EX-10.18 7 dex1018.htm FLEXTRONICS MANUFACTURING SERVICES AGREEMENT CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406...
Exhibit 10.18
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
Flextronics Manufacturing Services Agreement
This Flextronics Manufacturing Services Agreement (“Agreement”) is entered into this 1st day of March 2009 by and between Enphase Energy, Inc. having its place of business at 000 0xx Xxxxxx, Xxxxx 000, Xxxxxxxx, XX 00000 (“Customer”) and Flextronics Industrial, LTD, having its place of business at Xxxxx 0, Xxxxxxxxx Xxxxx 00 Xxxxxxxxx, Xxxxx Mauritius (“Flextronics”).
Customer desires to engage Flextronics to perform manufacturing services as further set forth in this Agreement. The parties agree as follows:
1. | DEFINITIONS |
Flextronics and Customer agree that capitalized terms shall have the meanings set forth in this Agreement and Exhibit 1 attached hereto and incorporated herein by reference.
2. | MANUFACTURING SERVICES |
2.2. Engineering Changes. Customer may request that Flextronics incorporate engineering changes into the Product by providing Flextronics with a description of the proposed engineering change sufficient to permit Flextronics to evaluate its feasibility and cost. Flextronics will proceed with engineering changes when the parties have agreed upon the changes to the Specifications, delivery schedule and Product pricing and the Customer has issued a purchase order for the implementation costs. The Customer Focus Team will analyze and incorporate at [***] expense the first [***] engineering changes per [***] affecting less than [***]% of the product BOM except for the following: new ICT fixtures & programs, tooling/equipment, etc. The CFT will provide an implementation quote for material E&O, direct labor and pilot build to validate the ECO change as warranted.
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2.5. Factory Access. Flextronics agrees to grant access as needed to the Canadian Standards Association (CSA) and other industry-standards entities for factory audits at no charge to Customer. It is anticipated that CSA will visit the factory 4 times per year.
2.6. IT Support. Customer requires a client-to-site connection to the Flextronics facility be available at all times to monitor production test equipment and to troubleshoot any potential problems. Flextronics shall provide a static internet connection, through which Customer can tunnel via a secure protocol such as VPN. Enphase shall provide pre-configured equipment for installation at the Flextronics facilities.
3. | FORECASTS; ORDERS; FEES; PAYMENT |
3.1. Forecast. Customer shall provide Flextronics, on a monthly basis, a rolling twelve (12) month forecast indicating Customer’s monthly Product requirements. The first ninety (90) days of the forecast shall be in weekly time buckets and will constitute Customer’s written purchase order for all Work to be completed within the first ninety (90) day period. Such purchase orders will be issued in accordance with Section 3.2 below.
3.2. Purchase Orders; Precedence. Customer may use its standard purchase order form for any notice provided for hereunder; provided that all purchase orders must reference this Agreement and the applicable Specifications. The parties agree that the terms and conditions contained in this Agreement shall prevail over any terms and conditions of any such purchase order, acknowledgment form or other instrument, unless specifically agreed in writing by both parties.
3.3. Purchase Order Acceptance. Purchase orders shall normally be deemed accepted by Flextronics, provided however that Flextronics may reject any purchase order: (a) that is an amended order in accordance with Section 5.2 below because the purchase order is outside of the Flexibility Table; (b) if the fees reflected in the purchase order are inconsistent with the parties’ agreement with respect to the fees; (c) if the purchase order represents a significant deviation from the forecast for the same period, unless such deviation is within the parameters of the Flexibility Table; or (d) if a purchase order would extend Flextronics’s liability beyond Customer’s approved credit line. Flextronics shall notify Customer of rejection of any purchase order within five (5) business days of receipt of such purchase order.
3.4. Fees; Changes; Taxes.
(a) The fees will be agreed by the parties and will be indicated on the purchase orders issued by Customer and accepted by Flextronics. The initial fees shall be as set forth on the Fee List attached hereto and incorporated herein as Exhibit 3.4 (the “Fee List”). If a Fee List is not attached or completed, then the initial fees shall be as set forth in purchase orders issued by Customer and accepted by Flextronics in accordance with the terms of this Agreement.
(b) Customer is responsible for additional fees and costs due to: (a) changes to the Specifications except as permitted in Section 2.2; (b) failure of Customer or its subcontractor to timely provide sufficient quantities or a reasonable quality level of Customer Controlled Materials where applicable to sustain the production schedule; and (c) any pre-approved expediting charges reasonably necessary because of a change in Customer’s requirements.
(c) All costs and fees will be evaluated quarterly during the quarterly business review. Any changes and timing of changes shall be agreed by the parties, such agreement not to be unreasonably withheld or delayed. By way of example only, the fees may be increased if the market price of fuels, Materials, equipment, labor and other production costs, increase beyond normal variations in pricing or currency exchange rates as demonstrated by Flextronics.
(d) All fees are exclusive of federal, state and local excise, sales, use, VAT, and similar transfer taxes, and any duties, and Customer shall be responsible for all such items. This subsection (d) does not apply to taxes on Flextronics’s net income.
(e) The Fees List will be based on the exchange rate(s) for converting the purchase price for Inventory denominated in the Parts Purchase Currency(ies) into the Functional Currency. The fees will be adjusted, on a monthly basis based on changes in the Exchange Rate(s) as reported on the last business day of each month, for the following month to the extent that such Exchange Rates change more than +/- .75% from the prior month (the “Currency Window”). “Exchange Rate(s)” is defined as the closing currency exchange rate(s) as reported on
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Reuters’ page FIX on the last business day of the current month prior to the following month. “Functional Currency” means the currency in which all payments are to be made pursuant to Section 3.5 below. “Parts Purchase Currency(ies)” means U.S. Dollars, Japanese Yen and/or Euros to the extent such currencies are different from the Functional Currency and are used to purchase Inventory needed for the performance of the Work forecasted to be completed during the applicable month.
