EXHIBIT 10.15
MANUFACTURING SERVICES AGREEMENT
THIS AGREEMENT (the "Agreement") is effective as of this 17th day of February
2006 (the "Commencement Date"), by and between ISILON SYSTEMS, INC., a Delaware
corporation having a principal place of business at 000 X. Xxxxxx Xx. Xxxxxxx,
XX, 00000, on behalf of itself and its majority-owned subsidiaries (collectively
"CUSTOMER") and SANMINA-SCI CORPORATION, a Delaware corporation having its
principal place of business at 0000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxxxxxxxxx
00000, on behalf of itself and its majority owned subsidiaries ("SANMINA-SCI").
CUSTOMER and SANMINA-SCI are sometimes collectively referred to herein as the
"Parties."
1. TERM
The initial term of this Agreement shall commence on the Commencement Date
and shall continue through the first anniversary of the Commencement Date unless
sooner terminated by mutual agreement or in accordance with this Agreement. Upon
the expiry of the initial term, this Agreement shall continue from year to year
until one Party terminates the Agreement in accordance with section 10.0
Notwithstanding the foregoing, the term of this Agreement shall automatically
extend to include the term of any purchase order ("Order") issued hereunder.
2. PRICING
2.1 Pricing. During the term, CUSTOMER may purchase from SANMINA-SCI the
Products specified in Exhibit A hereto, as such Exhibit may be amended from time
to time (the "Products") at the prices set forth in Exhibit A (the "Prices").
Prices (a) are in U.S. Dollars, (b) include SANMINA-SCI standard packaging, (c)
exclude the items set forth in Section 2.2, and (d) are based on (i) the
configuration set forth in the specifications provided to SANMINA-SCI on which
SANMINA-SCI's quotation was based (the "Specifications") and (ii) the projected
volumes, minimum run rates and other assumptions set forth in SANMINA-SCI's
quotation and/or Exhibit A. The Prices shall remain fixed for the term of the
Agreement, subject to any price adjustments effected pursuant to Section 15.3,
or any special, non-QBR price adjustments agreed to by the parties in writing.
SANMINA-SCI warrants that such Prices shall be as low as or lower than the
prices charged to any third party for such Product, or items similar to Product,
in similar quantities and under similar terms and conditions and similar
delivery requirements. In the event SANMINA-SCI offers a lower price for Product
or items similar to Product to any such third party, or in the event of a
general price reduction for Product or items similar to Product, the price for
Product hereunder and under each Purchase Order shall be reduced to such lower
price (subject to all otherwise applicable discounts) effective upon the date of
the implementation for such third party.
2.2 Exclusions from Price. Prices specifically exclude (a) export licensing
of the Product and payment of broker's fees, duties, tariffs and other similar
charges; (b) taxes or charges (other than those based on net income of
SANMINA-SCI) imposed by any taxing authority upon the manufacture, sale,
shipment, storage, "value add" or use of the Product; and (c) setup, tooling, or
non-recurring engineering activities (collectively "NRE Charges").
2.3 Purchases on CUSTOMER's Behalf. Prior written approval, from a specific
job title specified by CUSTOMER, shall be required before the purchase by
SANMINA-SCI, on CUSTOMER"S behalf, of any tooling, component expedite charges or
PPV (purchase price variance, the difference between the Delivered Cost of the
expedited component(s) and the Delivered Cost on which normal pricing is based)
in excess of [+]. An email from the specified job title to constitute approval
in writing. All such requests and associated approvals will be consolidated on
the last day of each calendar month and presented to CUSTOMER for a Purchase
Order covering such charges. Purchase Order to be provided to SANMINA-SCI within
fifteen (15) calendar days of such request.
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2.4 New Price Quotations. CUSTOMER may, from time to time, request from
SANMINA-SCI quotations for a new Product or service. RFQ (Request For Quotes)
will follow the guidelines outlined in EXHIBIT F. SANMINA-SCI recognizes the
importance of a timely, accurate response. The following completions targets are
established;
SCI will provide written acknowledgement of receipt of quote requests to
CUSTOMER within [+] working days of such receipt. Completed quotes will be
provided according to the following schedule, start date to be defined as
receipt by SANMINA-SCI of a full and complete documentation package detailed in
EXHIBIT F, and a valid request for quote, including a statement of work if
applicable:
1. Quotes with labor and material, but no sheet metal, cables or other
custom parts - [+] working days
2. Quotes with sheet metal, cables or other custom parts - completion
date depends on commits from custom part supplier, but a date for
completion to be committed to CUSTOMER within 4 days from quote
request
3. Labor Only quotes - [+] working days
All Product quotes provided to CUSTOMER by SANMINA-SCI will provide pricing
calculated at various run rates. Such pricing will be the basis for pricing
adjustments as referenced in section 2.2.
2.5 Other Price Adjustments:
(a) At the conclusion of each price review referenced above, the run
rate on which to base pricing for the upcoming quarter shall be calculated as
follows: An average run rate for each Finished Goods Assembly will be calculated
by adding the past 2 most current quarter's numbers for actual units purchased
by CUSTOMER, and the number of units on the Orders for the same assembly for the
upcoming quarter, and dividing by 3. Both parties agree that by basing the
pricing on this calculated run rate, there will be no xxxx backs or rebates
based on the actual results for the upcoming quarter.
(b) CUSTOMER acknowledges that the Prices are based on the
Specifications and the assumptions set forth in SANMINA-SCI's quotation and in
Exhibit A. In the event SANMINA-SCI experiences an increase in cost as a result
of changes in the pricing assumptions or the Specifications, SANMINA-SCI shall
be entitled to the Price adjustment set forth in Section 6.1.
3. PAYMENT
3.1 Payment Terms. Payment terms are [+] after the date of the invoice. On
any invoice not paid by the maturity date, CUSTOMER shall pay interest from
maturity to date of payment at the rate of [+] per month. Unless otherwise
stated, payment shall be made in U.S. Dollars.
3.2 Setoffs. Each Party shall be entitled at all times to set-off any
amount owing from the other Party to such Party against any amount payable to
the other Party from such Party, arising out of this or any other transaction.
For purposes hereof, (i) the term "Party" shall include the Parties to this
transaction and each Party's majority-owned subsidiaries.
3.3 Credit Limit. SANMINA-SCI's Credit Department shall provide CUSTOMER
with an initial credit limit, which shall be reviewed (and, if necessary,
adjusted) from time to time. SANMINA-SCI shall have the right to reduce the
credit limit upon [+] prior written notice to CUSTOMER, such notice to be in the
form of a letter, sent overnight delivery, with copies to, at a minimum, to
CUSTOMER CFO, VP Operations and Director of Supply Chain Management. SANMINA-SCI
shall advise in writing as detailed above and copied to the same individuals,
when CUSTOMER reaches [+] of credit limit. In the event CUSTOMER exceeds this
credit limit or has any outstanding invoice more than [+] past due, SANMINA-SCI
shall notify CUSTOMER in writing, electronic mail to constitute written notice,
of such past due amount or CUSTOMER exceeding the credit limit. If CUSTOMER
fails to bring the account current within
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five (5) days or reduce total exposure to an amount lower than the credit limit,
as the case may be, SANMINA-SCI shall have the right to stop shipments of
Product to CUSTOMER until CUSTOMER makes a sufficient payment to bring its
account within the credit limit provided.
3.4 Security Interest. CUSTOMER grants SANMINA-SCI a security interest,
equal to the value of the Product for the Products delivered to CUSTOMER until
CUSTOMER has paid for the Products and all Product-related charges. CUSTOMER
agrees to promptly execute any documents requested by SANMINA-SCI to perfect and
protect such security interest.
4. PURCHASE ORDERS/FORECAST/RESCHEDULE
4.1 Purchase Orders.
(a) CUSTOMER will issue to SANMINA-SCI specific Orders for Product
covered by this Agreement. Each Order shall be in the form of a written or
electronic communication and shall contain the following information: (i) the
part number of the Product; (ii) the quantity of the Product; (iii) the delivery
date or shipping schedule; (iv) the location to which the Product is to be
shipped; and (v) transportation instructions. Each Order shall contain a number
for billing purposes, and may include other instructions and terms (provided
that such terms do not conflict with this Agreement) as may be appropriate under
the circumstances.
(b) All Orders shall be confirmed by SANMINA-SCI within five (5)
business days of receipt. If SANMINA-SCI does not accept or reject the Order
within the five day period, the Order shall be deemed rejected by SANMINA-SCI
unless SANMINA-SCI has commenced performance, in which case the Order shall be
deemed accepted to the extent of such performance. In the event SANMINA-SCI is
unable to meet the delivery schedule set forth in a proposed Order, or finds the
schedule or Order to be unacceptable for some other reason, the Parties shall
negotiate in good faith to resolve the disputed matter(s).
