** Confidential treatment has been requested with respect to the information
contained within the "[**]" markings. Such marked portions have been omitted
from this filing and have been filed separately with the Securities and
Exchange Commission
EXHIBIT 10.36
MANUFACTURING AGREEMENT
by and between
PREMISYS COMMUNICATIONS, INC.
and
CMC MISSISSIPPI INC.
This Agreement is entered into this 9th day of Jan., 1997, by and between
PREMISYS COMMUNICATIONS, INC., a California corporation having a place of
business at 00000 Xxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxx, 00000, ("Buyer") and CMC
MISSISSIPPI INC., a Mississippi corporation, having a place of business at 0000
Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxx, 00000 ("Seller").
1. DEFINITIONS
AML Approved Manufacturer List
ATP Availability To Promise
BABT British Approvals Board for Telecommunications
DMR Discrepant Material Report
ECO Engineering Change Orders
EDI Electronic Data Interchange
ESD Electric Static Discharge
FGI Finished Goods Inventory
FIFO First In First Out
FOB Free On Board
ICT In Circuit Test
MOQ Minimum Order Quantity
MRP Material Requirements Planning
NCNR Non-Cancelable Non-Reschedule
NDA Non-Disclosure Agreement
NRE Non-Recurring Engineering
P/I ECO Disposition: Phase In
PCB Printed Circuit Board
Page 1
POTS Plain Old Telephone Service
PPM Parts Per Million
PPV Purchase Price Variance
RMA Return Material Authorization
RWK ECO Disposition: Rework
SMT Surface Mount Technology
SOF Sales Order Forecast
UAI ECO Disposition: Use As Is
VPA Volume Purchase Agreement
WIP Work In Process
Delivery Date The scheduled date for material receipt at Buyer's
premises as indicated on Buyer's Purchase Orders.
Purchase Order A periodic contract specifying Product part
number, Product description, quantity, price,
revision, scheduled delivery date and ship-to
address.
Written Communication Throughout this contract, communication between
the Buyer and Seller is referred or alluded to.
This means any type of mutually agreed to form of
documented communication; U.S. mail, express
courier, facsimile, E-mail, EDI, etc. The
communication will be deemed received on the date
it is transmitted (and verified) electronically,
taking into account time zone differences, or on
the date it is actual delivered by U.S. mail or
other express courier.
2. TERM OF AGREEMENT
2.1. The term of this Agreement ("Term") shall commence on January 12,
1997 and expire on January 12, 1998 (twelve months after the
commencement). In the event that neither party to this Agreement
gives written notice to the other within three (3) months prior to an
expiration date, this Agreement shall automatically be renewed for
successive twelve-month periods, unless terminated in accordance with
Section 14 or Section 18 hereof. All existing terms and conditions
shall remain the same, unless specifically modified by the parties in
a written amendment to this Agreement.
3. STATEMENT OF WORK
3.1. Buyer agrees that Seller shall be a manufacturer of Products, as
defined in Purchase
Page 2
Order and amended from time to time upon the mutual agreement of the
parties, for the Term, as long as schedule, delivery and pricing
requirements of this Agreement are met.
3.2. Seller agrees to assemble, test, inspect, package for delivery and
sell the Products only to Buyer as described in this Agreement, and
Buyer agrees to purchase the Products in accordance with the terms
and subject to the conditions of this Agreement.
3.3. Buyer shall consign to Seller all applicable Product documentation,
including bills of materials, for use in the manufacture of each
Product. Seller shall make available to Buyer all necessary
manufacturing, testing, inspection and other information required in
the qualification of the manufacturing process, as mutually agreed by
the parties, as well as a costed xxxx of materials for each Product,
excluding certain components which, by contractual obligation with
suppliers, Seller cannot divulge. A written NDA shall be signed by
both Buyer and Seller prior to transfer of Product documentation from
Buyer to Seller.
3.4. Seller shall purchase parts and material for Products only from
Buyer's AML; as amended from time to time and submitted in writing by
Buyer via the Buyer's Source Control Process.
3.5. Nothing in this Agreement shall obligate Buyer to purchase any
quantity of Products from Seller for which Buyer does not deliver to
Seller a purchase order nor shall anything in this Agreement prevent
Buyer from purchasing from any source other than Seller.
4. ORDERS
4.1. Upon execution of this Agreement, and on a quarterly basis
thereafter, Buyer shall supply Seller with an eight (8) month rolling
SOF for anticipated requirements for each Product. This forecast
shall be used to drive Seller's MRP thereby providing Seller with ATP
against future Purchase Orders submitted.