3.5. Payment. Customer agrees to pay all invoices in U.S. Dollars within [***] days of the date of the invoice.
3.6. Late Payment. Customer agrees to pay one and one-half percent (1.5%) monthly interest on all late payments. Furthermore, if Customer is late with payments, or Flextronics has reasonable cause to believe Customer may not be able to pay. Flextronics may (a) stop all Work under this Agreement until assurances of payment satisfactory to Flextronics are received or payment is received; (b) demand prepayment for purchase orders; and (c) delay shipments and (d) to the extent that Flextronics’s personnel cannot be reassigned to other billable work during such stoppage and/or in the event restart cost are incurred, invoice Customer for additional fees before the Work can resume. Customer agrees to provide all necessary financial information required by Flextronics from time to time in order to make a proper assessment of the creditworthiness of Customer.
3.7. Letter of Credit. Within forty-five (45) days of Flextronics’s request made at any time during the term of this Agreement, Customer agrees to obtain and maintain a stand-by letter of credit or such other financial instrument mutually agreed upon by the parties on behalf of Flextronics to support Customer’s payment obligations set forth in this Agreement and to minimize the financial risk to Flextronics for its performance of the Work under this Agreement. The stand-by letter of credit or other mutually agreed upon financial instrument shall be for a minimum period of time of three (3) months and shall be for a total amount that is equal to the total value of the risks associated with Inventory, Special Inventory, and the accounts receivable from Customer. The calculation shall be based upon the forecast provided by Customer pursuant to Section 3.1. The draw down procedures under the stand-by letter of credit or other mutually agreed upon financial instrument shall be determined solely by Flextronics. Flextronics will, in good faith, review Customer’s creditworthiness periodically and may provide more favorable terms once it feels it is prudent to do so. In addition, Flextronics agrees that no letter of credit shall be required from Customer as long as Customer has promptly paid all invoices in accordance with Section 3.5.
4. | MATERIALS PROCUREMENT; CUSTOMER RESPONSIBILITY FOR MATERIALS |
4.1. Authorization to Procure Materials, Inventory and Special Inventory. Customer’s accepted purchase orders and forecast will constitute authorization for Flextronics to procure, without Customer’s prior approval, (a) Inventory to manufacture the Products covered by such purchase orders based on the Lead Time and (b) certain Special Inventory based on Customer’s purchase orders and forecast as follows: Long Lead-Time Materials as required based on the Lead Time when such purchase orders are placed and Minimum Order Inventory as required by the supplier. Flextronics will only purchase Economic Order Inventory with the prior approval of Customer. Flextronics will provide to Customer each quarter a list of all long lead time parts (greater than [***]) and the total quantity on order for each long lead time part.
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Materials Terms or enter into new Customer Controlled Materials Terms with suppliers that will negatively impact Flextronics’s procurement activities.
4.4. Customer Responsibility for Inventory and Special Inventory. Customer is responsible under the conditions provided in this Agreement for all Materials, Inventory and Special Inventory purchased by Flextronics under this Section 4.
5. | SHIPMENTS, SCHEDULE CHANGE, CANCELLATION, STORAGE |
5.1. Shipments. All Products delivered pursuant to the terms of this Agreement shall be suitably packed for shipment in accordance with the Specifications and marked for shipment to Customer’s destination specified in the applicable purchase order. Shipments will be made [***] at which time risk of loss and title will pass to Customer. Notwithstanding the foregoing, Customer shall reimburse Flextronics for all actual costs incurred by Flextronics in shipping the Products [***] which may include, but not be limited to, freight, insurance and other shipping expenses, and any expenses involved in the Customs clearance as well as any special packing expenses not included in the original quotation for the Products.
5.2. Quantity Increases and Shipment Schedule Changes.
(a) For any accepted purchase order, Customer may (i) increase the quantity of Products or (ii) reschedule the quantity of Products and their shipment date as provided in the flexibility table below (the “Flexibility Table”):
Maximum Allowable Variance From Accepted Purchase Order Quantities/Shipment Dates
# of days before Shipment Date on Purchase Order | Allowable Quantity Increases | Maximum Reschedule Quantity | Maximum Reschedule Period | |||||||||
0-14 | 0 | % | 0 | % | 0 | |||||||
15-30 | [*** | ]% | [*** | ]% | [*** | ] | ||||||
31-60 | [*** | ]% | [*** | ]% | [*** | ] days | ||||||
61-90 | [*** | ]% | [*** | ]% | [*** | ] days |
Any decrease in quantity is considered a cancellation, unless the decreased quantity is rescheduled for delivery at a later date in accordance with the Flexibility Table. Quantity cancellations are governed by the terms of Section 5.3 below. Any purchase order quantities increased or rescheduled pursuant to this Section 5.2 (a) may not
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be subsequently increased or rescheduled, unless such subsequent increase or reschedule also conforms to the Flexibility Table.
(b) All reschedules to push out delivery dates outside of the table in subsection (a) require Flextronics’s prior written approval, which, in its sole discretion, may or may not be granted. If Customer does not request prior approval from Flextronics for such reschedules, or if Customer and Flextronics do not agree in writing to specific terms with respect to any approved reschedule, then Customer will pay Flextronics the Monthly Charges for any such reschedule, calculated as of the first day after such reschedule for any Inventory and/or Special Inventory that was procured by Flextronics to support the original delivery schedule that is not used to manufacture Product pursuant to an accepted purchase order within thirty (30) days of such reschedule. In addition, if Flextronics notifies Customer that such Inventory and/or Special Inventory has remained in Flextronics’s possession for more than ninety (90) days since such reschedule, then Customer agrees to immediately purchase any affected Inventory and/or Special Inventory upon receipt of the notice by paying the Affected Inventory Costs. In addition, any finished Products that have already been manufactured to support the original delivery schedule will be treated as cancelled as provided in Sections 5.3 and 5.4 below.
(c) Flextronics will use reasonable commercial efforts to meet any quantity increases, which are subject to Materials and capacity availability. All reschedules or quantity increases outside of the table in subsection (a) require Flextronics’s approval, which, in its sole discretion, may or may not be granted. If Flextronics agrees to accept a reschedule to pull in a delivery date or an increase in quantities in excess of the flexibility table in subsection (a) and if there are extra costs to meet such reschedule or increase, Flextronics will inform Customer for its acceptance and approval in advance.
