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EXHIBIT 10.2
Standard Manufacturing Agreement
Fine Pitch Confidential
STANDARD MANUFACTURING AGREEMENT
Fine Pitch Technology ("Fine Pitch") a subsidiary of Solectron Corporation, a
Delaware corporation, whose principle place of business is located at ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ and Accelerated Networks, Inc., a Delaware
corporation ("Customer") whose principle place of business is located at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ in their desire to formulate a strategic
business relationship and to define their expectations regarding this
relationship, hereby agree as follows:
1.0 PRECEDENCE:
1.1 This Agreement is intended by Fine Pitch and Customer to operate as a basic
set of operating conditions regarding their respective business
relationship. Product specific requirements along with specific business
terms and conditions will be mutually agreed to and documented by an
addendum to this Agreement.
1.2 It is the intent of the parties that this Agreement and its addenda shall
prevail over the terms and conditions of any purchase order, acknowledgment
form or other instrument.
1.3 This Agreement may be executed in one or more counterparts, each of which
will be deemed the original, but all of which will constitute but one and
the same document. The parties agree this Agreement and its addenda may not
be modified except in writing signed by both parties.
2.0 TERM
2.1 This Agreement shall commence on the effective date shown on the signature
page of his Agreement, and shall continue for an initial term of one (1)
year. This Agreement shall automatically be renewed for successive one (1)
year increments unless either party requests in writing, at least ninety
(90) days prior to the anniversary date, that this Agreement not be so
renewed.
3.0 PRODUCT FORECAST
3.1 It is agreed that Customer will provide Fine Pitch, on a monthly basis, a
rolling twelve (12) month Product forecast. This section, as appropriate,
may be modified in an addendum to reflect specific Product requirements.
3.2 Customer and Fine Pitch will work together on a plan to ensure that the
first units built by Fine Pitch are built at full turnkey (Fine Pitch will
procure all the necessary material including the Hard Drive). Fine Pitch
will allow Customer reasonable access to their facilities for purposes of
monitoring and working with Fine Pitch quality control, manufacturing
processes and production.
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4.0 MATERIAL PROCUREMENT
4.1 Fine Pitch is authorized to purchase materials using standard purchasing
practices including, but not limited to, acquisition of material
recognizing Economic Order Quantities, ABC buy policy and long lead time
component management in order to meet the forecasted requirements of
Customer. Customer recognizes its financial responsibility for the material
purchased by Fine Pitch on behalf of Customer. This financial
responsibility is more clearly defined in the addendum.
4.2 In the event of a termination or a cancellation of a Purchase Order or
Material Release, and/or discontinuance of Product or excess material
created by an engineering change, Customer agrees to compensate Fine Pitch
for Products and material inventory as follows: (i) the contract price of
all finished Products in Fine Pitch's possession, (ii) the cost of material
inventory (including handling charges and value add), whether in raw form
or work in process, and not returnable to the vendor or usable for other
customers, (iii) the cost of material on order (including handling charges)
which cannot be canceled, and (iv) any vendor cancellation charges incurred
with respect to material canceled or returned to the vendor, or otherwise
set forth in an addendum.
4.3 Fine Pitch shall undertake reasonable efforts to cancel all applicable
component purchase orders and reduce component inventory through return for
credit programs or allocate components for alternate programs if
applicable.
5.0 PURCHASE ORDERS AND PRICE REVIEWS
5.1 Customer agrees to provide Fine Pitch Purchase Orders or Material Releases
four (4) weeks in advance of delivery (or as otherwise provided by an
addendum) and shall become effective upon acceptance of the order by Fine
Pitch which is more clearly defined in the Addendum.
5.2 Fine Pitch and Customer will meet every three (3) months during the term of
this Agreement to review pricing and determine whether any price increase
or decrease is required. Any price change shall apply only to purchase
orders or material releases issued after the effective date of such price
change. However, the Customer Focus Team will meet on a more frequent basis
(monthly) to discuss operational and quality related issues.
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6.0 DELIVERY
6.1 Fine Pitch will target 100% on time delivery, defined as shipment of
Product by Fine Pitch within a window of three (3) days early and zero days
late (of acknowledged date). This section, as appropriate, may be modified
by an addendum to reflect specific Product requirements.
6.2 All shipments are EXW: Fine Pitch Facility, Cypress, CA (Incoterms 2000).
6.3 Fine Pitch and Customer shall agree to delivery schedule flexibility
requirements specific to the Product as documented in the addenda.
6.4 Upon learning of any potential delivery delays, Fine Pitch will notify
Customer as to the cause and extent of such delay.
6.5 If Fine Pitch fails to make deliveries at the specified time and such
failure is caused by Fine Pitch, Fine Pitch will, at no additional cost to
Customer, employ accelerated measures such as material expediting fees,
premium transportation costs, or labor overtime required to meet the
specified delivery schedule or minimize the lateness of deliveries.
6.6 Unless otherwise agreed to and stated in an Attachment to this Agreement,
Fine Pitch will not undertake export activities on behalf of Customer.
7.0 PAYMENT TERMS
7.1 Fine Pitch and Customer agree to payment terms of Net 30 days from the date
of invoice.
7.2 Currency will be in U.S. Dollars unless specifically negotiated and
reflected in the addenda.
8.0 QUALITY
8.1 Fine Pitch shall manufacture the Products in accordance with the quality
requirements, standards and expectations as mutually agreed to and
reflected in the addenda.
8.2 Customer will have a right to conduct source inspection based on reasonable
notice and reasonable timelines.
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9.0 ENGINEERING CHANGES
9.1 Customer may, upon advance written notice to Fine Pitch, submit engineering
changes for incorporation into the Product. It is important that this
notification include documentation of the change to effectively support an
investigation of the impact of the engineering change. Fine Pitch will make
a reasonable effort to review the engineering change and report to Customer
within one (1) week. If any such change affects the price, delivery, or
quality performance of said Product, an equitable adjustment will be
negotiated between Fine Pitch and Customer prior to implementation of the
change.