4.2. Pursuant to this Section 4, Buyer shall issue written Purchase Orders
signed by an authorized representative of Buyer. Such Purchase
Orders shall, at a minimum, indicate the; quantity, Buyer's part
number, description, revision level(s), price, ship-to address, and
Delivery Date(s) for each Product ordered. Buyer shall ensure that
the delivery schedule contained in each Purchase Order will allow for
a standard Product lead time of not less than four (4) months.
4.3. Upon execution of this Agreement, Buyer shall issue a Purchase Order
for Products to be delivered during the first 180-day period of the
Term. Subject to the provisions hereof, including, without
limitation, Section 5 and 6 hereof, Buyer may issue a
Page 3
Purchase Order or change order each thirty (30) days or as business
conditions dictate, specifying Products to be delivered during the
succeeding six (6) month period.
4.4. All Purchase Orders for Products are subject to Seller's review for
correct specification level and pricing. Seller's acceptance and
confirmation shall be within five (5) business days of the date of
Buyer's issuance and Seller's receipt. Each Purchase Order shall
become effective upon written acceptance of the Seller provided that,
however, in the event that no written confirmation is received within
six (6) business days of the date of Buyer's issuance and Seller's
receipt, the Purchase Orders shall be deemed accepted and confirmed
by both parties.
4.5. The parties hereby agree that where any term or provision in any
Purchase Order conflicts with, or could be construed to alter, a term
or provision of this Agreement, the term or provision herein shall
govern.
5. RESCHEDULES AND CANCELLATIONS
5.1. Seller shall use reasonable efforts to accommodate any reschedule
request, subject in each case to material availability, available
capacity and other factors impacting the manufacturing process, and
subject to the following guidelines:
5.1.1. Orders and quantities scheduled for a Delivery Date within
thirty (30) days of the current date cannot be rescheduled
out to a later date;
5.1.2. Orders and quantities scheduled for a Delivery Date between
thirty-one (31) and sixty (60) days of the current date may
be rescheduled out to a maximum of ninety (90) days.
5.1.3. Orders and quantities scheduled for a Delivery Date outside
sixty (60) days of the current date are cancelable at no
fee; subject to obligations for written acceptance of NCNR
and/or component MOQ by Buyer.
5.2. Reschedules must be in the form of written changes to existing
Purchase Orders. Seller's acceptance and confirmation of reschedule
requests shall be within five (5) business days of the date of
Buyer's issuance and Seller's receipt provided that, however, in the
event that no written confirmation is received within six (6)
business days of the date of Buyer's issuance and Seller's receipt,
the reschedule shall be deemed accepted and confirmed by both
parties.
5.3. Buyer may at any time expedite delivery of a Product by requesting an
earlier delivery date with no additional fee. Seller shall use best
efforts to accommodate such requests. In cases where best efforts
are insufficient due to PPV issues, Seller shall identify all gating
items and corresponding PPV proposals within five (5)
Page 4
business days of Buyer's request date and Buyer shall respond to said
gating items within three (3) business days of Seller's response.
Buyer acknowledges the responsibility to provide a timely response to
Seller's queries and reasonable assistance to secure material when
expediting efforts are in process. Such assistance is not to be
construed to include material purchases by Buyer for resale to Seller
in support of such efforts. Acceptance of Products delivered in
accordance with Buyer's reschedule request (Purchase Order change
order) constitute Buyer's agreement to the payment terms contained
herein.
5.4. Seller shall make best efforts to return "obsolete/excess" materials
and/or components to the source of purchase or to use said materials
and/or components for other Customers when held by the Seller due to
cancellations or ECO's which are within ninety (90) days of Buyer's
scheduled Delivery Date. Seller shall identify and return such
materials and/or components at the time of cancellation or Product
change. Buyer shall be responsible for reimbursement to Seller of
demonstrated cancellation or restocking charges upon verification of
best effort communications with the source of purchase and
presentation of supplier invoices evidencing such charges. In the
event that the excess material has become non-returnable or non-
useable elsewhere, then Seller shall provide Buyer the origin of the
excess material, the Product and quantities that were canceled by
Buyer which used said material, and the purchase price of said
material. Upon review and agreement by the Buyer, Buyer shall issue
a Purchase Order for the excess material plus a 9.5% handling charge
and determine a disposition of the material. Excess Material shall
also include all other components and materials purchased by Seller
for the manufacture of Products pursuant to a Purchase Order accepted
by the Seller for Products that have not been completed at the time
of termination of this Agreement for cause.