(d) Any delays in the normal production or interruption in the workflow process caused by Customer’s changes to the Specifications or failure to provide sufficient quantities or a reasonable quality level of Customer Controlled Materials where applicable to sustain the production schedule, will be considered a reschedule of any affected purchase orders for purposes of this Section 5.2 for the period of such delay. In addition, Customer shall be responsible for costs related to adjusting foreign currency hedging contracts due to changes in cash flows resulting from such delays.
(e) For purposes of calculating the amount of Inventory and Special Inventory subject to subsection (b), the “Lead Time” shall be calculated as the Lead Time at the time of procurement of the Inventory and Special Inventory.
5.3. Cancellation of Orders and Customer Responsibility for Inventory.
(a) Customer may not cancel all or any portion of Product quantity of an accepted purchase order without Flextronics’s prior written approval, which, in its sole discretion, may or may not be granted. If Customer does not request prior approval, or if Customer and Flextronics do not agree in writing to specific terms with respect to any approved cancellation, then Customer will pay Flextronics Monthly Charges for any such cancellation, calculated as of the first day after such cancellation for any Product or Inventory or Special Inventory procured by Flextronics to support the original delivery schedule. In addition, if Flextronics notifies Customer that such Product, Inventory and/or Special Inventory has remained in Flextronics’s possession for more than thirty (30) days since such cancellation, then Customer agrees to immediately purchase from Flextronics, such Product, Inventory and/or Special Inventory by paying the Affected Inventory Costs. In addition, Flextronics shall calculate the cost or gain of unwinding any currency hedging contracts entered into by Flextronics to support the cancelled purchase order(s). Should the unwinding result in a loss to Flextronics, Customer agrees to cover such loss amount for Flextronics immediately upon receipt of an invoice for such amount. Should the unwinding result in a gain to Flextronics, a credit note will be immediately issued to Customer.
(b) If the forecast for any period is less than the previous forecast supplied over the same period, that amount will be considered canceled and Customer will be responsible for any Special Inventory purchased or ordered by Flextronics to support the forecast.
(c) Products that have been ordered by Customer and that have not been picked up in accordance with the agreed upon shipment dates shall be considered cancelled and Customer will be responsible for such Products in the same manner as set forth above in Section 5.3(a).
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(d) For purposes of calculating the amount of Inventory and Special Inventory subject to subsection (a), the “Lead Time” shall be calculated as the Lead Time at the time of (i) procurement of the Inventory and Special Inventory; (ii) cancellation of the purchase order or (iii) termination of this Agreement, whichever is longer.
5.4. Mitigation of Inventory and Special Inventory. Prior to invoicing Customer for the amounts due pursuant to Sections 5.2 or 5.3, Flextronics will use reasonable commercial efforts for a period of thirty (30) days, to return unused Inventory and Special Inventory and to cancel pending orders for such inventory, and to otherwise mitigate the amounts payable by Customer. Customer shall pay amounts due under this Section 5 within thirty (30) days of receipt of an invoice. Flextronics will ship the Inventory and Special Inventory paid for by Customer under this Section 5.4 to Customer promptly upon said payment by Customer. In the event Customer does not pay within thirty (30) days, Flextronics will be entitled to dispose of such Inventory and Special Inventory in a commercially reasonable manner and credit to Customer any monies received from third parties. Flextronics shall then submit an invoice for the balance amount due and Customer agrees to pay said amount within thirty (30) days of its receipt of the invoice.
5.5. No Waiver. For the avoidance of doubt, Flextronics’s failure to invoice Customer for any of the charges set forth in this Section 5 does not constitute a waiver of Flextronics’s right to charge Customer for the same event or other similar events in the future.
5.6. Delivery performance. On time delivery shall be measured and reported to Customer on a monthly basis. Orders shall be considered on time if they are shipped from one week earlier than the scheduled shipment date up to one day after the scheduled shipment date. On-time delivery shall be the sole responsibility of [***] If [***] can not meet the on time delivery requirement for any order due to [***] then [***]
6. | PRODUCT ACCEPTANCE AND EXPRESS LIMITED WARRANTY |
(a) Flextronics warrants that the Products will have been manufactured in accordance with the applicable Specifications and will be free from defects in workmanship for a period of 1 year from the date of shipment. In addition, Flextronics warrants that (A) Production Materials shall be used in compliance with Environmental Regulations, (B) Flextronics will not manufacture Products using Materials from vendors that are not on the Approved Vendor List, unless otherwise agreed in writing by Customer.
(b) Notwithstanding anything else in this Agreement, this express limited warranty does not apply to, and Flextronics makes no representations or warranties whatsoever with respect to: (i) Materials and/or Customer Controlled Materials; (ii) defects resulting from the Specifications or the design of the Products; (iii) Product that has been abused, damaged, altered or misused by any person or entity after title passes to Customer; (iv) first articles, prototypes, pre-production units, test units or other similar Products; (v) defects resulting from tooling, designs or instructions produced or supplied by Customer, or (vi) the compliance of Materials or Products with any Environmental Regulations. Customer shall be liable for costs or expenses incurred by Flextronics related to the foregoing exclusions to Flextronics’s express limited warranty.
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(c) Upon any failure of a Product to comply with this express limited warranty, Flextronics’s sole obligation, and Customer’s sole remedy, is for Flextronics, at its option, to promptly repair or replace such unit and return it to Customer freight prepaid. Customer shall return Products covered by this warranty freight prepaid after completing a failure report and obtaining a return material authorization number from Flextronics to be displayed on the shipping container. Customer shall bear all of the risk, and all costs and expenses, associated with Products that have been returned to Flextronics for which there is no defect found.
(d) Customer will provide its own warranties directly to any of its end users or other third parties. Customer will not pass through to end users or other third parties the warranties made by Flextronics under this Agreement. Furthermore, Customer will not make any representations to end users or other third parties on behalf of Flextronics, and Customer will expressly indicate that the end users and third parties must look solely to Customer in connection with any problems, warranty claim or other matters concerning the Product.
6.3. No Representations or Other Warranties. FLEXTRONICS MAKES NO REPRESENTATIONS AND NO OTHER WARRANTIES OR CONDITIONS ON THE PERFORMANCE OF THE WORK, OR THE PRODUCTS, EXPRESS, IMPLIED, STATUTORY, OR IN ANY OTHER PROVISION OF THIS AGREEMENT OR COMMUNICATION WITH CUSTOMER, AND FLEXTRONICS SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OR CONDITION OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT.
