SANMINA CORPORATION,
EVANS & SUTHERLAND COMPUTER CORPORATION
MASTER AGREEMENT FOR
ELECTRONIC MANUFACTURING SERVICES
This Master Agreement for Electronic Manufacturing Services (the "Agreement") is
made and entered into effective as of June 3, 1999, by and between Sanmina
Corporation, a Delaware corporation ("Sanmina") and Evans & Sutherland Computer
Corporation, a Utah Corporation ("Customer" or "E&S").
RECITALS
Sanmina and E&S have entered into an Asset Purchase Agreement dated concurrently
with the date of this Agreement (the "Purchase Agreement"), pursuant to which
Sanmina is acquiring certain assets associated with E&S' Salt Lake City, Utah
prototype, printed circuit board and other electronic assemblies manufacturing
operation (the "Electronics Manufacturing Operation"). In connection with the
execution and performance of the Purchase Agreement, and as a condition and
inducement to the parties' undertakings therein, this Agreement is being
executed to provide for a continuing relationship between Sanmina and E&S,
pursuant to which Sanmina will perform manufacturing services for E&S, upon the
terms and conditions set forth herein.
AGREEMENT
I. Manufacturing Services to be Performed
A. Products. The products covered by this Agreement (collectively the
"Products") are those electronic products and assemblies, including
printed circuit boards, prototypes and Legacy Products (as defined
below) which Customer may desire to have Sanmina manufacture for
Customer during the term of this Agreement. "Legacy Products" means
those electronics products, boards and assemblies having no
identifiable, forecastable demand (i.e., driven solely by discreet
orders) which were previously produced at the Electronics
Manufacturing Operation, for which Customer may need replacements or
additional inventory.
B. Manufacturing Services. During the term of this Agreement, and in
accordance with the provisions hereof, Sanmina will manufacture and
sell Products to Customer.
C. Scope of Agreement. All manufacturing and sales of Products by
Sanmina, its subsidiaries and affiliates (collectively referred
hereinafter as "Sanmina") for and to Customer during the term of this
Agreement shall be governed by and subject to the terms and conditions
of this Agreement.
II. Orders and Acceptances for Products
A. Purchase Orders and Acceptances. Customer will purchase Products by
issuing purchase orders ("Order" or "Orders") to Sanmina. Orders will
contain such things as quantity, prices, specified delivery dates,
specifications, and Product number or designation, consistent with the
terms of this Agreement. Repeat Orders for Products may initially be
placed by electronic transmission, provided that Customer will make
commercially reasonable efforts to send a confirmational written Order
to Sanmina (except as otherwise agreed) within one week after the
electronic order. Blanket Orders may be placed, with subsequent
electronic or written instructions to authorize shipment and delivery
of Products, up to the maximum quantities covered by the blanket
Orders. Sanmina will sign and return written confirmation of each
Order within five business days after receipt. All Orders and
acceptances relating to Products will be governed by the terms of this
Agreement, and nothing contained in any Order or acceptance will in
any way modify the terms or conditions of this Agreement, unless
expressly agreed to in writing by Sanmina and Customer. Sanmina and
Customer hereby give notice of their objection to any additional or
different terms.
B. Placement of Orders; Delivery of Forecasts. Upon execution of this
Agreement, Customer will submit an Order for Products deliverable over
the first three months of the term of this Agreement. Thereafter,
Customer will provide Orders to Sanmina on a monthly basis, including
orders for Products to be delivered in the third month following the
date of the Order, resulting in a rolling three month period covered
by Orders. Upon execution of this Agreement, and on a monthly basis
thereafter, concurrently with the submission of the monthly Orders
referenced above, Customer will provide a rolling nine month forecast
of Customer's anticipated Product purchases, for the nine month period
immediately following the three month period covered by submitted
Orders. Obligations to purchase Products, and any liability of the
parties with respect to anticipated Product requirements, will arise
only as actual Orders are submitted to Sanmina, with the sole
exception that with respect to any long lead-time parts for which a
forecast would cause procurement activity as provided herein, Customer
shall have those obligations set forth in Section III below. Actual
Orders may be different from forecasted numbers. Orders may be
submitted other than at the monthly intervals provided above,
consistent with the terms of this Agreement. Where appropriate,
Customer will level load requirements for certain Products in order to
provide a steady flow of Product to Customer and a steady production
schedule for Sanmina. Sanmina will review forecasts provided by
Customer and advise Customer if Sanmina anticipates that it will be
unable to achieve the Product volumes reflected in such forecasts.
