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Exhibit 10.10
[PLEXUS LOGO]
Confidential Materials omitted and filed separately
with the Securities and Exchange
Commission. Asterisks denote omissions.
COMPREHENSIVE PROFESSIONAL SERVICES AGREEMENT
This Agreement is hereby entered into on this 25th day of August, 1999 and
between Arrowpoint Communications, 000 Xxxxxxxxx Xxxx, Xxxxxxxx, XX
018886,(hereinafter "Customer") and Plexus Corp. of 00 Xxxxxxxx Xxxx Xxxxx,
Xxxxxx, XX 00000, (along with its wholly-owned subsidiaries Technology Group
Inc., and Electronic Assembly Corporation, hereafter collectively referred to as
"Plexus".)
A. PRODUCT DEVELOPMENT AND PROTOTYPE PHASE
The terms and conditions set forth in this Section A, Product Development and
Prototype Phase, as well as the terms and conditions set for in Section C,
Standard Terms and Conditions, shall be applicable to this portion of the
Agreement.
1. PROGRAM
Plexus will undertake for the Customer a Program (which includes a
Prototype Production Run) defined in the accompanying Proposal which
this Agreement is part of. The activity described in the accompanying
Proposal will be referred to as the "Program". Prototype Services
further include, but not limited to, assembly labor, parts,
manufacturing defect analysis "MDA" testing and printed circuit board
"PCB" layout.
a) At the Customers request, Plexus will provide a monthly detailed
engineering report showing progress of the agreed to Program and
schedule.
b) From time to time, Plexus and the customer may redefine, revise,
enlarge, amend, abandon, or undertake a new phase of activity as an
addition to the Program. These revisions to the Program shall be
defined in writing and agreed upon by both parties. Any additional
cost associated with the revisions shall be quoted by Plexus and
authorized by the Customer before work can proceed on them. Except
for appropriate changes in objectives, schedules and budgets, all
additional work shall be conducted under the terms of this
Agreement.
c) Unit cost estimates provided in this Proposal or during the course
of the Product Development Phase are not binding and are for
informal use only.
d) Sections B.1."Definitions" and B. h. regarding "Engineering Changes"
of this Agreement shall further apply to all Prototype Services
herein.
2. DRAWINGS, RECORDS AND MODELS
Customer agrees to provide to Plexus drawings, records and models,
assembly drawings, xxxx of materials, approved vendor list ("AVL") and
Gerber files. All records, sketches, original drawings, photographs,
prototypes, assembly drawings, xxxx of materials, AVL, Gerber files or
finished models and the use thereof are the exclusive property of the
Customer. Normally any such items, which are of continuing value to the
Customer, are returned to the Customer. In order to avoid questions
regarding value, the customer will issue written instructions to Plexus
within sixty (60) days following termination or completion of the
Product Development and Prototype Phase for the disposition all such
items. Plexus is authorized to determine the disposition of any such
items, which are not covered by written instructions.
At the completion of the Product Development and Prototype Phase, the
customer will receive hard copies and/or magnetic medium of the files
generated as a result of the Product Development and Prototype Phase.
These deliverables are described in the Proposal. Customer will be
responsible for maintaining the deliverables in a suitable environment.
Plexus will assume no responsibility for archiving the deliverables at
the completion
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of the Product Development and Prototype Phase, unless otherwise
negotiated or agreed upon between the parties.
3. COMMITMENT TO MANUFACTURE
Customer understands that PLEXUS desires to manufacture the product at
the end of the program. Customer understands that manufacturing of the
product by a competitor of PLEXUS is undesirable to PLEXUS. Should
Customer manufacture the product outside Customer's facilities,
Customer will work with PLEXUS in good faith to ensure that PLEXUS is
awarded the manufacture of the product. Manufacturing decisions will be
based on competitive analysis and capability requirements.
4. PROTOTYPE UNITS
Engineering and Pre-production Prototypes: During the Product
Development and Prototype Phase, Plexus may generate several versions
of the unit to verify design concepts. The number of prototypes and/or
pre-production units that Plexus will deliver to the Customer is
outlined in the body of the proposal. These prototypes may or may not
meet the requirements of the product specification. Once these units
are built, any modifications (hardware, software, or mechanical)
required as a result of further testing will be done by Plexus on a
time and material basis.
5. ON-GOING SUPPORT
At the conclusion of the Product Development and Prototype Phase of the
Program, Plexus and the Customer will jointly review the entire Program
to assure compliance with the Program Specifications. When this has
been completed, Plexus will notify the Customer in writing that this
Phase has been completed, and the Customer will have thirty (30) days
to respond by identifying errors or omissions they believe should be
corrected by Plexus under this Agreement. After that period, the
Customer requests for on-going support will be handled on a time and
materials basis at Plexus' then current billing rates.
6. COMPENSATION, CHARGES, AND BILLING
a) Unless other specific arrangements are agreed upon, Plexus will
invoice the Customer each month for services rendered up to the
total amount specified in the Proposal. Invoices are subject to
terms of NET AMOUNT DUE IN THIRTY (30) DAYS following the date of
the invoice.
b) The parties agree to work in good faith on prototype unit machine
and assembly labor rates in connection with this Agreement, which
shall be calculated in a manner and similar to the Parts and Labor
Pricing Estimate ("Pricing Model Estimate") set forth in Attachment
A, attached hereto and made a part hereof. The parties further agree
that this Pricing Model Estimate shall be used for estimating and
budgetary purposes only and that prototype pricing may change from
time to time due to market fluctuations, components pricing and
other variables.
c) Unless specifically stated to the contrary in the Proposal, the
following parts and/or services are not included in the base
Proposal and may be an additional billing monthly as costs are
incurred:
Parts, PCBs and freight which may be required for project,
breadboard and/or prototypes, which shall be calculated in a manner
and similar to the Parts and Labor Pricing Model Estimate ("Pricing
Model Estimate") set forth in Attachment A, attached hereto and made
a part hereof. The parties further agree that this Pricing Model
shall be used for estimating and budgetary purposes only and that
prototype pricing may change from time to time due to market
fluctuations, components pricing and other variables.
i. Tooling charges for custom components such as graphics,
plastics, metal, etc. - actual cost plus 10%.
ii. Telephone, fax, and travel expenses incurred by Plexus in
pursuing the customers objectives and directives - actual
cost.
iii. Any travel required by Plexus in pursuing the Customer's
objectives and directives will be billed at the normal hourly
rate of the personnel performing the work for the Customer,
with a maximum day billing of 8 hours plus any expenses
incurred.
