1
EXHIBIT 10.9
Wellex Confidential
WELLEX/TELOCITY
Product Manufacturing Agreement
November 1999
2
MANUFACTURING AGREEMENT
THIS MANUFACTURING AGREEMENT is entered into as of this 8th day of November 1999
by And between Wellex Corporation, a California corporation, whose principal
place of business is located at 00000 Xxxxx Xxxxxxx Xxxx., Xxxxxxx, XX 00000
(hereinafter referred to as "MANUFACTURER") and Telocity, Inc., a California
corporation, whose principal place of business is located at 00000 Xxxxx Xx Xxxx
Xxxx., Xxxxxxxxx, XX. 00000 (hereinafter referred to as "PURCHASER")
1. TERM
This AGREEMENT shall become effective on the date hereof and the body of
the AGREEMENT shall nominally be in effect for two years. The terms of
this Agreement may be extended by an amendment to the agreement, signed
by both parties. Prior to anniversary dates, MANUFACTURER will provide
revised volume pricing for the next year.
2. SPECIFICATION COMMENTS
All items covered under this Agreement shall be in accordance with
PURCHASERS Specifications, drawings, files, documents provided by
PURCHASER.
3. SHIPPING
All shipments shall be made by Wellex F.O.B. MANUFACTURER'S
manufacturing facility in California.
4. PAYMENT TERMS
Net [*] from receipt of invoice.
5. COMMODITY LIST
Items listed on PURCHASER'S purchase orders may be added to or deleted
from, providing such additions or deletions meet all of the terms and
conditions of this contract.
6. REQUIREMENT FOR PURCHASING
All purchase orders issued shall contain the following information:
a) PURCHASER'S part number, description and revision level of
product to be shipped.
b) The delivery schedule AND unit price.
----------
[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the
Commission.
PAGE 2 OF 9
3
7. PURCHASE ORDERS/FORECASTS
A) PURCHASER will provide to MANUFACTURER firm purchase orders for a
minimum of [*] in advance of delivery. Further, PURCHASER will provide
to MANUFACTURER an additional [*] forecast to be updated monthly.
MANUFACTURER will purchase materials per purchase order and forecast
based on leadtime and inventory class buy policy as agreed to by
PURCHASER.
b) PURCHASER reserves the right to reschedule deliveries on orders that are
due [*] days or more from the date such change notice is given to
MANUFACTURER. If such reschedule represents a delay in shipment, the
reschedule cannot be for more than [*] days from the original delivery
date and PURCHASER will be responsible for a [*] per month carrying
charge on material acquired pursuant to the original delivery date that
MANUFACTURER cannot mitigate.
If such reschedule represents an acceleration or increase, MANUFACTURER
will make best effort to meet the request, subject to material and
capacity availability. Any extra costs incurred to meet the request will
be the liability of PURCHASER. MANUFACTURER will notify PURCHASER of any
extra cost prior to commitment of new cost incurred.
c) PURCHASER may cancel any order scheduled for delivery more than [*] days
from the date such cancellation notice is given to MANUFACTURER. [*] All
other materials which are classified as off the shelf material stock
items pursuant to Paragraph (7a) shall be the responsibility of the
MANUFACTURE.
Notwithstanding PURCHASER'S liability, MANUFACTURER will attempt to
mitigate any such liability. Any costs incurred to make such mitigation
are the liability of the PURCHASER and will be reviewed with the
PURCHASER prior to their incurrence.
8. WARRANTY
(a) MANUFACTURER warrants that the PRODUCT sold hereunder will be free from
latent and patent defects in material and workmanship according to
IPC-610 Workmanship Standards. Wellex Corporation will warrant product
for a period of [*] from the date of shipment to PURCHASER, provided
that: (i) MANUFACTURER is notified in writing by PURCHASER within thirty
(10) days after PURCHASER'S discovery of such failure or (ii) the
defective PRODUCT is returned to MANUFACTURER no longer than ten (10)
days following the last day of the warranty period. MANUFACTURER shall
include serial numbers and/or date stamps, as designated by PURCHASER,
on each PRODUCT to facilitate warranty tracking. PURCHASER shall forward
defective PRODUCT to MANUFACTURER freight prepaid, and MANUFACTURER Will
make return the repaired or replaced PRODUCT freight prepaid by
MANUFACTURER to PURCHASER no later than thirty (30) days from the date
MANUFACTURER receives the defective PRODUCT.
(b) The foregoing warranty shall not be valid if the PRODUCT or component
parts have been subjected to abuse, misuse, accident, alteration,
neglect, unauthorized repair or installation. MANUFACTURER shall make
the final determination as to the existence or cause of any alleged
defect.
----------
[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the
Commission.
