EXHIBIT 10.11
SANMINA CORPORATION
AGREEMENT FOR
ELECTRONIC MANUFACTURING SERVICES
This Agreement between Novacept, Inc. hereinafter referred to as
"Customer", and Sanmina Corporation, hereinafter referred to as "Sanmina" is
entered into on June 22, 2001. Sanmina shall perform manufacturing services for
the Customer under the terms and conditions set forth herein.
I. TERM
This Agreement shall be in effect for 60 months from the date of this
Agreement. Unless the parties agree to extend such initial term of the
Agreement, for any period, prior to the termination of such initial term, the
Agreement shall terminate.
II. SCOPE OF WORK PERFORMED
Customer wishes Sanmina to manufacture a range of Electronics products
or Assemblies on behalf of Customer at the prices identified in Exhibit A.
Sanmina and the Customer shall mutually agree upon a delivery schedule for the
Products.
Customer shall be liable for Material that Sanmina procures or
otherwise contracts for in order to manufacture the products that Customer
wishes to buy from Sanmina on a turnkey basis.
This liability shall be determined by defining the process that incurs
this liability and describing the situations or circumstances under which
Customer is liable for Material that Sanmina has procured.
Sanmina shall purchase components for the Products in accordance with a
vendor list approved by Sanmina and the Customer ("AVL"). In the event Sanmina
cannot purchase a component from an approved vendor for any reason, including
unavailability or commercial unfeasibility of the purchase of such components,
Sanmina may purchase such components from an alternate vendor with the prior
written consent of the Customer.
III. GENERAL PLANNING AND PROCUREMENT PROCESS
A. On the date this Agreement is executed and the first business day of
each calendar month thereafter, the Customer shall provide Sanmina
with firm, monthly, rolling purchase orders covering a minimum period
of three (3) months ("Purchase Order").
B. On the same dates, the Customer shall provide Sanmina with additional
monthly, rolling nine (9) month forecast ("Forecast") covering nine
(9) months immediately following the Purchase Order period. Forecast
does not incur any
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liability for either Sanmina or Customer except that of any long
lead-time parts for which the forecast would cause procurement
activity, and, even in such a situation such liability for Customer
would be limited per section IV and it subsections.
C. Sanmina will take the Purchase Orders and Forecast referred to in
III(A) and III(B) above and generate a Master Production Schedule
(MPS) for a twelve month period using the process described in Section
III(D) below.
D. This MPS will define the master plan on which Sanmina will base its
procurement, internal capacity projections and commitments.
1. Sanmina will use the Purchase Orders referred to in A
to generate the first three months of the MPS.
2. Sanmina will use the Forecast referred to in B to
generate the second nine months of the MPS.
3. The MPS created as described above does not incur any
liability for either Sanmina or Customer except that
of any long lead-time parts for which the forecast
would cause procurement activity, and, even in such a
situation such liability for Customer would be
limited per section IV and it sub-sections.
E. Sanmina will process the MPS through industry-standard MRP software
that will convert the MPS reflecting Customer's Purchase Orders and
Forecasts into requirements for components that are required to make
these products. In doing so, Sanmina will off-set the requirements for
receipt of components or materials by allowing for the time required
to build the products per the following times:
1. In-Circuit Test/Functional Test - 5 Working Days
2. Assembly - 7 Working Days
3. Kitting - 2 Working Days
4. Material Handling - 2 Working Days
Per this agreement Sanmina will plan and schedule material to be at
Sanmina eleven working days before the products are due to ship to
Customer where no Test is required, and sixteen working days before
the products are due to ship to Customer where Test is required.
F. Sanmina will also release (launch) orders to suppliers of materials
sometime prior to the anticipated date that the material is needed
(per section III(E) above). When these orders are launched will depend
on the Vendor Lead Time that Sanmina will determine from time to time
and maintain as a parameter of Sanmina's manufacturing or materials
planning systems.
G. Sanmina, through its MRP System will also issue an instruction (MRP
Signal) to its procurement group to buy a part approximately seven
days before the order is due to be placed per section F above.
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H. When Sanmina places an order with its suppliers per the sections
above, Sanmina will order parts in various quantities (defined in
periods-worth-of-supply) that are defined by the part's ABC
Classification. This classification as well as the expected
distribution or characteristics of various classes of parts, and, the
periods-worth-of-supply (Periods-of-Supply) that will be bought for
each class of part is shown on Table 1.
