CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
EXHIBIT 10.27
Netgear and Xxxxx Logistics Operating Agreement
DISTRIBUTION OPERATIONS AGREEMENT
Effective Date: December 1st, 2001 Term: 2 years (with possible renewal periods)
This Distribution Operations Agreement ("Agreement") is entered into
between Netgear. Inc., a Delaware corporation ("Netgear"), and Xxxxx Logistics
(Hong Kong) Limited, a Hong Kong corporation ("Xxxxx Logistics"), and is made as
of the Effective Date for the Term. Subject to the terms and conditions set
forth in this Agreement, the parties have caused this Agreement to be executed
by their duly authorized representatives on the date(s) shown below.
Netgear, Inc. Xxxxx Logistics (Hong Kong) Limited
for and on behalf of
XXXXX LOGISTICS (HOKG KONG) LIMITED
Signature /s/ XXXXX XxXXXXXX Signature /s/ XXXXX XXX
-------------------- ---------------------------
Authorized Signature(s)
Printed XXXXX XxXXXXXX Printed XXXXX XXX
Tide DIRECTOR LOGISTICS Title DIRECTOR
Date 10-19-01 Date Oct 20th, 2001
4500 Great America Parkway 00/X Xxxxx Xxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000 00 Xxxx Xxx Xxxx, Xxxx Xxxxx,
X.X.X. N.T. Hong Kong
Netgear, Inc. CONFIDENTIAL INFORMATION Page 1/20
NETGEAR AND XXXXX LOGISTICS OPERATING AGREEMENT
In consideration of their mutual representations, promises and
obligations. Netgear and Xxxxx Logistics agree as follows;
1. SCOPE OF THE AGREEMENT
This Agreement sets forth the terms and conditions pursuant to which
Xxxxx Logistics shall provide Netgear full warehousing, physical distribution,
and other logistics services, including but not limited to the services set
forth below (the "Services") in a timely, competent and cost effective manner in
and from Hong Kong, as more fully described in the "Standard Operating
Procedures" attached hereto as Exhibit 1:
- Receiving;
- Warehouse management;
- Inventory management;
- Quality management;
- Product fulfillment and logistics;
- System transaction processing;
- Return materials authorization ("RMA") processing;
- Freight out transportation management services;
- Product conversions & repackaging;
- Import and export coordination;
- Updating Netgear's operating system, Sun System, to manage
receipts, shipments and RMA; and
- Reporting.
This Agreement contains those terms that shall pertain to Xxxxx
Logistics' Facility, as defined below. Xxxxx Logistics shall conduct all of its
Netgear operations from the Xxxxx Logistics' Facility.
2. DEFINITIONS
The following words and expressions shall have the meanings
set forth below:
"Affiliate" means, with respect to a party hereto, a
corporation that directly or indirectly controls, is
controlled by, or is under common control with, that party.
"Confidential Information" means any information, including
but not limited to software (in object or source code form),
pricing terms, customer lists, technical information, future
plans, know-how, proprietary information, trade secrets, and
any other information, whether disclosed in writing, orally or
otherwise, that is marked "confidential" or should be deemed
by its nature to be confidential by a reasonable person in
similar circumstances as the parties.
"Conversions" means the process of unpacking, changing product
accessories and repacking products in accordance with Netgear
assembly process instructions.
"Customer" means a customer purchasing any Product(s) from
Netgear.
"Xxxxx Logistics' Facility" means the facility of Xxxxx
Logistics located at 0 Xxx Xxxxx Xxxxxx, Xxxx Xxxxx, Xxx
Xxxxxxxxxxx, Xxxx Kong.
"Xxxxx Logistics' Systems" means all software and systems used
by Xxxxx Logistics in the performance of this Agreement,
excluding any software or systems provided to Xxxxx Logistics
by Netgear.
"Netgear Inventory Location" means the physical location
identified by Xxxxx Logistics where Products shall be staged
prior to shipment to Customers.
"Order" means any order for Products placed by a Customer in
accordance with the terms of this
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NETGEAR AND XXXXX LOGISTICS OPERATING AGREEMENT
Agreement.
"Product(s)" means the products, commercially supplied by
Netgear from time to time.
"Sun System" means Netgear`s operating system used by Netgear
and Xxxxx Logistics to manage receiving, inventory control,
pick, pack, ship and RMA activities.
"Supplier(s)" means manufacturer(s) of products purchased by
Netgear.
"Undisputed Amounts or Charges" means all amounts or charges
in accordance with Exhibit 1 and/or any other amounts or
charges with prior written cost approvals from Netgear,
including but not be limited to e-mail and fax.
3. BUSINESS MANAGEMENT PROCEDURES
3.1. METHODOLOGY
Xxxxx Logistics shall:
(a) Assign an account management team whose goal is to
provide consistent and efficient responses to program
requirements and to address all operational, business
and continuous improvement plans with Netgear;
(b) Conduct quarterly business reviews of performance,
cost and continuous improvement opportunities;
(c) Create a process to communicate about and resolve
issues promptly and to drive continuous improvement
of the day-to-day operation;
(d) Comply with reporting requirements as outlined in
this Agreement; and
(e) Meet annually with Netgear at the executive level to
exchange business strategies with the specific
purpose of working to ensure that each party's
business goals can be met.
3.2 QUARTERLY REVIEWS
Xxxxx Logistics and Netgear shall, in conjunction with each
other, conduct quarterly operations reviews of the business processes and
procedures of both Xxxxx Logistics and Netgear with the intent to improve the
overall performance of the Services. The review shall include, at a minimum,
performance measurements of quality, delivery, customer satisfaction, cost model
review, transportation cost review and update, capacity and innovations. Staff
allocation, and the plan to meet future requirements in these areas, shall also
be reviewed.
The quarterly reviews shall be held in person at Xxxxx
Logistics' Facility.
3.3 TARGET COST REDUCTION
Xxxxx Logistics agrees to participate in periodic cost reviews
with the intent to reduce the costs of operations, which shall include but not
be limited to the costs relating to transportation, transaction processing and
distribution services, as applicable. Such reviews shall be held in person at
Xxxxx Logistics' Facility. The cost reviews shall be combined with the quarterly
reviews set forth under Section 3.2 hereof.
3.4 LOCATION OF XXXXX LOGISTICS' OPERATIONS
Xxxxx Logistics shall perform the Services from the Xxxxx
Logistics' Facility. Any deviation from this policy must be authorized by
Netgear in writing, Xxxxx Logistics shall not relocate Netgear inventory without
the written approval of Netgear.
