EXHIBIT 2.4
AMENDMENT NUMBER TWO TO THE
ORIGINAL DESIGN MANUFACTURER AGREEMENT
This Amendment Number Two to the Original Design Manufacture Agreement
("Amendment") is entered into on October 31, 2001, between TriGem Computer,
Inc., a Korean corporation whose principal office is located at TriGem Computer
Bldg., 00-0 Xxxxx-xxxx, Xxxxxxxxxxxx-xx, Xxxxx 000-000, Xxxxx ("TriGem") and
eMachines, Inc., a Delaware corporation whose principal office is located at
00000 Xxxxxx Xxxx, Xxxx. 000, Xxxxxx, Xxxxxxxxxx 00000-0000, X.X.X.
("eMachines"). TriGem and eMachines shall be referred collectively as "Parties"
or individually as "Party."
WITNESSETH:
WHEREAS, TriGem and eMachines entered into that certain Original Design
Manufacturer Agreement (the "Agreement"), dated January 24, 2000, whereby TriGem
manufactures, assembles and provides Support for the Products and whereby
eMachines markets and sells the Products on a worldwide basis; and
WHEREAS, the Parties now desire to amend certain portions of the Agreement.
NOW, THEREFORE, in consideration of the mutual premises and covenants
contained herein, the Parties hereby agree as follows:
1. New Exhibit B. The Parties hereby agree that as of June 1, 2001, Exhibit
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B of the Agreement shall be replaced with the new Exhibit B, which is attached
to this Amendment.
2. New Section 15.4. Section 15.4 of the Agreement is hereby deleted and
replaced with the following:
"Arbitration Venue. The arbitration shall be conducted in Los
Angeles, California, and shall be conducted in accordance with
the Rules of Arbitration of the International Chamber of
Commerce ("ICC Rules")."
3. Other Provisions. All other provisions, terms and definitions of the
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Agreement not deleted, altered or otherwise modified by this Amendment shall
remain in full force and effect. If there is any conflict between the Amendment
and the Agreement, the provisions of the Amendment shall prevail.
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IN WITNESS WHEREOF, the duly authorized representatives of the parties
hereto have executed this Amendment as of the Amendment Date.
TRIGEM COMPUTER, INC. EMACHINES, INC.
By: /s/ Xxxxx Xxxx By: /s/ Xxxx Xxxxxxxx
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Name: Xxxxx Xxxx Name: Xxxx Xxxxxxxx
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Title: Director Title: Senior Vice President and
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Chief Operating Officer
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EXHIBIT B
SUPPORT TERMS
TriGem and eMachines agree to the following terms and processes for Product
Support:
I. Definitions. As used in this Exhibit B, the following terms shall be
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defined as follows:
A. "DF" shall mean the definition mutually agreed to between the Parties
and attached hereto as Attachment A.
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B. "NDF" shall mean the definition mutually agreed to between the Parties
and attached hereto as Attachment A.
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C. "RA" shall mean Return Authorization to eMachines of a specific
Product unit by eMachines' resellers during the warranty period.
D. "RMA" shall mean Return Material Authorization to eMachines of a
specific Product unit returned by eMachines' end users ("End Users")
during the warranty period.
E. "Service Charge" shall mean the support costs associated with the
Agreement for the period June 1, 2001 through September 30, 2001. The
Service Charge shall be Three Dollars and Fifty Cents ($3.50), which
includes all costs for labor, freight, handling, replacement
components, packaging material and other associated items.
F. "Support Charge" shall mean the support costs associated with the
Agreement for the period beginning October 1, 2001. The Support Charge
shall be Three Dollars and Fifty Cents ($3.50), which includes all
costs for labor, freight, handling, replacement components, packaging
material and other associated items.
II. RA Products.
A. Effective June 1, 2001 until September 30, 2001 the following
provisions shall apply:
a. If the Product unit is DF, then eMachines shall be entitled to a
full credit from TriGem for the returned Product unit, minus the
Service Charge.
b. If the Product unit is NDF, then eMachines shall be entitled to a
full credit from TriGem for the returned Product unit, minus the
Service
Charge. However, in the event that the NDF Product units returned
exceeds ten percent (10%) of all RA NDF returned Product units,
then TriGem shall be entitled to a fee of One Hundred Fifty
Dollars ($150) per NDF RA returned Product unit for each Product
unit in excess of the ten percent (10%) threshold.
c. TriGem shall repair and refurbish all RA returned Product units.
