Authorized International Distributor Agreement

FORM FACTOR, INC.


AUTHORIZED INTERNATIONAL DISTRIBUTOR AGREEMENT


This Authorized International Distributor Agreement ("Agreement"), effective as of June 1, 2000 ("Effective Date"), is made between Form Factor, Inc., a Delaware corporation with its principal place of business at 2140 Research Drive, Livermore, CA 94550, ("Company"), and Spirox Corporation, a Taiwan Corporation with its principal place of business at 6F-1, No. 69, Tze You Road, Hsinchu City, Taiwan, R.O.C. ("Distributor").


RECITALS


A. Company manufactures and distributes certain computer hardware
products, including the products listed in Exhibit A ("Company
Products"). This Agreement pertains only to "Company Products" as
listed in Exhibit A and not to any other products manufactured or
distributed by Company.


B. Distributor has 14 years of experience in distributor business in
Taiwan, has particular expertise in working with Taiwan-based
companies, and desires to be a distributor for Company's Product
and Services.


C. Company and Distributor desire that Distributor be authorized to
act as Company's sole independent distributor of Company Products
under the terms and conditions set forth below.


NOW, THEREFORE, Company and Distributor agree as follows:


1. Appointment as Authorized Company Distributor.


(a) Appointment. Subject to the terms of this Agreement, Company appoints Distributor, and Distributor accepts such appointment, as the sole independent distributor of Company Products as set forth in Exhibit A in and limited to the territory set forth in Exhibit B (the "Territory"). Nothing in this Agreement shall prohibit Company from making sales of Company Products directly into the Territory, or permitting an entity that manufactures semiconductor test equipment with which Company Products are used, from selling Company Products directly into the Territory.


(b) Company's Reserved Rights. Company reserves the rights from time to time, in its sole discretion and without liability to Distributor, to change, or to add to or delete from the list of, Company Products by written notice to the Distributor at least thirty (30) days prior to the effective date of the change, addition, or deletion.


(c) Additional Distributors. With respect to the appointment of additional distributors in the Territory, Company agrees that, provided Distributor is meeting its obligations


-------------- * * * Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as *****. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.


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hereunder and is not in breach of this Agreement, Company will not appoint a second distributor in the Territory. Further, in the event that Company reasonably believes Distributor is not meeting its obligations set forth hereunder, prior to the appointment of any second distributor in the Territory, Company will identify the inadequacies of Distributor's efforts and permit Distributor thirty (30) days within which to cure the inadequacies. During the 30-day cure period, and thereafter assuming the deficiency(ies) were cured, Company will not appoint any such second distributor.


2. Obligations of Distributor.


(a) Promotion Efforts. Distributor will use its best efforts to (i) vigorously promote the distribution of Company Products in the Territory in accordance with the terms and policies of Company as announced from time to time; and (ii) satisfy those reasonable criteria and policies with respect to Distributor's obligations under this Agreement communicated in writing to Distributor by Company from time to time, including but not limited to Company's style guide.


(b) Adaptation For Local Market. Distributor will be responsible for translating, at its expense, all Company manuals, advertising and promotional materials used in connection with Company Products into the language(s) of the Territory if so instructed by Company in writing. Distributor will consult with Company as to what changes need to be made to Company written materials pursuant to this Section 2(b), and will obtain Company's prior written consent to each such change to Company related written materials.


(c) Inventory. Distributor will maintain an inventory of Company Products and warehousing facilities in the Territory sufficient to serve adequately the needs of its customers on a timely basis.


(d) Personnel, Training and Support. Distributor will retain personnel and institute and maintain programs sufficient to meet the standards and obligations set forth in Exhibit C.


(e) Distributor Financial Condition. Distributor will maintain and employ in connection with Distributor's business under this Agreement such working capital and net worth as may be required in Company's reasonable opinion to enable Distributor to carry out and perform all of Distributor's obligations and responsibilities under this Agreement. From time to time, on reasonable notice by Company, Distributor will furnish to Company a complete set of audited financial statements, including a balance sheet, income statement and cash flow statement, on an annual basis, and a copy of the summary financial documents that Distributor routinely prepares in its ordinary course of business on a quarterly basis. In the event that Distributor becomes a public company, the foregoing financial condition disclosure requirement shall be replaced by the requirement that Distributor provide to Company copies of all financial documents Distributor publicly files.