C. Acceptance of Orders. Sanmina will accept all orders for Products
submitted by Customer in accordance with the terms and conditions of
this Agreement up to the greater of (i) 125% of the amount specified
in the forecast delivered in the preceding month with respect to the
period covered by such Orders, or (ii) the amount of Products for
which Sanmina has purchased Materials, as provided herein. Sanmina
will use its reasonable best efforts to accept Orders submitted by
Customer for Products in excess of the committed volume levels. Orders
submitted in excess of the committed quantity levels that Sanmina is
unable to accept must be rejected within five business days after
receipt by Sanmina.
III. Materials Planning, Procurement Process and Liabilities
A. Master Production Schedule. Based on the Orders and forecasts received
from Customer as provided above, Sanmina will on a monthly basis
generate a Master Production Schedule ("MPS") for a rolling twelve
month period. This MPS will define the master plan on which Sanmina
will base its procurement, internal capacity projections and
commitments. The MPS created as described above will not impose any
liability on either Sanmina or Customer, except that with respect to
any long lead-time parts and that portion of the MPS related to firm
orders as described in Section II paragraph B of this document, for
which the MPS would cause procurement activity as provided herein,
Customer shall have those obligations set forth in this Section III.
B. Material Procurement Schedule. Sanmina will process the MPS through
industry-standard MRP software that will convert the MPS reflecting
Customer's Orders and forecasts into requirements for components
utilized to make the applicable Products. In doing so, Sanmina will
off-set the requirements for receipt of components or materials by
allowing for the time required to build the Products per the following
times:
1. In-Circuit Test/Functional Test - 5 Working Days
2. Assembly - 7 Working Days
3. Kitting - 2 Working Days
4. Material Handling - 2 Working Days
Per this Agreement, Sanmina will plan and schedule material to be at
Sanmina eleven working days before the Products are due to ship to
Customer where no test is required, and sixteen working days before
the Products are due to ship to Customer where testing is required.
C. Sanmina Orders for Materials. Sanmina will release (launch) orders to
suppliers of materials required in connection with the production of
Products a reasonable period of time prior to the anticipated date
that the material is needed (as set forth in the preceding paragraph).
When these orders are launched will depend on the vendor lead time
determined by Sanmina from time to time and maintained as a parameter
of Sanmina's manufacturing or materials planning systems. Sanmina,
through its MRP system, will also issue an instruction ("MRP signal")
to its procurement group to buy a part approximately seven days before
the order is due to be placed in accordance with this paragraph.
Unless otherwise directed by Customer, Sanmina will purchase
components for Products in accordance with a vendor list approved by
Sanmina and Customer ("AVL"). In the event Sanmina for any reason
cannot purchase any components from an approved vendor named on the
AVL, Sanmina may purchase such components from an alternate vendor
with the prior written consent of Customer. In no event will Sanmina,
without the prior written consent of Customer, be authorized to
purchase (or to impose obligations on Customer with respect to,
pursuant to Section III of this Agreement), materials, parts and
components beyond those necessary to support Orders actually delivered
by Customer, with the exception of minimum quantity requirements
imposed by vendors for parts being procured by Sanmina for Customer,
and any anticipated Orders for the next 30 day period, as reflected in
any forecasts delivered by Customer to Sanmina. Proto-type and
Quick-turn Orders will not appear on the MPS, but will be managed on a
manual basis due to the critical time factor and lot size of these
orders. Customer agrees that it will be liable for all materials ,
including minimum purchase requirements, purchased for any Quick-turn
or Proto-Type Order that Customer places with Sanmina.