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NETGEAR AND XXXXX LOGISTICS OPERATING AGREEMENT
4. PRICES AND PAYMENT
4.1 PRICES FOR SERVICES
The price for Services shall be as set forth on the price list
attached hereto as Exhibit 2 (the "Price List"). Xxxxx Logistics and Netgear
agree that the price shall include all costs associated with the Services and
Xxxxx Logistics' service fee. The parties acknowledge that Xxxxx Logistics'
service fee includes all overheads, allocations, services and profits, as set
forth in Exhibit 2 attached hereto. Xxxxx Logistics agrees to provide Netgear
with a detailed statement of the actual cost for each Service in final form
within four (4) weeks after the month in which such costs were incurred.
4.2 PAYMENT
All prices and payments shall be in U.S. Dollars. All payments
of Undisputed Amounts or Charges shall be made net thirty (30) days from the
invoice date. Invoices for the Services performed by Xxxxx Logistics shall be
submitted to Netgear on a monthly basis.
4.3 TAXES, DUTIES AND DECLARATION FEES
Netgear shall pay as a separate item on an invoice including
but not limited to tax, duties, declaration fees lawfully imposed on the
import/export or sale of the Products or on the provision of Services to Netgear
or shall provide Xxxxx Logistics with a certificate of exemption acceptable to
the appropriate authority. Xxxxx Logistics agrees to provide reasonable
assistance without charge in any proceeding for the refund or abatement of any
such taxes Netgear is required to pay. Without limiting the generality of the
foregoing, Netgear shall have no obligation to pay taxes based upon Xxxxx
Logistics net income.
5. ORDER FULFILLMENT
5.1 ORDER FULFILLMENT
Netgear's Operations Centers in the U.S. shall handle all of
Netgear's Order Administration functions. Xxxxx Logistics shall be responsible
for fulfilling Orders including the preparation of all shipping documents and
coordination with appointed carriers/couriers.
5.2 TITLE, RISK OF LOSS AND SHIPMENT
Title to the Products shall remain with Netgear in accordance
with the terms of sale and delivery to Netgear's Customers. Prior to title
passing, Xxxxx Logistics shall bear risk of all loss, damage or theft while the
Products are in the care, custody and control of Xxxxx Logistics. Shipping
instructions shall be specified and Netgear shall designate default shipping
instructions. Xxxxx Logistics shall provide Netgear with proof of shipment upon
request and shall provide reasonable assistance to Netgear in any claim Netgear
may bring against a carrier or insurer for misdelivery, loss or damage to the
Products.
Xxxxx Logistics shall check all outer cartons containing the
Products immediately upon delivery thereof to the Xxxxx Logistics' Facility for
visible loss or damage and quantity. If the Products are damaged or the number
of Products is incorrect, Xxxxx Logistics shall immediately make a note thereof
on the waybill or other document received from the carrier. Furthermore, Xxxxx
Logistics shall immediately, but in no event later than two (2) working days
after receipt of the Products, notify Netgear of any such inconsistency. Xxxxx
Logistics shall take all necessary measures to allow Netgear to claim damages
for any such inconsistencies against the carrier.
Upon delivery of the Products to the carrier for distribution
in Hong Kong, Xxxxx Logistics shall check the number of Products mentioned on
the waybill or other document used by the carrier. In case of an inconsistency.
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NETGEAR AND XXXXX LOGISTICS OPERATING AGREEMENT
the number mentioned on the waybill or document used by the carrier shall be
amended before departure of the Products from the Xxxxx Logistics' facility.
Xxxxx Logistics shall be responsible for loading and unloading
of the Products.
6. INVENTORY MANAGEMENT
Products shall be received into the Netgear Inventory Location
using purchase order receipts on Netgear's Sun System. Xxxxx Logistics shall
maintain its own full warehouse management system in order to control inventory
to ensure back-to-back accuracy with Netgear's Sun System.
All Products shall require a cycle count by Xxxxx Logistics to
be completed on a weekly basis. A joint cycle count to be performed by
representatives of Xxxxx Logistics and Netgear shall take place on a quarterly
basis.
Products returned from Netgear Customers shall be initially
received into the Netgear Inventory Location using the "Sales Order Return"
transaction in Sun System. Xxxxx Logistics shall have the responsibility to
verify the contents, receive, transact and report all Customer Product returns.
Xxxxx Logistics shall perform all RMA processing in accordance with the terms
set forth in Exhibit 1 attached hereto.
Any Products that are lost or damaged while in the care,
custody and control of Xxxxx Logistics shall be charged to Xxxxx Logistics at
the Netgear full inventory standard cost of that inventory as substantiated by
Netgear's Sun System at the time the actual loss took place. Xxxxx Logistics
shall have access to Netgear inventory standard cost.
On a weekly basis, Xxxxx Logistics and Netgear shall jointly
complete a book inventory reconciliation to support an inventory accuracy of
100% as determined and agreed between the parties from time to time.
On a quarterly basis, Xxxxx Logistics and Netgear shall
jointly complete a reconciliation of book inventory (stock status) and actual
on-hand inventory. Positive variances (additional units found) and negative
variances (missing units) shall be netted against each other. If the total net
variance is positive, Netgear and Xxxxx Logistics shall adjust their respective
book inventory with no financial charge to either party. If the total net
variance is negative, Netgear shall charge Xxxxx Logistics at the Netgear full
inventory standard cost of that inventory as substantiated by Netgear's Sun
System to be settled on a quarterly basis, provided that Xxxxx Logistics'
maximum liability for such inventory variances shall be US$ 1,000,000 per year
in the aggregate. Xxxxx Logistics shall have access to Netgear inventory
standard cost. Damaged products shall not be a part of the quarterly
reconciliation netting process for positive and negative variances. Damage to
Products shall be charged as it takes place as set forth above.
All inventories shall remain the property of Netgear.
7. TESTING OF PRODUCTS
7.1 SCOPE OF TEST AND INSPECTION
Xxxxx Logistics shall manage the execution of the test and
inspection process for each Product, which includes testing Products, test
capacity planning, and performing preventative maintenance on the test
equipment. Xxxxx Logistics warrants that it shall perform each and every test
and inspection in accordance with the process and for the quantities identified
in the relevant specification. All Products delivered to Netgear and/or its
Customers shall have passed all applicable tests and inspections see forth in
such specification.
At the commencement of production of any Product, Netgear
shall qualify each piece of test equipment and each test process for such
Product. No such equipment or process shall be changed or modified without the
prior written consent of Netgear.
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NETGEAR AND XXXXX LOGISTICS OPERATING AGREEMENT
Netgear shall provide certain Functional Test ("FT") equipment
and test set ups, including test scripts, loop back connectors, and cables to
Xxxxx Logistics.
From time to time, Xxxxx Logistics shall develop inspection
capacity plans. Xxxxx Logistics shall consider upside volume percentage,
preventative maintenance time, new Product additions and holding of appropriate
spare parts as part of its inspection capacity plan. Netgear shall provide
reasonably sufficient details to enable Xxxxx Logistics to perform such capacity
planning.