5.5. Buyer may, at any time, provide written notification of cancellation
of Purchase Order Line Item balances in the event of:
5.5.1. Buyer accepted short shipments pursuant to Section 7.7.
5.5.2. Certification revocation pursuant to Section 9.9.
5.6. Buyer demands, and Seller acknowledges, that on-time shipments of
Products purchased from Seller is a primary factor of Buyer's
successful business operations. To compensate for potential
cancellations and expediting costs on behalf of Buyer's customers due
to late shipments on the part of Seller, Buyer is entitled to cost
reductions and an additional reschedule allowance (superseding
Section 5.1) commensurate with the degree of late shipments on the
part of Seller against accepted Purchase Orders with specified
Delivery Dates as expressed in the following table:
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------------------------------------------------------------
Days Late Discount Reschedule Allowance
------------------------------------------------------------
[**] [**] [**]
------------------------------------------------------------
[**] [**] [**]
------------------------------------------------------------
[**] [**] [**]
------------------------------------------------------------
[**] [**] [**]
------------------------------------------------------------
6. PRICING
6.1. Pricing shall be reviewed by Buyer and Seller quarterly, and price
changes will be incorporated upon completion of review, effective for
all orders placed and released. Price changes will not be applicable
to any existing inventories or NCNR purchase orders that Buyer has in
place with vendors. Seller shall allow Buyer to verify component
prices via on line system data using a telephone number and password,
if applicable, supplied to Buyer by Seller. Should further audits be
deemed necessary by Buyer, Buyer may request an audit of invoices
from Seller's vendors upon reasonable notification to Seller by
Buyer. The component, material, and labor pricing agreed upon as a
result of these quarterly reviews shall be based on actual costs,
firm for all orders placed during the next three months, except as
referenced for cost reductions under Section 6.3.
6.2. Gross material xxxx-up will be determined on a step scale based on
the average total annual volume, expressed in U.S. Dollars, averaged
on a quarterly calendar basis. The following table shall be
referenced:
------------------------------------------------------
Average Annual Volume [**] [**] [**]
------------------------------------------------------
Gross Material Xxxx-Up % [**] [**] [**]
------------------------------------------------------
6.3. Buyer and Seller will make every reasonable effort to reduce costs in
their respective areas.
6.3.1. Seller driven Cost Reductions
Buyer and Seller agree that Seller driven cost reductions
will be [**] for the following six months. After the six
month time period, the Product's component/material price
will be reduced to actual cost plus the agreed upon xxxx-
up.
(Seller driven cost reduction example: Seller recommends a
new manufacturer's part which is acceptable to the Buyer
and which is added to the Buyer's AML per the Buyer's
Source Control process. This part change reduces the
Product cost by [**]. The Product cost during the next six
months will only be reduced by [**], thus earning the
Seller an extra [**] profit per Product required and
shipped to Buyer during this time period.)
** Confidential treatment has been requested with respect to the information
contained within the "[**]" markings. Such marked portions have been omitted
from this filing and have been filed separately with the Securities and
Exchange Commission.
Page 6
6.3.2. Buyer Driven Cost Reductions
Seller agrees to use best efforts to implement Buyer
arranged cost reductions, whether due to manufacturer or
supplier substitution, subject to invoice offsets if
delayed beyond the following maximum time limits (excluding
custom materials and components under MOQ controls when
inventory accumulation was the result of Buyer reschedules
and subject to Buyer verification):
6.3.2.1. When existing materials are on order and subject
to cancellation charges, Buyer cost reductions
must occur within 75 days of notification (i.e.,
fifteen (15) days for reaction time plus thirty
(30) days for existing orders and thirty (30) days
for kitting and manufacturing lead time except for
excess material due to any Buyer initiated
reschedule or material on order under NCNR terms.
6.3.2.2. When Buyer's arrangements (e.g., VPA, etc.) permit
price effectivity on existing orders, Buyer cost
reductions must occur within 45 days of
notification (i.e., fifteen (15) days for reaction
time plus thirty (30) days for kitting and
manufacturing lead time) except for excess
material due to any Buyer initiated reschedule or
material on order under NCNR terms.
6.4. Engineering changes shall be set forth in written ECOs furnished by
Buyer to Seller. Seller shall evaluate the ECO for cost and/or
schedule impact within ten (10) business days of the date of ECO
receipt, based on Buyer's indicated ECO implementation requirements.