9.2 Fine Pitch agrees not to undertake significant process changes, design
changes, or process step discontinuance affecting electrical performance
and/or mechanical form and fit without prior written notification and
concurrence of the Customer.
10.0 INVENTORY MANAGEMENT
10.1 Fine Pitch agrees to purchase components according to the Customer approved
vendor list (AVL) including any sourcing plans as provided by the addenda.
10.2 All customer tooling/equipment furnished to Fine Pitch or paid for by
Customer in connection with this Agreement shall:
(a) Be clearly marked and remain the personal property of Customer.
(b) Be kept free of liens and encumbrances.
(c) Unless otherwise agreed, Customer is responsible for the general
maintenance of Customer tooling/equipment.
Fine Pitch shall hold Customer property at its own risk and shall not
modify the property without the written permission of Customer. Upon
Customer's request, Fine Pitch shall redeliver the property to Customer in
the same condition as originally received by Fine Pitch with the exception
of reasonable wear and tear. In the event the property is lost, damaged or
destroyed, Fine Pitch's liability for the property is limited to the book
value of the property. During possession of the property,if required, Fine
Pitch will maintain calibration on the property on a regularly scheduled
basis.
11.0 CONFIDENTIAL INFORMATION
11.1 Fine Pitch and Customer agree to execute, as part of this Agreement, a
Nondisclosure Agreement for the reciprocal protection of confidential
information that will be included in the addendum.
11.2 Subject to the terms of the Nondisclosure Agreement and the proprietary
rights of the parties, Fine Pitch and Customer agree to exchange, at least
semi-annually, relevant process development information and business plans
to include market trends, process technologies, product requirements, new
product developments, available capacity and other information to support
technology advancements by both Fine Pitch and Customer.
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Standard Manufacturing Agreement
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12.0 WARRANTY
12.1 Fine Pitch warrants for a period of one (1) year from the date of
manufacture of the Product, that (i) the Product will conform to the
specifications applicable to such Product at the time of its manufacture,
which are furnished in writing by Customer and accepted by Fine Pitch; (ii)
such Product will be of good material (supplied by Fine Pitch) and
workmanship and free from defects for which Fine Pitch is responsible in
the manufacture; (iii) such Product will be free and clear of all liens and
encumbrances and that Fine Pitch will convey good and marketable title to
such Product. In the event that any Product manufactured shall not be in
conformity with the foregoing warranties, Fine Pitch shall, at Fine Pitch's
option, either credit Customer for any such nonconformity (not to exceed
the purchase price paid by Customer for such Product), or, at Fine Pitch's
expense, replace, repair or correct such Product. The foregoing constitutes
Customer's sole remedies against Fine Pitch for breach of warranty claims.
12.2 Fine Pitch shall have no responsibility or obligation to Customer under
warranty claims with respect to Products that have been subjected to abuse,
misuse, accident, alteration, neglect or unauthorized repair.
THE WARRANTIES CONTAINED IN THIS SECTION ARE IN LIEU OF, AND FINE PITCH
EXPRESSLY DISCLAIMS AND CUSTOMER WAIVES ALL OTHER REPRESENTATIONS AND
WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR ARISING BY COURSE OF DEALING OR
PERFORMANCE, CUSTOM, USAGE IN THE TRADE OR OTHERWISE, INCLUDING WITHOUT
LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE AND FITNESS FOR
A PARTICULAR USE.
13.0 TERMINATION
13.1 If either party fails to meet any one or more of the terms and conditions
as stated in either this Agreement or the addenda, Fine Pitch and Customer
agree to negotiate in good faith to resolve such default. If the defaulting
party fails to cure such default or submit an acceptable written plan to
resolve such default within thirty (30) days following notice of default,
the nondefaulting party shall have the right to terminate this Agreement by
furnishing the defaulting party with thirty (30) days written notice of
termination.
13.2 This Agreement shall immediately terminate should either party; (i) become
insolvent; (ii) enter into or file a petition, arraignment or proceeding
seeking an order for relief under the bankruptcy laws of its respective
jurisdiction; (iii) enter into a receivership of any of its assets or; (iv)
enter into a dissolution of liquidation of its assets or an assignment for
the benefit of its creditors.
13.3 Either Fine Pitch or Customer may terminate this Agreement without cause by
giving One hundred twenty (120) days advance written notice to the other
party.
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14.0 DISPUTE RESOLUTION
14.1 In the spirit of continued cooperation, the parties intend to and hereby
establish the following dispute resolution procedure to be utilized in the
unlikely event any controversy should arise out of or concerning the
performance of this Agreement.
14.2 It is the intent of the parties that any dispute be resolved informally and
promptly through good faith negotiation between Fine Pitch and Customer.
Either party may initiate negotiation proceedings by written notice to the
other party setting forth the particulars of the dispute. The parties agree
to meet in good faith to jointly define the scope and a method to remedy
the dispute. If these proceedings are not productive of a resolution, then
senior management of Fine Pitch and Customer are authorized to and will
meet personally to confer in a bona fide attempt to resolve the matter.
14.3 Should any disputes remain existent between the parties after completion of
the two-step resolution process set forth above, then the parties shall
promptly submit any dispute to mediation with an independent mediator. In
the event mediation is not successful in resolving the dispute, the parties
agree to submit the dispute to binding arbitration as provided by their
respective jurisdiction as more clearly defined in the addendum.