7.2 TEST EQUIPMENT MAINTENANCE COSTS
Xxxxx Logistics agrees to be responsible for and to pay for
all costs of maintaining all inspection equipment and related materials and
shall perform preventative maintenance, which shall include, without limitation,
repair and replacement of worn loop-back connectors, cables, and back planes or
any other failing components due to normal wear. Notwithstanding the above.
Netgear shall pay to upgrade or replace test equipment or fixtures which are
rendered outdated because of Product design changes or changes in test
requirements. Xxxxx Logistics shall xxxx and Netgear shall pay all such costs
incurred plus 10% management fee under item (4) of Exhibit 1 attached hereto.
7.3 TEST RECORDS FOR PRODUCTS
Xxxxx Logistics shall maintain adequate authenticated
inspection and test documents for Products and shall make such documents
available to Netgear upon request for a period of one year after the delivery of
the last Product purchased, unless otherwise directed by Netgear.
8. PRODUCT CHANGES
Either party may propose in writing a change to the test or
packaging assembly procedure of any Product. The other party shall respond in
writing within five (5) business days to any such proposal. Where necessary and
appropriate. Netgear shall initiate either an engineering change order ("ECO")
or a temporary change to the specification. Netgear shall develop a list of the
process steps for Xxxxx Logistics to follow. Xxxxx Logistics shall provide an
estimate of the time necessary to complete the change, the hourly rate to
complete the work, any excess or obsolete materials (list and cost), and the
increase or decrease, if any, in the price of the Products affected. Upon
receipt of Xxxxx Logistics' response, Netgear shall determine whether to
implement the change. If Netgear decides to implement the change, the parties
shall negotiate any open issues and set the implementation date.
If either Netgear or Xxxxx Logistics identifies a change that
must be implemented on a Product for reasons of safety ("Safety Change"), the
parties shall cooperate so as to effect such Safety Change as soon as possible
after discovery. Once such a Safety Change is discovered, no affected Products
shall be tested, packaged, refurbished or shipped until such Safety Change has
been implemented. The parties shall cooperate in the implementation of such
Safety Change on any Products shipped prior to discovery of the hazard, Netgear
shall pay all the costs associated with the Safety Change.
9. PRODUCT QUALITY
Xxxxx Logistics agrees to adopt the quality assurance
procedures and perform the quality control tests (collectively the "QA
Procedures") described in Exhibit 1. The QA Procedures may be amended by mutual
agreement of the parties from time to time, to ensure that all Products conform
to the specifications.
10. TOOLING OWNERSHIP AND USE
Netgear shall retain title to the internal tooling utilized by
Xxxxx Logistics in connection with this Agreement, and Xxxxx Logistics
acknowledges that Netgear shall have the right to use such tooling in the event
of a material default by Xxxxx Logistics as defined in Section 18 of this
Agreement only in order to fulfill Kerry
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NETGEAR AND XXXXX LOGISTICS OPERATING AGREEMENT
Logistics obligations hereunder prior to such default. Xxxxx Logistics agrees
that each Product created is for Netgear's exclusive use and further agrees that
Xxxxx Logistics has no right to sell or otherwise transfer any interest in a
Product to any party unless Netgear has provided permission in writing prior to
any such sale or transfer.
11. CAPITAL ASSETS
In order to perform the test and repackaging effort, as set
forth in Section 7 of this Agreement and Exhibit 1, Xxxxx Logistics may have to
use certain capital equipment specified by Netgear. If Xxxxx Logistics can use
the equipment for current or future applications other than for Netgear
assemblies, such equipment shall be the property of Xxxxx Logistics and shall be
funded as such. If the capital equipment cannot be used by other non-Netgear
applications, such equipment shall be solely the property of Netgear and shall
have Netgear asset tags affixed to the equipment. Such property shall be funded
by Netgear. Maintenance of all such capital equipment shall be performed in
accordance with the terms of Section 7 of this Agreement.
Xxxxx Logistics shall maintain an inventory of all capital
assets, regardless of ownership, and shall provide inventory records to Netgear
upon request. Inventory records shall include, but not be limited to, the date
of acquisition, description, serial number, and location of the assets.
12. ACCESS TO XXXXX LOGISTICS' FACILITY
Netgear shall have the right to access Xxxxx Logistics'
Facility and review its operations processes at any reasonable time upon
reasonable notice. The costs of opening the Xxxxx Logistics' Facility at
non-standard hours and the costs of telecommunications incurred by Xxxxx
Logistics as a result of such visits shall be paid by Netgear, "Netgear and
Xxxxx Logistics acknowledge that certain Customers and Suppliers may require
access to the Xxxxx Logistics' Facility from time to time and that the parties
shall cooperate to arrange and coordinate such access under mutually agreeable
terms."
13. EXPORTS AND CUSTOMS
13.1 EXPORT REGULATIONS
Each party agrees that it shall not knowingly (i) export or
re-export, directly or indirectly, any technical data (as defined by the U.S.
Export Administration Regulations), including software, received from the other
party under this Agreement, or (ii) export or re-export, directly or indirectly,
any direct product of such technical data, including software, to any
destination to which such export or re-export is restricted or prohibited by
U.S. or other applicable non-U.S. laws without obtaining prior authorization
from the U.S. Department of Commerce and/or other competent government
authorities to the extent required by such laws. Xxxxx Logistics shall follow
Netgear's instructions as provided from time to time. This Section 13 shall
survive the termination or expiration of this Agreement for any reason
whatsoever.
13.2 CUSTOMS DOCUMENTATION
Xxxxx Logistics shall be responsible for completing required
export documentation and complying with export formalities based on the
information provided by Netgear and/or Netgear's suppliers. Unless otherwise set
forth in this Agreement, Xxxxx Logistics shall take all necessary administrative
actions required to comply with all laws, treaties and regulations of both the
exporting country and the importing country. Netgear shall be responsible for
providing timely and correct information in such cases and shall provide Xxxxx
Logistics with invoices containing the required data. Based on the information
provided by Netgear and/or Netgear suppliers, Xxxxx Logistics shall be
responsible for timely and correct application of required data to appropriate
authorities.