4.2 Forecast; Minimum Buys; Excess and Obsolete Inventory.
(a) Initial Forecast. Upon the execution of this Agreement, CUSTOMER
shall provide SANMINA-SCI with (i) an initial ninety (90) day firm Order and
(ii) a forecast for Product requirements (in monthly buckets) for an additional
nine (9) months ("Forecast"). All Orders shall be binding and may be rescheduled
only in accordance with Section 4.2(d), or cancelled upon payment of (1) the
purchase price of the Product (if the cancellation is made within 30 days of the
scheduled delivery date) or (2) the amounts set forth in Section 4.2(f) (if
cancellation is made outside of such 30-day period). SANMINA-SCI shall make
purchase commitments (including purchase commitments for Long Leadtime
Components) to its Component suppliers ("Vendors") based upon the Order and
Forecast, and CUSTOMER shall be responsible for all such Components purchased in
support of Customer's then-current Forecast. For all other purposes, however,
the Forecast shall be non-binding.
(b) Subsequent Forecasts. On the first business day of each calendar
month or an alternately agreed to date within each month after the initial Order
and Forecast, a new Forecast month shall be added, to maintain Forecast horizon
at 12 months, and a new firm Order issued for an additional month to bring the
Order horizon back to 90 days, so that a rolling Order of ninety (90) days is
always maintained.
(c) MRP Process.
(1) SANMINA-SCI shall take the Order and Forecast and generate a
Master Production Schedule ("MPS") for a twelve-month period in accordance with
the process described in this Section. The MPS shall define the master plan on
which SANMINA-SCI shall base its procurement, internal capacity projections and
commitments. SANMINA-SCI shall use CUSTOMER's Order to
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generate the first three (3) months of the MPS, inform the Component vendors of
forward requirements, and shall use CUSTOMER's Forecast to generate the
subsequent nine (9) months of the MPS, also to be communicated to the component
vendors.
(2) SANMINA-SCI shall process the MPS through industry-standard
software (the "MRP Software") that will break down CUSTOMER's Product
requirements into Components, Sub Assemblies and Finished Goods Hub
requirements. When no Product testing (in-circuit or functional testing) is
required by CUSTOMER, SANMINA-SCI will use commercially reasonable efforts to
schedule delivery of all Components to SANMINA-SCI [+] working days before the
Products are scheduled to ship to CUSTOMER; in the event Product testing is
required, SANMINA-SCI will use commercially reasonable efforts to schedule
delivery of all Components to SANMINA-SCI [+] before the Products are scheduled
to ship to CUSTOMER.
(3) SANMINA-SCI will release (launch) purchase orders to Vendors
(including other SANMINA-SCI facilities) prior to the anticipated date that the
Components are needed at SANMINA-SCI. The date on which these orders are
launched will depend on the lead time determined between the Vendor and
SANMINA-SCI and SANMINA-SCI's manufacturing or materials planning systems. If
SANMINA-SCI fails to order Components in a timely manner in accordance with this
section for which there is valid demand based on the most current forecast, and
such failure results in failure to deliver Product to CUSTOMER on time,
SANMINA-SCI shall pay the cost of expedited freight as a sole remedy.
(4) A list of all Components with lead times greater than [+] (or
the Order period, if the Order period is less than [+]) ("Long Leadtime
Components") is set forth in Exhibit B to this Agreement and/or has previously
been provided to CUSTOMER. SANMINA-SCI shall use reasonable efforts to update
the list of Long Leadtime Components every month and present an updated list of
Long Leadtime Components to CUSTOMER at the time SANMINA-SCI presents the
CUSTOMER with the E&O List described in Section 4.2(e). Each revised Long
Leadtime Item list shall be deemed an amendment to Exhibit B, whether or not it
has been formally designated as such. In the event SANMINA-SCI fails to present
an updated list of Long Leadtime Components, (i) the Parties shall continue to
rely on the preceding list (as updated in writing by the Parties) and (ii)
CUSTOMER will accept responsibility for Long Leadtime Components ordered outside
the leadtimes set forth in the list provided that SANMINA-SCI can demonstrate to
CUSTOMER'S reasonable satisfaction that such Components were ordered in
accordance with the then-current Vendor leadtimes. (CUSTOMER acknowledges that
leadtimes constantly change and that SANMINA-SCI might not always be able to
present CUSTOMER with a current Long Leadtime Component List).
(5) CUSTOMER acknowledges that SANMINA-SCI will order Components
in quantities sufficient to support CUSTOMER's Forecast. In determining the
quantity of Components to order, SANMINA-SCI divides the Components into three
classes, "Class A," "Class B" and "Class C." Class A Components are comprised of
the approximately [+] of Components constituting approximately [+] of the
Product's total Component cost. Class C Components are comprised of the
approximately [+] of Components constituting approximately [+] of the Product's
total Component cost. Class B Components are comprised of the remaining [+] of
Components constituting approximately [+] of the Product's total Component cost.
SANMINA-SCI will place orders with its Vendors for approximately [+] worth of
Class A Components, [+] worth of Class B Components and [+] worth of Class C
Components. A summary of SANMINA-SCI's purchase commitments is set forth in the
table below.
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Expected Percentage
Part Expected Percentage of Total Value (of Periods Worth of Supply to
Class of Total Parts Gross Requirements) be Bought with Each Order
----- ------------------- ------------------- --------------------------
A [+] [+] [+]
B [+] [+] [+]
C [+] [+] [+]
(6) CUSTOMER acknowledges that SANMINA-SCI will be required to
order Components in accordance with the various minimum buy quantities, tape and
reel quantities, and multiples of packaging quantities required by the Vendor.
In addition, CUSTOMER acknowledges that there is a lag time of up to ten working
days, between any CUSTOMER cancellation and the cancellation of the Components
required to support production.
(7) CUSTOMER acknowledges that the Vendor leadtimes can be
significant (e.g., 26 weeks or greater), and understands that it is possible for
SANMINA-SCI to have Components on order which would support the last week of
CUSTOMER'S Forecast. For example, assuming a Vendor leadtime of 40 weeks and a
"B" Component, SANMINA-SCI would place an order for 3 months' worth (see table
above) of such Component approximately 40 weeks prior to the date on which the
first Component is expected to be used.
(d) Reschedule. CUSTOMER may reschedule all or part of a scheduled
delivery (per Order or Forecast) three (3) times for a period not to exceed [+]
days in accordance with the table below. At the end of this [+] period, CUSTOMER
shall either accept delivery of rescheduled finished units and/or pay
SANMINA-SCI's Delivered Cost (as defined in Section 4.2(e)) associated with
rescheduled units not yet built
[+]
SANMINA-SCI shall use reasonable commercial efforts to accommodate any
upside schedule changes beyond the firm order periods.
(e) Excess and Obsolete Inventory. Within fifteen (15) working days
after the end of each calendar month, SANMINA-SCI shall advise CUSTOMER in
writing of any excess or obsolete Components, Sub Assemblies and Finished Goods
purchased or manufactured solely for the manufacture of CUSTOMER's Products but
remaining in its inventory, and the Delivered Cost of such Components, Sub
Assemblies and Finished Goods (the "E&O List"). For the purpose of this
Agreement, (i) the phrase "Obsolete Components, Sub Assemblies and Finished
Goods" shall mean any on-hand Components, Sub Assemblies and Finished Goods,
ordered or manufactured in accordance with this Section, for which there is no
demand for the next six (6) month period, according to the most current Forecast
(whether as a result of an ECO or otherwise), (ii) the term "Excess Components,
Sub Assemblies and Finished Goods" shall mean any on-hand Components, Sub
Assemblies and Finished Goods, ordered or manufactured in accordance with this
Section, which are not required to meet CUSTOMER's requirements (1) for the
ensuing thirty-day period for "A" Components, Sub Assemblies and Finished Goods,
(subassemblies and Finished Goods shall be deemed as A components) (2) for the
ensuing ninety-day period for "B" Components or (3) for the ensuing one hundred
eighty day period for "C" Components(ii) the term "Delivered Cost" shall mean
SANMINA-SCI's quoted cost of Components, Sub Assemblies and Finished Goods as
stated on the xxxx of materials, delivered to the point of manufacture. Within
five (5) business days of receiving SANMINA-SCI's E&O List, CUSTOMER shall
advise SANMINA-SCI of any Components, Sub Assemblies and Finished Goods that it
believes are not excess or obsolete. Within five (5) business days after
receiving SANMINA-SCI's E&O List, SANMINA-SCI and CUSTOMER shall finalize the
E&O List, and CUSTOMER (i) shall issue to SANMINA-SCI an Order for all Obsolete
Components, Sub Assemblies and Finished Goods on the E&O List at a price equal
to the Delivered Cost of such Components, Sub Assemblies and Finished Goods plus
a [+] markup on such Components. Sub Assemblies and Finished Goods shall have no
additional markup to listed price, but may have charges for packaging if not
included in the price, and (ii) shall issue an Order to
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SANMINA-SCI for any carrying charge due on the Excess Components, Sub Assemblies
and Finished Goods. The carrying charge shall be an amount equal to [+].