Table 1. ABC Classifications. Descriptions and Periods-of-Supply
Expected Percentage
of Total Value (of Periods Worth of
Expected Percentage Gross Supply to be Bought
Part Class of Total Parts Requirements) with Each Order
-------------------------------------------------------------------------------------
A 3% 80% 2 Weeks
B 17% 17% 3 Months
C 80% 3% 6 Months
I. In addition to ordering parts for various periods-of-supply, Sanmina
will order parts according to various minimum-buy quantities, tape and
reel quantities, and, multiples of packaging quantities.
J. The components Sanmina purchases or orders to fulfill the Purchase
Order and the Forecast on behalf of the Customer to manufacture the
Products, and any associated expenses related to purchasing, ordering,
manufacturing (labor and overhead), shipping, storing and eliminating
such components and agreed upon xxxx-up shall constitute a part of the
Customer's Total Liability ("Total Liability").
IV. LIABILITIES FOR MATERIALS
A. Customer's liability for material that Sanmina has procured is limited
to the following:
1. Parts that Sanmina, having ordered per the guidelines above,
cannot cancel prior to their receipt. This includes parts that
may not be cancelable by virtue of having insufficient time
between the MRP signal to cancel and the expected or real
receipt date at Sanmina.
2. Parts that Sanmina, having ordered per the guidelines above,
cannot return to the suppliers that the parts came from, where
the value of the parts exceed $1000 in total, and where Sanmina
has made reasonable efforts to return the parts (for no more
than four weeks).
3. Parts that are worth less than $1000 in total and where Sanmina
is not required to attempt return.
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B. Where Sanmina is able to return parts with a re-stocking or other
fees, those fees shall also become part of Customer's Total Liability.
C. If necessary and with the Customer's written consent, Sanmina shall
purchase any necessary tools to fulfill the Purchase Order and
Forecast. Such tools shall be deemed a part of the Customer's Total
Liability. All such tooling purchased by Sanmina shall remain the
Customer's property, and Sanmina shall return such tooling (normal
wear and tear excepted) to the Customer upon request, the completion
of the relevant order or the termination of the Agreement.
D. Customer's liability for the material defined in the previous sections
will be at the quoted cost agreed between Sanmina and Customer plus
the agreed materials margin of 13% (thirteen percent).
V. RESCHEDULES
The Customer may reschedule delivery dates of Products subject to the
following matrix:
NOTICE PRIOR TO PERCENT OF ORIGINAL
ORIGINAL QUANTITY THAT CAN BE
DELIVERY DATE RESCHEDULED
------------- -----------
0 to 30 days 0%
31 to 60 days 15%
61 to 90 days 30%
Beyond 90 Days 100%
As an example, if the Customer notifies Sanmina in writing between 31
and 60 days prior to the scheduled delivery date of the Products, the Customer
may reschedule a maximum of 15% of the total amount of the Products to be
delivered on such date.
A. For a decrease in quantity of Products to be delivered on a specific
delivery date, Sanmina and the Customer shall mutually agree upon a
date to deliver the undelivered Products within 45 days from the
original delivery date.
B. For an increase in quantity of Products to be delivered on a specific
delivery date, Sanmina, on a best effort basis, will attempt to
accommodate such increase.
C. Any change in the delivery dates of any Product for a period exceeding
45 days in the aggregate shall be deemed a cancellation by the
Customer with respect to such Products. If the Customer's schedule
change results in additional expenses to Sanmina to store such
Products or to acquire additional components, such additional expenses
shall be deemed Part of the Customer's Total Liability.
VI. Revisions
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In the event the Customer requests and engineering change to a product,
Sanmina shall notify the Customer of any impact on the cost and/or scheduled
delivery of such Products within five (5) business days of the receipt of
Customer's request. Unless the Customer consents to the amended notification
from Sanmina, the requested engineering change shall be deemed canceled. Any
increases in the cost of the Products resulting from such Engineering Change
Order ("ECO") shall be deemed a part of the Customer's Total Liability as
defined above. Similarly, any parts made obsolete or excess as a result of such
an ECO shall be deemed part of the Customer's Total Liability. Sanmina will
charge a $250.00 administrative fee per ECO that changes revisions to partially
cover Sanmina's processing costs involved in processing the ECO.