Buyer shall be advised of all potential price and/or schedule impacts
incurred by Seller in connection with such changes. Seller shall not
commence implementation of engineering changes which have a price
and/or schedule impact until written approval has been received from
Buyer authorizing all price and/or schedule impacts. ECO
implementations shall occur as appropriate to the ECO dispositions
indicated in the following sections:
6.4.1. UAI dispositions shall be implemented upon exhaustion of
affected inventory immediately following the effectivity
date of the ECO and shall not have applicable rework or
excess inventory charges.
6.4.2. P/I dispositions shall be implemented upon the next
scheduled production run immediately following the
effectivity date of the ECO.
6.4.3. RWK dispositions shall be implemented immediately following
the effectivity date of the ECO and are applicable to all
affected inventory (i.e., WIP, FGI and Safety Stock)
regardless of processing state.
Page 7
6.5. Buyer shall be responsible for all freight, duties, insurance, and
other external shipping costs incurred by Seller, in addition to the
unit prices payable pursuant to Section 6.1, in connection with the
Products shipped to Buyer. However, in the event that Product is not
available by the specified Delivery Date indicated on accepted
Purchase Orders, Seller may, at the sole discretion of Buyer, be
liable for freight expediting charges required to achieve the
specified Delivery Date. Such expediting charges would be charged as
offsets to existing invoices.
7. DELIVERY
7.1. The risk of loss and title to Products shall pass to Buyer at FOB
shipping point.
7.2. Seller shall package each Product according to written specifications
supplied by the Buyer. Seller shall take reasonable steps needed to
insure maximum protection from damage due to handling, ESD and other
hazards which might occur during handling and transit.
7.3. A packing list will accompany each shipment and include, at a
minimum, the; purchase order number, Buyer's part number, revision,
serial numbers, quantity, quantity back-ordered, date of shipment,
country of origin, manufacturer's affidavits of all American made
components, and foreign assemblers declaration.
7.4. Buyer shall designate the carrier and method of all shipments. Buyer
may withhold authorization to carrier for shipment acceptance in the
event of partial availability of Products (Section 7.7) or written
consolidation requirements expressed at time of Purchase Order
acceptance (Section 4.4).
7.5. Seller shall notify Buyer of Products ready for shipment at least two
(2) days prior to actual shipment. All shipments are to receive
written authorization prior to release to the designated carrier; a
copy of which will be sent to the designated carrier by Buyer.
7.6. Seller shall deliver Products in accordance with the scheduled
Delivery Dates set forth in any Purchase Order issued and accepted in
conformity with this Agreement. Seller shall ship to the locations
designated by Buyer. Seller shall schedule delivery and initiate
shipment so Products reach the Buyer's facility in a window from
three (3) days prior to the scheduled Delivery Date to zero (0) days
past the scheduled Delivery Date. Buyer shall be notified of
shipment by facsimile transmission to Buyer of a copy of the Packing
List or other agreed upon document within twenty-four (24) hours of
actual shipment of Products. Any delay in notification to Buyer
shall defer invoice payment by a corresponding period. Shipping
notification will include, at a minimum, the Purchase Order number,
Buyer's part number, revision, quantity shipped, quantity back-
ordered, date of shipment and components that are of US domestic
origin and their value. Seller will not ship any of the Buyer's
Page 8
Products short any components without Buyer's written authorization.
7.7. Seller will not ship less than 100% of the total quantity of Products
ordered per Purchase Order line item nor ship more than the total
quantity of Products ordered per Purchase Order line item without the
written approval of Buyer.
8. PAYMENT TERMS
8.1. Payments shall be made in U.S. dollars Net thirty (30) days from the
date of invoice, subject to offsets due to late shipment notification
(Section 7.6), and sent to the following address:
CMC Mississippi Inc.
0000 Xxxxxx Xxxxx
Xxxxxxx, XX 00000
8.2. If Buyer disputes the amount due pursuant to any invoice, the Buyer
may only withhold payment of the amount in dispute, if the Seller is
notified in writing of the dispute in question within twenty-five
(25) days of receipt of the subject invoice. Otherwise, payment
shall be made in full as required by this Section.
8.3. Each party shall refund any disputed amount already paid to the other
party after receipt of satisfactory supporting evidence. In no case
shall any adjustment, refund, or credit be issued for any items after
six (6) months following the original date of the subject invoice,
unless such items are called to the attention of the Seller in
writing within six (6) months following the original date of the
subject invoice or are as a result of defects covered under Warranty
in Section 11.
8.4. All invoices will be in writing and contain, at a minimum, the
following information; Buyer's invoice and ship-to address, Buyer's
purchase order number, Product or service description, quantity of
goods shipped, unit and extended price, and method of shipment.
