Exhibit 10.1
Manufacturing Contract
This Manufacturing Agreement ("Agreement") is entered into this 27/th/ day of
August 1998 by and between Airspan Communications Limited having its place of
business at 0 Xxx Xxxxxx Xxxxxxx, Xxxxxxxxx. XX00 0XX Xxxxxxx. ("Customer") and
Flextronics International Sweden AB, Xxxxxxxxx 0, Xxxxx, Xxxxxxxxxx. Xxxxxx
("Flextronics").
Customer has created a market for Customer's Products and is solely responsible
for the sales and marketing of the Products. Flextronics has developed
processes and practices for manufacturing products for many different electronic
applications and at Customer's request desires to manufacture Customer's
Products in accordance with Customer's specifications. Customer acknowledges
that Flextronics' expertise is manufacturing and that Flextronics'
responsibility related to the Customer's Products is limited to this extent.
The parties agree as follows:
1.0 WORK, LICENSE
Flextronics agrees to perform the work (hereinafter "Work") pursuant to purchase
orders or changes thereto issued by Customer and accepted by Flextronics. Work
shall mean to procure components, materials and other supplies and to
manufacture, test, and assemble products (hereinafter "Products") pursuant to
detailed written specifications for each such Product which are provided by
Customer and accepted by Flextronics and to deliver such Products to a Customer
designated location. For each Product or revision thereof, written
specifications shall include but are not limited to xxxx of materials,
schematics, assembly drawings, test specifications, current revision number, and
approved vendor list (hereinafter "Specifications") as attached hereto.
Flextronics is granted by Customer a non-exclusive license during the term of
this Agreement to use all of Customer's patents, trade secrets and other
intellectual property required to perform Flextronics' obligations under this
Agreement.
Flextronics shall retain all intellectual property rights in manufacturing
processes developed by Flextronics but shall grant to Airspan a license on a
royalty-free basis without limit of time for all improvements made to the
Product by Flextronics.
2.0 FORECASTS, ORDERS, MATERIAL PROCUREMENT
2.1 Forecast. Customer shall provide Flextronics, on a two weekly basis, a
rolling six (6) month Product Forecast (including a call-off schedule).
2.2 Purchase Orders. The first four (4) months in the latest issued Product
Forecast issued by Customer, as described in Section 2.1, shall be considered as
a Purchase Order subject to Section 3.2. Each Purchase Order shall reference
this Agreement, and the applicable written Specifications as described in
Section 1.0. Purchase Orders shall not to be unreasonably withheld be binding on
Flextronics until accepted by Flextronics at its discretion. Flextronics shall
notify Customer of rejection of any purchase order within five (5) working days
of receipt of such order.
Customer may use its standard Purchase Order form to release items, quantities,
prices, schedules, change notices, specifications, or other notice provided for
hereunder. The parties agree that the terms and conditions contained in this
Agreement shall prevail over any terms and conditions of any purchase order,
acknowledgment form or other instrument.
2.3 Material Procurement. Customer's accepted Purchase Orders will constitute
authorization for Flextronics to procure, using standard purchasing practices,
the components, materials and supplies necessary for the manufacture of Products
("Inventory") covered by such purchase orders.
In addition, Customer authorizes Flextronics to purchase, in amounts beyond the
amount necessary to fill accepted purchase orders, the components, materials,
and supplies: i) with lead times greater than ninety (90) days at the time the
order is placed ("Long Lead Time Components") plus 30 days to account for the
order, shipment, receipt and manufacturing time and, ii) purchased in
quantities above the required amount in order to achieve price targets
("Economic Order Inventory"), and iii) purchased in excess of requirements
because of minimum lot sizes available from manufacturers ("Minimum Order
Inventory"). Together these are called "Special Inventory".
Flextronics may purchase Long Lead Time Components sufficient to meet all
deliveries under the purchase orders and forecast in effect at the time the
order with the supplier is placed, and may reasonably purchase Minimum Order
Inventory
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even if greater than the amount necessary to meet purchase orders and
forecast. Economic Order Inventory shall be purchased by Flextronics only with
the prior approval of Customer. Flextronics may, from time to time, hold Long
Lead Time Components and finished goods in inventory to increase customer
flexibility. The components and quantities of all such inventory will be
documented in a separate letter and signed by both Flextronics and Customer.
Customer expects diligent stock handling and control procedures including cycle
counting where necessary to maintain stock accuracy and hence reduce liability
to customer.