7. | INTELLECTUAL PROPERTY LICENSES |
8. | TERM AND TERMINATION |
9. | INDEMNIFICATION; LIABILITY LIMITATION |
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FLEXTRONICS CONFIDENTIAL
(a) any actual or threatened injury or damage to any person or property caused, or alleged to be caused, by a Product sold by Flextronics to Customer hereunder, but solely to the extent such injury or damage has been caused by the breach by Flextronics of its express limited warranties related to Flextronics’s workmanship and manufacture in accordance with the Specifications only as further set forth in Section 6.2;
(b) any infringement of the intellectual property rights of any third party but solely to the extent that such infringement is caused by a process that Flextronics uses to manufacture, assemble and/or test the Products; provided that, Flextronics shall not have any obligation to indemnify Customer if such claim would not have arisen but for Flextronics’s manufacture, assembly or test of the Product in accordance with the Specifications; or
(c) noncompliance with any Environmental Regulations but solely to the extent that such non-compliance is caused by a process or Production Materials that Flextronics uses to manufacture the Products; provided that, Flextronics shall not have any obligation to indemnify Customer if such claim would not have arisen but for Flextronics’s manufacture of the Product in accordance with the Specifications.
(a) any failure of any Product (and Materials contained therein) sold by Flextronics hereunder to comply with any safety standards and/or Environmental Regulations to the extent that such failure has not been caused by Flextronics’s breach of its express limited warranties set forth in Section 6.2 hereof;
(b) any actual or threatened injury or damage to any person or property caused, or alleged to be caused, by a Product, but only to the extent such injury or damage has not been caused by Flextronics’s breach of its express limited warranties related to Flextronics’s workmanship and manufacture in accordance with the Specifications only as further set forth in Section 6.2 hereof; or
(c) any infringement of the intellectual property rights of any third party by any Product except to the extent such infringement is the responsibility of Flextronics pursuant to Section 9. l(b) above.
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Section 2.2 above. Notwithstanding the foregoing, in the event that a third party makes an infringement claim, but does not obtain an injunction, the indemnifying party shall not be required to substitute a fully equivalent Product or process (as applicable) or modify the Product or process (as applicable) if the indemnifying party obtains an opinion from competent patent counsel reasonably acceptable to the other party that such Product or process is not infringing or that the patents alleged to have been infringed are invalid.
THE FOREGOING SECTION 9 STATES THE ENTIRE LIABILITY OF THE PARTIES TO EACH OTHER CONCERNING INFRINGEMENT OF PATENT, COPYRIGHT, TRADE SECRET OR OTHER INTELLECTUAL PROPERTY RIGHTS.
10. | MISCELLANEOUS |
(a) Each party shall refrain from using any and all Confidential Information of the disclosing party for any purposes or activities other than those specifically authorized in this Agreement. Except as otherwise specifically permitted herein or pursuant to written permission of the party to this Agreement owning the Confidential Information, no party shall disclose or facilitate disclosure of Confidential Information of the disclosing party to anyone without the prior written consent of the disclosing party, except to its employees, consultants, parent company, and subsidiaries of its parent company who need to know such information for carrying out the activities contemplated by this Agreement and who have agreed in writing to confidentiality terms that are no less restrictive than the requirements of this Section. Notwithstanding the foregoing, the receiving party may disclose Confidential Information of the disclosing party pursuant to a subpoena or other court process only (i) after having given the disclosing party prompt notice of the receiving party’s receipt of such subpoena or other process and (ii) after the receiving party has given the disclosing party a reasonable opportunity to oppose such subpoena or other process or to obtain a protective order. Confidential Information of the disclosing party in the custody or control of the receiving party shall be promptly returned or destroyed upon the earlier of (i) the disclosing party’s written request or (ii) termination of this Agreement. Confidential Information disclosed pursuant to this Agreement shall be maintained confidential for a period of three (3) years after the disclosure thereof. The existence and terms of this Agreement shall be confidential in perpetuity.
(b) Notwithstanding anything contained in this Section 10.1, a receiving Party may disclose the existence and terms of this Agreement if such information is required by Law to be disclosed under applicable law, including without limitation pursuant to the rules and regulations promulgated by the United States Securities and Exchange Commission.
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maximum extent permitted by law, and the parties hereto consent and agree that such scope may be judicially modified accordingly and that the whole of such provisions of this Agreement shall not thereby fail, but that the scope of such provisions shall be curtailed only to the extent necessary to conform to law.
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10.11. Disputes Resolution; Waiver of Jury Trial.
(a) Except as otherwise provided in this Agreement, the following binding dispute resolution procedures shall be the exclusive means used by the parties to resolve all disputes, differences, controversies and claims arising out of or relating to the Agreement or any other aspect of the relationship between Flextronics and Customer or their respective affiliates and subsidiaries (collectively, “Disputes”). Either party may, by written notice to the other party, refer any Disputes for resolution in the manner set forth below.
(b) Any and all Disputes shall be referred to arbitration under the rules and procedures of Judicial Arbiter Group, Inc. (“JAG”), who shall act as the arbitration administrator (the “Arbitration Administrator”).
(c) The parties shall agree on a single arbitrator (the “Arbitrator”). The Arbitrator shall be a retired judge selected by the parties from a roster of arbitrators provided by the Arbitration Administrator. If the parties cannot agree on an Arbitrator within seven (7) days of delivery of the demand for arbitration (“Demand”) (or such other time period as the parties may agree), the Arbitration Administrator will select an independent Arbitrator.
(d) Unless otherwise mutually agreed to by the parties, the place of arbitration shall be Denver, Colorado, although the arbitrators may be selected from rosters outside Denver.
(e) The Federal Arbitration Act shall govern the arbitrability of all Disputes. The Federal Rules of Civil Procedure and the Federal Rules of Evidence (the “Federal Rules”), to the extent not inconsistent with this Agreement, govern the conduct of the arbitration. To the extent that the Federal Arbitration Act and Federal Rules do not provide an applicable procedure, Colorado law shall govern the procedures for arbitration and enforcement of an award, and then only to the extent not inconsistent with the terms of this Section. Disputes between the parties shall be subject to arbitration notwithstanding that a party to this Agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.