TriGem may resell the repaired and refurbished Product units
received by September 30, 2001 (the "Resold Units"). eMachines
hereby grants TriGem the right to use eMachines' figure "e" and
"EMACHINES" xxxx on the Resold Units and all associated materials
included with such units. TriGem agrees to remove all eMachines
licensed software, and all consumer information and the rear
eMachines label from the Resold Units.
d. TriGem shall provide timely and accurate report of all Product
unit returns and all Resold Unit sales, in a format reasonably
specified by eMachines, within fifteen (15) days but no later
than thirty (30) days after the end of each month. In the event
TriGem fails to provide such reports within the specified time,
then the defect rate will be calculated based on the three (3)
month rolling average based on the last three (3) months for
which there are timely reports.
e. Upon request by eMachines, TriGem shall disclose to eMachines its
inspection process used to determine whether a returned Product
unit is DF, and shall permit eMachines and its representatives to
inspect such process and audit any documentation related to such
process or the determination of whether any Product returned
hereunder is DF. eMachines may direct TriGem to modify its
inspection process as necessary to meet prevailing industry
standards.
B. Effective October 1, 2001, eMachines shall screen all RA Product
units to determine whether such units are DF or NDF. eMachines shall
return to TriGem only those units that satisfy the definition of DF.
Further, the following provisions shall apply:
a. eMachines shall receive a credit from TriGem for the returned DF
Product, minus the Support Charge. The amount of such credit from
TriGem shall be determined according to the devaluation schedule
attached hereto as Attachment B. TriGem will be responsible for
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payment of all freight charges associated with shipment of DF
Product units.
b. Upon request by TriGem, eMachines shall disclose to TriGem its
inspection process used to determine whether a returned Product
unit is DF, and shall permit TriGem and its representatives to
inspect such process and audit any documentation related to such
process or the
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determination of whether any Product returned hereunder is DF.
TriGem may direct eMachines to modify its inspection process as
necessary to meet prevailing industry standards.
c. TriGem shall consign to eMachines the repaired and refurbished DF
Product units received on or after October 1, 2001 (the
"Repackaged Units") for resale.
d. Beginning October 1, 2001, TriGem shall apply credits to
eMachines based on TriGem's screening results of RA Product units
within seven (7) business days of receipt by TriGem. In the event
that TriGem does not provide a report within the time period
specified herein, then eMachines may debit its account with
TriGem. TriGem shall credit eMachines for DF Product units only.
TriGem shall not be obligated to issue credit to eMachines for
missing parts, missing system units, NDF units, incorrect model
units or any non-TriGem units. TriGem shall return to eMachines
such NDF and incorrect model Product units to eMachines at
eMachines' expense.
e. Upon request by eMachines, TriGem shall disclose to eMachines its
inspection process used to determine whether a returned Product
unit is NDF, and shall permit eMachines and its representatives
to inspect such process and audit any documentation related to
such process or the determination of whether any Product returned
hereunder is NDF. eMachines may direct TriGem to modify its
inspection process as necessary to meet prevailing industry
standards.
f. eMachines shall remove and replace the original serial numbers on
all NDF refurbished units screened by eMachines. In exchange for
eMachines releasing any claim to a warranty for such units,
eMachines shall receive a credit from TriGem based upon the
schedule attached hereto as Attachment C. TriGem shall not
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provide any warranty on the NDF Refurbished units refurbished by
eMachines or eMachines selected Third (3/rd/) Party. eMachines
shall make best efforts to provide TriGem the original serial
number labels from the NDF refurbished units.
III. RMA Products
A. For the period beginning June 1, 2001 until September 30, 2001, the
following provisions shall apply:
a. If the Product is DF, TriGem shall repair or replace the DF
Product with a Product of equal or better specifications (such
decision to be made at TriGem's discretion) and return the
repaired/replaced Product unit within seven (7) business days
after TriGem receives the DF
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Product unit from eMachines or End User (at eMachines'
instructions). Invalid orders, such as incorrect model, incorrect
systems, incorrect address or any incorrect orders associated
with Product that can not be serviced shall be escalated to
eMachines for resolution. All such invalid orders shall be
resolved by eMachines within seven (7) business days. All
shipping costs associated with returning the Product unit to
eMachines or End User (as applicable) shall be borne exclusively
by TriGem.
b. If the Product is NDF, then eMachines shall pay TriGem an
aggregate amount of Twenty-Two Dollars and Fifty Cents ($22.50)
and all shipping cost incurred by TriGem in return shipping such
products to eMachines or End User (as applicable). TriGem shall
return the Product unit to eMachines or End User within seven (7)
business days after TriGem receives the Product from eMachines or
End User (at eMachines' instructions).
c. Per eMachines' request, End Users may directly ship the Product
units to TriGem and TriGem may directly return such Product units
to End Users.
B. For the period beginning October 1, 2001, eMachines shall screen all
RMA Product units to determine whether they are DF or NDF. eMachines
shall return to TriGem only those Product units that are DF. Further,
the following provisions shall apply:
a. eMachines shall receive a credit from TriGem for the returned DF
Product units, minus the Support Charge. TriGem shall credit
eMachines for returned DF Product units for a credit determined
according to the schedule attached hereto as Attachment B.