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iv. Services of consultants or other outside personnel retained by
Plexus will be invoiced to the customer at a rate commensurate
with Plexus' in-house rates or actual cost plus 10%.
v. NRE and Tooling: Xxxx-up percentage on NRE is 10%.Plexus will
make reasonable efforts to minimize tooling and NRE charges
including competitive quoting. Customer has the right to
review NRE and tooling quotes. Customer has the right to
alternatively source NRE materials if NRE if pricing cannot be
mutually agreed upon between the parties.
7. PRODUCT DEVELOPMENT AND PROTOTYPE CANCELLATION
During the Product Development and Prototype Phase, Customer may cancel
this project upon providing forty-five (45) days written notice to
Plexus. In such an event, the Customer shall be responsible for all
expenses incurred through the effective date of cancellation,
including, but not limited to, all labor undertaken and all materials
purchases or ordered prior to said effective date.
8. ADVANCED PROCUREMENT OF COMPONENTS
Plexus may, at its sole discretion, with Customer approval, procure in
advance of Customer POs for assemblies, pursuant to the Prototype
Quantity Build for each top level and board level assembly, the
Components and/or the Long Lead Time Components, NCNR Components and/or
Special Components, as required for each top level and board level
assembly. Plexus shall purchase all components in accordance with
Customer's approved vendor list (AVL) exclusively. Any deviation from
the AVL must be authorized in writing by Customer prior to purchase by
Plexus.
B. MANUFACTURING PHASE
The terms and conditions set forth in this Section B, Manufacturing Phase, as
well as the terms and conditions set forth in Section C, Standard Terms and
Conditions, shall be applicable to this portion of the Agreement.
1. DEFINITIONS
For the purpose of this Manufacturing Phase:
"Long Lead Time Component(s)" shall mean all of those individual parts
and materials whose current lead times extend beyond forty (40)
business days. The Long Lead Time Components may, from time to time, be
reviewed by Plexus and Customer, at the request of either party due to
possible changes in market conditions of supply and demand affecting
the procurement by Plexus of the Components and/or Long Lead Time
Components for the assemblies hereunder. Any changes resulting from
such review shall be with the mutual written agreement of Plexus and
Customer.
"NCNR Component(s)" shall mean those parts that are not cancelable once
placed on order with Plexus suppliers, and are not returnable once
delivered to Plexus. The NCNR Component(s) may, from time to time, be
reviewed by Plexus and Customer, at the request of either party due to
possible changes in market conditions of supply and demand affecting
the procurement by Plexus of the Components and/or NCNR Component(s)
for the assemblies hereunder. Any changes resulting from such review
shall be with the mutual written agreement of Plexus and Customer.
"Special Component(s)" shall mean those parts that have special
procurement conditions such as limited change parameters or other
special liability conditions that are required by Plexus' suppliers.
The Special Component(s) may, from time to time, be reviewed by Plexus
and Customer, at the request of either party due to possible changes in
market conditions of supply and demand affecting the procurement by
Plexus of the Components and/or Special Component(s) for the assemblies
hereunder. Any changes resulting from such review shall be with the
mutual written agreement of Plexus and Customer.
"Monthly Rolling Quantity Forecast of Delivery Requirements" shall mean
the written documents provided to Plexus by Customer each month
indicating the delivery requirements projected for the next six
(6)months.
2. AUTHORIZATION OF WORK/PROCUREMENT OF MATERIALS
The following terms will apply:
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a) The purpose of this section is to define the methods under which
Plexus will procure materials to support manufacturing of product
for the Customer. The intent is to provide the Customer with
flexibility to alter and/or cancel schedules within a reasonable
period of time while at the same time minimizing Plexus liability
that is a result of those alterations and cancellations. In order to
offer the best possible price, Plexus does not attempt to build
unanticipated carrying charges into its price. When changes in
Customer requirements occur that cause Plexus to incur unanticipated
expenses that are the result of Customer actions, the Customer is
expected to reimburse Plexus for the costs incurred.
b) For each top level assembly and/or board level to be manufactured,
Plexus establishes a manufacturing lead time, which is the number of
business days it will take, on average, to receive and kit all
components, assemble, test and ship the lot. Unless otherwise noted,
this manufacturing lead-time is twenty (20) business days. Plexus
schedules all components for a particular lot of assemblies to
arrive one manufacturing lead-time prior to the Customer due date.
Plexus then uses this information, together with the Forecast and
Purchase Order information as defined below, to place commitments to
its suppliers for materials.
c) At the beginning of each month, Customer will provide a six (6)
month rolling Forecast of total requirements listing top level
assembly and/or board level assembly requirements by month. This
monthly rolling Forecast shall be used by Plexus to determine the
Components and/or the Long Lead-Time Components, NCNR Components
and/or Special Components that Plexus must obtain and/or procure
and/or inventory, and unless otherwise agreed to, Plexus will
negotiate pricing contracts with its supplier based upon the
Forecast. Changes from the previous month's Forecast are allowed to
the current Forecast as follows:
i) Current Month: No Change Allowed
ii) Second Month: Up to 50% reduction, to be negotiated in
lieu of Attachment B.
iii) Third Month: Up to 75% reduction, to be negotiated in
lieu of Attachment B.
iv) Fourth Month (and beyond): As required; increase or decrease
Changes in excess of these parameters may be mutually agreed to by
Plexus and Customer.