14. CONFIDENTIAL INFORMATION
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NETGEAR AND XXXXX LOGISTICS OPERATING AGREEMENT
14.1 CONFIDENTIALITY OBLIGATIONS
During the term of this Agreement, the parties anticipate that
each may disclose certain of its Confidential Information to the other party in
connection with this Agreement. The receiving party shall protect the
Confidential Information of the disclosing party using the same degree of care
to prevent the unauthorized use, dissemination, or publication of such
Confidential Information as the receiving party uses to protect its own
Confidential Information of a like nature, but no less than a reasonable degree
of care. The receiving party's duty to protect the Confidential Information of
the disclosing party shall expire three (3) years from the expiration or
termination of this Agreement, except that any source code disclosed hereunder
shall be protected indefinitely. Except as permitted by this Agreement, the
receiving party shall disclose no part of the disclosing party's Confidential
Information to anyone except to those of its employees or contractors who have
(i) a need to know the Confidential Information in order to accomplish the
purposes of this Agreement, (ii) signed non-disclosure agreements with terms at
least as protective as the terms set forth in this Section 14 under which they
shall keep confidential such Confidential Information, (iii) before receiving
access to such Confidential Information, acknowledged its confidential,
proprietary and trade secret nature, and (iv) agreed to use such Confidential
Information only for purposes of performing the receiving party's obligations
under this Agreement. The terms of this Agreement may also be disclosed to
directors, officers, employees, attorneys, accountants, contractors, banks or
actual or potential financing sources of the receiving party, but only if and to
the extent such persons (i) need to know the disclosing party's Confidential
Information for the performance of their duties, and (ii) are subject to
confidentiality agreements or fiduciary duties of confidentiality to the
receiving party under terms at least as protective as the terms set forth in
this Section 14 and agree to use such Confidential Information only for such
duties.
14.2 EXCEPTIONS TO CONFIDENTIALITY
This Agreement imposes no restriction upon the receiving party
with respect to disclosure or use of the disclosing party's Confidential
Information (i) that was in the receiving party's possession before receipt from
the disclosing party; (b) that is or becomes (prior to such disclosure or use) a
matter of public knowledge through no fault of the receiving party; (c) that is
received by the receiving party from a third party without a duty of
confidentiality; (d) that is independently developed by the receiving party; (e)
that is disclosed in accordance with the order or requirement of a court,
administrative agency, or other governmental body; provided, however, that the
receiving party shall provide prompt notice thereof to enable the disclosing
party to seek a protective order or otherwise prevent such disclosure; (f) that
is disclosed by the receiving party with the disclosing party's prior written
approval; or (g) as required by the federal securities law and rules and
regulations promulgated thereunder.
14.3 PUBLICITY
All press releases and printed material using the name, logo
or other identifying characteristics of a party shall be subject to prior
approval of the other party.
14.4 SPECIFIC CONFIDENTIAL INFORMATION
Each party agrees that the price of any services negotiated by
such party and provided to the other party shall be deemed to be Confidential
Information of that party. Each party agrees not to discuss the origins of such
information with any third party. Each party agrees not to use such information
to solicit a discount from the disclosing supplier, from any of the supplier's
competitors or from any other supplier for use by the receiving party other than
for the purposes of performing its obligations under this Agreement. Each party
acknowledges that unauthorized disclosure of such information may irreparably
damage the disclosing party's relationship with its suppliers and that any
benefit accruing to the receiving party shall belong to the disclosing party.
14.5 RETURN OF CONFIDENTIAL INFORMATION
Upon termination or expiration of this Agreement for any
reason whatsoever in accordance with Section 18.3(c) hereof, and upon the
written request of the disclosing party, the receiving party shall (i) promptly
return all of the disclosing party's Confidential Information received from the
disclosing party hereunder, together with all copies of any such Confidential
Information, or (ii) if requested by the disclosing party, certify in writing
that all of the disclosing party's Confidential Information and all copies
thereof have been destroyed.
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NETGEAR AND XXXXX LOGISTICS OPERATING AGREEMENT
15. WARRANTY
Xxxxx Logistics warrants that all Services performed under
this Agreement shall be performed in a competent, professional manner and in
accordance with this Agreement and Exhibit 1.
16. INDEMNIFICATION
16.1 INDEMNIFICATION BY NETGEAR
Netgear shall, at its expense and at Xxxxx Logistics' request,
defend any claim or action brought against Xxxxx Logistics by a third party (i)
to the extent that it is based on a claim that any specifications provided under
this Agreement infringes or violates any patent, copyright, trademark, trade
secret or other proprietary right of such third party, or (ii) to the extent
such claim is caused by any grossly negligent act or omission or willful
misconduct of Netgear; and Netgear shall indemnify and hold Xxxxx Logistics
harmless from and against any costs and liability reasonably incurred by Xxxxx
Logistics that are attributable to such claim, subject to compliance with the
notice provisions set forth in Section 16.3 below.
16.2 INDEMNIFICATION BY XXXXX LOGISTICS
Xxxxx Logistics shall, at its expense and at Netgear's
request, defend any claim or action brought against Netgear by a third party to
the extent such claim is caused by breach of this Agreement by, or any negligent
act or omission or willful misconduct of, Xxxxx Logistics or its Affiliates; and
Xxxxx Logistics shall indemnify and hold Netgear harmless from and against any
costs and liability reasonably incurred by Netgear that are attributable to such
claim, subject to compliance with the notice provisions set forth in Section
16.3 below.
16.3 PROCEDURE FOR INDEMNIFICATION
If any claim, other than a claim based on transport losses or
damages, or action is brought or asserted against an indemnified party as
provided in Section 16.1 and 16.2 (the "Indemnified Party") in respect of which
an indemnity may be sought from an indemnifying party under such sections (the
"Indemnifying Party") the Indemnified Party shall promptly notify the
Indemnifying Party who shall assume the defense thereof and the payment of all
expenses associated therewith; except that any delay or failure to so notify the
Indemnifying Party shall only relieve the Indemnifying Party of its obligations
hereunder to the extent that the Indemnifying Party is prejudiced by reason of
such delay or failure, if at all. The Indemnified Party shall have the right to
employ separate counsel with respect to any such claim or action and participate
in the defense thereof, but the fee and expenses of such counsel shall be at the
expense of the Indemnified Party, unless (i) the employment of such counsel was
specifically directed and required by the Indemnifying Party, or (ii) the
Indemnifying Party elected not to assume the defense of such claim and employ
counsel in connection therewith. Without the consent of the Indemnified Party,
the Indemnifying Party shall have no right to settle any such claim or
compromise on any non-monetary matter associated with such claim; provided that
this consent shall not be unreasonably withheld.
17. LIMITATION OF LIABILITY
EXCEPT FOR BREACHES OF THE PARTIES' OBLIGATIONS UNDER SECTION
14 HEREOF (RELATING TO CONFIDENTIAL INFORMATION) AND OBLIGATIONS UNDER SECTION
16 HEREOF (RELATING TO INDEMNIFICATION), TO THE MAXIMUM EXTENT PERMITTED BY LAW,
UNDER NO CIRCUMSTANCES AND UNDER NO LEGAL THEORY. WHETHER IN TORT, CONTRACT, OR
OTHERWISE, SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY THIRD PARTY
FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING BUT
NOT LIMITED TO LOST PROFITS OR LOSS OF BUSINESS, EVEN IF SUCH PARTY SHALL HAVE
BEEN INFORMED OF THE POSSIBILITY OF SUCH DAMAGES.