3.0 SHIPMENTS, SCHEDULE CHANGE, CANCELLATION
3.1 Shipments. All Products delivered pursuant to the terms of this Agreement
shall be suitably packed for shipment in accordance with Customer's
Specifications, marked for shipment to Customer's destination specified in the
applicable purchase order and delivered to a carrier or forwarding agent.
Shipment will be F.C.A. at which time risk of loss and title will pass to
Customer. All freight, insurance and other shipping expenses, as well as any
special packing expenses not included in the original price quotation for the
Products will be paid by Customer.
3.2 Quantity Increases and Shipment Schedule Changes. 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
table below:
1) Product in manufacture Change only by agreement
2) Product in preparation Reschedule with customer covering all
extraordinary costs by joint agreement
3) Product on schedule and no work in progress Reschedule within the bounds of component supply
If there are extra costs, as demonstrated in Appendix 2 to meet any schedule
change Flextronics will inform the Customer for its approval in advance of the
change. Changes in quantity or shipment date causing excess inventory in more
than thirty (30) days may be subject to an inventory carrying charge.
Furthermore, any changes in quantity and shipment date, within 30 days from
originally scheduled, may not subsequently be rescheduled within the next 30 day
period to thereby avoid charges for excess inventory, without the prior approval
of Flextronics. The inventory carrying charge shall be 1.25% per month for
inventory and Special Inventory procured to support the original schedule.
Excess inventory, as described in this Section, which is subject to carrying
charge, shall, upon request from Customer, be reasonably provable by
Flextronics. Excess inventory held by Flextronics for more than six (6) months
shall be purchased by Customer or disposed according to Section 3.3. .
Allowable quantity changes are subject to material disposition. Flextronics
will use reasonable commercial efforts to meet quantity changes.
In order to meet the Customer's flexibility in demands, the Customer may request
and identify Special Inventory to be procured and held by Flextronics in excess
of inventory required to meet the Product Forecast. The inventory carrying
charge for such Special Inventory shall be 1.25% per month.
3.3 Cancellation. Customer may not cancel any portion of Product quantity of
an accepted purchase order without Flextronics' prior written approval, not to
be unreasonably withheld. If the parties agree upon a cancellation, Customer
will pay Flextronics for Products, Inventory, and Special Inventory affected by
the cancellation as follows: (i) 100% of the contract price for all finished
Products in Flextronics' possession, (ii) 106% of the cost of all Inventory and
Special Inventory in Flextronics' possession excluding unrepairable production
reject and not returnable to the vendor or usable for other customers, whether
in raw form or work in process, less the salvage value thereof, (iii) 105% of
the cancellation cost of all Inventory and Special Inventory on order and not
cancelable, (iv) any previously approved, between Customer and Flextronics,
vendor cancellation charges incurred with respect to Inventory and Special
Inventory accepted for cancellation or return by the vendor, and (v) expenses
incurred by Flextronics related to labor and equipment specifically put in place
to support Customer's purchase orders.
Flextronics will use reasonable commercial efforts to return unused Inventory
and Special Inventory and to cancel pending orders for such inventory, and to
otherwise mitigate the amounts payable by Customer.
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.
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The customer may substitute a similar purchase order for the cancellation of an
existing purchase order by agreement of both parties.
3.4 Effect of Exchange Rates on material pricing. Variation in component
pricing due to currency fluctuations will be managed in good faith by Airspan
and Flextronics.
3.5 Backlog Recovery. Flextronics undertakes to provide suitable and timely
resources to accelerate the existing schedule to recover a backlog or lost time
position. Reasonable costs for such action will be allocated as follows:
a) Customer default and request Costs to be covered by the customer
b) Flextronics default Costs to be covered by Flextronics
4.0 ENGINEERING CHANGES
Customer may request, in writing, that Flextronics incorporate engineering
changes into the Product. Such request will include a description of the
proposed engineering change sufficient to permit Flextronics to evaluate its
feasibility and cost. Flextronics' evaluation shall be in writing and shall
state the costs and time of implementation and the impact on the delivery
schedule and pricing of the Product. If the change does not involve any company
outside of Flextronics Sweden then Flextronics will respond to the customer
within 3 working days. Flextronics will not be obligated to proceed with the
engineering change until the parties have agreed upon the changes to the
Product's Specifications, delivery schedule and pricing and upon the reasonable
implementation costs to be borne by the Customer including, without limitation,
the cost of Inventory and Special Inventory on-hand and on-order that becomes
obsolete. When the customer agrees to accept such costs detailed at that time,
Flextronics will implement the change immediately or in accordance to the
proposed schedule.
