TempleMemo.8(LOI)

MEMORANDUM

To: Thomas Blackacre, Esq.

From: Mr. John Alexander

Re: Proposed Production Project in Japan

Date: March 7, 1995

_____________________________________________________________

I have finished looking over the Memoranda prepared by Finance, Sales, Personnel, Operations and International regarding our proposed production project in Japan. Based on those Memoranda, it appears that it will not be feasible for us to establish our Asian production base and enter the Japanese market unless we have a strong joint venture partner. In the circumstances, our best (and possibly our only realistic) choice is Yasuda.

Yasuda has agreed to meet with UTís negotiating team in March to discuss the joint venture and, if possible, to execute a ìletter of intentî or ìheads of agreementî (their term) for the project. It is important for us to work out as many of the key terms for the project as possible and in any event to agree on some form of letter of intent which our two companies can sign by March 31, 1994 (their and our fiscal year ends). Consequently, I will need you to provide me a draft letter of intent for this joint venture by March 17. Also, according to our established policy, we will need a confidentiality agreement with Yasuda since we will be discussion our precision machinery and MIPIT technologies.

I would like to have the letter of intent cover the following key points regarding the joint venture project (I have also indicated the priority of each point to us):
International Sales Royalty on UT technologyWe would like to see 5% of net sales royalty but we should be flexible based on market needsNot ImportantPersonnelWe should seek a commitment on Yasudaís part to staff the Joint Venture with their best staffImportantLand

Issue UT Position Priority

Name of Joint Venture UTís name must be included in the Joint Ventureís name. Essential

Japan OEM sales We need to retain exclusive rights for existing OEM sales Very Important

Other Japan sales We prefer non-exclusive license for new sales distribution and would like to see the joint venture develop its own sales force over time Less Important

International Sales-General Sales from joint venture limited only to East and South Asia (no license to sell in U.S. or European markets) Very Important

International Sales-Distribution Joint venture unlikely to develop own distribution, therefore we wish to retain as much flexibility as possible to use alternative non-exclusive distributors Less Important

OEM Sales Royalty for UT Technology We prefer 5% of net sales but willing to go down to 3% of net sales if necessary Important

Other Japan Sales Royalty for UT technology We want a 6% of net sales royalty but willing to accept 4% if Yasuda can produce results Less Important

The above list is not, of course, exhaustive of what might be in our draft of the letter of intent. If there are any other factors that I have left out, you should include them in our draft.

Issue	UT Position	Priority
Name of Joint Venture	UTís name must be included in the Joint Ventureís name.	Essential
Japan OEM sales	We need to retain exclusive rights for existing OEM sales	Very Important
Other Japan sales	We prefer non-exclusive license for new sales distribution and would like to see the joint venture develop its own sales force over time	Less Important
International Sales-General	Sales from joint venture limited only to East and South Asia (no license to sell in U.S. or European markets)	Very Important
International Sales-Distribution	Joint venture unlikely to develop own distribution, therefore we wish to retain as much flexibility as possible to use alternative non-exclusive distributors	Less Important
OEM Sales Royalty for UT Technology	We prefer 5% of net sales but willing to go down to 3% of net sales if necessary	Important
Other Japan Sales Royalty for UT technology	We want a 6% of net sales royalty but willing to accept 4% if Yasuda can produce results	Less Important