PAGE 3 OF 9
4
(c) The foregoing warranty provisions set forth the MANUFACTURER'S sole
liability and the PURCHASER'S exclusive remedies for claims (except as
to title) based on defects in, or failure of, any PRODUCT sold hereunder
when the claim is based in warranty. Upon the expiration of the
applicable warranty for any PRODUCT sold hereunder, all such liability
shall terminate.
(d) The above warranty periods shall not be extended by the repair or
replacement of PRODUCT pursuant to any of the above warranties. The
above warranties shall apply to PURCHASER, its successors, assigns and
those who purchase or use said PRODUCT. PURCHASER shall deal directly
with MANUFACTURER for returns and repairs.
(e) EXCEPT AS HEREINABOVE PROVIDED, THE FOREGOING WARRANTIES ARE EXCLUSIVE
AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, OR STATUTORY,
INCLUDING THE IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
9. DELIVERY
a) Product shall be delivered to PURCHASER in accordance with required
delivery dates as specified on PURCHASER'S purchase orders as agreed to
by MANUFACTURER. Engineering changes (EC's) and purchase order volume
increases may affect the original purchase order delivery dates and new
dates will be established with agreement from the PURCHASER.
a) Upon learning of any potential delays, MANUFACTURER will immediately
notify PURCHASER in writing as to the cause and extent of such delay.
b) Should such delay extend longer than one (1) month (not caused by 9a)
EC's or significant volume increases), MANUFACTURER will be
responsible for reasonable costs accrued by the PURCHASER due to this
delay and new delivery dates will be established.
10. TERMINATION
a) FOR CAUSE - This Agreement may be terminated by either party at any time
upon the occurrence of any one or more of the following Events of
Default:
(1) failure of the other party: a) to perform pursuant to the terms
and conditions of this agreement; and b) to cure such
performance deficiency within sixty (60) days after receiving
written notice thereof given by the aggrieved party;
(2) the entering into or filing by the other party of a petition,
arrangement or proceeding seeking an order for relief under the
bankruptcy laws of the United States, a receivership for any of
the assets of the other party; a composition with or assignment
for the benefit of its creditors; a readjustment of debt or the
dissolution or liquidation of the other party;
(3) or the insolvency of the other party.
PAGE 4 OF 9
5
(4) Upon termination, PURCHASER shall be liable for any material
acquired plus handling charges pursuant to purchase orders, long
lead items and NCNR materials. Any such material shall be
shipped promptly to PURCHASER upon termination and shall be
subject to the then-current pricing and payment terms.
MANUFACTURER and PURCHASER shall jointly agree on final
disposition of materials.
11. INSPECTION
a) SOURCE INSPECTION
Upon request from PURCHASER, MANUFACTURER agrees to allow PURCHASER'S
source inspector to inspect and review the work being performed under
this Agreement, including materials and supplies being used. However,
shipments will not be delayed if PURCHASER fails to effect such source
inspection. Source inspection does not constitute acceptance. Final
acceptance shall be at PURCHASER'S facility.
PURCHASER shall have ten (10) days, after actual receipt of the goods,
within which to inspect prior to PURCHASER'S acceptance thereof.
PURCHASER'S acceptance of each type of Goods shall be based on
PURCHASER'S standard test procedures for such Goods, including the Goods
satisfying the AQL established by PURCHASER.
b) APPROVED MANUFACTURERS
In the course of purchasing component parts on behalf of PURCHASER,
MANUFACTURER must follow PURCHASER'S Approved Vendors List for all
component parts. If MANUFACTURER offers alternative to PURCHASER'S AVL,
the alternative must be approved in writing by PURCHASER prior to any
production at MANUFACTURER'S facility.
12. LOT INSPECTION APPROVAL
PURCHASER will inspect unit lots per [*], Acceptance level will be [*]
for both cosmetic and electrical performance. Disposition of failed lot
is at the PURCHASER'S discretions.
13. ENGINEERING CHANGE ORDERS
It is recognized that from time to time MANUFACTURER will be asked to
implement ECOs. The following delineates the proper procedures:
a) PURCHASER to notify MANUFACTURER in writing of proposed ECO.
This notification should include the documentation of the change
to effectively support MANUFACTURER'S investigation of the
impact of this proposal.
b) Upon notice of a change, MANUFACTURER will make best effort to
review all costs impacted within one (1) week. All cost impacts
and material availability issues will be mutually reviewed and
agreed to with PURCHASER prior to implementation.
c) Emergency ECOs will be immediately implemented at PURCHASER'S
written request.
d) PURCHASER will be liable for all costs associated with emergency
ECO implementation.
----------
[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the
Commission.