15.0 LIMITATION OF LIABILITY
IN NO EVENT, WHETHER AS A RESULT OF BREACH OF CONTRACT, WARRANTY, OR TORT
(INCLUDING NEGLIGENCE), STRICT LIABILITY, PRODUCT LIABILITY, OR OTHERWISE,
SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL, EXEMPLARY DAMAGES OF ANY KIND WHETHER OR NOT EITHER PARTY
WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
16.0 PATENT, COPYRIGHT AND TRADEMARK INDEMNITY
Each party (the "indemnifying party") shall defend, indemnify, and hold
harmless the other party from any claims by a third party of infringement
of intellectual properties resulting from the acts of the indemnifying
party pursuant to this Agreement, provided that the other party (i) gives
the indemnifying party prompt notice of any such claims, (ii) renders
reasonable assistance to the indemnifying party thereon, and (iii) permits
the indemnifying party to direct the defense of the settlement of such
claims.
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17.0 GENERAL
17.1 Each party to this Agreement will maintain insurance to protect itself from
claims (i) by the party's employees, agents and subcontractors under
Worker's Compensation and Disability Acts, (ii) for damages because of
injury to or destruction of tangible property resulting out of any
negligent act, omission or Willful misconduct of the party or the party's
employees or subcontractors, (iii) for damages because of bodily injury,
sickness, disease or death of its employees or any other person arising out
of any negligent act, omission, or willful misconduct of the party or the
party's employees, agents or subcontractors.
17.2 Neither party shall delegate, assign or transfer its rights or obligations
under this Agreement, whether in whole or part, without the written consent
of the other party. Such delegation, assignment or transfer shall not be
unreasonably withheld. Failure by either party to enforce any provision of
this Agreement shall not be deemed to be a continuing waiver or a waiver of
any other default or other term and condition.
17.3 Neither party shall be liable for any failure or delay in its performance
under this Agreement due to acts of God, acts of civil or military
authority, fires, floods, earthquakes, riots, wars or any other cause
beyond the reasonable control of the delayed party provided that the
delayed party: (i) gives the other party written notice of such cause
within fifteen (15) days of the discovery of the event; and (ii) uses its
reasonable efforts to remedy such delay in its performance.
17.4 This Agreement shall be governed by, and construed in accordance with the
laws of the State of California, excluding its conflict of laws provisions.
In any action to enforce this Agreement, the prevailing party shall be
awarded all court costs and reasonable attorney fees incurred.
17.5 Fine Pitch and Customer will mutually agree on a timeline and language for
a press release announcing their relationship. Any other publicity will
subject to mutual agreement.
17.6 Additional General terms and conditions are set forth in the addendum.
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IN WITNESS WHEREOF, the parties have executed this Agreement and it is effective
as of the latest date of execution set forth below.
Fine Pitch Technology, a subsidiary of Accelerated Networks, Inc.
Solectron Corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: General Manager Title: Director of Contracts
Date: 4/16/01 Date: 4/10/01
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ADDENDUM TO STANDARD MANUFACTURING AGREEMENT
This Addendum (hereinafter "Addendum") is effective as of the latest date of
execution identified herein and is incorporated by reference into the Standard
Manufacturing Agreement (Agreement) executed between Accelerated Networks, Inc.
(ACCELERATED) and Fine Pitch Technology, A Solectron Subsidiary, (FINE PITCH)
dated on the latest date of execution, collectively "the parties".
The parties desire to clarify Product specific requirements, manufacturing and
quality requirements and other specific business terms and conditions.
In consideration of the foregoing and the agreements contained herein,
ACCELERATED and FINE PITCH hereby agree as follows:
1.0 Definitions
1.1 "Approved Vendor List shall mean the list of vendors to be used to
supply inventory list of the Bills of Materials included with each
Specification.
1.2 "Bills of Materials (BOM)" shall mean a listing or reference for the
Components and Materials included in or required for the
manufacture/assembly of the Products based on the Specifications.
1.3 "Components" shall mean the parts, materials and supplies included in
or required for each Product, as stipulated in the Bills of Materials.
Components may be supplied by ACCELERATED as defined herein, if so
indicated in the Bills of Materials.
1.4 "Days" shall mean calendar days unless other wise specified, provided
however if a deadline falls on a Saturday, Sunday or a United States
Government recognized holiday, it shall be extended to the following
regular day.
1.5 "Delivery Date" shall mean a date for which delivery of a Product is
requested in a ACCELERATED Purchase Order or is otherwise mutually
established by the Parties.
1.6 "Downside" shall mean the percentage decrease in the quantity of
Products that ACCELERATED may purchase less than the quantities in any
Purchase Order.
1.7 "Upside" shall mean the percentage increase in the quantity of
Products that ACCELERATED may purchase above the quantities in any
Purchase Order.
1.8 "Engineering Change Order" (ECO) shall mean the document that details
a change in the Specifications and/or design of a Product.
1.9 "Excess Inventory" shall mean those components listed in the
Specifications which are in FINE PITCH or its subcontractors
possession, whose quantity exceed ACCELERATED Purchase Order
requirements, at a referenced date and/or termination.
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1.10 "Intellectual Property " shall mean all rights held by either Party in
its Products and/or Confidential Information, including, but not
limited to each Party's patent rights, copyrights, trade secret
rights, mask work rights and other intellectual property and
proprietary rights, restrictions on the manufacture, assembly or
distribution of the Products or the subsequent use, sale or repair of
the Products as purchased by ACCELERATED from FINE PITCH.
1.11 "Inventory" shall mean raw materials, supplies and componenets that
comprise Product pursuant to this Agreement.
1.12 Long Lead Time Components and Materials" shall mean the Inventory used
to manufacture the Products that require a longer time to procure than
the time from Purchase Order acceptance to production start
time."Minimum Order Quantity Components and Materials" shall mean the
Inventory that is procurable only in minimum quantities that exceed
that quantities required for ACCELERATED Purchase Orders.