CUSTOMER shall pay SANMINA-SCI in accordance with Section 3.
(f) Customer Component Liability. CUSTOMER acknowledges that it shall
be financially liable for all Components, Sub Assemblies and Finished Goods
ordered or manufactured in accordance with Section 4. Specifically, CUSTOMER's
Liability shall be equal to SANMINA-SCI's Delivered Cost of all Components, Sub
Assemblies and Finished Goods ordered or manufactured in support of any Order or
Forecast, including any excess Components, Sub Assemblies and Finished Goods
resulting from any minimum buy quantities, tape and reel quantities, and
multiples of packaging quantities required by the Vendor less the actual cost
(per the xxxx of materials) of those Components, Sub Assemblies and Finished
Goods which are returnable to Vendor (less any cancellation or restocking
charges). At CUSTOMER'S request, SANMINA-SCI shall use its most diligent efforts
to mitigate all resulting costs and to return such Components, to the Vendor for
full or partial refund, or by attempting to use such Components, within the
SANMINA-SCI Corporation; provided, however, that SANMINA-SCI shall not be
obligated to attempt to return to Vendor Components, Sub Assemblies and Finished
Goods which are, in the aggregate, worth less than $100.00. SANMINA-SCI shall
fully inform CUSTOMER in connection with such mitigation and return efforts
5. DELIVERY AND ACCEPTANCE
5.1 Delivery. All Product shipments (including shipments made in accordance
with Section 7 (Warranty)) shall be Ex Works (Incoterms 2000). SANMINA-SCI's
facility of manufacture (or repair). Title to and risk of loss or damage to the
Product shall pass to CUSTOMER upon SANMINA-SCI's tender of the Product to the
common carrier. CUSTOMER shall be the exporter of record for all shipments of
Products, including any repaired or replacement Products. SANMINA-SCI shall
xxxx, pack, package, crate, transport, ship and store Product to ensure (a)
delivery of the Product to its ultimate destination in safe condition, (b)
compliance with all requirements of the carrier and destination authorities, and
(c) compliance with any special instructions of CUSTOMER. SANMINA-SCI shall use
reasonable efforts to deliver the Products on the agreed-upon delivery dates
defined as 3 days early to 0 days late, and shall use commercially reasonable
efforts to notify CUSTOMER of any anticipated delays immediately, as well as the
cause and extent of any such delay. Upon such notice, CUSTOMER may modify any
affected Orders; provided, however, that in the event of a delay as described
above, CUSTOMER may take any of the measures referenced in Section 4.2(a). If
the cause of the late delivery is solely due to causes within SANMINA-SCI's
reasonable control, SANMINA-SCI will pay the difference between the standard
cost of shipping, and the expedited cost of shipping and, if necessary, the cost
of incurring overtime to expedite the delivery. This payment of expedited
delivery cost differential shall constitute the sole remedy for late deliveries
by SANMINA-SCI.
5.2 Acceptance. Acceptance of the Product shall occur no later than fifteen
(15) days after shipment of Product and shall be based solely on whether the
Product passes a mutually agreeable On-Site Verification Test ("OVT") designed
to demonstrate compliance with the Specifications. Product cannot be rejected
based on criteria that were unknown to SANMINA-SCI or based on test procedures
that SANMINA-SCI has not approved or does not conduct. Notwithstanding anything
to the contrary, Product shall be deemed accepted if not rejected within this
fifteen-day period. Once a Product is accepted, all Product returns shall be
handled in accordance with Article 7 (Warranty). Prior to returning any rejected
Product, CUSTOMER shall obtain an Authorized Return Material ("RMA") number from
SANMINA-SCI, and shall return such Product in accordance with SANMINA-SCI's
instructions; CUSTOMER shall specify the reason for such rejection in all RMA's.
In the event a Product is rejected, SANMINA-SCI shall have a reasonable
opportunity to cure any defect which led to such rejection.
6. CHANGES
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6.1 General. CUSTOMER may upon five business days notice, and based upon
Component availability make changes within the general scope of this Agreement.
If changes need to be made on an emergency basis, SANMINA-SCI will use
commercially reasonable efforts to complete change as quickly as possible. Such
changes may include, but are not limited to changes in (1) drawings, plans,
designs, procedures, Specifications, test specifications or xxxx of material
("BOM"), (2) methods of packaging and shipment, (3) quantities of Product to be
furnished, (4) delivery schedule, or (5) Customer-Furnished Items. All changes
other than changes in quantity of Products to be furnished shall be requested
pursuant to an Engineering Change Notice ("ECN") and finalized in an Engineering
Change Order ("ECO"). If any such change causes either an increase or decrease
in SANMINA-SCI's cost or the time required for performance of any part of the
work under this Agreement (whether changed or not changed by any ECO) the Prices
and/or delivery schedules shall be adjusted in a manner which would adequately
compensate the Parties for such change.
6.2 ECN's. SANMINA-SCI will respond to five ECN requests per month without
a non-recurring administrative fee; responses to additional ECN's will incur an
administrative fee of [+] each. Within five (5) business days after an ECN is
received, SANMINA-SCI shall advise CUSTOMER in writing (a) of any change in
Prices or delivery schedules resulting from the ECN and (b) the Delivered Cost
of any Finished Product, Work-in-Process or Components, Sub Assemblies and
Finished Goods rendered excess or obsolete as a result of the ECN (collectively
the "ECN Charge"). Unless otherwise stated, ECN Charges are valid from thirty
(30) days from the date of the ECN Charge.
6.3 ECO's. In the event CUSTOMER desires to proceed with the change after
receiving the ECN Charge pursuant to Section 6.2, CUSTOMER shall advise
SANMINA-SCI in writing and shall immediately issue a PO for the portion of the
ECN Charge set forth in Section 6.2(b). In the event CUSTOMER does not desire to
proceed with the Change after receiving the ECN Charge, it shall so notify
SANMINA-SCI. In the event SANMINA-SCI does not receive written confirmation of
CUSTOMER's desire to proceed with the change within thirty days after
SANMINA-SCI provides CUSTOMER with the ECN Charge, the ECN shall be deemed
cancelled.
7. WARRANTY
7.1 SANMINA-SCI Warranty. SANMINA-SCI warrants that, for a period of one
year from the date of manufacture of the Product, the Product will be free from
defects in workmanship and will conform to the Specifications. Products shall be
considered free from defects in workmanship (and CUSTOMER shall have no warranty
claim) if they are manufactured in accordance with the latest version of
IPC-A-600 or IPC-A-610 and successfully complete any mutually agreed Product
acceptance test. SANMINA-SCI shall, at its option and at its expense (and as
CUSTOMER's sole and exclusive remedy for breach of any warranty), repair,
replace or issue a credit for Product found defective during the warranty
period. In addition, SANMINA-SCI will pass on to CUSTOMER all Vendor's (and
manufacturers') Component warranties to the extent that they are transferable,
but will not independently warrant any Components. All warranty obligations will
cease upon the earlier of the expiration of the warranty period set forth above
or the return (at CUSTOMER's request) of any test equipment or test fixtures.
ALL CLAIMS FOR BREACH OF WARRANTY MUST BE RECEIVED BY SANMINA-SCI NO LATER THAN
THIRTY (30) DAYS AFTER THE EXPIRATION OF THE WARRANTY PERIOD.
7.2 RMA Procedure. SANMINA-SCI shall concur in advance on all Product to be
returned for repair or rework. CUSTOMER shall obtain a RMA number from
SANMINA-SCI prior to return shipment. All returns shall state the specific
reason for such return, and will be processed in accordance with SANMINA-SCI's
RMA Procedure, EXHIBIT G. SANMINA-SCI shall pay all transportation costs for
valid returns of the Products to SANMINA-SCI and for the shipment of the
repaired or replacement Products to CUSTOMER, and shall bear all risk of loss or
damage to such Products while in transit; CUSTOMER shall pay these charges, plus
a handling charge of [+] for invalid or "no defect found" returns that exceed
[+] of the total returns for a given month. Any repaired or replaced Product
shall be warranted as set forth in this
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Article for a period equal to the greater of (i) the balance of the applicable
warranty period relating to such Product or (ii) sixty (60) days after it is
received by CUSTOMER.
7.3 Exclusions From Warranty. This warranty does not include Products that
have defects or failures resulting from (a) CUSTOMER's design of Products
including, but not limited to, design functionality failures, specification
inadequacies, failures relating to the functioning of Products in the manner for
the intended purpose or in the specific CUSTOMER's environment; (b) accident,
disaster, neglect, abuse, misuse, improper handling, testing, storage or
installation including improper handling in accordance with static sensitive
electronic device handling requirements; (c) unauthorized alterations,
modifications or repairs to defective Products by CUSTOMER or third parties or
(d) defective CUSTOMER-provided test equipment or test software. CUSTOMER bears
all design responsibility for the Product.