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18. TERM AND TERMINATION
18.1 TERM
This Agreement shall commence on the Effective Date and shall
continue for an initial period of two (2) years thereafter. Unless terminated
earlier pursuant to the terms of this Section 18, this Agreement shall
automatically be renewed after such initial period for successive one (1) year
periods. Either party may terminate this Agreement upon ninety (90) days written
notice prior to the end of the initial two-year term or any renewal term
thereof.
18.2 TERMINATION
A party shall be in material default under this Agreement if
such party:
(a) ceases conducting business in the normal course,
makes a general assignment for the benefit of
creditors, suffers or permits the appointment of a
receiver for its business or assets, or becomes
subject to any proceeding under any statute of any
governing authority relating to insolvency or the
protection of rights of creditors; or
(b) fails to perform any of its material obligations
under this Agreement for a period of thirty (30)
days after receipt of written notice thereof from the
other party.
In the event of such default, the non-defaulting party shall
have the right to terminate this Agreement immediately by giving written notice
to the other party.
18.3 EFFECT OF EXPIRATION OR TERMINATION
Upon expiration or termination of this Agreement for any
reason whatsoever:
(a) Netgear shall pay all Undisputed Amounts or Charges
owed to Xxxxx Logistics as provided in this
Agreement, provided that Netgear shall have the right
to offset any such amounts or charges against any
Undisputed Amounts or Charges owing to Netgear by
Xxxxx Logistics under this Agreement. If the
aggregate amount owing by either party to the other
party is less than the aggregate amounts owing by the
other party to that either party, the other party
shall pay such net amount owing to that either party
promptly and in full within forty-five (45) days of
the date or expiration or termination of this
Agreement, whichever is applicable;
(b) The provisions of this Agreement relating to
Confidential Information (Section 14), Warranties
(Section 15) and Indemnification (Section 16) and
Export Regulations (Section 13.1), shall survive the
termination or expiration of this Agreement for any
reason whatsoever; and
(c) Xxxxx Logistics shall upon Netgear's written request
(i) return all of Netgear's Confidential Information
disclosed to Xxxxx Logistics hereunder and all copies
thereof, as far as legally allowed, or (ii), destroy
or erase all such Confidential Information and all
copies thereof in the possession of Xxxxx Logistics
or any of its Affiliates or their respective
employees, consultants, agents or representatives,
including copies on paper or other hard copy and
copies on computer or other storage media.
Upon termination or expiration of this Agreement for any
reason whatsoever, Xxxxx Logistics shall place all inventory of the Products
immediately at the disposal of Netgear, and Xxxxx Logistics shall not have a
right of retention, lien, or any other right to such Products, as set forth in
Section 19.15 hereof.
18.4 DUTY TO FULFILL
Netgear, Inc. CONFIDENTIAL INFORMATION Page 10/20
NETGEAR AND XXXXX LOGISTICS OPERATING AGREEMENT
Notwithstanding the termination or expiration of this
Agreement for any reason whatsoever, Xxxxx Logistics agrees to manage all
inventory control functions and to fulfill all Orders placed prior to the date
of such termination or expiration in accordance with the terms of this Agreement
if such Orders have not previously been cancelled.
19. GENERAL PROVISIONS
19.1 FORCE MAJEURE
For purposes of this Section 19.1. "Force Majeure" shall
include all acts or events beyond the control of a party, including but not
limited to acts of God. government restrictions, continuing domestic or
international problems such as wars or insurrections, fires, floods, work
stoppages, and embargoes, which prevent totally or partially the fulfillment of
the obligations of either party.
A party affected by an event of Force Majeure shall be
released without any liability on its part from the performance of its
obligations, other than an obligation to pay money, under this Agreement, if
any, but only to the extent and only for the period that its performance of such
obligations is prevented by circumstances of Force Majeure and provided that
such party shall have given prompt notice thereof to the other party. Such
notice shall include a description of the nature of the event of Force Majeure,
its cause, and its possible consequences. The party claiming circumstances of
Force Majeure shall promptly notify the other party of the conclusion of the
event. The period of Force Majeure shall be deemed to commence on the date that
the event of Force Majeure first occurs. Regardless of the excuse of Force
Majeure, if either party is not able to perform its obligations within ninety
(90) days after such event of Force Majeure, the other party may terminate the
Agreement. Termination of this Agreement shall not affect the obligations of
either party that exist as of the date of termination.
19.2 NOTICES
All notices or other communications hereunder shall be sent by
certified mail, postage prepaid, by personal delivery, courier service,
facsimile, e-mail or other form of recorded communication to the parties at
their respective addresses set forth below. Any notices given shall be deemed to
have been received as follows: (i) if sent by facsimile or other form of
recorded communication, when transmitted; (ii) if sent by certified mail, on the
date of delivery as shown on the return receipt; and (iii) if by courier
service, on the date delivered. Either party may change its notice address by
written notice to the other party.
If to Xxxxx Logistics: If to Netgear:
Xxxxx Logistics Hong Kong Limited Netgear, Inc.
00/X Xxxxx Xxxxx Xxxxxx 0000 Xxxxx Xxxxxxx Parkway
55 Wing Kei Road, Xxxx Xxxxx Xxxxx Xxxxx, XX 00000
N.T. Hong Kong U.S.A.
Attention: Attention:
With a copy to: With a copy to:
19.3 AMENDMENT, MODIFICATION OR WAIVER
No modification, amendments or supplements to this Agreement
shall be effective for any purpose unless in writing and signed by authorized
representatives of each party.
19.4 DISASTER RECOVERY PLAN
Xxxxx Logistics agrees to do its utmost together with Netgear
to restart the Services following a disaster. Xxxxx Logistics shall have a
recovery plan which can be in operation after a reasonable period not to exceed
a maximum of one week with respect to any computer system used in connection
with the Services.
Netgear, Inc. CONFIDENTIAL INFORMATION Page 11/20
NETGEAR AND XXXXX LOGISTICS OPERATING AGREEMENT
19.5 INDEPENDENT CONTRACTORS
This Agreement shall not constitute Xxxxx Logistics as the
agent or legal representative of Netgear for any purpose and Xxxxx Logistics
shall not hold itself out as an agent of Netgear other than as expressly
provided in this Agreement. This Agreement creates no relationship of joint
venturers, co-owners, partners, associates, employer and employee, franchisor
and franchisee or principal and agent between the parties, and both parties are
acting as independent contractors. Neither party shall have the right to
exercise any control or direction over the operations, activities, employees or
agents of the other party in connection with this Agreement. Except as expressly
agreed between the parties in writing, neither party is granted any right or
authority to, and shall not attempt to, assume or create any obligation or
responsibility for or on behalf of the other party. Neither party shall have any
authority to bind the other party to any contract, whether of employment or
otherwise, and each party shall bear all of its own expenses for its operations,
including, without limitation, the compensation of its employees and sales
people and the maintenance of its offices, service, warehouse and transportation
facilities. Each party shall be solely responsible for its own employees and
sales people and for their acts and omissions.