PAGE 5 OF 9
6
14. CONFIDENTIALITY
Both parties acknowledge that, by reason of their relationship, they may
have access to certain information and materials concerning the other's
business, plans, and products (including, but not limited to,
information and materials contained in technical data provided to the
other party) which is confidential and of substantial value to the other
party, which value would be impaired if such information were disclosed
to third parties. Both parties agree that they shall not use in any way,
for their own account or the account of any third party, nor disclose to
any third party, any such confidential information which is revealed to
it by the other party hereto, without written authorization from the
other party. Each party will take every reasonable precaution to protect
the confidentiality of such information consistent with the efforts
exercised by it with respect to its own confidential information. Each
party shall advise the other if it considers any particular information
or materials to be confidential. This provision shall survive
termination of this AGREEMENT. Nothing in this provision shall prevent
either Party from disclosing the terms and conditions of this agreement
in the event of, in anticipation of, or as necessary in advance of a
merger, acquisition, financing or public offering.
15. INDEMNIFICATION
Each party shall indemnify and defend the other party against all
claims, suits, losses, expenses and liabilities for bodily injury,
personal injury, death and property damage directly or indirectly caused
by any Products or through the intentional acts or negligence of a party
or of any person for whose actions said party is legally liable. Both
parties shall carry and maintain liability insurance coverage to
satisfactorily cover its obligations under this Agreement.
16. COMPLIANCE WITH APPLICABLE LAWS
MANUFACTURER has been, and shall continue to be, in material compliance
with the provisions of all applicable federal, state and local laws,
regulations, rules and ordinances applicable to the transactions
governed by this Agreement.
17. FORCE MAJEURE
In the event that performance by either party of its obligations under
this Agreement is prevented due to any Act of God, fire, casualty,
flood, earthquake, war, strike, lockout, epidemic, destruction of
production facilities, riot, insurrection, material unavailability, or
any other cause beyond the reasonable control of the party invoking this
section - and if such party shall give prompt written notice to the
other party - its performance shall be excused, and the time or the
performance shall be extended for the period of delay or inability to
perform due to such occurrences.
PAGE 6 OF 9
7
18. MISCELLANEOUS
a) SEVERABILITY - In the event that one or more of the provisions,
or parts thereof, contained in the Agreement shall for any
reason be held to be invalid, illegal, or unenforceable by a
court of competent jurisdiction, the same shall not invalidate
or otherwise affect any other provision in the Agreement, and
the Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained therein.
b) ENTIRE AGREEMENT: MODIFICATION - The Agreement constitutes the
entire and exclusive statement by PURCHASER and MANUFACTURER of
the terms of their agreement, notwithstanding any additional or
different terms that may be contained in any quotation,
acknowledgment, confirmation, purchase order, invoice or other
form Of PURCHASER or MANUFACTURER. All prior and contemporaneous
proposals, negotiations, representations and agreements are
merged in the Agreement. These terms of the Agreement may not be
altered, modified, superseded, amended or rescinded, and no
additional terms shall become a part of the Agreement, except
pursuant to a writing specifically referencing the Agreement and
signed by a representative of the party against whom enforcement
is sought.
c) NOTICE - Unless otherwise specified in the Agreement, all
notices and other communications permitted or required by the
provisions of those documents shall be in writing and shall be
mailed, telecopied, telegraphed, telexed or delivered to the
other party at the address set forth below (or at such other
address as either party shall designate in writing to the other
party during the term of this Agreement) and shall be effective
and deemed received: i) if mailed, when actually received; ii)
if telecopied, when actually received; iii) if telegraphed, when
actually received; iv) if telexed, when dispatched; or v) if
personally delivered, when delivered. Each notice to
MANUFACTURER or PURCHASER shall be addressed, until notice of
change thereof, as follows:
i) If intended for MANUFACTURER, to:
Wellex Corporation
00000 X. Xxxxxxx Xxxx.
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. XxxxXxxxxx
xx) If intended for PURCHASER, to:
Telocity, Inc.
10355 X.Xx. Anza. Boulevard
Cupertino, Ca. 95014
Attn: Xxxxx Xxxxxx
d) ASSIGNMENT - This Agreement shall not be assignable by either
party without the prior written consent of the other party,
provided however, that this agreement shall be assignable to
either Party's successor in the event of a change in control of
the company.
e) WAIVER - No failure or delay on the part of either party hereto
in exercising any right or remedy under the Agreement shall
operate as a waiver thereof; nor shall any single or partial
exercise of any such right or remedy. No provision of the
Agreement may be waived except in writing signed by the party
granting such waiver.