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(f) Company Packaging. Except as provided in section 2(b), Distributor will distribute Company Products with all packaging, warranties and disclaimers intact as shipped from Company.


(g) No Competing Products. Except for Company Products, Distributor will not represent or distribute during the term of this Agreement any * * *-device or greater in-parallel (* * *) probe card products, or any probing technology that competes with Company Products. Distributor warrants that Exhibit D lists all of the manufacturers and distributors, and their respective products, that Distributor represents or distributes as of the date of full execution of this Agreement.


(h) Distributor Covenants. Distributor will:


(i) conduct business in a manner that reflects
favorably at all times on Company Products and the
good name, good will and reputation of Company;


(ii) avoid deceptive, misleading or unethical practices
that are or might be detrimental to Company,
Company Products or the public;


(iii) make no false or misleading representations with
regard to Company or Company Products;


(iv) not publish or employ, or cooperate in the
publication or employment of, any misleading or
deceptive advertising material with regard to
Company or Company Products;


(v) make no representations, warranties or guarantees
to customers or to the trade with respect to the
specifications, features or capabilities of Company
Products that are inconsistent with the literature
distributed by Company;


(vi) not enter into any contract or engage in any
practice detrimental to the interests of Company in
Company Products; and


(vii) not sell Company Products to entities outside of
the Territory, or to an entity which it knows or
reasonably should know will resell or transfer the
Company Products outside of the Territory.


(i) Compliance with Law. Distributor will comply with all applicable international, national, state, regional and local laws and regulations in performing its duties hereunder and in any of its dealings with respect to Company Products.


(j) Compliance with U.S. Export Laws. Distributor agrees to comply with all applicable international, national, state, regional and local laws and regulations in performing its duties hereunder and in any of its dealings with respect to the technical information and technology disclosed hereunder or direct products thereof. In addition to such compliance and in particular:


-------------- * * * Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as *****. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.


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(i) Distributor agrees that it will not reexport or
release the software or technology it receives from
Company to any party involved in sensitive or
unsafeguarded nuclear activities, or activities
related to chemical or biological weapons or
missiles unless authorized by the U.S. Export
Administration Regulations or a license from the
U.S. Department of Commerce ("DOC"); and,


(ii) Without limiting the generality of Sections 2(m)
and 2(m)(i) immediately above, Distributor agrees
that it will not reexport or release any technical
information or technology it receives from Company,
including under License Exception TSR, 15 C.F.R.
Section 740.6, to a national of the countries named
in Section 2(m)(iv) below without a license
exception or a license from DOC; and,


(iii) Without limiting the generality of Sections 2(m)
and 2(m)(i) above, Distributor agrees that it will
not export the direct product of the technical
information or technology it receives from Company,
including under License Exception TSR, to a country
named in Section 2(m)(iv) below without a license
exception or a license from DOC if such foreign
produced direct product is subject to national
security controls as identified on the Commerce
Control List, 15 C.F.R. Supp. No. 1 to Part 774.


(iv) Albania, Armenia, Azerbaijan, Belarus, Bulgaria,
Cambodia, Cuba, Estonia, Georgia, Iran, Iraq,
Kazakhstan, Kyrgyzstan, Laos, Latvia, Libya,
Lithuania, Moldova, Mongolia, North Korea, Romania,
Russia, Rwanda, Sudan, Syria, Tajikstan,
Turkmenistan, Ukraine, Uzbekistan and Vietnam.


(k) Governmental Approval. If any approval with respect to this Agreement, or the notification or registration thereof, will be required at any time during the term of this Agreement, with respect to giving legal effect to this Agreement in the Territory, or with respect to compliance with exchange regulations or other requirements so as to assure the right of remittance abroad of U.S. dollars pursuant to Section 5(e) hereof or otherwise, Distributor will immediately take whatever steps may be necessary in this respect, and any charges incurred in connection therewith will be for the account of Distributor. Distributor will keep Company currently informed of its efforts in this connection. Company will be under no obligation to ship Company Products to Distributor hereunder until Distributor has provided Company with satisfactory evidence that such approval, notification or registration is not required or that it has been obtained.