7.4 Remedy. THE SOLE REMEDY UNDER THIS WARRANTY SHALL BE THE REPAIR,
REPLACEMENT OR CREDIT FOR DEFECTIVE PARTS AS STATED ABOVE. THIS WARRANTY IS THE
SOLE WARRANTY GIVEN BY SANMINA-SCI AND IS IN LIEU OF ANY OTHER WARRANTIES EITHER
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY,
NONINFRINGEMENT, COMPLIANCE WITH ROHS AND WEEE (AND SIMILAR LEGISLATION IN OTHER
COUNTRIES), AND FITNESS FOR A PARTICULAR PURPOSE, EACH OF WHICH IS SPECIFICALLY
DISCLAIMED.
8. CUSTOMER FURNISHED EQUIPMENT AND COMPONENTS
8.1 Customer-Furnished Items. CUSTOMER shall provide SANMINA-SCI with the
Product design and related specifications, applicable regulatory requirements,
equipment, tooling, Components or documentation set forth in Exhibit C
(collectively the "Customer-Furnished Items"). CUSTOMER hereby represents and
warrants that the Customer-Furnished Items are or will be fit for their intended
purposes, meet all applicable regulatory requirements, and will be delivered to
SANMINA-SCI in a timely manner. Documentation (including BOM's, drawings and
artwork) shall be current and complete. CUSTOMER shall be responsible for
schedule delay, reasonable inventory carrying charges and allocated equipment
down time charges associated with the incompleteness, late delivery or
non-delivery of the Customer-Furnished Items. Sanmina-SCI will notify CUSTOMER
by email of any impact from the incompleteness, late delivery or non-delivery of
the CUSTOMER furnished items so that issues can be resolved before any impact to
the CUSTOMER.
8.2 Care of Customer-Furnished Items. All Customer-Furnished Items shall
remain the property of CUSTOMER. SANMINA-SCI shall clearly identify all
Customer-Furnished Items by an appropriate tag and shall utilize such
Customer-Furnished Items solely in connection with the manufacture of CUSTOMER's
Product. SANMINA-SCI shall not make or allow modifications to be made to the
Customer-Furnished Items without CUSTOMER's prior written consent. SANMINA-SCI
shall be responsible for reasonable diligence and care in the use and protection
of any Customer-Furnished Items and routine maintenance of any
Customer-Furnished equipment, but shall not be responsible for repairs or
replacements (including servicing and calibration to the equipment) unless such
failure was caused by SANMINA-SCI's negligence or willful misconduct. All
Customer-Furnished Items shall be returned to CUSTOMER at CUSTOMER's expense
upon request. SANMINA-SCI's Production and warranty obligations which require
the utilization of the returned Customer-Furnished Items will cease upon
SANMINA-SCI's fulfillment of CUSTOMER'S request.
8.3 Customer-Furnished Components. Customer-furnished Components shall be
handled in accordance with SANMINA-SCI's procedures regarding Customer-Furnished
Material, incorporated by reference herein, copies of which are available upon
request.
9. INDEMNIFICATION AND LIMITATION OF LIABILITY
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9.1 SANMINA-SCI's Indemnification. SANMINA-SCI shall indemnify, defend, and
hold CUSTOMER and CUSTOMER's affiliates, shareholders, directors, officers,
employees, contractors, agents and other representatives (the
"Customer-Indemnified Parties") harmless from all third party demands, claims,
actions, causes of action, proceedings, suits, assessments, losses, damages,
liabilities, settlements, judgments, fines, penalties, interest, costs and
expenses (including fees and disbursements of counsel) of every kind (each a
"Claim," and, collectively "Claims") (i) based upon personal injury or death or
injury to property (other than damage to the Product itself, which is handled in
accordance with Article 7/Warranty) to the extent any of the foregoing is
proximately caused either by the negligent or willful acts or omissions of
SANMINA-SCI or its officers, employees, subcontractors or agents and/or (ii)
arising from or relating to any actual or alleged infringement or
misappropriation of any patent, trademark, mask work, copyright, trade secret or
any actual or alleged violation of any other intellectual property rights
arising from or in connection with SANMINA-SCI's manufacturing processes or
SANMINA-SCI-furnished items, which are items used by SANMINA-SCI in its
manufacturing processes excluding Components.
9.2 CUSTOMER's Indemnification. CUSTOMER shall indemnify, defend, and hold
SANMINA-SCI and SANMINA-SCI's affiliates, shareholders, directors, officers,
employees, contractors, agents and other representatives (the
"SANMINA-SCI-Indemnified Parties") harmless from all third party Claims (i)
based upon personal injury or death or injury to property to the extent any of
the foregoing is proximately caused either by a defective Product, by the
negligent or willful acts or omissions of CUSTOMER or its officers, employees,
subcontractors or agents and/or (ii) arising from or relating to any actual or
alleged infringement or misappropriation of any patent, trademark, mask work,
copyright, trade secret or any actual or alleged violation of any other
intellectual property rights arising from or in connection with any
Customer-Furnished Items, except to the extent that such infringement exists as
a result of use by CUSTOMER of SANMINA-SCI's manufacturing or
SANMINA-SCI-furnished items, which are items used by SANMINA-SCI in its
manufacturing processes excluding Components.
9.3 Procedure. A Party entitled to indemnification pursuant to this Article
(the "Indemnitee") shall promptly notify the other Party (the "Indemnitor") in
writing of any Claims covered by this indemnity. Promptly after receipt of such
notice, the Indemnitor shall assume the defense of such Claim with counsel
reasonably satisfactory to the Indemnitee. If the Indemnitor fails, within a
reasonable time after receipt of such notice, to assume the defense with counsel
reasonably satisfactory to the Indemnitee or, if in the reasonable judgment of
the Indemnitee, a direct or indirect conflict of interest exists between the
Parties with respect to the Claim, the Indemnitee shall have the right to
undertake the defense, compromise and settlement of such Claim for the account
and at the expense of the Indemnitor. Notwithstanding the foregoing, if the
Indemnitee in its sole judgment so elects, the Indemnitee may also participate
in the defense of such action by employing counsel at its expense, without
waiving the Indemnitor's obligation to indemnify and defend. The Indemnitor
shall not compromise any Claim (or portions thereof) or consent to the entry of
any judgment without an unconditional release of all liability of the Indemnitee
as to each claimant or plaintiff.
9.4 Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
THE OTHER FOR ANY INDIRECT, CONSEQUENTIAL, INCIDENTAL, PUNITIVE OR SPECIAL
DAMAGES, OR ANY DAMAGES WHATSOEVER RESULTING FROM LOSS OF USE, DATA OR PROFITS,
EVEN IF SUCH OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
FOR THE PURPOSE OF THIS SECTION, BOTH LOST PROFITS AND DAMAGES RESULTING FROM
VALUE ADDED TO THE PRODUCT BY CUSTOMER SHALL BE CONSIDERED CONSEQUENTIAL
DAMAGES. IN NO EVENT SHALL SANMINA-SCI'S LIABILITY FOR A PRODUCT (WHETHER
ASSERTED AS A TORT CLAIM OR CONTRACT CLAIM) EXCEED THE AMOUNTS PAID TO
SANMINA-SCI FOR SUCH PRODUCT HEREUNDER. IN NO EVENT WILL SANMINA-SCI BE LIABLE
FOR COSTS OF PROCUREMENT OF SUBSTITUTE PRODUCT BY CUSTOMER. IN ADDITION, IN NO
EVENT SHALL SANMINA-SCI'S LIABILITY FOR ALL CLAIMS ARISING OUT OF OR RELATING TO
THIS AGREEMENT EXCEED [+] OF THE AMOUNTS PAID TO SANMINA-SCI BY CUSTOMER IN THE
TWELVE MONTHS PRECEDING SUCH CLAIM. THESE LIMITATIONS SHALL APPLY
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
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Notwithstanding the foregoing, the caps set forth herein shall not apply to
limit (i) CUSTOMER's obligation for termination payments in accordance with
Section 10, (ii) a Party's obligation to indemnify the other Party against any
third party Claim for personal injury or property damage, or (iii) actual
damages required to be paid to any third party as a result of any infringement
claim. THE LIMITATION SET FORTH IN THIS SECTION SHALL APPLY WHERE THE DAMAGES
ARISE OUT OF OR RELATE TO THIS AGREEMENT.