1.13 "Non-Cancelable Non-Returnable (NCNR) Components and Materials shall
mean (i) Inventory listed on the Bills of Materials that is procured
from suppliers that will not accept returns or cancellations once such
Inventory is ordered and built or (ii) Inventory that may not be
returned because the right of return has expired.
1.14 "Product" shall mean the ACCELERATED part number or assembly
identification specified in each Purchase Order for Components,
Printed Circuit Boards (PCBs) assemblies and/or Box Assemblies issued
under this Agreement and as described in the Specifications. There can
be multiple versions of a Product, based on differences provided for
the Bills of Materials.
1.15 "Program Manager" shall mean the Acceptable FINE PITCH resource and
the ACCELERATED resource that will manage the over-all effort defined
in the Agreement.
1.16 "Program Reviews" shall mean the scheduled review meetings (monthly
and/or quarterly) to review the over-all Program status. ACCELERATED
and FINE PITCH shall meet to develop the frequency, agenda and
contents of these meetings.
1.17 "Purchase Order" shall mean the ACCELERATED written authorization
submitted to FINE PITCH and accepted by FINE PITCH as identified
herein stipulating the product(s), Engineering Change and/or Revision
level, quantity, pricing, and requested delivery date(s). The terms of
this Agreement shall control over printed terms on any Purchase Order,
acknowledgement, confirmation or invoice.
1.18 "Specifications" shall mean the written specifications provided by
ACCELERATED for the manufacture and testing of the Product including,
without limitation, the current revision number, Approved Vendor List
(AVL), Bills of Material (BOMs), manufacturing procedures, schematics,
testing procedures, drawings and documentation.
1.19 "Statement of Work" shall mean a document submitted by Accelerated and
agreed to by FINE PITCH that defines a particular product to be
assembled, manufactured or modified and references a product
specification or any other requirement or change in scope of work.
Such a document as defined herein will be submitted with each Purchase
Order and will be subject to the terms and conditions of the Agreement
and this Addendum.
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1.20 "Exhibits" shall include the following;
Exhibit A Product Price List
Exhibit B Minimum Order Quantity Components and Materials
Exhibit C Long Lead Time Components and Materials
Exhibit D Non-Cancelable Non-Returnable (NCNR) Components and
Materials
Exhibit E List of Products and Revision Level; and Prices for Rework
Exhibit F Consigned Tooling and Equipment
Exhibit G Workmanship Standards
The Exhibits will be added to the Addendum subsequent to execution of the
Agreement and the Addendum. The parties agree these Exhibits will be completed,
signed and dated by both parties within sixty (60) days of the latest date of
execution of the Agreement. Each Exhibit will be effective and incorporated by
reference into the Agreement on the latest date of execution of each Exhibit.
2.0 Manufacture of Products. During the term of this Agreement, FINE PITCH
shall manufacture and test the Products in accordance with the
Specifications and as requested pursuant to ACCELERATED purchase orders ,
including any Statement of Work, if applicable, and maintain manufacturing
records in accordance with reasonable industry standards. All inventory and
equipment required in connection with such manufacture and testing other
than what is being supplied by Accelerated will be acquired or supplied by
FINE PITCH pursuant to the Specifications. Test ICT fixtures and functional
test equipment will be supplied by Accelerated.
2.1 Program Management. Each party shall appoint a technical coordinator
to maintain technical liaison with the other party in connection with
the initial coordination and implementation of the manufacture of the
Products as well as ongoing support issues thereafter. This
coordination will be with regard to all technical aspects of the
Program but not limited to the release of the manufacturing
specifications, design or engineering of the Products, pending ECOs
and release dates, and the status of the manufacturing program. The
parties shall agree in writing as to the frequency (monthly or
quarterly) of these business performance reviews including but not
limited to documentation, quality, delivery, field quality
communications, responsiveness, costs, payments and other related
issues. The Program Managers will coordinate these meetings.
2.2 Quality Requirements. FINE PITCH agrees that the manufacture of the
Products under terms of this Agreement will be in accordance with
Workmanship Standards as detailed in Exhibit G. FINE PITCH agrees to
maintain and be responsible for ISO 9002, Revision 2000 certification
effective June 2001. Accelerated and FINE PITCH shall mutually agree
in writing, within ninety (90) days after the consummation of this
Agreement, on development of the minimum quality performance
measurements and quarterly reports such as supply yields for all
processes, process capability data, on-time delivery, performance to
standard lead times, RMA's processed in the standard time, audit
failure rates and action steps necessary in the event these measures
are not met.
2.3 Product Training. ACCELERATED and FINE PITCH will jointly develop a
program specifying which processes, the number of personnel and where
the personnel of FINE PITCH are to be trained on the Products. FINE
PITCH, during the term of this agreement including any extensions,
will maintain a sufficient and trained staff of personnel to
adequately support all of the requirements set forth in this
agreement.
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3.0 Consigned Materials. ACCELERATED may supply consigned materials to FINE
PITCH.ACCELERATED agrees that all consigned materials, including
Components, shall be delivered to FINE PITCH in sufficient time and in
sufficient quantities, taking into account mutually agreed to Attrition
levels by the parties, to allow FINE PITCH to meet scheduled delivey dates
for the applicable Products. ACCELERATED agrees that all consigned
materials shall be in good condition, meet Products Specifications, be
packaged in a readily usable format, and be free of any material defects or
deficiencies. ACCELERATED shall retain all rights, title and interest in
ACCELERATED Components delivered herein, and ACCELERATED Components shall
be used, without modification, unless directed in writing by ACCELERATED
and used only in filling purchase orders from ACCELERATED. FINE PITCH shall
bear all risk of damage or loss for ACCELERATED Components until such
ACCELERATED Components are returned to ACCELERATED, or otherwise leaves the
care and custody of FINE PITCH at ACCELERATED'S request. FINE PITCH shall
keep the Components segregated for tracking and inventory management
purposes and shall use the same degree of care it uses in managing and
protecting it's own inventory. FINE PITCH shall not be obligated to
purchase any excess consigned materials.