19.6 SUBCONTRACTORS
The acknowledgment by Netgear of any subcontractors of Xxxxx
Logistics shall in no way be construed to relieve Xxxxx Logistics of any of its
duties, responsibilities and obligations to Netgear under this Agreement.
19.7 NO ASSIGNMENT
Neither this Agreement nor any right or obligation hereunder
shall be assigned or delegated by Xxxxx Logistics, voluntarily or by operation
of law, without the prior written consent of Netgear, which consent may not be
unreasonably withheld. Any purported assignment by Xxxxx Logistics in violation
of this Section 19.7 shall be deemed void. A purported assignment of Xxxxx
Logistics shall be deemed to occur in the event of a sale or transfer of
substantially all of the assets of, or a majority interest in, the voting shares
to, or the merger or consolidation with or into, any other entity.
19.8 APPLICABLE LAW AND DISPUTES
This Agreement, and any disputes arising out of or in
connection with this Agreement, shall be governed by and construed in accordance
with the laws of Hong Kong, excluding its rules governing conflicts of laws. The
courts located within Hong Kong shall have exclusive jurisdiction to adjudicate
any disputes arising out of or in connection with this Agreement; provided,
however, that either party may seek preliminary or permanent injunctive relief
in any court of competent jurisdiction in order to protect its Confidential
Information.
19.9 RIGHTS CUMULATIVE
Except as otherwise expressly provided in this Agreement, all
rights and remedies conferred by this Agreement, by any other instrument, or by
law are cumulative and may be exercised singularly or concurrently.
19.10 SEVERABILITY
If a court or other competent tribunal in any jurisdiction
holds any provision of this Agreement illegal, invalid or unenforceable in whole
or in part under applicable law, such provision or such portion thereof shall be
ineffective as to such jurisdiction to the extent of its illegality, invalidity
or unenforceability. The illegality, invalidity or unenforceability of such
provision in that jurisdiction shall not in any way affect the legality,
validity or enforceability of any other provision of this Agreement, or of such
provision, in any other jurisdiction, and the parties shall seek in good faith
to agree on replacing any such illegal, invalid or unenforceable provisions with
legal, valid and enforceable provisions that, in effect, shall most nearly and
fairly approach the effect of the invalid provisions.
19.11 ENTIRE AGREEMENT
This Agreement, including all Exhibits attached hereto,
constitutes the entire Agreement between the parties pertaining to the subject
matter hereof. This Agreement supersedes all prior agreements and understandings
Netgear, Inc. CONFIDENTIAL INFORMATION Page 12/20
(NETGEAR AND XXXXX LOGISTICS OPERATING AGREEMENT)
between the parties, whether written or oral, with respect to such subject
matter. No representations or statements of any kind made by any representative
of either party which are not stated in this Agreement shall be binding on that
either party. No course of dealing or course of performance shall be relevant to
explain or supplement any term expressed in this contract.
19.12 NO WAIVER
The failure by either party to assert any of its rights
hereunder, including, but not limited to, the right to terminate this Agreement
due to a breach or default by the other party hereto, shall not be deemed to
constitute a waiver by that party of its right thereafter to enforce each and
every provision of this Agreement in accordance with its terms.
19.13 HEADINGS
The subject headings of this Agreement are included for
purposes of convenience only, and shall not affect the construction or
interpretation of any provision of this Agreement.
19.14 COMPLIANCE WITH APPLICABLE LAWS
In the exercise of their respective rights and the performance
of their respective obligations, each party shall comply with all applicable
laws, regulations and governmental orders. Xxxxx Logistics shall, at its own
expense, obtain, and maintain in full force and effect throughout the
continuance of this Agreement, all licenses, permits, approvals and other
governmental authorizations required with respect to the operation of the Xxxxx
Logistics' Facility.
19.15 NO COLLATERAL
[*]
Netgear. Inc. CONFIDENTIAL INFORMATION Page 13/20
CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
NETGEAR AND XXXXX LOGISTICS OPERATING AGREEMENT
EXHIBIT 1
STANDARD OPERATING PROCEDURES
1.1 PROCESS OVERVIEW & ENVIRONMENT
The requirement is to receive, into a bonded warehouse, a regular receipt of
Products, which have been manufactured in Asia. The Products are to be stored,
controlled and accounted for and then picked to match specific customer order
requirements.
REAL TIME OPERATION
At all Xxxxx Logistics' warehouses operation shall be in real time. The product
flow through the warehouse shall be bar code controlled from handling-in until
the loading of the truck. Xxxxx Logistics shall update stock immediately when
the Products are put on location and after the pick.
SECURITY SYSTEMS
Xxxxx Logistics shall use a digital CCTV system throughout the warehouse. The
information captured by such system shall be stored for twenty-four (24) hours
(max. legal time). Xxxxx Logistics shall use a burglar alarm throughout the
warehouse, and a fire/sprinkler alarm system which are connected to the building
management office.
LEAD-TIME
The standard lead-time shall be such that orders received before 3:00 p.m. Hong
Kong time are ready for shipment the next working day.
1.2 RECEIPT
The parties acknowledge that the majority of volume will be containerized sea
freight. The receipts shall be delivered throughout the week. The remaining
volume will be by ad-hoc airfreight. All pallets shall be 100 x 120 x 160/200
plywood-shipping pallets.
Each shipment shall be verified against the packing list and/or invoice upon
arrival, booked into the storage location and all Sun System receipt
transactions shall be manually data entered on the day of delivery.
The majority of pallets received shall contain single part numbers. If a pallet
contains mixed part numbers it shall be split down into an individual part
number per pallet. Each mixed pallet shall be marked on all four sides with a
label designating it as a "mixed pallet."
Approximately one (1) month's supply of Products shall be held in stock, i.e.,
300 pallets, covering approximately 700 part numbers.
Netgear has five primary stockroom locations within the Sun System: one IQC
location, two finished goods locations, one stock rotation location and one
warranty returns location. Receipts shall be played into the correct location
based on the specific type of transaction. Netgear shall provide to Xxxxx
Logistics the definition of each stock room location under Sun System.
Xxxxx Logistics shall provide a safe and secure warehouse environment.
A product identification, not necessarily a bar code identification, shall be
sufficient to handle incoming Products. Trucks and containers arriving before
12:00 p.m. with a pre-alert of a minimum of two (2)
Netgears, Inc. CONFIDENTIAL INFORMATION Page 14/20
NETGEAR AND XXXXX LOGISTICS OPERATING AGREEMENT
working days shall be off-loaded and the Products put on location the same day.