Changes to the monthly rolling Forecast may result in an excess
inventory position (due to component market conditions), the impact
for which is not considered in the original cost of the assembly. In
addition, Plexus may have to place orders for quantities of
components in excess of that required to support Customer
requirements. This may be as a result of minimum order size
requirements or standard package sizes from the supplier. In the
event that the monthly rolling forecast does not define component
consumption of sufficient magnitude to eliminate the excess
inventory within sixty (60) business days, Plexus will notify
Customer of its excess inventory position of Components and/or Long
Lead Time Components, NCNR Components and/or Special Components that
Plexus has procured and is inventorying and/or has on order with its
suppliers. Upon receipt of such notification, Customer will purchase
the excess inventory at Plexus' actual cost plus the agreed upon
quoted material markup. Payment terms are net thirty (30) days.
d) At the end of each quarter, Customer will issue Purchase Orders
("POs") for top level and/or board level assemblies in accordance
with, but not limited to, the monthly rolling Forecast of total
requirements. These POs will cover the next quarter's total
requirements. New pricing will actually take effect the second month
of the new quarter and run for three (3) continuous months.
e) Plexus shall procure in advance of Customer POs for assemblies,
pursuant to the monthly rolling Forecast for each top level and
board level assembly, the Components and/or the Long Lead Time
Components, NCNR Components and/or Special Components, as required
for each top level and board level assembly. Plexus shall purchase
all components in accordance with Customer's approved vendor list
(AVL) exclusively. Any deviation from the AVL must be authorized in
writing by Customer prior to purchase by Plexus.
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f) Customer may request that Plexus purchase from Customer certain
components that the Customer has in its inventory as a result of the
transfer of new business to Plexus. Plexus and Customer will
negotiate in good faith to determine pricing and title transfer of
such inventory. In addition, open component purchase order(s) with
Customer's suppliers may be transferred to Plexus upon mutual
agreement.
g) Customer will communicate a monthly Production Schedule to Plexus
outlining the top level assembly and/or board level production
requirements. The Production Schedule will be firmed for the current
month fifteen (15) business days prior to the start of that month,
will be within Forecasted quantities, and have a six (6) month
rolling horizon. Changes to the Production Schedule are allowed as
follows:
(1) Current Month: No Change Allowed
(2) Second Month: Up to 50% reduction, to be negotiated
in lieu of Attachment B.
Third Month: Up to 75% reduction, to be negotiated
in lieu of Attachment B.
(3) Fourth Month (and beyond): As required; increase or decrease
Changes to the Production Schedule within the current month may be
mutually agreed to by Plexus and Customer.
i) At any time during the current month, Customer may exercise an
increase or decrease in delivery requirements (Flexibility
Quantity). This Flexibility Quantity is limited to a maximum
accumulation of the Flexibility Percentage outlined in
Attachment B for each top level and board level assembly, for
the current month's production based on the average of the
current sixty (60) business days of the Forecast. This
Flexibility Quantity will be available within ten (10)
business days of the Customer request. Additional Flexibility
Quantity may be mutually agreed to by Plexus and Customer. Any
finished goods inventory (FGI) at the end of the current month
will be netted from the Forecast in accordance with the change
provisions of this Agreement. Unless otherwise noted, any
remaining FGI at the end of the quarter will be shipped to
Customer on the last business day of the last month of the
quarter.
ii) For Production Schedule decreases issued within the current
month beyond the allowable Flexibility Quantity decrease, the
Customer will either:
(1) Accept shipment of the completed assemblies within the
current month as originally scheduled: or
(2) Pay full price and accept title and risk of loss for
completed assemblies and any work in process materials and
labor
iii) For Production Schedule decreases issued outside the current
month and beyond the allowable Production Schedule decrease
parameters, the Customer will:
(1) Pay for and accept title and risk of loss for the value of
the components (cost plus the agreed upon quoted material
markup) which Plexus is unable to return or reschedule to
meet the new schedule requirements, and
(2) Pay Plexus for any additional cost from suppliers
resulting from the prescheduling.
iv) For Production Schedule increases beyond the allowable
Flexibility Quantity, Plexus will make its best effort to
obtain the components necessary to meet Customer requirements.
However, Plexus may be unsuccessful in obtaining all of the
components required to meet the Customer's increased
requirements. In that situation, Plexus reserves the right to
Customer payment of the value of all inventory in house as of
the delivery date that is a result of the increased
requirement.
h) The term "Engineering Change(s)" (hereinafter called "EC" or "EC's")
shall mean those mechanical, software, or electrical design and/or
specification and requirement changes which, if made to the
assemblies to be delivered hereunder, would affect the schedule
performance, reliability, availability,
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serviceability, appearance, dimensions, tolerance, safety or
purchase price of such assemblies or which would require additional
approval test.
Plexus may determine that Engineering Changes will affect its
ability to maintain the delivery schedule, due to the lead time of
newly specified parts and/or the impact of substantial rework or
modification. Under these circumstances, Plexus reserves the right
to define a new Production Schedule for delivery and treat this as a
Production Schedule change, with the Customer liability as defined
under section 2e above.