4.0 License Grant. Subject to the terms and conditions of this Agreement,
ACCELERATED grants FINE PITCH a non-transferable, non-exclusive,
royalty-free license with the right to grant sublicenses, as set forth in
Section 5.0, under ACCELERATED'S Intellectual Property Rights to use the
Specifications and any ACCELERATED inventory solely to manufacture the
Products and otherwise perform its obligations hereunder.
5.0 Subcontractor. FINE PITCH may grant sublicenses under the license granted
in Section 4.0; provided however, (i) any sublicense shall be subject to
the prior written approval of ACCELERATED, which approval shall not be
unreasonably withheld, and (ii) such sublicense shall bind such
subcontractor to the same terms and conditions of this Agreement.
6.0 Packing and Shipping. FINE PITCH shall package and pack Products to a best
commercial practice that will provide reasonable protection against damage
(including static) during shipment (ground, air or ship), and handling.
From time to time Accelerated will require FINE PITCH to deliver product
directly to Acclerated customers. FINE PITCH and Accelerated will mutually
develop and agree on implementing such a requirement which may include
Shipping and Receiving Transaction Bar Code Label Specifications.
7.0 Finish Goods Inventory. ACCELERATED and FINE PITCH to discuss at a later
date a mutually agreeable process and procedure where ACCELERATED will
submit Purchase Orders (i.e. over and above binding Purchase Orders and
forecasts as set forth in paragraph 15.0) to FINE PITCH to manufacture
completed Product to be held at FINE PITCH. The parties agree that they
intend to add this process to the Agreement. The parties will enter into
good faith negotiations to complete this process and add finish goods
inventory to this Agreement within 180 days of the date of execution.
8.0 Acceptance. All Products supplied by FINE PITCH under this Agreement shall
conform to the Specifications. Notwithstanding any prior inspection or
payment by ACCELERATED, ACCELERATED may reject any portion of any shipment
of Products which is not conforming to the Specifications as determined by
ACCELERATED following quality control tests and inspection or as otherwise
found to be defective including defects in workmanship. Any Products so
returned to FINE PITCH shall be repaired or replaced, at FINE PITCH' option
and expense, within ten (10) business days of receipt by FINE PITCH of the
rejected Product; provided that (i) ACCELERATED obtains a Return Material
Authorization ("RMA") from FINE PITCH prior to returning the Products and
FINE PITCH shall provide ACCELERATED with a RMA promptly upon request, (ii)
the Products are returned within sixty (60) calendar days of the date the
Product was received by ACCELERATED from FINE PITCH, and (iii) the failure
analysis conducted by ACCELERATED shall accompany the Product.
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9.0 Right of Return. In the event of a epidemic failure cause by a material
defect in workmanship, manufacture of the Product, which is exhibited in 5%
or more of the field or other failures that have been shipped within the
previous six months of discovery of the defect, FINE PITCH and Accelerated
agrees to jointly develop and support a program to identify and resolve the
failure defect. Any cost implications will be included and resolved as part
of the program at no cost to Accelerated, unless design induced failures.
10.0 Limitation on Liability. FINE PITCH shall have no liability or
responsibility for any costs, losses or damages due to defective or failed
product claims to the extent that the claims result from (FINE PITCH'S
compliance with ACCELERATED supplied Specifications and/or manufacturing
process, (b) inadequate operating environment, accident, disaster, neglect,
abuse or misuse, (c) design flaws or design parameters exceeding or
violating component specifications for components either supplied or
directed to be purchased by ACCELERATED, (d) external or environmental
factors after shipment from FINE PITCH, (e) follow-up handling, processing,
or manufacturing of products after shipment from FINE PITCH, (f) repair,
attempted repair, modification or alteration of the product by a party
other then FINE PITCH or ACCELERATED, (g) electrostatic discharge damage
(not caused by FINE PITCH), (h) defects related to components provided by
third party suppliers selected by ACCELERATED, which defects FINE PITCH
could not have reasonably detect, prevent or control, and (i) products for
which ACCELERATED has not provided functional or other tests to adequately
diagnose failures."
11.0 Inspection by ACCELERATED. Upon request by ACCELERATED, from time to time,
and with at least one (1) business day notice and during normal business
hours, FINE PITCH will grant access to its manufacturing facilities and
records (excluding financial records not directly related to this
Agreement) to ACCELERATED inspectors. FINE PITCH shall allow such
inspectors to inspect the manufacturing and quality control, testing
operations, compliance procedures and records relating to the Products
(excluding financial records not directly related to this Agreement), as
well as inventory levels to ensure that FINE PITCH can meet ACCELERATED'S
future orders for Products, and is otherwise satisfying its obligations
under this Agreement. FINE PITCH shall promptly implement corrective action
to remedy deficiencies identified by ACCELERATED during such inspections or
in order to comply with the Specification.
12.0 Engineering Change Order (ECO). An ECO is required when the form, fit or
function of the design of the Product and/or Specificiations are affected.
FINE PITCH agrees to promptly implement, at ACCELERATED'S expense, any
change in the Specifications or the design of a Product reasonably
requested by ACCELERATED pursuant to an Engineering Change Order ("'ECO").
FINE PITCH shall provide a written response in the form of an "Engineering
Change Analysis" form to ACCELERATED if such changes affect the per-unit
price and/or delivery of a Product, within three (3) business days.