This shall also apply to the stock update.
After discharge, the Products shall be sorted by SKU (stock keeping unit) and
checked for outer damage and quantity. The system shall create a location and a
put away. For the storage of pallets. Xxxxx Logistics may maintain a random
storage system; provided, however that Netgear's Products shall be stored as
much as possible together. For shelves and bins Xxxxx Logistics shall maintain a
fixed storage location system.
The individual bringing the Products to their location shall scan the put away
and then the location. If the scanner indicates the correct location, the
individual shall put the Products on location, provide confirmation thereof and
the stock shall be updated.
1.3 ORDER PICKING
The current Netgear customer base is 17. The average number of customer orders
per month is approximately 60. The average number of lines per customer order is
approximately nine (9). Orders shall be placed over night (in the U.S.) and
shall be visible by 7:00 a.m. Hong Kong time (Day 1), at which time an order
requirement report (shippable backlog) shall be produced. The majority of
shipments (+90%) shall be in full case and pallet quantities, but there may be
some shipments that require case breaks.
The order cut-off time is 15:00 hrs (Day 1) for next day fulfillment (Day 2).
All orders shall be picked, made ready for dispatch and confirmed on the system
by 6:00 p.m. Hong Kong time (Day 2), with all stock being picked on a FIFO
basis.
The parties acknowledge that weekly order volumes are expected to fluctuate by
plus or minus twenty-five percent (25%) per week, with the third week of the
month seeing the highest volume.
The required service level shall have the result that all Customer Orders are
dispatched from the distribution hub within forty-eight (48) hours (2 working
days) of entering on the Sun System.
1.4 SHIPMENT QUALITY AND MIS-SHIPS
All packing lists shall be generated from the Xxxxx Logistics operating system.
The commercial invoices shall be generated from the Sun System. All shipments
shall be audited to confirm 100% accuracy to Customer Order and packing/delivery
specifications (which may vary from Customer to Customer).
Mis-shipments, excluding losses and damage during transportation, are shipments
reported by Netgear's Customers that reportedly do not contain what the packing
list declares. In case of mis-shipments. Netgear shall immediately credit the
customer with an RMA or invoice the Customer according to the actual contents of
the shipment. The Customer shall then either return to Netgear the extra units
received or receive credit from Netgear for any short shipment. Xxxxx Logistics
and Netgear shall jointly review the audit trail documentation associated with
the mis-shipment. This may include a warehouse cycle count for extra units in
relation to book inventory, proof of delivery for the shipment, pieces, weights,
dimensions, shipping documentation and other related pick and pack documents.
Netgear shall not charge Xxxxx Logistics for any missing units if Netgear and
Xxxxx Logistics conclude that:
A) The documentation audit trail is consistent with the
commercial invoices and Customer order;
B) The inventory cycle count does not show any inventory
discrepancy for the SKU's at issue.
Netgear shall charge Xxxxx Logistics for any missing units if Netgear and Xxxxx
Logistics conclude that:
Netgear, Inc. CONFIDENTIAL INFORMATION Page 15/20
Netgear and Xxxxx Logistics Operating Agreement
A) The documentation audit trail is not consistent with the
commercial invoices and Customer order:
B) The inventory cycle count reveals an inventory discrepancy for
the SKU's at issue.
1.5 QUALITY ASSURANCE PROGRAM AND MANAGEMENT
The parties acknowledge that the quality of Netgear's Products and services is
vital to Netgear's continued growth and success. As such, a strong quality
management organization is an absolute requirement. Xxxxx Logistics quality
management team must be able to:
- Report to Netgear the measurement of the quality of Products received
in order for Netgear to take objective corrective actions with
suppliers, including:
- AQL Sampling Plan;
- Use of Defect Codes;
- Pareto of Defects (at incoming);
- Incoming Defects per Million (DPM) by Product and
supplier;
- Warranty return rates, by Product and supplier;
- Pareto of Defects (warranty returns); and
- MRB Coordination (discrepant material disposition),
- Perform reasonable inspection procedures, including:
- Functional test capability;
- Mechanical/cosmetic inspection standards;
- Workmanship standards; and
1.6 TRANSACTION PROCESSING
All receipts & picks/dispatches shall be transacted daily on Netgear's Sun
System. Xxxxx Logistics shall provide two administrative resources to play all
receipt and shipment transactions in the Sun System on a daily basis.
1.7 TRANSPORTATION
All import transportation costs shall be paid for and managed by Netgear.
All outbound transportation costs shall be paid by Xxxxx Logistics and invoiced
to Netgear at the agreed rate schedule set forth in Exhibit 3 of the
Distribution Operations Agreement between Netgear and Xxxxx Logistics. The
parties acknowledge that transportation costs are over and above the agreed to
cost model for the Services set forth in Exhibit 2 of the Distribution
Operations Agreement between Netgear and Xxxxx Logistics.
1.8 RMA (RETURN MATERIAL AUTHORIZATION) PROCESSING
Currently, approximately 40 RMA orders per month of "faulty" Products are
returned to the distribution hub from Netgear's Customers. This represents
approximately 1150 line items and 5100 units per month. This is audited against
RMA information in the Sun System and transacted to allow credits to be issued
to Netgear's Customers. A nominated carrier then returns the Products to Hong
Kong.
Netgear, Inc. CONFIDENTIAL INFORMATION Page 16/20
Netgear and Xxxxx Logistics Operating Agreement
The parties acknowledge that the cost to receive, inventory, report, stage and
ship RMAs has been included in the agreed to cost model for the Services set
forth in Exhibit 1 of the Distribution Operations Agreement between Netgear and
Xxxxx Logistics.