D. Materials Classifications and Periods of Supply. When Sanmina places
an order with its suppliers in accordance with the preceding
paragraph, Sanmina will order parts in various quantities (defined in
periods-worth-of-supply) that are defined by the part's ABC
classification. This classification, as well as the expected
distribution or characteristics of various classes of parts, and the
periods-worth-of-supply ("Periods-of-Supply") that will be bought for
each class of part, are shown on the following table:
ABC Classifications, Descriptions and Periods-of-Supply
- --------------------------- -------------------------- -------------------------- --------------------------
Part Class Expected Expected Periods Worth of
Percentage of Total Percentage of Total Supply to be Bought
Parts Value (of Gross With Each Order
Requirements)
A 3% 80% 4 Weeks
- --------------------------- -------------------------- -------------------------- --------------------------
B 17% 17% 3 Months
- --------------------------- -------------------------- -------------------------- --------------------------
C 80% 3% 12 Months
- --------------------------- -------------------------- -------------------------- --------------------------
E. Materials Quantities Criteria. In addition to ordering parts for
various Periods-of-Supply as referenced above, Sanmina will order
parts according to appropriate minimum-buy quantities, tape and reel
quantities, and multiples of packaging quantities.
F. Customer Liability for Materials. In the event that Sanmina procures
(other than pursuant to the terms of the Purchase Agreement)
components, parts or materials unique to, and specifically for use in,
Products ordered or forecasted by Customer (collectively "Materials"),
consistent with the procurement procedures set forth above, and any
such Materials become obsolete or surplus to Customer, so as to be
unusable in current Orders for Products from Customer, then Sanmina
will provide to Customer prompt notice of such obsolescence/surplus,
and the potential cost to Customer hereunder as a result of such
obsolescence or surplus. Sanmina shall use its reasonable best efforts
(for a period of at least four weeks) to cancel any outstanding orders
for any such Materials, use excess/uncancelable Materials for the
manufacture of products for other customers, and return such Materials
back to the original supplier or sell such Materials to the original
supplier or a third party at the original purchase price, or on such
other terms as Supplier and Customer may agree upon. After the
exhaustion of such remedies, Sanmina will be entitled to: (a) sell to
Customer any remaining obsolescent/surplus Materials, at an amount
equal to 116% of Sanmina's out-of-pocket costs therefor (the
"Materials Transfer Price"); and (b) invoice Customer for (i) the
amount by which the Materials Transfer Price for any such Materials
which Sanmina was able to sell to third parties as provided above
exceeded the price obtained from such third parties with respect
thereto, and (ii) the amount of any re-stocking or other fees charged
to Sanmina with respect to any order cancellations and returns of
obsolete/surplus Materials. Customer's obligations with respect to
obsolete/surplus Materials as set forth herein shall not extend to any
materials acquired by Sanmina pursuant to the terms of the Purchase
Agreement. Customer's only obligations with respect to such Materials
shall be as set forth in the Purchase Agreement.
G. Acquisition of Tooling. If necessary and with the Customer's written
consent, Sanmina will acquire any necessary tools and tooling to
fulfill any Orders. All such tooling required by Sanmina shall remain
the Customer's property, and Sanmina shall return such tooling (normal
wear and tear excepted) to Customer upon request, following the
completion of the relevant Order or the termination of this Agreement.
Responsibility for the cost of tooling acquired pursuant to the terms
of the Purchase Agreement shall be as set forth in the Purchase
Agreement. Except as otherwise provided herein or agreed by the
parties hereto, Customer will be responsible for the cost of all other
tools and tooling required to be acquired by Sanmina hereunder. When
requested by Customer, and agreed to in writing by Sanmina and
Customer, the cost of such tooling will be amortized over the
estimated volume of Products to be produced with such tooling.
H. Limitations on Sanmina's Rights to Build Ahead. Although Orders cover
up to 90 days and forecasts cover longer periods, Sanmina is not
authorized to make unilateral decisions on the amount of Products to
be built more than 30 days prior to scheduled delivery date, with the
exception of agreed upon Kanban levels. Lot sizes and build-ahead
quantities will be the result of a mutual agreement between Sanmina
and Customer.
IV. Reschedules
A. Rescheduling Matrix. Customer may reschedule delivery dates for
Products subject to the following matrix:
Notice Prior to Percent of Original
Original Quantity that can be
Delivery Date Rescheduled
0 to 30 days 0%
31 to 60 days 25%
61 to 90 days 50%
Beyond 90 days 100%
As an example, if Customer notifies Sanmina in writing between 31 and
60 days prior to the scheduled deliver date of certain Products,
Customer may reschedule the delivery of a maximum of 25% of the total
amount of such Products.
B. Revised Delivery Dates. Deliveries rescheduled as provided above shall
be deferred to such date or dates, within 60 days following the
original delivery date, as Customer may reasonably determine. A change
in the delivery date of any Product for a period exceeding 60 days in
the aggregate shall be deemed a cancellation by Customer with respect
to such Product.
V. Revisions
In the event Customer requests an engineering change to a Product,
Sanmina will notify Customer of any impact on the cost and/or
scheduled delivery of such Product within five business days of the
receipt of Customer's request. Unless Customer consents to the amended
notification from Sanmina, the requested engineering change will be
deemed canceled. Any changes (whether up or down) in the cost of
Products resulting from an engineering change order ("ECO") will be
applied to the applicable purchase price for such Products. Sanmina
will charge a $250.00 administrative fee per ECO to partially cover
Sanmina's processing costs involved in processing the ECO.
VI. Cancellations
Customer may cancel any Order, with the exception of Quick-turn and
/or Proto-type Orders, by notifying Sanmina in writing at least 30
days prior to the delivery date of such Order. Within 10 days of such
cancellation, Sanmina will provide Customer with the amount of
Customer's obligations with respect to Materials and labor costs
associated with the canceled order, as provided in Section III above.
Customer will pay such cancellation amount to Sanmina on a net 30 day
basis. After receipt of such cancellation amount, Sanmina shall
deliver to Customer, at Customer's expense, any Materials purchased
but unused as a result of such cancellation or scrap such Materials,
at the discretion of Customer.
VII. Product Pricing
A. Initial Prices; Adjustments. The initial prices for Products listed in
Exhibit A attached hereto will be as set forth in Exhibit A. For
Products not listed in Exhibit A, or with no prices established
therefor, the prices shall be established through the Sanmina-Customer
quote process. Sanmina will respond to Customer's requests for quotes
and proposals within 14 days after receipt of all necessary data. The
initial prices for Products shown in Exhibit A will be evaluated on a
quarterly basis for potential changes, in accordance with prior
agreements with Customer. Customer expects improvements in
efficiencies, material cost reductions and innovative processes to
contribute to these reductions. Prices otherwise established as
provided herein are subject to adjustment as provided herein to
reflect ECOs and variations in the market prices of Materials and
other components. Any cost reductions realized by Sanmina due to a
reduction in material or labor costs or yield improvements will be
shared equally with Customer at the time such reductions are realized.
Any price decreases will apply immediately to all new Orders Price
increases will apply to new Orders issued (i) after agreement by the
parties of the price increase, or (ii) more than thirty (30) days
following Customer's receipt of written notice of the increase.
B. Computation of Prices; Taxes. All prices of Products are F.O.B.
Sanmina's facility. All prices will be quoted and paid in U.S.
dollars. All prices applicable to Products purchased pursuant to the
terms of this Agreement will include all charges for packaging,
packing, crating, storage and shipping and transportation costs to
Customer's facility or other designated ship-to location, except as
otherwise provided herein. Prices do not include any federal, state or
local sales, use, excise VAT and similar taxes, that may be applicable
to the Products. When Sanmina has the obligation to collect taxes, the
appropriate amount may be added to Customer's invoice and will be paid
by Customer unless Customer provides Sanmina with a valid tax
exemption certificate authorized by the appropriate taxing authority
and quantities.
C. Most Favored Customer Pricing. In no event are the prices applicable
to Products ordered by Customer hereunder to be higher than the lowest
prices then offered by Sanmina to its most favored customers, for
substantially similar products and quantities.
VIII. Shipping and Delivery
A. Delivery Terms. Customer's Orders will state delivery dates for
Products in accordance with the terms of this Agreement, and time will
be of the essence in meeting Customer's delivery requirements. Unless
otherwise agreed in writing by the parties, delivery of all Products
under this Agreement shall be F.O.B. Sanmina's plant, at which time
risk of loss and title shall pass to Customer.
B. Shipping. Sanmina will transport Products by the method specified by
Customer, to Customer's address or to an address specified in writing
by Customer. All freight, insurance and other shipping expenses from
the delivery point shall be borne by Customer. All Products delivered
pursuant to the terms of this Agreement will be suitably packed for
shipment in a commercially reasonable manner in Sanmina's standard
shipping cartons, unless otherwise designated by Customer. When
special packaging is requested or, in the opinion of Sanmina, is
required under the circumstances, the additional expenses related to
such special packaging will be borne by Customer. Each shipping
container will be marked to show Customer's Order number, Product
description and identifying numbers, and quantity contained therein.
If Products are delivered more than five days in advance of the
specified delivery date, Customer may either return such Products at
Sanmina's risk and expense for subsequent delivery on the specified
delivery date or retain such Products and make payment when it would
have been due based on the specified delivery date. If Products are
returned to Sanmina then reshipped to Customer, Sanmina will bear the
cost and risk of loss associated with such return and reshipment. In
the event Products will be delivered more than five business days
late, Customer may request such Products to be shipped and delivered
via an expedited method of delivery. In such event, Sanmina agrees to
pay or reimburse Customer for all transportation charges in excess of
the normal charges.
IX. Payment and Invoicing
Payment terms will be net 30 days from invoice date, which will be no
earlier than the date of delivery to Customer of the Products covered
thereby. Sanmina will provide Customer with a credit limit]. In the
event that Customer exceeds this credit limit or has outstanding
invoices for more than 60 days, Sanmina may stop shipments of Products
to Customer until Customer makes sufficient payment to bring its
account consistent with terms outlined above. In the event of a
material default by Customer of its payment obligations hereunder,
Sanmina may reduce the credit limit, upon written notice to Customer.
X. Quality Standards and Warranty
Sanmina warrants that the Products will be manufactured in a good and
workmanlike manner, consistent with industry standards, and will
conform to and perform in accordance with applicable specifications,
and that the Products (excluding components purchased from third-party
vendors ("Vendor Components")) will be free from any defects in
workmanship for a period of one year from the date of delivery to
Customer. Warranty on Vendor Components is limited to the warranty
provided by the component manufacturer. Sanmina will pass on any
unexpired warranty for such Vendor Components provided by third-party
vendors or passed on by such third-party vendors from the original
manufacturers until the expiration of such warranties. As Customer's
sole remedy under the warranty, Sanmina will, at no charge, rework,
repair and retest, or replace, any Products returned to Sanmina and
found not to be manufactured in accordance with the applicable
specifications or that are otherwise defective. Warranty coverage does
not include failures due to Customer's design, the supply or selection
of improper or defective parts or materials designated by Customer,
Customer requested changes, damages caused by Customer's misuses,
unauthorized repair or negligence. Sanmina does not assume any
liability for expendable items such as lamps and fuses. The
performance of any repair or replacement by Sanmina does not extend
the warranty period for any Products beyond the period applicable to
the Products originally delivered.
EXCEPT FOR THE ABOVE EXPRESS WARRANTIES, SANMINA MAKES AND THE
CUSTOMER RECEIVES NO WARRANTIES ON THE PRODUCTS, EXPRESS, IMPLIED,
STATUTORY, OR OTHERWISE, AND SANMINA SPECIFICALLY DISCLAIMS ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
XI. Service of Legacy Products
During the term of this Agreement, Sanmina will continue to
manufacture and repair all Legacy Products as Customer may request, in
accordance with such pricing schedule as may be mutually agreed upon
by the parties from time to time, consistent with the Sanmina-Customer
quote process referenced in Section VII above.
XII. Design Services
During the term of this Agreement, Sanmina will provide design
services to Customer, in connection with the design and development of
prototype and production electronic circuit boards, assemblies and
Products, at such prices and on such terms as may be mutually agreed
upon by the parties from time to time, consistent with the
Sanmina-Customer quote process referenced in Section VII above.
XIII. Minimum Work Commitment - "Take or Pay" Provision
A. Minimum Order Requirement. During each of the three one year periods
commencing from the effective date of this Agreement, Customer will
undertake to submit to Sanmina Orders for Products and design services
having an aggregate purchase price of at least $22,000,000 (subject to
adjustment as provided below). If in any of such one year periods
Customer should fail to submit Orders to Sanmina in such minimum
aggregate amount, then Customer will make payments to Sanmina as
provided below (and such payment obligations will be Customer's sole
liability and Sanmina's sole remedy with respect to any such failure).
B. Consequence of Missing First or Second Year Targets by More Than 20%.
If, during the first or second one year period commencing from the
effective date of this Agreement, Orders are submitted to Sanmina in
an aggregate amount of less than 80% of the targeted minimum amount
(or $17,600,000 in the first year), then within 60 days following the
end of such one year period, Customer will pay to Sanmina a sum equal
to the amount of such shortfall, multiplied by 25% (representing
Sanmina's assumed profit margin with respect to the Orders represented
by the shortfall). For example, if during the first year Customer
submitted Orders to Sanmina aggregating $15,000,000, Customer would
pay to Sanmina the sum of $7,000,000 x .25 = $1,750,000.
C. Consequence of Missing First or Second Year Targets by Less Than 20%.
If, during the first or second one year periods commencing from the
effective date of this Agreement, Orders are submitted to Sanmina in
an aggregate amount of at least 80% of the targeted minimum amount,
then the amount of the shortfall will be added to the minimum
commitment applicable to the following year, and any amount to be paid
by Customer to Sanmina would be determined after completion of the
following year. For example, if during the first year Customer
submitted Orders to Sanmina aggregating $20,000,000, then the minimum
order requirement applicable to the second year would be $24,000,000.
D. Consequence of Missing Third Year Target. If, during the third one
year period commencing from the effective date of this Agreement,
Orders are submitted to Sanmina in an aggregate amount of less than
the targeted minimum amount, then within 60 days following the end of
such one year period, Customer will pay to Sanmina a sum equal to the
amount of such shortfall, multiplied by 25% (representing Sanmina's
assumed profit margin with respect to the Orders represented by the
shortfall). For example, if during the third year Customer submitted
Orders to Sanmina aggregating $20,000,000, and, as a result of a
carry-over of $2,000,000 from the second year the minimum target
applicable to the third year were $24,000,000, then Customer would pay
to Sanmina the sum of $4,000,000 x .25 = $1,000,000.
E. Carry-Over of Orders in Excess of Minimum. If, during the first or
second one year periods commencing from the effective date of this
Agreement, Orders are submitted to Sanmina in an aggregate amount in
excess of that required to satisfy the minimum obligation set forth
above (i.e., having an aggregate purchase price of $22,000,000 or such
lesser amount which, when added to the excess Orders submitted during
the prior year, would satisfy the minimum annual $22,000,000
requirement), then the amount by which the aggregate purchase price of
such Orders exceed such targeted minimum amount (the "Surplus Amount")
will be counted toward satisfaction of Customer's minimum Order
requirement for the next one year period.
F. Sale of Operations; Counting of Orders. If, at any time during the
three year period that the requirements of this Section XIII are in
effect, Customer sells any divisions or operations which have
previously submitted Orders to Sanmina hereunder, then any Orders
subsequently submitted to Sanmina by the purchaser with respect to
products Sanmina is building for any such division or operation will
be counted toward the satisfaction of the targeted minimum Order
requirement hereunder, as if such Orders had been submitted hereunder
by Customer to Sanmina.
XIV. Right of First Refusal
As Customer develops new products that require manufacturing of
printed circuit boards or other electronics assemblies or components,
or puts out to bid the manufacturing rights to the printed circuit
boards or other electronics components of existing products, then to
the extent such manufacturing rights are not contractually committed
to any other party, and Sanmina demonstrates to the satisfaction of
Customer that it can satisfactorily perform such manufacturing
operations in terms of price competitiveness, quality, timeliness and
production capacity, Customer will extend to Sanmina the right to
perform such manufacturing services, on such terms as Customer may in
its discretion determine to be appropriate.
XV. Testing
During the term of this Agreement, and in accordance with the
following requirements, Sanmina will continue to maintain and support
all in-circuit tests developed for the S790 test platform, and E&S
will support, sustain and develop all functional test platforms,
diagnostics and post production test hardware:
1. System Requirements. Sanmina will maintain the S770 and S790
systems. Sanmina has the option of converting to the S790 system,
and Sanmina will convert all S770 fixtures and programs to the
S790 as required by Order, thereby eliminating the requirement to
maintain the S770 system once all S770 fixtures and programs have
been converted. The conversion will be at E&S expense.
2. Fixture Requirements.
a. Sanmina will preserve and maintain all S770 and S790 test
fixtures in good working order.
b. In the event that Customer requires changes to current test
fixtures, Sanmina will provide services necessary to
implement and maintain changes. In the event that the
changes will require a new test fixture, Sanmina has the
option to move the test to a different platform or system.
Any of the above actions pursuant to this paragraph 2(b)
will be at the expense of E&S.
3. Test Program Requirements. Sanmina will preserve and maintain all
S790 test programs in good working order. In the event that
Customer requires changes to current test programs, Sanmina will
provide services necessary to implement and maintain changes, at
E&S' expense. Prudent test program archival and back-up processes
will be secured to prevent the loss of any test programs.
4. Status of Tools and Tooling. All tools and tooling relating to
test fixtures and programs provided to and maintained by Sanmina
will remain the property of Customer.
XVI. Indemnification
A. By Customer. Customer will indemnify and hold harmless Sanmina
from and against any and all losses, damages, costs, liabilities
or expenses (including court costs and the reasonable fees of
attorneys and other professionals) to the extent that such
losses, costs, liabilities or expenses arise out of, or in
connection with, in whole or in part, (a) infringements of any
patent, trademark, copyright or other intellectual property of
Customer or (b) any negligence or willful misconduct by Customer,
its employees or agents and subcontractors, including but not
limited to any such act or omission that contributes to: (i) any
bodily injury, sickness, disease, or death; (ii) any injury or
destruction to tangible or intangible property of the injured
party or any loss of use resulting therefrom; or (iii) any
violation of any statute, ordinance or regulation.
B. By Sanmina. Sanmina will indemnify and hold harmless Customer
from and against any and all losses, damages, costs, liabilities
and expenses (including court costs and the reasonable fees of
attorneys and other professionals) to the extent that such
losses, costs, liabilities or expenses arise out of, or in
connection with, in whole or in part, (a) Sanmina having utilized
in the manufacture of any Products any intellectual property
rights of others, where such use has not been required by the
specifications or instructions provided to Sanmina by Customer or
(b) any negligence or willful misconduct by Sanmina, its
employees or agents and subcontractors, including but not limited
to any such act or omission that contributes to: (i) any bodily
injury, sickness, disease, or death; (ii) any injury or
destruction to tangible or intangible property of the injured
party or any loss of use resulting therefrom; or (iii) any
violation of any statute, ordinance or regulation. . XVII.
Quality, Inspection and Reporting
A. Inspection of Work. Customer will have the right at all
reasonable times, upon reasonable advance notice, to visit
Sanmina's plant to inspect the work performed on Products.
Inspection of the work shall not relieve Sanmina of any of its
obligations under this Agreement or any Orders. Sanmina will
provide Customer with all mutually agreed upon quality reports at
agreed upon intervals. Sanmina reserves the right to restrict
Customer's access to the plant or any area within it as necessary
to protect confidential information of Sanmina or its other
customers.
B. Inspection as Condition of Acceptance. If Customer demands
inspection of any Products prior to the delivery of such Products
as a condition of acceptance of such Products, Customer must
inspect the Products within 48 hours of a transmission of written
notice by facsimile or other electronic or telephonic delivery
system from Sanmina informing Customer that the Products are
ready to be shipped.
C. Quality Improvement Program. Customer and Sanmina will implement
a joint quality improvement program that will develop and
implement continuous Product quality improvements.
XVIII. Term and Termination
A. Initial Term; Extension. This Agreement shall be in effect for a
period of 36 months commencing from the effective date hereof as
set forth above, unless earlier terminated or extended as
provided herein. The parties may, by mutual agreement, extend
this Agreement at any time prior to its expiration or
termination. Except as otherwise specifically provided herein, in
the event of the expiration or earlier termination of this
Agreement, the Agreement shall remain in full force and effect
with respect to, and shall be applicable to, any Orders issued by
Customer and accepted by Sanmina prior to such expiration or
termination.
B. Termination. Either party may, without penalty, terminate this
Agreement upon 60 days prior written notice to the other party in
either one of the following events:
1. the other party materially breaches this Agreement and such
breach remains uncured for thirty (30) days following
written notice of breach from the non breaching party; or
2. the other party becomes involved in any voluntary or
involuntary bankruptcy or other insolvency petition or
proceeding for the benefit of its creditors, and such
petition, assignment or proceeding is not dismissed within
sixty (60) days after it was filed.
C. Effect of Termination. Upon the expiration or earlier termination
of this Agreement, Sanmina will provide Customer with an invoice
of amounts owed to Sanmina hereunder. In addition, Customer will
be liable for all work-in-progress at its value at the time of
cancellation and any outstanding charges. Any work-in-progress
and/or finished goods built beyond the mutually agreed-upon
schedule will not be the responsibility of Customer. Upon
termination, Customer will pay all invoiced charges in net thirty
(30) days.
XIX. Limitation of Liability
IN NO EVENT WILL SANMINA OR CUSTOMER BE LIABLE FOR ANY SPECIAL,
INDIRECT, CONSEQUENTIAL OR INCIDENTAL DAMAGES, HOWEVER CAUSED AND ON
ANY THEORY OF LIABILITY, ARISING IN ANY WAY OUT OF THIS AGREEMENT.
THIS LIMITATION WILL APPLY EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, AND NOTWITHSTANDING ANY FAILURE OF
ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED HEREIN.
XX. Miscellaneous
A. Governing Law. This Agreement will be governed by and interpreted
under the laws of the State of Utah, without reference to
conflict of laws principles.
B. Jurisdiction. For any dispute arising out of this Agreement, the
parties consent to personal and exclusive jurisdiction of and
venue in the state and federal courts within Salt Lake County,
Utah.
C. Entire Agreement; Amendment and Waiver; Enforcement of Rights.
This Agreement sets forth the entire agreement and understanding
of the parties relating to the subject matter herein and merge
all prior discussions between them. No modification of or
amendment to this Agreement, nor any waiver of any rights under
this Agreement, will be effective unless in writing signed by the
party to be charged. The failure by either party to enforce any
rights thereunder will not be construed as a waiver of any rights
of such party.
D. Assignment; Successors and Assigns. Neither party will have any
right to assign its rights or obligations under this Agreement
without the prior written consent of the other party. Subject to
the foregoing, this Agreement, and the rights and obligations of
the parties hereunder, will be binding upon, and inure to the
benefit of, their successors and permitted assigns.
E. Notices. Any required notices hereunder will be given in writing
at the address of each party set forth on the signature pages
hereof, or to such other address as either party may substitute
by written notice to the other in the manner contemplated herein,
and will be deemed served when delivered by facsimile or mail or
when tendered in person.
F. Force Majeure. Neither party will be liable to the other for any
default hereunder if such default is caused by an event beyond
such party's control, including without limitation acts or
failures to act of the other party, strikes or labor disputes,
component shortages, unavailability of transportation, floods,
fires, governmental requirements and acts of God (a "Force
Majeure Event"). In the event of threatened or actual
non-performance as a result of any of the above causes, the
non-performing party will exercise commercially reasonable
efforts to avoid and cure such non-performance. Should a Force
Majeure Event prevent a party's performance hereunder for a
period in excess of ninety (90) days, then the other party may
elect to terminate this Agreement by written notice thereof.
G. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original and all of
which together will constitute one and the same instrument.
SANMINA: CUSTOMER:
Sanmina Corporation Evans & Sutherland Computer Corporation
By: /s/ Bertnard.J. Whitney By: /s/ William C. Gibbs
Bernard J. Whitney, Executive William C. Gibbs, Vice President of
Vice President and Chief Financial Corporate Development
Officer
Address: 355 East Trimble Road Address: 600 Komas Drive
San Jose, California 95131 Salt Lake City, Utah 84108