ACCELERATED shall respond with a written acceptance or rejection of the
FINE PITCH "Engineering Change Analysis" form within three (3) business
days. FINE PITCH shall not implement the change to the design or
Specifications of any Product or materials, equipment, manufacturing and
quality assurance procedures, methods and techniques used to produce a
Product, without ACCELERATED'S prior written approval in the form of a
Purchase Order. In the event that the implementatoin and acceptance of an
ECO creates obsolete inventory and/or restocking fees, ACCELERATED will
issue FINE PITCH a Purchase Order for the obsolete inventory and agrees to
pay restocking fees within thirty days of the implementation of the ECO.
FINE PITCH will use its best effort to return the obsolete inventory from
an ECO to the vendor to mitigate the cost prior to payment of any
restocking fees which will be subject to mutual agreement by the parties.
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13.0 Out of Warranty Repairs. The parties agree to enter into good faith
negotiations for the purpose of FINE PITCH becoming an authorized repair
facility for out of warranty repairs of Products and components. The
Parties agree to negotiate in good faith with the end goal of having an
amendment or other agreement executed within ninety (90) days of execution
of this Agreement. Price for this repair shall be as set forth in Exhibit E
of this Agreement, which is subject to change by mutual agreement of the
Parties in writing.
14.0 Price. Price for the Products shall be as set forth in Exhibit A of this
Addendum, which is subject to change by mutual agreement in writing of the
Parties hereto.
15.0 New Products. The Parties acknowledge, and agree that ACCELERATED may from
time to time, request in writing the manufacture and testing of prototypes,
pre-production units, test units or other similar products ("Odd Units").
FINE PITCH makes no representation or warranty as to Odd Units identified
as such by ACCELERATED and assumes no liability for or obligation related
to the yield, performance, accuracy, specifications, defects of or due to
(i) fixtures, designs or instructions produced or supplied by ACCELERATED,
(ii) ACCELERATED Components, (iii) components or other equipment from any
vendor on the Approved Vendor List or (iv) printed circuit boards or any
other ACCELERATED designated components that are manufactured pursuant to
ACCELERATED's specifications.
16.0 Purchase Orders and Product Forecast. During the term of this Agreement,
ACCELERATED shall provide FINE PITCH with Purchase Orders for the Products
to cover three (3) months of ACCELERATED'S requirements based on a twelve
(12) month rolling forecast. ACCELERATED shall issue each succeeding
month's Purchase Order by the tenth (10th) day of each month. Each Purchase
Order shall be as specified in Section 1.19. Notwithstanding the foregoing,
a Purchase Order shall be deemed accepted by FINE PITCH, including any
Specifications or other identifications (including any ECO's) unless it is
rejected in writing within three (3) business days of submission by
ACCELERATED. The terms and conditions of the Agreement and this Addendum
will control over any terms contained in any ACCELERATED Purchase Order,
written acceptance or acknowledgment by FINE PITCH, invoice or any other
document that is not clearly an amendment to this Agreement signed by both
Parties.
17.0 Schedule Changes. ACCELERATED may not cancel any Purchase Orders or
re-schedule the quantity of Products and/or Delivery Date within thirty
(30) calendar days of the scheduled Delivery Date. ACCELERATED may delay
all or any portions of the scheduled Product delivery upon written
notification to FINE PITCH on the following schedule:
17.1 From thirty one (31) to sixty (60) calendar days prior to the
scheduled Delivery Date, ACCELERATED may reschedule out not more than
fifty percent (50%) of the of the quantity of Product (per deliverable
part number) to be shipped up to sixty (60) calendar days of the
scheduled Delivery Date.
17.2 From sixty-one (61) to ninety (90) calendar days prior to the
scheduled Delivery Date, ACCELERATED may reschedule out up to one
hundred percent (100%) of the quantity of Product to be shipped up to
ninety (90) calendar days of the scheduled Delivery Date.
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17.3 In the event that ACCELERATED desires to increase or decreases in
quantities (Upside or Downside) of Products scheduled for delivery;
FINE PITCH will use its commercially reasonable best efforts to
accommodate the desired increases or decreases and will be determined
on a case-by-case basis. Costs incurred by such increases, including,
but not limited to Purchase Price Variances and expedited component
deliveries will be presented by FINE PITCH to ACCELERATED on a case by
case basis and the Parties will mutually agree on such costs.
18.0 Cancellation. ACCELERATED may cancel any order, thirty (30) calendar days
or more from the scheduled Delivery Date upon written notification to FINE
PITCH and on the following schedule:
18.1 From thirty (30) to sixty (60) calendar days from the scheduled
Delivery Date, FINE PITCH shall use its commercially reasonable best
efforts to (i) return to the suppliers of the inventory or otherwise
utilize any such inventory, or (ii) cancel FINE PITCH' order for such
inventory. ACCELERATED is not obligated to pay FINE PITCH for on-order
inventories not yet received and can be cancelled or returned at no
cost to Fine Pitch... In the event FINE PITCH cannot return inventory
to the suppliers, or cannot otherwise utilize or cancel future orders,
ACCELERATED shall pay (i) FINE PITCH' cost of all inventories that are
in FINE PITCH' or its subcontractor's possession as of the
cancellation date that have been procured for the canceled order, (ii)
FINE PITCH' cost of all the inventories used in the manufacture or
assembly of the Products that are in FINE PITCH' or subcontractor's
possession or on order, and (iii) supplier's restocking fees up to 10%
of the cost of the inventories, and (iv) take title to those Products
and inventories. FINE PITCH shall provide ACCELERATED with
documentation to support all such charges. ACCELERATED authorizes FINE
PITCH to ▇▇▇▇ any such costs within sixty (60) calendar days of
ACCELERATED'S notification of cancellation. Inventories that become
unusable because of a ACCELERATED ECO, shall be treated in a like
manner as inventories that become unusable because of cancellation, as
noted above.