VII. CANCELLATIONS
The Customer may cancel any order by notifying Sanmina in writing at
least 90 days prior to the delivery date of such order. Within 30 days of such
cancellation, Sanmina shall provide the Customer with the amount of the Total
Liability related to such canceled order. The Customer shall pay such
cancellation amount to Sanmina on a net 30 day basis. After receipt of such
cancellation amount, Sanmina shall deliver to the Customer, at the Customer's
expense, any components purchased but unused as a result of such cancellation or
scrap such components, at the discretion of the Customer.
VIII. PRICING
The prices for the Products are shown in Exhibit A and shall remain
fixed for the term of this Agreement with the following exceptions:
1. ECO - Engineering Change Order (referred to in section VI)
2. Material variations on the market prices of components.
IX. DELIVERY
Delivery of all items under this Agreement shall be delivered F.O.B.
Sanmina's plant located at the address specified in Exhibit A ("Delivery
Point"), at which time risk of loss and title shall pass to the Customer.
Products held or stored by Sanmina at the Delivery Point or any other location
after the delivery date of such Products, shall be held or stored at the risk
and expense of the Customer.
SANMINA SHALL USE REASONABLE EFFORTS TO DELIVER THE PRODUCTS ON THE
AGREED UPON DELIVERY DATES. While Sanmina shall use reasonable efforts to notify
the Customer of anticipated delays, Sanmina shall not be liable for any failure
to give notice of anticipated delays or to meet such delivery dates.
UNLESS OTHERWISE SPECIFIED BY THE CUSTOMER, Sanmina shall transport the
Products by the method Sanmina deems most advantageous to the Customer's address
or to an address specified in writing by the Customer. All freight, insurance
and other
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shipping expenses from the delivery point shall be borne by the Customer. When
special packaging is requested or, in the opinion of Sanmina, is required under
the circumstances, the additional expenses related to such special packaging
shall also be borne by the Customer.
X. PAYMENT AND INVOICING
Payment terms will be net 30 days from invoice date. Sanmina will
provide the Customer with a credit limit set at (to be determined). In the event
that the Customer exceeds this credit limit or has outstanding invoices for more
than 60 days, Sanmina may stop shipments of Products to Customer until the
Customer makes sufficient payment to bring its account consistent with terms
outlined above. Sanmina may reduce the credit limit with written notice to the
Customer.
XI. WARRANTY
Sanmina warrants that the Products (excluding components purchased from
third-party vendors ("Vendor Components")) shall be free from any defects in
WORKMANSHIP for a period of one year from the date of manufacture. Warranty on
components is limited to the warranty provided by the component manufacturer.
Sanmina shall pass on any unexpired warranty for such Vendor Components provided
by third-party vendors or passed on by such third-party vendors from the
original manufacturers until the expiration of such warranties or up to a
maximum of one (1) year from date of manufacture of the Product by Sanmina,
whichever is shorter. As the Customer's sole remedy under the warranty, Sanmina
will, at no charge, rework, repair and retest any such Products returned to
Sanmina and found to contain such defects caused by Sanmina. Warranty coverage
does not include failures due to the Customer design errors, the supply or
selection of improper or defective parts or materials used by the Customer, the
Customer requested changes, damages caused by the Customer's misuse,
unauthorized repair or negligence. Sanmina does not assume any liability for
expendable items such as lamps and fuses. Sanmina reserves the right to inspect
the Products and verify that they are defective or non-conforming. Sanmina's
total liability shall be limited to the value of the Product supplied under this
Agreement.
The warranty afforded to these assemblies is limited to these items,
parts and defects that are within the capability of existing test equipment,
program and processes.
The performance of any repair or replacement by Sanmina does not extend
the warranty period for any Products beyond the period applicable to the
Products originally delivered.
EXCEPT FOR THE ABOVE EXPRESS WARRANTIES, SANMINA MAKES AND THE CUSTOMER
RECEIVES NO WARRANTIES OR CONDITIONS ON THE PRODUCTS, EXPRESS, IMPLIED,
STATUTORY, OR OTHERWISE, AND
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SANMINA SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
XII. GENERAL INDEMNITY
The Customer shall indemnify Sanmina against, and hold it harmless from
any loss, cost, liability or expense (including court costs and the reasonable
fees of attorneys and other professionals) to the extent that such loss, cost,
liability or expense arises out of, or in connection with, in whole or in part,
(A) infringements of any patent, trademark, copyright or other intellectual
property of the Customer or (B) any negligence or willful misconduct by the
Customer, its employees or agents and subcontractors, including but not limited
to any such act or omission that contributes to: (i) any bodily injury,
sickness, disease, or death; (ii) any injury or destruction to tangible or
intangible property of the injured party or any loss of use resulting therefrom;
or (iii) any violation of any statute, ordinance or regulation.