9. PRODUCT QUALITY STANDARDS; BUYER'S REMEDY FOR NON-CONFORMANCE
9.1. Buyer and Seller hereby agree to mutually establish the standards of
Product quality as set forth in this section ("Quality Standards").
Seller shall adopt the processes and procedures for quality control
as set forth herein ("Quality Control Tests") and Buyer shall adopt
the processes and procedures for incoming inspection of Products as
set forth herein ("Incoming Inspection"). At a minimum, Buyer
expects Products to be built to the latest issue of the following
acceptable industry and workmanship standards;
Page 9
9.1.1. IPC-A-610 Class 2 (Acceptability of Electronic Assemblies),
9.1.2. IPC-S-815 Class 2 (SMT - Acceptability of Electronic
Assemblies),
9.1.3. IPC-R-700 (Guidelines for modification and repair of PCB's
and Assemblies),
9.1.4. IPC-A-600 (Acceptability of Printed Boards),
9.1.5. BABT 340 approved production Quality Assurance schemes on
all manufacturing processes used for Products in Buyer's
multiplexer applications. Buyer to provide written
notification to Seller in the event that Products are not
intended for multiplexer applications such that Seller can
obtain appropriate BABT certification for said
applications.
9.2. Prior to each shipment of Products to the Buyer, Seller shall perform
Quality Control Tests as specified herein. Buyer, or Buyer's
authorized representative, may inspect Seller's manufacturing and
quality control facilities at any reasonable time upon advance
notice. Upon request, Seller will provide Buyer with access and
copies of Seller's quality control documentation applicable to
Products in process and previously shipped to Buyer. Buyer's
personnel shall comply with Seller's security and safety regulations
while on Seller's premises.
9.3. All Products ordered by Buyer pursuant to this Agreement shall be
subject to an Incoming Inspection by Buyer at the Products'
destination or at the Seller's facilities; as determined by Buyer.
The Buyer shall accept all Products which pass such Incoming
Inspection. Upon discovery of non-conforming Products, Buyer shall
supply Seller with written notice of such rejection consisting of, at
a minimum, a DMR indicating the specific discrepancies. All Products
not explicitly rejected within ninety (90) days pursuant to this
Section 9.3 shall be deemed to be accepted. Such Incoming Inspection
will include, at a minimum, the following conformance expectations
for acceptance:
9.3.1. Workmanship failures, as agreed by both parties, in excess
of 1000 PPM shall be rejected. PPM will be based on number
of opportunities for error per assembly.
9.3.2. Component failures in excess of 3.4 PPM on ICT tested
Products shall be rejected if attributable to the assembly
process.
9.4. Upon receipt of notice of rejection, Seller shall, within two (2)
days of such notice of rejection, verify indicated failure(s) and/or
cause(s) for rejection and either:
9.4.1. provide Buyer with a RMA number authorizing the Buyer to
return such
Page 10
rejected Products to Seller for credit at Seller's expense
and pursuant to which Seller may designate a carrier and
method of shipment, or
9.4.2. replace such rejected Products and request Buyer to dispose
of such rejected Products at Sellers cost.
9.5. In the event that Seller elects to provide Buyer with a RMA number,
Buyer may, request replacement or repair of the rejected Products and
shall arrange for shipment of the rejected Products to the Seller,
freight collect, within seven (7) days of receipt of the RMA number.
Seller shall, within seven (7) days of receipt of the Product, repair
or replace such Product, at Seller's option, and return it to the
Buyer, freight prepaid.
9.6. In the event that Seller receives the rejected Products from Buyer
and determines, by means of performance of additional Quality Control
Tests on the rejected Products and/or other evidence, that the
alleged defects in the Products are not the result of failure to meet
the applicable Quality Standards on the part of the Seller, Seller
shall repair or replace such Products in a timely manner and invoice
the Buyer for the full expenses associated with such repair or
replacement, including all costs associated with shipping such
Products to the Seller and return the Products to Buyer freight
collect.
9.7. If Seller cannot meet the required turn around time specified by
Buyer in regards to reworking or replacing the rejected material, or
if it is more beneficial to either the Buyer or the Seller, the
Seller may authorize Buyer, and Buyer may accept the responsibility,
to "rework" rejected Product at Buyer's facility, or at another local
subcontractor. Buyer will consequently be authorized to charge back
to Seller the cost of all such rework.
9.8. Buyer's remedies as set forth in this Section 9 shall be Buyer's sole
remedies with respect to the non-conformance of Products with any
requirements, terms or conditions of or pursuant to this Agreement.