10. TERMINATION
10.1 Termination for Cause. Subject to Section 10.4, either Party may
terminate this Agreement or an Order hereunder for default if the other Party
materially breaches this Agreement; provided, however, no termination right
shall accrue until thirty (30) days after the defaulting Party is notified in
writing of the material breach and has failed to cure within the thirty (30) day
period after notice of material breach or provide a mutually agreeable plan to
cure. Notwithstanding the foregoing, there shall be no cure period for
payment-related breaches. If either party fails to cure or provide a plan to
cure within the 30 day period, the Parties will escalate the issues as set forth
below:
SANMINA-SCI Titles CUSTOMER COUNTERPART
Programs Team Leader Supply Chain Specialist
Plant Manager Director of Operations
Senior VP VP of Operations
EVP VP of Operations
President CEO
CEO
10.2 Termination For Convenience. Subject to Section 10.4, CUSTOMER may
terminate this Agreement hereunder for any reason upon [+] days' prior written
notice and may terminate any Order hereunder for any reason upon [+] days'
(before scheduled shipment) prior written notice. Subject to Section 10.4,
SANMINA-SCI may terminate this Agreement for any reason upon [+] days' notice.
10.3 Termination by Operation of Law. Subject to Section 10.4, this
Agreement shall immediately and automatically terminate should either Party (a)
become insolvent; (b) enter into or file a petition, arraignment or proceeding
seeking an order for relief under the bankruptcy laws of its respective
jurisdiction; (c) enter into a receivership of any of its assets or (d) enter
into a dissolution or liquidation of its assets or an assignment for the benefit
of its creditors.
10.4 Consequences of Termination.
a. Termination for Reasons other than SANMINA-SCI's Breach or
Termination for Convenience By SANMINA-SCI. In the event this Agreement or an
Order hereunder is terminated for any reason other than a breach by SANMINA-SCI
(including but not limited to a force majeure or termination for convenience),
CUSTOMER shall pay SANMINA-SCI, charges equal to (1) the contract price for all
finished Product and Subassemblies existing at the time of termination; (2)
SANMINA-SCI's cost (including labor, Components and [+] xxxx-up on Components
and labor) for all work in process. At CUSTOMER'S option, provided that CUSTOMER
is current with all payments to SANMINA-SCI and agrees to pay for additional
Product, SANMINA-SCI shall complete to the extent reasonably possible, all work
in process into finished Product and charges shall then be according to Section
10.4.a(1); and (3) CUSTOMER'S Component Liability pursuant to Section 4.2(f).
b. Termination Resulting From SANMINA-SCI'S Breach or Convenience by
SANMINA-SCI. In the event CUSTOMER terminates this Agreement or any Order
hereunder as a result of a breach by SANMINA-SCI, CUSTOMER shall pay
SANMINA-SCI, termination charges equal to (1) the contract price for all
finished Product and Subassemblies existing at the time of termination; (2)
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SANMINA-SCI's cost (including labor and Components for all work in process; and
(3) CUSTOMER'S Component Liability pursuant to Section 4.2(f); provided,
however, that for the purposes of this subsection only, CUSTOMER's Component
Liability shall be calculated based on the quoted cost of Components as stated
on the BOM rather than the Delivered Cost. At CUSTOMER'S request, SANMINA-SCI
shall use reasonable commercial efforts to mitigate all resulting cost liability
by attempting to return Components, Sub Assemblies and Finished Goods to the
Vendor for full or partial refund, by attempting to use such Components,
Subassemblies or Finished Goods within the SANMINA-SCI Corporation.
11. QUALITY
11.1 Specifications. Product shall be manufactured by SANMINA-SCI in
accordance with the Specifications, as modified via written ECO's in accordance
with this Agreement. Neither Party shall make any change to the Specifications,
to any Components described therein, or to the Products (including, without
limitation, changes in form, fit, function, design, appearance or place of
manufacture of the Products or changes which would affect the reliability of any
of the Products) unless such change is made in accordance with Section 6.1.
Notwithstanding the foregoing, SANMINA-SCI shall be permitted to make minor
changes in its manufacturing process at any time, so long as such changes do not
affect the form, fit or function of the Products.
11.2 Content of Specifications. The Specifications shall include, but shall
not be limited to (i) detailed electrical, mechanical, performance and
appearance specifications for each model of Product, (ii) the BOM; (iii) tooling
specifications, along with a detailed description of the operation thereof, (iv)
art work drawings, (v) Component specifications, (vi) Vendor cross references if
any.
11.3 Quality Metrics. The quality metrics which shall be tracked and
reported to CUSTOMER are detailed in EXHIBIT E
11.4 Components. SANMINA-SCI shall use in its Production of Products such
Components of a type, quality, and grade specified by CUSTOMER to the extent
CUSTOMER chooses to so specify, and shall purchase Components only from Vendors
appearing on CUSTOMER's approved vendor list ("AVL"); provided, however, that in
the event SANMINA-SCI cannot purchase a Component from a Vendor on CUSTOMER'S
AVL for any reason, SANMINA-SCI shall be able to purchase such Component from an
alternate Vendor, subject to CUSTOMER's prior written approval, which approval
shall not be unreasonably withheld or delayed. SANMINA-SCI shall use
commercially reasonable efforts to manage all Vendors, but shall not be
responsible for any Component (including the failure of any Component to comply
with the Specifications).
11.5 Quality Specifications. SANMINA-SCI shall comply with the quality
specifications set forth in its Quality Manual, incorporated by reference
herein, a copy of which is available from SANMINA-SCI upon request. SANMINA-SCI
shall provide CUSTOMER a copy each time changes are made.
11.6 Inspection of Facility. Upon reasonable advance written notice of no
less than [+] working days and, upon SANMINA-SCI's request the execution of an
appropriate nondisclosure agreement, CUSTOMER may inspect the Products,
Equipment and Components held by SANMINA-SCI for CUSTOMER at SANMINA-SCI's
facilities during SANMINA-SCI's regular business hours, provided that such
inspection does not unduly affect SANMINA-SCI'S operations. CUSTOMER and its
representatives shall observe all security and handling measures of SANMINA-SCI
while on SANMINA-SCI's premises. CUSTOMER and its representatives acknowledge
that their presence on SANMINA-SCI's property is at their sole risk.
12. FORCE MAJEURE
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12.1 Force Majeure Event. For purposes of this Agreement, a "Force Majeure
Event" shall mean (i) the occurrence of unforeseen circumstances beyond a
Party's reasonable control and without such Party's negligence or intentional
misconduct, including, but not limited to, any act by any governmental
authority, act of war, natural disaster, strike, boycott, embargo, shortage,
riot, lockout, labor dispute, civil commotion and (ii) the failure of a Vendor
to timely deliver a Component to SANMINA-SCI (unless the Vendor's failure to
timely deliver directly results from SANMINA-SCI's failure to order the
Component).
12.2 Notice of Force Majeure Event. Neither Party shall be responsible for
any failure to perform due to a Force Majeure Event provided that such Party
gives notice to the other Party of the Force Majeure Event as soon as reasonably
practicable, but not later than five (5) days after the date on which such Party
knew or should reasonably have known of the commencement of the Force Majeure
Event, specifying the nature and particulars thereof and the expected duration
thereof; provided, however, that the failure of a Party to give notice of a
Force Majeure Event shall not prevent such Party from relying on this Section
except to the extent that the other Party has been prejudiced thereby
12.3 Termination of Force Majeure Event. The Party claiming a Force Majeure
Event shall use reasonable efforts to mitigate the effect of any such Force
Majeure Event and to cooperate to develop and implement a plan of remedial and
reasonable alternative measure to remove the Force Majeure Event; provided,
however, that neither Party shall be required under this provision to settle any
strike or other labor dispute on terms it considers to be unfavorable to it.
Upon the cessation of the Force Majeure Event, the Party affected thereby shall
immediately notify the other Party of such fact, and use its best efforts to
resume normal performance of its obligations under the Agreement as soon as
possible.
12.4 Limitations. Notwithstanding that a Force Majeure Event otherwise
exists, the provisions of this Article shall not excuse (i) any obligation of
either Party, including the obligation to pay money in a timely manner for
Product actually delivered or other liabilities actually incurred, that arose
before the occurrence of the Force Majeure Event causing the suspension of
performance; or (ii) any late delivery of Product, equipment, materials,
supplies, tools, or other items caused solely by negligent acts or omissions on
the part of such Party.
12.5 Termination for Convenience. In the event a Party fails to perform any
of its obligations for reasons defined in this Article 12 for a cumulative
period of ninety (90) days or more from the date of such Party's notification to
the other Party then the other Party at its option may extend the corresponding
delivery period for the length of the delay, or terminate this Agreement for
Convenience in accordance with Section 10.2.