PAGE 7 OF 9
8
MISCELLANEOUS (continued)
f) GOVERNING LAW: INTERPRETATION - The Agreement shall be governed
by and construed in accordance with the laws of the State of
California. Acceptance or acquiescence in a course of
performance rendered under the Agreement shall not be relevant
to determining the meaning of the Agreement, even though the
accepting or acquiescing party had knowledge of the nature of
the performance and an opportunity for objection. No course of
prior dealing between the parties and no usage of the trade
shall be relevant to supplement or explain any terms used in the
Agreement.
g) CONSEQUENTIAL DAMAGES - In no event shall PURCHASER or
MANUFACTURER be liable for any special, incidental or
consequential damages including without limitation, loss of
profits, even if advised of the possibility thereof.
19. PRICING
a) Prices and volume commitments for Products sold under this
Agreement are defined in purchase orders issued to the
MANUFACTURE and signed material liability agreements.
b) Every [*], PURCHASER and MANUFACTURER will review the actual
volume purchased.
c) Notwithstanding Part 2 of this section, if significant
fluctuations occur at any time in the material cost of
components required under this Agreement, PURCHASER and
MANUFACTURER will review the impact of such fluctuations and
mutually agree to any pricing changes arising therefrom.
(Significant fluctuation is defined to mean [*] of the quoted
Xxxx of Material cost.)
20. RETURN MATERIAL AUTHORIZATION
If product is found to be defective per Section 8 or 11 of this
Agreement, PURCHASER will notify MANUFACTURER and MANUFACTURER will
provide a Return Material Authorization number prior to PURCHASER
returning the Product. MANUFACTURER Will make best effort to provide an
RMA number within twenty four (24) hours.
21. Notwithstanding Xxxxxxxxx 00, XXXXXXXXX and MANUFACTURER will jointly
work towards process improvements in the following areas:
- Total Price
- Quality
- Cycle Time
- On-time Delivery
- Design improvements on manufacturability, quality and price
----------
[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the
Commission.
PAGE 8 OF 9
9
PURCHASER and MANUFACTURER Will meet every three (3) to six (6) months
to review current worldwide material prices for high dollar components
and make changes with mutual agreement to a procurement strategy to
achieve best total pricing.
AGREED: WELLEX CORPORATION AGREED: TELOCITY INC.
00000 XXXXX XXXXXXX XXXX. 00000 X. XX XXXX XXXX.
XXXXXXX, XX 00000 XXXXXXXXX, XX 00000
BY: /s/ XXXX XXXXXXXXXX BY: /s/ XXXXX XXXXXX
-------------------------- -----------------------------
PRINT: Xxxx Xxxxxxxxxx PRINT: Xxxxx Xxxxxx
-------------------------- -----------------------------
TITLE: President TITLE: VP ENG
-------------------------- -----------------------------
DATE: 11/14/99 DATE: 11/14/99
-------------------------- -----------------------------
PAGE 9 OF 9
10
[WELLEX LETTERHEAD]
MATERIAL LIABILITY AGREEMENT
Telocity, Inc.
00000 Xxxxx Xx Xxxx Xxxx.
Xxxxxxxxx, XX 00000
The Wellex Corporation agrees to purchase material classified as Long Lead Time
and Non Cancelable Non Returnable components based on Telocity's Coyote product
forecast. All engineering changes related to materials are the full liability of
the Telocity Corporation.
Wellex will provide Telocity a list of material, which will be identified as
Long Lead Time and Non Cancelable Non Returnable. Upon agreement of each item
and the quantity, Wellex will issue a purchase order to the appropriate supplier
/ vendor with a specified delivery date based on the Telocity product build
forecast. Telocity will provide Wellex with purchase orders at least [*] prior
to final product delivery. The purchase orders will cover costs for all
material, labor and burden including the material purchased by Wellex as Long
Lead Time and Non Cancelable Non Returnable. In the event, Telocity delays the
product delivery date in excess of [*] past the original delivery date, an
agreed to interest charge will be paid monthly.
If for any reason, the Telocity Corporation changes, modifies or cancels the
forecast or purchase orders, Telocity agrees to purchase all material (including
handling charges or cancellation fees) within the standard net [*] agreement.
All material engineering changes will also be the full liability of Telocity.
The Wellex Corporation will perform its best efforts to return material and
cancel material in both categories. In the event Wellex is not able to cancel
or return the identified material Telocity remains fully liable to purchase the
remaining material from Wellex.
AGREED: Wellex Corporation AGREED: Telocity Inc.
00000 Xxxxx Xxxxxxx Xxxx. 00000 Xxxxx Xx Xxxx Xxxx.
Xxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
By: /s/ XXXX XXXXXXXXXX 10/26/99 By: /s/ XXXXX XXXXXX 10/26/99
------------------------------- --------------------------------
(Signature) (Date) (Signature) (Date)
Print Name: Xxxx Xxxxxxxxxx Print Name: Xxxxx Xxxxxx
----------------------- ------------------------
Title: President Title: VP Engineering
---------------------------- -----------------------------
----------
[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the
Commission.
