CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
EXHIBIT 10.18
NETGEAR, INC.
MASTER PURCHASE AGREEMENT
FEB. 11, 2003
Master Purchase Agreement Page 1
NETGEAR
MASTER PURCHASE AGREEMENT
This Master Purchase Agreement (the "Master Agreement") is entered into as of
Feb. 11, 2003 ("Effective Date") between NETGEAR, Inc., a Delaware corporation
having its principal place of business at 4500 Great America Parkway, Santa
Clara, California 95054 ("NETGEAR") and LITE-ON Technology Corp., a corporation
having its principal place of business at 7F, No. 10, Lane 345, Yangguang St.,
Neihu Chiu. Taipei 114, Taiwan ("SUPPLIER"), for good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged.
Incorporated into this Master Agreement by reference herein are:
Exhibit A, General Terms (Version US 11/07/02)
Exhibit A1, Purchase Order (Version US 11/07/02)
Exhibit A2, Purchase Price and Services Fees (Version US
11/07/02)
Exhibit A3, Products, Product Specifications and Lead Time
(Version US 11/07/02)
Exhibit A4, NETGEAR Proprietary Technology (Version US
11/07/02)
Exhibit B, Software License Terms (Version US 11/07/02)
and any of the following selected Exhibits (uncheck the box for any Exhibits
that shall not be part of this Master Agreement):
[X] Exhibit C, Maintenance Services Terms (Version US 11/07/02)
[X] Exhibit D, Intellectual Property Protection Agreement (Version
US 11/07/02)
[X] Exhibit D1, Statement of Work (Version US 11/07/02)
[X] Exhibit E, Non-Recurring Engineering Costs (Version US
11/07/02)
[X] Exhibit F, Supplier Training Services Terms (Version US
11/07/02)
[X] Exhibit G, Quality Procedures/On-Going Reliability Testing
(Version US 11/07/02)
This Master Agreement, including all Exhibits that are incorporated by reference
herein, shall form the entire agreement, representation and understanding
between the parties with respect to the subject matter hereof and shall
supersede all previous and contemporaneous communications, representations or
understandings, either oral or written, between the parties relating to the
subject matter hereof.
IN WITNESS WHEREOF, the parties have caused this Master Agreement to be executed
by their duly authorized representatives with the intent to be legally bound as
of the Effective Date.
Master Purchase Agreement Page 2
NETGEAR, Inc. SUPPLIER (Name of Company) Lite-on Technologies Corp.
/s/ Michael F. Falcon /s/ Landy Chen
- ----------------------- --------------------------------------
Name Michael F. Falcon Name Landy Chen
VP of Operations AVP of Sales & Product Marketing
- ----------------------- --------------------------------------
Title Title
February 11, 2003 Feb. 11, 2003
- ----------------------- --------------------------------------
Date Date
Master Purchase Agreement Page 3
EXHIBIT A
GENERAL TERMS
Version US 11/07/02
These General Terms are part of the Master Agreement between NETGEAR and
SUPPLIER, which incorporates these General Terms by reference herein. These
General Terms shall apply to the entire Master Agreement,
RECITALS
A. NETGEAR is engaged in the design, manufacture and sale of certain home
and office systems and related products, which consist of hardware and
associated software.
B. SUPPLIER is engaged in the design, manufacture and sale of certain
software and hardware Products (as defined below), which are used in or
complement NETGEAR's products. SUPPLIER wishes to supply and license
the Products to NETGEAR, for resale under the NETGEAR label as part of,
or complementary to, NETGEAR's products,
1. DEFINITIONS
1.1 Affiliate: means an entity that directly or indirectly controls, or is
controlled by or is under common control with, the party. For the
purposes of this definition, the term "control" shall mean the
ownership of voting stock or other equity interest entitling the owner
to exercise at least fifty percent (50%) of the voting rights of the
entity.
1.2 Change of Control: means (i) any transaction following the Effective
Date by which any person or group of persons (other than an Affiliate)
acquires (in a single or a series of related transactions) more than
fifty percent (50%) of the equity interest of SUPPLIER; (ii) a merger
or other business combination by which any third party acquires (in a
single or a series of related transactions) more than fifty percent
(50%) of the equity interest of SUPPLIER or the entity surviving such
merger or combination; or (iii) any other transaction by which any
third party acquires (in a single or a series of related transactions)
control of all or fifty percent (50%) of all the assets of SUPPLIER or
acquires the exclusive rights to the Products and the Intellectual
Property Rights necessary to make, modify, manufacture and sell the
Products.
1.3 Documentation: means all technical and operating guides and manuals and
program descriptions of the Products listed in Exhibit A3. as updated
by SUPPLIER from time to time,
1.4 End User: means a person or business entity that purchases, leases or
otherwise properly obtains the right to use NETGEAR systems directly
from NETGEAR or through one or more intermediaries for its own use or
for internal business purposes (and not for transfer or resale to
others).
Master Purchase Agreement Page 4
1.5 Epidemic Failure: means a defect or set of related defects in the
Products resulting from defects in material, workmanship, manufacturing
process or design deficiencies affecting one-quarter percent (.25%) or
more of the Products delivered during any three (3) month period,
1.6 Intellectual Property Rights: means all United States and foreign
patents, copyrights, trade names, trademarks, trade secrets, know-how,
mask work rights, and any other intellectual property rights, whether
registered or unregistered.
1.7 Marks; means NETGEAR's trademarks, service marks, trade names, and
logos.
1.8 Maximum Quantity; means the quantity of the Products in excess of [*].
1.9 NETGEAR Proprietary Technology; means any proprietary information,
technical data, trade secrets or know-how, including, but not limited
to, research, product plans, computer software and code, developments,
inventions, processes, formulas, technology, designs, drawings,
engineering, hardware configuration information, ,and other information
and technology disclosed by NETGEAR either directly or indirectly in
writing, orally or by drawings or inspection of parts or equipment, By
way of illustration and not limitation, NETGEAR Proprietary Technology
may include materials listed in Exhibit A4.
1.10 Products: means the SUPPLIER base products identified in Exhibit A3
that are privately labeled and customized for NETGEAR in accordance
with the Product Specifications, and the Work Products that are
developed for NETGEAR by SUPPLIER in accordance with Exhibit D. All
Products include the Supporting Software,
1.11 Product Specifications; means the specifications for the Products set
forth in Exhibit A3.
1.12 Refurbished Products: means the Products that contain used or repaired
parts.
1.13 Supporting Software; means all device drivers, firmware, and all
necessary software for the proper operation and support of the Products
and any Updates thereto, The Supporting Software may be pre-installed
on the Products or be in a stand-alone form. SUPPLIER shall supply the
Products along with the Supporting Software and to the extent
reasonably possible the supporting Software shall include built-in
diagnostic software that NETGEAR can run on its own systems.
1.14 Taxes means all federal, state, local, foreign, international, sales,
use, withholding and value added taxes, GST, duties and other
government charges (except for taxes based on NETGEAR's net income),
and any related penalties and interest.
1.15 Unit Price: means prices for the Products that are set out in
SUPPLIER'S price list, less the applicable discount specified in
Exhibit A2.
1.16 Updates: means all future enhancements, improvements or modifications
to the Supporting Software. An Update is designated (i) by a numerical
increase to the right of the Supporting
Master Purchase Agreement Page 5
Software's decimal point, e.g., 3.1, or (ii) by any other reasonable
and consistent method adopted by current standard industry practices
for designating an update.
1.17 Upgrades: means all new versions of the Supporting Software that
contain new features or functionality. An Upgrade is designated (i) by
a numerical increase to the left of the Supporting Software's decimal
point, e.g., 4.0, or (ii) by any other reasonable and consistent
method adopted by current standard industry practices for designating
an upgrade.
1.18 Work Products; means products as defined in Section 3.1 of Exhibit D
2 PURCHASE AND SALE OF PRODUCTS
2.1 General. This Master Agreement sets forth the only terms and conditions
under which NETGEAR shall purchase and SUPPLIER shall supply the Products. The
terms and conditions of this Master Agreement shall apply to all Products
purchased or licensed by NETGEAR from SUPPLIER. NETGEAR purchases and licenses
the Products for resale to its End Users, NETGEAR may resell the Products solely
in conjunction with its system or sell or lease the Products as a "Customer Kit"
to its End Users. Resale, as used in the foregoing sentences, shall also include
the right to grant End Users appropriate licenses or sublicenses to use the
Products. NETGEAR shall have full freedom and flexibility in its decisions
concerning the distribution and marketing of the Products including, without
limitation, the decision of whether or not to distribute or discontinue
distribution of the Products.
2.2 Private Label and Customization. All Products supplied by SUPPLIER to
NETGEAR shall be customized in accordance with the Product Specifications with
the use of NETGEAR Proprietary Technology, and shall be provided to NETGEAR in
the color and branded with such Marks as NETGEAR may designate to SUPPLIER.
Within thirty (30) days after the Effective Date of this Master Agreement,
NETGEAR will provide to SUPPLIER NETGEAR Proprietary Technology and ad
specifications and guidelines necessary to private label the Products ("Label
and Packing Specifications"). SUPPLIER shall strictly comply with such Label and
Packing Specifications.
2.3 Product Development. Subject to the parties' selection of Exhibit D on
the signature page of this Master Agreement, SUPPLIER shall develop, manufacture
and/or assemble the Work Products for NETGEAR in accordance with Exhibit D.
2.4 Exclusivity. SUPPLIER agrees to supply the Products exclusively to
NETGEAR and to any of NETGEAR's Affiliates or agents identified by NETGEAR under
the terms of this Master Agreement. SUPPLIER agrees not to sell such Products
directly to any third party or agent or former agent of NETGEAR. Notwithstanding
the foregoing, SUPPLIER may utilize its underlying technology to create similar
products for itself or other third parties as long as it does not incorporate
into those products NETGEAR Proprietary Technology or the Work Products.
3 PURCHASE ORDERS, CHANGES AND CANCELLATIONS
3.1 Purchase Orders. All orders for the Products shall be made pursuant to
written purchase orders submitted by NETGEAR to SUPPLIER that shall be
substantially in the form of Exhibit A1 and shall specify at a minimum the
Products, quantity, shipping address, and the requested delivery date ("Purchase
Orders"). All Purchase Orders placed under this Master Agreement shall be
subject to the terms and conditions set forth in this Master Agreement and on
the Purchase Order. In the event of any
Master Purchase Agreement Page 6
inconsistency between this Master Agreement and the Purchase Order or
SUPPLIER'S sales acknowledgment, the terms and conditions of this Master
Agreement shall prevail. NETGEAR hereby rejects any term, provision or condition
in SUPPLIER's sales acknowledgment or other communication in conflict with, or
purporting to add to, or modify, the terms of this Master Agreement or the
Purchase Order, and any such term, provision or condition shall be deemed
stricken and not binding upon NETGEAR. SUPPLIER shall be obligated to honor all
Purchase Orders plus [*] of the quantity of the Products stated in the Purchase
Orders, unless the resulting quantity of the Products requested therein exceeds
the Maximum Quantity. If the quantity stated in any Purchase Order exceeds the
Maximum Quantity, such order shall be subject to SUPPLIER's review and
acceptance, which shall not be unreasonably withheld,
3.2 Changes to Purchase Orders. NETGEAR shall have the right at any time
prior to delivery of the Products to make changes to the Purchase Order.
SUPPLIER shall notify NETGEAR in writing if any such changes cause an increase
in the time required for the performance, and NETGEAR must accept in writing
such revised performance schedule in order for it to be binding. SUPPLIER agrees
10 accept any such changes to the Purchase Orders made at any time prior to
delivery.
3.3 Cancellation for Convenience. NETGEAR shall have the right to cancel by
written notice any Purchase Order, in whole or in part, at any time prior to
delivery of the Products; provided that SUPPLIER shall be paid a cancellation
charge equal to SUPPLIER'S actual direct costs resulting from such cancellation.
SUPPLIER'S actual direct costs shall be limited to NETGEAR's unique components
that cannot be utilized by other customers or disposed of without costs being
incurred, and shall not include any damages occurred or costs of work performed
after receipt of the cancellation notice or any costs incurred by SUPPLIER's
suppliers or subcontractors, NETGEAR's liability for actual direct costs shall
be contingent on SUPPLIER's using commercially reasonable efforts to mitigate
damages constituting actual direct costs. SUPPLIER shall present a calculation
of its actual direct costs to NETGEAR within fourteen (14) days of its receipt
of the cancellation notice.