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eMachines shall be responsible for shipping of the Product units
to TriGem.
b. Upon request by TriGem, eMachines shall disclose to TriGem its
inspection process used to determine whether a returned Product
unit is DF, and shall permit TriGem and its representatives to
inspect such process and audit any documentation related to such
process or the determination of whether any Product unit returned
hereunder is DF. TriGem may direct eMachines to modify its
inspection process as necessary to meet prevailing industry
standards.
c. TriGem shall consign to eMachines the Repackaged Units for
resale.
d. Beginning October 1, 2001, TriGem shall apply credits to
eMachines based on TriGem's screening results of RMA Product
units within seven (7) business days of receipt by TriGem. In the
event that TriGem does not provide a report within the time
period specified
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herein, then eMachines may debit its account with TriGem. TriGem
shall credit eMachines for DF Product units only. TriGem shall
not be obligated to issue credit to eMachines for missing parts,
NDF units or incorrect model units. TriGem shall return to
eMachines such NDF and incorrect model Product units to eMachines
at eMachines' expense.
e. eMachines shall remove and replace the original serial numbers on
all NDF refurbished units screened by eMachines. In exchange for
eMachines releasing any claim to a warranty for such units,
eMachines shall receive a credit from TriGem based upon the
schedule attached hereto as Attachment C. TriGem shall not
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provide any warranty on the NDF Refurbished units refurbished by
eMachines or eMachines selected Third (3/rd/) Party. eMachines
shall make best efforts to provide TriGem the original serial
number labels from the NDF refurbished units.
IV. Parts Replacement
A. Effective October 1, 2001, eMachines shall screen all parts to
determine whether they are DF or NDF. eMachines shall return to TriGem
only those parts that satisfy the definition of DF. Further, the
following provisions shall apply:
a. TriGem will furnish to eMachines, at no additional charge, a
sufficient seed stock to enable eMachines to advance ship
replacement parts for those parts that are still under the
Product unit warranty. TriGem hereby provides to eMachines a
warranty on all replacement parts used by eMachines for the
remaining warranty period of the Product unit for which the part
is inserted.
b. The parties shall mutually agree as to eMachines' initial seed
stock. In the event that the DF rate for parts exceeds TriGem's
component failure rate data, then TriGem shall provide additional
seed stock, at no additional charge, to meet the actual demand
for the DF parts. eMachines shall provide parts forecasts,
consumption rate and inventory control reports on a monthly
basis.
c. eMachines shall exchange DF parts for NDF parts with TriGem on a
one-for-one basis. TriGem will replace the DF parts by no later
than seven (7) business days from the date received by TriGem. In
the event TriGem cannot supply replacement parts within such time
period, then TriGem shall replace the entire Product unit or
component with one that is of better specifications. Each party
shall bear the costs of freight in one direction.
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d. TriGem shall retain ownership of the consigned parts inventory.
eMachines shall be responsible for management of the consigned
parts inventory and shall maintain a ninety-eight and one half
percent (98.5%) accuracy of such inventory. In the event that any
portion of the slippage in the one and one half percent (1.5%)
allowance is due to eMachines' intentional loss or gross
negligence, eMachines shall reimburse TriGem the xxxx of
materials costs for that portion. eMachines shall conduct
physical inventory count per quarter. Upon TriGem's request,
eMachines shall conduct additional physical inventory count of
the consigned parts inventory and TriGem shall have the right to
audit the physical inventory count. All costs associated with
physical inventory counts requested by TriGem shall be the sole
responsibility of TriGem. eMachines shall provide TriGem with
weekly and monthly inventory reports for the consigned parts.
e. Beginning January 1, 2002, if a the percentage of DF part
returned by eMachines (as reasonably determined by TriGem) that
are NDF exceed two percent (2%) of the total number of returned
parts, then TriGem shall have the right to charge eMachines a
restocking fee of fifteen percent (15%) of the weighted average
xxxx of materials costs per NDF Parts returned that exceeds the
two percent (2%) allowance.
f. Upon request by TriGem, eMachines shall disclose to TriGem its
inspection process used to determine whether a returned part is
DF, and shall permit TriGem and its representatives to inspect
such process and audit any documentation related to such process
or the determination of whether any part returned hereunder is
DF. TriGem may direct eMachines to modify its inspection process
as necessary to meet prevailing industry standards.
g. Upon request by eMachines, TriGem shall disclose to eMachines its
inspection process used to determine whether a returned part is
NDF, and shall permit eMachines and its representatives to
inspect such process and audit any documentation related to such
process or the determination of whether any part returned
hereunder is NDF. eMachines may direct TriGem to modify its
inspection process as necessary to meet prevailing industry
standards.