Upon receipt, Plexus shall review Customer's proposed EC and Plexus
shall give to Customer a written evaluation of the EC, stating
Plexus' cost to implement the EC (including the cost to modify any
tooling), the excess quantity of Components and/or Long Lead Time
Components, NCNR Components and/or Special Components Plexus has
inventoried and/or has on order with its Components and/or Long Lead
Time Components, NCNR Components and/or Special Components suppliers
that are excess due to the EC, and associated costs and expenses
such Components and/or Long Lead Time Components, NCNR Components
and/or Special Components that Customer shall be liable for and the
cost savings, if any, resulting from the EC, and the expected effect
on the Production Schedule, availability and/or purchase price of
such assemblies, or which may require additional approval tests by
Customer. Plexus will submit its written evaluation to the Customer
within five (5) business days after receipt of the proposed EC, or
in conjunction with Customer's stated timeframe (if possible).
i) The Customer may provide certain components required to build
Customer's assemblies. The Customers inability to provide parts in a
timely manner may effect Plexus's ability to meet its delivery
schedule and may cause Plexus to incur extraordinary expenses to
hold Plexus purchased material and/or labor in process. Under these
circumstances, Plexus reserves the right to define a new Production
Schedule for delivery based upon component availability information
from the Customer and treat this as a Production Schedule change,
with the Customer liability as defined under section 2e above.
j) Customer may cancel requirements defined in orders and/or forecasts
at any time before the scheduled delivery date. Any assembly
requirements canceled within the manufacturing lead-time of the
scheduled delivery date will be invoiced at the full agreed to price
for the completed assembly.
For assembly requirements canceled outside the manufacturing lead
time of the scheduled delivery date, Customer's liability to Plexus
will be the value of the components in Plexus's inventory (including
the full markup as defined in the Plexus quotation), and other
components for which Plexus has liability but which are not in
Plexus inventory, as well as payment for any and all in-process
manufacturing costs and expenses, and reasonable administrative
costs and expenses. Plexus will deliver an itemized list of these
costs to customer. Customer agrees to pay the costs identified by
Plexus within thirty (30) calendar days of notification of such
costs. To help minimize the impact of cancellation charges, Plexus
will attempt to restock components at the supplier, resell the
components, and/or utilize the components on non-customer
assemblies.
k) Reporting requirements are identified in Attachment C.
l) Cost Reduction: Cost Reductions will be agreed to quarterly. Plexus
initiated cost reductions will be shared 50/50 for 6 months.
Customer initiated reductions will be passed through at full value.
Actual cut-in reduction will based upon, at minimum, inventory at
Plexus and committed on-order Product with Plexus's supplier.
m) Customer Property: Tooling and consigned material - Plexus has the
responsibility to have proper security, insurance, and material
storage.
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n) Packaging and Shipping:
i. Product will be shipped to the customer in a manner that meets
industry standard packaging requirements. Plexus is not liable
for design related packaging issues but is liable for products
improperly packaged. Plexus is responsible for the selection
of the shipping company unless otherwise directed.
ii. Distribution Services: Plexus will provide Customer with
"Direct Ship" Distribution Services for the specified
product(s) identified in Attachment E, attached hereto and
made a part hereof. Prior to expanding these services for
additional product(s), Plexus and Customer must review and
mutually agree upon written changes to this Agreement.
Upon manufacturing completion of Direct Ship product, Plexus
will invoice Customer and identify/store product as Customer's
Finished Goods Inventory in a segregated location in the focus
factory. Consequent to the invoice transaction, Customer
assumes complete title, liability, and ownership of the
Customer's Finished Goods Inventory, which includes insurance
coverage and loss of product. Plexus assumes no liability for
Customer's Finished Goods Inventory on the premise or in
transit.
Immediately following the invoice transaction, Plexus will
"receive" Direct Ship product onto Customer's computer system
(Great Plains.) Customer to provide completely functional
computer terminals, with applicable hardware and software,
dedicated printer, and access to Customer's computer system.
Additionally, Customer will provide necessary training and
on-going computer support.
When Plexus receives signal to direct ship product, Plexus
will complete appropriate actions and transactions on
Customer's computer system to package, per specifications, and
ship product. Plexus to ship product 3rd party collect. Plexus
will guarantee same business day shipment of product for
domestic locations, if signal is received prior to 2:00 p.m.
CST. For signals received after 2:00 p.m. CST, Plexus will
make every effort to ship domestic locations the same business
day, but will guarantee next business day shipment. Plexus
will guarantee shipment of product for all international
locations within two (2) business days.
The cost to provide these Direct Ship Distribution Services
will be included in the unit price of each assembly shipped.
Payment terms and conditions shall be pursuant to this
Agreement.
Any EC's that will require re-work and/or upgrade for Customer
Finished Goods Inventory shall be the sole liability of the
Customer and follow standard re-work/upgrade policies and
procedures as specified in this Agreement.
o) Testing Inspection and Acceptance: All products will be tested to
the agreed upon process. Customer reserves the right to perform
periodic audits or source inspection. Customer also reserves the
right to hold product for non-conformances. The two companies must
agree upon target test yield goals and implement a process to
achieve those goals. Customer will pay for special pilot or
pre-production builds. Plexus and Customer will need to agree upon a
sample size in conducting a post pack audit. Plexus and Customer
must also agree to the sample size for on-going reliability testing.
p) The parties may conduct a mutual review of component pricing,
material markup, and labor on a quarterly basis. The estimated
quantity of Products is a factor used to determine unit pricing. In
the
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event of a significant quantity change, either increasing or
decreasing the estimated quantity of Products, the parties agree to
evaluate and negotiate the impact and timing of unit price
adjustments.
3. PRICING AND PAYMENT
As full compensation for the assemblies provided by Plexus hereunder
and its obligations contained herein, Customer will make payments
subject to terms of NET AMOUNT DUE THIRTY (30) DAYS following the date
of the invoice. Unless stated otherwise, prices quoted are F. O. B.