(f) Unless otherwise mutually agreed to by the parties, each party shall allow and participate in discovery as follows:
(i) Non-Expert Discovery. Each party may (1) conduct three (3) non-expert depositions of no more than five (5) hours of testimony each, with any deponents employed by any party to appear for deposition in Denver, Colorado; (2) propound a single set of requests for production of documents containing no more than twenty (20) individual requests; (3) propound up to twenty written interrogatories; and (4) propound up to ten (10) requests for admission.
(ii) Expert Discovery. Each party may select a witness who is retained or specially employed to provide expert testimony and an additional expert witness to testify with respect to damages issues, if any. The parties shall exchange expert reports and documents under the same requirements as Federal Rules of Civil Procedure 26(a)(2) &(4).
(iii) Additional Discovery. The Arbitrator may, on application by either party, authorize additional discovery only if deemed essential to avoid injustice. In the event that remote witnesses might otherwise be unable to attend the arbitration, arrangements shall be made to allow their live testimony by video conference during the arbitration hearing.
(g) The Arbitrator shall render an award within six (6) months after the date of appointment, unless the parties agree to extend such time. The award shall be accompanied by a written opinion setting forth the findings of fact and conclusions of law. The Arbitrator shall have authority to award compensatory damages only, and shall not award any punitive, exemplary, or multiple damages. The award (subject to clarification or correction by the arbitrator as allowed by statute and/or the Federal Rules) shall be final and binding upon the parties, subject solely to the review procedures provided in this Section.
(h) Either party may seek arbitral review of the award. Arbitral review may be had as to any element of the award.
(i) This Agreement’s arbitration provisions are to be performed in Denver, Colorado. Any judicial proceeding arising out of or relating to this Agreement or the relationship of the parties, including without limitation any
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proceeding to enforce this Section, to review or confirm the award in arbitration, or for preliminary injunctive relief, shall be brought exclusively in a court of competent jurisdiction in the county of Denver, Colorado (the “Enforcing Court”). By execution and delivery of this Agreement, each party accepts the jurisdiction of the Enforcing Court.
(j) Each party shall pay their own expenses in connection with the resolution of Disputes pursuant to this Section, including attorneys’ fees.
(k) Notwithstanding anything contained in this Section to the contrary, in the event of any Dispute, prior to referring such Dispute to arbitration pursuant to Subsection (b) of this Section, Customer and Flextronics shall attempt in good faith to resolve any and all controversies or claims relating to such Disputes promptly by negotiation commencing within ten (10) calendar days of the written notice of such Disputes by either party, including referring such matter to Customer’s then-current President and Flextronics’s then current executive in charge of manufacturing operations in the region in which the primary activities of this Agreement are performed by Flextronics. The representatives of the parties shall meet at a mutually acceptable time and place and thereafter as often as they reasonably deem necessary to exchange relevant information and to attempt to resolve the Dispute for a period of four (4) weeks. In the event that the parties are unable to resolve such Dispute pursuant to this Subsection (k), the provisions of Subsections (a) through (j) of this Section, inclusive, as well as Subsections (1), (m) and (n) of this Section shall apply.
(l) The parties agree that the existence, conduct and content of any arbitration pursuant to this Section shall be kept confidential and no party shall disclose to any person any information about such arbitration, except as may be required by law or by any governmental authority or for financial reporting purposes in each party’s financial statements.
(m) IN THE EVENT OF ANY DISPUTE BETWEEN THE PARTIES, WHETHER IT RESULTS IN PROCEEDINGS IN ANY COURT IN ANY JURISDICTION OR IN ARBITRATION, THE PARTIES HEREBY KNOWINGLY AND VOLUNTARILY, AND HAVING HAD AN OPPORTUNITY TO CONSULT WITH COUNSEL, WAIVE ALL RIGHTS TO TRIAL BY JURY, AND AGREE THAT ANY AND ALL MATTERS SHALL BE DECIDED BY A JUDGE OR ARBITRATOR WITHOUT A JURY TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW.
(n) In the event of any lawsuit between the parties arising out of or related to this Agreement, the parties agree to prepare and to timely file in the applicable court a mutual consent to waive any statutory or other requirements for a trial by jury.
FLEXTRONICS CONFIDENTIAL
10.14. Controlling Law. This Agreement shall be governed and construed in all respects in accordance with the domestic laws and regulations of the State of Colorado, without regard to its conflicts of laws provisions; except to the extent there may be any conflict between the law of the State of Colorado and the Incoterms of the International Chamber of Commerce, 2000 edition, in which case the Incoterms shall be controlling. The parties specifically agree that the 1980 United Nations Convention on Contracts for the International Sale of Goods, as may be amended from time to time, shall not apply to this Agreement. The parties acknowledge and confirm that they have selected the laws of the State of Colorado as the governing law for this Agreement in part because jury trial waivers are enforceable under Colorado law. The parties further acknowledge and confirm that the selection of the governing law is a material term of this Agreement.