5.0 TOOLING, NON-RECURRING EXPENSES, SOFTWARE
Flextronics shall provide non-Product specific tooling at its expense. Customer
shall pay for or obtain and consign to Flextronics any Product specific tooling
and other reasonably necessary non-recurring expenses, to be set forth in
Flextronics' quotation. All software which Customer provides to Flextronics is
and shall remain the property of Customer. Customer grants Flextronics a
license to copy, modify and use such software required to perform Flextronics'
obligations under this Agreement. All software developed by Flextronics to
support the process tooling or otherwise shall be and remain the property of
Flextronics.
6.0 PRODUCT ACCEPTANCE AND WARRANTIES
6.1 Product Acceptance. The Products delivered by Flextronics will be
inspected and tested as required by Customer within thirty (30) days of receipt.
If Products are found to be defective in material or workmanship, Customer has
the right to reject such Products during said period. Products not rejected
during said period will be deemed accepted. Customer may return defective
Products, freight collect, after obtaining a return material authorization
number, not to be unreasonably withheld, from Flextronics to be displayed on the
shipping container and completing a failure report. Rejected Products will be
repaired or replaced at Flextronics' option and returned freight pre-paid. If
the Product is source inspected by Customer prior to shipment, Customer will
inspect goods within five (5) days of request date.
6.2 Express Warranty. Flextronics warrants that the Products will conform to
Customer's applicable Specifications and will be free from defects in
workmanship for a period of one hundred and eighty (180) days from the date of
shipment. Materials are warranted to the same extent that the original
manufacturer warrants the materials. This express warranty does not apply to
(a) materials consigned by Customer to Flextronics; (b) defects resulting from
Customer's design of the Products; or (c) Product that has been abused, damaged,
altered or misused by any person or entity after title passes to Customer. With
respect to first articles, prototypes, pre-production units, test units or other
similar Products, Flextronics makes no representations or warranties whatsoever.
Notwithstanding anything else in this Agreement, Flextronics assumes no
liability for or obligation related to the performance, accuracy,
specifications, failure to meet specifications or defects of or due to tooling,
designs or instructions produced or supplied by Customer and Customer shall be
liable for costs or expenses incurred by Flextronics related thereto. Upon any
failure of a Product to comply with the above warranty, Flextronics' 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 collect.
Customer shall return Products covered by the warranty freight pre-paid after
completing a failure report and obtaining a return material authorization number
from Flextronics to be displayed on the shipping container.
FLEXTRONICS MAKES NO OTHER WARRANTIES OR CONDITIONS ON THE PRODUCTS, EXPRESS,
IMPLIED, STATUTORY, OR IN ANY OTHER PROVISION OF THIS AGREEMENT OR COMMUNICATION
WITH CUSTOMER,
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AND FLEXTRONICS SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OR CONDITION OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
6.3 Production Yields. It is Flextronics intention to provide the customer with
a quality production service. Subject to agreement and a design for
manufacturability review Flextronics will trigger an investigation should solder
joint quality ppm figures exceed 150ppm.
7.0 PAYMENT AND DELIVERY TERMS, ADDITIONAL COSTS AND PRICE CHANGES
7.1 Price, Payment and Delivery Terms. The price for Products to be
manufactured will be set from time to time through purchase orders issued by
Customer and accepted by Flextronics. All prices quoted are exclusive of local
excise, sales, use and similar taxes, and any duties, and Customer shall be
responsible for all such items. Payment for any Products, services or other
costs to be paid by Customer hereunder is due thirty (30) days net from the date
of invoice and shall be made in SEK. If Customer is late with payments,
Flextronics may require prepayment or delay shipments or suspend work until
assurances of payment satisfactory to Flextronics are received. Customer shall
open, no later than 10 days after the signing of this document, a Bank
Guarantee, or such other guarantee acceptable to Flextronics, in an amount of
one and a quarter (1.25) million USD as separately detailed by and in favor of
Flextronics upon which this contract comes into force. The Delivery Terms are
Free Carrier (FCA) Flextronics factory in Karlskrona, Sweden, according to
INCOTERMS 1990.
Pricing will be calculated using the general model shown in Appendix 1,
demonstrating the negotiated 5% reduction in overall costs.
7.2 Additional Costs. Customer is responsible for (a) any expediting charges
reasonably necessary because of a change in Customer's requirements which
charges are preapproved, (b) any overtime or downtime charges incurred as a
result of delays in the normal production or interruption in the workflow
process and caused by: (1) Customer's change in the Specifications; or (2)
Customer's failure to provide sufficient quantities or a reasonable quality
level of consigned materials where applicable to sustain the production
schedule. Customer caused delays as a result of consigned inventory will result
in a special charge to the Customer of 1.25% of the sales price of the Product
for each month, or part thereof, delayed.
