall be modified in writing accordingly. Contractor agrees to accept any such changes and proceed with the performance of this Agreement, subject to this paragraph.

(i) Changes to Specifications by Company will be made according to Company' s Engineering Change Procedure (000-0101-001) (the " Change Procedure" ). Contractor will approve all changes relating to Products manufactured at Contractor according to the Change Procedure.

(ii) If Contractor proposes to change the Specifications with respect to any Product, it shall provide Company written notice thereof and shall implement such changes only upon written consent from Company. In no event shall Contractor ship other than strictly in accordance with the Specifications or amendments thereto, that Company has approved in writing.


(c) New Products. Company may from time to time request Contractor to Manufacture and perform prototype and pilot testing for any future versions of the Product developed after the date of this Agreement by Company (each a " New Product" ). Such request shall be accompanied by all Specifications and other relevant documentation necessary to Manufacture the New Product. Upon receipt of such information, Contractor shall provide to Company the price to perform prototype and pilot assembly and test for such New Product and the estimated time schedule required to implement the Manufacture of the New Product. Contractor shall not be obligated to Manufacture or perform any services hereunder with respect to such price and time schedule for implementation. Company and Contractor agree to negotiate price, quantities and Production Start Up schedules for New Products, should Contractor agree to Manufacture the New Product.


(d) Approved Vendor List. With respect to each component part comprising Materials, Company shall maintain a list of suppliers approved by Company to supply such part (the " Approved Vendor List" ). Contractor may obtain a copy of the Approved Vendor List at any time by requesting same from Company' s Purchasing Department. A supplier or vendor not on the Approved Vendor List shall not provide material or services for the Manufacture of Product without Company' s written authorization.

(i) Addition and Removal of Supplier from Approved Vendor List. Company may remove any supplier from or add any supplier to the Approved Vendor List with respect to any component part comprising Materials by giving written notice thereof to Contractor. Contractor may request removal or addition of a supplier to Approved Vendor List.

(ii) Additional Suppliers. Company will qualify at the request of Contractor additional suppliers who meet Company' s standards and will not unreasonably disqualify a proposed supplier. Once Company qualifies an additional supplier, Company will provide written approval (updated Approved Vendor List) in a timely manner to give Contractor adequate time to meet its schedule requirements.


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(e) Yields. Parties understand and agree that production yields are a primary driver for Manufacturing cost effectiveness. Company shall provide Die, which are consistent with Specifications established by Company, in sufficient quantity to meet Manufacturing requirements. Both Company and Contractor will work together to increase production yields. Yield improvement and cost reduction goals will be established and evaluated at the Quarterly Operations Reviews.

(i) Company outgoing testing and inspection of Materials supplied by Company and incoming test and inspection by Contractor will be in place to ensure the Die, packages and assembly Materials are in Specification as they are introduced to Contractor' s assembly Factory.

(ii) The Assembly Yield is the responsibility of Contractor. Contractor is liable for the Materials supplied by Company, according to the definition of Allowable Assembly Yield. The Allowable Assembly Yield for each part number of Product is the average yield of the part number of Product experienced during the sixth consecutive month of quantity production, quantity being defined by Company. Once the Allowable Assembly Yield is determined, Company and Contractor shall work together to establish yield goals, and a schedule for yield goal attainment, for each part number of Product. As yield goals are attained, Company and Contractor shall jointly re-evaluate and establish new Allowable Assembly Yield parameters for each part number of Product.

(iii) The Test Final Visual Inspection Yield is the responsibility of Contractor.


(iv) Should either party incur unacceptable yield loss, based on monthly average yield, either party may request a failure analysis to determine the cause of such failures. The requesting party shall bear the cost of the analysis. However, if the analysis establishes that the unacceptable yield loss is due primarily to the non-requesting party, the non-requesting party shall reimburse the requesting party for the cost of the analysis.


(f) Annual Review Process. Company and Contractor shall meet annually to review performance to the Agreement (Annual Review Process). Such review shall include, but not be limited to, review of Contractor' s performance to Company' s Specifications and quality and service standards, review of Product pricing, and cost reductions.

(g) Quarterly Operations Review Process. Company and Contractor shall conduct Quarterly Operations Reviews. Such meetings shall include, but not be limited to, review of Contractor' s Product yields, cycle times, delivery performance, quality metrics and cost reduction roadmaps. The meeting may be scheduled to combine with other reviews, such as the annual review, or may be held via conference telephone call or video conference. Production yield improvement and c ...