9.9. Seller shall maintain ISO9002 and BABT certification at all times
throughout the term of this agreement. If at any time either of
these certifications are challenged, temporarily suspended or
revoked, Buyer shall immediately be notified. Revocation of these
certifications are sufficient reason for Purchase Order cancellation
for cause.
10. SAFETY STOCK
10.1. Seller, on a rolling FIFO basis, will carry in stock one additional
two weeks quantity of assembled Product available for shipment within
twenty-four (24) hours of notification by Buyer. Seller shall bring
the Product safety stock quantities back up to their required level,
within twelve (12) weeks of usage/shipment of Product to
Page 11
Buyer. However, Safety Stock restoration has priority over Purchase
Order shipments and therefore, based on the sole discretion of the
Buyer, Seller may be so instructed to defer scheduled shipments such
that Safety Stock is returned to its required level.
10.2. The two week safety stock quantity will be based on the Product's
average one month requirement as derived from the eight (8) month SOF
and expressed on Buyer's Safety Stock Purchase Order as modified
periodically by Buyer. Quantities are to be reviewed monthly by
Buyer and Seller. Product Safety Stock Inventory amounts shall not
be greater than two (2) week's average production release plus an
additional 10% or be less than two (2) week's average production
release minus 10% except during the eight (8) week period immediately
following an adjustment to the Safety Stock Purchase Order when
modified by Buyer. Product Safety Stock Inventories are quantities
above and beyond the production requirement schedule.
11. WARRANTY
11.1. Warranty by Seller.
11.1.1. The following warranty for Products is in lieu of all
conditions or warranties, express or implied, including,
but not limited to, any implied conditions or warranties of
merchantability or fitness for a particular purpose on the
part of the Seller.
11.1.2. Seller warrants that, upon delivery and for a period of one
(1) year following receipt of a Product by Buyer's
customer, such Product will be free from defects in
workmanship for work which was performed by Seller.
11.2. Warranty by Buyer
Buyer warrants that, at the time of delivery of consigned materials
and tools (as defined in Section 12 hereof) to Seller, Buyer has free
and clear title to the consigned materials and tools. Buyer warrants
the consigned materials and tools against faulty workmanship and
materials, that they meet applicable specifications and that the
tools perform the functions on which the Seller will rely to
manufacture the Products. Buyer warrants and represents that it is
the owner of any and all proprietary rights in the information
provided to Seller in order to manufacture the Products, and that the
Buyer has the unqualified right to make available to the Seller the
consigned materials, tools, and other information, including
drawings, designs and specifications, for use by the Seller
thereunder, and to grant licenses, if required, under the terms of
this Agreement. Buyer shall indemnify Seller, its employees, agents,
shareholders, licensees, sub-licensees, successors and assigns from
any and all damages, costs and liabilities incurred by any of them
arising out of the breach of the foregoing warranty by Buyer.
Page 12
11.3. Seller agrees that any rights it may have against any supplier of
components or other materials used in Products manufactured
hereunder, which rights arise out of a breach of any warranty of
supplier with respect to such materials or components be subjugated
to Buyer.
11.4. Seller warrants to Buyer that the manufacturing services will conform
to Buyer's applicable specifications at the time of delivery of the
Products. Seller will transfer to Buyer any and all transferable
warranties and indemnities Seller receives from the manufacturer of
the electronic or other components/materials.
12. LIMITATION OF LIABILITY
12.1. In no event shall Seller be liable in connection with the performance
or nonperformance of this agreement for indirect, incidental or
consequential damages, loss of profits, loss of use or data or
interruption of business, whether such alleged damages are labeled in
tort, contract, warranty or indemnity, even if Seller has been
advised of the possibility of such damages; and in no event shall
Seller's liability arising out of the performance or nonperformance
of this agreement, whether arising out of contract, tort (including
negligence and strict liability) under any warranty, indemnity or any
other legal or equitable form of action, exceed the aggregate
purchase price paid by the Buyer for such Products under the
agreement.
12.2. Seller is performing work pursuant to specifications provided by
Buyer; therefore, Seller shall not be liable for the technical
adequacy or design of the Products, nor shall Seller be liable for
the safety or regulatory compliance of the Products, including, but
not limited to, ensuring the Product meets applicable government or
responsible agency regulations. Buyer agrees to indemnify and save
Seller harmless from and against all losses, expenses or damages
arising out of any claim resulting from Seller's compliance with
Buyer's specifications.