10.15. Counterparts. This Agreement may be executed in counterparts.
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ENPHASE ENERGY, INC.: | FLEXTRONICS INDUSTRIAL, LTD: | |||||||
By: |
| By: |
| |||||
Title: | CEO | Title: | Director |
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Exhibit 1
Definitions
“Affected Inventory Costs” | shall mean: (i) [***]% of the Cost of all affected Inventory and Special Inventory in Flextronics’s possession and not returnable to the vendor or reasonably usable for other customers, whether in raw form or work in process, less the salvage value thereof, (ii) [***]% of the Cost of all affected Inventory and Special Inventory on order and not cancelable, (iii) any vendor cancellation charges incurred with respect to the affected Inventory and Special Inventory accepted for cancellation or return by the vendor, (iv) the then current fees for any affected Product, and (v) expenses incurred by Flextronics related to labor and equipment specifically put in place to support the purchase orders and forecasts that are affected by such reschedule or cancellation (as applicable). | |
-“Approved Vendor List” or “AVL” | shall mean the list of suppliers currently approved to provide the Materials specified in the xxxx of materials for a Product. | |
“Confidential Information” | shall mean (a) the existence and terms of this Agreement and all information concerning the unit number and fees for Products and Inventory/Special Inventory and (b) any other information that is marked “Confidential” or the like or, if delivered verbally, confirmed in writing to be “Confidential” within 30 days of the initial disclosure. Confidential Information does not include information that (i) the receiving party can prove it already knew at the time of receipt from the disclosing party; or (ii) has come into the public domain without breach of confidence by the receiving party; (iii) was received from a third party without restrictions on its use; (iv) the receiving party can prove it independently developed without use of or reference to the disclosing party’s data or information; or (v) the disclosing party agrees in writing is free of such restrictions. | |
“Cost” | shall mean the cost represented on the xxxx of materials supporting the most current fees for Products at the time of cancellation, expiration or termination, as applicable. | |
“Customer Controlled Materials” | shall mean those Materials provided by Customer or by suppliers with whom Customer has a commercial contractual or non-contractual relationship. | |
“Customer Controlled Materials Terms” | shall mean the terms and conditions that Customer has negotiated with its suppliers for the purchase of Customer Controlled Materials. | |
“Customer Indemnitees” | shall have the meaning set forth in Section 9.1. | |
“Damages” | shall have the meaning set forth in Section 9.1. | |
“Disputes” | shall have the meaning set forth in Section 10.1 l(a) | |
“Economic Order Inventory” | shall mean Materials purchased in quantities, above the required amount for purchase orders, in order to achieve price targets for such Materials. | |
“Environmental Regulations” | Shall mean any hazardous substance content laws and regulations including, without limitation, those related to the EU Directive 2002/95/EC about the Restriction of Use of Hazardous Substances (RoHS). | |
“Fee List” | shall have the meaning set forth in Section 3.4. | |
“Flexibility Table” | shall have the meaning set forth in Section 5.2. | |
“Flextronics Indemnitee” | shall have the meaning set forth in Section 9.2. | |
“Force Majeure” | shall have the meaning set forth in Section 10.8. | |
“Inventory” | shall mean any Materials that are used to manufacture Products that are ordered pursuant to a |
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purchase order from Customer. | ||
“Lead Time (s)” | shall mean the Materials Procurement Lead Time plus the manufacturing cycle time required from the delivery of the Materials at Flextronics’s facility to the completion of the manufacture, assembly and test processes. | |
“Long Lead Time Materials” | shall mean Materials with Lead Times exceeding the period covered by the accepted purchase orders for the Products. | |
“Materials” | shall mean components, parts and subassemblies that comprise the Product and that appear on the xxxx of materials for the Product. | |
“Materials Procurement Lead Time” | shall mean with respect to any particular item of Materials, the longer of (a) lead time to obtain such Materials as recorded on Flextronics’s MRP system or (b) the actual lead time, if a supplier has increased the lead time but Flextronics has not yet updated its MRP system. | |
“Minimum Order Inventory” | shall mean Materials purchased in excess of requirements for purchase orders because of minimum lot sizes available from the supplier. | |
“Monthly Charges” | shall mean a finance carrying charge of one and one-half of one percent (1.5%) and a storage and handling charge of one-half of one percent (0.5%), in each case of the Cost of the Inventory and/or Special Inventory and/or of the fees for the Product affected by the reschedule or cancellation (as applicable) per month until such Inventory and/or Special Inventory and/or Product is returned to the vendor, used to manufacture Product or is otherwise purchased by Customer. | |
“Product” | shall have the meaning set forth in Section 2.1. | |
“Production Materials” | shall mean Materials that are consumed in the production processes to manufacture Products including without limitation, solder, epoxy, cleaner solvent, labels, flux, and glue. Production Materials do not include any such production materials that have been specified by the Customer or any Customer Controlled Materials. | |
“Special Inventory” | shall mean any Long Lead Time Materials and/or Minimum Order Inventory and/or Economic Order Inventory. | |
“Specifications” | shall have the meaning set forth in Section 2.1. | |
“Work” | shall have the meaning set forth in Section 2.1. |
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EXHIBIT 2.1
SPECIFICATIONS
Incorporated by reference only
EXHIBIT 2.3
CONSIGNED EQUIPMENT LIST
To be attached or incorporated by reference
Item | Manufacturer and Model | |
Cabinet | Xxxxxxx Manufacturing | |
PC | Dell Optiplex | |
Barcode Scanner | Symbol Tech. LSR4208-SR2000722R | |
[***] | [***] | |
[***] | [***] | |
[***] | [***] | |
[***] | [***] | |
[***] | [***] | |
[***] | [***] | |
[***] | [***] | |
[***] | [***] | |
[***] | [***] | |
[***] | [***] | |
Total Cost USD $[***] | ||
Hi-Pot Test Station - List Of Equipment | ||
Dielectric Analyzer | [***] | |
Total Cost USD $[***] |
Initial Potting Machine and Material Supply Infrastructure for China CM - PM01
All Equipment supplied by Exact Dispensing (formerly known as Sheepscot)
[***]
[***]
[***]
[***]
[***]
[***]
[***]
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[***]
[***]
[***]
[***]
[***]
Estimated Value: USD $[***]
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EXHIBIT 3.4
FEES LIST
To be attached or incorporated by reference