13. CONFIDENTIALITY AND NON-SOLICITATION OF EMPLOYEES
13.1 Definitions. For the purpose of this Agreement,
(a) "Confidential Information" means information (in any form or media)
regarding a Party's customers, prospective customers (including lists of
customers and prospective customers), methods of operation, engineering methods
and processes (include any information which may be obtained by a Party by
reverse engineering, decompiling or examining any software or hardware provided
by the other Party under this Agreement), programs and databases, patents and
designs, billing rates, billing procedures, vendors and suppliers, business
methods, finances, management, or any other business information relating to
such Party (whether constituting a trade secret or proprietary or otherwise)
which has value to such Party and is treated by such Party as being
confidential; provided, however, that Confidential Information does not include
information that (i) is known to the other Party prior to receipt from the
Disclosing Party hereunder, which knowledge shall be evidenced by written
records, (ii) is independently developed as evidenced by written records, (iii)
is or becomes in the public domain through no breach of this Agreement, or (iv)
is received from a third party without breach of any obligation of
confidentiality; and provided further, that Confidential Information does not
include any information provided by CUSTOMER to
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SANMINA-SCI regarding the manufacturing process. CUSTOMER shall at all times
have title to specifications and the microcode provided to SANMINA-SCI by
CUSTOMER, and also all associated artwork, negatives, designs, or materials
furnished for use in connection with this Agreement. Such specifications,
microcode and all other non-public information provided by or on behalf of
CUSTOMER, including without limitation each forecast and the content and results
of each quarterly business review, shall be at all times the confidential
information of CUSTOMER ("Confidential Information"). SANMINA-SCI shall use
Confidential Information solely in connection with its performance of this
Agreement, and shall not disclose Confidential Information to anyone other than
CUSTOMER or SANMINA-SCI employees who have a reasonable need to know for
purposes of SANMINA-SCI's performance hereunder. SANMINA-SCI shall, upon
CUSTOMER's request or upon completion of the Agreement, whichever comes first,
promptly return all such specifications, microcode and other Confidential
Information (including all copies) to CUSTOMER, or if so directed by CUSTOMER
destroy them, and shall promptly certify in writing that SANMINA-SCI has done
so. The obligations hereunder shall survive any expiration or termination of
this Agreement for a period of five (5) years. Notwithstanding anything to the
contrary in this Agreement, SANMINA-SCI shall ensure that the only individuals
who shall have the right to have access to Microcode, or to act on behalf of
SANMINA-SCI with respect to Microcode pursuant to the license granted with
respect thereto shall be those regular fulltime employees of SANMINA-SCI As a
condition of this Agreement, SANMINA-SCI shall ensure that each Authorized
Employee has executed in a legally-binding fashion, and with copy available for
inspection by CUSTOMER, a confidentiality agreement in substantially the form
and format described in EXHIBIT I ("AUTHORIZED EMPLOYEE AGREEMENT"), and
SANMINA-SCI further agrees to the enforcement of such confidentiality agreement.
In the event that any Authorized Employee ceases for any reason to be employed
by SANMINA-SCI, SANMINA-SCI shall inform CUSTOMER as soon as practically
possible of his or her departure SANMINA-SCI shall thereafter promptly select
another qualified regular, full-time employee of SANMINA-SCI, and shall ensure
that a corresponding confidentiality agreement is thereupon executed by such
Authorized Employee and returned to CUSTOMER, as hereinabove described.
(b) "Person" shall mean and include any individual, partnership,
association, corporation, trust, unincorporated organization, limited liability
company or any other business entity or enterprise.
(c) "Representative" shall mean a Party's employees, agents, or
representatives, including, without limitation, financial advisors, lawyers,
accountants, experts, and consultants.
13.2 Nondisclosure Covenants.
(a) In connection with this Agreement, each Party (the "Disclosing
Party") may furnish to the other Party (the "Receiving Party") or its
Representatives certain Confidential Information. For a period of three (3)
years from the date of the last disclosure under this Agreement, the Receiving
Party (a) shall maintain as confidential all Confidential Information disclosed
to it by the Disclosing Party, (b) shall not, directly or indirectly, disclose
any such Confidential Information to any Person other than (i) those
Representatives of the Receiving Party whose duties justify the need to know
such Confidential Information and then only after each Representative has agreed
to be bound by this Confidentiality Agreement and clearly understands his or her
obligation to protect the confidentiality of such Confidential Information and
to restrict the use of such Confidential Information or (ii) if SANMINA-SCI is
the Receiving Party, a third party Vendor for the purpose of obtaining price
quotations and (c) shall treat such Confidential Information with the same
degree of care as it treats its own Confidential Information (but in no case
with less than a reasonable degree of care).
(b) The disclosure of any Confidential Information is solely for the
purpose of enabling each Party to perform under this Agreement, and the
Receiving Party shall not use any Confidential Information disclosed by the
Disclosing Party for any other purpose.
(c) Except as otherwise set forth in this Agreement, all Confidential
Information supplied by the Disclosing Party shall remain the property of the
Disclosing Party, and will be promptly returned by the Receiving Party upon
receipt of written request therefor.
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(d) If the Receiving Party or its Representative is requested or
becomes legally compelled to disclose any of the Confidential Information, it
will provide the Disclosing Party with prompt written notice. If a protective
order or other remedy is not obtained, then only that part of the Confidential
Information that is legally required to be furnished will be furnished, and
reasonable efforts will be made to obtain reliable assurances of
confidentiality.
13.3 Non-Solicitation of Employees. During the term of this Agreement and
for a period of one (1) years thereafter, neither Party shall directly or
indirectly solicit, recruit or hire (or attempt to solicit, recruit or hire) any
of the other Party's employees; provided, however, that this shall not prohibit
a Party from (a) advertising for open positions provided that such
advertisements are not targeted solely at the employees of the other Party; (b)
or employing any individual who initiates contact with such Party on his or her
own initiative, whether in response to an advertisement or otherwise.
13.4 Injunctive Relief Authorized. Any material breach of this Article by a
Party or its Representatives may cause irreparable injury and the non-breaching
Party may be entitled to equitable relief, including injunctive relief and
specific performance, in the event of a breach. The above will not be construed
to limit the remedies available to a Party. In addition, the prevailing Party
will be entitled to be reimbursed for all of its reasonable attorneys' fees and
expenses at all levels of proceedings and for investigations, from the
non-prevailing Party.
13.5 No Publicity. Each Party agrees not to publicize or disclose the
existence or terms of this Agreement to any third Party without the prior
consent of the other Party except as required by law (in which case, the Party
seeking to disclose the information shall give reasonable notice to the other
Party of its intent to make such a disclosure). Neither Party shall make any
press release or similar public statement without the prior consent of the other
Party.
14. INSURANCE
SANMINA-SCI agrees to maintain during the term of this Agreement (a)
workers' compensation insurance as prescribed by the law of the state in which
SANMINA-SCI's services are performed; (b) employer's liability insurance with
limits of at least $500,000 per occurrence; (c) commercial automobile liability
insurance if the use of motor vehicles is required, with limits of at least
$1,000,000 for bodily injury and property damage for each occurrence; (d)
commercial general liability insurance, including blanket contractual liability
and broad form property damage, with limits of at least $1,000,000 combined
single limit for personal injury and property damage for each occurrence; and
(e) commercial general liability insurance endorsed to include products
liability and completed operations coverage in the amount of $1,000,000 for each
occurrence. SANMINA-SCI shall furnish to CUSTOMER certificates or evidence of
the foregoing insurance indicating the amount and nature of such coverage and
the expiration date of each policy. Each Party agrees that it, its insurer(s)
and anyone claiming by, through, under or in its behalf shall have no claim,
right of action or right of subrogation against the other Party and the other
Party's affiliates, directors, officers, employees and customers based on any
loss or liability insured against under the insurance required by this
Agreement.
15. MISCELLANEOUS
15.1 Integration Clause. This Agreement (including the Exhibits and
Schedules to this Agreement) constitutes the entire agreement of the parties,
superseding all previous Agreements covering the subject matter. This Agreement
shall not be changed or modified except by written agreement, specifically
amending, modifying and changing this Agreement, signed by SANMINA-SCI and an
authorized representative of the CUSTOMER.
15.2 SANMINA-SCI Support Team Staffing. SANMINA-SCI shall make reasonable
commercial efforts to provide a fully staffed support team, made up of
individuals qualified for their respective positions.
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As long as total revenue realized by the primary manufacturing plant
attributable to CUTOMER'S purchases remains above [+], SANMINA-SCI shall provide
CUSTOMER with a dedicated Program Manager. To the extent reasonably possible,
SANMINA-SCI shall advise CUSTOMER in advance of any plans to change the Program
Manager, provide CUSTOMER with a summary of the planned replacement's experience
and qualifications, and shall carefully consider any input CUSTOMER may have as
to the suitability of the planned replacement.