13. TOOLING AND TEST EQUIPMENT
The tooling, test equipment and other items identified in Exhibit I
("Tools") are property of Buyer. The parties agree to the following
provisions with respect to the Tools listed under Exhibit I:
13.1. Seller expressly agrees that all Tools are the property and assets of
Buyer. Seller shall not assign, lease, license, pledge, loan,
mortgage or otherwise part with possession or the right to possess
the tools. Seller shall allow no claims, encumbrances or liens with
respect to the Tools and shall not state or imply to any third party
that Seller is the owner of the Tools.
13.2. Seller agrees that all Tools will be used only to manufacture Buyer's
Products, unless otherwise approved by the Buyer.
Page 13
13.3. The Seller agrees that it will follow normal industrial practice in
the identification and maintenance of the property control records on
all such tooling, and will make such records available for inspection
by the Buyer at all reasonable times. This includes annual
calibration requirements imposed by Buyer. All such reasonable labor
costs associated with maintenance shall be absorbed by Seller. All
material costs associated with maintenance will be the responsibility
of Buyer. After the termination or completion of such order(s) and
upon the request of the Buyer, the Seller shall furnish a list of
such tooling in the form requested and shall make such tooling
available for disposition by the Buyer.
13.4. Seller shall make available to Buyer the following equipment for the
purpose of enhanced ICT and functional testing of Products as desired
by Buyer: 1) Hewlett Packard 3070 with POTS option, 2) Rod-L High
Potential Tester.
14. DEFAULT - DUE ON DEMAND
14.1. If either party becomes insolvent, ceases to do business, or becomes
a party to any bankruptcy or receivership proceedings, the other
party may, with or without previous written notification to the first
party, declare this Agreement terminated upon written notification to
the first party.
14.2. If either party shall be in default with respect to any of its
obligations herein, the other party may notify the defaulting party
in writing specifying the nature of the default; and if such default
is not cured within thirty (30) days after the receipt of such
notice, the notifying party may terminate this Agreement as of the
effective date of notice of termination provided to the defaulting
party.
14.3. In the event this Agreement is terminated pursuant to this Section
14, Buyer shall forthwith pay to Seller
14.3.1. all outstanding invoices,
14.3.2. the per unit price for all completed but un-shipped
Products as of the termination, plus freight and other
charges hereunder,
14.3.3. a negotiated price mutually agreed by both Buyer and Seller
for all work in process, and
14.3.4. the cost of all Excess Materials ordered plus 9.5% for
released purchase orders.
14.4. Seller is to return all "tools", drawings, and other consigned or
proprietary material or information to Buyer. Terminating Party's
rights pursuant to this Section 14 are in addition to all other
remedies provided by law or equity.
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15. LIAISON
Each party designates the person below as its primary representative that
the other party may contact for exchanging information concerning this
Agreement. Either party may change its representative by written notice to
the other.
Buyer: Premisys Communications, Inc. Seller: CMC Mississippi Inc.
00000 Xxxxxxx Xxxxx 0000 Xxxxxx Xxxxx
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Phone: (000) 000-0000 Phone: (000) 000-0000
Attn: Xxxx Xxxxxx Attn: Xx Xxxxxxx
Title: Director of Materials Title: Sr. V.P. Program
Management
16. NOTICE
16.1. Except as otherwise provided in this Agreement, all notices,
requests, consents and other communications hereunder shall be in
writing, shall be addressed to the receiving party's address set
forth below or to such other address as a party may designate by
notice hereunder, and shall be either
16.1.1. delivered by hand,
16.1.2. made by telex, telecopy or facsimile transmission,
16.1.3. sent by overnight courier, or
16.1.4. sent by registered mail, return receipt requested, postage
prepaid.
If to Seller:
CMC Mississippi Inc. Attn: Xx Xxxxxxx
0000 Xxxxxx Xxxxx Phone: (000) 000-0000
Xxxxxxx, XX 00000 Fax: (000) 000-0000
If to Buyer: Premisys Communications, Inc. Attn: Xxxx Xxxxxx
00000 Xxxxxxx Xxxxx Phone: (000) 000-0000
Xxxxxxx, XX 00000 Fax: (000) 000-0000
16.2. All notices, requests, consents and other communications hereunder
shall be deemed to have been given either
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16.2.1. if by hand, at the time of the delivery thereof to the
receiving party at the address of such party set forth
above,
16.2.2. if made by telex, telecopy or facsimile transmission, at
the time that receipt thereof has been acknowledged by
electronic confirmation or otherwise,
16.2.3. if sent by overnight courier, on the next business day
following the day such notice is delivered to the courier
service, or
16.2.4. if sent by registered mail, on the 5th business day
following the day such mailing is made.