Plexus manufacturing facility. Unless specifically stated otherwise,
all quoted prices are firm for thirty (30) days from the date of
quotation. Quotations are based on drawings, specifications, and other
written information available to Plexus at the time of quotation. Any
additional data supplied at the time of purchase may necessitate price
adjustments. Any manufacturer's tax, retailer's occupation tax, use
tax, sales tax, excise tax, or tax of any nature whatsoever imposed on
or measured by the transaction between Plexus and Customer shall be
paid by the Customer in addition to the prices quoted or invoiced. In
the event Plexus is required to pay such tax, the Customer shall
reimburse Plexus therefore, within ten (10) days of written demand by
Plexus to the Customer for such reimbursement. If the transaction
between Plexus and the Customer is exempt from all such taxes, Customer
shall provide Plexus with a tax exemption certification or other
document acceptable to all taxing authorities at the time the order or
contract is submitted. The parties further agree to the credit terms
and conditions set forth in Attachment D, attached hereto and made a
part hereof. Plexus and Customer will review the status of deposit and
credit history on a regular basis; and, after sufficient credit history
is established by the Customer, Plexus will remove the credit
restrictions set forth in Attachment D, and all business shall resume
subject to the payment terms and provisions set forth in this Section 3
above.
4. WARRANTY
PLEXUS EXPRESSLY WARRANTS THE WORK AS SET FORTH HEREIN. PLEXUS MAKES NO
OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED (INCLUDING WITHOUT
LIMITATION WARRANTIES AS TO MERCHANTABILITY OR FITNESS FOR PARTICULAR
PURPOSES). IN ADDITION, THE FOLLOWING SHALL CONSTITUTE THE EXCLUSIVE
REMEDIES FOR CUSTOMER FOR ANY BREACH BY PLEXUS OF ITS WARRANTIES
HEREUNDER.
Plexus warrants the assemblies against all defects in: (a) workmanship
- where the assemblies do not conform to the agreed upon manufacturing
specifications, for a period of fifteen (15) months from date of
shipment, provided agreed upon testing is conducted by Plexus prior to
shipment, except as set forth below; and (b) turnkey components - the
warranty period provided by the component manufacturer to Plexus or
Customer, to the extent possible or allowed by the component
manufacturer. Plexus will not be liable for component failures beyond
the manufacturer's warranty unless failures are determined to be caused
by the sole negligence of Plexus and as a result of Plexus's
manufacturing process. Plexus shall repair or replace, at Plexus's
option and free of charge, any portion of the assemblies which is
returned to Plexus's factory securely packaged, insured and with
freight pre-paid within the warranty period, and which upon examination
Plexus determines in its sole discretion to be defective in
workmanship. Plexus will return the repaired or replaced assemblies to
customer with freight pre-paid.
Plexus is responsible for determining root cause of any defective
assemblies, and will work with Customer and material supplier to
develop corrective actions. Customer and Plexus will work cooperatively
in pursuing corrective action if a third party is determined to cause
failures. In the event Customer and Plexus are unable to reach an
agreement for a resolution of a deficiency caused by a third party,
then Plexus will recommend the final solution and/or corrective action
plan to remedy any defect caused by such third party. Plexus will allow
Customer to participate in any discussions with such third party as
requested.
This Warranty does not apply to:
a) Design deficiencies. Plexus expressly disclaims any warranty
responsibility for design deficiency, and for infringement for the
like.
b) Any modifications and/or alterations made to the Assemblies, or any
portion thereof, without the express written authorization of Plexus
obtained in advance. If this is the case, all warranties made herein
are invalid and Customer shall have no further remedies hereunder
against Plexus.
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c) Any defect, loss or damage resulting from theft, loss, fire, misuse,
abuse, negligence, vandalism, acts of God, accident, casualty, power
failures or surges, alteration, modification or failure to follow
installation, operation or maintenance instructions, or any other
cause beyond Plexus's reasonable control.
d) Any defect, unless written notice of the defect is given by the
Customer to Plexus as soon as practical after the defect first
appears. The right to make a claim under this warranty expires
fifteen (15) months from the date of shipment. Actions taken by
Plexus to correct any defect shall not extend beyond this period.
e) Components incorporated into the assemblies.
IN NO EVENT, REGARDLESS OF CAUSE, SHALL PLEXUS BE LIABLE FOR
INCIDENTAL, INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES OR LOSSES OF
ANY KIND, WHETHER IN CONTRACT OR IN TORT, ARISING FROM ITS PERFOMANCE
UNDER THIS AGREEMENT.
5. TEST EQUIPMENT
Unless otherwise noted, any test equipment quoted herein is warranted
to be free from defects in material and workmanship for a period of one
(1) year from the date of certification, provided Customer agrees that
Plexus shall be entitled to use its own preferred Supplier for purposes
of this section relating to test equipment and/or material.
After the warranty period the equipment will be repaired on a time and
materials basis. Labor will be charged at the current billing rate.
Parts will be charged at cost plus 25%. Travel expenses will be added
to any repairs including travel between Plexus and/or one of its
affiliates. All dedicated test/burn in fixtures will be progress billed
monthly up to 95% of the program cost. The remaining 5% is due upon
fixture certification.
6. DOCUMENTATION
The Customer is responsible for supplying Plexus with complete
documentation. This includes, at a minimum, (three) 3 complete and
current sets of documentation including, at a minimum, all prints,
softwares, artwork, and xxxx of materials with manufacturer and part
number, and any specifications, including test specializations or
procedure, called for on any customer prints. It is the Customer's
responsibility to assure that Plexus receives timely notification of
any changes to the documentation, and updated prints reflecting the
changes.