15.3 Quarterly Business Reviews. The parties shall have meetings (each, a
"Quarterly Business Review") at mutually agreeable times and places starting
after the Commencement Date, and thereafter during the first month of each
fiscal quarter during the Term. At each Quarterly Business Review, SANMINA-SCI
shall provide to CUSTOMER, in a form and format required by CUSTOMER and
including all relevant documentation, all information reasonably requested by
CUSTOMER, including: (a) Product quality; (b) Product delivery; (c) customer
satisfaction assessments and (d) cost management initiatives and results, (e)
Component warranty terms offered by Component suppliers (f) Product service. The
parties shall discuss all of the foregoing types of information in good faith,
and to the extent any adjustments in prices are deemed necessary upon agreement
of the parties, prices shall be so adjusted and documented in a writing, signed
by both parties, which adjusted prices shall thereupon be deemed part of this
Agreement. Each Quarterly Business Review will include review of processes,
component costing and actual volumes of Product purchased. If the new pricing
includes a cost reduction, SANMINA-SCI shall provide to CUSTOMER the amount of
any inventory revaluation associated with the cost reduction. CUSTOMER shall
provide to SANMINA-SCI a Purchase Order for the amount of the total inventory
revaluation amount not later than [+] working days from the end of the fiscal
quarter. Upon receipt of the revaluation PO, SANMINA-SCI will change Product
pricing to be effective with the first shipments of the next quarter.
15.4 Order of Precedence. All quotations, Orders, acknowledgments and
invoices issued pursuant to this Agreement are issued for convenience of the
Parties only and shall be subject to the provisions of this Agreement and the
Exhibits hereto. When interpreting this Agreement, precedence shall be given to
the respective parts in the following descending order: (a) this Agreement; (b)
Schedules and Exhibits to this Agreement; and (c) if Orders are used to release
Product, those portions of the Order that are not pre-printed and which are
accepted by SANMINA-SCI. The Parties acknowledge that (y) the preprinted
provisions on the reverse side of any such quotation, Order, acknowledgment or
invoice and (z) all terms other than the specific terms set forth in Section
4.1(a)(i)-(iv) shall be deemed deleted and of no effect whatsoever. No
modification to this Agreement, the Exhibits or any Order shall be valid without
the prior written consent of the Purchase Agreement Coordinators of SANMINA-SCI
and CUSTOMER.
15.5 Assignment. Neither this Agreement nor any rights or obligations
hereunder shall be transferred or assigned by either Party without the written
consent of the other Party, which consent shall not be unreasonably withheld or
delayed. Notwithstanding the foregoing, either party may assign this Agreement,
without the other party's permission, in connection with any merger,
consolidation, sale of all or substantially all of the assigning party's assets,
or any other similar transaction, provided that such assignee agrees to be bound
by the terms and conditions of this Agreement.
15.6 Notices. Wherever one Party is required or permitted or required to
give written notice to the other under this Agreement, such notice will be given
by hand, by certified U.S. mail, return receipt requested, by overnight courier,
or by fax and addressed as follows:
If to Buyer: with a copy to:
Isilon Systems, Inc. Isilon Systems, Inc.
000 X. Xxxxxx Xx 000 X. Xxxxxx Xx
Xxxxxxx, Xxxxxxxxxx 00000 Xxxxxxx, Xxxxxxxxxx 00000
Att'n: Director of Supply Chain Att'n: Vice President of Operations
Management
With a second copy to:
02-01-05
[+] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION
- Page 15
Isilon Systems, Inc.
000 X. Xxxxxx Xx.
Xxxxxxx, Xxxxxxxxxx 00000
Att'n: Sr. Corporate Counsel
If to Seller: with a copy to:
SANMINA-SCI Corporation SANMINA-SCI Corporation
0000 X. Xxxxx Xxxxxx 0000 X. Xxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000 Xxx Xxxx, Xxxxxxxxxx 00000
Att'n: President Att'n: Vice President & Corporate
Phone: (000) 000-0000 Counsel
Fax: (000) 000-0000 Phone: (000) 000-0000
Fax: (000) 000-0000
With a second copy to:
SANMINA-SCI Corporation
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Att'n: Vice President of Operation
Phone: (719) 382- _____
Fax: (719) 382- _____
All such notices shall be effective upon receipt. Either Party may designate a
different notice address from time to time upon giving ten (10) days' prior
written notice thereof to the other Party.
15.7 Disputes/Choice of Law. The Parties shall attempt to resolve any
disputes between them arising out of this Agreement through good faith
negotiations. In the event the Parties cannot resolve a dispute: Any litigation,
suit or other similar action or proceeding arising out of or relating to this
Agreement that is initiated by CUSTOMER will be conducted in the federal or
state courts located in Santa Xxxxx County, California and CUSTOMER hereby
consents to jurisdiction and venue therein. In such event, the rights and
obligations of the parties will be governed by, and construed and interpreted in
accordance with, the laws of California, excluding its rules of conflicts of
law. Any litigation, suit or other similar action or proceeding arising out of
or relating to this Agreement that is initiated by SANMINA-SCI will be conducted
in the federal or state courts located in King County in the State of Washington
and SANMINA-SCI hereby consents to jurisdiction and venue therein. In such
event, the rights and obligations of the parties will be governed by, and
construed and interpreted in accordance with, the laws of the State of
Washington, excluding its rules of conflicts of law. The provisions of the
United Nations Conventions on Contracts for the International Sale of Goods
shall not apply to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
effective as of the date on page one, by their officers, duly authorized.
SANMINA-SCI CORPORATION CUSTOMER
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxx Xxxxxx
--------------------------------- ------------------------------------
Signature Signature
Xxxxx Xxxxxx Xxxx Xxxxxx
Typed Name Typed Name
SRVP Executive Vice President
Title Title
3/10/06 2/24/2006
Date Date
02-01-05
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INDEX
1. TERM
2. PRICING
3. PAYMENT TERMS
4. PURCHASE ORDERS/FORECAST/RESCHEDULE
5. DELIVERY AND ACCEPTANCE
6. CHANGES
7. WARRANTY
8. CUSTOMER FURNISHED EQUIPMENT AND COMPONENTS
9. INDEMNIFICATION AND LIMITATION OF LIABILITY
10. TERMINATION
11. QUALITY
12. FORCE MAJEURE
13. CONFIDENTIALITY AND NON-SOLICITATION OF EMPLOYEES
14. INSURANCE
15. MISCELLANEOUS
EXHIBITS
A. [+]
B. [+]
C. [+]
D. [+]
E. [+]
F. [+]
G [+]
H AUTHORIZED EMPLOYEES
I AUTHORIZED EMPLOYEE AGREEMENT
J [+]
02-01-05
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REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION
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EXHIBIT A
PRICING
[+]
02-01-05
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REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION
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EXHIBIT B
LONG LEAD-TIME COMPONENTS
[+]
02-01-05
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REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION
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EXHIBIT D
NCNR ITEMS
[+]
02-01-05
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REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION
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EXHIBIT E
INTENTIONALLY LEFT BLANK
02-01-05
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REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION
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EXHIBIT F
QUOTING SPECIFICATIONS AND QUOTING GUIDELINES
[+]
02-01-05
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REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION
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EXHIBIT G
RMA PROCEDURE
[+]
[+] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION
EXHIBIT H
INTENTIONALLY LEFT BLANK
[+] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION
EXHIBIT I
Authorized Employee Agreement
This Authorized Employee Nondisclosure Agreement ("Agreement") is made and
entered into as of this ___ day of __________ by and between Sanmina-SCI
Corporation, a Delaware corporation having a principal place of business at 0000
X. Xxxxx Xxxxxx, Xxx Xxxx, Xxxxxxxxxx 00000 and its wholly-owned subsidiaries
and affiliates (collectively "Sanmina-SCI") and ___________________________ a
person having a principal address of ________________________ "Recipient".
1. PURPOSE OF DISCLOSURE.
The purpose of this Agreement is to bind the Recipient to maintaining the
confidentiality of any information provided to the Recipient by either
SANMINA-SCI or it's customers.
2. CONFIDENTIAL INFORMATION.
"Confidential Information" shall mean and include (i) samples and
prototypes, (ii) all information disclosed in any form or medium (e.g.,
written, verbal, electronic, visual) which (a) has been identified by
Sanmina-SCI or it's customers as "Confidential," "Proprietary" or other
appropriate legend indicating the confidential nature of the information or
(b) would reasonably be understood to be confidential. Confidential
Information includes, but is not limited to, information regarding pricing,
customers and prospective customers, vendors and vendor lists, costed bills
of materials, processes (including but not limited to manufacturing
processes), know-how, designs (including but not limited to designs of
enclosures and printed circuit boards), formulae, computer programs,
databases, methods of operation, sales techniques, business methods or
plans, marketing plans and strategies, finances, management, plant and
equipment, and any other business information relating to Sanmina-SCI or
it's customers, whether constituting a trade secret, proprietary
information or otherwise, which has value to Sanmina-SCI or it's customers
and is treated by Sanmina-SCI or it's customers as being confidential.