17. EXHIBITS
The following document(s) are attached to and made a part of this Agreement:
Exhibit I Tools
18. TERMINATION
This Agreement may be terminated by either party upon one hundred-twenty
(120) days prior written notice. In the event of such termination, Seller
shall continue shipment of all orders accepted prior to the date of such
notice, and Buyer shall remain obligated to accept and pay for such
deliveries at the agreed-upon price, and to be liable for payment for all
Excess Material pursuant to Section 5.4 hereof.
18.1. This agreement may be terminated immediately for cause by either
party in the event the other party:
18.1.1. Shall become insolvent;
18.1.2. Ceases to function as a going concern;
18.1.3. Fails to perform any of its obligations hereunder so as to
be in default and fails to cure said default within thirty
(30) days after written notice hereof.
18.2. Notwithstanding termination of this agreement, Buyer shall be liable
for payment for all Products pursuant to orders accepted by Seller
and for all Products delivered to and accepted by Buyer prior to the
effective date of termination of this agreement.
19. GENERAL PROVISIONS
19.1. Entire Agreement; Amendment
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This document and its Exhibits contain the entire Agreement between
the parties relating to the subject matter hereof. All prior or
contemporaneous agreements, written or oral, between the parties
regarding the Products and services are superseded by this Agreement.
This Agreement may not be modified except by written document signed
by an authorized representative of each party.
19.2. Force Majeure
Neither party shall be liable for delay or defaults due to fire,
weather, riot, strikes, acts of God, acts of the public enemy, or
other similar unforeseeable events or causes beyond the reasonable
control and without the fault or negligence of the party incurring
such delay.
19.3. Waiver
No term of this Agreement shall be considered waived and no breach
excused by either party unless made in writing by the other party.
No consent, waiver, or excuse by either party, express or implied,
shall constitute a subsequent consent, waiver or excuse.
19.4. Nonassignment
Neither party shall assign this Agreement without the consent of the
other party provided, however, that either party may assign this
Agreement and its rights hereunder, without the consent of the other,
to its parent corporation or any subsidiary or corporate affiliate of
it.
19.5. Governing Law and Language.
This Agreement shall be governed by California law, without reference
to conflict of laws principles (and specifically excluding the United
Nations Convention on Contracts for the International Sale of Goods),
and is in the English language only, which language shall be
controlling in all respects. All communications and notices to be
made or given pursuant to this Agreement shall be in the English
language.
19.6. Arbitration.
Any dispute arising out of or relating to this Agreement, or the
interpretation, making, performance, breach or termination thereof,
shall be finally settled by binding arbitration in San Francisco,
California under the Rules for International Arbitration of the
American Arbitration Association, by three arbitrators reasonably
familiar with the technology and business pertaining to the products
covered by this Agreement, appointed in accordance with said Rules.
The arbitrators shall apply
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California law to the merits of any dispute or claim, without
reference to rules of conflicts of law. The arbitration and all
pleadings and written evidence shall be in the English language.
Judgment on the award entered by the arbitrator may be entered in any
court having jurisdiction thereof. Notwithstanding the foregoing,
the parties may apply to any court having jurisdiction for a
temporary restraining order, preliminary injunction, or other interim
or conservatory relief, without breach of this arbitration agreement
and without any abridgment of the power of the arbitrator.
19.7. Severability
If any provision of this Agreement is held invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired.
19.8. Headings
All headings and captions included in this Agreement are for
convenience of reference only and are not intended to affect the
interpretation of any provision hereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement,
in one or more counterparts, on the dates set forth below:
CMC PREMISYS
MISSISSIPPI INC. COMMUNICATIONS, INC.
(Seller) (Buyer)
By: /s/Xxxx X. O'Rear /s/Xxxx Xxxxxx
-------------------------------- --------------------------------
(Authorized Representative) (Authorized Representative)
Xxxx X. O'Rear Xxxx Xxxxxx
-------------------------------- --------------------------------
(Printed Name) (Printed Name)
President VP of Operations
-------------------------------- --------------------------------
(Title) (Title)
9 Jan 97 1/9/97
-------------------------------- --------------------------------
(Date) (Date)
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EXHIBIT I
Tools
Seller shall build and maintain burn-in fixtures, high-potential fixtures and
ICT fixtures for Buyer at Buyer's request upon submission of Purchase Orders.
Such tools shall remain the sole property of Buyer and shall reside at Seller's
location until Buyer otherwise requests.
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