(l) Market Conditions. Distributor will advise Company promptly concerning any market information that comes to Distributor's attention respecting Company, Company Products, Company's market position or the continued competitiveness of Company Products in the marketplace. Distributor will confer with Company on a monthly basis concerning matters relating to market conditions, sales forecasting and product planning relating to Company Products. Distributor will also advise Company in writing on no less frequently than a monthly basis as to competing products and technologies, and potentially competing products and technologies.


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(m) Costs and Expenses. Except as expressly provided herein or agreed to in writing by Company and Distributor, Distributor will pay all costs and expenses incurred in the performance of Distributor's obligations under this Agreement.


3. Inspections, Records and Reporting.


(a) Reports. Within 3 days of the end of each month, Distributor will provide to Company a written report showing, for the time periods Company reasonably requests, (i) Distributor's shipments of Company Products by dollar volume, both in the aggregate and for such categories as Company may designate from time to time, (ii) forecasts of Distributor's anticipated orders by Company Product, (iii) Distributor's current inventory levels of Company Products, in the aggregate and by Company Product and (iv) all purchase orders from Distributor's customers of Company Products.


(b) Notification. Distributor will: (i) notify Company in writing of any claim or proceeding involving Company Products within ten (10) days after Distributor learns of such claim or proceeding; (ii) report to Company all claimed or suspected product defects within 72 hours of Distributor's notice thereof; and (iii) notify Company in writing not more than thirty (30) days after any change in the management of Distributor or any transfer of more than twenty-five percent (25%) of Distributor's voting control or a transfer of substantially all its assets.


4. Order Procedure.


(a) Company Acceptance. All orders for Company Products placed by Distributor to Company shall be in writing and shall be subject to acceptance in writing by Company.


(b) Controlling Terms. The terms and conditions of this Agreement and of the applicable Company Invoice or confirmation will apply to each order accepted or shipped by Company hereunder. The provisions of Distributor's form of purchase order or other business forms will not apply to any order notwithstanding Company's acknowledgment or acceptance of such order.


(c) Cancellation. This Section 4(c) shall govern any and all cancellation of orders accepted by Company. While Distributor is not obligated to provide to Company a binding forecast for Company Products, this Section 4(c) is intended to encourage Distributor to place orders at least * * * (* * *) weeks before any scheduled delivery date for unforecasted orders and at least * * * (* * *) weeks before any scheduled delivery date for forecasted orders.


(i) Company reserves the right to cancel any orders
placed by Distributor and accepted by Company as
set forth above, or to refuse or delay shipment
thereof, if Distributor (x) fails to make


-------------- * * * Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as *****. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.


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any payment as provided in this Agreement (through
no fault of Company), or (y) otherwise fails to
comply with any of the material terms and
conditions of this Agreement, including by way of
example but not of limitation, Sections 2, 3 and 5.
No such cancellation, refusal or delay will be
deemed a termination (unless Company so advises
Distributor) or breach of this Agreement by
Company.


(ii) Company's acceptance of an order from Distributor,
consistent with Section 4(a), Distributor's
cancellation of such order, in whole or in part, is
subject to the non-refundable payment obligation(s)
of this Section 4(c)(ii). For orders involving new
designs for Products ("First Article Order"), if
the cancellation is (i) * * * prior to the
scheduled delivery date ("Delivery Date"), then
Distributor will have no cancellation payment
obligation, except for * * *, (ii) * * * prior to
the Delivery Date, then Distributor shall pay * * *
percent (* * * %) of the First Article Order, plus
* * *, (iii) * * * prior to the Delivery Date, then
Distributor shall pay * * * percent (* * * %) of
the First Article Order plus * * *, and (iv) * * *
prior to the Delivery Date, then Distributor shall
pay * * * percent (* * * %) of the First Article
Order plus * * *. All * * * submitted by Company to
Distributor should be in the amounts that are
reasonable and actual, and in no circumstance
exceeding the amount specified in the original
order. For orders involving repeat orders (i.e.,
Company Products identical to a Company Product
contained in a delivered and non-rejected First
Article Order), if the cancellation is (i) * * *
prior to the Delivery Date, then Distributor will
have no cancellation payment obligation, (ii) * * *
prior to the Delivery Date, then Distributor shall
pay * * * percent (* * * %) of the value of the
order, (iii) * * * prior to the Delivery Date, then
Distributor shall pay * * * percent (* * * %) of
the value of the order, and (iii) * * * prior to
the Delivery Date, then Distributor shall pay * * *
percent (* * * %) of the value of the order.