7.3 Price Changes. The price of Products to Customer may be increased by
Flextronics if the parties agree to the increase after good faith negotiation.
7.4 Cost Reductions. Flextronics agrees to seek ways to reduce the cost of
manufacturing Products by methods such as elimination of components, obtaining
alternate sources of materials,redefinition of Specifications, and improved
assembly or test methods. Upon implementation of such ways which have been
initiated by Flextronics, Flextronics will receive one hundred (100) percent of
the demonstrated cost reduction for a period of three (3) months and thereafter
fifty (50) percent of the demonstrated cost reduction for a further six (6)
months. Customer will receive one hundred percent of the demonstrated cost
reduction upon implementation of such ways initiated by Customer.
8.0 TERM AND TERMINATION
8.1 Term. The term of this Agreement shall commence on the date hereof above
and shall continue thereafter until terminated as provided in Section 8.2 or
10.9.
8.2 Termination. This Agreement may be terminated by either party for any
reason, with or without cause, upon one hundred and twenty (120) days
written notice to the other party. Termination of this Agreement shall not
affect the obligations of either party which exist as of the date of
termination. Upon termination for any reason whatsoever, Customer shall be
responsible for the finished Products, Inventory, and Special Inventory in
existence at the date of termination in the same manner as for
cancellations as set forth in section 3.3. Notwithstanding termination of
this Agreement, Sections 6.2, 9.0, and 10.1 shall survive said termination.
8.3 Insolvency In the event that one of the parties becomes insolvent, is
adjudicated bankrupt voluntarily or involuntarily files a petition of
bankruptcy , or becomes financially incapable of performing its obligations
in accordance with the terms of this agreement , and such involuntary
proceedings, insolvency or incapacity is not revoked ,stayed or discharged
within a thirty (30) day period , this agreement can be terminated without
notice.
8.4 Material Breach. In the event of a material breach of this agreement by
either party the aggrieved party shall by written notice to the other
party, give said party a thirty (30) day period in which to cure such
material breach. In
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the event such material breach has not been cured within the thirty (30)
day period the aggrieved party can terminated this agreement without
notice.
9.0 LIABILITY LIMITATION
9.1 Patents, Copyrights, Trade Secrets, Other Proprietary Rights. Customer
shall defend, indemnify and hold harmless Flextronics from all claims, costs,
damages, judgments and attorney's fees resulting from or arising out of any
alleged and/or actual infringement or other violation of any patents, patent
rights, trademarks, trademark rights, trade names, trade name rights, registered
design rights, unregistered design rights, copyrights, trade secrets,
proprietary rights and processes or other such rights in connection with the
performance by Flextronics of its obligations under this Agreement. This
excludes infringements not attributable to Airspan. Flextronics shall promptly
notify Customer in writing of the initiation of any such claims.
THE FOREGOING STATES THE ENTIRE LIABILITY OF THE PARTIES TO EACH OTHER
CONCERNING INFRINGEMENT OF PATENT, COPYRIGHT, TRADE SECRET OR OTHER INTELLECTUAL
PROPERTY RIGHTS.
9.2 Product Liability. Customer agrees that, if notified promptly in writing
and given sole control of the defense and all related settlement negotiations,
it will defend Flextronics from any claim or action and will hold Flextronics
harmless from any loss, damage or injury, including death, which arises from any
alleged defect in design, workmanship or materials of any Products. Customer
shall, if requested by Flextronics, name Flextronics as an additional insured
under Customer's product liability policies for any Products.
9.3 Limitation of Liability
9.3.1 Each party's maximum liability under this Agreement shall be limited to
the sum of $5M in respect of physical damage to or loss of tangible property,
and $5M in respect of all other events or any one event or series of connected
events.
9.3.2 Each party acknowledges that this is a commercial contract and that,
except as expressly set forth in this Agreement, neither party shall be liable
to the other party or any person or entity claiming through or under that other
party, directly or indirectly, for any loss or damage (whether direct, indirect,
general, special or consequential) sustained for any cause or reason whatsoever
relating to or arising out of the Product.
9.3.3 For the avoidance of doubt the "loss or damage" referred to in clause
above includes:
(i) any:
(a) loss of profits;
(b) loss of sales;
(c) loss of turnover;
(d) loss of bargain; or
(e) loss of opportunity; or
(ii) any indirect or consequential loss or damage howsoever
caused.