7. TOOLING
All tooling produced or obtained for the assemblies delivered hereunder
and paid for by Customer shall become and remain the property of
Customer at the time payment in full is received for the tooling by
Plexus. Such tooling shall be used by Plexus only for the benefit of
Customer, and shall be delivered to Customer upon request. If Customer
requests the return of any tooling from Plexus and Plexus determines
the return of such tooling prevents Plexus from providing the
assemblies to Customer, then Plexus shall inform Customer in writing,
and Customer and Plexus shall negotiate a mutually acceptable
resolution.
Customer, at its sole discretion, may consign to Plexus, items,
including, but not limited to, materials and/or equipment relating to
the production and/or testing of the assemblies at Plexus's location.
The material and/or equipment shall be utilized by Plexus only for the
production and/or testing of the assemblies. Customer shall assist
Plexus in installing the materials and/or equipment and shall provide
training and maintenance instructions, if requested by Plexus or
required by Customer. Customer shall be responsible for repairing,
upgrading, replacing and/or maintaining the materials and/or equipment
consigned to Plexus. However, Plexus shall provide routine maintenance.
All tooling quoted herein is quoted at the cost to Plexus from its
suppliers. A procurement charge of 10% will be added to all tooling
with a cost of less than $5,000, and a 5% procurement charge added to
all tooling with a cost of $5,000 or greater.
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8. TERMINATION AND CANCELLATION OF MANUFACTURING PHASE
During the Manufacturing Phase, either party shall have the right to
terminate any or all activities under this agreement for any reason and
at any time upon ninety (90) days prior written notice to the other
party. Plexus agrees to immediately terminate the specified activity
pursuant to this Agreement upon termination or cancellation. If this
entire Agreement is terminated, all existing Customer POs shall be
deemed to have been canceled unless otherwise specified by Customer.
Customer agrees to reimburse Plexus for unrecovered expenses. In
addition, Customer and Plexus shall negotiate a settlement of charges,
if any, for reasonable and allowable expense directly incurred by
Plexus including, but not limited to, manufacturing process ramp down
costs and packaging and transportation costs and expenses, and the
return to Customer of any Customer owned material(s), tools, equipment
and/or any other related items, consistent with Section B2, above.
If this entire agreement is terminated, then Plexus shall:
a) Deliver to Customer all completed assemblies which conform to the
applicable and then current specifications and requirements; and
b) Return to Customer, at Customer's expense, all tooling, equipment,
Components and/or Long Lead Time Components, drawings,
specifications, documentations and supplies that are owned by
Customer pursuant to the Agreement; and
c) Prepare and submit to Customer an itemized document to include the
quantity of assemblies in the production process.
Upon such termination, all existing Customer POs shall be deemed to
have been canceled unless otherwise specified by Customer and Customer,
agrees to reimburses Plexus for unrecovered expenses, consistent with
section B2, above.
C. STANDARD TERMS AND CONDITIONS
The terms and conditions set forth in this Section C, STANDARD TERMS AND
CONDITIONS shall be applicable to both the Product Development and Prototype
Phase and the Manufacturing Phase of the Agreement.
1. MUTUAL COOPERATION
Plexus represents that it will pursue the Agreement to the best of its
ability and in the best interest of the Customer, and the Customer
represents that it will cooperate with Plexus in reaching the
objectives of the Agreement. Plexus and Customer will mutually agree on
the appointment of a project manager for the duration of the Agreement.
Plexus will require the Customer to establish one person to coordinate
all activities through. In the event that the project manager is not
operating in the best interest of the Customer, the Customer shall
contact Plexus to discuss Agreement related concerns and/or complaints.
2. CONFIDENTIAL INFORMATION
Plexus will use its best efforts to prevent the disclosure of any
confidential information, unless specifically instructed otherwise in
writing by the Customer, and excepting in such instances where Plexus
may be compelled by law to make disclosures. The mechanisms for
controlling and processing confidential information may be covered
under a separate Confidential Disclosure Agreement (if required).
3. FORCE MAJEURE
Plexus shall not be liable for any delay in or failure of performance
under this agreement due to any contingency beyond Plexus's control,
including, but not limited to, an act of God, war, insurrection, fire,
riot, strike or labor dispute, sabotage, act of public enemy, flood,
storm, accident, equipment failure, inability to obtain suitable or
sufficient labor or material, laws or regulations, or any other cause
beyond its reasonable control.
4. INTELLECTUAL PROPERTY RIGHTS
All patents, copyrights, trademarks, or other rights pertaining to
inventions, developments, or improvements made in the course of the
work are the property of Customer. Plexus will, upon written direction
from Customer, execute any and all papers and documents prepared or
submitted by Customer as may be reasonably
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required to transfer or secure to Customer full title and authority
over such rights. Plexus will be compensated by Customer for time and
expense as incurred in this obligation at the then current billing
rates for those of its employees necessary for these purposes.
Customer agrees that it shall assume all responsibility for determining
whether the assemblies to be designed and assembled infringe on any
patent, copyright or trademark, and Customer shall indemnify and hold
harmless Plexus from any liability, including legal costs and expenses,
damages and attorney fees arising from any claim demand or suit,
including a claim by Customer, based on allegations or claims that the
assemblies or any design, patent, copyright, or trademark sought to be
obtained or obtained by Customer as a result of this agreement
constitutes an infringement of any patent, trademark or copyright of
the United States or any foreign county.
In the event any such claim or suit is asserted or instituted against
Plexus, Plexus shall promptly notify Customer of the assertion of any
such allegation or claim. Customer shall thereupon assume
responsibility for and conduct the defense of each assertion or suit at
its expense, and reasonable information and assistance for the defense
of same shall be provided by Plexus for which Plexus will be
compensated for time and expenses at its then current billing rate.