3. INFORMATION THAT IS NOT CONFIDENTIAL.
Information in the following categories shall not be considered
Confidential Information under this Agreement: (a) information which is in
the public domain at the time of the receipt under this Agreement; (b)
information which comes into the public domain after receipt under this
Agreement without a breach of this Agreement by the Recipient; (c)
information which the Recipient can show was in the Recipient's possession
before the date of disclosure under this Agreement; (d) information that
the Recipient can show was acquired by the Recipient from a third party who
was not known by the Recipient to be under an obligation of confidence to
Sanmina-SCI or it's customers; and (e) information which the Recipient can
show was independently developed by the Recipient.
4. DISCLOSURE PERIOD AND EXPIRATION.
This Agreement controls Confidential Information which is disclosed from
the effective date for a period of five (5) years after the date of
termination of employment with SANMINA-SCI for any reason of the Recipient,
at which time the Agreement will terminate unless extended in writing by
both parties. Recipient's duty of non-disclosure under this Agreement shall
extend beyond the term of this Agreement for a period of five (5) years
from the date of last disclosure.
5. DUTY TO PROTECT/PUBLICITY.
The Recipient shall protect the disclosed Confidential Information by using
the same degree of care, but no less than a reasonable degree of care, to
prevent the unauthorized use,
[+] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION
dissemination or publication of the Confidential Information. Recipient
shall use the Confidential Information solely in connection with the
Purpose. Each party agrees not to publicize or disclose the existence or
terms of this Agreement to any third party without the prior consent of the
other party except as required by law (in which case, the party seeking to
disclose the information shall give reasonable notice to the other party of
its intent to make such a disclosure). Neither party shall make any press
release or similar public statement without the prior consent of the other
party.
6. COURT ORDERS.
Nothing contained in this Agreement shall restrict Recipient from
disclosing Confidential Information that is required to be disclosed under
any law, subpoena or court order provided that the Recipient provides
Sanmina-SCI or it's customer (as appropriate) with prompt notice so that
Sanmina-SCI or it's customer (as appropriate) may, at its expense, seek a
protective order or take other appropriate measures.
7. NO FURTHER RIGHTS OR DUTIES IMPLIED.
The Confidential Information is provided "AS IS" with all faults.
Sanmina-SCI or it's customers shall not be liable for the accuracy or
completeness of the Confidential Information.
Nothing contained herein shall grant a license under any patent or other
intellectual property right, nor shall this Agreement or any transmission
of information constitute any representation or warranty to the Recipient
with respect to infringement of any intellectual property right of others.
Recipient shall not reverse-engineer, de-compile, or disassemble any
software disclosed to it and shall not remove, overprint or deface any
notice of copyright, trademark, logo, legend, or other notices of ownership
from any originals or copies of Confidential Information it obtains from
Sanmina-SCI or it's customers.
8. OWNERSHIP/RETURN OF CONFIDENTIAL INFORMATION.
Sanmina-SCI or it's customer (as appropriate) shall remain the owner of all
Confidential Information. Within ten (10) days after any written request by
Sanmina-SCI or it's customer, Recipient shall promptly return all copies of
the Confidential Information.
9. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of California, without regard to its conflicts of law
principles. The parties agree that the state courts of Santa Xxxxx County,
California and the federal courts located in the Northern District of the
State of California shall have exclusive jurisdiction and venue to
adjudicate any and all disputes arising out of or in connection with this
Agreement. The parties consent to the exercise by such courts of personal
jurisdiction over them and each party waives any objection it might
otherwise have to venue, personal jurisdiction, inconvenience of forum, and
any similar or related doctrine.
10. REMEDIES.
Recipient agrees that its obligations hereunder are necessary and
reasonable in order to protect Sanmina-SCI or it's customers and
Sanmina-SCI's and it's customers' business, and expressly agrees that
monetary damages will be inadequate to compensate Sanmina-SCI or it's
customers for any breach by either party of any covenants and agreements
set forth herein. Accordingly, Recipient agrees and acknowledges that any
such violation or threatened violation will cause irreparable injury to
Sanmina-SCI or it's customers and that, in addition to any other remedies
that may be available, in law, in equity or otherwise, Sanmina-SCI or its
customers shall be entitled to obtain injunctive relief against the
threatened breach of this Agreement or the
[+] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION
continuation of any such breach, without the necessity of proving actual
damages and without the necessity of posting bond.
11. EXPORT RESTRICTIONS.
Recipient acknowledges its obligations to control access to technical data
under the U.S. export laws and regulations and agrees to adhere to such
laws and regulations with regard to any technical data received under this
Agreement.
12. ENTIRE AGREEMENT.
This document contains the complete and exclusive Agreement between the
parties, and it is intended to be final expression of their Agreement. No
promise, representation, warranty or covenant not included in this document
has been or is relied upon by any party. Each party has relied upon its own
examination of the warranties, representations and covenants expressly
contained in the Agreement itself. No modification or amendment of this
Agreement shall be of any force unless in writing executed by all parties
hereto.
13. NOTICES.
Wherever one party is required or permitted or required to give written
notice to the other under this Agreement, such notice will be given by
hand, by certified U.S. mail, return receipt requested, by overnight
courier, or by fax and addressed to the President of such party (with a
copy to the Legal Department) at the address set forth in the preamble. All
such notices shall be effective upon receipt. Either party may designate a
different notice address from time to time upon giving five (5) days' prior
written notice thereof to the other party.
14. ASSIGNMENT.
Neither this Agreement nor any rights or obligations hereunder shall be
transferred or assigned by either party without the written consent of the
other party, which consent shall not be unreasonably withheld or delayed.
SANMINA-SCI CORPORATION RECIPIENT
By: By:
--------------------------------- ------------------------------------
Printed Name: Printed Name:
----------------------- --------------------------
Title: Title:
------------------------------ ---------------------------------
[+] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION
EXHIBIT J
FOUNTAIN FINISHED GOODS/SUBASSEMBLY HUB OPERATIONS
The following definitions are terms used in this Table and as such are
considered as part of the Agreement.
1. DEFINITIONS:
"Finished Goods" shall mean CUSTOMER Products which are in a final
configuration to be sold to CUSTOMER's end customer. Finished Goods part
numbers generally begin with an "850" prefix.
"Subassemblies" Subassemblies shall mean the various assemblies that are
assembled together to form a Finished Good. Subassemblies may be
manufactured or purchased. Subassembly part numbers generally begin with a
"4XX" prefix, where X is any number between 0 and 9
"Forecast" shall mean CUSTOMER's projected requirements for Finished Goods
("850 - level Products") transmitted on a weekly basis to Sanmina-SCI.
"Hub Items" shall mean the Finished Goods and Subassemblies ("4XX - level
subassemblies to be assembled to Finished Goods") listed in Table 1, below,
being manufactured by Sanmina-SCI and placed in the Fountain Hub.
[+]
"Hub" shall mean the storage location in Fountain Colorado used to store
CUSTOMER Hub Finished Goods and Subassemblies.
2. PERIOD OF PERFORMANCE:
This Exhibit shall run concurrently with the Manufacturing Services Agreement
("Agreement").
3. [+]
4. HUB ITEM NUMBERS:
The Item numbers Table 1 shall indicate all the Sanmina-SCI Hub Items that
will be held and managed under the Hub Operations process. Table 1 many be
revised to add or remove Hub Items from Hub's Table 1 as mutually agreed and to
adjust Hub levels based on the most current Forecast. The Parties will agree
upon the effects of any engineering change (including "end of life" issues as
applicable). FAX or e-mail transmissions are acceptable methods for documenting
such changes to Table 1.
5. PURCHASE ORDER PLACEMENT:
For each Hub Item number, CUSTOMER shall place an individual purchase
order.
6. COMMUNICATION:
CUSTOMER shall communicate Ship Notices to Sanmina-SCI as follows; TBP, By
Mututal Agreement.
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7. [+]
8. TITLE AND RISK OF LOSS:
Title and risk of loss for the Hub Items shall remain with Sanmina-SCI
until CUSTOMER's carrier picks up the Hub items from the Hub dock. Title and
risk transfers to CUSTOMER at Hub dock.
9. TRANSPORTATION AND STORAGE:
CUSTOMER will pay for the delivery charges from the Hub to CUSTOMER or to
CUSTOMER's customer.
10. QUALITY ADHERENCE:
All Hub Items pulled by CUSTOMER from the Hub Inventory shall be subject to
Section 11 of the Agreement. Hub items which fail to conform to the
mutually agreed Product manufacturing Specifications and Designs shall be
subject to the Section 11.
11. INDEMNITY:
Indemnification terms and conditions are contained in the Agreement.
12. TERMINATION:
Termination provisions are contained within the Agreement.
13. IMPORT/EXPORT REQUIREMENTS:
CUSTOMER will be the Exporter of Record for all Hub items.
[+] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION
14. NOTICES:
All notices and communications shall be given to the Parties at the
addresses contained within the Agreement. It shall be the responsibility of the
Parties to notify each other in the event of a change of address.
15. [+]
EXHIBITS:
[+]
[+] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION
