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EXHIBIT 10.22
BOARD MANUFACTURING AND TRANSITION AGREEMENT
This Board Manufacturing and Transition Agreement ("Agreement") is entered into
effective as of November, 1998 (the "Effective Date"), by and between Chaparral
Technologies, Inc. a Delaware corporation, having a place of business at 0000
Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxx, XX 00000 ("Purchaser"), and Adaptec, Inc., a
Delaware corporation having a place of business at 000 X. Xxxxxxxx Xxxxxxxxx,
Xxxxxxxx, XX 00000 ("Adaptec").
RECITALS
A. On November 17, 1998, Purchaser and Adaptec are entering into a certain Asset
Transfer Agreement under which Purchaser shall acquire certain assets of Adaptec
and license certain intellectual property and technology of Adaptec related to
certain Adaptec bridge products.
B. During a transition period not to extend beyond April 30, 1999, Purchaser
desires for Adaptec to perform certain manufacturing services, including
purchasing, assembly and manufacture, testing, and packaging of certain of the
Adaptec bridge products transferred to Purchaser under the Asset Acquisition
Agreement, and to sell and ship such products to Purchaser, and Adaptec is
willing to perform such services.
C. The parties desire to define the general terms and conditions governing
Adaptec's manufacture of such products, and the purchase and sale of such
products, all as further set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing, premises and the
covenants and agreements set forth in this Agreement, the parties agree as
follows:
AGREEMENT
1. DEFINITIONS
1.1 "Confidential Information" shall have the meaning set forth in the
Mutual Master Non-Disclosure Agreement, dated January 21, 1998, executed between
the parties ("MNDA"), attached hereto as Exhibit C, and shall include the terms
and conditions of this Agreement, which shall constitute confidential
information of both parties.
1.2 "Deliver, Delivered or Delivery" means the delivery of the Products
ordered pursuant to a particular Purchase Order to the Delivery Point for
shipment in accordance with Purchaser's instructions.
1.3 "Delivery Point" means the San Francisco Bay Area.
1.4 "Lead Time" means 1) the minimum amount of time prior to the
requested Delivery of each respective Product that Adaptec must receive a
Purchase Order for the Product, and
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2) the maximum amount of time that Adaptec has after receiving a Purchase Order
before Adaptec must Deliver the ordered Product, as specified in Exhibit A.
1.5 "Packaging Specification" means Adaptec's standard packaging process
and format for each respective Product as set forth in Adaptec's applicable
standard assembly specification as may be amended from time to time by Adaptec
in its sole discretion, including without limitation the use and placement of
Adaptec stickers and logos on such packaging.
1.6 "Price" means the price for each respective Product, initially as
set forth in Exhibit A and Section 4, as may be adjusted from time to time in
accordance with Section 4.
1.7 "Product" means an Adaptec bridge product to be manufactured and
sold by Adaptec hereunder, as set forth in Exhibit A.
1.8 "Purchase Orders" means written or electronically transmitted
purchase orders to Adaptec for the Products, including the description of the
Product, quantity, Delivery Point, requested Delivery date and other relevant
information relating to the order and shipment.
1.9 "Purchaser Documentation" means the documentation to be provided to
Adaptec by Purchaser for each respective Product, including the items listed on
Exhibit B.
1.10 "Purchaser Technology" means technical information specific to the
Products, including Product design documentation (including Purchaser
Documentation); test data; and Test Equipment.
1.11 "Services" means the manufacturing services performed by Adaptec
hereunder, including purchasing, assembly and manufacture, testing, packaging
and shipping.
1.12 "Specifications" means the respective specifications for each
Product, as agreed in writing by the parties.
1.13 "Test Equipment" means testers, fixtures, tooling, and other test
equipment used in manufacture, assembly, and production test of the Products, as
set forth on Exhibit B hereto.
1.14 "Functional Test Plan" means the testing process and criteria with
respect to each Product to determine whether such Product meets the
Specifications.
1.15 "Consigned Inventory" means the inventory of AIC-1160 integrated
circuit products, which are owned by Purchaser and consigned to Adaptec for
purposes of incorporation into Products.
1.16 "Inventory" means the Consigned Inventory, Risk-buy Inventory,
Unique Inventory and other Adaptec inventory of components for Products,
partially completed Products, and completed Products consistent with Purchaser's
outstanding Purchase Orders.
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1.17 "ICT" means in circuit testing.
1.18 "Standard Cost" means the standard cost of a component or Product,
as set forth in Adaptec's SAP system, at the Effective Date or such later date
as a Price of a Product may be determined in accordance with Section 4.
1.19 "Minimum Lot Size" means the minimum quantity of each type of
Product that may be manufactured at one time, as specified in Exhibit A.
1.20 "Risk-buy Inventory" means the inventory of long lead time
components used in rendering the Services, as specified in Exhibit F, ("Long
Lead Time Components") which are purchased by Adaptec pursuant to Purchaser's
direction for purposes of Adaptec's rendering the Services.
1.21 "Unique Inventory" means the inventory of components which are used
by Adaptec solely for the purpose of rendering the Services, as specified in
Exhibit G, ("Unique Components"), which are purchased by Adaptec for the purpose
of rendering the Services.
2. TERM OF AGREEMENT
The term of this Agreement ("Term") shall commence on the Effective Date
and shall continue until the earlier of Purchaser's transition of manufacturing
to another manufacturer or April 30, 1999, subject to earlier termination as
provided in Section 16.
3. MANUFACTURE OF PRODUCTS
3.1 Manufacture of Products. During the Term, Adaptec shall use
reasonable commercial efforts to manufacture the Products in accordance with the
terms of this Agreement. This Agreement shall be strictly limited to the
Products listed in Exhibit A and no Product shall be added to this Agreement
after the Effective Date. Adaptec will commence performance of the Services with
respect to a Product upon receipt of a Purchase Order therefor, including
without limitation the procurement of any components required to render such
Services. Adaptec shall have no obligation to procure or stock in inventory any
such components prior to the receipt of a Purchase Order requiring such
components. Adaptec may, at its reasonable discretion, allocate production and
delivery among Adaptec's customers.
3.2 Provision of Purchaser Documentation and Purchaser Technology. As
soon as required after the Effective Date, Purchaser will deliver to Adaptec the
Purchaser Documentation. Subject to the terms and conditions of this Agreement,
Purchaser grants to Adaptec and its subcontractors, during the Term of this
Agreement, a non-exclusive, nontransferable license to use the Purchaser
Technology solely to perform the Services.
3.3 Provision of Test Equipment. Upon the Effective Date, Purchaser
consigns to Adaptec Test Equipment necessary for Adaptec to test the Products in
accordance with the Functional Test Plan. Such Test Equipment shall remain the
property of Purchaser, and Adaptec
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agrees to use the Test Equipment solely for the purpose of testing the Products.
Adaptec shall use reasonable commercial efforts to maintain the Test Equipment
in good condition and repair, including the provision of any necessary regular
maintenance. However, Adaptec shall not be responsible for any loss or damage to
the Test Equipment unless it results from the negligence or willful misconduct
of Adaptec or its employees. Adaptec will use reasonable efforts to monitor the
capacity of existing Test Equipment and to advise Purchaser when additional Test
Equipment is necessary.
3.4 Purchase of Long Lead Time Components. Upon Purchaser's written
request, Adaptec shall purchase Long Lead Time Components consistent with
Purchaser's forecast and outstanding Purchase Orders. All such Long Lead Time
Components shall be deemed to be "Risk-buy Inventory" and Purchaser shall assume
all risk for non-use of such components.
3.5 Reconciliation of Unique Inventory. Adaptec shall purchase Unique
Components consistent with Purchaser's forecast and outstanding Purchase Orders.
All such Unique Components shall be deemed to be "Unique Inventory" and
Purchaser shall assume all risk for non-use of such components. At each
Quarterly Review Meeting, if the per-unit price of the then-existing Unique
Inventory has decreased since the last reconciliation of the Unique Inventory,
Purchaser shall pay to Adaptec an amount equal to the decrease in per-unit price
multiplied by the number of units in the then-existing Unique Inventory.
3.6 Packaging. Adaptec will package each Product substantially in
accordance with the applicable Packaging Specification.
3.7 Meetings. Purchaser shall be responsible for scheduling the
Quarterly Review Meeting and for preparing the agenda for discussion. Each party
shall use reasonable efforts to have appropriate personnel attend such meetings
in order to conduct a thorough operations review in accordance with the agenda.
3.8 Contractors. Adaptec may retain third parties ("Contractors") and
subsidiary companies ("Subsidiaries") to furnish services to it in connection
with the performance of its obligations hereunder and permit such Contractors
and Subsidiaries to have access to Purchaser's Confidential Information, but
only to the extent and insofar as reasonably required in connection with the
performance of Adaptec's obligations under this Agreement; provided that all
such Contractors and Subsidiaries shall be required by Adaptec to execute a
written agreement (a) sufficient to secure compliance by such Contractors and
Subsidiaries with Adaptec's obligations of confidentiality concerning
Confidential Information set forth in Section 17; (b) acknowledging the
Contractor's or Subsidiary's obligation to assign all work product in connection
with performance hereunder; and (c) effecting assignments of all Intellectual
Property Rights concerning any Purchaser Technology to Purchaser. Purchaser,
upon request, may review such agreements at any time before or after execution
by such Contractors and Subsidiaries to ensure compliance with this Agreement.
3.9 Consigned Inventory. Purchaser shall consign to Adaptec a sufficient
quantity of the Consigned Inventory and will maintain the Consigned Inventory at
sufficient levels for Adaptec to timely manufacture Products utilizing such
Consigned Inventory in accordance with the applicable Lead Time and yields.
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4. PRICING
Subject to the terms and conditions of this Agreement, Adaptec agrees to
sell the Products at the respective Prices set forth on Exhibit A. The Prices
shall not include the cost of any Consigned Inventory. Any Price which is not
set forth on Exhibit A initially will be set at the Standard Cost of the Product
at the time of production release (exclusive of the AIC-1160), plus ten percent
(10%). All Prices shall be reviewed at the Quarterly Review Meeting, and shall
be adjusted including for variations in the yield of each Product such that they
are approximately equivalent to the Standard Cost of the Product, plus ten
percent (10%). Unless otherwise agreed to in writing by Adaptec, all Prices are
exclusive of transportation and insurance costs, and all taxes, duties and
assessments (except taxes levied against Adaptec's income), including state and
local use, sales property and similar taxes. Purchaser agrees to pay such taxes
unless Purchaser has provided Adaptec with (i) an exemption resale certificate
in the appropriate form for the jurisdiction of Purchaser's place of business
and any jurisdiction to which Product is to be directly shipped hereunder, or
(ii) written evidence that such sale is otherwise exempt from such taxes. In the
event Adaptec is required to pay any tax, transportation, insurance, or duty
charges, Purchaser shall reimburse Adaptec therefor. Where applicable,
transportation and taxes shall appear as separate items on Adaptec's invoice
5. FORECASTS, ORDERING & ADJUSTMENTS
5.1 Forecasts. Purchaser has provided to Adaptec a forecast of
Purchaser's quantity requirements for each Product for the Term ("Forecast").
Purchaser acknowledges that the Forecast will be used by Adaptec for material
and manufacturing planning purposes, and that, during the Term, Purchaser shall
be required to purchase the quantity of Products forecasted. The Forecast is
attached hereto as Exhibit E.
5.2 Purchase Order. On the first day of each calendar month, Purchaser
shall issue a Purchase Order to Adaptec to initiate the performance of Services
with respect to the Products. Each Purchase Order will be issued by Purchaser in
accordance with the applicable Lead Time(s) to allow Delivery during the Term
and, together with previously issued Purchase Orders, shall cover the ordering
of Products to be delivered during the next three (3) months. Quantities
specified in each Purchase Order shall be at least the Minimum Lot Size for each
Product ordered. Adaptec shall use reasonable efforts to acknowledge the
Purchase Order and to confirm the scheduled Delivery Date within forty-eight
(48) hours. No Purchase Order shall be binding until accepted by Adaptec.
5.3 No Cancellation. Purchaser may not cancel any Products ordered or on
order for Delivery and, further, must order the quantities set forth in the
Forecast. Upon Purchaser's request, Adaptec will use reasonable efforts to
reschedule Products scheduled for Delivery. However, such adjustment may be
subject to additional costs or charges and may not be feasible for short time
frames.
5.4 Agreement Controls. Except for the Products, quantities and other
matters necessary to be specified by a Purchase Order, to the extent accepted by
Adaptec, the terms
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governing the manufacture, delivery, acceptance and payment for the Products
will be governed by the terms and conditions of this Agreement. In the case of
conflict between this Agreement and any Purchase Order, invoice, acknowledgment
or similar document, the terms of this Agreement will prevail. Any remedies at
law or equity not specifically disclaimed or modified by this Agreement remain
available to both parties.
6. DELIVERY, CARRIER & RISK OF LOSS
6.1 Delivery of Product: Risk of Loss. All Products purchased hereunder
shall be Delivered F.O.B. Adaptec's dock in the San Francisco Bay Area, and
title and risk of loss or damage to the Products will pass to Purchaser at such
Delivery Point. All quoted Delivery dates are estimates only and Adaptec shall
not be liable for any failure to meet a quoted Delivery date.
6.2 Shipment. Unless otherwise agreed by the parties, shipment costs
from San Francisco and Milpitas to destinations within the United States shall
be freight collect. The carrier will be selected by Adaptec. In no event shall
Adaptec be liable for any delay in delivery, or assume any liability in
connection with shipment, nor shall the carrier be deemed an agent of Adaptec.
All claims for damages must be filed with the carrier. Shipments may be made in
installments. All shipments will be made directly to Purchaser; no drop
shipments shall be made under this Agreement. Unless otherwise agreed in writing
or as set forth in the Packaging Specification, all Products will be packed and
shipped in accordance with Adaptec's normal practices.
7. PAYMENTS
Upon Delivery of the Products, Adaptec will send an invoice to Purchaser
identifying the Purchase Order and confirming the quantity and description of
all Products that have been shipped. Purchaser will pay invoices for Products,
or such other invoices as are issued under this Agreement, within thirty (30)
days of receipt. Payment of invoices shall be made to Adaptec as Adaptec may
direct in its invoice (or otherwise in writing). Payment does not constitute
final acceptance of the Products and is subject to adjustments for errors,
shortages and defects. Shipments, deliveries, and performance of the Services
shall at all times be subject to the approval of Adaptec's credit department and
Adaptec may at any time decline to make any shipments or deliveries or perform
any Services except upon receipt of payment, or upon terms and conditions or
security satisfactory to Adaptec. If shipments are delayed by Purchaser, payment
shall become due, at Adaptec's option, thirty (30) days after the date Adaptec
is prepared to make shipment.
8. QUALITY AND INSPECTION
8.1 Process and Quality. Adaptec will manufacture the Products in
accordance with its general process and quality procedures currently in place
for the Products.
8.2 Yield Improvement and Problems. Adaptec will use reasonable
commercial efforts to improve Product yield, but shall not be liable for Product
yield except as provided in Sections 9 and 10. Purchaser acknowledges that the
Prices are based on a yield of at least ninety percent (90%) acceptable Products
under the Functional Test Plan. If the yield is less than ninety
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percent (90%) on any lot of Products, Adaptec shall issue a Stop Action and
Purchaser and Adaptec shall review the design details and other issues which may
have contributed to the inadequate yield. As a consequence of such Stop Action
and review, the parties shall negotiate appropriate revisions to the Prices,
Functional Test Plan or other terms of this Agreement with respect to future
Product deliveries.
8.3 Adaptec Testing. Adaptec will use the Functional Test Plan, which
has been approved by Purchaser, to test each Product. Adaptec shall fully test
all products delivered hereunder in accordance with its ICT and with the
applicable Functional Test Plan.
8.4 Training on RMA Testers. Within thirty (30) days after the
Effective Date, upon Purchaser's request and at the mutual convenience of the
parties, Adaptec shall provide to two (2) representatives of Purchaser training
on the maintenance and operation of the RMA ("Chop Top") Testers to be
transferred to Purchaser under the Asset Transfer Agreement. Adaptec shall
provide up to thirty (30) hours of such training at Adaptec's facility in
Milpitas. Upon the conclusion of such training, the RMA Testers shall be
delivered to Purchaser, F.O.B. Adaptec's facility in Milpitas.
9. ACCEPTANCE AND REJECTION OF PRODUCTS
Any Product Delivered hereunder shall be deemed accepted by Purchaser
unless Adaptec receives written notice of a defect or non-conformity with
respect to such Product within thirty (30) days of shipment to Purchaser or its
Customer. In the event a Product appears not to conform to the Specifications,
Purchaser shall promptly notify Adaptec and afford Adaptec a reasonable
opportunity to inspect such Product. No Product shall be returned to Adaptec
without compliance with Adaptec's Return Material Authorization ("RMA")
procedures, a current version of which is attached hereto as Exhibit D.
10. WARRANTY
10.1 Materials and Workmanship. Adaptec warrants that the Products
purchased and Delivered hereunder will, for a period of one (1) year ("Warranty
Period"), commencing on the date of Delivery, be free from defects in material
and workmanship and conform to the Specifications. Notwithstanding the
foregoing, the warranty in this Section 10.1 will not extend to defects
attributable to the Product design or defects arising from compliance with the
Specifications or defects in the Functional Test Plan.
10.2 Warranty Remedy. If any Product is found to breach the warranty
specified in Section 10.1 during the Warranty Period, Purchaser may send a
notice to Adaptec informing it of the breach of warranty and shall provide
appropriate failure analysis data indicating the defect or failure mode. Upon
Adaptec's confirmation of such failure analysis data, Adaptec shall reimburse
Purchaser for the lesser of its actual cost of repair of such defective Product
and the actual purchase price paid by Purchaser for such defective Product.
Subject to confirmation of a defect, Adaptec will make payment of any
reimbursement or refund within thirty (30) days of receipt of the failure
analysis data and documentation of Purchaser's actual cost of repair or, if
repair is not appropriate, an explanation of why repair is not appropriate.
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10.3 No Liability. Adaptec shall have no liability or obligation to
Purchaser under this Section 10 with respect to any Products which have been
subjected to abuse, misuse, improper use, negligence, accident, alteration,
repair or rework performed by unauthorized parties.
10.4 Disclaimer of Warranties. EXCEPT AS EXPRESSLY SET FORTH IN SECTION
10.1, THE PRODUCTS ARE PROVIDED "AS IS" AND ADAPTEC MAKES NO REPRESENTATION OR
WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED
TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND
NONINFRINGEMENT.
11. PRODUCT CHANGES
11.1 On Adaptec's Notice. In no event shall Adaptec make any
modification to the form, fit or function of the Products without Purchaser's
prior written approval, which shall not be unreasonably withheld or delayed.
11.2 At Purchaser's Request. Should Purchaser desire modifications in
the Product which do not affect fit, form or function, Purchaser shall submit
its request to Adaptec in writing, and Adaptec shall use reasonable commercial
efforts to respond to such request in writing within five (5) business days,
setting forth the impact of such proposed change on the performance of the
Services and the Price of the Products. Any change affecting, safety or
necessary for proper functioning of the Products will be implemented by Adaptec
as soon as possible. Unless the parties agree otherwise, requested changes will
not affect the Products already scheduled or rescheduled for Delivery as of the
date such request is received by Adaptec. Purchaser shall be responsible for
payment for any inventory which is made obsolete or any yield loss as a
consequence of the implementation of the change.
11.3 Change Management. All changes to a Product shall be subject to
Adaptec's standard change management procedure.
12. TRADEMARK LICENSE
12.1 Trademark License. Subject to the terms and conditions of this
Agreement, Adaptec hereby grants to Purchaser and Purchaser accepts a worldwide,
nontransferable, fully-paid and royalty-free right and license to use the
Adaptec trademarks "AIC", "Adaptec" and the Adaptec stylized "a" logotype (the
"Adaptec Marks") solely as affixed by Adaptec to Products and corresponding
packaging supplied by Adaptec to Purchaser hereunder. Purchaser acknowledges and
agrees that Adaptec owns and will continue to own all right, title and interest
in and to the Adaptec Marks and any and all goodwill therein and thereto,
whether arising as a result of Purchaser's use of the Adaptec Marks or
otherwise. Purchaser hereby assigns and, if and as Adaptec may request in the
future, agrees to assign and affirm assignment to Adaptec of all such right,
title and interest in the Adaptec Marks and related goodwill. If requested by
Adaptec, Purchaser will cooperate with Adaptec in securing any trademark
registrations and other indicia of ownership for which Purchaser's cooperation
is required as a matter of applicable local law as a result of Purchaser's use
of the
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Adaptec Marks. Purchaser agrees to use the Adaptec Marks only in the exact
manner of use by Adaptec.
12.2 Private Labeling. If Purchaser repackages Products received from
Adaptec, Purchaser agrees to repackage in packaging using Purchaser's marks and
to sticker over Adaptec Marks with Purchaser's marks. Purchaser further agrees
to use commercially reasonable efforts to cease all use of the Adaptec Marks as
soon as feasible.
13. FREEDOM OF ACTION
Purchaser is aware that Adaptec is in the business of developing and
manufacturing products similar to the Products, and intends to continue to
manufacture the same in the future. Nothing, in this Agreement shall limit the
ability of Adaptec to produce products or portions of products which are similar
to the Products for customers other than Purchaser, either during the term of
this Agreement or after its termination, provided that in doing so, Adaptec does
not infringe Purchaser's intellectual property rights or breach the terms of the
Asset Transfer Agreement or Technology License Agreement entered into between
the parties contemporaneously herewith.
14. PROPRIETARY RIGHTS INDEMNITY
14.1 Adaptec Indemnity. Adaptec shall, at its expense and at
Purchaser's request, defend any claim or action brought against Purchaser, and
Purchaser's subsidiaries, affiliates, directors, officers, employees, agents and
independent contractors, to the extent it is based on a claim that the
manufacturing process for the Products infringes any patent, copyright, mask
work right or other intellectual property right, or misappropriates any trade
secret, of a third party ("Claim"). Adaptec shall pay all costs of defense and
settlement, together with any judgment which may be finally awarded; provided:
(a) Purchaser gives Adaptec reasonably prompt notice in writing of any such
Claim and permits Adaptec, through counsel of its choice, to defend and/or
settle such Claim; and (b) Purchaser provides Adaptec information, assistance
and authority, at Adaptec's expense, to enable Adaptec to defend such Claim.
Adaptec shall not be responsible for any settlement made by Purchaser without
Adaptec's written permission.
14.2 Exceptions. Adaptec will not have liability under this Section 14
to the extent that the Claim results from (a) the use of the Purchaser
Documentation or otherwise from the Product design or features; or (b)
Purchaser's combination, operation, or use of the Products with designs,
devices, parts, or software not supplied by Adaptec (including, but not limited
to, Purchaser Components).
14.3 Purchaser Indemnity. Purchaser shall, at its expense and at
Adaptec's request, defend any claim or action brought against Adaptec, and
Adaptec's subsidiaries, affiliates, directors, officers, employees, agents and
independent contractors, to the extent it is based on a claim that the Purchaser
Documentation, the Product design or any third party intellectual property
incorporated in Product at the direction of Purchaser, infringes any patent,
copyright, mask work right or other intellectual property right, or
misappropriates any trade secret, of a third party ("Claim"). Purchaser shall
pay all costs of defense and settlement, together with any judgment which may be
finally
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awarded, provided: (a) Adaptec gives Purchaser reasonably prompt notice in
writing of any such suit and permits Purchaser, through counsel of its choice,
to defend and/or settle such Claim; and (b) Adaptec provides Purchaser
information, assistance and authority, at Purchaser's expense, to enable
Purchaser to defend such Claim. Purchaser shall not be responsible for any
settlement made by Adaptec without Purchaser's written permission.
14.4 Exceptions. Purchaser will not have liability under this Section
14 to the extent that such Claim results from Adaptec's manufacturing process.
15. GENERAL INDEMNITY
Each party hereto (the "Indemnifying Party") shall, at its own expense,
defend the other party, and its subsidiaries, affiliates, directors, officers,
employees, agents and independent contractors (collectively, the "Indemnified
Party"), from and against any and all loss, cost, liability or expense
(including costs and reasonable fees of attorneys and other professionals)
arising out of or in connection with the negligence of the Indemnifying Party's
agents and employees. Such indemnity shall include claims brought with respect
to the defective design of the Product for which Purchaser shall be the
indemnifying party. The Indemnifying Party shall pay all costs of defense and
settlement, together with any judgment which may be finally awarded; provided:
(a) the Indemnified Party gives the Indemnifying Party reasonably prompt notice
in writing of any such suit and permits the Indemnifying Party, through counsel
of its choice, to defend and/or settle such Claim; and (b) the Indemnified Party
provides the Indemnifying Party information, assistance and authority, at the
Indemnifying, Party's expense, to enable the Indemnifying Party to defend such
Claim. The Indemnifying, Party shall not be responsible for any settlement made
by the Indemnified Party without the Indemnifying Party's written permission.
16. TERMINATION
16.1 Termination Without Cause. Purchaser may, for any reason or for no
reason whatsoever, terminate this Agreement, in whole, or in part, upon two (2)
months advance notice to Adaptec.
16.2 Effect Of Termination Without Cause. In the event Purchaser
terminates this Agreement pursuant to Section 16.1, Purchaser shall immediately
pay to Adaptec all amounts due to Adaptec, including the full purchase price for
all outstanding Purchase Orders, the full purchase price of all Risk-buy
Inventory not incorporated into Products, and the then-current price of all
Unique Inventory not incorporated into Products.
16.3 Termination For Default. Either party may suspend its performance
and/or terminate this Agreement immediately upon written notice at any time if:
(a) The other party is in material breach of any warranty, term,
condition or covenant of this Agreement other than those contained in Section 17
and fails to cure that breach within thirty (30) days after written notice of
that breach and of the first party's intention to suspend its performance or
terminate;
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(b) The other party is in material breach of any warranty, term,
condition or covenant of Section 17; or
(c) The other party: (i) becomes insolvent; (ii) admits in writing
its insolvency or inability to pay its debts or perform its obligations as they
mature; or (iii) makes a general assignment for the benefit of creditors.
16.4 Effect of Termination in General. The following terms apply to any
termination under this Agreement, including without limitation, termination for
convenience and for default:
(a) Immediately upon any termination of this Agreement, Adaptec
shall, to the extent and at times specified by Purchaser, stop all work on
outstanding Purchase Orders, incur no further direct cost, and protect all
property in which Purchaser has or may acquire an interest pursuant to this
Section 16.
(b) Immediately upon any termination of this Agreement, each party
will return to the other party or, pursuant to the other party's written
instructions, destroy all materials in its possession containing Confidential
Information of the other party. Returned Confidential Information materials
shall be shipped freight collect. In addition Adaptec shall immediately deliver
to Purchaser any and all Purchaser Technology, Inventory or other property of
the Purchaser within Adaptec's possession or control. Such items shall be
delivered FOB Singapore. Notwithstanding the foregoing, Adaptec shall have no
obligation to deliver any Inventory until and unless Purchaser has paid in full
all amounts due to Adaptec.
(c) Unless this Agreement is terminated pursuant to Section 16.1
or by Adaptec pursuant to Section 16.3, Purchaser shall reimburse Adaptec for
(i) the full purchase price paid by Adaptec, including freight, tax, and other
costs paid by Adaptec, of all Risk-buy Inventory which is not incorporated into
Products, and (ii) the then-current price for all Unique Inventory which is not
incorporated into Products. Such reimbursement shall be paid for as provided in
Section 7.
(d) If this Agreement is terminated by Adaptec pursuant to Section
16.3, then Purchaser shall immediately pay to Adaptec all amounts due to
Adaptec, including the full purchase price for all outstanding Purchase Orders,
the fall purchase price of all Risk-buy Inventory not incorporated into
Products, and the then-current price for all Unique Inventory not incorporated
into Products.
(e) If this Agreement is terminated by Purchaser pursuant to
Section 16.3, then Purchaser shall pay to Adaptec amounts due for Products
Delivered to Purchaser, the full purchase price of all Risk-buy Inventory not
incorporated into Products, and the then-current price for all Unique Inventory
not incorporated into Products, but Purchaser shall have no obligation to pay
for unfilled Purchase Orders.
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(f) Notwithstanding any termination of this Agreement, the
provisions of Section 7, 9, 10, 12, 13, 14, 15, 17, 18 and the relevant sections
of Sections 16 and 19 shall remain in effect.
16.5 Transition Assistance. In connection with the transition of the
manufacture of the Products to Purchaser's designated third party manufacturer,
Adaptec will provide up to forty (40) hours of transition assistance in
connection with the production of the Products and the use of the ICT test
fixtures and Functional Testers, including maintenance and debugging of the
Functional Testers, to such manufacturer at its own or its designated
facilities. Purchaser shall request such assistance at least thirty (30) days
prior to the expiration of this Agreement and provision of the assistance shall
be scheduled at the mutual convenience of the affected parties. Subject to
reimbursement of the reasonable travel costs incurred by Adaptec's personnel in
connection with such training, which shall be billed to Purchaser and paid as
provided in Section 7, such training shall be provided at no charge. Should
Purchaser desire additional transition assistance, Purchaser may make a written
request for a quotation for the provision of such technical assistance. Adaptec
shall provide such quotation for such additional assistance as is reasonably
requested by Purchaser and shall provide the technical assistance quoted upon
Purchaser's written acceptance of the quotation.
17. CONFIDENTIALITY
Each party will protect the other's Confidential Information in
accordance with the terms of the MNDA. Notwithstanding the terms of the MNDA,
Purchaser may disclose the terms and conditions of this Agreement to investors
and potential investors, subject to such parties' agreement to maintain such
terms and conditions in confidence.
18. LIMITATION OF LIABILITY
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, AND EXCEPT AS SET FORTH
IN SECTIONS 14 AND 15, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER OR
ANY OTHER PERSON FOR ANY SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES
OF ANY KIND, INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS OR DAMAGES TO THE
OTHER PARTY'S BUSINESS REPUTATION HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY,
WHETHER IN AN ACTION FOR CONTRACT, STRICT LIABILITY OR TORT (INCLUDING
NEGLIGENCE) OR OTHERWISE, WHETHER OR NOT THE FIRST PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGE AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE
OF ANY REMEDY.
19. GENERAL
19.1 Notice. Any notice shall be considered given if delivered
personally or if sent by either party to the other by prepaid Federal Express,
registered or certified mail, or by telefax (followed by a confirming hard copy)
addressed to the address specified below, or to such other address as the party
provides by written notice:
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If to Adaptec:
Adaptec, Inc.
000 X. Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Vice President, Operations
cc: General Counsel
If to Purchaser:
Chaparral Technologies, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: President
19.2 Assignment. Neither party shall assign any of its rights or
privileges hereunder without the prior written consent of the other party;
provided, however, that Adaptec may subcontract the performance of any or all of
the Services without Purchaser's consent. Any attempt at assignment in
derogation of the foregoing shall be null and void. Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto, their subsidiaries, and their respective successors and assigns.
19.3 Damage Limitation. INDEPENDENTLY OF ANY OTHER REMEDY LIMITATION
HEREOF AND NOTWITHSTANDING ANY FAILURE OF THE ESSENTIAL PURPOSE OF ANY SUCH
LIMITED REMEDY, THE PARTIES AGREE THAT IN NO EVENT SHALL ADAPTEC BE LIABLE FOR
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND UNDER THIS AGREEMENT.
19.4 Allocation of Risk. The parties acknowledge and affirm that the
sections on limitation of liability, warranties and disclaimer of warranties and
damage limitation in this Agreement allocate the risks between the parties. This
allocation is reflected in the pricing of the Products and is an essential
element of the basis of the bargain between the parties.
19.5 Export Control.
(a) Representation. Purchaser agrees to comply strictly and fully
with all export controls imposed on the Products by any country or organization
in whose jurisdiction Purchaser operates or does business. Purchaser will not
knowingly, export or reexport any Product to any country prohibited under United
States Export Administration Regulations, without first obtaining a valid
license to so export or reexport the Products.
(b) Responsibility. All export permits, import certificates,
insurance, duty, customs clearance charges and/or licenses and related costs
will be Purchaser's responsibility.
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19.6 Waiver. No failure or delay on the part of either party in the
exercise of any right or privilege hereunder shall operate as a waiver thereof
or as a waiver of the exercise of any other right or privilege hereunder, nor
shall any single or partial exercise of any such right or privilege preclude
other or further exercise thereof or of any other right or privilege.
19.7 Governing Law; Attorneys' Fees. This Agreement shall be governed
by and enforced in accordance with California law as applied to contracts
entered into in California by California residents to be performed entirely
within the State of California. Any action arising out of any dispute between
any of the parties to this Agreement with respect to any of the transactions
contemplated by this Agreement shall be brought in either the Superior Court for
the City and County of Santa Xxxxx, or the United States District Court for the
Northern District of California, and each of the parties hereto hereby submits
itself to the jurisdiction of such courts for purposes of any such action. In
the event either party is required to seek legal recourse to enforce its rights
hereunder, such party shall be entitled to receive, in addition to any other
award, all costs in connection therewith, including reasonable attorneys' fees.
19.8 Titles. Any titles included herein are for convenience only and
are not to be used in the interpretation of this Agreement.
19.9 Severability. If any provision of this Agreement is held to be
ineffective, unenforceable or illegal for any reason, such provision partially
will be enforced to the maximum extent permitted by law, and the remainder of
this Agreement will remain in full force and effect.
19.10 Force Majeure. Neither of the parties shall be deemed to be in
default of this Agreement to the extent any failure to perform hereunder is a
result of conditions beyond the other party's reasonable control, including but
not limited to, acts of God, war, strikes, fires, floods, earthquakes, work
stoppages and embargoes, material shortages, subcontractor delays, equipment or
other facilities failures (which delays or failures are beyond the reasonable
control, without negligence, of the defaulting party), and neither party shall
have the right to terminate this Agreement for any such delay or default on the
part of the other party.
19.11 Integration. This Agreement and its Exhibits embodies the entire
understanding of the parties and supersedes any prior agreements,
representations or understandings between the parties as it relates to the
subject matter hereof. No amendment or modification of this Agreement shall be
valid or binding unless in writing and signed by duly authorized representatives
of each party.
19.12 Publicity. Except as required by law, neither party will disclose
the existence or terms of this Agreement to any third party without the express
written consent of the other, which consent shall not unreasonably be withheld
or delayed.
19.13 Relationship. The parties are independent contractors. Nothing
contained herein and no action taken pursuant hereto shall constitute the
parties as joint ventures or the agents of the other party for any purpose or in
any sense whatsoever.
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19.14 Counterparts. This Agreement may be executed in counterparts,
each of which constitutes an original, and together which constitute the
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives as of the Effective Date.
ADAPTEC, INC.
------------------------------------ ("Adaptec")
("Purchaser")
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxx Xxxxxxx
------------------------------- --------------------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxxx Xxxxxxx
------------------------------ ------------------------------
Title: President and Chief Title: Chairman of the Board
Operating Officer -----------------------------
-----------------------------
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