Plexus shall have the right, at its expense, to be represented in the
defense of any such assertion or suit by counsel of its own selection.
The prices quoted do not include, unless specifically stated otherwise,
the cost for testing and/or submittals for assembly approvals or any
annual file maintenance fee, such as for UL, VDE, CSA or FCC. Plexus
will assist Customer in obtaining such approvals and charge for same
services at Plexus's current hourly billing rate.
5. LIABILITY AND INDEMNIFICATION
Plexus will use its discretion to pursue the Agreement in the best
interest of Customer. Plexus will be under no liability to Customer or
otherwise for its choice of methods employed, the character or tests
and experiments performed, the results obtained, nor for the use which
shall thereafter be made by Customer of such results. IT IS UNDERSTOOD
THAT OTHER THAN THE WARRANTY SET FORTH IN SECTION B4, NO OTHER
GUARANTEES OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARE GIVEN BY
PLEXUS, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE. PLEXUS SHALL NOT BE LIABLE FOR ANY
INDIRECT, INCIDENTAL OR CONSENQUENTIAL DAMAGES (INCLUDING LOST PROFITS)
SUSTAINED OR INCURRED IN CONNECTION WITH THIS AGREEMENT.
Customer will fully indemnify and hold harmless Plexus from any and all
liability, claims demands, costs and expense arising out of the use,
publication, and/or marketing of the results of Plexus's efforts, the
functioning of the assemblies or the product(s) which they are a part
of, or any other matter resulting from Plexus's performance under this
Agreement, whether such liability, claims or demands be in the nature
of patent, trademark or copyright infringement, public or product
liability, contract liability, or otherwise during or following the
terms of this Agreement, and Customer shall, at its own expense, defend
any and all such actions based thereon and shall pay all attorney's
fees and cost and other expenses arising therefrom.
Plexus will not be liable for errors, or expenses which may be incurred
in its performance of this work which results from the engineering
and/or design of the Assemblies, or from Plexus's reliance upon
information, technological records, sketches, drawings, or prototypes
furnished by Customer or Customer's design engineering firm. Customer
will forthwith, during the term of this Agreement, notify Plexus of any
and all information, technology changes, or other facts relevant to any
aspect or phase of the Agreement.
6. YEAR 2000 ("Y2K")
Customer shall maintain systems and procedures that ensure that all
assemblies delivered by Plexus shall conform to purchase order
requirements and shall not be affected by the transition from the year
1999 to the year 2000 (Year 2000 Compliance.) Customer agrees that if
any Special Tooling and/or Equipment is supplied by Customer, Customer
warrants that: (i) the operation of such deliverables on or after
January 1, 2000, without limitation to date, shall in no way be
different from their operation prior to that date; and (ii) such
deliverable will be able to process, store, record and present data
containing dates in the Year 2000, and thereafter without limitation as
to date, in the same manner as data containing dates prior to the year
2000. Plexus assumes no
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liability for, nor will bear any additional costs relating to
assemblies that are not Year 2000 compliant. Customer agrees to
indemnify and hold harmless Plexus from any and all liability, claims,
demands, costs and expenses arising from Customer's non-compliance with
Year 2000. Customer further agrees, at its own expense, to defend any
and all such actions based on such non-compliance and shall pay all
attorney's fees and costs and other expenses arising therefrom
including reimbursement to Plexus for any expenses or costs related
thereto. Plexus shall not be liable for errors, or expenses which may
be incurred from Plexus's reliance upon Customer's compliance with Year
2000.
Upon request by Plexus, Customer agrees to provide written
certification to Plexus by completing a "Certification Notice",
certifying: (1) the operating systems used by Customer will operate
satisfactorily and will not be affected by the transition from the year
1999 to the year 2000; (2) issues relating to Year 2000 compliance will
not interrupt the flow of Products (including goods and services) from
Plexus to Customer; (3) Plexus delivery of Products will not cause
Plexus to bear any additional costs to facilitate operating without
interruption and (4) Customer will meet Plexus deadline of September
30, 1999 to be fully Year 2000 compliant.
7. CONSENT TO JURISDICTION AND APPLICABLE LAW
The parties hereby irrevocably submit to the jurisdiction of the courts
of the State of Wisconsin in any action or proceeding arising out of or
relating to this Agreement, and the parties hereby irrevocably agree
that all claims in respect of such action or proceeding may be
determined by such courts. The parties hereby waive, to the fullest
extent possible, the defense of an inconvenient forum to the
maintenance of such action or proceeding, and the parties agree that a
final judgement in any action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgement or in any
other matter provided by law.
The parties hereby agree that this Agreement shall be governed by and
will be construed in accordance with the laws of the State of
Wisconsin, irrespective of the conflicts of laws provisions thereof.
8. NO RECRUITING
Plexus and the Customer agree that during the term of this program and
for twelve (12) months thereafter, it shall not solicit or recruit
(even through professional recruiters) the employees of the other. This
shall not preclude an employee of either Plexus or the Customer from
independently pursuing and securing employment opportunities with the
other on such employee's own initiative.
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9. ENTIRE AGREEMENT
This Agreement, along with the proposal, and Confidential Disclosure
Agreement and/or quotation (if any) and Plexus's invoices, contains the
entire understanding of the parities pertaining to the subject matter
hereof, and no other agreements, oral or otherwise, shall be deemed to
exist or to bind the parties. Notwithstanding anything to the contrary
contained herein, the parties hereto agree that the terms and
conditions set forth herein and in Plexus's invoices, proposal and
Confidential Disclosure Agreement (if any), shall supersede any and all
terms and conditions submitted by the Customer in any document,
including but not limited to any terms and conditions contained in the
Customer's purchase order. This agreement may not be modified or
terminated orally, and no claimed modification, termination, or waiver
shall be binding unless in writing and signed by both parties.