3.4 Cancellation for Cause. NETGEAR may cancel any Purchase Order at any
lime in the event of any defaulter failure to comply with the terms and
conditions of the Master Agreement by SUPPLIER, If any Purchase Order is
canceled for any default. or cause, NETGEAR shall not be liable to SUPPLIER for
any amount and SUPPLIER shall be liable to NETGEAR for any damages sustained by
such default or cause giving rise to the cancellation.
3.5 Sole and Exclusive Remedy. SUPPLIER acknowledges and agrees that the
liabilities set forth in Sections 3.3 and 3,4 represent NETGEAR's sole liability
for the cancellation of the Purchase Orders whether for convenience or cause and
represent the sole and exclusive remedy of SUPPLIER for cancellation of the
Purchase Orders.
4. MONTHLY FORECASTS AND PURCHASE OBLIGATIONS
4.1 Monthly Forecasts. On approximately a monthly basis, NETGEAR will
provide rolling six (6) month forecasts to SUPPLIER, SUPPLIER will use
commercially reasonable efforts to support such rolling six (6) month forecasts.
SUPPLIER acknowledges and agrees that any such forecast provided by NETGEAR is
for planning purposes only, SUPPLIER further acknowledges and agrees that
monthly forecasts provided by NETGEAR do not constitute a commitment of any type
on behalf of NETGEAR.
Master Purchase Agreement Page 7
4.2 Purchase Obligations, The parties agree that there is no minimum or
maximum purchase obligation under this Master Agreement, SUPPLIER shall supply
the Products only after NETGEAR places a Purchase Order and only in the quantity
specified in the applicable Purchase Order, NETGEAR shall be under no obligation
to place Purchase Orders under this Master Agreement.
5. DELIVERY OF PRODUCTS
5.1 The parties acknowledge and agree that meeting requested delivery dates
specified in the Purchase Orders is a material term of this Master Agreement.
SUPPLIER agrees to fill all Purchase Orders and to deliver the Products along
with the applicable Documentation on the requested delivery date. SUPPLIER
further agrees to work aggressively to reduce the lead times for all Products as
specified in Exhibit A3. To the extent that any Purchase Order exceeds the
Maximum Quantity, quantity of the Products in excess of the Maximum Quantity
shall be subject to delivery schedules agreed to between NETGEAR and SUPPLIER,
If delivery of the Products is delayed by SUPPLIER for more than [*] for
reasons other than force majeure (as defined in Section 24.6), NETGEAR may
terminate that Purchase Order and return the ordered Products (if already
shipped). Upon receipt of the returned Products, SUPPLIER shall issue a full
refund of all amounts if already paid for that Purchase Order, and pay any
damages incurred by NETGEAR due to the delay, including any costs incurred in
purchasing substitute products, NETGEAR shall have the right to offset any such
amounts payable by SUPPLIER under this Section 5,1 against any amounts
outstanding and payable by NETGEAR to SUPPLIER hereunder, SUPPLIER shall not
deliver to NETGEAR any Products that were manufactured in locations not approved
in advance and in writing by NETGEAR,
5.2 SUPPLIER shall handle, pack and mark the Products in accordance with
NETGEAR's Label and Packing Specifications and/or written instructions provided
by NETGEAR. NETGEAR shall have the right to inspect each delivery of the
Products and perform those tests it deems necessary to determine if the Products
are acceptable, Under no circumstances shall NETGEAR's inspection and testing of
the Products, including samples, be deemed to constitute acceptance, NETGEAR
shall be deemed to have accepted the Products only in the event that: (i)
NETGEAR fails to accept or reject the Products within thirty (30) days of
delivery; (ii) NETGEAR explicitly accepts the Products in writing; (Hi) the
Products are used in a manufacturing process conducted by NETGEAR-authorized
contract manufacturer and the Products successfully complete final test; or (iv)
NETGEAR delivers the Products to any End User NETGEAR's acceptance of any
Products shall in no way be construed as a representation by NETGEAR that
NETGEAR has completely tested the Products or that such Products comply with
their specifications or conform to any warranties made by SUPPLIER under this
Master Agreement. NETGEAR's acceptance of any Product shall in no way negate any
warranty provided under this Master Agreement or affect any other provision of
this Master Agreement. Acceptance is only to be used to determine whether
SUPPLIER is entitled to receive payment for the Products, The Products rejected
or supplied in excess of quantities specified in any Purchase Order may be
returned to SUPPLIER, at its expense, and in addition to NETGEAR's other rights,
NETGEAR may charge SUPPLIER all expenses of unpacking, examining, repacking, and
reshipping such Products. If NETGEAR receives the Products with defects or non-
conformities that are not apparent upon examination, NETGEAR reserves the right
to require replacement thereof as well as payment of damages therefor upon
discovery of any such defects or non-conformities. Nothing contained in this
Master Agreement shall in any way relieve SUPPLIER from the obligation of
testing, inspection and quality control with respect to the Products.
5.3 SUPPLIER shall be responsible for all actions necessary to transport
the Products in accordance with this Section 5. In addition, SUPPLIER shall be
responsible for payment of all shipping, freight,
Master Purchase Agreement Page 8
insurance, taxes, duty and other charges for delivery of the Products from
SUPPLIER'S factory to the port of exit. An itemized packing list must accompany
each shipment and include the following information: Purchase Order number,
quantity, shipment address, indication of partial/complete shipment, and
description of the Products including, but not limited to, weight and dimensions
of the Products.
5.4 Upon NETGEAR's written authorization, SUPPLIER shall deliver the
Products directly from SUPPLIER'S manufacturing facility to NETGEAR. NETGEAR
will transmit a Purchase Order by facsimile or other agreed upon means to
communicate to SUPPLIER, SUPPLIER shall communicate to NETGEAR an acknowledgment
within two (2) business days of receipt of the Purchase Order confirming the
quantity, delivery date, and delivery location. SUPPLIER will then schedule
delivery of each Product to the delivery location on the delivery date specified
in the Purchase Order. If the delivery date in SUPPLIER'S acknowledgment is
different than the date set forth in the Purchase Order, SUPPLIER must promptly
notify NETGEAR Worldwide Procurement of the discrepancy, SUPPLIER agrees that
the delivery date in SUPPLIER'S acknowledgement shall not exceed the lead times
as specified in Exhibit A3. If only a portion of the Products are available for
shipment to meet the delivery date, SUPPLIER will notify NETGEAR and ship the
available Products unless otherwise directed by NETGEAR.
5.5 Products supplied by SUPPLIER to NETGEAR shall be delivered CIP
(Incoterms 2000) to NETGEAR's facility, or such other destination specified in
the Purchase Order, at which point title to, all responsibility for, and all
risk of loss of, the Products shall pass from SUPPLIER to NETGEAR.
5.6 NETGEAR's transmission of a Purchase Order is SUPPLIER'S only
authorization to ship the Products to NETGEAR and invoice NETGEAR for the
Products specified in the Purchase Order.
6. PURCHASE PRICE AND PAYMENT
6.1 Purchase Price. The prices for the Products supplied under this Master
Agreement are specified on Exhibit A2. The prices for new products that the
parties may add to Exhibit A3 shall also be reflected on Exhibit A2. Such prices
shall be the sole amount payable by NETGEAR for the Products supplied to it by
SUPPLIER under this Master Agreement, The Unit Price for each Product will be
reviewed on a quarterly basis or as otherwise required by NETGEAR. The prices
can be changed only upon mutual agreement of the parties evidenced in writing
signed by both parties, All prices shall be in United States dollars and are
exclusive of applicable Taxes,
6.2 Equivalent Prices. SUPPLIER represents and warrants that the prices for
the Products shall not be less favorable than prices applicable to sales by
SUPPLIER to any other customer purchasing like quantities of substantially
comparable products, If at any time during the term of this Master Agreement
SUPPLIER offers to any other such customer more favorable prices and terms,
SUPPLIER shall immediately offer to sell the Products to NETGEAR at equivalent
prices and terms offered to such other customer. Additionally, if a lower price
has been provided to another customer, then SUPPLIER will apply this lower price
retroactively to NETGEAR consistent to the date that the lower price was first
provided to the other customer.
6.3 Costs Reductions. NETGEAR expects material cost reductions to be
pursued aggressively by SUPPLIER. Upon NETGEAR's request, SUPPLIER shall review
with NETGEAR on a quarterly basis the costs associated with manufacturing each
Product and SUPPLIER agrees to reduce the price of the Products in accordance
with any costs reductions realized as a result of reviews, in certain cases,
NETGEAR may be able to assist in component supply negotiations. If NETGEAR is
able to assist
Master Purchase Agreement Page 9
SUPPLIER in obtaining component price reductions, such reductions shall be
passed through to NETGEAR in its entirety through a price reduction.
6.4 Costed Bill of Materials. On a quarterly basis, SUPPLIER shall provide
to NETGEAR a value chain analysis for the Products that shall consist of a
complete costed bill of materials including, but not limited to, all component
costs, labor costs, overhead costs, freight, duty, profit, SG&A, and warranty.
Costed bills of materials will be provided to NETGEAR on the fifteenth (15th)
day of the second (2nd) month of each calendar quarter. For new products and new
projects, costed bills of materials will be provided along with quotations,
6.5 Non-Recurring Engineering Costs. Non-recurring engineering costs
("NRE"), if any, shall be borne by the parties in accordance with the schedule
set forth in Exhibit E.
6.6 Payment. For all Purchase Orders fulfilled by SUPPLIER, payment will be
made within [*] from the date of NETGEAR's receipt of the Product invoice,
Unless the parties agree otherwise, all payments will be made in U.S. currency,
In the event taxes are required to be withheld by any foreign taxing entity on
payments due SUPPLIER, NETGEAR will deduct such taxes from any amount owed
SUPPLIER and pay them to the appropriate taxing authority. NETGEAR will provide
SUPPLIER a receipt for such taxes.
6.7 Taxes. Subject to Section 6,6, SUPPLIER shall pay or reimburse NETGEAR
for all Taxes paid or payable by SUPPLIER or NETGEAR which are accrued or
assessed during the term of this Master Agreement whether against SUPPLIER or
NETGEAR, relating to this Master Agreement.
6.8 Right to Offset. NETGEAR shall have the right to offset any payments
that its owes to SUPPLIER under this Section 6 against any payments outstanding
and payable by SUPPLIER hereunder.
7. AUDIT RIGHTS
SUPPLIER agrees to keep and maintain, for a period of two (2) years after the
end of the year to which they pertain, complete and accurate records of the
Products purchased by NETGEAR, Upon twenty-four (24) hour prior notice, NETGEAR
shall have the right, exercisable not more than once every twelve (12) months,
to appoint an independent accounting firm, at SUPPLIER'S expense, to examine
such books, records, and accounts during SUPPLIER'S normal business hours to
verify the actual cost compared to costed bills of materials submitted to
NETGEAR by SUPPLIER. SUPPLIER shall fully cooperate with such audit, and grant
all required assistance and access to all records, materials and equipment. The
auditor shall not disclose any of SUPPLIER'S Confidential Information to NETGEAR
except as related to any non-compliance with this Master Agreement, In the event
such audit discloses an overpayment by NETGEAR, SUPPLIER shall promptly remit
the overpaid amounts to NETGEAR.
8. OWNERSHIP OF INTELLECTUAL PROPERTY
8.1 Ownership of Rights in and to SUPPLIER Proprietary Technology. NETGEAR
acknowledges SUPPLIER'S exclusive right, title and interest in and to any and
all Intellectual Property Rights embodied in or pertaining to SUPPLIER
proprietary technology that has been developed by SUPPLIER at its own expense
without any involvement of NETGEAR or NETGEAR Proprietary Technology and that,
except as specified in this Master Agreement, NETGEAR shall acquire no rights
whatsoever in or to any of such
Master Purchase Agreement Page 10
Intellectual Property Rights. SUPPLIER reserves all rights and licenses to such
SUPPLIER proprietary technology not specifically granted to NETGEAR hereunder.
8.2 Ownership of Rights in and to NETGEAR Proprietary Technology. SUPPLIER
acknowledges NETGEAR's exclusive right, title and interest in and to any and all
Intellectual Property Rights embodied in or pertaining to NETGEAR Proprietary
Technology and that, except as specified in this Master Agreement, SUPPLIER
shall acquire no rights whatsoever in or to any of such Intellectual Property
Rights, Without limiting the generality of the foregoing and for the avoidance
of any doubt, SUPPLIER further acknowledges and agrees that any software
developed by NETGEAR in support of the Products shall be owned exclusively by
NETGEAR and SUPPLIER shall acquire no rights whatsoever in or to any
Intellectual Property Rights associated with such software. SUPPLIER shall not
utilize any of NETGEAR Proprietary Technology for any purpose whatsoever, except
as authorized herein, and shall not take any action which may, in the reasonable
opinion of "NETGEAR, adversely affect or impair NETGEAR's rights, title and
interests in and to NETGEAR Proprietary Technology. NETGEAR reserves all rights
in and to NETGEAR Proprietary Technology not specifically granted to SUPPLIER
hereunder.
8.3 Ownership of Rights in and to the Work Products. Ownership of any and
all Intellectual Property Rights embodied in or pertaining to the Work Products
shall be as set forth in Section 3 of Exhibit D.
8.4 Ownership of Rights in and to Other Technology and Materials. NETGEAR
shall own exclusive right, title and interest in and to any and all Intellectual
Property Rights embodied in or pertaining to any software, hardware, industrial
design, specifications, and other technology and materials developed by SUPPLIER
at NETGEAR's expense, or with any involvement of NETGEAR Proprietary Technology
("Other Technology and Materials"). SUPPLIER hereby irrevocably transfers,
conveys and assigns to NETGEAR, and agrees to transfer, convey and assign to
NETGEAR, in perpetuity all right, title, and interest in the Other Technology
and Materials, including without limitation, ail Intellectual Property Rights
with respect thereto. [*] NETGEAR shall have the exclusive right to apply for or
register patents, copyrights, and such other proprietary protections as it
wishes for the Other Technology and Materials. SUPPLIER agrees to execute such
documents, render such assistance, and take such other action as NETGEAR may
reasonably request, at NETGEAR's expense, to apply for, register, perfect,
confirm, and protect NETGEAR's rights in the Other Technology and Materials.
SUPPLIER hereby irrevocably designates and appoints NETGEAR and its duly
authorized officers and agents as its agents and attorneys-in-fact, to act in
its behalf and instead of SUPPLIER, to execute and file any such application,
and to do all other lawfully permitted acts to further the prosecution and
issuance of Intellectual Property Rights for the Other Technology and Materials
thereon with the same legal force and effect as if executed by SUPPLIER. This
power of attorney shall be deemed coupled with an interest and shall be
irrevocable.
8.5. NETGEAR's License to the Supporting Software. SUPPLIER agrees to grant
and hereby grants to NETGEAR a license to the Supporting Software on the terms
and conditions specified in Exhibit B.
8.6 Protection of NETGEAR's Introduction of Partner Technology and
Engineering Expertise. NETGEAR may introduce its partners' technology to
SUPPLIER in order to integrate such technology into the Products, If such an
introduction occurs, the panics acknowledge and agree that SUPPLIER shall not
share [*]
Master Purchase Agreement Page 11
[*]
9. TRADEMARK LICENSE
Subject to the terms and conditions of this Master Agreement, NETGEAR hereby
grants to SUPPLIER, and SUPPLIER hereby accepts, a limited, non-transferable
right and license to utilize the Marks solely in conjunction with its
obligations under this Master Agreement. SUPPLIER hereby acknowledges and agrees
that it shall acquire no rights whatsoever with respect to any of the Marks and
SUPPLIER shall not utilize any of the Marks in connection with any products it
creates for itself or any third parties. The use, placement, type, style and
size of such Marks shall be in accordance with the Label and Packing
Specifications. Upon NETGEAR's request, SUPPLIER shall provide NETGEAR with
samples of the Products containing the Marks for NETGEAR's quality control
purposes.
10. CONFIDENTIALITY
10.1 Confidential Information. The panics agree that for the purpose of this
Master Agreement confidential information shall mean and include any and all
data and information not in the public domain, relating to, or contained or
embodied in, the business, affairs, products or services of either party
("Confidential Information"). Data and information shall be considered to be
Confidential Information if (i) the disclosing party has marked them as such,
(ii) the disclosing party, orally or in writing, has advised the receiving party
of their confidential nature, or (iii) due to their character or nature, a
reasonable person in a like position and under like circumstances would treat
them as secret and confidential. Confidential Information does not include, for
purposes of this Master Agreement, material or information that; (a) is already,
or otherwise has become, generally known by third parties as a result of no act
or omission of the receiving party; (b) subsequent to disclosure hereunder was
lawfully received from a third party having the right to disseminate the
information and without restriction on disclosure; (c) was already known by the
receiving party prior to receiving it from the disclosing party and was not
received from a third party in breach of that third party's obligations of
confidentiality; or (d) was independently developed by the receiving party
without use of Confidential Information of the disclosing party.
10.2 Obligation. Each party will maintain the confidentiality of the other
party's Confidential Information and will not disclose such Confidential
Information other than to its own employees, employees of its Affiliates, its
attorneys, auditors and accountants, consultants, contractors and subcontractors
who are bound by their own confidentiality agreements that by their terms apply
to and cover the other party's Confidential Information and are at least as
protective with respect to such Confidential Information as this Section 10. The
confidentiality provisions of this Master Agreement shall continue for three (3)
years following the expiration or termination of this Master Agreement,
10.3 Return of Confidential Information. Upon the expiration or termination
of this Master Agreement, at the request of either party, the receiving party
will cease all use of the disclosing party's Confidential Information and will
promptly destroy or return to the disclosing party all such Confidential
Information in tangible form and all copies thereof in that party's possession
or under its control, and will destroy all copies thereof on its computers,
disks and other digital storage devices, NETGEAR's compliance with
Master Purchase Agreement Page 12
this Section 10.3 shall be subject to its and its End Users' ability to continue
to use the Products provided under this Master Agreement. Upon request, a
receiving party will certify in writing its compliance with this Section 10.3.
11. REPRESENTATIONS AND WARRANTIES
11.1 SUPPLIER represents and warrants on an ongoing basis that:
11.1.1 NETGEAR will acquire good and marketable title to the
Products, and that all Products will be free and clear of all liens, claims,
encumbrances and other restrictions;
11.1.2 All Products will be new and unused unless NETGEAR requests
Refurbished Products in writing. If NETGEAR requests Refurbished Products, the
Refurbished Products will be provided to NETGEAR clearly marked as such and will
be discounted as agreed by the parties in writing;
11.1.3 All Products will be free from defects in design, materials
and workmanship, and will perform in conformance with SUPPLIER'S Product
specifications and specifications provided by NETGEAR in Exhibit A3 for [*] from
the date of delivery to NETGEAR unless a greater warranty period is stated in
documents accompanied by the Products, The foregoing warranty extends to any
Product which was properly used for its intended purpose and does not cover the
Product which was modified without SUPPLIER'S approval or which was misused or
subjected to unusual physical stress;
11.1.4 It has all the necessary rights and licenses in, and to, the
Products necessary to allow NETGEAR to resell and sublicense, the Products
without restriction or additional charge; It is subject to LITE-ON's master
agreement and it is allowed to negotiate with software vendor.
11.1.5 The Products do not infringe any third party's Intellectual
Property Rights.
11.2 On-Going Quality Assurance. SUPPLIER will follow good manufacturing
practices (equivalent to IPC Class II for electrical assembly) utilizing
materials, techniques, and procedures, which conform to industry standards.
SUPPLIER shall comply and shall use suppliers in its manufacturing process which
comply with the requirements of ISO 9000 and CE Mark standards, and all other
applicable global standards including any requested by NETGEAR in Exhibit A3.
Without limiting the generality of the foregoing, SUPPLIER represents that it
has and shall maintain (SO 9000 certification. SUPPLIER shall monitor, test and
assure the quality of the Products in accordance with Exhibit C (Quality
Procedures/On- Going Reliability Testing).
11.3 Non-Conforming Product. If NETGEAR determines that any Product does not
conform to the foregoing warranties ("Non-Conforming Product(s)"), NETGEAR will
promptly notify SUPPLIER of any Non-Conforming Product in order to obtain a
return materials authorization number ("RMA"). SUPPLIER will issue a RMA within
twenty-four (24) hours of notification. Upon NETGEAR's receipt of a RMA, NETGEAR
will (i) cause the return of the Non-Conforming Product to SUPPLIER'S facility
or to such other location specified by SUPPLIER, and (it) issue a [credit]
memorandum in the amount of the then-current Purchase Order price for such
Non-Conforming Products (such amount shall be applied towards subsequent
purchase price payables for the Products), All such Non-Conforming Products will
be shipped by NETGEAR to SUPPLIER at SUPPLIER'S risk and expense, including
packing and freight charges to and from SUPPLIER, and SUPPLIER will reimburse
NETGEAR for any reasonable costs
Master Purchase Agreement Page 13
incurred by NETGEAR with respect to the same. Upon NETGEAR's request, SUPPLIER
will, at its own cost and expense, (a) test the returned Non-Conforming Products
for defects, (b) repair/refurbish the returned Non-Conforming Products that
prove to be defective during testing; provided that SUPPLIER shall have the
discretion to determine whether to dispose/scrap defective Non-Conforming
Products, and (c) repackage the Non-Conforming Products that have been tested
and repaired/refurbished. If, within thirty (30) days after SUPPLIER's carrier
receives the returned Non-Conforming Products, SUPPLIER tests, repairs (if
necessary), and repackages such returned products ("Refurbished Products"), then
NETGEAR will repurchase such Refurbished Products at [*] of the then-current
Purchase Order price for such products. If SUPPLIER does not complete such
testing, repair (if necessary) and repacking within such 30-day period, NETGEAR
shall not be obligated, but shall have the right and option, to repurchase the
Refurbished Products at [*] of the then-current Purchase Order price for such
products. In recognition of SUPPLIER's efforts with respect to the RMA program
described herein, the Purchase Order price for Products ordered by NETGEAR after
NETGEAR's repurchase of Refurbished Products shall be increased by a certain
percentage to be mutually agreed upon between the parties in writing. Any such
increase shall be based, in part, on NETGEAR's historic return rate and defect
rates for the Products. These remedies are in addition to any others that may be
provided by this Master Agreement or by law.
11.4 Out-of-Warranty Repair. Upon request of NETGEAR, SUPPLIER shall repair
or replace out-of-warranty Products for a period of two (2) years after the last
date of production, following the RMA procedures, at a charge to NETGEAR as set
forth in the price schedule in Exhibit A2. Upon such request, NETGEAR shall
provide SUPPLIER with a detailed description of the defect.
11.5 EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS MASTER AGREEMENT,
SUPPLIER GRANTS NO OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED, AND HEREBY
DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, IN CONNECTION WITH ANY PRODUCT SOLD BY SUPPLIER UNDER THIS MASTER
AGREEMENT.
12. EPIDEMIC PROBLEMS AND SAFETY
12.1 Epidemic Failures. In the event of Epidemic Failure of the Products,
SUPPLIER agrees to compensate NETGEAR for all costs and expenses (whether inside
or outside the warranty period) caused by Epidemic Failure. If an Epidemic
Failure occurs, NETGEAR will notify SUPPLIER, and the parties will cooperate in
good faith to promptly conduct analyses of the Epidemic Failure and develop a
recovery plan, which may include a preventive action plan if appropriate to
correct the Epidemic Failure (the "Recovery Plan"), SUPPLIER shall bear the cost
of implementing the Recovery Plan unless otherwise agreed by NETGEAR, including
the cost of airfreight for the Products in need of repair to, and from,
NETGEAR's End Users' locations. The parties will use reasonable efforts to
minimize the costs associated with the Recovery Plan without compromising
NETGEAR's ability to aggressively respond to End Users' needs. If the parties
are unable to promptly agree on a Recovery Plan to correct an Epidemic Failure,
NETGEAR may implement its own recovery plan which it deems reasonable under the
circumstances, and SUPPLIER will reimburse NETGEAR for reasonable repair depot
expenses (including, but not limited to, equipment and material, labor, test,
design, product replacements, two-way transportation, packing, handling, etc.)
and all other direct costs incurred by NETGEAR implementing the Recovery Plan
associated with the Epidemic Failure. NETGEAR may at its discretion offset any
such expenses and other direct costs against the amounts payable by NETGEAR to
SUPPLIER hereunder.
Master Purchase Agreement Page 14
12.2 Product Safety. In the event either SUPPLIER or NETGEAR becomes aware
of any information which reasonably supports a conclusion that a hazard may
exist in any Product and the defect could cause death or bodily injury to any
person or property damage ("Hazard(s)"), the party becoming aware of this
information shall notify the other party of the Hazard. Whenever possible,
notification to the other party shall precede notice to any governmental agency,
unless required by law. SUPPLIER and NETGEAR shall promptly exchange all
relevant data and then, if practical, as promptly as possible, meet to review
and discuss the information, tests, and conclusions relating to the alleged
Hazard. At this meeting, the parties shall discuss the basis for any action,
including a recall, and the origin or causation of the alleged Hazard, SUPPLIER
shall be responsible for the costs affecting a recall including, but not limited
to, the reasonable and actual out-of-pocket costs to NETGEAR directly related to
the recall provided that NETGEAR uses reasonable efforts to mitigate SUPPLIER's
damages. Each party shall, on request, provide to the other reasonable
assistance in: (i) determining how best to deal with the Hazard; and (ii)
preparing for, and making any presentation before, any governmental agency,
which may have jurisdiction over Hazards involving the Products.
13. INDEMNIFICATION
13.1 SUPPLIER agrees to defend (or at its option settle), indemnify and hold
harmless NETGEAR from and against any and all legal claims, actions, demands,
proceedings, judgments, authorized settlements, costs and expenses, including,
without limitation, attorney's fees, arising out of or in connection with any
alleged or actual:
13.1.1 infringement by SUPPLIER or a Product of any copyright, patent,
trademark, trade secret or other Intellectual Property Rights of any third
party, provided that such alleged and actual infringement is result solely from
the SUPPLIER's design without any revisions or changes from NETGEAR;
13.1.2 claim by a third party that a Product provided under this Master
Agreement has caused bodily injury (including death) or has damaged real or
tangible personal property;
13.1.3 breach of any of SUPPLIER's warranties contained in this Master
Agreement;
13.1.4 claim arising out of or relating to SUPPLIER's provision of
Products whether repaired or not that contain used or refurbished parts that are
not clearly and conspicuously labeled as such; and
13.1.5 any violation by SUPPLIER of any governmental laws, rules,
ordinances or regulations.
13.2 In the event of any such claims, NETGEAR shall: (i) promptly notify
SUPPLIER of such claims; (ii) tender to SUPPLIER the right to defend such claims
provided, however, that NETGEAR shall have the right to participate in such
defense with its own counsel and at its own expense; and (iii) cooperate with
SUPPLIER in the defense thereof at SUPPLIER's expense. SUPPLIER shall not settle
any such claims without NETGEAR's consent.
13.3 In addition to SUPPLIER's obligations and liabilities above, if an
infringement claim is made by a third party with respect to a Product, SUPPLIER
shall use its best efforts to, as agreed upon by the parties, (i) procure for
NETGEAR the right to continue to use and market the Product, (ii) modify the
Product so that it is no longer infringing, or (iii) replace the Product with a
non-infringing Product. If the parties determine that none of these alternatives
is feasible, NETGEAR will, in addition to any remedies
Master Purchase Agreement Page 15
available to it under this Master Agreement, at law and equity, return any
affected Products for a full at refund of the purchase price.
14. LIABILITY
UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE TO THE OTHER FOR SPECIAL,
INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES INCLUDING LOSS OF REVENUE OR LOST
PROFITS HEREUNDER, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES BY REASON
OF ANY PERFORMANCE OR NON-PERFORMANCE UNDER THIS MASTER AGREEMENT. EXCEPT FOR
THE INDEMNIFICATION OBLIGATIONS SPECIFICALLY REFERRED TO IN THIS MASTER
AGREEMENT AND CLAIMS FOR INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS, A PARTY'S
TOTAL LIABILITY UNDER THIS MASTER AGREEMENT (REGARDLESS OF THE FORM OF ACTION,
WHETHER IN CONTRACT OR TORT) SHALL NOT EXCEED THE GREATER OF: [*].
15. TERM, RENEWAL AND TERMINATION
15.1 Initial Term. This Master Agreement will be effective on the Effective
Date and will remain in effect for three (3) years thereafter unless renewed or
terminated in accordance with the terms of this Section 15.
15.2 Renewal. This Master Agreement will renew automatically for successive
one (1) year periods after the initial term unless either party gives the other
party notice of intent to terminate at least ninety (90) days prior to the
renewal date of the then-current term or period.
15.3 Termination.
15.3.1 If either party is in breach of any material obligation under
this Master Agreement and such breach remains uncured for a period of thirty
(30) days after written notice thereof from the other party, then the other
party may, by written notice, terminate this Master Agreement thirty (30) days
after delivery of such written notice.
15.3.2 Notwithstanding anything in this Master Agreement to the
contrary, either party has the right to terminate this Master Agreement
immediately, upon written notice to the other party, if the other party's breach
of any material obligation of this Master Agreement causes the non-breaching
party to be in violation of any applicable law, rule, regulation or order and
that breach cannot be cured or rectified within ten (10) days without subjecting
the non-breaching party to liability.
15.3.3 This Master Agreement will terminate automatically, without
prior notice, upon the insolvency or bankruptcy of either party, the inability
of either party to pay its debts as they fall due or upon the appointment of a
trustee or receiver or the equivalent for either party, or upon the institution
of proceedings relating to dissolution, liquidation winding up, bankruptcy,
insolvency or the relief of creditors.
Master Purchase Agreement Page 16
15.4 Effect of Termination.
15.4.1 Upon termination of this Master Agreement, SUPPLIER shall
expedite delivery of the Products under Purchase Orders for which it has
submitted acknowledgements.
15.4.2 Upon termination of this Master Agreement, all licenses granted
under this Master Agreement and sublicenses granted by NETGEAR to the End Users
shall remain in effect, provided that and so long as such End Users are not in
default of their license agreements. At NETGEAR's option and request, SUPPLIER
shall continue to provide maintenance support to NETGEAR and its End Users at
SUPPLIER's prevailing rates for a minimum of one (1) year after termination or
expiration of this Master Agreement.
15.4.3 In addition to all other rights and remedies NETGEAR may have
including, but not limited to, those under this Master Agreement and in law and
in equity, in the event NETGEAR terminates this Master Agreement for a material
breach by SUPPLIER, NETGEAR may obtain products similar to the Products, at
volumes consistent with NETGEAR's rolling three (3) month forecasts, in a
commercially reasonable manner and upon commercially reasonable terms, and
SUPPLIER shall reimburse NETGEAR upon demand for any reasonable premium that
NETGEAR paid for such substitute products; provided however that SUPPLIER's
entire obligation under this section shall be for ninety (90) days from the date
of termination.
15.4.4 Upon termination or expiration of this Master Agreement,
SUPPLIER shall cease all use of NETGEAR Proprietary Technology and shall
promptly return to NETGEAR all such NETGEAR Proprietary Technology.
15.4.5 The following provisions shall survive any termination or
expiration of this Master Agreement: Sections 7, 8, 10, 11, 13, 14, 15, 16,
20,21, 23 and 24.
16. ESCROW OF TECHNOLOGY - BREACH BY SUCCESSOR IN INTEREST
16.1 Change of Control. SUPPLIER agrees to promptly disclose in writing to
NETGEAR if there is a Change of Control of SUPPLIER. SUPPLIER represents that as
of the Effective Date it is not in current negotiations with any third party
that might result in the Change of Control. In the event of a Change of Control
of SUPPLIER, NETGEAR shall have the right to immediately terminate this Master
Agreement upon written notice to SUPPLIER.
16.2 Escrow. Prior to any Change of Control, SUPPLIER shall place in escrow
all technology, documentation and other information relating to the Products
necessary or appropriate to enable a reasonably skilled party to manufacture and
test the Products which will comply with specifications and warranties described
in this Master Agreement, such information shall include, but not be limited to,
the product specifications, design and manufacturing documentation, fixtures
documentation and test codes, parts, firmware lists and schematics, functional
descriptions, test vector files, design specifications relating to the ASIC and
source code listings for each Product it sells to NETGEAR ("SUPPLIER Proprietary
Information"). Such escrow shall be established with a mutually acceptable third
party agent with instructions to release SUPPLIER Proprietary Information to
NETGEAR in the event NETGEAR notifies the escrow agent that the successor in
interest to SUPPLIER has breached and fails and refuses to perform under this
Master Agreement. The parties shall develop specific instructions to the escrow
agent
Master Purchase Agreement Page 17
shortly after the execution of this Master Agreement but in no event later than
forty five (45) days following the Effective Date. [*].
16.3 License. Upon receiving SUPPLIER Proprietary Information from escrow,
NETGEAR and its Affiliates shall have a non-exclusive, worldwide,
non-transferable, royalty free, license to copy and use SUPPLIER Proprietary
Information under all of SUPPLIER's patents, issued or which may be issued, and
all of SUPPLIER's copyrights, trade secrets embodying inventions and
improvements reflected or contained in the Products and SUPPLIER Proprietary
Information, to make, have made, modify, use, sell maintain, support and
service, solely under NETGEAR's brand name, the Products purchased from SUPPLIER
under this Master Agreement. NETGEAR is authorized to contact existing
SUPPLIER's suppliers and they are authorized to provide NETGEAR with access to
the existing tooling and documents necessary to build SUPPLIER tooling, at the
expense of NETGEAR. NETGEAR shall also have the right to acquire any custom
ASICs used in the Products directly from SUPPLIER's manufacturers at SUPPLIER's
prices. SUPPLIER agrees that upon NETGEAR's request, it will provide prompt
written authorization to such SUPPLIER's suppliers and manufacturers if so
needed.
16.4 Access. NETGEAR shall restrict access to all SUPPLIER Proprietary
Information to employees and third parties with a need to know and shall protect
all SUPPLIER Proprietary Information in the same manner it protects its own
proprietary information of a like kind and nature. At such time as the successor
in interest indicates that it will perform under this Master Agreement, both
parties shall negotiate in good faith to reach an agreement regarding the terms
of such continuation of the Master Agreement and upon execution of such written
agreement, NETGEAR shall cease to use and return SUPPLIER Proprietary
Information and the license to use such information shall terminate.
17. COMPONENT SHORTAGES AND LONG LEAD-TIME
17.1 Component Shortages. In the event that component parts or supplies
necessary to create or repair the Products (the "Raw Materials") become short in
supply, SUPPLIER agrees to allocate all Raw Materials which are available to it
to fill Purchase Orders for the Products and perform warranty repairs on the
Products. Except for priority allocations of Raw Materials required pursuant to
government contracts which are in place as of the Effective Date of this Master
Agreement, SUPPLIER shall allocate Raw Materials to NETGEAR in the proportion of
Purchase Orders placed during the previous calendar quarter. SUPPLIER agrees to
cooperate with NETGEAR in identifying all Raw Materials which are likely to be
in short supply and/or which have long lead limes. Upon receipt of each Purchase
Order from NETGEAR, SUPPLIER agrees to diligently and promptly analyze its Raw
Materials inventory and projected needs to avoid shortages, and to notify
NETGEAR promptly upon learning of a shortage.
17.2 Long-Lead-Time Part Requirements. SUPPLIER shall purchase long
lead-time components in support of NETGEAR forecasts and Purchase Orders. Long
lead-time components are to be purchased according to the lead-time for the part
and to a schedule that supports the new product introduction schedule or in
support of the monthly rolling forecast. SUPPLIER will immediately notify
NETGEAR of the need for "risk buys" in support of new product introductions.
18. END OF LIFE AND SPARES
18.1 End-of-Life Purchases. In the event of termination or expiration of
this Master Agreement, NETGEAR will be entitled, at its option, to place a
non-cancelable Purchase Order for a "life cycle purchase" of the Products within
fifteen (15) days after the effective date of such termination or
Master Purchase Agreement Page 18
expiration, for delivery within one hundred and eighty (180) days after the
effective date of termination or expiration of this Master Agreement. NETGEAR
agrees to give SUPPLIER two (2) month's advance notice of "end of life" Products
and SUPPLIER agrees to promptly notify NETGEAR of any potential issues, concerns
or exposures with the "end of life" plan for such Products.
18.2 Availability of Spares. SUPPLIER shall make available to NETGEAR spare,
replacement, and maintenance parts including customized parts, necessary to
enable NETGEAR to support the Products for a period of at least five (5) years
after the date of the last delivery of the Products to NETGEAR, SUPPLIER will
make these part available to NETGEAR at the discounted prices set forth in
Exhibit A2.
19. PRODUCT CHANGES
19.1 Engineering Change. In case of an engineering change which impacts
form, fit, function, safety or environmental compliance of the Product
("Engineering Change"), SUPPLIER shall submit an Engineering Change notice to
NETGEAR at least thirty (30) days prior to such change for review and approval,
with such approval not to be unreasonably withheld by NETGEAR. The Engineering
Change notice will include a summary of the expected impact of any such planned
change on the above listed characteristics of the Products and the expected
financial impact to NETGEAR, if any. SUPPLIER shall not perform any Engineering
Change without NETGEAR's prior written approval. If the change is accepted by
NETGEAR and is other than an emergency deviation, the effective date thereof
will be established by SUPPLIER but in no event will such effective date be
earlier than thirty (30) days after the date of acceptance of the change by
NETGEAR. Where the change is an emergency deviation, an effective date of not
more than thirty (30) days after the date of acceptance of the change by NETGEAR
will be set by mutual agreement of the parties.
19.2 Engineering Chance Requested by NETGEAR. When an Engineering Change to
the Products is desired by NETGEAR, NETGEAR shall provide SUPPLIER applicable
documentation, specifications and the requested effective date of such
engineering change. SUPPLIER shall use reasonable efforts to respond within ten
(10) working days, advising NETGEAR as to: (i) implementation and the effective
date of such change; (ii) associated costs; and (iii) the impact of the change
upon the existing Product pricing, if any.
19.3 Mandatory Changes. SUPPLIER may issue mandatory changes, which are
changes required to satisfy governmental standards or for safety ("Mandatory
Changes"). If possible, SUPPLIER will provide NETGEAR with ninety (90) days
prior written notice of Mandatory Changes prior to implementing such changes; if
ninety (90) days notice is not possible, SUPPLIER shall notify NETGEAR promptly.
If Mandatory Changes must be installed on the Products already delivered to
NETGEAR, SUPPLIER will provide at SUPPLIER's expense, all necessary materials,
reasonable labor and instructions.
19.4 Retrofit. In the event a change to the Products is made for safety or
health-related reasons, SUPPLIER shall retrofit NETGEAR's existing inventory of
such Products free of charge, with such retrofit being limited to the
replacement of the specific item that is deemed to be the cause of the retrofit.
20. REGULATORY COMPLIANCE
20.1 SUPPLIER is responsible for obtaining and maintaining all necessary
U.S. and foreign regulatory approvals for the Products. Additionally, SUPPLIER
will assist NETGEAR in addressing problems with
Master Purchase Agreement Page 19
the Products that contribute to NETGEAR system's failure to meet any regulatory
requirement due to the Products being integrated into the NETGEAR systems.
20.2 Since NETGEAR transacts business with the United States government,
SUPPLIER shall also comply with applicable laws and Federal Acquisition
Regulations ("FARs") including, but not limited to: (i) FAR 52.222-26 "Equal
Opportunity"; (ii) FAR 52.222-35 "Affirmative Action for Special Disabled and
Vietnam Era Veterans"; and (iii) FAR 52.222-36 "Affirmative Action for
Handicapped Workers".
20.3 In addition, SUPPLIER represents and warrants that it will comply with
all applicable requirements of 33 U.S.C Section 1251 "Federal Water Pollution
Control Act" and 42 U.S.C. Section 7401 "Clean Air Act." SUPPLIER further
represents and warrants that none, of the items listed in paragraph (a) of FAR
52.209-5 exists with respect to SUPPLIER or any SUPPLIER's "principals" as that
term is defined by FAR 52.209-5. SUPPLIER represents and warrants that it will
comply with the prohibition on the use of convict labor as set forth in FAR
52.222.3 "Convict Labor".
21. IMPORT AND EXPORT COMPLIANCE
21.1 Country of Origin. SUPPLIER will certify to, and mark the Products and
packaging with, the country of origin for each Product so as to satisfy the
requirements of customs authorities of the country of receipt and any applicable
laws. If any Products are imported, SUPPLIER will, at NETGEAR's request, either:
(i) allow NETGEAR to be the importer of record; or (ii) provide NETGEAR with any
documents required to prove importation and to transfer duty drawback rights to
NETGEAR.
21.2 Export Control. SUPPLIER shall comply strictly with all export control
laws and regulations of the United States and any other applicable laws and
regulations, and shall not export, reexport, transfer, divert or disclose any
such Products or Confidential Information, or any direct product thereof, to any
destination restricted or prohibited by applicable export control laws, or to
any national or resident thereof SUPPLIER's obligations under this Section 21.2
shall survive the termination of this Master Agreement for any reason
whatsoever.
22. INSURANCE
SUPPLIER shall maintain during its performance under this Master Agreement (i)
comprehensive general liability insurance on an occurrence basis (including
contractual liability) with limits of not less than [*] combined single limit
per occurrence for bodily injury and property damage, (ii) workers' compensation
insurance and other employee insurance coverage required by law, (iii)
employers' liability insurance with limits of not less than [*], and (iv) owned
and non-owned automobile insurance with limits of not less than [*]. Prior to
the Effective Date of, and on every annual dale of, this Master Agreement,
SUPPLIER shall furnish to NETGEAR a certificate of insurance evidencing that
such insurance is in effect. SUPPLIER shall add NETGEAR to such policy as an
additional insured. SUPPLIER shall furnish a new certificate in the event of
renewal, cancellation or expiration of any insurance.
23. GOVERNING LAW AND DISPUTE RESOLUTION
23.1 General. Before either party initiates a lawsuit against the other
relating to this Master Agreement, the parties agree to work in good faith to
resolve between them all disputes and claims arising out of, or relating to,
this Master Agreement, the parties' performance under it, or its breach. To this
end, either
Master Purchase Agreement Page 20
party may request, after informal discussions have failed to resolve a dispute
or claim, that each party designate an officer or other authorized
representative to meet in good faith and attempt to resolve the dispute or
claim. During their discussions, each party will honor the other's reasonable
requests for information relating to the dispute or claim with the understanding
that neither party will be required to turn over any attorney work product or
information protected by attorney client privilege or similar legal privileges.
23.2 Dispute Resolution. Subject to Section 23.1, all disputes shall be
resolved by the federal and state courts of the State of California. SUPPLIER
hereby specifically consents to the exercise of personal jurisdiction by such
courts and hereby agrees that any such court shall be a proper forum for the
determination of any dispute arising hereunder.
23.3 Governing Law. This Master Agreement and any disputes arising out of,
or relating to, this Master Agreement shall be governed by laws of the State of
California, excluding conflict of law principles and excluding the United
Nations Convention on Contracts for the International Sale of Goods.
23.4 Injunctive Relief. Either party may, at its sole discretion, seek
injunctive relief in any court of competent jurisdiction (including but not
limited to preliminary injunctive relief). SUPPLIER acknowledges that NETGEAR
has a vital interest in enjoining any unauthorized use or violation of its
Intellectual Property Rights or Confidential Information, because damages would
not adequately compensate NETGEAR for any infringement or violation thereof.
23.5 Legal Expenses. The prevailing party in any court proceeding brought by
one party against the other party because of a dispute shall be entitled to
recover its legal expenses, including, but not limited to, the court fees and
reasonable attorneys' fees.
24. GENERAL
24.1 Assignment and Subcontracting. Neither party shall have the right or
the power to assign any of its rights, or delegate the performance of any of its
obligations, under this Master Agreement without the prior written consent of
the other party, except: (i) to an Affiliate of such party; or (ii) in
connection with the sale of all or substantially all of the assets of such party
or such party's business unit or Affiliate that is principally responsible for
such party's performance hereunder SUPPLIER may not subcontract its obligations
hereunder without the prior written consent of NETGEAR, which shall not be
unreasonably withheld.
24.2 Independent Contractors. In the exercise of their respective rights,
and the performance of their respective obligations under this Master Agreement,
the parties are, and shall remain, independent contractors. Nothing in this
Master Agreement shall be construed (i) to constitute the parties as principal
and agent, franchisor and franchisee, partners, joint venturers, co-owners or
otherwise as participants in a joint undertaking, or (ii) to authorize either
party to enter into any contract or other binding obligation on the part of the
other party hereto, and neither party shall represent to any other person, firm,
corporation or other entity that it is authorized to enter into any such
contract or other obligation on behalf of the other party hereto.
24.3 Severability. If and to the extent any provision of this Master
Agreement is held illegal, invalid or unenforceable in whole or in part under
applicable law, such provision or such portion thereof shall be ineffective as
to the jurisdiction in which it is illegal, invalid or unenforceable to the
extent of its illegality,
Master Purchase Agreement Page 21
invalidity or unenforceability and shall be deemed modified to the extent
necessary to conform to applicable law so as to give the maximum effect to the
intent of the parties. The illegality, invalidity or unenforceability of such
provision in that jurisdiction shall not in any way affect the legality,
validity or enforceability of such provision or of any other provisions of this
Master Agreement in any other jurisdiction.
24.4 No Waiver. The failure of either party to assert any of its rights
hereunder, including, but not limited to, the right to terminate this Master
Agreement in the event of breach or default by the other party, shall not be
deemed to constitute a waiver by that party of its right thereafter to enforce
each and every provision of this Master Agreement in accordance with their
terms.
24.5 Non-Exclusivity. Nothing in this Master Agreement will prevent or
restrict NETGEAR from entering into agreements for the provision of products of
the same or similar nature as those provided under this Master Agreement with
any third party.
24.6 Force Majeure. Neither party shall be deemed to be in default of or to
have breached any provision of this Master Agreement as a result of any delay,
failure in performance, or interruption of service resulting directly or
indirectly from acts of God, acts of war, strikes or other labor disputes,
telecommunications or power failures, fires, or other catastrophes or any other
circumstances beyond the party's reasonable control.
24.7 Counterparts. This Master Agreement may be executed in two (2) copies,
each of which shall be deemed an original and all of which together shall
constitute one and the same Master Agreement.
24.8 Publicity. The parties agree that the existence and terms of this
Master Agreement shall constitute Confidential Information. Notwithstanding the
above, either party may disclose the existence and relevant terms to any of its
Affiliates or agents who may exercise certain of that party's rights under this
Master Agreement. Each party and their representative shall not issue or cause
to be issued publication of any press release, public announcement of other
public statement with respect to the transactions contemplated by this Master
Agreement without the prior written consent of the other party. SUPPLIER will
not use the name of NETGEAR or quote the opinion of any NETGEAR employee in any
advertising or otherwise without first obtaining the prior written consent of
NETGEAR; such consent shall not be unreasonably withheld.
24.9 Notices. All notices, reports and other communications between the
parties relating to this Master Agreement will be sent by overnight courier or
by facsimile, addressed as follows:
If to NETGEAR:
NETGEAR, Inc.
4500 Great America Parkway
Santa Clara, CA 95054
Attention: Patriek Lo, CEO & L.C.
Cc: CFO
CEO VP of Operations & L.C.
If to SUPPLIER:
Master Purchase Agreement Page 22
LITE-ON Technology Corp.
7F, No. 10, Lane 345, Yangguang St.,
Neihu Chiu, Taipei 114, Taiwan
Attention: Hubert Lu
Cc: Tommy Tsai
All notices, reports and other communications will be deemed received: (i) if
sent by overnight courier, twenty-four (24) hours after delivery to the courier;
and (ii) if sent by facsimile, at the date and time of transmission.
24.10 Subject Headings. The subject headings of this Master Agreement are
included for purposes of convenience only, and shall not affect the construction
or interpretation of any provision of this Master Agreement.
24.11 Entire Agreement. This Master Agreement, including all Exhibits
selected therein, shall constitute the entire understanding of the parties with
respect to the subject matter hereof and shall supersede all previous and
contemporaneous communications, representations or understandings, either oral
or written, between the parties relating to the subject matter hereof.
Master Purchase Agreement Page 23
EXHIBIT Al
PURCHASE ORDER
Version US11/07/02
The rights and obligations of the parties under this Purchase Order are defined
by the Master purchase Agreement between NETGEAR and SUPPLIER of________
[EFFECTIVE DATE OF THE MASTER PURCHASE AGREEMENT] including all Exhibits
referenced therein (the "Master Agreement"). Except as specified in the Master
Agreement, this Purchase Order or in a separate writing duly signed by
authorized representatives of both parties, no other terms and conditions shall
be applicable with respect to the Products covered by this Purchase Order and
any other terms and conditions are hereby expressly rejected.
Master Purchase Agreement Page 24
EXHIBIT A2
PURCHASE PRICE AND SERVICES FEES
Version US11/07/02
Master Purchase Agreement Page 25
CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
EXHIBIT A3
PRODUCTS, PRODUCT SPECIFICATIONS AND LEAD TIME
Version US11/07/02
1. PRODUCTS:
2. PRODUCT SPECIFICATIONS:
3. LEAD TIME:
Pursuant to Section 5.1 of the Master Agreement, SUPPLIER shall work
aggressively to reduce the lead times. The lead time is [*] from the date a
Purchase Order is placed by NETGEAR to the date such order is shipped by
SUPPLIER.
THE ON TIME IN FULL DELIVERY PERFORMANCE GOAL IN THE UP-COMING YEARS IS AS
FOLLOWS:
Q1'03: [*]
Q2'03: [*]
Q3'03: [*]
Q4'03: [*]
2003 onwards: [*]
If SUPPLIER does not meet the lead times and the On Time In Full Delivery
Performance goal specified in this Exhibit A3, then it shall be responsible for
any and all airfreight charges for delivery of such delayed Products.
Master Purchase Agreement Page 26
CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
EXHIBIT A4
NETGEAR PROPRIETARY TECHNOLOGY
Version US11/07/02
NETGEAR Proprietary Technology includes, but is not limited to, the following:
1. Any computer software and code that NETGEAR provides, directly or
indirectly, for incorporation with or into the Products, and any developments
based on such software and code (regardless of the party that created such
developments). This includes, without limitation:
1.1 [*].
2. Any Product specifications that NETGEAR provides, directly or
indirectly, for incorporation with or into the Products, and any developments
based on such Product specifications (regardless of the party that created such
developments). This includes, without limitation, the specifications for:
2.1 [*]
(For clarification, where pre-existing, publicly available products are included
as part of a NETGEAR product specification, such products shall not, by
themselves, be considered NETGEAR Proprietary Technology.)
3. The identities or descriptions of the types of any non-public NETGEAR
products being researched, developed, manufactured, assembled and/or tested.
This includes, without limitation, the identities and descriptions of:
3.1 [*]
3.2 [*]
4. Any technology, technical information or know-how that NETGEAR
provides, directly or indirectly, relating to Product integration, including,
without limitation, technology, technical information, and know-how relating to
the integration of third-party technology with or into the Products.
Master Purchase Agreement Page 27
EXHIBIT B
SOFTWARE LICENSE TERMS
Version US11/07/02
These Software License Terms are part of the Master Purchase Agreement between
NETGEAR and SUPPLIER, which incorporates these Software License Terms by
reference (the "Master Agreement"). These Software License Terms apply to the
extent NETGEAR acquires any Supporting Software under the Master Agreement,
pre-installed on the Products or as stand-alone Products. Unless otherwise
specified, all capitalized terms used in these Software License Terms shall have
the same meanings as in the Master Agreement.
1. LICENSE GRANT
SUPPLIER grants NETGEAR sublicensable, non-exclusive, worldwide, irrevocable
license and right to use, reproduce, and distribute the Supporting Software in
connection with NETGEAR's distribution and support of the Products including,
but not limited to, distribution in electronic form on bulletin boards and
NETGEAR's website. NETGEAR shall, at its own expense and risk check with the
copyright owner of each software to obtain the right to: (i) decompile,
disassemble, or reverse engineer the Supporting Software; (ii) modify or create
any derivative works (including, without limitation, translations,
transformations, adaptations or other recast or altered versions) based on the
Supporting Software or Documentation, or alter the Supporting Software in any
manner whatsoever; and (iii) merge the Supporting Software with any other
software, provided that the above actions are necessary in order to incorporate
the Supporting Software into, or bundle the Supporting Software with, NETGEAR's
products.
2. ALL RIGHTS RESERVED
Subject to the rights and licenses granted under the Master Agreement, SUPPLIER
reserves all rights in and to the Supporting Software, including title,
ownership, Intellectual Property Rights, and any other rights and interests in,
and to, the Supporting Software.
3. NOTICES
NETGEAR shall not remove any product identification, trademark, copyright or
other proprietary rights notices from the Supporting Software or Documentation
and shall display SUPPLIER's names, logos and notices on each copy of the
Supporting Software and Documentation made by NETGEAR.
4. LICENSE RESTRICTIONS
Notwithstanding any other provisions of the Master Agreement, NETGEAR shall not
distribute any Supporting Software or any modification thereof created, except
pursuant to its standard end-user license agreement.
Master Purchase Agreement Page 28
5. SUPPORTING SOFTWARE WARRANTY AND REPRESENTATIONS
5.1 Warranty Standard. SUPPLIER warrants that during the warranty period
described in Section 5.5 (Warranty Period) the Supporting Software will
substantially conform to, and operate in accordance with, the applicable
Documentation and will be free of any Trap as expressly warranted below
("Conformance") provided, however, that SUPPLIER does not warrant that the
Supporting Software will perform uninterrupted or error-free.
5.2 Traps. SUPPLIER further warrants that the Supporting Software shall not
have been engineered to contain any timer, clock, counter, trap, virus or other
limiting design, disabling code or routine (collectively, a "Trap") that may
cause the Supporting Software, Products or any data generated or used by the
Products to be erased or become inoperable or inaccessible, or otherwise
incapable of being used in the full manner for which they were designed after
the occurrence or lapse of any triggering event, and SUPPLIER shall take
reasonable measures to ensure that at the time of delivery of the Supporting
Software no such Traps are contained in the Supporting Software or Products. The
foregoing includes any Trap that is triggered after use or copying of the
Supporting Software or any component a certain number of times, or after the
lapse of a period of time, or after the occurrence or lapse of any other
triggering event or factor.
5.3 Remedies. If the Supporting Software is not in Conformance, and NETGEAR
complies with Section 5.5 (Warranty Period), SUPPLIER shall, upon consultation
with NETGEAR, either: (i) repair or replace the Supporting Software to achieve
Conformance; or (ii) refund to NETGEAR the purchase price for the Products
affected by the non-conformance of the Supporting Software.
5.4 Costs. If the Supporting Software is not in Conformance, and NETGEAR
complies with Section 5.5 (Warranty Period), SUPPLIER will not charge for any
repair, replacement, error identification or correction, or return shipment of
the non-conforming Supporting Software and the affected Products.
5.5 Warranty Period. The warranty period for Supporting Software shall be
[*] following delivery to NETGEAR. To make a warranty claim, NETGEAR shall
provide, during the warranty period, a written notice describing how the
Supporting Software fails to be in Conformance to SUPPLIER.
6. DISCLAIMER
EXCEPT AS PROVIDED IN SECTION 5 (SUPPORTING SOFTWARE WARRANTY AND
REPRESENTATIONS) OF THESE SOFTWARE LICENSE TERMS, SUPPLIER MAKES NO EXPRESS
REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE SUPPORTING SOFTWARE.
Master Purchase Agreement Page 29
EXHIBIT C
MAINTENANCE SERVICES TERMS
Version US11/07/02
These Maintenance Services Terms are part of the Master Purchase Agreement
between NETGEAR and SUPPLIER, which incorporates these Maintenance Services
Terms by reference (the "Master Agreement"). These Maintenance Services Terms
apply if and to the extent NETGEAR acquires Software Maintenance Services or
Hardware Maintenance Services (collectively, "Maintenance Services") under the
Master Agreement. Unless otherwise specified, all capitalized terms used in
these Maintenance Services Terms shall have the same meanings as in the Master
Agreement.
1. SOFTWARE MAINTENANCE SERVICES
1.1 Scope of Services. SUPPLIER will provide to NETGEAR software support
and maintenance services as specified in the Documentation and the applicable
Purchase Order ("Software Maintenance Services") consisting of help line support
and Updates in support of NETGEAR's use of the Supporting Software and customer
support in support of End Users' use of the Supporting Software.
1.2 Help Line Support. SUPPLIER will provide to NETGEAR help line support
that includes answering any software application specific questions, addressing
problems specified in Defect Reports (as defined below in Section 4 of these
Maintenance Terms), directing NETGEAR documentation that may answer NETGEAR's
questions, clarifying the Documentation and recommending possible training
courses. SUPPLIER will provide help line support under either Business Day or
Critical 24x7 coverage depending on NETGEAR's selection specified on the
applicable Purchase Order. Help line support provided under Business Day
coverage will be performed via email and telephone support during the principal
service hours of 8 a.m. to 5 p.m. (at NETGEAR's principal place of business)
Monday through Friday, excluding U.S. observed holidays. Help line support
provided under Critical coverage will be performed via email and telephone
support during twenty-four (24) hours a day, seven (7) days per week, Response
intervals depend on the selected coverage and are described in the
Documentation. In addition to help line support. SUPPLIER's personnel will
answer standard usage questions relating to general usability of software
issues. General usability of software issues are defined as, but not limited to,
non-programming issues, and include general information about the functionality
of the Supporting Software.
1.3 Updates. As part of the Software Maintenance Services, SUPPLIER shall
make available to NETGEAR Updates without separate charge in addition to
applicable standard maintenance and support fees. SUPPLIER shall provide Updates
via a website, email or post mail, to be installed by NETGEAR or to be installed
remotely by SUPPLIER, depending on the Product. NETGEAR's use of any Updates
provided by SUPPLIER shall be governed by the Software License Terms specified
in Exhibit B. NETGEAR may obtain Upgrades for additional fees.
1.4 Onsite Support. Per NETGEAR's request, SUPPLIER may provide Software
Maintenance Services onsite to resolve a specific problem. For Software
Maintenance Services provided onsite, NETGEAR shall pay SUPPLIER's then current
rates on a time and materials basis. SUPPLIER's personnel will keep records of
all Software Maintenance Services performed onsite ("Services Records"), which
shall recite information about the date and type of Software Maintenance
Services that were performed, as well as the time of day personnel began
performing Software Maintenance Services and the time of day they finished
performing Software Maintenance Services that day. The Services Records shall be
reviewed and countersigned by NETGEAR's authorized representative on a daily,
weekly or monthly basis.
Master Purchase Agreement Page 30
1.5 Limitations and Exclusions. Software Maintenance Services shall not
include maintenance or repair (i) resulting from catastrophe, accident, neglect,
misuse, fault or negligence of NETGEAR or causes external to the Supporting
Software; (ii) of software or other devices not identified in the Master
Agreement; (iii) resulting from NETGEAR's failure to implement Updates; or (iv)
resulting from force majeure conditions as stated in Section 24.6 (Force
Majeure) of Exhibit A (General Terms). Per NETGEAR's request, SUPPLIER may
perform one or more of the above for additional charges at its then current
rates.
1.6 Customer Support. SUPPLIER shall provide Level 3 escalation customer
support to End Users. SUPPLIER must acknowledge all Level 3 escalations within
twenty-four (24) hours of receipt of such escalations. The parties acknowledge
that the time required to reach a resolution/solution on the escalations depends
on the complexity of the problem involved. SUPPLIER shall, however, provide
reasonable resources to work on the escalations and provide updates on progress
until a mutually agreed resolution is reached. All information required for the
resolution of the escalation will be requested from End Users by NETGEAR.
SUPPLIER shall not interact with End Users unless specifically authorized by
NETGEAR.
2. HARDWARE MAINTENANCE SERVICES
2.1 Scope of Services. SUPPLIER will provide to NETGEAR hardware
maintenance services for the Products as specified in the Documentation and
Purchase Order ("Hardware Maintenance Services") consisting of preventive
maintenance as deemed appropriate by SUPPLIER and remedial maintenance based on
NETGEAR's Defect Reports, including replacement parts required for the Products
used under normal operating conditions in accordance with the coverage option
selected by NETGEAR on the applicable Purchase Order. If coverage option is not
selected by NETGEAR then SUPPLIER's standard coverage for Hardware Maintenance
Services will apply. Coverage options for Hardware Maintenance Services are
described in the Documentation. Hardware Maintenance Services will be provided
onsite.
2.2 Limitations and Exclusions. Hardware Maintenance Services do not cover
repair for damages or malfunctions caused by: (i) NETGEAR's failure to follow
installation, operation or maintenance instructions for the Products; (ii)
failure or malfunction of equipment, or software not serviced by SUPPLIER; or
(iii) force majeure conditions as stated in Section 24.6 (Force Majeure) of
Exhibit A (General Terms), Per NETGEAR's request, SUPPLIER may perform repair or
other services not covered by Hardware Maintenance Services for additional
charges at SUPPLIER's then current rates.
3. SUPPORT MATERIALS AND TOOLS
SUPPLIER shall provide NETGEAR with support materials and tools to enable
NETGEAR's technicians to perform troubleshooting over the phone. Such materials
and tools should contain precise scripts, flowcharts and any other instructions
that can be used by trained technicians to identify issues with the Supporting
Software.
4. DEFECT REPORTS
NETGEAR will document and report malfunctions of the Products in a reasonably
detailed manner to SUPPLIER promptly after discovery ("Defect Reports"). The
Defect Reports must provide the following information:
- caller's name, location, and company;
- contract number or reference;
- call-back telephone number;
Master Purchase Agreement Page 31
- the system type and configuration, including the Products and
interfacing products; and
- a brief description and history of the malfunction and any
efforts to solve it by NETGEAR.
5. PAYMENT TERMS
For Maintenance Services, NETGEAR shall pay to SUPPLIER, in advance for the term
defined in the applicable Purchase Order, the applicable fees specified in
Exhibit A2.
6. LIMITED MAINTENANCE SERVICES WARRANTY
6.1 Warranty Standard. SUPPLIER warrants that Maintenance Services will be
carried out in a professional and workmanlike manner by qualified personnel in a
timely and careful manner.
6.2 Remedy. If Maintenance Services are not in conformance with the above
Warranty Standard, and SUPPLIER fails to achieve such conformance within thirty
(30) days of receiving NETGEAR's written notice, NETGEAR may cancel the
applicable Purchase Order with respect to the affected Maintenance Services with
effect for the future and, thereupon, be entitled to receive a proportionate
refund of any prepaid fees applicable to the canceled time period in which
Maintenance Services will not be performed.
6.3 Disclaimer. EXCEPT AS PROVIDED IN THIS SECTION 6 (LIMITED MAINTENANCE
SERVICES WARRANTY), SUPPLIER MAKES NO EXPRESS REPRESENTATIONS OR WARRANTIES WITH
RESPECT TO MAINTENANCE SERVICES.
7. TERM AND TERMINATION
7.1 Renewals. Maintenance Services shall take effect on the date specified
in the Purchase Order for Maintenance Services and shall continue in effect for
the initial term of one (1) year, unless a different term is expressly defined
in the applicable Purchase Order. Maintenance Services shall be automatically
renewed for successive one (1) year terms, unless either party gives the other
written notice of its intent not to renew at least thirty (30) days prior to the
expiration of any initial or renewal term.
7.2 Termination for Cause. Either party may terminate the provision of the
Maintenance Services by written notice if the other party fails to cure any
material breach with respect to such Maintenance Services within thirty (30)
days of having received written notice from the other party detailing the
breach.
7.3 Survival. Exhibit A (General Terms), as applicable to Maintenance
Services, and Sections 5 through 7 of these Maintenance Services Terms shall
survive any termination of any provision of the Maintenance Services.
Master Purchase Agreement Page 32
EXHIBIT D
INTELLECTUAL PROPERTY PROTECTION AGREEMENT
Version US11/07/02
This Intellectual Property Protection Agreement ("IPP Agreement") is part of the
Master Purchase Agreement between NETGEAR and SUPPLIER, which incorporates this
IPP Agreement by reference (the "Master Agreement"). This IPP Agreement apples
if and to the extent NETGEAR and SUPPLIER expressly agree on development work to
be performed under this IPP Agreement. Unless otherwise specified, all
capitalized terms used in this IPP Agreement shall have the same meanings as in
the Master Agreement.
1. DEVELOPMENT
1.1 Development Work. From time to time, as requested by NETGEAR, SUPPLIER
shall perform certain development work for NETGEAR under this IPP Agreement
including development, manufacturing or assembling the Work Products (the
"Development Work"). The Development Work will be performed by SUPPLIER either
in consideration for payments of the NRE costs as set forth in Exhibit E or such
other consideration as may be agreed upon by the parties in the Statement of
Work attached hereto as Exhibit D1.
1.2 Statement of Work. The parties shall agree upon the scope of the
Development Work in the Statement of Work. Each Statement of Work shall (i) be
executed by the parties; (ii) reference the IPP Agreement; and (iii) be subject
to the terms and conditions of the IPP Agreement. If there is any conflict
between the terms of the IPP Agreement and any Statement of Work, the terms of
the IPP Agreement shall control and govern. Subject to the terms and conditions
of the IPP Agreement, SUPPLIER shall perform the tasks set forth in each
Statement of Work by completion dates set forth therein and shall perform such
other Development Work by the completion dates that the parties mutually agree
upon. All Development Work shall be subject to the acceptance testing
procedures, if any, set forth in the applicable Statement of Work or such other
acceptance procedures, if any, that the parties mutually agree upon. Further,
SUPPLIER will from time to time during the term of the IPP Agreement keep
NETGEAR advised as to SUPPLIER's progress in performing the Development Work,
and will, as reasonably requested by NETGEAR, prepare written reports with
respect thereto.
1.3 Master Agreement. If there is any conflict between the terms of the IPP
Agreement and the Master Agreement, the terms of the IPP Agreement shall control
and govern.
2. PROTECTION OF NETGEAR PROPRIETARY TECHNOLOGY
2.1 Disclosure. To assist SUPPLIER, NETGEAR may disclose or make available
to SUPPLIER certain NETGEAR Proprietary Technology that, in NETGEAR's sole
judgment, will assist SUPPLIER in performing the Development Work. Upon
completion of the Development Work or termination of the IPP Agreement, SUPPLIER
shall promptly return to NETGEAR all NETGEAR Proprietary Technology.
2.2 Use of NETGEAR Proprietary Technology. SUPPLIER agrees to maintain in
confidence and not to disclose any NETGEAR Proprietary Technology to any third
party. SUPPLIER also agrees not to use NETGEAR Proprietary Technology for its
own benefit (or the benefit of others), but shall only use NETGEAR Proprietary
Technology to perform its obligations under the IPP Agreement. SUPPLIER further
agrees to take all reasonable precautions to prevent any unauthorized disclosure
or use of any NETGEAR Proprietary Technology. It is understood and agreed that
notwithstanding the obligations of
Master Purchase Agreement Page 33
this Section 2, with respect to third party proprietary information and
technology provided by NETGEAR and identified in writing by NETGEAR as "USABLE
THIRD PARTY PROPRIETARY INFORMATION AND TECHNOLOGY," SUPPLIER's agreement to use
such third party proprietary information and technology exclusively for the
benefit of NETGEAR shall only remain in effect for one (1) year after NETGEAR's
commencement of general commercial sales of the Products that incorporate or are
based upon such third party proprietary information and technology irrespective
of the termination for any reason whatsoever of the IPP Agreement.
3. OWNERSHIP
3.1 Work Products. NETGEAR shall own sole right, title, and interest in all
tangible and intangible results, processes and items arising out of or
constituting the results of any Development Work in which NETGEAR pays the NRE
costs or other consideration, or arising out of any disclosure of NETGEAR
Proprietary Technology to SUPPLIER, including without limitation all software,
reports, deliverables, ideas, inventions, designs, know-how, notes, and
copyrighted materials, and all copyrights and other intellectual property rights
constituting, embodied in, or pertaining to any of the foregoing (collectively,
the "Work Products").
3.2 Assignment of Rights. SUPPLIER hereby waives and agrees not to assert
any and all moral rights, including any right to identification of authorship or
limitation on subsequent modification that SUPPLIER (or its employees, agents or
consultants) has or may have in any Work Product. SUPPLIER hereby irrevocably
transfers, conveys and assigns to NETGEAR, and agrees to transfer, convey and
assign to NETGEAR, in perpetuity all right, title, and interest in the Work
Products, including without limitation, all Intellectual Property Rights with
respect thereto. To the extent that any of the foregoing rights are not
assignable, SUPPLIER agrees to grant, and hereby grants, to NETGEAR an
exclusive, perpetual, fully-paid and royalty-free, worldwide license to use,
distribute, sublicense, and otherwise utilize the Work Products. NETGEAR shall
have the exclusive right to apply for or register patents, copyrights, and such
other proprietary protections as it wishes for the Work Products, SUPPLIER
agrees to execute such documents, render such assistance, and take such other
action as NETGEAR may reasonably request, at NETGEAR's expense, to apply for,
register, perfect, confirm, and protect NETGEAR's rights in the Work Products.
SUPPLIER hereby irrevocably designates and appoints NETGEAR and its duly
authorized officers and agents as its agents and attorneys-in-fact, to act in
its behalf and instead of SUPPLIER, to execute and file any such application,
and to do all other lawfully permitted acts to further the prosecution and
issuance of Intellectual Property Rights for the Work Products thereon with the
same legal force and effect as if executed by SUPPLIER. This power of attorney
shall be deemed coupled with an interest and shall be irrevocable.
3.3 Pre-Existing Materials. SUPPLIER agrees that if in the course of
performing the Development Work, SUPPLIER incorporates into any Work Product
developed hereunder any software, content, copyrightable material, invention,
improvement, development, concept, discovery or other materials owned by
SUPPLIER (or in which SUPPLIER has an interest) prior to the Effective Date
("Pre-Existing Materials"): (i) SUPPLIER shall inform NETGEAR in writing before
incorporating such Pre-Existing Materials into any Work Product; and (ii)
SUPPLIER hereby grants NETGEAR a nonexclusive, fully-paid and royalty-free,
perpetual, irrevocable, worldwide license, with the rights to sublicense through
multiple levels of sublicensees, to use, reproduce, distribute, publicly perform
and publicly display by all means now known or later developed, modify, prepare
derivative works of, make, have made, sell and export Pre-Existing Materials as
part of or in connection with such Work Product or the business of NETGEAR.
Master Purchase Agreement Page 34
4. LIMITED WARRANTY AND REPRESENTATIONS
4.1 Warranty Standard. SUPPLIER warrants that during the warranty period
described in Section 4.3 the Work Products will substantially conform to the
specifications contained in the applicable Statement of Work ("Conformance").
4.2 Remedy. If the Work Products are not in Conformance, SUPPLIER shall
repair or replace the non-conforming Work Products, or if either the repair or
replacement is not feasible refund to NETGEAR the applicable consideration paid
for such non-conforming Work Products.
4.3 Warranty Period. The warranty period for the Work Products shall be
ninety (90) days beginning on the date of their acceptance by NETGEAR.
4.4 Representations. SUPPLIER hereby represents and warrants that: (i) all
Work Products will be the original work of SUPPLIER; (ii) the Work Products will
not infringe the copyright, patent, trademark, trade secret, mask work or any
other intellectual property right of any third party; (iii) neither the Work
Products nor any element thereof will be subject to any restrictions or to any
mortgages, liens, pledges, security interests, encumbrances or encroachments;
(iv) the Work Products will not contain any virus, trap door, worm, or any other
device or routine that is injurious or damaging to software or hardware used in
conjunction with the Work Products; and (v) SUPPLIER has no outstanding
agreement or obligation that is in conflict with any of the provisions of the
IPP Agreement, or that would preclude SUPPLIER from complying with the
provisions hereof, and further warrants that SUPPLIER will not enter into any
such conflicting agreement during the term of the IPP Agreement.
5. TERM AND TERMINATION
5.1 Term. The term of the IPP Agreement will begin on the date specified in
the Statement of Work and shall continue until it is terminated in accordance
with this Section 5.
5.2 Termination. NETGEAR may terminate the IPP Agreement or any Statement
of Work without cause upon giving thirty (30) days' prior written notice thereof
to SUPPLIER. NETGEAR may terminate the IPP Agreement immediately and without
prior notice if SUPPLIER refuses to or is unable to perform the Development Work
or is in breach of any material provision of the IPP Agreement. The IPP
Agreement terminates automatically upon termination of the Master Agreement.
5.3 Effect of Termination. Upon the termination or expiration of the IPP
Agreement, or upon NETGEAR's earlier request, SUPPLIER shall: (a) discontinue
use of all NETGEAR Proprietary Technology and all Work Products, and (b) deliver
to NETGEAR all Work Products (without regard to stage of completion and
including all deliverables described in the Statement of Work) and all
embodiments of NETGEAR Proprietary Technology that SUPPLIER may have in
SUPPLIER's possession or control.
5.4 Survival. Upon termination or expiration, all rights and duties of the
parties toward each other will cease except: (a) NETGEAR shall pay, within
thirty (30) days of the effective date of termination, all amounts owing to
SUPPLIER for the Development Work completed and accepted by NETGEAR prior to the
termination date. Exhibit A (General Terms), as applicable to the IPP Agreement,
and Sections 2, 3, 4 and 5 of the IPP Agreement shall survive any termination of
the IPP Agreement.
Master Purchase Agreement Page 35
EXHIBIT D1
STATEMENT OF WORK
Version US11/07/02
This Statement of Work #__________("Statement of Work") is made and entered into
by and between NETGEAR and SUPPLIER, on________________2003 and incorporates by
reference the Master Purchase Agreement between NETGEAR and SUPPLIER ("Master
Agreement").
NETGEAR and SUPPLIER agree that this Statement of Work completely and accurately
contains the entirety of both parties' requirements in the provision of the
Development Work.
DELIVERABLES SPECS: INSERT DESCRIPTION AND PERFORMANCE SPECIFICATIONS FOR
DELIVERABLES
PROJECT NUMBER: INSERT PROJECT NUMBER
REQUESTED DELIVERY Work will commence the week of INSERT DATE, and will
DATES: be completed on INSERT DATE.
ACCEPTANCE TESTING: INSERT THE ACCEPTANCE TESTING PROCEDURE
AMOUNTS PAYABLE TO NETGEAR shall pay SUPPLIER as follows:
SUPPLIER:
ESTIMATED TOTAL
FEES AND COSTS:
NETGEAR PROJECT INSERT NAME OF NETGEAR PROJECT AUTHORITY NAME AND
CONTACT INFORMATION
AUTHORITY:
- --------------------------------------------------------------------------------
FORWARD ALL INVOICES FOR THIS WORK ORDER TO THE FOLLOWING ADDRESS:
CONTACT NAME:
ADDRESS:
PHONE NUMBER:
FAX NUMBER:
EMAIL ADDRESS:
- --------------------------------------------------------------------------------
ENTIRE AGREEMENT. This Statement of Work and the IPP Agreement embody the entire
understanding of the parties with respect to the subject matter hereof and shall
supersede all previous communications, representations or understandings, either
oral or written, between the parties relating to the subject matter hereof.
- --------------------------------------------------------------------------------
Proposed by Agreed and Accepted by
NETGEAR, INC. SUPPLIER (NAME OF COMPANY)
Address Address
SIGNATURE: ________________________ SIGNATURE: ________________________
NAME: ________________________ NAME: ________________________
TITLE: ________________________ TITLE: ________________________
DATE: ________________________ DATE: ________________________
- --------------------------------------------------------------------------------
Master Purchase Agreement Page 36
CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
EXHIBIT E
NON-RECURRING ENGINEERING COSTS
Version US11/07/02
This Exhibit E is part of the Master Purchase Agreement between NETGEAR and
SUPPLIER, which incorporates this Exhibit E by reference (the "Master
Agreement").
The following schedule lists the definitions and burdens of the NRE costs of
each type of development. The parties acknowledge that the NRE burdens may be
negotiated on a per-project negotiation.
- ------------------------------------------------------------------------------------------------------
New Design Transferred Existing Redesign
Redesign
- ------------------------------------------------------------------------------------------------------
Definition A new NETGEAR An existing An existing
product NETGEAR product NETGEAR Product
that is and is currently
transferred from a being produced
different supplier by SUPPLIER
- ------------------------------------------------------------------------------------------------------
MC(1) Cost Burden FCC, CE, VCCI, NETGEAR: [*] NETGEAR: [*] NETGEAR: [*]
C-tick, LVD(2) SUPPLIER: [*] SUPPLIER: [*] SUPPLIER: [*]
------------------ ---------------------------------------
EMC NOT in the NETGEAR: [*] NETGEAR: [*]
current design SUPPLIER: [*] SUPPLIER: [*]
- ------------------------------------------------------------------------------------------------------
Safety Cost Burden UL, cUL, TUV(3) NETGEAR: [*] NETGEAR: [*] NETGEAR: [*]
SUPPLIER: [*] SUPPLIER: [*] SUPPLIER: [*]
------------------ ---------------------------------------
Safety NOT in the NETGEAR: [*] NETGEAR: [*]
current design SUPPLIER: [*] SUPPLIER: [*]
- ------------------------------------------------------------------------------------------------------
Tooling Cost Burden NETGEAR: [*] NETGEAR: [*] NETGEAR: [*]
SUPPLIER: [*] if changes if changes
requested by requested by
NETGEAR NETGEAR
- ------------------------------------------------------------------------------------------------------
Packaging and Printing Materials Cost NETGEAR: [*] NETGEAR: [*] NETGEAR: [*]
Burden SUPPLIER: [*] SUPPLIER: [*] SUPPLIER: [*]
- ------------------------------------------------------------------------------------------------------
Samples Cost Burden NETGEAR: # of NETGEAR: # of NETGEAR: # of
samples received samples received samples received
by NETGEAR x by NETGEAR x by NETGEAR x
Negotiated BOM Negotiated BOM Negotiated BOM
cost cost cost
- ------------------------------------------------------------------------------------------------------
- ---------------------------
(1) EMC means electro magnetic compliance.
(2) FCC means EMC for the US; CE means EMC for Europe; VCCI means EMC for Japan;
C-tick means EMC for Australia; and LVD means safety standard for Europe.
(3) UL and cUL means safety standards for the US and Canada; And TUV means
safety standards for Germany.
Master Purchase Agreement Page 37
EXHIBIT F
SUPPLIER TRAINING SERVICES TERMS
Version US11/07/02
These Supplier Training Services Terms are part of the Master Purchase Agreement
between NETGEAR and SUPPLIER, which incorporates these Supplier Training
Services Terms by reference (the "Master Agreement"). These Supplier Training
Services Terms apply if and to the extent NETGEAR purchases any Training
Services under the Master Agreement. Unless otherwise specified, all capitalized
terms used in these Supplier Training Services Terms shall have the same
meanings as in the Master Agreement.
1. TRAINING
1.1 Scope of Training. SUPPLIER shall conduct at least one on-site training
course at a location specified by NETGEAR, taught by qualified SUPPLIER
personnel, for each major release of the Products in order to train NETGEAR's
representatives on the use and operation of the Products ("Training Services").
The Training Services shall include, but not limited to, the following: (i)
overview of underlying technologies, (ii) Product features and applications;
(iii) competitive information; (iv) frequently asked questions ("FAQ"); (v)
troubleshooting techniques; and (vi) hands-on sessions.
1.2 Training Materials. SUPPLIER shall provide NETGEAR with the training
materials consisting of handouts to be left for participants for further
reference and instructor guides that might be used by NETGEAR to deliver any
subsequent training. NETGEAR shall be free to modify the training materials for
its use in support and promotion of the Products. SUPPLIER shall also provide
NETGEAR with training materials for minor releases of the Products.
1.3 Videotaping. SUPPLIER shall authorize NETGEAR to videotape training
sessions and to use the resulting videotapes for future training. NETGEAR may
provide future training with the use of such videotapes only to its employees
and/or technicians at its technical support centers.
1.4 Time and Materials Basis. The Training Services will be provided on a
time and materials basis, unless the parties agree to a certain fee per course
and participant. All expenses incurred by or on behalf of NETGEAR or its
representatives attending such training will be covered by NETGEAR.
2. LIMITED TRAINING SERVICES WARRANTY
2.1 Warranty Standard. SUPPLIER warrants that it will have Training
Services carried out in a professional and workmanlike manner by qualified
personnel in a timely and careful manner. If any Training Services fail to
conform to the warranty in the preceding sentence and NETGEAR notifies SUPPLIER,
SUPPLIER shall either (i) re-perform the Training Services to the extent they
were non-conforming, or (ii) partially or completely refund fees paid by NETGEAR
in proportion to the extent of the non-conformance.
Master Purchase Agreement Page 38
2.2 Disclaimer. EXCEPT AS PROVIDED IN THIS SECTION 2 (LIMITED TRAINING
SERVICES WARRANTY), SUPPLIER MAKES NO EXPRESS WARRANTIES OR REPRESENTATIONS WITH
REGARD TO TRAINING SERVICES.
Master Purchase Agreement Page 39
CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
EXHIBIT G
QUALITY PROCEDURES/ON-GOING RELIABILITY TESTING
Version US11/0 7/02
This Exhibit G is part of the Master Purchase Agreement between NETGEAR and
SUPPLIER. which incorporates this Exhibit G by reference (the "Master
Agreement").
1. PURPOSE
On-going Reliability Testing ("ORT") is intended to characterize new
product reliability and to monitor manufacturing and supplier process
shifts proactively. Long-term, random reliability characteristics
affecting Product Mean-Time-Between-Failure ("MTBF") will be sought to
ensure the theoretical hardware design reliability is achieved at a
minimum. Additionally, ORT will be monitored to identify variations in
workmanship, manufacturing processes, and components which may affect
product reliability or result in early stage failures and/or epidemic
failures.
2. TIMING
ORT should be planned as part of the new product introduction ("NPI")
process. ORT sampling should consist of production units (not
prototypes) that have been through the complete production process (to
ensure they are free from defects). Formal ORT should begin within [*]
from First Customer Ship ("FCS") for each new product. For legacy
products, ORT must be fully implemented prior to reduction or
elimination of burn-in or ESS cycle count reduction as part of the
burn-in optimization process.
3. SAMPLE SIZE
Sample size will be established such that the product predicted MTBF at
[*] (Defined by products), whichever is greater, can be demonstrated
with minimum consumer risk. The module sample size (host boards, MDAs,
etc.) will be estimated in proportion to the ratio of install base as
is practical from a network configuration standpoint. ORT sample units
shall be selected randomly at the production line finished goods pack
out or may also be obtained from Finished Goods Inventory ("FGI").
The ORT sample will be fully populated within [*] of beginning ORT. [*]
of the sample units will be removed and replaced with new units every
[*] to minimize wear out. Units removed shall be rerouted through the
normal manufacturing test process and processed into FGI; replacement
units shall be selected randomly at finished goods pack out or from
FGI. (Individual units shall be part of the ORT sample only once.)
4. GENERAL DESCRIPTION
ORT will be implemented as a network of product family members arranged
to accommodate sampling requirements. Traffic will be passed through
this network in a
Master Purchase Agreement Page 40
fashion similar to actual use in a customer environment, although
relying on hardware only within the particular product family.
(Defined by products)
5. ROLES AND RESPONSIBILITIES
5.1 Reliability Engineering is responsible for predicting product design
MTBF and determining the precise ORT sample size for each product and
option. ORT data will be monitored, analyzed, and reported quarterly.
If a failure should occur, Reliability Engineering will drive the
failure analysis and corrective action processes (see paragraph 5.5).
Reliability Engineering is also responsible for providing the test
software tools with data collection features and the appropriate
fixture design. Test equipment set up and maintenance will also be
supported.
5.2 Operations NPI Management is responsible for including ORT as part of
NPI planning. Proper allocations for the ORT sample shall be planned
into the pilot production build. Manufacturing Engineering and
Production Planners are responsible for incorporating the ORT sample
requirements into the production build plan and the capacity model.
5.3 Production Operations is responsible for maintaining the ORT product
sample.
5.4 Release Test Engineering (RTE) will provide guidance in ORT test
network architecture and ORT traffic simulation method. This
information, along with failure criteria, will be contained in an
addendum to this document specific to each product family.
5.5 If necessary, Manufacturing Engineering will manage Stop Ships, Purges,
and any other required manufacturing action. Customer (Sustaining)
Engineering and Hardware Development will support fault isolation and
troubleshooting requirements for root cause analysis and corrective
action development.
6. CONDITIONS AND PARAMETERS
6.1 Temperature Limit And Power Cycling
The maximum ambient temperature shall be [*] simulating customer
operating conditions and configuration. Power cycling of the ORT sample
lot shall be performed periodically. (Defined by products)
Although not preferred, ORT can be run at room ambient temperature if
thermal test equipment is not available. The disadvantage of this
method is the absence of time-wear accelerating mechanisms, thus the
sample size must be up to four times greater than that for ORT at [*].
(Defined by products)
Master Purchase Agreement Page 41
For operating temperatures below [*] (Defined by products), but above
[*], the acceleration factor shall be adjusted based on the activation
energy of [*].
6.2 Duration
Running the test at an operating temperature of [*] (Defined by
products) and using an acceleration factor of [*], ORT can simulate
eight (8) weeks of operation in [*] operating hours on a per unit
basis. ORT units within the sample shall operate for a total of
fourteen (14) days, minimum [*] operating hours), cycling ten percent
(10%) of the total ORT sample approximately once every [*]. Due to
unforeseen circumstances, a unit may have to stay in ORT for longer
than [*], however, the maximum duration should not exceed [*] on any
given unit.
6.3 Failures
Failure criteria shall be provided in an addendum to this document
along with the functional test specification for each product family.
Random failures shall be fault isolated to root cause and repaired or
corrected. After the diagnosis and repair of a failure, the repaired
unit will complete ORT to ensure the corrective action was effective.
If more than one failure occurs with the same symptom during ORT, it
will be considered a chronic failure. Chronic failures shall be failure
analyzed to root cause and a permanent corrective action implemented.
If reasonable evidence exists that a chronic failure mode has
developed, a Stop Ship should be issued until an effective corrective
action can be implemented.
ORT data will be used to calculate product MTBF quarterly. Corrective
actions shall be required for any product not demonstrating predicted
MTBF within six (6) months of FCS and require the approval of the
Director of Quality.
Master Purchase Agreement Page 42