5. Prices and Payment.


(a) Prices to Distributor and Commissions on Third Party Sales Into Territory.


(i) Prices. During the term of this Agreement, Company
shall inform Distributor of the current base prices
it will charge Distributor for Company Products.


-------------- * * * Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as *****. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.


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(ii) Commissions on Third Party Sales Into the
Territory. If Company Products are sold within the
Territory by any third party based outside the
Territory ("Outside Products"), and Distributor
does not take title to or deliver the Outside
Products, Company will pay Distributor a commission
of at least * * * % but not more than * * * % of
the sales price of the Outside Products,
conditioned on (x) the sale into the Territory
occurring within * * * of the original sale by
Company to the third party, and (y) Distributor's
provision of the post-sale support described in
Exhibit C of this Agreement with respect to such
Outside Products and on the other terms and
conditions of this Agreement. In the event that
Company Products are shipped, or designated for
shipment, by a specific third party into the
Territory after the * * * time period, the * * *
time period shall be automatically extended to
* * * for all future sales by such third party.


(iii) Commissions to Third Parties. If Company, in its
sole discretion, determines that the sale or
license of Company Products within the Territory is
the result of the combined efforts of Distributor
and any third party, Company may increase the base
price to cover commissions payable to such third
party in such amount as Company determines to be
equitable, and Company's decision to do so and the
manner in which it does so will be final and
binding on all parties involved. The base price
increases and commission payable will be split
between the ship to site, the bill to site, and the
design win site on a percentage to be determined by
the Company at the time of the order.


(iv) Payments for Extraterritorial Shipments. If Company
Products are sold to Distributor and, then, after
re-sale by Distributor to its customer, shipped out
of the Territory for use within * * * of
Distributor's sale, or designated for such shipment
within the * * * time period, Distributor shall be
required to pay an amount equal to a * * * %
commission of the sale price to such entity as
designated by Company in consideration for support
and service of the Company Product outside of the
Territory. In the event that Company Products are
shipped, or designated for shipment, out of the
Territory after the * * * time period, the * * *
time period shall be automatically extended to
* * * for all future sales by Distributor to such
customer.


(b) Price Increase. In the event Company increases the base price to Distributor for any class of Company Product, the increase shall apply to any order received by


-------------- * * * Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as *****. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.


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Company on or after the effective date of the increase. Company shall endeavor to give Distributor as much notice as possible regarding a price increase, but in all events at least twenty (20) days notice.


(c) Price Decrease. In the event that Company decreases the price to Distributor for any Company Product, the decrease shall apply to any order received by Company on or after the effective date of the decrease.


(d) Taxes. If any withholding or similar tax must be paid under the laws of any country outside of the U.S. based on the payments to Company in this Agreement, then Distributor will pay such taxes and such taxes shall be deducted from the payments to Company. Distributor will provide Company with written documentation, including but not limited to copies of receipts, of any and all such taxes paid in connection with this Agreement. Distributor will pay all sales, use and other taxes imposed by any applicable laws and regulations as a result of the payments under this Agreement, other than taxes based upon Company's net income.


(e) Payment Terms. Company shall issue an invoice to Distributor upon shipment of the Company Products ("Invoice"). All payments shall be Net * * * (* * *) days after the date of the Invoice assuming the shipment is void of any major fault of Company, payable in United States dollars, free of any currency control or other restrictions to Company at the address designated by Company. Distributor shall at all times remain obligated to make payments to Company regardless as to whether Distributor receives payment from a third party to whom Distributor may resell Products. Unless otherwise agreed by Company in writing, Distributor will pay all Invoices by:


(i) Wire transfer to a bank account designated by
Company the amount of the aggregate prices of the
Company Products ordered (plus any applicable
taxes, shipping and other charges); or,


(ii) Letter of credit payment wherein Distributor shall
cause to be issued by a bank acceptable to Company,
and confirmed by a bank designated by Company, one
or more irrevocable letters of credit to be equal
to the aggregate prices of the Company Products
ordered (plus any applicable taxes, shipping and
other charges) and to provide for payment at sight
upon presentation of Company's I ...