Accepted and agreed to:
CUSTOMER: PLEXUS:
ARROWPOINT COMMUNICATIONS
ENGINEERING AUTHORIZATION:
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------- -----------------------
Xxxxxxx X. Xxxxxxxxx
Title: Vice President of Manufacturing Title: Executive Vice President
----------------------- -----------------------
Date: 8/26/99 Date: 9/17/99
----------------------- -----------------------
MANUFACTURING AUTHORIZATION:
By: /s/ Xxxxx Xxxxxxxx
-----------------------
Xxxxx Xxxxxxxx
Title: Vice President
-----------------------
Date: 9/20/99
-----------------------
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Confidential Materials omitted and filed separately with the Securities and
Exchange Commission.
Asterisks denote such omission.
ATTACHMENT A
PROTOCENTER PARTS/LABOR PRICING MODEL ESTIMATE
1. Parts/materials-xxxx-up (reduced from our standard rate of 25%):
PROTOCENTER
--------------------
CS100 [**]
--------------------
CS800 [**]
2. Labor Estimating Model for machine and assembly. Note that this Pricing
Model Estimate is for estimating purposes only and that prototype pricing could
drastically change if there are changes to components, board size, density,
complexity, layers, or unknown technologies. Set-up cost play a significant role
in prototype builds, therefore the quantity involved is also a significant
factor.
ASSUMPTIONS LARGE BOARD SMALL BOARD
---------------------- -----------------
SIMILARITY SWITCH FAB XXXXXXX
---------------------- -----------------
DELIVERY 5 DAYS 5 DAYS
---------------------- -----------------
QTY. OF BUILD 25 25
---------------------- -----------------
SIZE 10 X 14 6 X 8
---------------------- -----------------
QTY. COMPONENTS 2,200 500
---------------------- -----------------
QTY. UNIQUE PARTS 160 50
---------------------- -----------------
QTY. NETS (APPROX.) 5,000 1,500
---------------------- -----------------
QTY. BGA'S 10 2
---------------------- -----------------
QTY. PRESS FITS 1 1
---------------------- -----------------
QTY. SOT'S 120 42
---------------------- -----------------
SMT BOTH SIDES BOTH SIDES
---------------------- -----------------
PTH SINGLE SIDE SINGLE SIDE
---------------------- -----------------
MDA TEST NOT INCLUDED NOT INCLUDED
---------------------- -----------------
PRICE PER BOARD
QTY 10 UNITS [**] [**]
QTY 25 UNITS [**] [**]
Lead Time Delivery Adjustment Multipliers
----------------------- ----------------------
Lead Time Multiplier
----------------------- ----------------------
3 days 1.200
----------------------- ----------------------
5 days 1.000
----------------------- ----------------------
12 days 0.915
or greater
----------------------- ----------------------
Note: In some cases, 50 piece builds may not be possible to complete due to
production limitations.
This Pricing Model Estimate is provided herein only for the convenience of
Arrowpoint to use for estimating future prototypes. MDA Test will be quoted on a
case by case basis.
3. MDA Takaya Testing (reduced from our standard rate of $125 per hour)
shall be $100 per hour.
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ATTACHMENT B
FLEXIBILITY PERCENTAGES PER ASSEMBLY
TO BE DETERMINED AT A LATER DATE BY MUTUAL AGREEMENT BETWEEN THE PARTIES.
CUSTOMER: J. K. W. 8/26/99 PLEXUS: C. W. 9/20/99
---------------- -------------
INITIAL/DATE INITIAL/DATE
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ATTACHMENT C
REPORTING REQUIREMENTS
TO BE DETERMINED AT A LATER DATE BY MUTUAL AGREEMENT BETWEEN THE PARTIES.
CUSTOMER: J. K. W. 8/26/99 PLEXUS: C. W. 9/20/99
---------------- -------------
INITIAL/DATE INITIAL/DATE
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ATTACHMENT D
March 3, 1999
Ms. Xxxxx Xxxxxxx
ArrowPoint Communications
000 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Dear Xxxxx,
I just wanted to follow up on the agreements we have reached verbally regarding
the credit arrangement between Plexus Electronic Assembly Corporation and
ArrowPoint Communications.
1) ArrowPoint Communications, upon request from Electronic Assembly Corporation,
will provide to Electronic Assembly Corporation, confirmation of the available
cash balances under ArrowPoint's control. Such confirmation shall be from the
bank or investment firm in which the funds are held.
2) ArrowPoint will provide quarterly financial statements to Electronic Assembly
for review. Statements will be provided within 20 working days after the close
of each quarter. All information will be strictly confidential and for internal
use only.
3) Invoice terms will be NET 30 days from invoice date. Payment to be received
by Electronic Assembly Corporation on the 30th day.
4) An initial credit limit of $400,000 has been established for accounts
receivable. If in the course of business this initial limit is exceeded, you
will be contacted and may be required to pay some invoices before the NET 30 day
term so as to remain within the limit. Any increase in the limit will be based
upon length and status of credit history.
I thank you for your cooperation in working to establish these credit standards,
and look forward to a mutually beneficial relationship between our two
companies. If you have any questions or concerns, please feel free to contact me
direct (000) 000-0000.
Sincerely,
Xxxx X. Xxxxxx
Controller
Cc: Xxx Xxxxxxxx, EAC
Xxxx Xxxxxx, Plexus
Xxx Xxxxxxx, EAC
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ATTACHMENT E
Plexus to provide Customer with Direct Ship Distribution Services for the
following product(s):
- CS100-LAN-01
Other products may be added with Customer and Plexus Corp. mutual
agreement.