9.3.4 Each party ("the Indemnifying Party") shall indemnify and hold harmless
and defend the other party ("the Indemnified Party") and its respective
officers, directors, employees, representatives and agents from and against all
claims, demands, actions, suits, proceedings, writs, judgements, orders and
decrees brought, made or rendered against them or any of them and all damages,
losses and expenses suffered or incurred by them or any of them howsoever
arising out of or related to the breach by the Indemnifying Party of any of the
terms of this Agreement.][The Indemnified Party shall notify the Indemnifying
Party forthwith of any claim, demand, action, suit, proceeding, writ, judgement,
order or decree falling within the scope of this Section 9.3 and shall permit
the Indemnifying Party sole conduct of the same and shall provide reasonable
assistance in relation thereto, subject to the payment by the Indemnifying Party
of the Indemnified Party's reasonable costs and expenses.]
10.0 MISCELLANEOUS
10.1 Confidentiality. Confidentiality is attached to all information
exchanged between the parties except anything that is already in the public
domain at the time of disclosure, or which subsequently becomes part of the
public domain
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otherwise than by breach of this agreement. The party which receives such
Confidential Information agrees not to disclose it directly or indirectly to any
third party without the prior written consent of the disclosing party.
Confidential Information disclosed pursuant to this Agreement shall be
maintained confidential for a period of three (3) years after the disclosure
thereof.
10.2 Entire Agreement. This Agreement constitutes the entire agreement between
the Parties with respect to the transactions contemplated hereby and supersedes
all prior agreements and understandings between the parties relating to such
transactions. Customer shall hold the existence and terms of this Agreement
confidential, unless it obtains Flextronics' express written consent otherwise.
In all respects, this Agreement shall govern, and any other documents including,
without limitation, preprinted terms and conditions on Customer's purchase
orders shall be of no effect.
10.3 Amendments. This Agreement may be amended only by written consent of both
parties.
10.4 Independent Contractor. Neither party shall, for any purpose, be deemed
to be an agent, partner, or part of a joint venture of the other party and the
relationship between the parties shall only be that of independent contractors.
Neither party shall have any right or authority to assume or create any
obligations or to make any representations or warranties on behalf of any other
party, whether express or implied, or to bind the other party in any respect
whatsoever.
10.5 Expenses. In the event a dispute between the parties hereunder with
respect to this Agreement must be resolved by litigation or other proceeding or
a party must engage an attorney to enforce its right hereunder, the prevailing
party shall be entitled to receive reimbursement for all associated reasonable
costs and expenses (including, without limitation, attorneys fees) from the
other party.
Security Interest. Flextronics retains title of all products delivered to
Customer until the purchase price and all other charges payable to Flextronics
hereunder have been received in full.
10.7 Governing Law. This Agreement shall be governed by and construed under
the rules of the laws International Chamber of Commerce in the Hague. All
disputes arising in connection with this agreement shall be finally settled
under the Rules of Conciliation and Arbitration of the International Chamber of
Commerce in the Netherlands by three arbitrators appointed in accordance with
the said rules. The language of all arbitration's proceedings under this
agreement shall be English.
Neither party shall have the right to assign or otherwise transfer its rights or
obligations under this Agreement except with the prior written consent of the
other party, not to be unreasonably withheld.
10.9 Force Majeure. In the event that either party is prevented from performing
or is unable to perform any of its obligations under this Agreement (other than
a payment obligation) due to any Act of God, fire, casualty, flood, earthquake,
war, strike, lockout, epidemic, destruction of production facilities, riot,
insurrection, material unavailability, or any other cause beyond the reasonable
control of the party invoking this section, and if such party shall have used
its best efforts to mitigate its effects, such party shall give prompt written
notice to the other party, its performance shall be excused, and the time for
the performance shall be extended for the period of delay or inability to
perform due to such occurrences. Regardless of the excuse of Force Majeure, if
such party is not able to perform within ninety (90) days after such event, the
other party may terminate the Agreement. Termination of this Agreement shall not
affect the obligations of either party which exist as of the date of
termination.
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10.10 Notices. All notices made or required to be given will be in writing and
will be mailed, postage prepaid via certified letter to the addresses shown
below
Airspan Communications Ltd. Flextronics International Sweden AB
5 New Square Rombvagen 4
Feltham Verko
Middlesex TW14 8HA Karlskrona
England Sweden
Attention:__________________ Attention:__________________
ACCEPTED AND AGREED TO:
CUSTOMER: FLEXTRONICS INTERNATIONAL SWEDEN AB:
__________________________ ___________________________________
By:_______________________ By:________________________________
Title:____________________ Title:_____________________________
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