Product | Minimum | Step 1 | Step 2 | Step 3 | Step 4 | |||||||||||||||
PCU (Annual Quantity) | 50,000 | 87,000 | 150,000 | 225,000 | 350,000 | |||||||||||||||
PCU (Quarterly Quantity) | 12,500 | 21,750 | 37,500 | 56,250 | 87,500 | |||||||||||||||
Price | $ | [*** | ] | $ | [*** | ] | $ | [*** | ] | $ | [*** | ] | $ | [*** | ] | |||||
Dually (Annual Quantity) | XXX | XXX | XXX | XXX | TBD | |||||||||||||||
Dually (Quarterly Quantity) | XXX | XXX | XXX | XXX | TBD | |||||||||||||||
Price | XXX | XXX | XXX | XXX | TBD | |||||||||||||||
EMU (Annual Quantity) | 2,100 | 3,700 | 4,400 | 6,600 | 7,800 | |||||||||||||||
EMU (Quarterly Quantity) | 525 | 925 | 1,100 | 1,650 | 1,950 | |||||||||||||||
Price | $ | [*** | ] | $ | [*** | ] | $ | [*** | ] | $ | [*** | ] | $ | [*** | ] |
The following applies:
1. | During the ramp-up of the Customers product shipments (April 2009 -September 2009), Step 1 pricing will be used. |
2. | Step quantities will be applied quarterly thereafter. The step quantities will be used as the basis for step pricing. |
3. | A true-up will be performed at the end of each quarter, to apply the appropriate step price for that quantity. Overages in quantity will be applied to the next quarter quantities. Additionally, a true up will be performed at the end of the first full year of production (April 2009 – April 2010) to make sure that customer has met the minimum quantity for step 1 pricing. Flextronics and customer will determine an appropriate method to account for product changes from Raptor to Dually since Dually will only be built at one-half the quantity of Raptor. |
4. | All scrap product will be purchased by the Customer, unless scrap was caused by Flextronics. Scrap will be shipped to customer and invoiced monthly. |
5. | The minimum quantity for each product must be reached each quarter except during the April 2009 – Sept 2009 ramp-up period. If the minimum quantity is not reached, further cost recovery from the Customer will be required. |
6. | Dually price will be quoted when RFQ is received. |
7. | Pricing for new or replacement products will be quoted as required. |
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EXHIBIT 3.4
FEES LIST
To be attached or incorporated by reference
NRE Tooling Schedule
NRE for Enphase-Micro Inverter
860-00003 | 830-00010 | |||||||||||||||||||||||
Forecast | $716 | Forecast | 87,000 | |||||||||||||||||||||
Equipment | Unit price | Qty for Final | Sum | Qty for First | Sum | Lead time | Lifecycle | Remark | ||||||||||||||||
Process | Stencil (Trial Run) | US$ | [*** | ] | 2 | US$ | [*** | ] | 2 | US$ | [*** | ] | 3 days | 2 year life cycle | ||||||||||
Stencil (MP) | US$ | [*** | ] | 4 | US$ | [*** | ] | 6 | US$ | [*** | ] | 3 days | ||||||||||||
SMT programming | US$ | [*** | ] | 10 | US$ | [*** | ] | 10 | US$ | [*** | ] | 3 days | ||||||||||||
Template for screen machine | US$ | [*** | ] | 2 | US$ | [*** | ] | 6 | US$ | [*** | ] | 3 days | ||||||||||||
Template for placement machine | US$ | [*** | ] | 2 | US$ | [*** | ] | 6 | US$ | [*** | ] | 3 days | ||||||||||||
Fixture for Band part | US$ | [*** | ] | 2 | US$ | [*** | ] | 2 | US$ | [*** | ] | 3 days | ||||||||||||
Fixture for Final Assembly | US$ | [*** | ] | 2 | US$ | [*** | ] | 4 | US$ | [*** | ] | 3 days | ||||||||||||
Wave soldering panel | US$ | [*** | ] | 15 | US$ | [*** | ] | 15 | US$ | [*** | ] | 7 days | EOL7000times | |||||||||||
Fixture for touch up solder | US$ | [*** | ] | 1 | US$ | [*** | ] | 2 | US$ | [*** | ] | 3 days | ||||||||||||
Fixture for PCBA clearing | US$ | [*** | ] | 1 | US$ | [*** | ] | 1 | US$ | [*** | ] | 3 days | ||||||||||||
Inspection templet | US$ | [*** | ] | 4 | US$ | [*** | ] | 6 | US$ | [*** | ] | 3 days | ||||||||||||
PCB Division fixture | US$ | [*** | ] | 1 | US$ | [*** | ] | 2 | US$ | [*** | ] | 3 days | Spare part 1set | |||||||||||
Fixture for LCD assemble | US$ | [*** | ] | US$ | [*** | ] | US$ | [*** | ] | 3 days | ||||||||||||||
Nozzle for Mini-Wave | US$ | [*** | ] | 0 | US$ | [*** | ] | 0 | US$ | [*** | ] | 5 days | Rework for MI part | |||||||||||
Test | ICT Fixture (TR518) | US$ | [*** | ] | 1 | US$ | [*** | ] | 1 | US$ | [*** | ] | 21 days | EOL 300000times | ||||||||||
Hil-Pot Fixture | US$ | [*** | ] | US$ | [*** | ] | 1 | US$ | [*** | ] | 21 days | EOL 500000times | ||||||||||||
Material Tooling | PCB, EMU_PLC | US$ | [*** | ] | 1 | US$ | [*** | ] | US$ | [*** | ] | 6weeks | FOB HK | |||||||||||
STAMPING, BASE, M175. SINGLE, R7 PCB PCU | US$ | [*** | ] | US$ | [*** | ] | 1 | US$ | [*** | ] | 4Weeks | EXW OG | ||||||||||||
STAMPING LID, M175, SINGLE, R7 PCB PCU | US$ | [*** | ] | US$ | [*** | ] | 1 | US$ | [*** | ] | 4weeks | EXW DG | ||||||||||||
CBL ASSY, DC INPUT, M/F, TYPE III, WOVERMOLD | US$ | [*** | ] | US$ | [*** | ] | 1 | US$ | [*** | ] | 14 weeks | EXW | ||||||||||||
CABLE ASSEMBLY, CPC BULKHEAD, AC, M/F, M175-240-24-S | US$ | [*** | ] | US$ | [*** | ] | 1 | US$ | [*** | ] | 14weeks | EXW | ||||||||||||
PCB, PCU, M175-24-277-S | US$ | [*** | ] | US$ | [*** | ] | 1 | US$ | [*** | ] | 8 weeks | FOB HK | ||||||||||||
US$ | [*** | ] | US$ | [*** | ] |
Assume,
1. The NRE Cost does not include Function teal Fixture and XXXX forture
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2. The NRE Cost does not include Potting equipment and forture
3. The NRE does not include NRE for IC programming
4 Assume we will use TR51B to DO ICT
5. Exchange rate based on 1USD=6 836RMB and 1USD=7 764HKD
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Follow-on NRE Tooling Schedule
Item description | Cost(USD) | Comments | ||
Stencil | $ [***] | Typical charge but can vary according to pca design. | ||
Template for screen machine | $ [***] | Typical charge but can vary according to pca design | ||
SMT Programming | $ [***]/hr | Typically will take 10 hours to program SMT equipment depending on changes to original program. | ||
Template for placement machine | $ [***] | Typical charge but can vary according to pca design | ||
Fixture for bend part | $ [***] | Fixtures are unique and will be quoted based on its intended function | ||
Fixture for final assembly | $ [***] | Fixtures are unique and will be quoted based on its intended function | ||
Wave solder panel | $ [***] | Typical charge but can vary according to pca design | ||
Fixture for touch-up solder | $ [***] | Fixtures are unique and will be quoted based on its intended function | ||
Fixture for PCBA cleaning | $ [***] | Fixtures are unique and will be quoted based on its intended function | ||
Inspection template | $ [***] | $[***] | ||
PCB division fixture | $ [***] | $[***] | ||
ICT Fixture | $ [***] | Fixtures are unique and will be quoted based on its intended function – based on TR518 equip. | ||
ICT Programming | $ [***]/hr | hrs will be quoted based on pca complexity and per ICT access | ||
HI-POT Fixture | $ [***] | Fixtures are unique and will be quoted based on its intended function |
The table assumes that there is no significant change in product design between revisions. Extensive changes to the product that will require higher costs will be agreed to by both Flextronics and EnPhase.