For purposes of this Specific Services and Agreements Addendum, RMA processing
means the management of the receipt, verification, inspection, testing,
disposition, re-packaging and reporting of Product returns from Netgear's
Customers. Netgear issues two types of authorizations to its Customers: (i)
warranty return authorizations for defective Products; and (ii) stock rotation
returns for unsold slow moving Products from Customers' inventory. Xxxxx
Logistics shall maintain proper separation of such warranty and stock rotation
Products throughout the following functions:
- Physical verification of shipments of returned Products from
Netgear's Customers;
- Verification that returned Products are received in good
physical condition, noting any and all shipping damage on the
relevant commercial documents (cargo receipt, bills of lading,
delivery receipts, etc.) prior to signing delivery documents;
- Upon acceptance, verification that a valid RMA exists for
returned Products;
- Reporting of any unauthorized returns to Netgear on date of
receipt;
- Verification that returned Products match product and quantity
authorized on Netgear's RMA;
- Reporting any discrepancy between Products and quantity
received and Products and quantity authorized on date of
receipt;
- Completing and faxing to Netgear the Netgear Returned Material
Receipt Form on that date of receipt;
- Preparing and submitting to Netgear a daily returns material
receipts report, detailing Customer name. RMA number, Product
and quantity, and value on the date of receipt. If no receipt
activity occurs on any given day, the receipts report shall be
sent, noting "no receipts";
- Investigating disputed claims by Netgear and/or Netgear's
Customers and providing proof of delivery as required;
- Performing incoming inspection on all returned Products per
agreed processes;
- Performing functional tests on all warranty defective Product
returns;
- Providing returned Product functional test, inspection yields
and pareto of defects report to Netgear on a monthly basis;
- Maintaining separate inventory locations for Product receipt,
work in process test, inspection or test failure Products,
inspected and accepted Products, and refurbished Products per
agreed processes;
- Arranging for timely disposition and return to original
manufacturer of all inspection or test failure Products, which
are still under manufacturers warranty; and
- Establishing procedures and processes to ensure inventory
integrity between Netgear's operating system and Xxxxx
Logistics' operating system.
1.9 COST PLUS MODEL
Netgear intends to manage the Hong Kong distribution center on a cost-plus model
basis, as specified further in Exhibit 3 attached hereto. Freight charges shall
be excluded from the cost model and shall be managed separately.
1.10 REPORTING
Netgear shall be provided with direct access to Xxxxx Logistics' systems,
including but not limited to Netgear Warehouse Control System information, which
shall take place via web. Such direct access shall include but not be limited to
access to on-hand inventory, receipts, shipments, but excluding RMA. Xxxxx
Logistics shall provide standard or custom reports to Netgear on regular basis
for comparison to Netgear's Sun System database. Xxxxx Logistics shall provide
Netgear with daily access to web site and account activity. Xxxxx Logistics
shall provide Netgear with a mutually agreed to set of standard reports on a
daily, weekly and/or monthly basis as required.
Netgear, Inc. CONFIDENTIAL INFORMATION Page 17/20
Netgear and Xxxxx Logistics Operating Agreement
1.11 PERFORMANCE INDICATORS
INBOUND FLOWS
The standard shall be that Products are handled in and stock updated the day of
arrival.
WAREHOUSING
Xxxxx Logistics agrees to ensure an inventory accuracy of 100%, re-insured at
Netgear's expense, and accepts full responsibility for missing Products.
MEASUREMENT METHOD
The measurement method shall be a cycle count.
ORDER PICKING
The standard shall be that orders received before 15:00 p.m. Hong Kong time are
ready for shipment the next working day. Depending on the number of orders and
lines to be shipped, the parties shall reach an agreement on the percentage of
Orders to be received over night. The measurement method and systems shall
indicate when an Order is ready for shipment.
ORDER CORRECTNESS
Xxxxx Logistics shall ensure that 99.9 % of the Order lines picked are correct,
provided that the content of the cartons in stock is correct.
DISTRIBUTION
Xxxxx Logistics shall not have any direct liability for on-time deliveries as
delivery is subcontracted to third parties. However the carriers used offer a
98% on-time delivery but do not guarantee same.
1.12 INSURANCE
Netgear shall provide its own marine and property insurance to cover fires,
flood, and other acts of God. Xxxxx Logistics shall be insured at its own cost
for workers' compensation and losses and damages caused by Xxxxx Logistics'
negligence. A copy of Xxxxx Logistics' insurance policy shall be made available
to Netgear at its first demand.
Netgear, Inc. CONFIDENTIAL INFORMATION Page 18/20
CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
Netgear and Xxxxx Logistics Operating Agreement
EXHIBIT 2
PRICE LIST
BASIS AMOUNT
----- ------
(1) Facility Set-up Cost One-off US$ [*]
(2) Relocation Cost from Celestica's One-off US$ [*]
Facility
(3) Logistics Services Cost (1) Monthly US$ [*]
(4) Miscellaneous Cost (1) - Monthly US$ [*]
Quality & RMA
(5) Miscellaneous Cost (2) - Monthly US$ [*]
Supply Chain Management (3)
ALL MISCELLANEOUS COST (A) AND MISCELLANEOUS COST (B) UNDER ITEMS (4)
AND (5) INCLUDE 10% MANAGEMENT FEE. SERVICES CHARGES FOR ITEMS (4) &
(5) HERETO SHALL BE REVIEWED AND AGREED, ON QUARTERLY BASIS, BETWEEN
NETGEAR AND XXXXX LOGISTICS IN WRITING (INCLUDING FAX & EMAIL). THE
DEADLINES FOR QUARTERLY REVIEW SHALL BE NO LATER THAN THE FIRST DATE OF
EACH OPERATING QUARTER (I.E., JANUARY 1, APRIL 1, JULY 1, OCTOBER 1).
UNLESS BEING AGREED IN WRITING OTHERWISE, THE HIGHEST MONTHLY COST
WITHIN THE PREVIOUS OPERATING QUARTER SHALL BE DEEMED AS THE AGREED
MONTHLY SERVICE COST FOR THAT CURRENT OPERATING QUARTER.
(6) Other Services as Required:-
6.1 Labour Worker as required US$ [*]/ labor day; overtime: US$ [*]/ labor
hour
6.2 Non-Labour Worker as required US$ [*]/ man day; overtime: US$ [*]/ man hour
6.3 Pallets as required US$ [*]/pallet
6.4 Overflow Storage (All-in Rate) as required US$ [*]/ pallet: min 10 pallets (all-in rate)
6.5 Vanning/ Devanning as required US$ [*]
US$ [*]
6.6 Loading / Unloading (Truck) as required US$ [*] /CBM. min [*] CBM
6.7 Forklift Driver as required US$ [*]/[*] hours
____________________________
(1) Inclusive of dedicated facility for Netgear operations (approximately
30,000 sq. ft.), inventory management, basic value-added services,
utility and office expenses, RF enabled operations, IQC room, test
equipment maintenance but exclusive of overseas travelling expenses or
any other ad-hoc services.
(2) August 2001 actual representation.
(3) Facility expenses, IT & telecommunications expenses, distribution &
warehousing expenses, transportation, office supplies & other related
expenses.
(4) August 2001 actual representation.
Netgear, Inc. CONFIDENTIAL INFORMATION Page 19/20
CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
Netgear and Xxxxx Logistics Operating Agreement
EXHIBIT 3
TRANSPORTATION COSTS
Local Haulage Xxxx Xxxxx Container Terminal - Kerry facility in Xxxx Xxxxx
US$ [*]
US$ [*]
Local Truckage US$ [*]/CBM, min [*] CBM (excluding gate/toll, which will be charged back to
Netgear)
Netgear, Inc. CONFIDENTIAL INFORMATION Page 20/20