18.2 ACCELERATED may cancel delivery of Products with written notice at
least sixty-one (61) calendar days prior to the scheduled Delivery
Date without cost or penalty, except for inventories on the Minimum
Order Quantity List, Non Cancelable-Non Returnable List, and Long Lead
Time Lists, which shall be treated in a like manner as inventories
that become unusable because of cancellation, as noted in Section
24.0. FINE PITCH shall provide ACCELERATED with documentation to
support all such charges.
19.0 Minimum Order Quantity Components and Materials. FINE PITCH and ACCELERATED
shall agree upon and maintain an approved listing of Minimum Order Quantity
Components and Materials in the form of Exhibit B, as initially established
and may be modified in writing from time to time by the Parties in
accordance with this Agreement. The Parties shall review this listing, at
least, on a quarterly basis.
20.0 Long Lead Time Components and Materials. FINE PITCH and ACCELERATED shall
agree upon and maintain an approved listing of Long Lead-Time Components
and Materials in the form of Exhibit C, as initially established and may be
modified in writing from time to time by the Parties in accordance with
this Agreement. The Parties shall review this listing, at least, on a
quarterly basis.
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21.0 Non-Cancelable Non-Returnable Components and Materials. The parties shall
mutually agree upon and maintain an approved listing of such materials in
the form of Exhibit D, as intitially established and may be modified in
writing from time to time by the parties in accordance with this Agreement.
The parties shall review this listing on at leat a quarterly basis.
22.0 Excess Inventory (Assemblies and Components), FINE PITCH shall identify
Excess Inventory on a monthly basis using the MRP system INFIMACS II Excess
Inventory Dollar Report, or using a BAAN equivalent report. FINE PITCH
shall provide each such report to ACCELERATED. FINE PITCH shall charge a
one percent (1.0 %) monthly fee on the on-hand excess inventory which
inventory will be mutually agreed to by the parties at the end of each
quarter. Payment of such monthly fee will be prospective based on the
previous quarters reconciliation. Upon termination of this Agreement,
ACCELERATED shall pay (i) FINE PITCH' documented cost of Products (that
should be a standard part of the cost) and (ii) supplier's restocking fee
up to ten percent (10%) of the cost of Products and (iii) take title to the
Excess Inventory that cannot be returned or used for other products
manufactured by FINE PITCH. Excess Inventory covers Inventory purchased for
ACCELERATED Purchase Orders issued to FINE PITCH and for purchases to cover
forecasts.
23.0 ACCELERATED Property. Any tooling and/or equipment supplied by ACCELERATED
(ACCELERATED's Property) or developed or procured by FINE PITCH at
ACCELERATED expense, shall remain the property of ACCELERATED and shall (i)
be clearly marked or tagged as the Property of ACCELERATED, (ii) be and
remain personal property, and not become a fixture to real property, (iii)
be subject to inspection by ACCELERATED at any time, (iv) be used only in
filling purchase orders from ACCELERATED, (v) be kept free by FINE PITCH of
liens and encumbrances, and (vi) not be modified in any manner by FINE
PITCH without the prior written approval of ACCELERATED and be maintained
by FINE PITCH in accordance with ACCELERATED'S Maintenance Procedures
including but not limited to periodic calibration. ACCELERATED shall retain
all rights, title and interest in the ACCELERATED Property, and FINE PITCH
agrees to treat and maintain the ACCELERATED Property with the same degree
of care as FINE PITCH uses with respect to its own valuable equipment- FINE
PITCH shall bear all risk of loss or damage to ACCELERATED Property until
it is returned to ACCELERATED. Upon ACCELERATED'S request, FINE PITCH shall
deliver all ACCELERATED Property to ACCELERATED in good condition, normal
wear and tear excepted, without cost to ACCELERATED (exclusive of freight
costs); ACCELERATED shall determine the manner and procedure for returning
the ACCELERATED Property, and shall pay the corresponding freight costs.
FINE PITCH waives any legal or equitable right it may have to withhold
ACCELERATED Property, and FINE PITCH agrees to execute all documents, or
instruments evidencing ACCELERATED'S ownership of the ACCELERATED Property
as ACCELERATED may from time to time request. Such ACCELERATED owned
tooling and equipment are listed on Exhibit F, which shall be revised as
required.
24.0 Effect of Termination. Termination of this Agreement shall not affect the
obligations of either Party that exist pursuant to the Agreement relative
to payment, confidentiality, licensing and warranties. Remedies for all
breaches hereunder shall also survive termination as of date of
termination. Upon termination of this Agreement FINE PITCH shall continue
to fulfill, subject to the terms of the Agreement all Purchase Orders and
ECO's accepted by it prior to the effective date of termination.
25.0 Relationship of Parties. FINE PITCH and its subcontractor(s) shall be
deemed to be independent contractors of ACCELERATED, and this Agreement
does not create a general agency, joint venture, partnership, employment
relationship, or franchise between FINE PITCH and ACCELERATED. Each Party
assumes full responsibility for the actions and negligence of its
employees, agents or other personnel assigned by it to perform work
pursuant to this Agreement, regardless of their place of work, and shall be
solely responsible for payment of salary, including withholding of federal
and state income taxes, social security, workers' compensation and the
like.
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26.0 Ownership. As between the Parties, ACCELERATED retains and shall
exclusively own all title to, and except as expressly and unambiguously
licensed herein, all rights (including without limitation, all Intellectual
Property Rights) and interest in the Products, the ACCELERATED Components,
ACCELERATED Property, and Specifications and all modifications,
improvements derivative works (by whomever produced) thereof.
27.0 Dispute Resolution.
27.1 In the spirit of continued cooperation, the parties intend to and
hereby establish the following dispute resolution procedure to be
utilized in the unlikely event any controversy should arise out of or
concerning the performance of this Agreement.