These costs shall be reviewed on a bi-annual basis to make adjustments for cost increases on wages, overhead and materials.
Context Engineering Fee Schedule (Chinese National rates)*
Item description | Cost (USD) | |
Sr. Test Engineer (Mgr level) | $[***]-$[***]/month | |
Test Engineer | $[***]-$[***]/month | |
Sr. Test Technician | $ [***]-$[***]/month |
* | Similar rates for process engineers |
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NPI FEES
To be attached or incorporated by reference
Quote Summary for PCU NPI
Quantity | 30 | |||
Depreciation Cost | US$ [***] | |||
Direct Labor Cost | US$ [***] | |||
Indirect Direct Labor Cost | US$ [***] | |||
SG & A (3% at BOM cost) | US$ [***] | |||
IDM&packing Cost | US$ [***] | |||
Power consumption and facility cost | US$ [***] | |||
Material Loss / Scrap (1%) | US$ [***] | |||
Total Manufacturing Cost/Unit | US$ [***] | |||
BOM Cost | US$ [***] | |||
Profit | [***] | % | ||
Target sales price | US$ [***] | |||
VAM/Unit | US$ [***] | |||
Total VAM | US$ [***] | |||
NRE cost | US$ [***] |
Remark:
1. The cost does not include logistics cost
2. The cost does not include potting process cost
3. The cost does not include Function tester depreciation
4. The NRE cost is for pilot run only
5. The cost includes ICT, Hi-Pot and Function only
6. The pilot run production does not carry warranty
7. The cost does not include DFX
8. The NRE cost will according to actual cost
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TABLE OF ASSUMPTIONS
1) To perform Industrial Engineering analysis.
2) This is a prelim quote for Enphase – Micro Inverter PCBA
3) Demand state: EMU: 3716/year, PCU: 87K/year
4) The calculated manpower and cycle time is estimated , strictly based on process flow provided by customer
1 | This quotation is based upon the information and documentation provided by customer. All product changes subsequent to initial quotation and prior to initial production are subject to the re-quotation of pricing. |
2 | Payment terms are [***]. |
3 | NRE Payment Terms: [***] |
4 | Pricing is valid for quoted volumes only. If actual volumes do not meet quoted volume, pricing will be adjusted per Exhibit 3.4. |
5 | The Customer bears the cost of administration, test labor, rework cost, packaging, and return freight for items returned to Flextronics NDF (No Defect Found). |
6 | Process are quoted as Lead-Free Compliant. |
7 | Pricing is exclusive of all taxes, duties, similar charges, unless otherwise noted |
8 | This quotation is valid for a period of 30 days from the date of this quotation. Flextronics reserves the right to revise this quotation for orders placed past this 30-day period. |
9 | All product changes subsequent to initial quotation and prior to initial production are subject to re-quotation of pricing All engineering change orders shall be priced separately from this quotation and subject to Section 2.2. |
10 | Both parties shall sign a Manufacturing Service Agreement once services and price are agreed upon. |
1 | Lead-Free process was used for the labor portion of this quotation unless otherwise noted. |
2 | Quote assumes design is fully optimized to Flextronics standards for manufacturability (DFM & DFT will be quoted separately) |
3 | All workmanship performed at Flextronics will adhere strictly to the IPC-A-610D standard. |
4 | Quote may be revised to reflect actual yield and test times. |
5 | Any additional work, inclusive of development, prototyping, qualification activities, as well as design and related rework are excluded and will incur additional charges. |
6 | Changes in fabrication, tooling and fixturing arising from engineering, logistics and packaging changes are excluded from the pricing. |
7 | NRE does not include NRE for programming for components unless otherwise noted. |
8 | Maintenance costs, including spares and replacement parts of consigned functional test equipment and fixtures are not included in this quote. |
9 | Assume ICT run in [***] Tester. |
10 | Assume all Function testers, XXXX tester will be consigned |
11 | Quote does not include nitrogen cost |
12 | Assume all potting equipment, tools and unique accessories will be consigned |
12 | All test time has been provided by customer |
1 | CBOM supplied by Global material team. |
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1 | Shipment term DDP to Flextronics California |
1 | After called and email with Peihua.the variance between DG and Enphase are: |
1. | The temperature range is the same, [***]. |
2. | Temperature cycling rate is [***] for Enphase and [***] for DG. |
3. | Recycle time is 5min for ambient to cold and 5min for ramp up to hot.DG is [***] respectively. |
2 | Therefore, considering the machine size, the usage for Enphase will be almost the same as DG. |
3 | The [***] for [***] is about: [***]. |
4 | The Price of [***] is about [***] so the cost is about [***] |
5 | Base on the demand (2009 and 2010), the average UPH is about 1000pcs/day. |
Therfore the cost for each piece is about [***]
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