B. TriGem shall work with eMachines and eMachines' agents to share
information in an electronic format.
V. Class Failures
A. From the Effective Date of the Agreement, in the event eMachines
deems a specific Product model or certain Product batch (those
Products that can
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be identified by a sequence of serial numbers or other reasonable
method) to be a Class Failure, eMachines, after consultation with
TriGem, may
1. Initiate a recall for the relevant Product model or
Product batch; or
2. Recall particular units of the relevant Product model or
Product batch.
In either case, eMachines shall be entitled to a full credit from
TriGem for all recalled and returned Product units. TriGem shall
reimburse eMachines for all costs associated with a recall,
including, but not limited to, any administrative costs and
attorneys' fees.
B. In the event of a Class Failure prior to the Effective Date of the
Agreement, regardless whether DF or NDF, then eMachines shall be
entitled to receive any and all fees paid by eMachines to TriGem
for such Product units.
VI. Additional Terms
A. Prior to October 1, 2001, in the event that TriGem is allowed to
resell any Product units, TriGem must delete all licensed software
and materials from the Products and return to eMachines any and
all Certificate of Authorizations ("COAs"). In the event that
TriGem fails to remove any licensed item and return the COAs,
eMachines may charge to TriGem the actual costs of such license
and any costs incurred by eMachines in tracking such licensed
items. TriGem shall also indemnify eMachines for any usage of such
licensed products, including attorneys' fees.
B. After October 1, 2001, eMachines shall be responsible for the
removal of all COAs from any returned Product units.
C. TriGem shall provide accurate reports to eMachines at the time of
shipment specifying the status and location of any resale of
Product units. The specific information and format of such reports
shall be in a format reasonably requested by eMachines. The
provisions of this section shall only apply to those Product units
that retain any Marks of eMachines.
D. TriGem agrees to provide eMachines' support team with xxxx of
materials and any updates to it during the support life of each
Product listed in Product Addenda.
E. TriGem agrees that it shall pursue its vendors to improve business
terms. From such modifications, TriGem shall reduce the Service
Charge and Support Charges to more accurately reflect its new
costs.
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F. Nothing in this Exhibit or Agreement shall be construed as
eMachines granting TriGem any right to license to use eMachines'
Marks. Unless otherwise provided, under no circumstances may
TriGem use any of eMachines Marks without first obtaining
eMachines' prior express written consent.
G. With respect to all Product units and associated material that
TriGem is allowed to resell, TriGem agrees that it shall comply
with all applicable regulations and industry guidelines, and
maintain a level of quality that is at least comparable to the
level of quality generally expected by consumers in the market.
Under no circumstances may TriGem resell any Product units into
any market without the express prior written consent of eMachines.
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Attachment A
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Definition of DF and NDF
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FAILURE No System Abnormal Recognition Read Write Video Sound Loopback K/B & CMOS No
SYMPTOM Boot Hang Operation Error Error Error Error Error Test Error Mouse Error Error Dialtone
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CPU O O O O O O
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Memory O O O O O O
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Mother Board O O O O O O O O O O O
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CD ROM O O O O
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DVD ROM O O O O
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CD RW O O O O O
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Combo O O O O O
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FDD O O O O O O
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HDD O O O O O O
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Modem O O O O O O
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Lan Card O O O O O
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Video Card O O O O O
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PSU O
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Cable O O O O O O
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CPU Fan
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DEVICES DEFECT
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FAILURE Cable Conn Mechanical O/S Driver Physical
SYMPTOM Noise Error Failure Corruption Corruption Scratch Damage
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CPU O
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Memory O
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Mother Board O O
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CD ROM O O O O O O O
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DVD ROM O O O O O O O
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CD RW O O O O O O O
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Combo O O O O O O O
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FDD O O O O O
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HDD O O O O O O
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Modem O O O
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Lan Card O O O
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Video Card O O O
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PSU O O O
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Cable O O
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CPU Fan O O O O
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DEVICES NDF
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A. Conditions
1. Physical damage and scratches caused by Customer
mishandling will be defined as "NDF"
2. Test failed by 3/rd/ Party Hardware will be considered
"NDF"
3. Failure caused by loose connection with broken QA Seal
will be re-seated and re-tested for the result.
B. Test Program to determine the status of the returns shall be PC
Check and/or any other commercially available products as
mutually agreed to by the parties.
C. eMachines, eMachines' 3/rd/ Party Vendor and TriGem shall use
the Test Program stated above to determine whether the returned
Product is DF or NDF. Other software not agreed in this Appendix
to determine the quality of the return shall not be valid.
D. Any quality areas that are not clearly defined in this Appendix
shall be escalated to eMachines and TriGem to resolve.