27.2 It is the intent of the parties that any dispute be resolved
informally and promptly through good faith negotiation between
Solectron and Customer. Either party may initiate negotiation
proceedings by written notice to the other party setting forth the
particulars of the dispute. The parties agree to meet in good faith to
jointly define the scope and a method to remedy the dispute. If these
proceedings are not productive of a resolution, then either party may
choose to escalate the problem to senior management.
27.3 Should any disputes remain existent between the parties after
completion of the resolution process set forth above, or in any event
more than twenty (20) days have passed following the initial notice of
dispute from a party, then either party may, by written notice to the
other party, request that the matter be submitted for non-binding
mediation with an independent mediator agreed to by the parties. The
mediator will be chosen by the parties within fifteen (15) days after
written notice by either party demanding mediation. Neither party
shall unreasonably withhold consent to the selection of a mediator.
Each party will bear its own attorney's fees and other costs and
expenses of the mediation and each party will equally share the cost
of the mediation, including the mediator's fees. If the matter is not
resolved by mediation within forty-five (45) days of the initial
request for mediation, the matter then may be submitted to the
appropriate court of law for final determination
27.4 Attorney's Fees. The prevailing Party in any legal action or
proceeding to enforce this Agreement after good faith completion of
the process identified in paragraphs 27.1, 27.2 and 27.3 shall be
entitled to recover from the unsuccessful Party its reasonable
attorneys' fees and all other costs incurred in connection with such
proceeding or the enforcement of the Agreement.
28.0 Confidentiality
28.1 Confidential Information. Information of either Party including, but
not limited to, trade secrets, know-how, inventions (whether
patentable or not), ideas, improvements, materials, data,
specifications, drawings, processes, results, and formulae and all
other business, technical and financial information ("Confidential
Information") shall be defined as confidential information. In
particular, but without limitation, the Specifications and the Product
components delivered to FINE PITCH by ACCELERATED shall be
Confidential Information of ACCELERATED. Both Parties shall, at all
times, both during the term of this
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Agreement and thereafter for a period of two (2) years, keep in
confidence as a fiduciary any and all of the Confidential Information
received by it from the other Party. Neither Party shall use the
Confidential Information of the other Party other than as expressly
permitted under the terms of this Agreement or by a separate written
agreement. Both Parties shall take reasonable steps to prevent
unauthorized disclosure or use of the other Party's Confidential
Information and to prevent it from falling into the public domain or
into the possession of unauthorized persons. Neither Party shall not
disclose Confidential Information of the other Party to any person or
entity other than its officers, employees, consultants and
subsidiaries who need access to such Confidential Information in order
to perform its obligations under this Agreement. Upon termination of
this agreement, both Parties shall promptly return any and all
Confidential Information to the other Party.
28.2 Exception to Confidential Information. Information that is in or
(through no improper action or inaction of a Party or any affiliate,
agent or employee) enters the public domain shall not be Confidential
Information hereunder. Without granting any right or license, the
Parties agree that the obligations set forth in Section 34.1 above,
shall not apply to the extent that Confidential Information includes
information which the Parties can document (i) was rightfully in its
possession or known by it prior to receipt from the disclosing Party,
or (ii) was rightfully disclosed to it by another person without
restriction, or (iii) developed independently by either Party without
use of the other Party's Confidential Information, or (iv) is
disclosed pursuant to the requirement of a court, or other
governmental body, provided the receiving Party provides notice of
such court order to the disclosing Party to enable the disclosing
Party to see a protective order or otherwise prevent or restrict such
disclosure.
29.0 Equitable Relief. Each party acknowledges and agrees that due to the unique
nature of the Confidential Information, there can be no adequate remedy at
law for any breach of the obligations hereunder and that such breach may
allow FINE PITCH or third Parties to unfairly compete with ACCELERATED
resulting in irreparable harm to ACCELERATED. Therefore, upon any such
breach or threat of breach, ACCELERATED shall be entitled to appropriate
equitable relief in addition to whatever remedies it has at law. FINE PITCH
agrees to notify ACCELERATED in writing immediately upon learning of any
unauthorized release or breach of its obligation of nondisclosure
hereunder.
31.0 Amendment and Waiver. Except as otherwise expressly provided herein, any
provision of this Agreement may be amended and the observance of any
provision of this Agreement may be waived (either generally or in any
particular instance and either retroactively) only with the written consent
by an officer of both Parties. However, it is the intention of the Parties
that this Agreement be controlling over additional or different terms of
any purchase order, confirmation, invoice or similar document, even if
accepted in writing by both parties.
32.0 Notice. Notices under this Agreement shall be sufficient only if personally
delivered by a major rapid delivery courier service or mailed by certified
or registered mail, return receipt requested to a Party at its addresses
first set forth herein or as amended by notice pursuant to this subsection.
If not received sooner, notice by mail shall be deemed received three (3)
days after deposit in the U.S. mail.
33.0 Severability. If any provision of this Agreement is held to be illegal or
unenforceable, that provision shall be limited or eliminated to the minimum
necessary so that this Agreement shall otherwise remain in fall force and
effect and enforceable.
35.0 Entire Agreement. THIS ADDENDUM, INCLUDING THE EXHIBITS, IS INCORPORATED BY
REFERENCE INTO THE AGREEMENT AND SETS FORTH THE ENTIRE UNDERSTANDING OF THE
PARTIES RELATING TO THE SUBJECT MATTER HEREIN AND SUPERSEDES ALL PRIOR
DISCUSSIONS BETWEEN THEM.
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IN WITNESS WHEREOF, the parties have executed this Addendum and it is effective
as of the latest day and year set forth below.
"ACCELERATED NETWORKS, INC" "FINE PITCH TECHNOLGY, INC."
Signature: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Signature: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------- -------------------------
Print Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Print Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Director of Contracts Title: General Manager
Date: 4/10/01 Date: 4/16/01
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