XIII. QUALITY, INSPECTION AND REPORTING
The Customer will have the right at all reasonable times, upon
reasonable advance notice, to visit Sanmina's plant to inspect the work
performed on the Products. Inspection of the work shall not relieve Sanmina of
any of its obligations under the Agreement or purchase orders. Sanmina shall
provide Customer with all mutually agreed upon quality reports at agreed upon
intervals. Sanmina reserves the right to restrict the Customer's access to the
plant or any area within it as necessary to protect confidential information of
Sanmina or its other customers.
If Customer demands inspection of the Products prior to the delivery of
such Products as a condition of acceptance of such Products, the Customer must
inspect the Products within 48 hours of a transmission of written notice by
facsimile or other electronic or telephonic delivery system from Sanmina
informing the Customer that the Products are ready to be shipped. If Customer
does to inspect the Products within such 48 hour period, Customer shall be
deemed to have waived its right to inspect the Products as a condition of
acceptance of such Products.
Customer and Sanmina will implement a joint quality improvement program
that will develop and implement a continuous quality improvement.
XIV. TERMINATION
Either party may, without penalty, terminate this Agreement upon 60
days written notice to the other party in either one of the following events:
a) The other party materially breaches this Agreement and such breach
remains uncured for thirty (30) days following written notice of
breach the non breaching party;
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b) The other party becomes involved in any voluntary or involuntary
bankruptcy or other insolvency petition or proceeding for the
benefit of its creditors, and such petition, assignment or
proceeding is not dismissed within sixty (60) days after it was
filed.
Upon termination, Sanmina shall provide the Customer with an invoice of
the Customer's Total Liabilities. In addition, the Customer shall be liable for
all work-in-progress and any outstanding charges. Upon termination, Customer
shall pay all invoiced charges in net thirty (30) days.
XV. LIMITATION OF LIABILITY
IN NO EVENT WILL SANMINA BE LIABLE FOR ANY SPECIAL, INDIRECT,
CONSEQUENTIAL, OR INCIDENTAL DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF
LIABILITY, ARISING IN ANY WAY OUT OF THIS AGREEMENT. THIS LIMITATION WILL APPLY
EVEN IF THE CUSTOMER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED
HEREIN.
XVI. MISCELLANEOUS
A. Governing Law. This Agreement will be governed by and interpreted
under the laws of the State of California, without reference to
conflict of laws principles.
B. Jurisdiction. For any dispute arising out of this Agreement, the
parties consent to personal and exclusive jurisdiction of and venue in
the state and federal courts within Santa Xxxxx County, California.
C. Entire Agreement: Enforcement of Rights. This Agreement sets forth the
entire agreement and understanding of the parties relating to the
subject matter herein and therein and merge all prior discussions
between them. No modification of or amendment to this Agreement, nor
any waiver of any rights under this Agreement, will be effective
unless in writing signed by the party to be charged. The failure by
either party to enforce any rights thereunder will not be construed as
a waiver of any rights of such party.
D. Assignment. The rights and liabilities of the parties hereto will bind
and incur to the benefit of their successors, executors or
administrators.
E. Notices. Any required notices thereunder will be given in writing at
the address of each party set forth above, or to such other address as
either party may substitute by written notice to the other in the
manner contemplated herein, and will be deemed served when delivered
by facsimile or mail or when tendered in person.
F. Force Majeure. Neither party will be liable to the other for any
default thereunder if such default is caused by an event beyond such
party's control, including without limitation acts or failures to act
of the other party, strikes or labor disputes, component shortages,
unavailability of transportation, floods,
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fires, governmental requirements and acts of God (a "Force Majeure
Event"). In the event of threatened or actual non-performance as a
result of any of the above causes, the non-performing party will
exercise commercially reasonable efforts to avoid and cure such
non-performance. Should a Force Majeure Event prevent a party's
performance thereunder for a period in excess of ninety (90) days, then
the other party may elect to terminate this Agreement by written notice
thereof.
G. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original and all of which
together will constitute one instrument.
Signed /s/ Xxx X. Xxxxxxxx Signed /s/ Xxxxxx X. Xxxxx
------------------- -------------------
Name: XXX X. XXXXXXXX Name: Xxxxxx X. Xxxxx
Title: V.P. SALES Title: VP Operations
SANMINA CORPORATION
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